European Union (Approval of Treaty Amendment Decision) Bill [HL]

Lord Foulkes of Cumnock Excerpts

Wednesday 13th June 2012 Lords Chamber

Moved by

[Lord Foulkes of Cumnock]

1: Clause 1, page 1, line 10, leave out subsection (3) and insert—
“(3) That decision is subject to the referendum condition, within the meaning of section 3 of the European Union Act 2011, being satisfied.”

[Lord Foulkes of Cumnock]

My Lords, as Members of this House will know, the Queen’s Speech was made here on 9 May and the Second Reading of the Bill came rather quickly after it on 23 May. Therefore, a number of Members who have taken a notable interest in the European Union over several years were unable to change engagements that had already been made to be here and participate at Second Reading. I was certainly one of them. However, I read the proceedings on the Bill and there was one speech with which I concur absolutely—that of my noble friend Lord Radice. Everything that he said was what I would have said, although he put it rather more eloquently, lucidly and intellectually than I could have.

Several issues that need to be explored arose from consideration of the Bill at Second Reading. Therefore, I tabled two or three amendments, thinking that they would appear on a long Marshalled List. Imagine my surprise when I found that they were the only amendments to the Bill that had been tabled. I wondered what had happened to the usual suspects, notably the UKIP Members, who are never usually at a loss to table reams of amendments and suggestions, and to participate at great length. This could not be more in the mainstream of some of their thinking. However, not only have they not tabled amendments; they are not even here to participate in the debate. I must say that I find that rather strange.

This first amendment proposes that there should be a referendum on the treaty in the United Kingdom. Let me make it absolutely clear that this is a probing amendment—I do not actually agree with it. I put it in to enable a debate to take place, and to contrast the areas in which there will or will not be a referendum because of the provisions of the European Union Act 2011 on this issue. Under Section 4 of that Act there are 13 instances—and we discussed this during the proceedings on that Bill—where referenda would be necessary. The whole of the electorate would be asked to go out to the ballot boxes to cast a ballot on—let us take Section 4(1)(m)—

“any amendment of any of the provisions specified in subsection (3) that removes or amends the provision enabling a member of the Council, in relation to a draft legislative act, to ensure the suspension of the ordinary legislative procedure”.

If that was to happen, we would have a referendum on it. Can you imagine people flocking to the polling stations to take part in that? Yet we have something in this Bill which is a major and very substantive change—as was said in important speeches by former Chancellors at Second Reading—and there is no provision for a referendum. I am not saying that there should be; I am against referenda on all these things. I want to contrast the fact that we would have referenda on all these minor matters but not on this. It seems strange.

I then looked specifically at the basis on which the Government are arguing that there should not be a referendum. The Minister said at Second Reading that the Foreign Secretary had indicated that,

“in his opinion a referendum is not required to give parliamentary approval. … it does not transfer further competence or power to the European Union from the United Kingdom. The statement was open to judicial review, but in the intervening eight months no one has sought to challenge it in the courts”.—[Official Report, 23/5/12; col. 802.]

I went back to the Act again to find out why he had given this opinion. Section 2(3) says:

“The exemption condition is that the Act providing for the approval of the treaty states that the treaty does not fall within section 4”.

We therefore look at Section 4, “Cases where treaty or Article 48(6) decision attracts a referendum”, which includes the 13 that I mentioned earlier. Then, that section says:

“A treaty … does not fall within this section merely because it involves one or more of the following”,

and the second of the following three is,

“the making of any provision that applies only to member States other than the United Kingdom”.

That would seem to me to be open to argument. The inclusion of “merely” implies that there should be something else—that there should be another factor involved in the decision on whether or not there should be a referendum.

I am, therefore, at a loss to understand why this is the case. I hope that the Minister will try further to explain this to the House, as he did briefly at Second Reading, and to convince us that although a referendum would be necessary in all these 13 tiny little areas it would not be necessary in this particular one. I beg to move.

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[Lord Howell of Guildford]

The European Court proceeds in ways which some of us do not always understand, but it is required to interpret the law. There is no issue with the European financial stability mechanism in the way that the noble Lord, Lord Stoddart, said. When this Bill is passed—I can boldly say when—and the amendment of Article 136 is ratified by all 27 member states, that will be the law, and the Court will interpret it. I do not see how the noble Lord could argue that this political decision, which is immensely valuable to the United Kingdom, could be somehow embroiled in the legal interpretations of the Court. I do not see how it comes into the interpretations of the law as embodied in the treaties.

