European Union Bill

Lord Hannay of Chiswick Excerpts

Tuesday 3rd May 2011 Lords Chamber

[Lord Taverne]

My Lords, the previous two speakers eloquently demonstrated the importance of these amendments. They made a passionate plea for a much more sensible and enlightened policy towards Europe. I will deal with one particular aspect: Amendment 23F and the banking crisis.

There are two aspects to the current financial crisis in Europe: sovereign debt and bank liquidity. Many continental banks are undercapitalised. They need more rigorous stress tests as a basis for recapitalisation. National regulation and supervision have failed. We need a special EU-wide resolution regime. We need new, more effective European regulation. If we have that, it will of course give new powers to Brussels and that, as I understand it, would trigger a referendum. The question arises: what sort of question would be posed in a referendum dealing with bank regulation?

Leaving that aside, it will mean that in the course of negotiations taking place in Europe, when negotiators are being very careful and thinking that they can achieve something without triggering a referendum in Denmark or Ireland, or an adverse ruling of the German constitutional court, our negotiators will have to have regard to the fact that there will have to be a referendum. They will be inhibited and looking over their shoulders: they will be negotiating with their hands behind their back. Since this will be an obstacle to reaching a very important area of agreement, the likelihood is that we will be bypassed.

Already we are being bypassed in many important respects. While John Major wanted to be outside the eurozone in a multipolar Europe, it seems that Mr Cameron has more or less accepted that there will be a small but very powerful unit in Europe. We will find that being in the outside lane of a much less congenial Europe is not a particularly effective experience for very important aspects of our economy. I have heard Treasury officials saying that we are now in the same position as Latvia, asking what agreements are being reached in rooms where the important people are meeting.

A story was told at a conference I went to about an occasion when Gordon Brown insisted on being present with eurozone Ministers. They said that they would meet him, but the press outside were speculating on how long he would last: would he be out in five minutes? In fact, that was precisely what happened: after hearing him for five minutes, they thanked him, said that they must now have their private meeting and asked him to leave. He could not face the press after five minutes, so he stayed in the lavatory for half an hour.

It is not very dignified to be outside the corridors of power. This, however, will be much worse. Obviously there were problems about joining the eurozone, but the regulation of banks will affect the City profoundly, and it will be another case where we are likely to be bypassed.

[Lord Hannay of Chiswick]

My Lords, I will address Amendments 23C, 23D and 23E, as did the noble Lord, Lord Deben, who gave us a brilliant illustration of why flexibility in this area is not only desirable but necessary.

I have, off and on, had quite a few dealings with the issue of energy in the European Union, and I have to say that we have got it comprehensively wrong. In the 1970s we fought desperately—of course, Mr Tony Benn was the Minister at the time—to avoid the European Union having any responsibility in this field whatever in case it stole our oil, which it was never going to be able to do because European law is perfectly clear on that point, and so we prevented any policy emerging then. Then, when the Single European Act was passed, we allowed—I agree that by then we were not favouring it—energy to be kept out of the single market at that stage because of the objections of the French and the Germans, and that was a disastrous mistake. Now, when we have discovered that we are not one of the three major oil and gas producers in the world, we have discovered, surprisingly, that we could do with a common energy policy, but it is quite difficult to get; and, as the noble Lord, Lord Deben, has said, it is in an area of shared competence. So it may very well be that, sometime in the not too distant future, we will want to support some changes that will give more powers to Brussels in the area of energy security, competition, interconnectors and all these things; yet here we are subjecting all that to a referendum requirement under which the no campaign would no doubt say yet again, “This is the European Union coming to take all our North Sea oil”, and so on. The result may very well be negative because that campaign would be very emotive. Heaven knows what the Scots would think about it—quite a lot, I should think.

I do really feel that this illustrates the case for flexibility—and the same is true on climate change. It is rather clear that the European Union will struggle under its current institutional arrangements to find a way forward through the next 30, 40 or 50 years on climate change. Things are going to be very different. Crises are going to emerge and Europe is going to have to find a response to them. Some of those responses may involve new powers for the Union as a whole. And yet again, this will be made extraordinarily difficult by the provisions of the Bill.

I am not saying that these particular amendments are the last words in wisdom on this particular issue, but I do really think that the Government ought to be taking this a bit more seriously. We have not had a single serious response from the Government since we began this Committee stage on any point that has been raised. I am waiting now for the response to this debate to have, for the first time, a serious response to the substance, because we have not had it so far. Those are issues of major importance. I think that if the Government were to go away and reflect on this now, they would see the wisdom, at the very least, of truncating the list of issues on which there need to be referendums.

[Lord Empey]

I am grateful to the noble Lord for giving way. A lot has been talked this evening about energy. Maybe I am missing something, but any of the energy sources that we will need for our future security will come from outside the European Union. In other words, they will be merely transmitted through the European Union, and that will largely be down to the authorities in each country, including planners, as to whether they will allow these things to pass through.

