Oral Answers to Questions

James Clappison Excerpts

Tuesday 18th June 2013 Commons Chamber

[Mr Hague]

The hon. Gentleman is right to say that settlement activity is steadily making a two-state solution impossible. That is why time is running out for a two-state solution, which was the case I made to the Israeli and Palestinian leaders on my visit to Israel and the occupied territories. We are taking up with other European countries the commitment of the EU High Representative to prepare EU-wide guidelines on the labelling of settlement goods—that is the direction we are taking on that policy. Above all, the answer is to get Israelis and Palestinians back into negotiations so that we can settle all the issues, including the future of settlements and final status issues. That is what we are concentrating on now.

[Mr James Clappison (Hertsmere) (Con)]

I warmly welcome what my right hon. Friend has said about trying to get both sides into negotiations, because that is the way of resolving issues such as settlements and the legitimate concerns of both sides. What progress has he made in persuading President Abbas and the Palestinians to drop their pre-conditions for talks, which are an obstacle to resolving the issues mentioned by the hon. Member for Easington (Grahame M. Morris)?

[Mr Hague]

We are encouraging both sides into negotiations. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), was also in Israel and the occupied territories a few days ago, and spoke to President Abbas, as I did. We encourage the Palestinians to enter negotiations without pre-conditions; we also encourage Israel to approach those negotiations in a way that will allow them to succeed. I pay tribute to Secretary Kerry for the energy he has put into the process in his four and a half months in office so far. He and I discussed the issue in detail in Washington last week.

Iran

James Clappison Excerpts

Monday 17th June 2013 Commons Chamber

[Mr Hague]

I absolutely agree. We do our utmost to hold Iran to account on human rights issues. We have designated under EU sanctions more than 80 Iranians as responsible for human rights violations. We have helped to establish a UN special rapporteur on human rights and we will continue to raise those issues.

[Mr James Clappison (Hertsmere) (Con)]

I warmly welcome the approach that my right hon. Friend has taken and what he has just said about human rights abuses in Iran. To those can be added the question of the persecution of religious minorities, including Christians. Will he join me in expressing the hope that there will be a reduction in the amount of persecution? That was such a feature of the time in office of the outgoing President, about whose departure few tears can be shed.

[Mr Hague]

Yes, absolutely. In addition to my other remarks about the human rights record, I deplore the persecution of Christians and the long string of anti-Semitic remarks made by the incumbent President. I think that people across the world will be hoping that these things will change.

European Council

James Clappison Excerpts

Tuesday 19th March 2013 Commons Chamber

[Mr Swire]

I agree with the hon. Gentleman’s second point; he is absolutely right. His first point was somewhat hypothetical. Of course there is understandable concern among Members on both sides of the House about the direction in which Syria is going, and about what might or might not happen, but there is no change in our position today. I have come to the House to explain what was discussed at the summit, and it is absolutely right that we keep all options under review. I think he would agree that what has been done to date has not worked very well, as we continue to see a greater deterioration in the country and greater humanitarian suffering. It is therefore quite right that we keep all our options open.

[Mr James Clappison (Hertsmere) (Con)]

May I say gently to my right hon. Friend that he is much more likely to persuade my hon. Friend the Member for Stone (Mr Cash) to become an evangelist for the European Union than to persuade the European Union to desist from creating burdensome regulations? Is it not deep within the DNA of the European Commission and the European Parliament to go on producing regulations, day in, day out, that impose burdens on our business? Is it not in our national interest to be outside the legal structures of the European Union as much as possible, and does not that illustrate the many merits of my right hon. Friend the Prime Minister’s policy of renegotiating our relationship with the European Union and having a referendum on that issue?

[Mr Swire]

It is worth saying that we secured agreement from the Commission at the Council to come up with plans to reduce the top 10 most burdensome EU regulations by June—including rules on chemicals, product safety and customs—and to produce proposals by the autumn on the unnecessary European rules that need to be reversed and removed from the statute book. We also secured agreement on action to improve the implementation of single market legislation, including the services directive. I hope that my hon. Friend will agree that, if implemented directly, those will be welcome steps that will enable businesses in his constituency and in mine to grow.

Oral Answers to Questions

James Clappison Excerpts

Tuesday 5th March 2013 Commons Chamber

[Mr Hague]

I think we can be absolutely clear that it is important for justice to be properly done and human rights to be observed on all occasions, for a justice system to be properly upheld, and for problems that have arisen in relation to hunger strikes—of which we have seen many in recent times—to be dealt with through successful talks between the Israeli authorities and those concerned whenever possible. We have urged that. There have been such successful talks in the past, and I hope that the same can happen in this case.

[Mr James Clappison (Hertsmere) (Con)]

3. What recent representations he has received on the activities of Hezbollah.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

On 18 February, the Bulgarian Foreign Minister told European Union Foreign Ministers that the Bulgarian Government took it as a justified assumption that two members of Hezbollah’s military wing had been involved in the terrorist attack in Burgas last July. Since then we have received representations from the United States and Israel about Hezbollah’s activity, and we have called on our European partners to respond robustly to terrorist actions on European soil.

