European Union Committee: 2012-13 (EUC Report)

Lord Davies of Stamford Excerpts

Tuesday 30th July 2013 Lords Chamber

[Lord Davies of Stamford]

My Lords, I declare my membership of Sub-Committee A, which handles economic and financial issues in the European Union. I have been on that sub-committee for only two months and can take no credit whatever for the fine reports that my noble friend Lord Harrison has outlined. I pay tribute to him as a very effective chairman of that committee. The reports have received a good response—not just here but on the continent—and have been acknowledged by the Government as having contained early warnings, which unfortunately in many cases they decided not to take. Like others, I pay tribute to the leadership of the noble Lord, Lord Boswell. In the two months that I have been a part of the system, as it were, I have seen that he provides extremely vigorous and effective leadership to this very important structure.

It is a pleasure to follow the noble Lord, Lord Bowness. In the debate we had last week on justice and home affairs, I paid tribute to the distinguished report that he, jointly with the committee of the noble Lord, Lord Hannay, produced on the subject and which was the background to that debate. That is where I want to start because we had the most extraordinary debate last week from which it was absolutely clear that the Government had been faced with 135, or thereabouts, potential home affairs and justice measures. They looked at them all very carefully and found that not one of them was against the national interest. Some were otiose and some were obsolete, but none of them was harmful. The Government selected the 35 measures which were clearly the most valuable to us, some of which were absolutely vital to the conduct of justice in this country. They decided that we could not avoid being a part of these measures without serious damage to the country and so they decided to opt back into them.

However, they opted out of the remainder when it was not logical to do so. There was no harm in the remainder, which added up to a positive element for the national interest on the Government’s own assessment. During the debate last week I read out several quotations from the Government’s own documents on the subject. There is no doubt that the whole of the 135 measures contains greater value than simply the 35, and yet the Government decided not to opt back into about 100 of them. There was no logical reason behind that decision. What is more, it has set at risk our getting back into the 35 measures because there are always doubts about these complicated procedures and the Government are incurring additional, unnecessary administrative and other costs through this complicated procedure—not to mention the costs in terms of good will. We are exasperating our partners by this extraordinary and utterly irrational conduct.

We all know that the reason for it is that the Government had to find a sop to give to their Eurosceptics. The Tory Party is desperately worried about people voting UKIP and wants to draw back into its fold the UKIP voters. We all know what the reasons are—they are pretty squalid party politics—and they have made it impossible for the Government to come to what any rational human being would have seen as the right functional decision to take in this case.

A situation in this country where the Government cannot take rational decisions on a European subject is a very serious matter. The question arises as to what we do and to whom we look for some kind of dispassionate and thorough cost-benefit analysis of measures that come forward in an EU context so that we can be reasonably confident that we are doing the right job for the British public in the decisions that we take. There is no better or other obvious mechanism than the committee structure we have in this place. We all know that the House of Commons does not engage in a systematic way in these deep and thorough reports on European legislative proposals. We have this extremely valuable instrument, which is made even more valuable and vital by the circumstances I have just described.

There are other irrationalities. The noble Lord, Lord Bowness, has just referred to the decision to opt out of the European prosecutor’s office proposal even before it was made. That is clearly a party political decision. Was it in the interests of the country? I have no idea. I have not looked at the matter in detail or read the report of the sub-committee but, nevertheless, it is quite clear that the Government did not make a rational decision on this matter. Someone ought to tell the British public about the pluses and minuses for the country as a whole of doing that.

There are other important issues pending. My noble friend Lord Harrison referred to the issue of the European banking union. The Government decided that we should not be part of the European banking union. Is that the right decision? I do not know. I was not on the committee when it reported on that subject. It is clearly a moving feast. It was only a week or two ago that the Commission produced its second directive on the resolution and recovery aspect. It has already produced a directive on the European supervisory mechanism and we hope that it will produce the third element before too long, which is a directive on retail deposit insurance in the European banking union.

This is not a proposal which is entirely clear or concrete, but we shall have to take a decision on it. It is important that we take the right decision. I have no confidence in the ability of the Government to take a dispassionate decision on this matter, any more than on any of the other issues that I have just talked about. It is important that we look at that.

We have already had some evidence that there will be increasing costs to our not being part of the banking union. It will be increasingly difficult to protect our interests. We have had witnesses in my time on the committee over the past two months who have said, in the context of other things, that over the medium or long term it is probably inconsistent with our being the largest financial centre in the European Union for us not to be a part of the banking union. All these things have to be taken very seriously.

Another big issue that it is quite impossible to expect the Government to take a rational view on is the issue of Schengen. At first sight, there must be great advantages to this country joining Schengen—the convenience and amenity for us all in being able to travel without a passport through more than 28 countries, as some non EU members have joined Schengen. The benefit would be particularly great for two very different categories of our citizens: the very poor and some probably rather rich. With regard to the very poor, there are a lot of people in this country who have never travelled abroad. Some get to retirement age and they have still never travelled abroad and have never had a passport. They hope to visit Paris, Italy or see the Alps before the end of their lives and they are going to have only a few hundred pounds at most to finance that trip. Therefore, the cost of a passport is quite a significant factor and deterrent, and we should think about people like that.

At the other end of the income spectrum, there are the international businessmen. These people are incredibly important when it comes to taking business decisions on location—where do you place your corporate headquarters in the EU? There are international businessmen who travel quite a lot and travel outside the EU to places where they need visas. Their passports often have to be with embassies or consulates for the issuing of visas. If they suddenly want to make a trip to Brussels or Frankfurt, they cannot do it. We are one of the very few countries that provide second passports for businessmen who ask for them for that sort of reason. Therefore, that is a significant issue, although perhaps not a vital issue, in terms of business decisions on location and it is something that we all feel strongly about.

There are other arguments about Schengen. One argument for joining would be that it would involve a lot of savings and would relieve the pressure on the border agency. We know the pressures it has been under and the real problems it has been having. The Government say they are interested in making administrative savings. There would certainly be administrative savings there.

