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

Lord Wallace of Saltaire Excerpts

Wednesday 13th June 2012 Lords Chamber

Let us take Moody’s as one example, although there are also Standard & Poor’s and Fitch. Moody’s, an American-based private company, recently made a statement about the United Kingdom and it can take it upon itself to rate not just other companies but sovereign countries too. As a result, the sovereign countries have to pay more for their borrowing. Therefore, the credit rating agencies helped to bring on the crisis. Look at who owns Moody’s and at who might benefit as a result of that speculation— it is Berkshire Hathaway, Capital World Investors, ValueAct Capital, Vanguard Group. The companies which own these credit rating agencies benefit by the decisions and the announcements made to downgrade the country concerned. It is, really, outrageous that this should happen.

[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.

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

Lord Wallace of Saltaire Excerpts

Wednesday 23rd May 2012 Lords Chamber

[Lord Davies of Stamford]

I am most grateful to the Minister for giving way. He said that it was the intention that the ESM should now enter into force next month. Indeed, we support the urgency of that, as I understand it. Therefore, why are we taking so long to ratify this? If we really support the initiative and recognise its urgency, why cannot we ratify it as soon as Parliament has approved this Bill?

[Lord Wallace of Saltaire]

My Lords, I do not think that it has been the usual practice of this House to interrupt Ministers in the middle of their opening speeches, when they are also winding up and when the interrupter has his chance to take part in the debate afterwards. These are questions that the Minister can answer in his wind-up speech.

[Lord Howell of Guildford]

As I have sought to explain, the ESM treaty is an intergovernmental affair between eurozone members, and they are going ahead with it—and they want to go ahead with it—in July. Nevertheless, the individual eurozone members have said that they would want the comfort of cover via an amendment to the European Union treaties, and we are pressing ahead with that as best we can in our own time. The two things are not ultimately dependent; it is just that the changes that we are proposing give comfort, support, reassurance and legal reassurance to the eurozone members so that they can go ahead. Therefore, those who say, “You are not doing anything to play your part in contributing to orderly developments in the eurozone”, are wrong. We are playing our part in doing so, although there are considerable benefits for the UK in making this move, which I have already outlined.

This brings me back to why this Bill is important. It represents Parliament giving a simple yes or no to amending part of the TFEU that does not actually apply to the UK at all. However, as I have made clear, by giving approval to this decision the UK avoids liability for future eurozone bailouts under the EU budget and gives the eurozone the legal clarity—this may reinforce the point I have just made—that it wants to back the European stability mechanism. We also uphold the commitment made by both the Prime Minister and the Chancellor to help the eurozone to get itself out of a crisis. Whichever way the situation goes, that must be to the advantage of us all.

If we were to refuse to agree the decision, the impact on our trading partners in the eurozone would not be positive, to put it mildly. We are under no illusion that the ESM alone will resolve the eurozone crisis, but, as the Prime Minister said last week, an effective firewall is part of the solution. It is safe to assume that markets would not view favourably any uncertainty about the eurozone’s ability to establish a permanent support mechanism. That is just what would arise if we failed to ratify this decision.

As the Prime Minister, my right honourable friend the Foreign Secretary and the Chancellor have repeatedly made clear, a stable Europe is directly in the UK’s interests. That must be so. We rely on the eurozone states for over 40% of our trade. London is Europe’s international financial centre. Stable progress in the eurozone states is vital to stable progress in the United Kingdom.

Therefore, agreeing to this treaty amendment is in our best interests. As I have said, it means that the UK will not be exposed to any future programmes of financial assistance for the eurozone through the EU budget, specifically the European financial stability mechanism—that will be closed—and it helps our neighbours in the eurozone in their search for financial stability in the currency area. Your Lordships have already agreed that the Prime Minister could sign this treaty amendment, as he has done. I hope that we can now take the necessary steps to allow us to ratify it. I beg to move.

--- Later in debate ---

[Lord Lawson of Blaby]

Yes, I am aware of that. I am also aware that he subsequently changed his mind on that point.

Those who promoted European monetary union were guilty of great arrogance and unbelievable irresponsibility. They were arrogant because the only way to have political union was with the consent of the peoples of Europe. The people of this country, the people of France, where I live nowadays, and the people of most, if not all, of the countries of Europe—Luxembourg may be an exception—do not wish to give up national self-government. They do not want to be part of a full-blown European political union. It is a sad thing but I am afraid that for all its, no doubt, high-minded motives, the European movement has been marked by the most appalling contempt for democracy throughout the years that I can remember. The irresponsibility is that political leaders must have known that if this gamble did not come off and they were not able to achieve the political union, the disaster which we see all around us was bound to ensue. That seems to me to be the most irresponsible thing that political leaders could ever have done.

What now? In my judgment, the least bad course—I say “least bad” rather than best because I accept that it is not good—is the orderly dissolution of the eurozone, which will begin with the departure of Greece in only a matter of time, and it will not be a long time. This dissolution is already happening before our eyes, even if the politicians do not accept it. Holders of euro deposits in Greek banks are taking them out at a rate of knots and they will do so increasingly. After that, I am afraid that the same thing will happen as regards euro deposits in the banks of other countries considered to be likely candidates for withdrawal—whether it be the Spanish or Portuguese banks, or wherever.

I agree that the dissolution of the eurozone will be far from painless. There will be a whole lot more sovereign defaults. We have already had getting on for an 80% write down of Greek government debt. That will be bigger. There will be other sovereign defaults. There will be banks in difficulty.

[Lord Wallace of Saltaire]

My Lords—

[Lord Lawson of Blaby]

I will come to a conclusion soon. There will be banks which may have to be saved. But we have handled something like this before. It may not have been on this scale but it was quite substantial. The first international economic issue I had to grapple with as Chancellor of the Exchequer in the mid-1980s was the Latin American sovereign debt crisis, which had many factors in common with this and the IMF played an important part.

In conclusion, there is a heavy cost in the course that I am suggesting but the EMU is a Doomsday machine. If the question is, “How do we keep it going?”, that beggars belief. We have got to get on with it. I do not believe that this will happen, but if there is a serious move to a political union, we can no longer be part of the European Union. That is not the form of European Union which the people of this country are prepared to accept, or, I believe, one which the politicians will accept. It is a very serious matter. The noble Lord, Lord Owen, referred to this in a very thoughtful contribution in the Queen’s Speech debate. He said that in those circumstances, we would have to leave the European Union, although with a referendum first. I do not believe that we will go to a political union. Therefore, the conclusion is that the European monetary union is doomed and the treaty change we are discussing today is supremely irrelevant.

EU: Recent Developments

Lord Wallace of Saltaire Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Harrison]

My Lords, in setting up ESMA, the European Securities and Markets Authority, have we not already given away that power in order to frustrate credit default swaps legislation?

[Lord Wallace of Saltaire]

My Lords, I think it would appropriate if we continued with the debate. The Minister has sat down. I will answer some of these questions when it comes to winding up.

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, at the end of a seven-hour debate in which a very wide range of points have been made and perspectives have been introduced, it is of course impossible to answer everything that has been raised, so I promise that either I or my noble friend Lord Howell will write to noble Lords to answer the points that I am not able to reach. In some ways, it has also been a debate on the just-published EU Committee report, The Euro Area Crisis. It is unusual to have a debate on a report that is close to publication, and I am sure that the noble Lord, Lord Harrison, is pleased about that. The Government are very pleased with the report and we will of course be responding in due course.

The coalition Government have no doubt that the UK is better off in the EU, not better off out of it. We support a prosperous and competitive Europe and a strong single market. These are good for Britain. It is therefore in Britain’s interests that the eurozone sorts out its current serious problems. We want to see a reformed and strengthened European Union, better able to cope with the new international pattern of powers and influence. We want Europe to succeed not just as an economic force but as a political force—that is, as an association of countries with the political will, the shared values and the voice to make a difference in the world. European countries acting together pack a bigger punch in a changing world. To repeat what my noble friend Lord Howell said in opening this debate, Britain is part of the European Union not by default but by choice. It fundamentally reflects our national interest to be part of the single market on our doorstep and we have no intention of walking away.

