Public Procurement

Jacob Rees-Mogg Excerpts

Tuesday 6th March 2012 Commons Chamber

[Jacob Rees-Mogg (North East Somerset) (Con)]

My hon. Friend the Member for Stone (Mr Cash), the Chairman of the European Scrutiny Committee, asked me to make a speech on behalf of the Committee and on his behalf because he thought that he would not be here, but such is the attraction of a European debate that he is in his place anyway. None the less, the Committee is grateful to Her Majesty’s Government for facilitating the debate so quickly. The time scale under the Lisbon treaty for national Parliaments to submit a reasoned opinion on a subsidiarity issue is extremely tight. In this instance, the European Scrutiny Committee received the views of the National Assembly for Wales only a couple of days before the Committee’s meeting last Wednesday, when it recommended that the House adopt the draft reasoned opinion.

The Government have welcomed the proposals, and many of the detailed measures in them, and have provided an impact assessment that suggests that the benefits would significantly outweigh the costs. However, as we have heard from the Minister, they have one major concern—namely, that the proposals would require member states to establish a national oversight body, which would not only have a range of administrative and regulatory powers, but would be able to “seize” jurisdiction of the courts and pre-empt their functions in a way that the Government consider might infringe the principle of subsidiarity.

As I mentioned, this concern was echoed in the letter from the Chairman of the Constitutional and Legislative Affairs Committee of the National Assembly for Wales. I understand that the Scottish Parliament takes a similar view. Let me say from the outset that this concern is shared by the European Scrutiny Committee for reasons that I will come on to in a moment. So the debate today is not about the generality of the draft directive, in spite of some of the comments that we heard earlier. Rather, it is about a subsidiarity issue that the Government, two of the devolved Assemblies and the European Scrutiny Committee have identified.

Before I turn to the subsidiarity issue, I should explain that a reasoned opinion is a new procedure under the treaty of Lisbon, available to national Parliaments if they wish to challenge Commission proposals for legislation on subsidiarity grounds. National Parliaments have eight weeks from publication of a proposal to submit a reasoned opinion. The deadline in this case is midnight Brussels time, which would be 11 pm Greenwich mean time, on 8 March 2012.

If such opinions represent one third of all votes of national Parliaments—the bicameral UK Parliament has two votes—the Commission has to reconsider its proposal. We understand that, as the Minister mentioned, one other national Parliament, Sweden’s Riksdag, is also submitting a reasoned opinion on similar grounds. Even if the threshold is not met—in reality, the numbers required mean that it is highly unlikely that it will ever be met—the Commission responds to each reasoned opinion it receives. In addition, national Parliaments can, acting through the Government, now challenge EU legislation on the grounds that it infringes the principle of subsidiarity.

The principle of subsidiarity is born of the wish to ensure—if you believe this, you would believe anything—that decisions are taken as closely as possible to the nationals of individual EU member states. It is touted as a buffer against unnecessary supranational—not supernatural—legislation but it has been largely unsuccessful. If only the legislation were supernatural, we might find that our experience of the European Union was a happier one. None the less, its definition is important. It is set out in article 5(2) of the treaty on the functioning of the European Union, which states:

“Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.”

In addition, the treaty requires the EU institutions to ensure “constant respect” for the principle of subsidiarity as laid down in protocol No. 2 on the application of the principles of subsidiarity and proportionality. Accordingly, article 2 of the same protocol obliges the Commission to consult widely before proposing legislative Acts. This is one of the parts that has not taken place. Such consultations are to take into account regional and local dimensions, where necessary. If the Commission fails to do so, a reason must be given in its proposal.

[George Eustice (Camborne and Redruth) (Con)]

Does my hon. Friend agree that the principle of subsidiarity would work far better if rather than just being able to prompt a response from the Commission, groups and national Parliaments were able to strike down policies of the Commission?

[Jacob Rees-Mogg]

If I may divert from the set text from the European Scrutiny Committee, it is always worth remembering that subsidiarity started as a theological term in the Roman Catholic Church, of which I am a member. That is one of the most centralised bodies of any organisation anywhere in the world, with power vested in the Holy Father, so I have always been rather suspicious as to what the purpose of subsidiarity is.

[Mr William Cash (Stone) (Con)]

As a fellow Catholic, may I ask my hon. Friend whether he agrees that it is one thing to have the Jesuitical concept of subsidiarity, which has been brought into the rule-making of the European Union, as a theological question, and that it would be far better if the matter were regarded purely as one of theology and not exclusively one for political purposes?