The big argument on Schengen is that we are losing hundreds of thousands at least but probably millions of tourists a year. For people from the Far East, China and elsewhere who come to Europe, mostly on organised trips, it is simply not worth the money or the time for the travel agency to apply for a second visa. They apply for a Schengen visa and they offer people a European tour which takes them to Paris, Amsterdam, down the Rhine, and then to Florence, Rome, Madrid and Seville, and they do not come to the United Kingdom at all. They do not come because they have to get an extra visa at extra cost. It is quite clear that we are now talking in terms of hundreds of thousands, but it might be millions, of lost visitors to this country every year as a result of that.

Why do we not join Schengen? On the other side of the argument, some people would say “Good God, you couldn’t possibly do such a thing. You’d have millions of people pouring across the Thracian border into Greece who a day or two later would appear in London, Birmingham and Bradford as illegal immigrants here”. We have to think about that. Is it true that the French, Germans and the Dutch have a much worse problem controlling illegal immigration than we do? Is it true that sophisticated countries such as Switzerland and Norway, which are not members of the EU, have actually chosen to join Schengen when it is so hopeless at actually filtering people through the common external frontier? We need at least to ask that sort of question.

Some people will say “It’s a principle that you must always control your frontiers. You have only your own citizens controlling the frontier”. That cannot be an absolute principle because we have officials in the Republic of Ireland taking decisions about who should come into the United Kingdom. It is certainly not an absolute principle. Some will say that it is all to do with sovereignty. People get very excited about sovereignty. Before 1914 you could go to Victoria station and buy yourself a ticket to Paris, Berlin, Rome or Madrid and go without a passport. It was not until you got to the Russian frontier, the frontier of the Russian empire, that you had to produce a passport. Whatever the nations of Europe were suffering from before 1914, I do not think that it was an insufficiency of sovereignty.

All of these arguments need to be probed. Who is going to look at them? Not the Government. If you suggested joining Schengen the Eurosceptics would go berserk. They would go barmy and get hysterical. The Eurosceptic press—the Murdoch press and the Rothermere press—would get completely hysterical as well. There is no chance of a cool, calm, measured and calculated cost-benefit analysis being done by the Government on a subject like that. It is all the more important that we have instruments of the kind we do in the form of committees in this House which are able to give the country some of that element of analysis of these issues.

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[Lord Hodgson of Astley Abbotts]

My Lords, it is a great privilege to follow the noble Lord, Lord Kerr of Kinlochard. A lifetime at the diplomatic coalface has given him analysis and perspective that I cannot hope to match, and I listened with great interest to his suggestions.

I am just an ordinary member, now of Sub-Committee E and previously of Sub-Committee F. This has given me the opportunity to study in detail four very different chairmen: my noble friends Lord Jopling and Lord Bowness, the noble Baroness, Lady Corston, and, previously, the noble Lord, Lord Hannay. Each has been extremely effective and has been able to corral their potentially recalcitrant flocks with humour and good sense. It has been a pleasure to serve under them all. The other group to whom I add my thanks are the clerks, who do such terrific preparatory work and manage to turn the meanderings of the committees into a coherent whole. In my view, the country and the House owe a great debt of gratitude to both these groups.

As a member of Sub-Committee E, I served on the joint Select Committee considering the opt-out decision but I am not proposing to cover that issue now. The House has debated it at length and I agree with the noble Lords, Lord Judd and Lord Hannay, that the delivery of the Government’s response was unacceptably late. However, we have had a good chew of that and candidly, if I am honest, I am suffering a bit from opt-out or opt-in fatigue, at least for the time being. We will no doubt return to that issue in the autumn.

Instead, I will focus first on another of Sub-Committee E’s reports: that on The Fight against Fraud on the EU’s Finances. The evidence that the sub-committee received indicated that the official figure of fraud—which, as we have been told, was £404 million—was a woeful underestimate and that the real figure could be as much as 12 times higher: around £5 billion.

We also received evidence that OLAF, the European agency charged with fighting fraud, did not always receive the full-hearted national co-operation that it deserved. In these circumstances, the Government’s participation in our inquiry, or perhaps I should say their non-participation, is disappointing. Further, the Government’s response to the sub-committee’s report, received only recently, did not seek to rebut the sub-committee’s suggestion that EU fraud could be as high as £5 billion, merely recording, as the noble Baroness, Lady Corston, said, that it was not a figure that they recognised. This smacks of a good deal of complacency. Fraud is theft—theft from the taxpayer, whose interests every Government in the EU ought to be protecting. Moreover, fraud, if not investigated and prosecuted with vigour, has an unhappy habit of spreading. I hope for a more vigorous approach by the Government on this topic in future.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. Does he agree that, given the importance of fraud—I think that the whole House will be with him on everything that he said on that—it might have been a good idea if the Government had decided to join in with the initiative of setting up a European prosecutor’s office with a specific remit of pursuing fraud cases in the EU?

[Lord Hodgson of Astley Abbotts]

As always, the noble Lord, Lord Davies, has a seductive tone to his voice, but of course that is a completely different issue. We are trying to ensure that OLAF, which is the European fraud investigative committee, operates effectively. That is what we need to concentrate on first rather than, as my noble friend Lord Howell has said, superimposing yet another body that will be out of touch with the reality on the ground.

I shall focus the rest of my remarks on Chapter 10, the future look. I have written to the noble Lord, Lord Boswell, to give him some advance warning of what I wish to raise and what I would like the EU Committee to look at in future: the implications for this country of the continued free movement of labour within the EU—one of the pillars, as the noble Lord, Lord Hannay, firmly pointed out, on which the whole EU structure rests. However, I fear that the UK, uniquely, is already facing some strains from this free movement, strains that I fear will almost certainly become more severe and increase over the next 10 to 20 years.

A couple of figures may help to illustrate the point. England, not the United Kingdom, has now overtaken the Netherlands as Europe’s most densely populated country, with some 400 people per square kilometre. By comparison, France has 125 people per square kilometre, which is one-third or one-quarter as densely populated, and Germany has 260 per square kilometre—about two-thirds as populated. That is today, but over the next 15 years to 2027, if you believe the mid-projection by the Office for National Statistics, the UK’s population—here I am talking about the UK, not England—will increase by 7 million people, from 63 million today to 70 million then. What does this mean in comparable statistics? Last year, the UK’s population grew by just short of 1,100 people per day—a small village every week; a parliamentary constituency every three months or so. By contrast, Italy’s, France’s and Germany’s populations are falling, and on present projections the UK will overtake Germany to become the most populous country in Europe by the early 2030s.