The benefits of the single market are hard-wired into the UK economy. Half our trade is with Europe—not surprisingly, as this is our nearest and most open market. This trade has been growing faster than our overall trade without diverting British companies with global ambitions from trading more and more with the big emerging markets. There is an absurd view which I see when I look at some of the Eurosceptic blogs that somehow being in the European Union prevents us trading more with China and Brazil. They do not look at the figures which show that German trade with China and Brazil is four times as large as that of Britain and that currently French trade with China is twice that of Britain. These are not contradictions. The UK therefore continues to play an active role and to lead the way in the European Union, and the Government continue to act decisively to defend our national interests within it, as do other Governments within the European Union.

In October, the eurozone countries set out the package of measures that will be needed in the short term if the euro is to resolve its ongoing problems: Europe’s banks need to be recapitalised properly; the uncertainty in Greece needs to be brought to an end; and the firewall must be big enough to deal with the full scale of the crisis. In the longer run, proper fiscal discipline in the eurozone is essential, and the question at the December European Council was on how this process should be taken forward. My right honourable friend the Prime Minister sought sensible and reasonable safeguards to protect the integrity of the single market, and my noble friend Lord Howell has spelt out what those safeguards were. The eurozone countries and others have since reached an intergovernmental agreement outside the European Union.

With the eurozone at the centre of the crisis, the UK is to some extent unavoidably at one side. Some say that we should have been more active, engaged and critical; others, such as the noble Lords, Lord Newby and Lord Kerr, say that we should not intervene too far—that unsolicited advice only irritates those who have to sort out the mess in which they find themselves. The Prime Minister, the Chancellor and the Foreign Secretary have all made it clear that the UK wants the eurozone to survive and prosper. However, we have also made it clear that the single market must not be threatened or sidelined, and there have been a number of noises from some other Governments who have suggested that they would not be unhappy to see aspects of the single market threatened. Europe needs economic recovery and growth, not the stability and no-growth pact of which the noble Lord, Lord Kerr, spoke. We are continuing to pursue that agenda in Brussels through active bilateral conversations as well as with groups of like-minded countries, with which the Government are fully engaged. We are neither isolated, nor ignored. There are many active exchanges in which all of us are fully engaged.

In a rather underreported speech the other day in Berlin, Chancellor Merkel went out of her way to say:

“Britain is essential and also more pro-European than some other countries. We want to have Great Britain in the European Union. We need Britain, by the way. I want to say this emphatically, because Britain has always given us strong orientation in matters of competitiveness and freedom and in the development of the single European market”.

This Government are actively engaged in close relations with Germany. After all, Germany is now the central power—the central economy—in the single market and therefore we all have to ensure that we are fully engaged with it.

Many noble Lords have quoted Keynes and said that they are already Keynesians. Halfway through the debate, I dashed out to find my copy of The Economic Consequences of the Peace, where on page 14 the young John Maynard Keynes argues against the very harsh reparations being imposed on Germany and that Germany was, after all, the natural centre of the European economy. I quote:

“Round Germany as a central support the rest of the European economic system grouped itself”—

it is talking about the 1890s and the 1910s—

“and on the prosperity and enterprise of Germany the prosperity of the rest of the Continent mainly depended. The increasing pace of Germany gave her neighbors an outlet for their products, in exchange for which the enterprise of the German merchant supplied them with their chief requirements”.

We are back to that position and we need to ensure that we erect the complex political mechanisms and exchanges in which we can ensure that we all manage to return to growth together.

There are tremendous problems in the European political system in which we operate about rhetoric and practice. Part of the problem, including in the past two or three months, has been that what people say is very often different from what they mean. The fiscal pact itself is a good example of that. The noble Lord, Lord Kerr, argues that we should have signed after all because it would not make any difference, to which one has to say that, if it will not make any difference, then it is not worth signing.

There are some very large issues in that respect. Institutional construction has been too frequent an alternative to policy change. The rhetoric on political union is still with us. Years ago when I was a graduate student, I remember Karl Deutsche saying that the concept of political union was immensely attractive to politicians because it means so many different things—indeed contradictory things—to many different people. The French and German Governments often believe contradictory things about what they mean by political union. “The European project” and “ever closer union” are phrases that are very loosely defined. We started with the threat of a financial transactions tax which was thought to be, and puffed up in Paris to be, a threat to the City of London. We are now in the process of discovering that what the French will propose is a stamp tax on share transactions at a much lower rate than the British already have for the City of London. What appeared to be an enormous threat turns out to be a very small step forward and attacks on Anglo-Saxon capitalism from Governments whose banks have been very rash in how far they have overextended themselves in lending to Greece and Portugal.

We need to promote, among other things, a greater interchange among economists, or at least a dialogue among economists. When I taught at the London School of Economics, I used to say to my international relations students that, if they went to lectures in the economics department, they would discover that according to the economics taught in the London School of Economics the German economy should have collapsed about 25 years before. I fear, at present, that if one follows the economics taught in German universities, we are pushing the Greek economy into collapse. We need to learn from each other and begin to understand how interdependent our approaches to financial economics and real market economics need to be. We also need to recognise that passing regulations is not the same as implementing them. Part of what we discovered about Greece was the extent to which it had simply ignored the rules of the single market. The noble Lord, Lord Pearson of Rannoch, said absurdly that the euro alone brought down Greece. What we are now discovering about the extent to which the Greek economy was running, with a structure of expensive restrictive practices and very extensive tax evasion, demonstrates that there was always a very large and deep domestically oriented problem there.

[Lord Pearson of Rannoch]

My Lords, perhaps I may put the question slightly differently. Would the Greek people be suffering as they are today without the project of European integration and its euro?

[Lord Wallace of Saltaire]

My Lords, in the context of a global recession, the Greeks would be facing a very severe run on the drachma and quite possibly also a default. As a number of people have remarked, the Greeks defaulted on a number of occasions over the past 120 years.

People talk also about a common European foreign and defence policy. When I am in Germany, politicians there often tell me they are deeply committed to it—and to a European army. However, they cannot explain the strategy, funding, structure or command structure that it would have. In practice, the United Kingdom contributes a great deal to a European foreign policy and to European co-operation in defence. The UK/France defence relationship continues to move forward very well. We are working with others to cope with the immensely complicated problems of the Syrian crisis. In Libya, we flew missions with our French, Belgian, Danish, Swedish and Italian partners. We have been working in Helmand with Estonian troops embedded in British battalions. When I went some weeks ago to the joint command centre at Northwood, I was briefed by a Latvian naval officer on the anti-piracy patrol. In practice we are very deeply embedded in co-operative defence and foreign policy in Europe.

We will have to work hard to defend liberalism in a recession. I mean liberalism in the broader sense of liberal societies, open markets and international co-operation. The noble Lord, Lord Judd, made a wonderfully liberal and internationalist speech. Nationalism, populism and protectionism thrive when unemployment rises and incomes go down. The noble Lord, Lord Monks, mentioned the problems in Hungary. The Commission is now in active dialogue with the Hungarian Government about the extent to which some of their new laws will fit with EU rules. I was fascinated to hear from my Finnish friends that there is now a sort of Eurosceptic International across the European Union, with Eurosceptics in Britain working with their Danish, Finnish and other colleagues internationally against internationalism, so to speak.

The problem of popular opinion across Europe is very severe. I suggest to the noble Lord, Lord Grenfell, that young people in Europe are often not immensely committed to internationalism. They take what they have for granted and they do not support the distant co-operation of elites through international organisations, which is what the European Union provides. It would be easy for us to give way to similar forces in the United Kingdom, in the belief that leaving the European Union would relieve us of international regulation. The demonisation of Germany is part of the way in which one finds easy answers to very complicated problems.

A number of noble Lords said that the fundamental underlying issue was that of Britain's place in the world. On my blog this morning, I came across references to a speech by Daniel Hannan MEP to the Conservative Political Action Committee in the United States, in which he praised Newt Gingrich and was in turn praised by Fox News. He made all the obvious references to Churchill and the Nazi threat, and suggested that Britain should leave Europe and blindly follow wherever the next American Republican Administration might lead us. Others would like us to become Switzerland with nuclear missiles or Norway without having to pay the very substantial sums that Norway contributes on a “voluntary basis” to the European Union. Our political leadership over the past 25 years, including the previous Labour Government, has failed to make the case for active engagement in Europe.