[Mr Clappison]

I warmly welcome what the Foreign Secretary has said. This was a terrorist attack which cost the lives of six people, tourists innocently going about their business. Is it not high time the European Union acted against Hezbollah and banned it in its entirety? Otherwise, will not the EU be left looking a little bit casual, if not shoddy, in its approach to terrorism?

[Mr Hague]

As my hon. Friend knows, we are clear about this. The United Kingdom proscribed Hezbollah’s external security organisation back in 2001, and extended that proscription to the military wing in 2008. We are now discussing the issue in the European Union, and we would like to see the EU follow what we have done. We are engaged in active discussion with EU countries. Some are supportive of this, some are awaiting evidence from Bulgaria before making a decision, and some have other concerns. We are seeking to persuade them that those concerns are not warranted, and that the European Union should take a decisive position.

Europe

James Clappison Excerpts

Wednesday 30th January 2013 Commons Chamber

[Mr Hague]

My right hon. Friend is quite right. That is why the Prime Minister’s speech made the case for benefits for the whole of the European Union and called for global competitiveness and flexibility to help people across Europe. That is the mindset with which we are approaching the debate.

[Mr James Clappison (Hertsmere) (Con)]

I welcome the approach that the Foreign Secretary has taken on a referendum. Will he give careful consideration to the request that the holding of a referendum in the next Parliament be entrenched through legislation? I believe that that idea has much support on both sides of the coalition, because I remember how angry the Liberal Democrats became in the last Parliament when they were refused a vote on an in/out referendum during the treaty of Lisbon, even though they are a little shy about remembering that today.

[Mr Hague]

Of course I hope that the concept of such a referendum will become entrenched, just as the European Union Act 2011 is now becoming entrenched through the belated acceptance of the Opposition. However, to entrench something, one must be able to get it through Parliament in the first place. My hon. Friend will know that what he is suggesting is not part of the coalition agreement. That is why it is our party’s proposal to have draft legislation and to legislate at the beginning of a new Parliament.

Palestinian Resolution (United Nations)

James Clappison Excerpts

Wednesday 28th November 2012 Commons Chamber

[Mr Hague]

Although there are clearly some differences between us, the shadow Foreign Secretary expressed common ground when he said that time is running out. The analysis of all of us in all parties on both sides of the House starts from that point, although we draw some different tactical conclusions from it. Indeed, my statement, and our attitude, is based on a sentiment the right hon. Gentleman expressed: we support the right to a Palestinian state. I supported that very strongly in my statement. I have not, however, changed my mind about anything. The right hon. Gentleman was looking too hard for changes between what I said last week and this week because, so far as I am aware, I said the same things about the risks to the peace process, the risks in the US Congress and the risks in Israel.

The right hon. Gentleman asked: is there a process? One of the main points I have been stressing is the need to revive—to restart—that process. There have been many attempts to do that over the past year, and, in particular, the Kingdom of Jordan has played a very constructive role. There are many obstacles to achieving that, however, including Israeli settlement building—which I think is condemned across the House—but another obstacle has been an unwillingness by Palestinians to remove all preconditions for negotiations. It is important to have the commitment from Palestinians to return to negotiations without preconditions, which is why that is one of the criteria we have set. We need both sides to do that, and to be ready to do so whatever happens at the General Assembly. We would welcome that—and, of course, we would particularly welcome it if it could be made clear before the vote. It would be the single most crucial factor that would enable us to vote for the resolution. We will still welcome it if the Palestinians can say that after the vote.

The right hon. Gentleman asked about the International Criminal Court. We are certainly not arguing that Israel should be exempt from the ICC, but it is important to remember that, given the urgency on which we all agree, our overriding objective is for negotiations to resume and to succeed. The right hon. Gentleman appealed to me as a historian, and the lesson of history in respect of negotiations is that we have to have enough common ground to bring the two sides together, and that it is important to avoid doing things, certainly in the short term, that make it harder to bring the two sides together. That is the reason for that criterion. So these are sensible criteria for us to have put forward. The right hon. Gentleman expressed his support for voting for the Palestinian resolution even before seeing the resolution. I have waited to see the resolution and then looked at how it can be improved and how we can react to it in a way that maximises the chances of successful negotiations.

It is very important for the Opposition to ask themselves this: if we succeeded and the Palestinians did give the assurances I have asked for, would the chances of negotiations taking place and succeeding be improved? Yes, they undoubtedly would if the Palestinians made those commitments. If they do not give those commitments and we abstain, will the United Kingdom still be in a position, with the Palestinians, with the Israelis, and with the United States, to advance whatever we can make of the peace process? Yes, we will. Therefore, what I have expressed is the optimum position for the United Kingdom and the best for the middle east peace process.

This is not about just agreeing with a resolution because we sympathise, as we do, with the position of the Palestinians; we are a country, not a newspaper or a pressure group. We have to use our vote with all considerations and the ultimate objective in mind. It does not help the Palestinians to help them celebrate for one day while at the same time failing to address the wider needs of the peace process. That is the reason for our position. Whatever happens with this resolution and in the vote tomorrow, the United Kingdom will continue to be at the forefront of working for peace, stability and security in the middle east.