Should we worry about this? Before answering that question, one needs to make it clear that race, colour and creed play no part in the debate. Indeed the social strains, if social strains there be, are likely to be felt most harshly in the minority communities. So should we worry? Physically, we can certainly fit the people in. Bangladesh has 1,400 people per square kilometre compared to England’s 400. However, it will be up to wiser minds than mine as to whether we wish to reproduce Bangladeshi living conditions in the UK.

Concerns revolve around two specific issues. First, there is the impact on our environment—the pressure on the green belt around our cities, the impact on our countryside, especially in the south-east, and so forth. These are important to me but are not the critical issues. For me, the critical issue is the potential crowding out of our native-born population—please note that I say, and I mean, “native-born”; that is not another word for white but, rather, means anyone and everyone who was born here—and the consequences of that crowding-out on our social structure. If the default option for British industry and commerce is to call for more immigration as opposed to upskilling our own population, we run the risk of creating a sullen, disconnected, unemployed and in due course no doubt unemployable underclass—an underclass that, in the minority communities, may well find extremist activities attractive. That is not good for us as a country or as taxpayers.

I shall give the House a practical example. I have a house on the Shropshire/Herefordshire border. As I speak here today, there are about 4,000 people from eastern Europe picking fruit. They are here legally, they behave well, they work hard and at the end of the season all, or at least most, of them will go home. However, there are unemployed locals in Herefordshire and south Shropshire. Talk to the fruit farmers and they will tell you that the locals will not work hard enough, are not reliable and turn up once and do not come again. Talk to the locals and they will tell you that they cannot get the farmers to recruit them because they prefer to recruit in bulk from eastern Europe in the hundreds. Where does the truth lie? I have no idea, but there is an issue here that at some point we have to address.

An argument often advanced for increasing immigration is the need to provide additional people to look after, and compensate for, our ageing population. This has extremely superficial attractions but it ignores the inexorable laws of ageing and compound interest. Today’s increased number of young people leads inevitably to tomorrow’s increased number of old people, who will in turn require still further increases of young people to compensate. Indeed, it has been calculated that if we wish to keep the same number of workers to pensioners as at present—it is about 3.5 to 1—we will already need an extra 27 million more workers by 2050: a 40% increase in our population.

To conclude, while free movement of labour within the EU is only part of the challenge, it is an important part and one which an EU committee will be uniquely well placed to address because it can do so in the non-partisan, equable, evidence-based way at which it excels and which this subject, above all, demands. I take a fairly hard-nosed approach to this country’s relationship with the EU but I do not doubt that at root it has been of great benefit to the United Kingdom. The 900,000 or so graves in France and Belgium are mute witnesses to that fact. However, outside the M25 in particular, the apparently inexorable rise in our population is causing concern. We need to reassure any concerned people that Parliament is aware of those concerns and prepared to investigate them fully, no matter how sensitive they may be.

Martin Wolf, the FT economics commentator, wrote:

“Society cannot function without a majority willing to play by the rules, without individuals demonstrating on a minute-by-minute basis their trustworthiness, reliability, courtesy and self-reliance”.

We need to ensure that we do not stretch these qualities to breaking point.

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[Lord Wallace of Saltaire]

My Lords, I am conscious that I now stand between noble Lords and what the noble Baroness, Lady O’Cathain, called their buckets and spades, although in my case it is my punnet and hoe. I failed to pick rather too many of our raspberries and a large quantity of our blackcurrants last weekend, so I look forward to getting back as soon as possible to provide my wife with them to process.

I declare an interest as a former member of the House of Lords EU Committee and a former chair of one of one of its sub-committees. I had thought that perhaps when I step down from government, it would be very pleasant to sit on the committee again. However, what I have heard today suggests that it is all extremely hard work, which is the last thing my wife would want me to do when I have finished working absurdly hard in government. We appreciate how much extremely valuable work the Lords EU Committee and its sub-committees do. The Government certainly have no intention to reduce the number of sub-committees. I remind Members that the number of sub-committees and the allocation of committee resources in this House is a matter for this House and its authorities, not for the Government.

The committee will have seen the Government’s written response to this report and the Minister for Europe welcomed it.

[Lord Davies of Stamford]

On the very important point of the allocation of resources to permit the committees to do their work, we have, of course, recently been subject to reductions in our travel budget. That is bizarre, because the work requires us to keep in close touch with our continental partners and in particular with the institutions in Brussels. Do the Government have a view on the matter of the resources that should be allocated or the reduction in resources that is being imposed on the committees here?

[Lord Wallace of Saltaire]

My Lords, I am simply not briefed on that. However, I can assure the noble Lord that as a Minister I travel with Ryanair and easyJet to various places around the outer fringes of the European Union. We also do our best to economise where we can. I remind the noble Lord that this is the leanest Government that Britain has had for many years because we have cut the government car pool very substantially—we have to walk everywhere.

This is a very timely debate. I recall our previous debate on the annual report, which took place rather later than this one, and in the Moses Room, although we are now here in the Chamber. I also recall it because the noble Baroness, Lady O’Cathain, criticised me very sharply on that occasion for not having read every single report that the committee had produced in the previous year. I can assure her that I have read at least the summary of every report that the committee has produced this year.

There are, of course, many examples of the way in which the committee has fed into the Brussels process and the work of other Governments, as well into the debate within Britain. We are concerned at the criticisms that the committee has made of the untimely provision of Explanatory Memoranda, and in particular of the role of the Treasury. We very much take on board what the noble Lord, Lord Kerr, said about the importance of timeliness in terms of subsidiarity. I will take all the points back, and we will discuss them in the Cabinet Office, the Foreign Office and various parliamentary branches of the relevant departments, to make sure that they are fully taken on board. I am an enthusiast for the development of the use of the yellow card mechanism. We have to make sure that we are given all the resources we can manage so that we will be able to use that to its best ability.