[Lord Lamont of Lerwick]

The noble Lord is enjoying himself attacking Eurosceptics right, left and centre. Is he going to answer some of the points in the debate? In particular, will he answer the questions asked by the noble Lord, Lord Kakkar, about the working time directive as it affects hospitals? Or will his answer be that it means different things to different people, or that it does not really mean what it says?

[Lord Wallace of Saltaire]

The coalition Government are clear that Europe is our firm base from which we look outwards. France, Germany, the Netherlands and Ireland are our closest neighbours and our natural partners, and with them we work to promote our shared values, economic and political, across the world.

Perhaps I may answer some of the points that have been made. The net British contribution to the EU budget was raised but, according to Treasury figures—which are, as always, entirely reliable—last year it was €7.4 billion and not the €10 billion that the noble Lord, Lord Pearson, suggested.

[Lord Pearson of Rannoch]

I was going on Pink Book figures, which include a number of contributions which we make to the European Union that are outside the ambit of the Treasury. The Pink Book figure of €10.3 billion last year is the correct net figure.

[Lord Wallace of Saltaire]

We will continue to disagree.

The noble Lord, Lord Kakkar, raised the working time directive and asked a number of other questions. We are working to ensure that it retains a secure economy-wide opt-out. We would welcome more flexibility on the areas of on-call time and compensatory rest. On the General Medical Council and the overinterpretation of language testing, I am confident that that is also an issue on which the British Government are actively engaged. I will write to the noble Lord further about that.

[Lord Lea of Crondall]

It is not the case that we have a general opt-out on the working time directive. I do not know what the Minister is referring to.

[Lord Wallace of Saltaire]

As I understand it, there is an individual right to opt-out voluntarily from the working time directive. That is precisely what I was explaining. I am sorry that the noble Lord misheard.

On the clinical trials directive, we are working with the Commission on revising the directive, and the Commission will publish proposals this year.

On other matters, the noble Lord, Lord Willoughby de Broke, suggested that the European Union is forcing regulations on the UK. In terms of climate change, the coalition Government, like the previous Government, are committed to climate change and work through the European Union. It is not Brussels forcing that on the United Kingdom.

In other areas, noble Lords may well be aware that some of what comes back from Brussels—the zoo regulation, for example, and a lot of the animal welfare stuff—has been promoted in Brussels extremely actively by British lobbies and is intended to implement and enforce new rules on other Governments across the European Union. That is the way in which democratic politics takes place to some extent above the national level.

The noble Lord, Lord Monks, talked about rebalancing. There is a good case for rebalancing competences between the European Union and its member states, but this would require the agreement of all 27 member states on the basis of negotiation and agreement. It would not be achieved through a unilateral decision.

The noble Earl, Lord Sandwich, asked a number of questions about the Balkans and Africa. Briefly, we are strongly in favour of Serbia finding its place within the European Union. We all understand the conditions which are required for that. We also support Kosovo coming into the European Union, but it will be a slow process for all the remaining Balkan countries. We have to make sure that they meet the criteria.

On the question of co-operation with China in Africa, the EU and the United Kingdom are working very closely on that. I hope the noble Lord noted Andrew Mitchell’s visit to China, during which he persuaded the Chinese to take part in the conference in Korea on the quality of aid. That is the basis on which we hope to find a closer partnership with the Chinese.

The noble Lord, Lord Newby, raised the issue of procurement. In December 2011, the Commission published new proposals to modernise the procurement rules, and I will write to the noble Lord in more detail on that.

The noble Lord, Lord Lea, asked about the Madagascar cyclone. The European Commission humanitarian office has provided nearly €20 million over the past five years for humanitarian response and disaster risk reduction, including cyclone-related support. Any future UK support is likely to be through multilateral channels, notably the European Union, UNICEF and the International Committee of the Red Cross.

I recognise that I cannot have covered all the points raised, but I will conclude by saying that the European Union as a whole is not in an easy position, as we all recognise. We are caught in a financial crisis that is also partly a fiscal crisis and which has contributed to a wider economic recession. We have to work together to resolve these crises—each member state is hobbled by its own domestic politics and the myths that float through the different national debates. It is not at all easy, facing successive rounds of domestic elections, for Governments and political leaders to rise above immediate interests and provide enlightened European statesmanship. The noises coming out of the French presidential election campaign this week illustrate that well. All of us, in all political parties, need to navigate carefully and reasonably between the pressures of our own domestic opinion and the obstacles created by domestic opinion in other countries. That is the task we all face and must all share.

Motion agreed.

Iran

Lord Wallace of Saltaire Excerpts

Tuesday 24th January 2012 Lords Chamber

[Noble Lords]

My Lords—

[Lord Wallace of Saltaire]

My Lords, the noble Baroness, Lady Afshar, has been trying to get in, and we can then come to the Conservative Benches.

[Baroness Afshar]

I declare an interest as someone who was born in Iran and still works very closely with Iranian academics. My worry is that in Iran views are very divided about nuclear weapons, but the moment there is a threat of sanctions and a threat against Iran, it is likely that even among those who are absolutely opposed—I work with the resistance movement—a great many would back the Government. The fear of Israel is very real, and the idea that there is one law for Israel and one for Iran is absolutely understood by Iranians. The idea that Britain will bring its Army or Navy will be seen as armed defence of Israel. That would undermine any negotiations on the table. It would be very much better if negotiations were conducted perhaps a bit more quietly and with less threat. As an academic, I know that we are suffering enormously because brilliant Iranian students who want to do postgraduate work in this country cannot do so. As someone who came to this country as a student I can tell you that sometimes we turn good.

European Union Bill

Lord Wallace of Saltaire Excerpts

Wednesday 13th July 2011 Lords Chamber

13A: Because the decisions concerned would involve an increase in the competences or powers of the European Union in relation to the United Kingdom and should therefore require approval by referendum as well as by Act.

[Lord Wallace of Saltaire]

My Lords, we now turn to the list of decisions in the existing treaties which were previously subject to the requirement of approval by Act and by referendum under Clause 6 but which for the most part would require approval only by Act as a result of your Lordships’ amendments. As with the previous amendments, the Government listened carefully to the arguments put forward after the amendments were agreed by a vote of 214 to 209 in this House. The other place considered these issues further two days ago after having examined in detail the make-up of Clause 6 during its consideration at the start of this year. It has disagreed with your Lordships’ amendments on the basis of our opposition to these changes and by consensus. In so doing, the shadow Europe Minister, Wayne David, said:

“Of course, Members in the other place are entitled to their views, but we have reservations about the proposal that referendums should be confined to these three subject areas, and it is important to put on the record that my comments set out the Labour party’s position”.—[Official Report, Commons, 11/7/11; col. 75.]

It now falls to your Lordships' House to consider whether to insist on its amendments on the basis of the approval of this clause, twice over, by the other place. I would be particularly interested to learn from noble Lords on the Front Bench opposite whether they will reflect the Labour Party’s position today or continue to adopt a different approach.

In moving the amendments on Report, the noble Lord, Lord Hannay of Chiswick, stated that,

“the long list of potential referendums is excessive and disproportionate”.—[Official Report, 13/6/11; col. 552.]

While I appreciate that there are strongly held views on this issue, I should like briefly to repeat why the Government do not agree with this view. The coalition’s programme for government sets out at the start of the section on Europe that,

“no further powers should be transferred to Brussels without a referendum”.

All the decisions listed in Clause 6 in its previous form would constitute such a transfer, as recognised by the other place in its reason for disagreement. As we have made clear previously, Clause 6 consists of five self-standing decisions of great sensitivity, such as on whether to join the euro or to give up national border controls, and seven sensitive national vetoes using a passerelle and avoiding formal treaty changes.

