European Union Bill

Lord Davies of Stamford Excerpts

Wednesday 8th June 2011 Lords Chamber

[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.

--- Later in debate ---

[Lord Lamont of Lerwick]

My Lords, I think that this is what might be called the Rumsfeld amendment, because it has been moved to deal with the unknown unknowns. That is what it is all about. I had not remotely intended to speak in this debate, but the noble Lord’s enthusiasm is so infectious. He looks at the European Union and sees that nothing has ever gone wrong with it. We ought always to be in there and engaging with it. We must be careful not to miss the train. We must always be positive regardless of what is happening. He tells us about the wonderful speech that Monsieur Trichet has made, saying that we ought to have fiscal union in order to save the euro. No mention is made that that comes out of the ashes of the disastrous ruin of monetary union.

I think it was the noble Lord who used the same arguments to try to persuade us to join the euro. He said that we are losing influence. Even though the euro has now itself faced enormous problems and even though some of my noble friends on the Back Benches have said that we shall never be able to have a single currency area without a fiscal union, we are told, “That is ridiculous. Now fiscal union is just another great step forward. We have got to be positive about it”.

The noble Lord also says that the European stability mechanism is another thing that we are missing out on, and that we ought to be involved in it. Of course, the ESM is in complete contradiction to the whole basis on which the euro was set up. It is not because it was an unexpected disaster—it was a predicted disaster. The reason the ESM had to be created was because the treaties totally forbade it. Yes, we do face some unknown unknowns.

I apologise to the House because we should not all give our own views on Europe, but I was completely provoked by the noble Lord, who seems to be like Alice through the looking-glass: every disaster is seen as a step forward. We just ought to take a step back, hold our breath, and think about it a little.

[Lord Davies of Stamford]

My Lords, I am going to resist the great temptation to respond to the noble Lord, Lord Lamont. I do so not because I do not think that he is completely wrong, which I think he is. He is quite wrong to write off the euro in this way, and he is wrong to suppose that we would not have had to face a systemic crisis caused by fiscal collapse in Ireland, Portugal and Greece. Whether or not the euro had ever existed, we would have needed to take intelligent and concerted action. The noble Lord, with whom I have debated these matters with great pleasure on many occasions over the years, is as wrong as he has always been. I am happy to give him good money in a private conversation afterwards that the euro is far from being in a state of crisis and that it will survive.

I hope noble Lords understand the very important distinction between a fiscal crisis, which has hit a number of countries that are members of the eurozone and have the euro currency, and a crisis for the euro itself. You can have a fiscal crisis caused by Governments overborrowing irrespective of the currency in which they are borrowing. Even if those countries had been members of the dollar area and had borrowed so much that the financial markets were in danger of ceasing to refinance them, there would have been a crisis affecting them; and because of the number of assets that we inevitably hold in those countries, which are major trading partners of ours here, we could not have been immune to a fiscal crisis irrespective of the currencies involved.

[Lord Hamilton of Epsom]

Does the noble Lord accept that the ECB is technically bankrupt?

[Lord Davies of Stamford]

I accept nothing of the kind—the ECB has a triple-A credit rating, as I am sure the noble Lord knows.

[Lord Flight]

Would the noble Lord give even just a little bit of credibility to the argument that the problem of different economies sharing the same currency is that the costs of some in the southern part of Europe have gone up 35 per cent while Germany’s costs have only gone up 10 per cent, so they have a big competitiveness problem, which is part of their fiscal problem? In the case of Spain and Ireland, the problem is that they have had a low rate of interest that is unsuitable for their own domestic rate of inflation, causing real interest rates to be negative. That caused everyone to borrow too much and the banks to lend too much, so they have had an overlending problem, in part caused by the fact that they are sharing an inappropriate currency. If they had their own currency, they could devalue when they had such a crisis.

[Lord Davies of Stamford]

I am getting signals, quite rightly so, from my Front Bench so I really must not respond to the substance of that because I shall be turning this into a debate—which we ought to have in this House on these important matters—on fiscal and monetary issues in the European Union at present. I hope that the Government take note of the obvious interest on their own Benches in having the opportunity to discuss this matter and exchange our various perspectives on it. I wanted to intervene really just to support my noble friend’s excellent amendment. If it is accepted by the House, it will get rid of a large amount—80 or possibly 90 per cent of the damage—that could be done by this Bill. If this amendment goes through, Clause 3(4) would then read:

“The significance condition is that the Act providing for the approval of the decision states that … the decision falls within section 4 only because of provision of the kind mentioned in subsection (1) of that section, and … the effect of that provision in relation to the United Kingdom is not significant”.