I have been heavily involved in the balance of competences review for six months, about which various comments have been made. Perhaps I may stress that those reports were not intended to have policy recommendations at the end. They were intended very much to feed into a better informed debate in the United Kingdom. I hope that the first six reports have done so. I look forward—although perhaps not entirely—to three more rounds of very careful assimilation of a large amount of evidence presented into another collection of reports.

I say to the noble Lord, Lord Hannay, that the balance of competences exercise is very much in parallel to other aspects of what is going on in government. We have welcomed his committee’s report on the justice and home affairs opt-out. The balance of competences exercise is proceeding in parallel with a whole range of other negotiations and the order of reports was drawn up some time ago, with other dimensions in mind.

We are attempting, both within the balance of competences exercise and in the work of this and other committees, to provide space for a reasoned debate within the European Union about our interaction with the European Union. We all recognise that over the next nine to 12 months that debate may be constricted in some ways as we move towards the next European elections. We are also conscious, particularly so over the past week, that the press is not always favourable to a reasoned debate. The Leveson report remarked that in press coverage of the European Union—as with press comment on women, minorities and Muslims—its attitude is that it is quite acceptable to invent stories without any source whatever.

I was very struck to see this story in the Mail the other day:

“Revealed: The shadowy lobbyists waging war to keep Britain in Europe”,

I read it with great interest, only to discover that it was actually talking about British Influence, which is an entirely public body. I think that the Mail had lifted this story from a Eurosceptic blog, which said that British Influence was a deeply dangerous organisation funded by the secretive Bilderberg Group. Oddly enough, the Mail did not include that bit.

I was also quite worried by the article by Peter Oborne in the Telegraph last week, saying that:

“The 1975 referendum was a fair poll in the same sense that the elections due to be held in Zimbabwe next Wednesday will be fair … The sense has lingered that we were hustled, against our will, by an anti-democratic elite, into an organisation whose true aims and nature were hidden from us until too late”.

The BBC, of course, was playing a role in the deceitful agenda.

On Saturday, the Telegraph’s Brussels correspondent, Bruno Waterfield, told us that,

“the European Union is planning to ‘own and operate’ spy drones, surveillance satellites and aircraft”,

under the control of the noble Baroness, Lady Ashton, in,

“a major move towards creating an independent EU military body with its own equipment and operations”.

I was therefore very pleased to receive this morning an invitation from King’s College London to a debate in October on how to ensure that we have impartial reporting on the European Union, at which Bruno Waterfield will be one of the speakers.

I say this partly to demonstrate that getting reasoned debate based on evidence about Britain’s involvement in the European Union is not easy and that this committee plays an immensely valuable role in helping to widen that debate. I hope that noble Lords have read the balance of competences review papers so far and I hope that they feel that they have drawn in evidence-based policy with which perhaps to counter the emotion-based policy, the prejudice-based policy and the conspiracy-oriented allegations which so often cloud out rational debate in Britain. All parties must contribute to this effort.

I say to the noble Lord, Lord Judd, that I very much look forward to hearing a speech from the Labour leadership comparable to the speech made by the Prime Minister in January. The leader of my party, the Deputy Prime Minister, will make a major speech on the European Union in October. I very much hope that we will hear a constructive Labour contribution to an EU reform agenda that keeps Britain in the European Union. This is what the Prime Minister was talking about, and I confirm to the noble Lord, Lord Liddle, that that is what the coalition Government are pursuing, rather than unilateral repatriation intended to lead to an exit, which is what the Telegraph, the Mail and a number of others on the fringes of conventional politics very much want us to pursue.

I turn to various issues that were raised in the debate. The sub-committee on foreign affairs produced a very valuable report on common security and defence policy. I have noted that on scrutiny we have shifted very often from major reports to follow-on reports and continued scrutiny. As we approach the December European Council, which will have European defence very much on its agenda, I trust that the sub-committee will continue to monitor the way in which the British Government and others approach this. As everyone knows, there is a tension between those who are interested in institution building and others who are interested in practical conflict prevention and conflict resolution under that dossier.

Similarly, on banking union, it would be immensely valuable if the sub-committee responsible for that continues to monitor the ongoing debate. Having read its report and various other—mainly German—documents, I think that I understand the various different definitions of banking union that are floating around. However, because there are so many different definitions of banking union—with maximum, minimum et cetera—clearly we need to contribute to the debate. As the noble Lord, Lord Harrison, and others rightly said, we need to think also about where in the debate the interests of Britain and of Britain’s financial centres are at stake.

On the workload of the European Court of Justice, I take on board what has been said. We have now moved on the question of—

House of Lords (Cessation of Membership) Bill [HL]

Lord Davies of Stamford Excerpts

Friday 29th June 2012 Lords Chamber

[Lord Davies of Stamford]

My Lords, this is a timely Bill which has been brought forward by a parliamentarian and colleague for whom we all have the highest regard. I think I am right in saying that the noble Lord has served in three legislatures, over one of which he has presided. On a memorable occasion he sought election to a fourth, the European Parliament. He has enormous experience and, most important, he is a man of great wisdom, integrity and, if I may say so, of humanity. I therefore come to any Bill drafted and presented by him with the greatest respect. But I hope he will forgive me for saying that, though I certainly hope the Bill makes rapid progress, I do not share the noble Lord’s hope that it will go through without any amendment and therefore without the need for a Committee or Report stage.

I will take the clauses of the Bill in turn. I entirely agree with Clause 1 on retirement. That is a necessary measure to introduce—no doubt it should have been brought in years ago—and I have no difficulty in supporting it. I also agree with Clause 2 on non-attendance. I take it that the reference there to our Standing Orders fully provides for the possibility that someone might need to take absence on medical grounds for a year or more but would then be able to come back and resume his or her responsibilities. On that basis, I am extremely happy with Clause 2.