I was involved in a gas pipeline that transmitted from the United Kingdom to the Irish Republic and from the different parts of the United Kingdom to the Irish Republic directly. The European Union contributed financially towards it, because it could be done under a whole range of headings—infrastructure, the cohesion fund, economic development, climate change issues, carbon reduction. There are many mechanisms already in existence. I may be wrong on this, but I feel that the energy example is not necessarily the most relevant.

[Lord Hannay of Chiswick]

I am afraid to say that I believe that the noble Lord is wrong on this. He has used a particular example of which he has very great experience. It is extremely interesting for the House to hear that example, but it is not very typical. It does not deal at all with the issue, for example, of whether it might be in the interests of the European Union in the not distant future to give a negotiating mandate to a body—whether it is the Commission or the presidency or whatever it is—to negotiate for energy supplies from outside the European Union, particularly gas, and to negotiate as a single unit. That would require new powers. It is as simple as that, and is, I am afraid to say, nothing whatever to do with building a pipeline between Ireland and Northern Ireland, interesting and important though that was.

I think there is serious matter in the energy field, the climate change field and the pollution field to reflect on here and a need for greater flexibility. I plead with the Government that we do not have the preprandial/postprandial schizophrenia that we have had in recent Committee stages in which in one session we are told that we need not worry about this enormous number of referendums because none of them will ever take place and we will stop anything happening in Brussels that will cause them to take place and then immediately afterwards we are told that we need not worry because the European Union does not work that way, and there will be a big package and we will all be able to find some nice sugar-plums in it for ourselves. I thought that was where we came in and decided that that was nothing that we wished to encourage in future. I think the Government need to make up their mind whether they are trying to lock the door and throw the key away, which is what this Bill does, and the consequences of that are pretty damaging for this country, or whether they are trying to propel the European Union towards another big institutional package, which I do not believe to be in the interests of this country. I would like to hear a response on Amendments 23C, 23D and 23E.

[Lord Willoughby de Broke]

My Lords, on the issue of climate change, the subject of the amendment that we are supposed to be talking about, several hours ago the noble Lord, Lord Wallace, said that Amendment 21 was the most useless, superfluous amendment that he had come across during the hours of Committee stage. I believe that Amendment 23C actually takes the palm as the most useless and redundant amendment we have had. The idea that the European Union is effective in climate change is frankly laughable. Let me remind your Lordships that our policy on emissions is guided entirely by the EU and we have to have 20 per cent of our energy from renewables by 2020. Of course, there is not the remotest chance of achieving that, and in the past couple of years, that aspiration—that dream—has begun to collide with reality.

Just to give your Lordships a little information on that, I shall repeat what was said in two sets of figures from two separate reports over the degree of delusion that surrounds the wish of our Government in Brussels and their subsidiary here in Westminster that the centrepiece of our energy policy should be to build ever more windmills. The report that drew most attention was from a Scottish environmental charity that focused on the fact that last year, despite our building ever more wind farms, the lack of wind meant that they operated on average at only 21 per cent of capacity, and that was during the period of highest demand. Several times when demand was at its highest the contribution of wind to our electricity supply was virtually zero.

I do not know why, but less attention was given to an interesting report put out by our Department of Energy and Climate Change showing that the 3,168 turbines that we have built at a cost of billions of pounds contributed on average less than the output of one large coal-fired power station. From the DECC figure, it is possible to work out that for this derisory contribution we paid through our electricity bills a subsidy of nearly £1.2 billion on top of the price of electricity itself. In return for getting 3 per cent, roughly, of our energy, nearly 7 per cent of our bills are paid in subsidies for these completely useless wind farms, and that will go up as years go on because we have committed to this 20 per cent from renewables by 2020. That report dealt with last year.

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[Lord Willoughby de Broke]

The noble Lord says, “happily we are going to close down”. I hope that he has got a generator in his house so that he can watch his television and read his books because with wind power that simply will not happen. Nuclear of course is a different matter, but let us not get into that debate right now.

[Lord Hannay of Chiswick]

I merely want to congratulate the noble Lord on having raised the issue of gas storage, which is a subject close to my heart. I ask him to recognise that the best way to improve the level of gas storage in Europe would be to impose a minimum gas storage obligation through the European Union.

[Lord Willoughby de Broke]

Surely it could be up to the nation member states to impose their own minimum gas storage obligation. Why do we have to do it through the European Union? It is perfectly ridiculous. This unhealthy EU obsession, which is what it is—I am very sorry that the previous Government and this Government seem to have signed up to it—of using wind power to keep our lights on is one of the most damaging fantasies of our time. I oppose the amendment and I hope that it will be dealt with accordingly.