We are debating this Bill in the context of a wide malaise within the European public across most EU member states and a worrying disconnect between the Brussels institutions and the national publics of the member states. Michel Barnier, European Commissioner for the Internal Market, said in a recent speech in Berlin:

“For 60 years we have been building Europe for its citizens and in their name; but too often we have been doing it without them. A malaise has taken hold and the gap between Europe and its citizens has gradually widened”—

that is to say, not just within the UK but across the EU. The deference on which Europe was built, which was given to managerial élites in Brussels on behalf of its peoples but without their informed understanding and consent, and through which substantial powers were transferred to Brussels, has now disappeared. We have to rebuild public confidence in institutionalised co-operation among European Governments. We have to carry our voters with us, not sweep through complex multilateral commitments over their heads.

Successive Governments in Britain have failed to make the case for positive European engagement over the past 20 years or more. Suspicions of French and German intentions, woven into an anti-European narrative, have been endlessly recycled in much of the British media. Some noble Lords might like to reflect on whether there ever was a Faustian pact with the Murdoch press in its Anglo-Saxon but anti-European stance, whereby it would support British Governments so long as they maintained an opposition to stronger European co-operation and in particular to international regulation of media ownership and competition.

If I may speak as a Liberal Democrat, I am entirely comfortable with the constructive approach that this coalition is taking to relations with our European neighbours, large and small, and its positive engagement with the institutions of the European Union. However, it will take us time to regenerate public confidence and to rebuild public trust. The provisions of the Bill, including those of Clause 6, are there to reassure our sceptical citizens that the British Government will not attempt to slip past them unexplained further transfers of power or competence to institutions which at present, sadly, inspire limited loyalty and widespread mistrust.

The other place has now considered the scope of Clause 6 on two occasions. In both cases the other place has approved that the scope of the referendum requirement should incorporate the 12 decisions. On the second occasion it did so by overwhelming consensus. It now, therefore, falls to your Lordships’ House to consider whether or not to insist on its amendments, but I beg to move that it accepts the view of the other place.

Motion B1

Moved by

--- Later in debate ---

[Lord Triesman]

My Lords, we are taking part in this debate this evening because the House of Commons did not accept Amendment 15. The noble Lord, Lord Empey, made the point that the other place may have been indifferent because relatively few Members were there. I ask him not to make that judgment in general about things that happen at the other end. When most debates are conducted, you see the camera sweep around without many people being there. It is entirely possible that you could regard this as indifference to almost everything, or you could say that it is the nature of the life of this place. I certainly do not think that the House could accept what he commended to us—that we should send no messages that are in any sense disagreeable to people in the other place. Such a supine response from this House to matters on which we feel amendments are needed would surely be exactly the opposite of the role that this House should play, and ample argument for its having no role at all.

What is fundamental at this stage is that this legislation takes us, in several constitutional areas, into waters that are—I candidly submit to the House—unknown. We are being invited to change from a system that is fundamentally parliamentary in the main thrust of its work to a system that is plebiscitary. It will on one reading lead to a significant number of plebiscites—that is entirely possible—or on another to very few, as the noble Lord, Lord Lamont, suggested. That is also entirely possible; I do not know which it will be. What I do know is that it will be fundamentally different from the way in which we have conducted parliamentary debate on key issues over many generations.

There is a fundamental constitutional change in that Parliament will offer the public votes—either frequently or infrequently, depending on which reading one takes—on whether to overturn the decisions that it has taken as a result of major debates and major opportunities to review changes in Europe in both Houses. Inevitably, there will be a fundamental change in how we conduct our relationship with Europe as a whole. That is what is intended. Some people advocate that, while others of us believe that this is a disproportionate way of trying to do that. None the less, these are all fundamental changes.

I suggest to the House that, in sailing into these waters, the reality is that we do not know how it will play out. Least of all do we know in what circumstances it will play out. We do not know which things will provide the most significant changes, although we have reason to believe that the present difficulties in European nation state economies give us ample evidence that they will be the tapestry against which all of this will play out. We do not know how the constitutional matters will play out. I doubt anybody here has the temerity to suggest that they know in which circumstances all these matters will play out either.

I entirely understand the argument that there are some things, even against the background that I have described, that are so important to the people of the United Kingdom that they will insist on having a say on them. It is also true that the Government of the day will be bound, in those circumstances, to try to make judgments of their own about what the interests of the country are at any time. There is no point to a parliamentary democracy where the Government of the day say, on some quite critical issues, “We will not be finally responsible for taking judgments about what the interests of our country are”. That would be a peculiar country to live in and one in which the notion of fundamental democracy had been considerably eroded. Variations by subsequent Governments in subsequent Parliaments, of the kind that are suggested in this amendment, seem just to be prudent as a means of allowing the possibility of dealing with circumstances as they arise in a way that is more flexible—I am not afraid of that word—in all of those circumstances.

I am wholly in agreement with the noble Baroness, Lady Williams, when she says that a significant number of these issues will be judged in general elections. When people look at the questions that must be resolved, they will look at them in general elections. For those who say “Trust in the people”, my trust is at its highest point when they decide which Government they want in a general election. That is a fundamental form of trust. I accept that there will be circumstances in which a referendum would be absolutely right. I hope I have been clear from this side of the House that these include such matters as defence policy, Schengen and the euro. There is a raft of policies where I can see that that would be entirely true. However, I do not believe that, in comparison with a general election and the decisions that are taken, the people of the country—in whom, inevitably, trust must be placed in all such circumstances—believe it is somehow better to replicate “The X Factor” than to deal with real politics in real circumstances. “The X Factor” may be fine as a form of entertainment, but it is hardly a way of dealing with the national interest when it must be dealt with under stress or duress.

I also agreed with the noble Baroness, Lady Williams, when she responded to the noble Lord, Lord Lamont. This is an important point; I hope the House will not mind my repeating it. The noble Lord, Lord Lamont, is right when he says that the case for clauses that limit the life of legislation is far clearer in dealing with emergency legislation. You do not know whether you will need it in the future, and you are not 100 per cent sure that it will meet the intentions for which it was introduced. However, there is also a completely reasonable case for saying that, when we are taking such significant steps into the dark in constitutional terms, there needs to be a way to say, “How do we make sure that we’ve got the balance right in the interests of the country? How can we make sure that we are taking the right decisions in the right way against the right environmental circumstances?”. That is, after all, the function of government.

I cannot stand at this Dispatch Box and claim that I know with certainty where those new balances will lie. It is precisely my point that none of us knows where they will lie. However, this generation of politicians or the next will have to make those judgments. They will come around and they will have to be made. Politicians should be in a position to make them with the greatest confidence and authority that they can. It is critical to our country that they are successful in doing so.

I hope we will accept Amendment 15B. It is a much more limited suggestion than Amendment 15. It seems, in every respect, to grant flexibility without overriding the key provisions of the Bill in any significant way. It commends itself strongly to me on that basis. Most of all, it commends itself on the basis that, if it is true that the cause for dissatisfaction is the belief that Parliament has let too many of its roles and responsibilities go toward Europe and for those reasons fundamental constitutional change is needed—because that is the argument for this kind of fundamental constitutional change—let us be certain as time goes by that we have got it right, that the balances are right and that whatever the causes were we have not backed ourselves into a cul-de-sac or something worse.

[Lord Wallace of Saltaire]

My Lords, I thank the noble Lord—

[Lord Stoddart of Swindon]

My Lords—

[Lord Wallace of Saltaire]

We are now winding up.

[Lord Stoddart of Swindon]

If anyone wishes to challenge me and move that I no longer be heard, let them do so, but I wish to ask a question. If I had been allowed to do so without the very rude interruption of the Whip on the Bench, noble Lords would have saved themselves a lot of time. What I wanted to ask—and I am going to ask it now—is whether, when the amendment states that a future Government “may”, it means “shall”. We often have debates about what “may” and “shall” should mean, and I think it is important that before noble Lords vote, if there is going to be a vote, they know whether they are voting for something that commits the next Government to something or is permissive for the next Government. Now I will sit down and be quiet.

Could I just add that the Whip on the Bench did not intervene on the noble Lord, Lord Maclennan, who widened the debate on this very narrow amendment to the extent of whether we should be in or out? I think I have been extremely badly treated, and I hope that the Whip will apologise.

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, I start by thanking the noble Lord, Lord Goodhart, for the careful and conciliatory way in which he moved the amendment, now some time ago. I do not regard this as a wrecking amendment, but I do see it as an amendment that will confuse and complicate the principles behind this Bill, weaken their role and not help to reassure our sceptical citizens.

