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

Lord Stoddart of Swindon Excerpts

Wednesday 13th June 2012 Lords Chamber

[Lord McAvoy]

Strathclyde council has a better record of administration than the European Union. I assure my noble friend that it is one of the best administrative councils in the history of Europe as well as being one of the biggest. I declare an interest as a former member of that council although I was not involved in its financial affairs.

In short, there is a certain amount of arrogance—I do not mean this in a hostile way—on the part of pro-European Union people as regards further encroachment on the British way of life and the concept that the intellectual giants are the people who have thought out everything to do with the European Union and its encroachments. That is not the case and those people do not represent the views of the British people. The view of the British people is best represented by those who say, “This far and no further”. Although I do not support the call for a referendum, it is useful for this House to hear a dissident voice on this side of the Chamber. We certainly should be very careful as regards further encroachment.

[Lord Stoddart of Swindon]

My Lords, I must confess that when I saw these amendments in the name of the noble Lord, Lord Foulkes, I thought that we had a convert. However, my hopes were dashed by his speech this afternoon. It appears that he tabled these amendments as it enabled him to make the speech—it is a very nice way of doing it—that he could not make when we debated this matter on Second Reading. He has a point. The implications of this Bill are much further ranging than has been related to the House. I shall quote from the Times on 11 May this year, which will support the case—or non-case—that the noble Lord made:

“There are two issues with this EU treaty change that could cause big problems: first, it allows the eurozone to integrate further with consequences for UK interests; second, the quid pro quo guarantee that the UK won’t be forced to contribute to euro bailouts in future may not be legally binding”.

So there is some support in that article for the view that perhaps this Bill is much more important and far-ranging than some of us had believed. I and other people considered whether this Bill could be amended and I came to the conclusion that it was best left to the House of Commons. However, we have an amendment here which I believe should be supported. The Bill is very important indeed, particularly in the light of what is happening at present. The problems of the eurozone and the European Union itself are leading to demands for further integration. Even today, the President of the European Commission, Mr Barroso, is outlining plans to the European Parliament for a European banking union, which would affect not only the eurozone but the whole of the European Union.

Angela Merkel, for example, believes that the answer to the problem is not less but more Europe, politically, financially and economically. This Bill facilitates what these people are thinking. The Bill is much more important than we previously believed and the House should be grateful to the noble Lord, Lord Foulkes. I should really describe him as my noble friend, because we have been around a long time and embarked on many debates. Usually, we have been on the same side. Paradoxically, according to the wording of the amendment we are still on the same side, but perhaps if he puts it to a vote we shall be in opposite Lobbies. We shall see. In the mean time, if he puts it to the vote, I shall support him.

[Lord Liddle]

My Lords, I had better explain briefly the opposition Front Bench position on this amendment and some of the speeches we have heard. It was a great pity that my noble friend Lord Foulkes could not make Second Reading, because he would have made a strong pro-European speech in that debate. He was right that my noble friend Lord Radice made an excellent speech as well. However, from our perspective I do not think that we can support the thrust of his amendment. I see the logic of his position. In the European Union Act, which we debated over many hours last year, we got ourselves in a situation where, if it was decided to establish a European office of paperclips, we would have to have a referendum on it, because it would involve a transfer of sovereignty to Brussels.

For our part, we believe that referenda should take place only on issues of major constitutional significance, as the Lords Constitution Committee recommended, and that we should be consistent with that principle. As far as the Labour position in the Commons is concerned—and I say this with some trepidation because my dear noble friend Lord McAvoy has a great record as a party loyalist and defender of party discipline in the other place—the shadow Foreign Secretary, Douglas Alexander, in the Commons debate last autumn on the question of a referendum, said:

“I urge opposition to the motion because I do not believe that Britain’s national interest would be served by spending the coming months and years debating the case for Britain leaving the world’s largest single market”.—[Official Report, Commons, 24/10/11; col. 60.]

The leader of the Labour Party made it clear only last week or the week before that Labour’s position had not changed from that view in the mean time.