My problems arise under Clause 3. Let me explain: first, I am mystified by the reference to “one year” as being the defining point beyond which a sentence of imprisonment would result in the automatic exclusion or expulsion of a Member. I heard a rumour or suggestion—I do not believe that it is true—that the reason the noble Lord had thought of one year was because it would have caught one individual and excluded another who he had in mind. I cannot believe that that is correct because that would of course be an ad hominem form of legislation. The law should be based on universal principles universally applied. The attempt to simply target one individual rather than another would amount to a Motion of impeachment, or non-declared impeachment. We would not even be able to consider the merits of an individual case or look at the evidence. That would involve the breach of a whole range of the rules of natural justice. I am sure that the noble Lord had not got that in mind. It may be the case, though I am not aware of it, that in sentencing people convicted of criminal offences courts distinguish very specially between sentences of, say, 12 and 15 months and there is generally regarded to be a great qualitative step between those two points. But I have never heard that to be the case and I do not know that it is. If it were, there would not be any assurance that it would remain so, so that would not be good grounds for making that distinction.

I am very worried about the 12 months. I would like to know the rationale for it. I totally understand that the noble Lord wanted to distinguish between a criminal offence and a serious criminal offence. After all, to drive at 65 miles an hour in a 60 mile-an-hour zone is a criminal offence. Even if you did not notice that there was a sign saying that the speed limit was going down from 70 to 60, it is still a criminal offence if you are driving at 65. If traffic violations of that kind were grounds for automatic expulsion, I think quite a lot of us might have an individual problem. So I quite see the need to find some particular criterion but this is not a very satisfactory approach, for the reasons I have mentioned. There is a better way, which I will come on to in a second.

My second problem is much more serious. I do not believe in the idea of automatic expulsion. Here I totally agree with my noble friend Lord Wills, who made exactly the point that I had in mind to make. He said that he could not think of any particular examples but that there could well be some anomalies and injustices involved in having an automatic mechanism of that kind. I can think of some notable examples, not going back to the Middle Ages or the 16th or 17th centuries but to the last 100 or 150 years, when parliamentarians—Members of the House of Commons, at least—have been sentenced to prison. Fortunately, they were not as a result excluded from Parliament or from standing again. Had they been so, in retrospect all of us would have regarded that as a national scandal.

Let me mention a few names that will be familiar to noble Lords. Jimmy Maxton was imprisoned for a speech he made in Glasgow in the middle of the First World War. Arthur Jenkins was imprisoned at the beginning of the 1920s for aiding and abetting an illegal strike. George Lansbury—I put it to noble Lords that there has been no finer human being or man of greater integrity in British politics over the centuries—went to jail in 1913, just before the First World War, for a speech in which he supported the suffragette movement. Look at the large number—I think dozens in all—of members of the Irish Parliamentary Party who went to jail under the Coercion Acts that we passed here in the 19th century, including Parnell and Redmond who are two enormous figures of Irish history. Indeed, Parnell is a dominating giant of Irish history. They were also two very great parliamentarians. I think there have been no greater in Westminster and the House of Commons than Parnell and Redmond—fine men who dominated that Chamber for decades. They went to jail under the Coercion Acts and would automatically have been excluded from Parliament for all time if we had had the automatic mechanism contained in the Bill, so I do not believe that it is the right way forward.

What is the right way forward? I think it is the one that the noble Lord, Lord Steel, has resorted to in Clause 3(5). There he has reserved it for Members of the House of Lords who might be convicted in a foreign court with a sentence of more than one year. Of course, I totally see the logic of his making that particular provision in the light of the other provisions of his Bill. Clearly, in some foreign courts, it would be an offence, perhaps imprisonable for 12 months or more, just to criticise the current dictator or the ruling party in a one-party state. It is quite natural that he has decided to make provision for that eventuality in Clause 3(5). By doing so, he has recognised that there might be circumstances in which we need to consider the merits of an individual case. If we can consider those merits when someone has been imprisoned for a criminal offence—or supposed criminal offence—in a foreign court, why can we not consider them when he or she might have been convicted and sentenced to prison in a court in the United Kingdom? The noble Lord has admitted the principle of this alternative approach. I put it to him that he has solved the two problems that I have set out. That particular approach would be the right one to adopt in all circumstances. We should use the opportunity of the Committee stage of the Bill to remove the automatic mechanism and replace it with one along the lines of that he anticipates in Clause 3(5).

I have one final point. I am not clear that the Bill as currently justified would not contain an element of retrospectivity. I am sure that it would not be the noble Lord’s intent that it could be retrospectively applied but it does not explicitly say that it should not be. I see from the gestures of the noble Lord that he totally agrees with me on that. It would therefore be desirable to introduce a new clause or provision into the Bill in the course of the Committee discussions making it absolutely clear that there is no retrospectivity. There may be many of us on both sides of the House—I put that in the subjunctive for obvious reasons—who regret that we did not have in place a provision for expulsion when one or two egregious breaches of the criminal law, and what we might all think of as rules of personal honour and morality, were breached by Members of this House recently. Yet we did not have that mechanism in place at the time and we cannot retrospectively apply a penalty that did not exist at the time that those actions were committed. Therefore, we must make it absolutely clear that we stand by that fundamental principle that the law must not be retrospective.

With those few comments and suggestions, and looking forward to the future stages of the Bill—which I hope will proceed as rapidly as possible—I congratulate the noble Lord on the initiative that he has taken. The whole House will be grateful for it.

[Lord Norton of Louth]

Is the noble Lord aware that the purpose of Clause 3 is simply to bring this House into line with the House of Commons in terms of the triggering mechanism for expulsion? While I am on my feet I will just mention that the wording of subsection (5) is taken from the previous Government’s drafting of the original Constitutional Reform and Governance Bill in 2010.

[Lord Davies of Stamford]

When we consider legislation, we really must consider it on its merits and look at the general principles to which we in this House are attached and which we believe should guide and inspire legislation. It is not a good excuse—if I may say so—for bringing in bad or inadequate legislation or legislation that conflicts with those general principles that one was at some point in the past a member of a Government who in one particular, peculiar situation may have done something that creates a precedent for the bad proposal that is before us. I stick by the comments I made just now, and I do not believe that, whatever may be the case in relation to precedent that the noble Lord cites, we should do other than look at the merits of the case.

[Lord Norton of Louth]

Is the noble Lord therefore saying that the House of Commons is wrong in its provisions for expulsion?

[Lord Davies of Stamford]

I do not wish to repeat the speech that I have just made, but I have explained that I think that the Bill as currently drafted is not correct and could be improved. I hope it will be improved along the lines that I have suggested.