In answer to the insistent question of the noble Lord, Lord Stoddart, my reading of this amendment, which I am sure is that of the noble Lord, Lord Goodhart, is that it is intended to be a permissive power and not an obligatory power for the Secretary of State, which is why it says “may” and not “shall”.

In its favour, the amendment rejects the passive approach proposed by Amendment 15; that is to say, the amendment in lieu requires the Government to take a positive decision to seek to suspend some of the provisions of the Bill. It is permissive in that respect. A Government taking such a decision would undoubtedly be mindful of the possible reaction of the British people to such a move. It would therefore be open to a greater degree of transparency in terms of the motivation of the Government of the day that the original sunset clause would not, to the same degree. As the noble Lord, Lord Lamont, noted, it allows for the suspension of the requirement for an Act of Parliament before any of the decisions in Clause 6 are taken, depending on the terms in the order. So it risks diluting the increased engagement for Parliament, which is an important part of this Bill. The level to which Parliament and the people would be involved in these important decisions would then be in the hands of Ministers, a principle that runs against the spirit of the Bill.

A number of noble Lords suggested that the Bill was intended only to apply to future Governments. I remind noble Lords that in the next Session of this House, we will consider legislation under the terms of this Bill on Croatian accession and the European stability mechanism, and that the conditions of the Bill will apply to those.

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Thursday 23rd June 2011 Lords Chamber

[Baroness Williams of Crosby]

My Lords, I, too, add my warm thanks to the Ministers for the extremely gracious and thoughtful way in which they have responded to issues in this House. In particular, I thank the Minister for his willingness to spend some time meeting people personally to discuss their particular problems when he is an extremely busy man with a heavy ministerial list, as indeed is his colleague the noble Lord, Lord Wallace of Saltaire. I do not want to detain the House either, beyond thanking them very much and saying one other word following the noble Lord, Lord Williamson.

There are issues in the amendments that this House has passed which would improve the Bill very considerably. I hope that the Ministers will think quite carefully before trying to oppose them completely, because they would bring about a degree of consensus across the House that would be extremely valuable for our future relations with Europe, about which the Minister has already spoken eloquently. We welcome what he has said about that. I hope that the Government will take away from this at least a willingness to consider whether it might not improve the Bill to accept some of these amendments.

[Lord Wallace of Saltaire]

My Lords, we are on the edge, between being in order or out of order. Perhaps I might repeat my noble friend’s request that the noble Lord, Lord Lea of Crondall, might now care to withdraw his amendment. The noble Lord, Lord Pearson of Rannoch, rightly pointed out that we are edging away from Third Reading and into Bill do now pass. I therefore suggest that we allow my noble friend to move the Motion that the Bill do now pass.

[Lord Lea of Crondall]

I thank the Minister for his reply. I will say for the record that I am taking it from what he has said that we will not have a blinkered or blindfolded ping-pong on the basis of asserting the primacy of the House of Commons. I hope not to be disabused of this but, reflecting on what the noble Baroness, Lady Williams of Crosby, has just said, I hope that these things will be considered very carefully. We are a mature democracy and there is a lot of mature thinking in this House. On that basis, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Pearson of Rannoch]

I am not sure that that intervention is entirely on target. I thought the noble Lord was going to berate us about the Murdoch press, and I do not think that the two newspapers to which I referred belong in the Murdoch stable. I am quite happy to collaborate with the noble Lord on that if he will collaborate with me on getting the BBC to fulfil its duty to explain to the British people how the European Union works.

I think I got as far as saying that three amendments were carried against this Bill which together emasculate it entirely and deny the British people any chance of a meaningful referendum on our relationship with the failing project of European integration, which they do not like.

The point I now want to make about those amendments is that they were largely proposed by noble Lords in receipt of a forfeitable EU pension, most of them undeclared, and they were all carried by the votes of noble Lords who did not declare their interest. I can but suggest that the Privileges Committee revisits this subject before the Bill returns from the Commons and does the obvious thing.

As the Bill now leaves us, there is one other regret that I would like to record. It is that the Government did not respond to a question about the background to this Bill which I put to them twice. The Government’s excuse, no doubt in their mind when they designed the Bill, may be that the Bill should not have allowed us to discuss the EU’s real defects: its common agricultural and fisheries policies, its wasteful and fraudulent use of vast sums of taxpayers’ money and its entirely undemocratic and secret law-making process which now controls so much of our lives. The question I put was this: given that even our political class is beginning to see that the euro was and is designed for disaster—

[Lord Wallace of Saltaire]

I remind the noble Lord that the Companion states that:

“The third reading of a Bill is normally confined to the formal motion”,

and that interventions should be only in opposition to the Bill itself.

[Lord Pearson of Rannoch]

I think that the noble Lord will find that I have cleared this intervention with the usual channels, and I am sorry if he was not part of it.

I think I was saying that even the political class now realises that the euro has become the disaster—

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Monday 13th June 2011 Lords Chamber

[Lord Liddle]

My Lords, from the Opposition’s point of view, exotic as it may seem that we should at this moment be debating the circumstances in which we might join the euro, this Bill is intended to bind future Parliaments for a long time. Indeed, that is one of our major difficulties with it, which is why we will be moving the sunset amendments on Wednesday. However, given that it is a Bill that is intended to bind Parliaments for the future, it is important to get this right. We have listened to our colleague the noble Lord, Lord Kerr, at great length on this subject and are persuaded that he is right. The Opposition will therefore be supporting his amendment.

[Lord Wallace of Saltaire]

My Lords, no Parliament can bind its successors. That is one of the principles of parliamentary sovereignty. I am grateful to the noble Lord, Lord Kerr of Kinlochard, for following up the previous Committee discussion with his letter of 19 May, in which he outlined his concerns in more detail: namely, that Clause 6(5)(e) of the Bill might be legally defective. We have therefore taken careful legal advice. The Government have now been able to reply to that letter and a copy has been sent to those of your Lordships who participated in the Committee debates. A copy of the letter has also been deposited in the Library of the House. On the basis of that legal advice, I hope to reassure your Lordships that we do not judge there to be a risk of more than one referendum on the euro being required and that the provision does what we and noble Lords on all sides of your Lordships’ House intend it to do.

Unlike other member states, the UK is not under an obligation to adopt the euro. Protocol 15 of the consolidated treaty begins with the clear statement that the United Kingdom,

“shall not be obliged or committed to adopt the euro without a separate decision to do so by its government and Parliament”.

That protocol, which needs to be read alongside Article 140 in the British case, sets out in detail the steps that must be satisfied before the UK could adopt the euro. Paragraph 9 of the protocol states that after the UK has notified,

“the Council … of its intention to adopt the euro”,

as its currency,

“decisions in accordance with the procedure laid down in Article 140(1) and (2)”,

of the TFEU must first be taken, to which protocol 13 is also relevant.

The process starts in practice by examining convergence criteria as set out in Article 140(2). That is bound to happen before the UK formally notifies, even if it is not part of the formal procedure. It might be helpful to consider what needs to be done following notification of our intention to join the euro. It is not a matter of negotiating terms of entry but of economic criteria being satisfied in terms of the treaty. The final step of the process is to take a decision in accordance with the procedure laid down in Article 140(3) of the TFEU. Paragraph 9(c) of Protocol 15 commits the Council,

“in accordance with the procedure laid down in Article 140(3)”,

to “take all other necessary” measures to enable the UK “to adopt the euro”.

Clause 6(5)(e) is designed to catch this final step in the process, thus ensuring that as much of the complex detail as possible is available to Parliament and the public in deciding whether to join, while giving the Government of the day the flexibility to set the timetable for when to seek approval from Parliament and the British people. If I may say so, the noble Lord, Lord Kerr, might almost be old enough to remember the first applications for Britain to join what was then the European Economic Community. Before formal application was made, a number of informal negotiations established the terms for potential negotiation. We envisage something of that in this situation. It will allow the Government to seek a referendum when sufficient detail is known about the circumstances and conditions of entry, but will allow the UK to seek approval from the people before the exact point at which the exchange rate between the euro and the pound would be set. We all recognise that the exact exchange rate will have to be set at the end of the process to avoid market turmoil and speculation against the rates declared.

