European Union Bill

Lord Kerr of Kinlochard Excerpts

Monday 16th May 2011 Lords Chamber

[Lord Kerr of Kinlochard]

I agree and disagree with the amendments. I agree with the concept of proportionality which underlies them, and I think that we need to relate what we are doing to the real world. I do not like the complication that is built into these procedures, largely for the reason that the noble Lord, Lord Waddington, has just given. We do not need the additional commission to advise us. As for the Joint Committee of the two Houses, I do not know why we need that either, because the expertise is here. We need to reinforce parliamentary sovereignty. What worries me about the Bill—and is in conflict, as I understand it, with the coalition agreement and the terms read out by the noble Baroness, Lady Falkner—is that it takes away from parliamentary sovereignty by moving towards a plebiscitary democracy.

I shall illustrate my point about the real world with a couple of examples. I like the amendments not because they introduce complication but because they introduce the concept of urgency. In the real world, the very elaborate procedures that we are laying down might not fit very well. The examples that I take are in Clause 6(5)(e) and (j). Paragraph (j) states that we would require a referendum for,

“a decision under the provision of Article 333(2) of TFEU”.

That would permit using qualified majority voting for the following article:

“Expenditure resulting from implementation of enhanced cooperation, other than administrative costs entailed for the institutions, shall be borne by the participating Member States”.

Let us say that we had an enhanced co-operation activity, such as conflict resolution or election monitoring, involving less than the total number of member states. Such enhanced co-operation is governed by Article 333(1), which states that it needs to be within the framework of the common foreign and security policy. Article 333(3) states that the activity should be paid for by the member states taking part in it. It is possible to envisage, because it has arisen before, countries that did not feel particularly muscular militarily but wished to contribute. Germany has several times in the past been in that position; that is, it has been prepared to stump up but not send people. The decision that the Germans should be allowed to pay would require a referendum in this country under Clause 6(5)(j). The whole action would have to stop or, rather, the Brits would say, “No, I’m sorry, we can’t have your money, because if we took it we would have to have a referendum on it”.

This is not the real world. It cannot be right. Let us remember that the provision is not about the voting rules. Paragraph (j) is different from the reference to the same article in the schedule. Schedule 1 states that there would need to be a referendum if the voting rules were changed under that article of the treaty. In this case we have a specific decision on how we are going to finance this week’s expedition somewhere. Do costs lie where they fall? Germany says, “No, we would like to stump up. We think others should be contributing”. The Brits have to say no. The real-world consideration, which would be helped by the amendment of the noble Lord, Lord Liddle, is relevant here.

My second example relates to paragraph (e), which is about the euro. We all know what would happen if we were one day to decide to join the euro: the Act would go through this Parliament; it would be followed by a referendum; and if the result of the referendum were yes, the Minister would fly to Brussels to take the decision referred to in the Bill under Article 140(3) of the TFEU to make the euro the currency of the United Kingdom. Article 140(3) states:

“The Council shall, acting with the unanimity of the Member States whose currency is the euro and the member state concerned, on a proposal from the Commission and after consulting the European Central Bank, irrevocably fix the rate at which the euro shall be substituted for the currency of the Member State concerned”.

That is the decision—and our Bill is about what we do with decisions.

The decisions have to be brought back here in draft and have to be the subject of an Act of Parliament and then a referendum. But hang on—we have had the Act of Parliament: the issue upon which we wanted a great national debate and a referendum was on whether we should join the euro. The Bill states that the Minister cannot vote in favour of or otherwise support the draft decision about the rate. If we have a referendum on a Thursday about whether we should join the euro, we will know the answer on a Friday; the Chancellor of the Exchequer of the day will get on to his colleagues, the ECOFIN will meet over the weekend and the rate will be set before the markets open in Tokyo at three o’clock on Monday morning—it would have to be because the amount of speculation would be enormous.

This is a small technical point but we need to look at the drafting of the Bill to ensure that we do not create an unworkable monster in the real world. We know what should happen—the sequence is Bill, Act, referendum, decision—but we will not know at the time of the referendum what the rate will be; by definition it will be different on the day from what it was during the referendum campaign. So there is something wrong with the drafting of Clause 6(1) and (5)(e).

We can get it right and I am not arguing that there should not be a referendum on joining the euro. However, I am arguing that there should not be a referendum on some of the extremely minor items in the Bill, such as the one covered in paragraph (j) about enhanced co-operation and its financing.