Queen’s Speech

Lord Davies of Stamford Excerpts

Monday 14th May 2012 Lords Chamber

[Lord Davies of Stamford]

My Lords, this has been a stimulating and, from my personal point of view, instructive debate. The noble Lord, Lord Wallace, in our debate on this subject just before Prorogation, said in his rather world-weary way that he had not heard any new questions being put and implied that it was something of a failure on the part of those who have problems with the Bill to come up with serious objections to it. I think the problem is the other way around. So far, we have not had anything like enough answers. If the Government feel that some of the objections that are being raised are not valid, it is up to them explicitly to take the time to refute them, and if they cannot do so, to recognise that it is necessary to think again and come back with something better. It is only on that basis that we will make any progress on this particularly difficult issue.

I have always been a supporter of a 100% democratically elected House of Lords. I have taken that line throughout my political career. I have spoken along those lines in another place, but hitherto I have not had an opportunity to do so in this place. I voted along those lines in the House of Commons whenever I had the opportunity. I can also remember speaking along those lines to Gordon Brown both before and after he was Prime Minister, so I have a consistent record. But I could not possibly support the Bill that is now before the House. Indeed, I read it with complete astonishment as it seems to be deeply flawed. It is flawed in three places, or perhaps more, but certainly in three places it is in glaring contradiction with its own principles. That is a very serious weakness in a Bill and it would be a great mistake on our part if we put it on to the statute book. Clearly I need to justify that statement, and I intend to do so.

Let us take, first, a membership of 80% elected and 20% appointed. It is clear to me that you cannot have it both ways. Either democratic election is necessary for political legitimacy, which is the argument behind the White Paper and the Bill, or it is not. You cannot say that it is a principle that must be applied to some people but not to others, that democratic legitimacy can only be conferred on me by election, but on my noble friend Lord Campbell-Savours it does not have to be conferred by election. You cannot possibly have a so-called “universal principle” which is selectively applied. In putting forward that idea, the Bill destroys its own argument and we should not proceed on that basis. It is entirely unjustifiable.

The practical point of view—if noble Lords think that that is a theoretical point, it is actually very important to get the theoretical points right and get our thinking clear on this subject—is whether we in this place, either elected or nominated, would rival in some way members of the House of Commons in their constituency functions. Another point made the other day at some length and with a lot of quotations by the noble Lord, Lord Wallace—and there is a widespread view in this country to this effect—was that the British public have lost faith in their institutions and have lost confidence in their politicians and people in public life, and that we need to do something about it. His suggestion was that we need this Bill in order to do that. Can you imagine a situation in which you introduce a Bill to have 80% of people elected to the House of Lords for a 15-year term who then, as the Government think will happen, refuse to take up any personal or local cases brought to them by their electors? Presumably they would say to those who had elected them, “Thank you for electing me, it was very good of you. But actually I have a 15-year term and I cannot stand for re-election, so you can get lost”. If we behaved along those lines, can anyone in the House think of a way more calculated to reinforce any cynicism there may be about people in public life or encourage a greater degree of rejection of our institutions and of us individually?

The second problem I have with the Bill has already been referred to by several other speakers. Clause 2 suggests that there would be no change in the constitutional position or the powers of the House of Commons if we became an elected or a largely elected House. This is a matter of elementary logic. If you define the qualities or status of something in relation to something else and you change the something else, you change that status and those qualities. If it be the case, as Erskine May says and as the White Paper argues, that the House of Commons is special because it is democratically elected, and then if the second House in our legislature becomes democratically elected, clearly in that respect the House of Commons would no longer be special. To recognise that is a matter of simple logic and honesty, otherwise one is in the business of promulgating an intellectual dishonesty. It is just like saying that everybody can have priority; for example, that everybody in this army can be a general but we will not change the concept of a “general”, or that everybody can go first class on aircraft or in trains but we will not change the concept of “first class”. However, you would be changing the concept of first class or generalship, and it is dishonest to believe otherwise.

There is a third area in which the Government seem to be in contradiction with themselves, and that is in relation to a referendum. I cannot make out what has happened to the Liberal Democrats on this because they fought the last election, as we did, saying in their manifesto that they were in favour of a referendum on this subject. Now, as part of the coalition, apparently they are no longer in favour of a referendum on a House of Lords reform Bill, and the Deputy Prime Minister goes around saying that he does not think that one is necessary. I also have a consistent record throughout my career of not liking referenda. My very first political campaign, which I enjoyed taking part in and am very proud to have done so, was the 1975 referendum on our membership of the European Community, as it was then called. But even at the time I personally regretted that that decision was taken by a referendum and not by Parliament. However, it would be less than honest not to recognise that over the past 30 or 40 years, the constitution of this country has evolved and there is now a general acceptance that major constitutional Bills cannot simply be passed through Parliament, as has happened down the centuries, but that they require a referendum. That would be the case if we left the European Union or, I think by universal agreement, if we joined the euro. Over the past few decades it has always been the case for devolution.

Moreover, noble Lords will recall that we have had referenda on much more minor issues like whether to have elected police commissioners or mayors. We had the referendum on AV last summer. It is really quite extraordinary that we now have a proposal to make a major constitutional change without a referendum. I think that that is very suspect and curious. What is more, it comes just a few months after we voted through the Europe Bill. The noble Lord, Lord Wallace, and I spent some time debating matters on that Bill which, as I recall, provided for 39 different circumstances in which there could be a referendum in this country, some as relatively trivial as changing the rules on the appointment of the Court of Auditors at the European Commission. That Bill is now an Act—a very bad one, in my view, but I will not go into that now—that provides for the possibility of referenda on extraordinarily trivial subjects, yet we are told that we cannot have a referendum on House of Lords reform. That is an inherently incredible and unbelievable situation. It would be very suspicious and everyone in the country will ask, “Why is there this inconsistency?”.