[Mr James Clappison (Hertsmere) (Con)]

I agree with what my right hon. Friend has said about the urgent need for talks. I also agree with my right hon. Friend the Prime Minister, who has said that for the Palestinians

“there is no path to statehood except through talks with Israel.”

Both territory and security for Israel must be addressed in the course of that. Will the Foreign Secretary give us some indication of the precise nature of the assurances he has sought from the Palestinians about membership of the International Criminal Court and the other international bodies? Have any assurances so far been offered from the other side and the Palestinians?

[Mr Hague]

I am grateful to my hon. Friend for that. The assurances are those I have described in the statement. On the recourse to the ICC, at this stage, in the occupied territories because of the impact on the ability to bring about a negotiated settlement, we are not talking about that. As I said in response to the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), we are certainly not advocating some permanent exemption. We have not received any assurances on those points, which is one of the reasons why we continue to seek them and why, as things stand, we cannot vote for the resolution. We will continue to seek them over the coming 24 hours.

Middle East

James Clappison Excerpts

Tuesday 20th November 2012 Commons Chamber

[Mr Hague]

Since one of our Ministers of State, Baroness Warsi, has a DCLG hat as well, we are in constant—hourly—discussion about such matters. They are important, of course, but it is also important to pursue the right foreign policy for the United Kingdom bearing in mind the whole interests of the UK, and that is how I regard these subjects as Foreign Secretary.

[Mr James Clappison (Hertsmere) (Con)]

Can my right hon. Friend assure me that the aim of our diplomacy is not only to reduce these rocket attacks but to bring them to an end? Surely we in this country would not have put up with hundreds of long-range missiles being fired into our centres of population? If some of those rockets had landed in Fife, even the right hon. and learned Member for North East Fife (Sir Menzies Campbell) might have had something to say about that.

[Mr Hague]

I am sure he would, although he is no longer in the Chamber and I will not put words into his mouth. My hon. Friend makes a wholly legitimate point, but at the same time we must, of course, recognise that it is important to bring the entire conflict to an end, of which the violence in the last week is another tragic symptom. It is important for Israel to address itself to doing that, as well as to the immediate security of its population.

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

James Clappison Excerpts

Monday 10th September 2012 Commons Chamber

[Mr Lidington]

I simply refer the hon. Gentleman to what I said in response to his earlier intervention. The amendment to article 136 will provide our friends and partners who are members of the eurozone with the additional certainty that they have sought ever since the proposal for a treaty change was first made in the autumn of 2010. He is searching for plots and mysteries where none exists. Over the past two and a half years, in every conversation that I have had with my opposite numbers from the eurozone member states, they have been anxious to find out what position the British Government were taking on the treaty amendment and keen that we should be committed to ratifying it, having agreed to it last year.

[Mr James Clappison (Hertsmere) (Con)]

I, too, am pleased to see my right hon. Friend still in his post. There are undoubtedly Euro-plots, but this is not one of them. As a member of the European Scrutiny Committee, I understood the former Financial Secretary to be talking about the European Union’s view of the legal position, not the British Government’s view. It was the EU’s view that the change was required. It was not the British Government’s responsibility. I think the hon. Member for Caerphilly (Wayne David) is a little confused about that.

[Mr Lidington]

I am grateful to my hon. Friend for that clarification.

Clause 1(3) fulfils the requirements of the European Union Act 2011 relating to the referendum lock. It demonstrates compliance with the condition in that Act that exempts the approval of certain European Council decisions from the requirement to hold a referendum. Section 3(1) provides that a Minister may not confirm the approval of a decision made under article 48(6) of the treaty on European Union unless three requirements have been met: first, that a statement has been laid under section 5 of the Act; secondly, that the decision has been approved by Act of Parliament; and thirdly, that the referendum condition, the exemption condition or the significance condition has been met.

The 2011 Act provides that a decision under article 48(6) is not subject to a referendum if its provisions apply only to member states other than the United Kingdom, and that is the case here. The decision amending article 136 applies only to member states whose currency is the euro, and therefore not to the United Kingdom. It therefore falls within the exemption provided for in section 4(4)(b) of the Act. My right hon. Friend the Foreign Secretary laid a statement before Parliament under section 5 on 13 October 2011 stating that in his opinion the decision amending article 136 fell within the exemption in section 4(4)(b) and therefore did not attract a referendum. To comply fully with the exemption condition, the Bill includes the provision in clause 1(3) stating that the decision does not fall within section 4 of the 2011 Act. I commend the clause to the Committee.

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[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

We now move to clause 2, amendment 1, for which Mr MacShane has already whetted our appetite.

Clause 2

Extent, commencement and short title

[Mr Clappison]

I beg to move amendment 1, page 1, line 14, leave out subsection (2) and insert—

‘(2) This Act shall not come into force until the day after the Secretary of State has laid an order certifying that the constitutional requirements of all the member states of the EU have been complied with and all the related legal challenges have been disposed of.’.