In contrast, the amendment proposed by the noble Lord would require the referendum to be held and approval given before the UK could notify the EU that it intended to adopt the euro. The Bill nevertheless allows for matters to be arranged in this way if the Government so wished, again providing the degree of flexibility which noble Lords, including the noble Lord, Lord Kerr, have so often called for on this Bill. It would be open to the Government of the day to undertake negotiations with the EU in line with paragraph 9 of the protocol before the UK issued its notification. This would allow draft decisions under Article 140(3) on the rate at which the euro would be substituted for sterling and other measures necessary for its introduction to be prepared—with perhaps a range of rates being negotiated—before notifying our final intention to join the euro.

On that basis, I do not consider that the Bill would lead to what we all view as an unwelcome situation in which two referendums would have to be held on the euro: the first on the UK notifying that it wished to join; the second in a rushed weekend on determining the specific question of the exact rate at which the euro is to be exchanged for the pound. Instead, it is possible under the Bill for the Government to submit the question of adopting the euro to a single referendum.

[Lord Lawson of Blaby]

My noble friend mentioned the lawyers early on and I am quite sure that the lawyers worked this out. To me, this is too redolent of lawyers. The practicalities might in fact tell the other way. The noble Lord, Lord Kerr, for whom I have a high regard as I indicated earlier, has raised a point that at least merits further thought and discussion. Quite apart from the problems that might or might not occur on the currency markets, it would be very confusing to the British people if there were no referendum on the principle of joining the euro at the first stage, when the Government of the day had decided that.

My noble friend the Minister said that this can be played either way, early or late, but we cannot know what a future Government might do. They might decide to play it late, which would not be desirable. It would be most undesirable for, and, as I say, very confusing to, the people, who would not quite understand why it was happening in that way. It might therefore be sensible if the noble Lord, Lord Kerr, could be persuaded to withdraw his amendment on an undertaking by the Government that they will give this matter further thought. That would be the right way forward.

[Lord Wallace of Saltaire]

I am very happy to give an assurance that the Government will look at this further, but we have consulted—we are dealing with legislation, so it is entirely appropriate to consult—lawyers on the implications of that legislation. The process is long by which what necessarily begins with informal exploration becomes formal notification, then, under the terms of Article 140(2), as the noble Lord, Lord Kerr, will know, entails a degree of negotiation on how far the UK meets the convergence criteria and then moves towards the final negotiation in Article 43. What we provide for under the existing arrangement is a degree of flexibility over at what stage in that process the Government put the—

[Lord Hamilton of Epsom]

Is not the other side of my noble friend Lord Lawson’s argument that if we take the decision in principle, we are put in a much weaker position in all subsequent negotiations because, in practice, the country has already voted in principle to go into the single currency and therefore we have to give way on many of the negotiations that follow?

[Lord Wallace of Saltaire]

That, of course, is partly why, in all three British applications to join the European Economic Community there were informal conversations before Britain made a formal application—we needed to know what potential terms were available before we formally declared our hand. For the reasons I have outlined, we conclude that Clause 6(5)(c) is not legally deficient and that there is no risk of the Bill requiring more than one referendum on the issue, the second referendum being on the rate at which the UK would join the single currency. I therefore urge the noble Lords to withdraw their amendment.

[Lord Kerr of Kinlochard]

I always listen very carefully to what my former bosses say and I take very seriously the advice of the noble Lord, Lord Lawson, but I did not hear from the Minister any suggestion of thinking further or looking again. I agree with the noble Lord, Lord Lamont, that there is not a great deal between the Minister and me. My language, which is the language of the existing Act plus the referendum requirement, would permit the Government to do everything that the noble Lord, Lord Wallace, has said they would wish to do. It is perfectly permissive; they could do that because the notification could be done informally and the formalisation of the notification could be saved up till the end. They could do absolutely as the noble Lord, Lord Wallace, says.

[Lord Wallace of Saltaire]

I was using the language of the consolidated treaty. The noble Lord was using the language of the Maastricht treaty, and I suggest that the current consolidated treaty might provide the more appropriate language.

[Lord Kerr of Kinlochard]

I was using the language of our Act, the Act in force in this country now. I am talking the 1993 Act language, which is replicated precisely in my amendment. I am very glad to hear the Minister agree that we must avoid a second referendum and that we must avoid the crisis weekend drama, but in a plain reading the Bill says that what should be put to Parliament and the people is the draft of the decision under Article 140(3), which sets out the rate. That is the decision that we are going to take over a weekend, and it is going to be a busy weekend if ECOFIN starts on Friday, Parliament sits on Saturday and the referendum is on Sunday. It is not going to be fun.

I agree that under my language the Government could do exactly as they want. Under their language, I believe that the country would think it very odd if they did not see the draft decision including the rate, because that is what Article 140(3) of the consolidated treaty says. It uses the rate; the rate is there in the treaty. So although I regret that I have taxed your Lordships’ patience long enough, I think that I really have to test the views of the House.

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Lord Wallace of Saltaire Excerpts

Monday 13th June 2011 Lords Chamber

[Lord Liddle]

My Lords, the Opposition cannot support the amendment. The reasons why many have spoken against it are very true. I agree with what the noble Baroness, Lady Brinton, had to say. I agree with the noble Lord, Lord Hamilton, that in our political culture a precise repeat referendum would be extremely unlikely. However, we should not tie our hands. As the noble Lord, Lord Deben, said, you vote under a particular set of circumstances but circumstances can change at remarkable speed. We do not need these kinds of constraints on our politics.

[Lord Wallace of Saltaire]

My Lords, this is the second time that we have examined an amendment of this nature. It did not find much sympathy around the Chamber in Committee and it has not found much more now. The amendment stipulates a lesser period of three years rather than the original five but the principle remains the same.

In Committee I set out some of the Government’s objections to an amendment of this nature and I will recapitulate some of those now. First, were the British electorate to vote no in a referendum, it is clear that the Government would have to consider their future action carefully. It would be difficult to view the result as anything other than a firm rejection of a proposal for treaty change. If the Government wanted to hold another referendum for whatever reason, under the terms of this legislation, as my noble friend Lady Brinton said, they would first need to secure parliamentary approval to do so by Act. Primary legislation would be necessary to enable the referendum, so Parliament would have to consider that request very carefully and itself be persuaded to agree, which is not necessarily a given.

Secondly, the amendment reduces flexibility, a quality that has attracted a lot of support from all Benches. We do not know what will happen in the future, and as the noble Lord, Lord Liddle, has suggested, sometimes we do know what will happen in the short term future. As noble Lords have argued on a number of occasions, and in this case following the rejection of a proposal by the British people in a referendum, circumstances could change. There are “events, dear boy” and unexpected crises whether they be security crises, financial collapse, economic recession or even crises of energy supply or surges in immigration. All might conceivably transform the situation. So there could be previously unanticipated grounds for the Government and Parliament to believe that the treaty change on the table was in the national interest of this country. As a consequence, if both the Government and Parliament were to decide that there were good reasons for putting a question to the British people in a further referendum, Parliament should be able to do so without having to disapply an inflexible provision.

I have to say to the noble Lord that I would be surprised if any Government in the future would wish to hold a referendum in the hope that the people would be somehow persuaded to change their minds merely by the Government cajoling them rather than in response to a substantial change in circumstances. I agree with what the noble Lord, Lord Triesman, said in Committee. He pointed out that the people of Denmark, Ireland, France and the Netherlands,

“were perfectly capable of settling the first propositions put in front of them and they were perfectly capable of assessing the changes”.—[Official Report, 23/5/11; col. 1621.]

Those changes were any changes that had taken place or had been made to the treaty before them between the holding of the first and second referendums. People are clear in their own mind and will not easily be browbeaten into giving a different answer just because the Government—any Government—would like one. As the Minister for Europe made clear in the other place, it is a recipe not only for the public to say no again, just as firmly if not even more so, but also an invitation to be voted out of government at the next election for treating the public with contempt. But I reiterate that there might be circumstances where a repeat referendum may be in order before the three years suggested by the noble Lord had elapsed.