--- Later in debate ---

[Jacob Rees-Mogg]

I am grateful to my hon. Friend for his helpful intervention. I do not think one should use the term “Jesuitical” too pejoratively, as the Jesuits are a fine body who, I believe, educated my hon. Friend—

[Mr Cash]

With great success.—

[Jacob Rees-Mogg]

With enormous success, which is acknowledged around the country and for which we are all grateful. However, I agree with the fundamental point that it is a political rather than a theological reality in this case.

By virtue of article 5 of protocol No. 2, any draft legislative Act should contain a “detailed statement” making it possible to appraise its compliance with the principles of subsidiarity and proportionality.

I turn now to the Committee’s view, as expressed in the draft reasoned opinion. The first conclusion we came to was that the Commission had failed to consult member states in the Green Paper, or otherwise, on the possibility of setting up a single national oversight body. This is in clear breach of article 2 of protocol No. 2, and I ask the Minister to say whether he agrees with this, and whether he intends to pursue it with the Commission.

Similarly, there is no evidence in the Commission’s explanatory memorandum or impact assessment of it carrying out the requirement under article 5 of protocol No. 2 to prepare a “detailed statement” containing

“some assessment . . . in the case of a directive of its implications for the rules to be put in place by Member States, including where necessary the regional legislation”.

As a consequence, the draft directive on public procurement and, by implication, the draft directive on procurement by public entities is said by the National Assembly for Wales to breach the devolution principle in both Wales and Scotland. I quote from the letter of 23 February from the National Assembly for Wales:

“The proposal also fails to have regard to the principle of devolution in imposing the duties on a single body.”

[Mr Watts]

I agree wholeheartedly with the thrust of the hon. Gentleman’s speech. The only weakness that I perceive is that it is clear to me that the Commission believes that there is not fair trade within Europe. Some countries abide by the rules and others do not. We have heard examples of that today. How would the hon. Gentleman address that problem?

[Jacob Rees-Mogg]

I am in complete agreement with the hon. Gentleman that one of the problems of the European Union has long been that we as a nation are particularly good at obeying the rules and our continental colleagues are not necessarily so good at obeying the rules. This is for all sorts of historical reasons and understanding of our constitution as against their constitutions. The problem, and the reason why I am fairly relaxed about them not obeying the rules, is that one would have to argue for more Europe and more intrusive regulation to get them to obey the rules. That would be a bad thing. I happen to believe, though I am not sure that Opposition Members share this view, that one-way free trade encourages efficiency in the home economy, that one can compete very effectively even with one-way free trade, and that we should be relatively relaxed about how they cheat, if I am allowed to use such a term in relation to our continental friends.

The National Assembly for Wales went on to say about the proposal:

“It fails to reflect the way in which separate implementing regulations have hitherto been made in Scotland, and the way in which extensive administrative and advisory functions in relation to procurement in Wales are exercised by or on behalf of Welsh Ministers.”

The Government’s explanatory memorandum does not consider the impact of the proposals on the devolution settlement, so I would be grateful if the Minister said whether the Government agree with the concerns raised.

Before turning to the Committee’s final conclusion, I should emphasise how important it is that the Commission, which has considerable executive power to initiate legislation, is obliged to consult properly, and prepare a “detailed statement” which assesses its proposals for compliance with subsidiarity. If it does not do so, we risk ending up with a provision such as this, which conflicts with a fundamental principle of the UK’s constitution. I trust that the Government agree with this and will take the Commission to task over it.

Finally, I turn to the proposal to establish a national oversight body, which not only would have a range of administrative and regulatory powers, but could “seize” the jurisdiction of the courts. The Committee thought this an alarming proposal, and it really is. It hits against the heart of our understanding of the separation of powers between governmental agencies and the judiciary. Again, no consultation on that proposal took place and it was not in the Green Paper—it came out later—so we have this great leap in our understanding of the law without any proper consultation. The Committee concluded that the proposal amounted to an unwarranted interference in the domestic legal order of the United Kingdom, where administrative and judicial powers have traditionally been exercised separately, and so infringed the principle of subsidiarity.

The Committee also considered that the combination of functions would be likely to prevent the oversight body from acting judicially without suspicion of a conflict of interest—we looked at that fairly recently when the European Court of Justice ruled in its own favour over the pay of EU officials, so we know how corrupt these EU courts can be—contrary to article 6(1) of the European convention on human rights. That is the core of the matter. It undermines one of the principal objectives of these two directives: to increase legal certainty in the award of procurement contracts. It is for these reasons that the Committee asks the House to approve the Government’s motion on subsidiarity.