This is the moment when one is right to remember the famous question put by Lenin. I emphasise that I am not a Marxist-Leninist. Indeed, unlike my noble friend Lord Grocott or a number of other people in this House, I cannot say that I have always been in the same party, but I have never been in a Marxist-Leninist party. Lenin had a point when he said the key question to ask about any proposal was, “Who, whom?”— “Kto kogo?” Who benefits and at whose expense? I think that people up and down the country, given this extraordinary dog’s breakfast of a Bill, with its mass of self-contradictions and breach of its own principles, will naturally ask that question. They will ask who had the incentive to bring forward this extraordinary legislation at the present time. The answer to that is quite obvious: it is the Liberal Democrats. We all know that the Liberal Democrats have dreamt for decades of introducing proportional representation for House of Commons elections, which would give them the balance of power in the House of Commons for the rest of time and therefore leverage and lien over, and probably membership of, every Government for the rest of time. It is clear that they have now despaired of introducing PR nationally; after the AV referendum, they despaired even of getting something in the direction of PR nationally; so this is now the next great agenda. The idea is that, since they cannot do it with the Commons, they should improve the standing of the Lords vis-à-vis the Commons by making the Lords directly elected, as will inevitably happen, and making sure that, through PR, they get their permanent blocking minority in the House of Lords for the rest of time. It is a very simple agenda, and I can see that it is very alluring for the Liberal Democrats. They see it as much more important than any individual piece of legislation that might go through in this Parliament; this is the long-term, historic prize; this is the great existential change for the Lib Dems if they can achieve it—and what a wonderful opportunity, being in coalition with the Conservative Party which is dependent on them for survival, to get this through. I think that that is really what it comes down to. I cannot believe that, without such an agenda, anybody would have come forward with such a self-contradictory and messy Bill.

I am worried that, if we proceed on this basis, there will be exactly what the noble Lord, Lord Wallace, predicts; that is, increasing cynicism on the part of the electorate about our priorities, the way we do things and how we cook up initiatives. It will be widely seen that this fundamental change in the constitution, accompanied by all these anomalies, is going through because it meets a party-political agenda. That will be seen as extremely squalid and, I fear, contribute to exactly the disease which the noble Lord, Lord Wallace, described the other day.

--- Later in debate ---

[Lord Rennard]

It was the beginning of the last Labour Government. The manifesto said in 1997 that,

“the House of Lords must be reformed ... to make the House of Lords more democratic and representative”.

In particular, the 1997 Labour manifesto said that,

“the legislative powers of the House of Lords will remain unaltered”.

[Lord Davies of Stamford]

I am grateful to the noble Lord for giving way. I have noticed—as has the whole House—that he has not attempted at all in his remarks to contest my hypothesis that the Lib Dem party is, in this matter, pursuing an entirely selfish party-political agenda. While we are quoting manifestos, can the noble Lord explain to the House why the Lib Dem party appears to have abandoned its commitment in favour of a referendum on this issue, which was certainly in its most recent general election manifesto in 2010?

[Lord Rennard]

With the greatest respect to the noble Lord, there was absolutely no promise of a referendum on the issue of Lords reform in the Liberal Democrat manifesto in 2010. I believe in representative democracy. I think there are many problems with referendums, as I shall elaborate. The Liberal Democrats did not promise any such thing in 2010.

In answer to the noble Lord’s basic premise that the Liberal Democrats are acting out of pure self-interest in this matter, I point out the major flaw in his argument. In common consensus around the Chamber tonight, we have talked about there being perhaps 400 or 450 Members of this House who are particularly active. I draw noble Lords’ attention to the fact that there are now 90 Liberal Democrat Peers. That is not far off some 23% of the active membership of this House. I also point out to noble Lords that many people who talk about the effectiveness and work of this House have said that it is effective because no one party has an overall majority. No one party has an overall majority if you have a system of proportional representation.

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, I was just coming to the issue of Commons primacy. The issue of primacy is partly a matter of whether one wishes to have a written constitution or one operates on the conventions of an unwritten constitution through restraint and reasonable behaviour. Of course we acknowledge the view of the committee that Clause 2 is not capable in itself of preserving the primacy of the House of Commons, which a number of noble Lords have cited, but we should listen to the committee in full when it said:

“A majority, while acknowledging that the balance of power would shift, consider that the remaining pillars on which Commons primacy rests would suffice to ensure its continuation”.

The primacy of the Commons rests on many pillars. These include the conventions governing the relationship between the two Houses, the Parliament Acts of 1911 and 1949, and the fact that the Prime Minister and most of the Government of the day are drawn from the House of Commons. The whole of the House of Commons will be renewed at each election, and that will clearly be the election in which the Government are chosen. The second Chamber will have, as the noble Baroness, Lady O’Neill, termed it in her interesting speech, a “different sort of legitimacy” as the second Chamber. The relationship between the two Houses is not a zero-sum game.

[Lord Davies of Stamford]

My Lords, I am most grateful to the noble Lord for giving way. How can the Parliament Acts possibly be a defence for the primacy of the House of Commons when all the legal advice that the House has heard on the subject makes it quite clear that the Parliament Acts would cease to apply if the House of Lords became an elected House?

[Lord Wallace of Saltaire]

My Lords, there is room for a discussion and a concordat between the two Houses. We have also seen in the evidence that there is some resistance to putting into statute a further codification of the relationship between the two Houses because, as I have heard many noble Lords say, the jurisdiction of the courts and litigation would not necessarily be desirable. The Government did notice and will consider the recommendations of the Joint Committee with regard to initiating preliminary work on a concordat between the two Houses, but such work ultimately would be the responsibility of the two Houses rather than of the Government, as it would be concerned with constitutional conventions.

I want to make one other brief point. I was puzzled to hear a number of noble Lords say that this Chamber is not part of the legislature. Erskine May has been quoted on several occasions. On the first page, chapter 1, page 1, paragraph 1 states:

“Parliament is composed of the Sovereign, the House of Lords and the House of Commons. Collectively they form the legislature”.

Government Procurement Policy

Lord Davies of Stamford Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord Davies of Stamford]

My Lords, I fear I must start by refuting and rejecting, I hope definitively, two very unscrupulous pieces of propaganda. They are complete falsehoods in both cases but they get mentioned far too frequently. One of them was mentioned this morning by the noble Lord, Lord Lee. I am sorry about that, because he is a man whose judgment I greatly respect and who knows a lot about this subject. It is absolutely not true that we in the Labour Government left a legacy of a £38 billion deficit—a so-called black hole. It is complete rubbish. You can only get to that figure if you assume that over 10 years, we would not have increased defence expenditure even in nominal or cash terms.