We were running through a most wonderful boom at the end of 2007. The recession hit us rapidly and sharply thereafter, with the financial collapse of a number of banks. We face a potential crisis in energy supply. At the moment there is a range of possibilities where crises might erupt that would affect us and our European partners. Therefore I see no reason for reducing flexibility, as this amendment would, and I urge the noble Lord to withdraw it.

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Lord Wallace of Saltaire Excerpts

Wednesday 8th June 2011 Lords Chamber

Moved by

[Lord Wallace of Saltaire]

4: Clause 2, page 2, line 18, after “treaty” insert “also”

[Lord Wallace of Saltaire]

My Lords, I shall speak also to Amendment 7. I hope that the noble Lord, Lord Liddle, will regard this too as a major concession by the Government. These two amendments are intended to address a point raised by a number of Peers during our debate on the first day in Committee some weeks ago on what the noble Baroness, Lady Symons of Vernham Dean, described as a probing amendment. The noble Baroness, along with the noble Lord, Lord Davies of Stamford, and the noble and learned Baroness, Lady Butler-Sloss, raised the question of the correct interpretation of Clauses 2 and 3 with respect to the application of the referendum provision to Gibraltar. They raised the concern that the provisions as drafted could result in the need to hold a referendum in the UK even if the proposed treaty change happened to apply solely to Gibraltar and not to the United Kingdom. They said that this would be nonsensical. I agree that in such unlikely circumstances it would be nonsensical.

As your Lordships’ House is aware, the Bill concerns only the future transfer of competence or power from the UK to the EU. As I promised at the end of that debate, we have reflected further on this issue. Our view remains that the requirement for a referendum to be held in Gibraltar under the provisions of the EU Bill is not self-standing but is dependent on three things: first, that there is a treaty change which applies both to the UK and Gibraltar and, secondly, that the treaty change would result in a transfer of competence or power from the UK to the EU. Then and only then does the third condition arise; namely, whether the treaty change would also represent a transfer of competence or power from Gibraltar to the EU.

That said, we recognise that it is important to be as transparent and clear as possible. That is the Government’s intention. Consequently, we have tabled these two simple amendments to Clauses 2 and 3 to make sure that the meaning is clear beyond doubt. The amendment makes explicit that only if a treaty change were to apply to both the UK and Gibraltar, and the referendum is to be held in the UK, would that referendum also be held in Gibraltar. I beg to move.

[Lord Davies of Stamford]

I hoped to intervene before the Minister sat down but I missed my cue. I shall be very brief. As the noble Lord and his colleague, the noble Lord, Lord Howell, have been courteous enough to mention me in the context of our debates on these matters in Committee, it would be wrong of me not to say that we on this side appreciate that the Government have genuinely reflected on the Committee stage debate on these two matters, relatively minor though they may be. That is encouraging for us and the hope that we can all take part in improving this legislation and that the result of our labours will not be entirely nil. Does the noble Lord have in mind any specific contingency in which there might be a proposal involving the transfer of powers from Gibraltar to the EU, or is this whole subject merely theoretical? Have the Government provided for it as a purely theoretical possibility, or do they have any issue in mind that might be triggered by this clause?

[Lord Triesman]

My Lords, I appreciate the tabling of these two amendments by the Government. I share the view of the noble Lord, Lord Wallace, that they will probably not be thought of as huge concessions almost anywhere. He put that rather generously and he is quite right—they will not. More to the point, they are wise amendments. It may well be that on some future occasion he will wish to land in Gibraltar. He would not want to receive the sort of frosty reception that he would receive if he had done anything to the people of Gibraltar other than what appears as a result of these two amendments. It is a helpful clarification. We are satisfied with it and thank him.

[Lord Wallace of Saltaire]

If no one else wishes to intervene, I ought to answer the point raised by the noble Lord, Lord Davies of Stamford. I find it difficult to imagine circumstances in which there would be proposals that would represent a transfer of powers or competences from Gibraltar to the EU. However, I have not looked back at Protocol 3 of the 1972 Act which ratified the treaty of accession and the extremely complicated circumstances in which Gibraltar is treated as a member of the EU but does not take part in all aspects of EU policy. For example, it does not take part in the common agricultural policy, but it takes part in the freedom of movement.

[Baroness Nicholson of Winterbourne]

Would the Minister recommend to other European Union member states that have territories that are not specifically part of their geographical parameters—such as Spain and the Canary Islands, and France and her piece of territory in north Africa—that they follow the lead of the United Kingdom in drawing more fully into their embrace the territories that belong to them?

[Lord Wallace of Saltaire]

My Lords, I shall not detain the House very long. The question of the different relationships between the Crown dependencies and the EU, and Gibraltar and the EU, is a deeply arcane subject. I read an extremely long report from the Government of Jersey some 18 months ago about the relationship between Jersey and the EU. It is very good bedtime reading for anyone who does not wish to go to sleep. These are very complicated areas. However, I and our advisers cannot at the moment envisage the likelihood of a referendum. We nevertheless hope that this amendment clarifies the situation.

Amendment 4 agreed.

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Lord Wallace of Saltaire Excerpts

Wednesday 8th June 2011 Lords Chamber

[Lord Kerr of Kinlochard]

The noble Lord, Lord Stoddart, will be very upset. I accuse myself of being nerdish, and I hope that the noble Lord will agree that I can be considered in the same class as Mr William Cash.

We are talking about an amendment to Clause 3. Clause 3 is about the accelerated, simplified procedure. I do not know why we have Clause 3 separate from Clause 2, but we do, and we are debating it. The simplified procedure cannot be used for the transfer of competences. That is what the treaty states. Article 48(6) states that the decisions referred to in the second paragraph,

“shall not increase the competences conferred on the Union in the Treaties”.

We are talking about urgency and the use of the competences that the treaties have conferred. We are talking about urgency because that is the nature of the simplified procedure. It was invented to move fast in situations where we might want to. It avoids the convention, it avoids the full paraphernalia after Parliament—you still have to consult Parliament under Article 48(6), but that can be quite quick.

This is a modest amendment, unlike the previous amendment on which we voted, which was bigger. This is a modest amendment because it simply suggests that the urgency condition might be written into Clause 3, on the simplified treaty revision procedure, which is about urgent treaty revision and not about competence. It cannot be used to confer competences on the Union from the member states.

It seems to me appropriate and modest to say that, when we are dealing with treaty revisions or decisions taken under Article 48(6)—which, by definition, will happen only in a hurry—we should be able to have an accelerated procedure here in this country. We might accept that the general view was correct: this was an emergency and we needed to move fast. Of course, if you did not accept that, you would have said “No” in Brussels and the accelerated procedure would have stopped, because it still requires unanimity. By definition, you are in a situation where people have thought, “We haven’t got the time to do the whole shooting match”. This is important. The Government think it is in the UK interest—they voted for it. Who would decide whether the urgency consideration applied? It is a question asked in this debate. The House would decide. Parliament would decide. If this provision was in the Bill, the Government would have to explain whether the urgency procedure, in their view, applied. Parliament would vote on that. This is a parliamentary democracy—that is where the decision should be made.

I do not see anything wrong with this amendment. It seems to me that it is appropriate—particularly appropriate—to this clause. I supported the previous amendment—the bigger amendment—which would have written it also into Clause 2, alongside the significance condition, which sadly is still missing in Clause 2, for reasons that I do not understand. Putting it in Clause 3, which the amendment of the noble Lord, Lord Triesman, proposes, is absolutely appropriate and I support the amendment.

The Minister commented with approval, as would I, on the evidence that Sir John Grant gave to the Commons committee. Sir John Grant made two points that the Minister quoted with approval. I approve of them too—although, as the Minister delicately pointed out, Sir John is a more recent permanent representative in Brussels than me. There may have been a faint connotation in the Minister’s remark that I might be a bit fuddy-duddy or out of date. I accept that; it is perfectly possible, and Sir John Grant is a very brilliant man.

Sir John said that he saw no chance of serious treaty amendment in the next few years. I agree with him for a whole lot of reasons. Nobody in Brussels wants it; the UK Government have said that they are not going to have it; and it is in a coalition agreement. That seems to me to be fairly conclusive, so I think Sir John Grant was on pretty safe ground with that prediction. He also spoke of the unlikelihood—and the Minister quoted him—of the passerelles being used in the near future. I agree. That seems to me to be implausible too.