I am grateful to the right hon. Member for Rotherham (Mr MacShane) for giving the Committee a perhaps unintended trailer of the film, as it were, but I hope to persuade hon. Friends that the film is rather better than his trailer for it. The gist of his argument was: what business is it of ours and how dare we lecture Europe on what it should do? But there is a difference between what he said and the amendment, which is concerned with what Europe has decided and how it takes effect in this country. That is rather a different matter, and I hope that I will persuade the Committee that important questions arise from it.

The amendment, which I do not intend to press to a vote, is designed to probe some of those questions. In the negotiations leading up to the amendment to article 136 of the EU treaty, the Prime Minister secured a good deal for Britain. It was a good deal for reasons I shall explain shortly. I do not want to go into the background of how in May 2010 the country became committed to the European financial stabilisation mechanism, which was different from the European stability mechanism, which we are talking about now, and from the European financial stability facility—there is no shortage of such acronyms and measures. In fact, I asked the House of Commons Library this morning how many attempts the EU had made since 2008 to resolve the euro crisis, but it said that it was difficult to say in the time available because there had been so many and it was so complex. However, it gave me a rough estimate of 17, including the latest one from Mr Draghi—we must hope that the 17th is more successful than the previous 16.

[Kelvin Hopkins (Luton North) (Lab)]

I agree with the hon. Gentleman. Some say that these repeated measures to try to save the euro are like kicking a can down the road, trying to fend off the inevitable for a little longer. Is that a fair assessment?

[Mr Clappison]

I pay tribute to the hon. Gentleman, who has been consistent in his analysis. I have not yet heard anyone who has convincingly contradicted his analysis of the underlying economic problems.

[Martin Horwood (Cheltenham) (LD)]

rose—

[Mr Clappison]

The hon. Gentleman has had many goes in the past. I will give him another one now to see whether he can do any better.

[Martin Horwood]

I actually rather agree about the underlying financial and economic problems not being tackled, but that is not what these measures are intended to do. The hon. Gentleman talked about the different mechanisms that have been introduced, but one of those in respect of which the UK has the greatest liability is the EFSM. The whole process being undertaken here will reduce our liability to that mechanism, which will cease to function, so surely he should be welcoming this process, not trying to lay obstacles in its way, however well meaning they might be.

[Mr Clappison]

I am doubly lucky now, because I have two trailers for the film. Neither is entirely accurate, but the hon. Member for Cheltenham (Martin Horwood) is slightly more on the right lines than the right hon. Member for Rotherham. I hope that I made it sufficiently clear earlier that I believe the Prime Minister negotiated a good deal for Britain, so far as it goes, in that he extracted us from our liability under the EFSF, which is the European financial stabilisation facility—

[Martin Horwood]

It was the EFSM.

[Mr Clappison]

I am sorry. It was the EFSM—the European financial stabilisation mechanism. That is different from the EFSF. Britain had liability under one of the two measures agreed in May 2010; it was the EFSM, not the EFSF.

I do not want to make many further points about this matter, because we went into it in the previous debate, but it was agreed in May 2010 that, under the EFSM, this country would have liability in relation to the eurozone which would have resulted in British taxpayers having to fork out with no prospect of Britain receiving any benefit from the EFSM because it was not a eurozone member. [Interruption.] If the hon. Member for Cheltenham can just contain his enthusiasm, he will see the point that I am trying to make on the timetable for all these measures to take effect. That is what the amendment relates to. He will know that there is agreement that, as soon as the European stability mechanism is in force, Britain will no longer have any such liability. It is not yet in force, however, and there are important issues regarding the timing of these events. That is what the amendment deals with. The Bill will come into force on the day it receives Royal Assent.

[Mr MacShane]

If, as seems possible, Ireland were again to find itself in the terrible trouble that it did two years ago, would the hon. Gentleman support help being given by Her Majesty’s Treasury to try to stabilise Ireland, as we did very generously—led by the Prime Minister—in 2010, or is he against any help being given to any other European country?

[Mr Clappison]

The main problem affecting the eurozone is the existence of the euro itself. It is the euro that is causing the loss of competitiveness across Europe, inflicting misery on the southern European states and, indeed, all the countries that have had to apply for a bail-out. The right hon. Gentleman must put his hands up and say that he has consistently argued in favour of British membership of the euro. He must take his share of the responsibility. How these matters are to be mitigated is a different matter, but I believe that the ultimate solution will involve a reconfiguration of the eurozone itself. [Interruption.] The right hon. Gentleman says he thinks that that is a slur on his character. He will have a chance to put that right in due course, but as I understand it, he is still in favour, in principle, of British membership of the euro, as, I think, are members of his Front Bench, although they do not tell us exactly when that should take place. But this is going wider than the matter in hand, and I should like to return to amendment 1.

On the day on which the Bill is passed, the European stability mechanism might not yet have come into force. Its ratification has been held up in at least two member states, with significant challenges having been mounted in their constitutional courts, and there is a possibility of challenges in other member states as well. We know that such a challenge is before the constitutional courts in Ireland, as well as in Germany, where important hearings are to take place later this week.