That is where we stand. The EU Act is a contradictory piece of legislation. The measure is not defined under the terms of that Act as a transfer of powers to Brussels, and we therefore do not have a referendum—but there is no point in reiterating our debates on that Act. Our view is that this is an emergency situation in Europe; the stability mechanism is a necessary part of tackling the problems of the eurozone, which is very much in the British national interest. Therefore, this legislation should go through in the speediest possible time.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, we all admire the lone role that the noble Lord, Lord Foulkes, has cast for himself in bringing forward these amendments, and his boldness in bringing forward an amendment with which he does not, in fact, agree. This is bravery on a high scale in this debating Chamber.

The amendment, as he pointed out, seeks to insert into the Bill a requirement for a favourable vote in a national referendum before the UK could approve the European Council decision amending Article 136 of the Treaty on the Functioning of the European Union. The European Council decision amends Article 136 of the TFEU. It was adopted in accordance with the simplified revision procedure in Article 48(6) of the Treaty on European Union. The decision added a paragraph to Article 136 which confirms that EU members whose currency is the euro may establish a financial stability mechanism. The provisions of Article 136 and the proposed new paragraph apply only—I repeat, only—to member states whose currency is the euro. They do not, therefore, apply to the United Kingdom.

The Bill is required under Section 3 of the 2011 Act, to which the noble Lord, Lord Liddle, referred, to give parliamentary approval to the decision. The other two requirements of that Act were, as noble Lords will recall, a statement by the Minister giving his opinion as to whether a referendum is required—I will come to the remarks of the noble Lord, Lord Foulkes, on that in a moment—and compliance with the so-called referendum condition, exemption condition or significance condition which we debated when we considered that Bill some time ago.

The 2011 Act makes it clear that decisions adopted under Article 48(6) of the TEU are not subject to a referendum under that Act if its provisions do not apply to the United Kingdom. The 2011 Act, to which the noble Lord, Lord Foulkes, rightly drew attention, provides:

“A treaty or Article 48(6) decision does not fall within this section merely”—

I come to that word—

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

The “merely” is intended to indicate that other conditions are also taken into account—for example, the exemption condition or the significance condition. It is not only the fact that it does not apply to the United Kingdom and is outside the application of the United Kingdom; it involves other conditions as well. The decision amending Article 136 therefore clearly falls within the exemption set out in Section 4(4)(b) of the 2011 Act.

The noble Lord, Lord Liddle, raised again the doubts of his own party and colleagues about that Act, which was vigorously debated. I do not think that it would be in order to debate the Act again, although I am always happy to reopen these great issues. I happen to think that it was an immensely important Act which has been a considerable reinforcement to the concerns of the British people that there will be no further transfer of competence to the European Union without a referendum. It is an important safeguard, and my right honourable and noble friends have drawn attention to its importance.

The Government have been clear that a referendum is not required under the 2011 Act right from the very beginning. On 13 October 2011, the Foreign Secretary laid a Statement before Parliament in accordance with Section 5 of the Act, in which he confirmed that in his opinion a referendum was not required under the Act. The Statement was open to judicial review but, as my right honourable friend pointed out, in the intervening eight months, no one has sought to challenge it in the courts. The noble Lord, Lord Stoddart, whose position is consistent and which he has put with admirable consistency over the years, said that in his view there was some practical implication of transfer of competence— although he did not put it in quite those words. But no judicial review to make that point has been launched. The noble Lord referred to the aspect, to which I will refer again in a moment, that in exchange for this going forward, the British liability to be exposed under the European financial stability mechanism is released, and the mechanism falls and is no longer in use. The noble Lord, Lord Stoddart, was concerned that that was just a political decision and not enshrined in law. He is perfectly correct, but it is a decision by all 27 members, and it is a firm commitment. To unravel the whole of that would be to throw the entire arrangement of the EFSM into complete chaos. It would be a total reversal of a firm commitment made in good faith by 27 members. We believe that it is a substantial and supported condition.

[Lord Stoddart of Swindon]

I am most obliged to the Minister. Can he deal with the point that I made concerning the article in the Times? I have given it to Hansard so I cannot quote from it again. The Times queried whether the European Court of Justice could interpret our passing of this Bill as an agreement to future financing within the European stability mechanism. The point being made by the Times was that perhaps the European Court could interpret what we are doing as being consistent with having to make future contributions.

[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.