What the Minister did not mention—I cannot remember whether Sir John Grant did—is the much more likely scenario in which, some time in the next decade, something will cause people to say, “Jeepers, we are going to have to change something. This is clearly a case for the accelerated procedure”. Things do happen in the world, things change, and the chances are—I do not think this is very likely in the near future, though the monetary example is fresh in our minds—that some time in the next decade there will be a need seen by most people, possibly by us as well, for a change, and if it is to be done quickly then the chances are that people will use Article 48(6) procedure.

[Lord Wallace of Saltaire]

May I, with apologies, ask a nerdish question of the noble Lord? If I understand Article 48(7) correctly, it suggests that urgency can be carried through at the fastest in six months. Is that correct?

[Lord Kerr of Kinlochard]

I do not think that is what the treaty says, but yes, it is likely that that is the case. Of course, any treaty amendment requires ratification by whatever the national procedures are. I am talking about an emergency situation in which most people think, “We have to do this pretty fast”.

We could still have our referendum. If the amendment in the name of the noble Lord, Lord Triesman, were accepted, there is nothing to stop the Government of the day saying to Parliament, “Despite all the risks of delay, we actually think this is a sufficiently serious matter to justify having a referendum”. That is entirely open to them, if the amendment of the noble Lord, Lord Triesman, is accepted. However, that amendment would remove the present danger in the text, which is that there would be an absolute requirement to have a referendum because there is no potential let-out for an emergency, even though that is the most plausible scenario for a treaty amendment and everyone, including us, would have agreed that it was an emergency and therefore justified the accelerated procedure. That is why I support the amendment of the noble Lord, Lord Triesman.

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, we all understand that events happen—although I believe that what Harold Macmillan said was, “Events, dear boy, events.” We also understand that in a crisis Governments get together and take the necessary decisions to deal with that crisis. The noble Lord, Lord Triesman, rightly said that we cannot envisage what sort of crisis we might be facing in five to 10 years’ time or even in two years’ time. The G20 is a very good example of the sort of body which has come to operate relatively effectively, as a form of consultation about a number of global problems. However, the G20 is of an entirely different quality from the European Union. If there were a crisis, the relevant Governments would necessarily get together and have to act, but they would undoubtedly act by consensus. That would be different from agreeing to change the structures and competences of a European Union, which is not simply an international organisation but a structure of law, a semi-confederal institution of which we have become a co-operative member.

Having had some informal conversations across the table with the noble Lord, Lord Kerr, I note that Article 48(6) states—

[Lord Davies of Stamford]

I thank the Minister for giving way. Is not the argument that he is adducing one that entirely excludes even the theoretical possibility that the European Union might turn out to be the best instrument for addressing the crisis that we are talking about? If the crisis can be dealt with by consensus with other Governments—the G20 or whatever—that is well and good, but what the Government are doing in the Bill is excluding the possibility that the European Union may be the most effective instrument for solving the problem and might need additional powers for that emergency.

[Lord Wallace of Saltaire]

My Lords, the Bill in no way excludes the European Union from being the appropriate body to respond. It is entirely appropriate that bodies such as the European Council and the Council of Ministers in its various forms should take decisions. How those decisions are taken, and what their legal implications will be, are matters probably best not dealt with in an emergency. Where there might be a transfer of competences, one should consider it not under emergency conditions but rather more coolly.

I was about to quote Article 48(6), which states that the decision under the simplified procedure,

“shall not enter into force until it is approved by the Member States in accordance with their respective constitutional requirements”.

That is why urgent decisions will take 18 to 24 months to get through the various constitutional requirements, and why the question of what we mean by urgency does not limit the British Government.

It is of course very difficult to foresee what sort of crises we might face, or how and in what framework we and others would respond. The European Union exists as a framework and therefore may very often be used as such, and we and others would work through it. It has plenty of competences and the ability to take decisions by consensus in response to a crisis. However, that does not transfer powers and competences. That is the difference between taking urgent decisions and changing the nature of procedures, structures, powers and competences. With respect, I say that the urgency question is not an important part of the Bill. There would be sufficient time to complete the processes set out by the Bill, by an Act of Parliament and, where required, a referendum of the British people.

The second part of the condition is that the treaty change should be in the national interest. My noble friend Lord Howell said, when debating a previous amendment, that the national interest is not an entirely objective concept. I am sure that the noble Lord, Lord Triesman, agrees that the coalition has come together in the national interest and is acting in what we think is the national interest—although he may have a different view of the national interest from members of the coalition. Politics revolves around our contesting views of Britain's best national interests. Therefore, the concept is not an entirely objective one that we can usefully write into the Bill. No Government would agree to any treaty change at EU level if they were not of the firm belief that such a move was consistent with the national interest. No Administration would ever agree to a treaty change if they considered that it would be against the interests of the United Kingdom. Therefore, I assure noble Lords that the national interest, as we see it, is at the heart of every major decision that this Government take on EU matters—as I assume was the case with the previous Government and will be for any subsequent Government.

Having answered those questions, I urge noble Lords to withdraw the amendment. We have had a useful but general debate about what might happen in a hypothetical crisis that none of us can yet quite envisage, let alone consider what immediate changes in powers or competences it would require.

[Lord Triesman]

My Lords, just to take any possible lingering tension out of the highly charged environment of this Chamber—I would hate to wind up everybody inappropriately—I will tell you now that, in a few minutes, I will withdraw the amendment. Before I do so, I have to say that, from an intellectual point of view, these have been some of the more depressing arguments that I have heard. I do not mean to say that in order to be rude. I just think that we must allow ourselves the courtesy of being a great deal more rigorous.

As the noble Lord, Lord Kerr, pointed out, it is plainly the intention of the amendment to provide a means whereby, in circumstances which are very pressing and where we need potentially to adjust our capacity to act—this is about our capacity to act and the mechanisms that we can use to act—we do not deny ourselves the opportunity to do something if it is in the national interest.

I cannot imagine that it really needed any presentation to us, but I readily accept that what constitutes the national interest will not be determined by some objective basis, as would a demonstration of Boyle’s law of gaseous volumes. This is not a point that I have ever attempted to make. The national interest will be defined by the Government of the day, whether a single party or a coalition. We may or may not all agree with one another, but it is in the nature of our parliamentary democracy that the power to arrive at a conclusion about what the national interest is is vested in a Government that enjoy the confidence of the House of Commons and can proceed on that basis. In that sense, from a political point of view, it is a completely objective test. I know whether the Government of the day enjoy the confidence of the House of Commons precisely because I know what would happen if they did not. It is a very simple matter.

Let us not deal with this kind of discussion as though it were incumbent upon us to do something like Boyle did, in showing the way in which the volumes of gases under pressure react to it, which can then be set out in a textbook to be tested to kingdom come in any laboratory in the land. Let us deal with it as political people—I was going to say, if the noble Lord, Lord Pearson, was in his place, as humble members of the political class. Let us deal with it as political people—with a small p—who understand perfectly well the convention which decides what the national interest is at any time. I am sorry, but I cannot buy that kind of argument. I do not think it treats us credibly.

I say to the noble Lord, Lord Flight, that it was never my intention in moving this amendment that the Bill should be watered down. I do not like that interpretation being ascribed to what I have said. I have always tried in the House, whether on the government Benches or on these Benches, to be very candid and very frank—it does not always win you friends—about what I am doing and why I am doing it, because it seems to me that life is a lot easier if you try to do it that way. The reason is not to water it down but to make certain that Ministers in any Government have the kind of authority and ability to act in circumstances which come along that we cannot predict.

I am not omniscient, and I cannot say any more than anybody else in the House what I know will happen or what kinds of competence we may require at a particular time to deal with those issues. I will be candid with the House: I did not expect the collapse of Lehman Brothers; I was astonished to know that we were within two hours of the Royal Bank of Scotland collapsing; and I notice that sovereign debt crises are occurring more rapidly and are likely to occur more rapidly. I just say to the House no more than that it is extremely likely that we will face more such circumstances. I do not want to feel that we do not have all the levers at our disposal in order to deal with them.