It is significant that the need to satisfy German constitutional concerns seems to have been one of the reasons for proposing the amendment to article 136 of the treaty in the first place, in order to shore up the legal position of the European financial stabilisation mechanism when there was doubt about whether it was actually needed. That amendment to the European treaty, which was introduced through the simplified revision mechanism, served to shore up the treaty and give legal comfort to the German constitutional court, among others.

I should like to ask the Minister some specific questions, and I would be grateful if he dealt with them in his usual able and comprehensive way. Will he tell us, in the light of those factors, whether Britain will remain liable for any new commitments entered into under the original EFSM, which we entered into in May 2010, until the European stability mechanism takes effect after the ratification procedures have been completed by all the member states? Will that be the case, and even though this Bill might have come into force in the meantime, will we nevertheless retain liability under the EFSM—the original EFSM—until the ESM comes into force? What will be the position if the ESM does not come into force as a result of ratification problems? In that case, could we still have liabilities—new liabilities—under the EFSM? Will the Minister say a few words, too, about existing liabilities under the EFSM? As I have already said, I believe the Prime Minister got a good deal for Britain in the original negotiations, but what is the position on existing liabilities under the EFSM? Will the Minister quantify for us what the Government view as possible future liabilities under the terms of the EFSM?

The Minister will understand a wish for us to have as much detail and certainty as possible in respect of the legal and financial arrangements of the European Union, the institutions of which—including the European Court—have shown themselves to be somewhat flexible in the past, if not completely elastic in their legal interpretations, particularly of treaties. No better example of such flexibility can there be than the so-called legal justification for the EFSM in the first place. As the Minister will recall, this was article 122, which allows financial assistance to be given to a member state facing difficulties

“caused by natural disasters or exceptional occurrences beyond its control”.

As I have already indicated in response to interventions, I believe that the current crisis affecting Europe—the European debt crisis—is not an act of God, but an act of man in the shape of human fallibility over the European single currency. The Government are right to restrict our liability for this, but I would like Ministers to go further in their analysis of the problems. I understand the diplomatic reasons that might restrain them from doing so, but I have heard the incantation so many times before—that “a stable eurozone is in the interests of the United Kingdom”. We hear it all the time. It is inherent in the structure of the eurozone that we see the problems arising throughout Europe today, and that incantation is really quite meaningless and bears no relation to the problems that Europe faces. The truth remains that the euro lies at the root of the economic problems presently ravaging Europe and of all the misery caused throughout Europe but particularly in the southern European countries in the shape of very high levels of unemployment, debt and uncertainty, which is ravaging the prospects of a generation. It is the euro and the political ambitions that lie behind it—ambitions for a centralised, unified European state—that lie at the very root of these problems.

[Mr MacShane]

In responding to how the hon. Member for Hertsmere (Mr Clappison) has introduced his amendment, one might as well say that the pound is the fault and the root cause of all our problems. In my Rotherham constituency, 25% of young people are without work. There is economic and social misery there, but do I attribute it to the fact that we have a certain currency? The notion that a currency causes bad Government policy is absurd.

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This is taking us into hypothetical territory, but it seems to me that if the ESM is set up—that is ultimately a matter for the 17 eurozone countries—the decision made by Heads of State and Heads of Government will click into place and our liabilities under the EFSM will end. I do not think it would be sensible for us simply to chuck away on a whim the prize of extinguishing our liabilities, or put it at risk in any way, by taking a decision that would place the ESM on a less secure constitutional and legal basis than if the article 136 change were to go through.

[Mr Clappison]

I am grateful to my right hon. Friend for his careful answers to my questions. I am grateful to him for giving the figures confirming that the majority of the contingent liabilities that could have been allocated under the EFSM have indeed been allocated, and that we already have a significant liability. However, I do not think he has quite answered one of my questions—he may be coming to it. If the ESM is not ratified, or until it is ratified, could we be liable for new liabilities entered into under the EFSM out of the remaining unallocated portion? If so, would that come about as a result of qualified majority voting or would it require unanimity?

[Mr Lidington]

The legal position is that yes, that is possible, and it would be by qualified majority voting. That flows from the decision taken on the final day of the last Government’s time in office. It may be some reassurance to my hon. Friend, though, if I say that the EFSM has tended not to feature in the discussions over the past year. The discussion has been very much about the EFSF, which can draw on a much larger sum and can therefore command much more credibility with the markets.

I say to those of my hon. Friends, and Opposition Members, who have been extremely critical of the European Union, that I have found that there is an understanding in other member states, whether among Heads of Government, Finance Ministers or Europe Ministers, that the EFSM is a sensitive and delicate subject for the United Kingdom and particularly for the House. I do not get the impression that our European Union colleagues want to push us into a corner for the sake of it. What they hope for, and reasonably so, is our co-operation, not in sacrificing our vital interests but in helping them solve the existential financial and economic crisis that the single currency area faces.

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[Mr Clappison]

I am grateful to the Minister for his careful reply, and to hon. Friends and the hon. Member for Luton North (Kelvin Hopkins) for their speeches in support of my amendment. This has been a worthwhile debate because it has clarified a number of issues relating to the United Kingdom’s liability under the arrangements agreed in May 2010 to the European financial stabilisation mechanism, the European financial stability facility, and the new European stability mechanism. There will doubtless be many more such bodies in the future.