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[Lord Pearson of Rannoch]

My Lords, the noble Lord, Lord Deben, was good enough to mention me in his few remarks and to accuse me of what I think was the impossible and most undesirable dream of the United Kingdom being altogether free of the European Union in all these matters. He is of course correct. However, he then mentioned the common fisheries policy as though that has to be solved by the European Union and as though the EU will not solve the acknowledged disaster which the policy is, environmentally and in every other way, if it is prevented from doing so. Surely, from our point of view, as I have mentioned before, the answer is terribly simple. We simply leave the European common fisheries policy and take back our international waters. Seventy five per cent of the fish which swim in European waters all the year round swim in waters that used to belong entirely to the United Kingdom before we made the mistake of joining the European Union. We then manage our own waters, re-establish our fish stocks and let out any surplus to foreigners.

On energy, the noble Lord again believes that the European Union is essential to solve our energy problems but, surely—

[Lord Hannay of Chiswick]

I am afraid that the noble Lord is yet again misleading the House. The waters did not belong to Britain before we joined the European Union. We had 12-mile limits in those days and the areas beyond those limits were high seas. The decision to go out to 250 miles was taken by the European Union collectively when we were a member.

[Lord Pearson of Rannoch]

Yes, but we should not have gone along with that decision because we should not have been in the policy in the first place. I therefore insist that most of the fish which swim now in European waters and are fished by European boats used to belong to us and they could and should belong to us again. I do not wish to detain the House—

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As I think the architects of Lisbon hoped, a new treaty may arise in the longer-term future, but that is some way ahead. It may be five or 10 years away. It could be a very big package indeed designed to adjust the European Union to the new international landscape, just as my right honourable friend the Foreign Secretary is seeking, through his speeches in the network world in which we are now operating, to adjust the position of the United Kingdom and the whole European Union stance in relation to Asia, Latin America, the emerging powers and Africa. The rising, looming power of China probably needs adjusting for as well. I would not rule out the need for a treaty five or 10 years ahead. When that treaty comes, it will contain many issues that involve extensions of competence. It might even contain issues that involve the retreat of competence, but the extensions of competence will be there. Extensions and transfers of power will probably be there, and that treaty, in the view of the coalition and of 84 per cent of the British people, will require a referendum. That is what some—I admit, not all—of us argued for over the Lisbon treaty. That is what the Government agreed to over the constitution for Europe, which was the predecessor of the Lisbon treaty, and that is what most people in the United Kingdom want to be reassured about. To make certain that that happens, we must have an admittedly elaborate and complex set of arrangements to ensure that all kinds of transfers of power and competence do not creep under the radar or take place without proper transparency and consultation of the British people after the necessary parliamentary Acts have been passed.

[Lord Hannay of Chiswick]

I am sorry to interrupt the noble Lord, but no one, as far as I know, has tabled an amendment to Clause 2. It states that if there is a major new constitutional package there will have to be a referendum. No one has argued about that—not one person. What we are all arguing about is whether you need this cascade of Clauses 3, 4, 5 and 6 that block off the non-intergovernmental conference treaty big-package route. Honestly, I ask the noble Lord not to answer the wrong question. All the amendments relate to this cascade of referendums for matters that are dealt with within the Lisbon treaty.

[Lord Howell of Guildford]

The noble Lord, who is very skilled in these matters, knows that he is putting the question upside down. It is dangerous to halt a cascade, because you may have to divert it, and the cascade that the Bill is designed to halt is the cascade of small competence and power transfers that have been going on over the years in many areas and have caused a lot of people to fear that competence creep—I am sorry to repeat that unfortunate term—and power creep are continuing all the time, allegedly under parliamentary control, but somehow without proper public discussion, and certainly without the consent of the people.

The referendum-lock device is precisely to ensure that when the big transfers of competence and power come, they are in a clear package. The noble Lord said that that was the wrong thing to talk about, but that is the way that it will happen, like the Lisbon treaty, and the country will be invited, because of the many items that will involve competence transfer, to have a referendum on them. That is precisely my point. There will be no cascade because, if the Bill works effectively, which I think it will, the great changes needed in the 2020s and 2030s in the European Union, as it adjusts to new conditions, will have to be treated in a substantial treaty that must and will automatically trigger a referendum. That is entirely right and it will offend only those who, like my noble friend Lord Deben, do not like referenda at all. However, for most people, including 84 per cent of the country, or their children, that will be the right way to proceed. It should ensure that some degree of trust, reconnection and support for the great European cause is resurrected. At present that support is fading away very fast. It is draining away in Finland, Hungary, to some extent in Poland and in many other countries. I am not sure that even in Germany these matters carry the popularity and support needed for the kind of reforms we want to see in Europe.

This is a very serious matter. I do not say that this Bill alone will do the job of reconnection—of course it will not. We need leadership, articulation and an understanding that giving more and more powers to the centre is an outdated 20th century idea and that the more you accumulate powers at the centre, the more you get public disaffection and remoteness. That must be understood. It must be understood that in this networked age, you do not need centralisation to carry out effective powers. Once that is understood, we will begin to get shapes in the European Union that relate to and connect with the people, as the Laeken declaration pleaded for almost a decade ago. That is why I believe that these exemptions will increase mistrust and take Europe back, rather than forward to the 21st century adjustment needed in the information age, and why I therefore plead with the noble Lord and his colleagues to withdraw the amendment.