When we debated the provisions of the EU Bill, as it then was, in this House last year, many Members were concerned that we might be bringing referenda into disrepute by requiring them for small changes to EU treaties and by being explicit about when a referendum was and was not required. Indeed, the noble Lord, Lord Liddle, made a proposition that something to do with paper clips, I think it was, could cause a referendum.

I spent a lot of time at this Dispatch Box explaining why we felt the provisions for referenda were not trivial. I explained that one of the reasons the European Union Bill was so long was so that it could be crystal clear about when a referendum was not required, and why issues which appeared small in the schedules to some of your Lordships were in fact the core of red-line considerations involving transfers of competence which we believed were not desirable and would certainly require a referendum.

The way in which the European Union Act 2011 applies to the treaty change we are considering today is clear. The provisions of this decision, amending Article 136 of the TFEU, do not apply to the United Kingdom, so the decision simply does not attract a referendum. What is more, there is no transfer of competence or power from the UK to the EU involved. The noble Lord, Lord Stoddart may feel that that is questionable; if that was his determined view and he thought he could mobilise the evidence for it, there would have been an opportunity for a judicial review, but no such review was brought forward.

The amendment to Article 136 simply recognises the ability of eurozone member states to establish a permanent stability mechanism—the European stability mechanism—by means of an intergovernmental agreement. The ESM is established by an agreement. This is not the ESM treaty. This is a treaty merely noting the amendment to the existing treaties, to Article 136.

I have listened very carefully, and I enjoyed the speech of the noble Lord, Lord McAvoy, for which I am grateful. I hear the views of the noble Lord, Lord Liddle—who is a considerable expert on these things—that his party does not stand against this Bill, but believes it will make a contribution. We can have a debate on what sort of contribution it makes to a rapidly changing scene where there are many issues that cannot be resolved at this stage, but holding a referendum on this decision would contradict the clear provisions of the European Union Act 2011. It would introduce confusion about the circumstances in which a referendum would be required in the UK, and that is, to my mind, the reason, above all, why it should be—and, I hope, will be—resisted by your Lordships’ House.

[Lord Foulkes of Cumnock]

My Lords, while I agree with the Minister that I enjoyed the speech of my noble friend, Lord McAvoy, I can honestly say that it did not contain any words with which I agreed. I was very pleased that my noble friend from the Front Bench gave what might almost be described as a muffled, mild rebuke to my noble friend Lord McAvoy about the importance of loyalty. I think that my noble friend is only too aware of that, because he has managed to follow the party line on many occasions when he did not agree with it, and has been an inspiration to all of us.

I am sorry to disappoint my noble friend—because he is my friend—Lord Stoddart. We are not on the same Benches now, but we were for many years and we agreed on almost everything except Europe. I agreed with everything that my noble friend on the Front Bench said, including his remarks quoting our shadow Foreign Secretary and our party leader on the question of a wider referendum. It would be unnecessary and wasteful. It is not covered in the amendment and not something that I dealt with, but I will say that I agreed with my noble friend completely.

If I had not already intended not to press my amendment, the speeches of the Minister and my noble friend Lord Liddle would have convinced me. Therefore, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

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[Lord Foulkes of Cumnock]

My Lords, I will not detain the House on this for more than a couple of minutes. As I found out, trying to devise amendments for the Bill is not easy. It is very tightly drawn and cleverly done by the usual draftspersons. At Second Reading, the noble Lord, Lord Howell of Guildford, said in relation to the ESM:

“The intention is that it will replace both the EFSM and EFSF”.—[Official Report, 23/5/12; col. 802.]

I wanted to devise an amendment that would make that clear. It would have said that by agreeing to the ESM we would have replaced the EFSM and the EFSF. However, I was told that that was not competent within the terms of reference of the Bill. I wonder whether the Minister—this is the only point I shall raise on the clause stand part debate—will give an assurance that it is the understanding of Her Majesty’s Government that those two mechanisms will be replaced. There is a tendency in my beloved European Union to keep things going when they are not necessary—actually, there is such a tendency in successive Governments. I hope that we will have a clear assurance on that.