I have heard the Minister’s reply. It remains the case—I have been making this point throughout the debate—that the Bill will become an Act and be law in our country before the ESM has taken effect. The ESM will not have been ratified before this Bill is enacted. That is hanging in the wind, and I am sure that all questions that arise from that, and from the Minister’s reply, will receive careful analysis in the future.

I agree with the line taken by the Government. As I have said throughout the debate, it is clearly in Britain’s interest no longer to be liable under the EFSM, and I regret that that has not yet come about. I appreciate the line taken by the Minister, and as I have said, there are sound diplomatic reasons for the Government’s continual incantation that a stable eurozone is in this country’s interest. I understand all those who say that and we do not want to lecture our European neighbours on the point. However, let me say gently to the Minister that the more I hear that phrase uttered—even if the Minister is right to do so and there are sound reasons for it—the more it brings to my mind the image of a witch doctor making his incantations over a prostrate patient in some village in remote parts. The witch doctor makes the incantation, the credulous draw comfort from it and there is perhaps a wider feeling that traditions have been complied with, but it makes no difference to the patient who lies prostrate and as sick as ever. That, I am afraid, will be the case with the European economy for as long as we are afflicted by the present eurozone.

The Minister made a point about listening to electorates, but leaders of the European Union—the European Commission in particular, but other leaders too—have never distinguished themselves in doing that in the past. Referendums have been held, European treaties have been turned down and electorates have been told to go back and think again. Even when public opinion has been overwhelmingly in favour of a particular course, or not in favour of something the European Union has proposed, the European Union elite has paid absolutely no attention.

I do not mind discomforting the European elite; I have nothing to lose because I am elected to represent my constituents and I am happy for them to hear my words and judge me accordingly. The European political elite has pressed the cause of European integration without bothering to seek the consent of electorates, and it put in place the European monetary union project as part of that process. Members of that elite must now be held to account for all the sad economic consequences that flowed from that decision, which have been outlined by the Conservative party, and they must be made to face up to their responsibilities, as no doubt some of them will in future. There are few ways in which we can influence the European Commission and organisations of the European Union in a democratic way—I wish it were otherwise—but the European elite must face up to the consequences of its poor decision making.

[Bob Stewart (Beckenham) (Con)]

How can we make those people face up to their responsibilities and take the blame for what they have done?

[Mr Clappison]

My hon. Friend makes a good point. The point I was making is that in many respects we cannot, because they are above and beyond the control of our electorate. That has always been the problem with the European Union. Some in Europe sought to impose their project without bothering to take account of the views of the electorate. That problem lies at the heart of the matters we are discussing today and is one of the reasons we are afflicted by the eurozone. It is time people began to listen and reflect on what electorates have to say and on the lamentable economic consequences of the euro. However, as I indicated I would, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Lidington]

Clause 2 simply declares that the Bill extends to the whole of the United Kingdom and will come into force on the day on which it is passed, and gives its title.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

New Clause 1

Impact of the European Stability Mechanism on the UK

‘The Chancellor of the Exchequer shall make a report to Parliament within one year of the Act coming into force and annually thereafter setting out an assessment of the impact of the European Stability Mechanism on the risks to the interests and obligations of the United Kingdom from eurozone instability.’.—(Emma Reynolds.)

Brought up, and read the First time.

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[Emma Reynolds]

As always, it is a great pleasure to follow the hon. Member for North East Somerset (Jacob Rees-Mogg). On behalf of the Opposition, I, too, would like to thank all right hon. and hon. Members who have taken part in today’s and last week’s debates on the Bill.

The Opposition support the Bill, as my right hon. Friend the shadow Foreign Secretary and I set out on Second Reading. Indeed, there seems to be a worrying level of harmony between those on the Opposition Front Bench, the Government Front Bench and the Liberal Democrat Benches. It even extends to the hon. Member for North East Somerset, to whom I say, in French, c’est un plaisir. To return the compliment, it is a pleasure to be in agreement with him. That agreement, however, does not extend to all of the Conservative party’s Back Benchers. As ever, there is some disagreement between those on the Treasury Bench and Conservative Back Benchers, but let us not dwell on that.

The Bill does not deal with the substance of the eurozone’s new bail-out fund, the European stability mechanism; it deals only with the treaty change required to allow for its establishment. To make our position clear, we do not believe that the UK should stand in the way of the eurozone setting up a fund that will be financed by the eurozone, operated by the eurozone and used by eurozone countries should they need that support. We believe that the eurozone must be allowed to take responsibility for this new, permanent bail-out fund.

Forty per cent. of British exports go to the eurozone, and many British businesses rely on the wider consumer market of 500 million people offered by the European Union. We therefore support immediate and decisive action by the eurozone to stabilise the single currency, because we believe that that stability is firmly in the UK’s national interest. The European stability mechanism is one necessary element of that decisive action. For too long there has been an absence of concrete action by eurozone leaders. Political inaction has, unfortunately, become the norm. As the eurozone’s problems developed, that inaction served only to deepen the crisis.