In other words, for 10 years you would have had a real-terms reduction in defence, year-on-year. Obviously, we were not planning to do that; we were increasing defence expenditure at 1.5 per cent in real terms. Even the new coalition Government are not doing that. Disgracefully, they are freezing defence spending in cash terms at the moment while saying that in the latter half of this decade, from 2015, they will be increasing it by 1 per cent per annum. On nobody’s assumption would you get £38 billion. That is absolutely untrue and fanciful. It is a disgraceful figure.

The second thing that I want to nail is the suggestion that we did not do everything we could to equip our troops in Afghanistan properly. That is a particularly unscrupulous suggestion. As history shows, at the beginning of any campaign you do not have the right equipment because the enemy, the terrain and the tactics are new. It takes a bit of time to get your act together, but we did that. We were 100 per cent committed to doing the best for our Armed Forces there. Gordon Brown asked me to do that and supported me 100 per cent.

I had a meeting every month in my office on counter-IED. We looked at a whole range of detection techniques, electronic countermeasures and protection systems. I invested deliberately right across the board in any and all of them that had any chance whatever of success. I think that I ordered nine types of armoured vehicle in my time as Defence Procurement Minister, several of them specifically conceived for Afghanistan: Mastiff 2, Jackal 2, Ridgeback, Coyote, Wolfhound, Husky and Warthog. I saw them all working extremely well last weekend in Afghanistan. My first decision was to re-engine the Lynx helicopter so that it could fly 365 days a year; that was done within a few months. I ordered the Wildcat, which I see in the latest NAO report is 100 per cent on time. I ordered 22 Chinooks, and this Government have cancelled half of them. They blame us for not equipping the Armed Forces properly, which is a bit rich when they then cancel half of the Chinooks. That shows the kind of basis on which these untruths are, I am afraid, being promulgated.

I want to make four points—or five if I have time—drawing the attention of the House to some aspects of defence procurement which are insufficiently appreciated. The first concerns buying off the shelf. I had the discipline in my time, which I hope is continuing, that whenever we looked at early requirement we looked first to see whether we could buy it off the shelf. If we needed to develop it, we looked to see, secondly, whether we could collaborate with another country and, thirdly, whether we could incorporate characteristics to make it exportable to third markets. Indeed, on some occasions I cancelled developments in favour of off-the-shelf solutions—for example, I cancelled the future helicopter project and spent the money on the Chinooks.

In many cases, however, that is not the appropriate thing to do because, by definition, in buying off the shelf you are not buying tomorrow's technology and may not even be buying today's technology. You do not necessarily have complete control of the technology that you are buying. You will not necessarily get all the source codes and will not be able to integrate new sensors and weapon systems. You will not be able to modify the goods in the way that you hoped you might and you will not necessarily have the long-term support, so it is not always the right thing. We in this country must, absolutely fundamentally, always make sure that our fighting men and women have the best that money can buy, or that can be found. That means we have to fight a capital-intensive war, never a labour-intensive war, so we have to go for the best and that often means development.

My second point is that if you go for new development, it is absolutely impossible to know in advance how much it is going to cost. By definition, you are at the frontiers of science and technology and no one can tell you how long it will take and how difficult it will be to solve those problems. Clearly, you have to have a budget for disciplinary reasons. You could put in an enormous contingency provision but you can end up putting in so many of those that, if they had a chance of being sufficient, you would have half your defence budget consumed by those provisions. That would not be sensible. You just have to accept that in defence procurement you will have uncertainty about the costs of development programmes. The first of its class or type will be a prototype. It will not be called that because you cannot junk a £1 billion destroyer or a £100 million fighter aircraft; you have to use it. It becomes a serviceable system but, nevertheless, you are inevitably treating it as a prototype.

The third point, which emerges from that, is that in order to develop new projects and technologies you need to have a long-term relationship of confidence with an industrial partner. You need to be able to work on an open-book system, to have flexibility with them and to have complete commitment from them to make sure that the system or weapon works in practice, over the long haul. That means an industrial strategy. We had some very good relations with the industry in my time; I shall just cite BAE Systems, the Astute class submarine, complex weapons and our relations with MBDA, Talis and Finmeccanica, which were ideal. I am very sorry to see that the present Government do not seem to want to continue with the industrial strategy that we had, although they do not say what kind of industrial strategy they want. Incidentally, we are talking here about what is, next to the pharmaceuticals, the greatest and most internationally competitive aspect of British manufacturing industry.

Because of time I shall pass to my last point, which is an important one. I see from the NAO report that the Government are wasting half a billion pounds by extending the production schedule of the Astute class submarine. As everyone knows, we had to do the same with the aircraft carriers, although I have to say that as a result of my intervention the delay and the cost were much less than they would have been if we had adopted the original Defence Board advice. If you extend the production schedule, you extend the fixed costs for your suppliers for a long time, which is extremely expensive.

That is a very stupid way of running a railway—no private business would do that. A private business would budget for and appraise investments on the basis of present-value comparisons. Present value would also enable you to seize current market opportunities. For example, I inherited a budget of well over £1 billion for six naval tankers. I discovered that I could buy them commercially on the market—the market being very depressed in 2008—for something like £50 million each, saving £500 million or £600 million. I could not do that because it would have meant bringing forward that expenditure into an earlier year. Equally, I could not lump all the systems for Astute boats 4, 5 and 6 together because that would have meant bringing those purchases forward, but seizing a market opportunity in that instance would have saved £300 million or £400 million a year.

We ought to have a present-value system of accounting. I made quite a lot of progress before the election in persuading the NAO of that, and some progress in persuading the Treasury. Obviously, under a present-value system, if you bring something forward it costs you more in the short term because you increase the present value, so using up more of your budget. The budget should be on a present-value basis and the Defence Procurement Minister should be able to bring things to operate within that strict net present-value budget, seizing market opportunities and ensuring that the taxpayers’ money is not spent wastefully, as too often it has been.