[Lord Howell of Guildford]

My Lords, briefly, I will give a clear assurance that it is our intention to replace the EFSM and the European Financial Stability Facility. That has been the aim all along. The Bill does not do either of those things but merely amends Article 136. However, those intentions were stated absolutely clearly and supported by all members of the European Community. That is what is proposed.

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Moved by

[Lord Foulkes of Cumnock]

2: Clause 2, page 1, line 14, at beginning insert “Subject to subsection (2A),”

[Lord Foulkes of Cumnock]

My Lords, it was a wise and appropriate suggestion by the Government to group Amendments 2, 3 and 4 together. Amendment 2 would insert,

“Subject to subsection (2A)”.

New subsection (2A) is proposed in Amendment 4. Amendment 3 changes the date to 1 January 2013—again, in order to enable a debate to take place on that.

The amendment is based on the assumption that the Act can come into effect only if the member states of the eurozone are those that existed when the treaty was agreed. Obviously, as we heard at Second Reading, this raises the question of Greece. If Greece was to have withdrawn or in some other way removed itself, or have been removed, from the eurozone, the treaty would not take effect—or, at least, the Bill would not take effect—and our agreement to the treaty would not take effect.

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[Lord Wallace of Saltaire]

My Lords, I see some puzzled faces around the Chamber and I think that others agree with me that this is rather wide of the amendment under discussion. Perhaps I may remind the noble Lord that we are at the Committee stage when we should address directly the amendments concerned.

[Lord Foulkes of Cumnock]

I have noticed that the noble Lord, Lord Wallace of Saltaire, has been up on his feet regularly in recent days and weeks keeping colleagues in order, so I know that he is not picking on me in any way. I accept that I had moved just a little wide of the amendment.

I was trying to say that if Greece were no longer a member of the eurozone, having been forced out because of all these speculators, the question would arise whether the treaty should go ahead as originally planned. That is the amendment and that is a valid point. People are concerned that countries such as Greece, Ireland and now Spain, which are in difficulties and suffering, might have to leave the eurozone because of the speculation taking place. If those countries were no longer members of the eurozone, why should a treaty which was drawn up at a time when they were members continue on that basis? I beg to move.

[Lord Brabazon of Tara]

I wonder whether the noble Lord, Lord Foulkes, would reconsider his suggestion that Greece might be forced to leave the eurozone purely because of the action of the speculators. Is the real reason why Greece is in trouble not because it has been spending money it does not have, it has been borrowing money that it cannot pay back, and it is basically bust?

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This treaty change is firmly in the UK’s national interests. These amendments risk undermining them and the steps towards financial stability that the eurozone so very badly needs to take, and that is why they should be resisted.

[Lord Foulkes of Cumnock]

My Lords, I just want to make two points in reply; first, to the noble Lord, Lord Brabazon, after his interesting—almost astonishing—intervention about Greece. I do not think I said that the increased interest rates were the only reason that Greece is in difficulties. Although one can of course argue that the Greeks have been living beyond their means, for the past few years pressure has been put on them to get their budget into balance and they have been doing that. However, if at the same time the money that they have to borrow costs them more and more because of higher interest rates, it will make it more and more difficult for them to balance the books and meet their obligations. If the noble Lord, Lord Brabazon, had a mortgage on his house and was just managing to survive paying the mortgage at a certain interest rate, he would find it much more difficult if the building society unilaterally doubled or trebled the rate. So I hope that he will accept that, although it is not the only factor, it is an exacerbating factor that makes it more difficult for Greece to balance its books effectively.

I agree very much with what the Minister said about the importance of the stability of the eurozone. That is very, very important, not just from the point of view of the eurozone itself but for us in the United Kingdom. People who foolishly wish the break-up or fragmentation of the eurozone, or the falling-out of any one country, are doing this country—and our economy—a disservice. That is very clear in what President Obama and others have said as well. The continuation and the stability of the eurozone are very important indeed, as the Minister said. Because he argued that my amendments might create some problems in relation to that, and because he argued so powerfully in favour of giving as much stability to the eurozone as possible, I am happy to withdraw my amendment.

Amendment 2 withdrawn.