As many commentators have noted recently, had the European Central Bank announced its support for the eurozone two years ago and used the unequivocal terms that we have heard recently from Mario Draghi, who said that the ECB would provide a fully effective backstop for the currency, it is possible that the crisis would not have reached this stage and that it would be nearing its end.

As the OECD stated last week,

“weakness in the periphery is spilling over to the core.”

It continued that

“further policy action is needed to instil more confidence in the monetary union.”

Although the ESM is certainly not a silver bullet to solve the eurozone crisis, its establishment is definitely part of the solution and is exactly the type of action that the OECD has called for.

Speculation on the future of the euro and uncertainty about the political will of eurozone leaders to save the currency have driven instability in Europe’s financial markets. Without that essential market confidence in the eurozone’s readiness to protect its weaker members, borrowing costs for countries on the periphery have rocketed. Coupled with the weak and under-capitalised banking systems of certain countries in the eurozone, that has led to a vicious circle of financial instability.

The OECD has emphasised that:

“Solvency fears for banks and their sovereigns are feeding on each other.”

It also stated:

“Concerns about the possibility of exit from the euro area are pushing up yields, which in turn reinforces break-up fears. It is crucial to stem these exit fears.”

It is clear that as banking systems have become increasingly weakened, pressure has grown on sovereigns, and that as the financial uncertainty has grown, the cost of sovereign borrowing has risen, which has raised borrowing costs for businesses and individuals. As economic growth has stagnated, the Governments of certain eurozone countries have had to borrow more, and as they have become more indebted, fears about their sustainability and ability to support their banking sectors have risen. That has driven an increased cost of borrowing, and the cycle begins again.

In the short term, it is extremely difficult to break that vicious circle without action from an external body, such as the EU, the ECB or the IMF. In Greece, Italy and Spain, the circle has become almost impossible to break without the financial markets believing that the eurozone as a whole is acting as guarantor.

Six weeks ago, the president of the ECB, Mario Draghi, said that he would do “whatever it takes” to save the euro. Only with that guarantee does the ECB believe it can break the vicious circle and begin to lower the cost of borrowing in the eurozone periphery. To that end, the ECB last week announced plans for a new scheme of Government bond buying, which will operate alongside the ESM. Along with other voices around the EU, including our Government and other Governments, we welcome last week’s announcement. Indeed, the French President, Francois Hollande, said in reaction to Mario Draghi’s announcement that “the euro is irreversible” and that the eurozone is now solving problems that have been pending for too long.

[Mr Clappison]

The hon. Lady is giving a most interesting analysis of the situation. What is her view, as the Opposition spokesman, on the means by which the ECB’s interventions will be financed?

[Emma Reynolds]

It was important that in its announcement, the ECB emphasised that there would be some sterilisation of its additional spending, which was intended to allay fears about inflation, particularly in Germany.

[Mr Clappison]

How credible does the hon. Lady think those promises of sterilisation are?

[Emma Reynolds]

The market reaction to Mario Draghi’s announcement suggests that they are very credible, because in the days afterwards, the markets rallied.

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[Emma Reynolds]

I thank the hon. Gentleman, because he brings me on nicely to the next part of my speech, which is about the conditionality of the ESM and the bond buying that was announced last week.

The conditionality of the ESM requires further scrutiny. As with our Government’s economic failings, we are concerned that the ESM will impose harsh austerity on countries that receive its support, and thereby choke off economic growth and recovery. In the UK, the effect of such “austerity alone” economics is acutely felt by the 2.65 million people who are unemployed. The former US Treasury Secretary, Larry Summers, last week reflected on the Government’s economic mismanagement at a conference in London:

“We have avoided the prospect of a 1930s-like experience in the US. I cannot say the same with respect to Great Britain. The downturn in British output is more sustained than at any point in the twentieth century. In such an environment, to radically slash public investment is, I would suggest, to violate the Hippocratic Oath—first, do no harm.”

Although he was referring to the catastrophe of our Government’s economic policy, he could have been talking about other countries within the eurozone that have been the subjects of severe austerity.

Although it is true, as the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) suggests, that the fiscal position of countries in the medium term must be looked at—the level of debt to GDP in Greece, which has been over 100% since the early 1990s, is certainly unsustainable—Greece and other countries must be allowed to get back to growth as a means of reducing their deficits and debts. As we are seeing in this country, without that growth, it is more difficult to bring down a country’s annual deficits and longer-term debt.

Thankfully, the debate in Europe is beginning to shift towards a focus on growth and job creation, rather than austerity alone. In particular, we welcome the growth measures agreed at the European summit in June. However, we note that the debate is ongoing in Europe between those who argue for growth and job creation, and those who believe in austerity. It is regrettable that our Government are still very much on the wrong side of that debate.

The Government try in vain to blame the eurozone for their own economic failure, but even their own Back Benchers are not convinced. Last week, the right hon. Member for Haltemprice and Howden (Mr Davis) told an audience in the City that it was wrong for the Government to blame the eurozone for their current economic failings. Before the summer recess, the hon. Member for Bury St Edmunds (Mr Ruffley), a member of the Treasury Committee, said that the Government must not use the eurozone crisis as an alibi. The Opposition recognise the importance of the eurozone and of Britain’s place within the EU in building growth and prosperity. However, the Government’s failure to deliver growth two years ago and their continuing failure to focus on it have left us more vulnerable to the escalation of the eurozone crisis.

I will reflect briefly on the wider future of the eurozone and the role that the ESM will play. In contrast to the unequivocal statements of support for the euro from Mario Draghi and Francois Hollande that we have heard in recent days, some hon. Members have called today and throughout the Bill’s passage for the break-up of the euro and have argued against the establishment of the ESM. However, the break-up of the eurozone is not an easy, cost-free way out of the crisis.

If Greece were to leave the eurozone, the consequences could be disastrous for Greece and for the rest of the EU. If the euro were replaced by a new currency in Greece, the value of that currency would in all likelihood plummet, causing a further disaster in the Greek economy. Moreover, the contagion effect following that could be hugely damaging for the rest of Europe. Far from stabilising the eurozone, a Greek exit might serve only to deepen the sovereign debt crisis. International lenders, seeing Greece cut loose from the euro, may become wary of lending to other struggling states in the eurozone. Greece may become only the tip of the iceberg as investor panic drives up borrowing costs for Italy and Spain, the eurozone’s fourth and third largest economies.

[Mr Clappison]

I am grateful to the hon. Lady for giving way; she has been most generous. Throughout the debate, I have been interested in how the various measures will be financed. She has now turned from Mr Draghi’s proposals to those that we have in front of us today. What is her view of the fact that Italy and Spain seem to be significant contributors to the ESM, even though she has just mentioned them as being prospective beneficiaries?

[Emma Reynolds]

It is not impossible for them to be beneficiaries and contributors at different points, so I do not really see the difficulty that the hon. Gentleman is trying to point out.

Depositor confidence would also be damaged by the contagion effect that I mentioned. In the past year alone, 10.9% of deposits have been withdrawn from Spanish banks, which is a staggeringly high amount. In the event of a Greek exit, it is unlikely that such banks would be robust enough to survive if there were a sustained run. In that scenario, the Greek bail-out could appear small in comparison with the sums that may be needed to support other states in the eurozone.

For the reasons that I have given, we support the Bill. The establishment of the ESM is not a silver bullet, but it is nevertheless a key part of the solution that is so urgently needed to resolve the eurozone crisis. It is manifestly in the UK’s national interest that stability is restored to the eurozone, so we welcome the Bill.

Question put and agreed to.

Bill accordingly read the Third time and passed, without amendment.

Oral Answers to Questions

James Clappison Excerpts

Tuesday 4th September 2012 Commons Chamber

[Mr Hague]

There has been fault on both sides when it comes to making a success of negotiations. We have advocated the need for Israel to make a more decisive offer than has been the case in the recent past, but we have also pressed the Palestinians to enter negotiations and not to set new conditions for doing so. I have said in the House in the past that Israel had been too intransigent in this process, but the Palestinians have been too erratic about the basis on which they are willing to enter negotiations. Both those things need to be put right in order for negotiations to get going and succeed.

[Mr James Clappison (Hertsmere) (Con)]

Has my right hon. Friend seen the reports that, on Sunday, 280 Israeli settlers were removed from the settlement in Migron under Israeli legal process, as a result of action initiated by Peace Now and Palestinian landowners? Does he not agree that it would be even better if those in some quarters dropped their blanket hostility towards Israel, if the Palestinians were to remove their preconditions to talks, and if there were direct and comprehensive negotiations during which the question of the settlements could be fully addressed?

[Mr Hague]

I absolutely agree that it is important to drop blanket opposition to Israel. We should stoutly defend the security and the legitimacy of Israel, but we must also be absolutely clear that Israel needs to make its contribution and recognise that settlements on occupied land are illegal, that settlement building activity must cease and that outposts on occupied land are illegal. We should be clear about that and maintain the pressure on Israel, as well as on Palestinians, to enter into direct negotiations and give them some chance to succeed.

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

James Clappison Excerpts

Monday 3rd September 2012 Commons Chamber

[Mr Cash]

Again, I am grateful for the intervention because back in the 1990s during the passage of the Maastricht treaty—and I say this without any sense of self-satisfaction—I predicted that this is where we would end up. Massively high unemployment, riots in the streets, the rise of the far right and the implosion of the European economic system were all predicted in the Maastricht treaty debates. It is there in black and white. It is no good now saying that because those of us who took that position and made those predictions then were right that, somehow or other, we should say, “Well, that is just the past. Let us not worry about the present.” We are looking towards the future and we need to have an association of nation states based on the principle of consent by the voters, who have already expressed their views in repeated opinion polls and are denied referendums.

[Mr James Clappison (Hertsmere) (Con)]

Does my hon. Friend recall that almost exactly the same lines of argument and descriptions were applied back in 1990 to the same prophecies about the UK exit from the exchange rate mechanism?