In other words, the only exemption from the need to have a referendum would be in relation to matters that were not significant for the United Kingdom. Surely, to accept this particular amendment is a cost-free concession on the part of the Government. I cannot believe that the Government actually want to provide for having a referendum on something that is not significant for the United Kingdom. Am I perhaps wrong about this?

We need to probe the Government’s logic a little here, because what an extraordinary thing it would be if the Government want to take through Parliament a Bill providing for the possibility of having referenda on issues that are not significant for the United Kingdom. The Government cannot turn around and use the argument that what is significant or not might be a subjective and difficult matter to determine at any one point, because they have already accepted in this Bill, as it stands, the need to make a distinction between significant and non-significant. That argument cannot be made. The only argument that can be made is that we need to provide for having referenda on something that is not significant, which does not make the slightest sense. I ask noble Lords to envisage a scenario in which we have a referendum in this country on something that everybody accepts is not significant for the United Kingdom. We ask the electorate to focus their mind on a difficult, technical and perhaps rather abstruse matter—maybe a whole package of such matters, which is what the Government have been suggesting recently; to take the time to master the relevant briefs or at least make up their minds on this matter; and to take time off from their work or from their leisure activities and go to the polls on something that they are told in advance is not significant for the United Kingdom.

[Baroness Nicholson of Winterbourne]

Since the noble Lord has such confidence in the judgment of Ministers that he wishes to recentralise the possible decision-making that would come through referenda, why does he not have confidence that the judgment of Ministers would be that something inessential would not come to Parliament in the first place? There is an illogicality in his circular argument.

[Lord Davies of Stamford]

There is no illogicality at all. There is no need to provide for a referendum on something which is not significant for the United Kingdom unless the Government believe that they might, at some point, wish to have such a referendum, which I regard as an utter absurdity. It would be an insult to the electorate; it would be treating the whole electoral system of this country in a thoroughly frivolous way. I have to ask the Government: what is the purpose—what is the logic, because it is not clear to me at all—in providing for the possibility of referenda on non-significant subjects? It would be an utter contradiction in terms.

I have to mention to the House a matter which I must not go into in any detail for fear of breaking the relevance rule. I shall not do that, but I need to refer to the fact that a week or two ago the Government published a Bill on reform of the House of Lords which provides for fundamental changes to this House, and therefore to the legislature of this country, without providing for a referendum at all. So we have a situation in which the same Government are saying, on one hand, “We have to change the House of Lords in a fundamental way and we cannot have a referendum on it”, and at the same time saying, “We have to have referenda on changing the rules on qualified majority voting on taking decisions about the future of the public prosecutor’s office in the European Union”—something idiotic like that. Now they come forward and say, “No, actually we need to provide for referenda on explicitly non-significant matters”. What an extraordinary contradiction.

I see that, for once, I have the agreement of the noble Lords, Lord Flight and Lord Hamilton, as well as other distinguished Members opposite. Maybe the Government, in responding, should not just turn to me; they should turn to their supporters on their own Back Benches. They certainly need to turn to the country to explain the logic of the Bill, because, whatever it is, it does not appear to be coherent or something that has been properly thought through. I am sure that it is not deliberate hypocrisy—I would not dream of accusing noble Lords of that. Maybe it is some kind of confusion, but we need to know what it is, because what they are bringing forward seems to have no sense at all either from the rational or the pragmatic point of view, or to be credible in any way.

--- Later in debate ---

I hope that these matters do not come forward. However, if they did, they would raise very important issues that would excite considerable public comment and attention and deal most intimately with out national interests and plans. We would have to start thinking about that which the noble Lord, Lord Liddle, talks about. This thinking ought to lead rapidly to ways in which we could deal with these issues in a co-operative and practical way. However, if it came about that there was an overwhelming demand and conviction that there should be a new treaty throughout the whole European Union, it would certainly have to be put to the people. The idea that it would not be put to the people is absolutely incredible.

[Lord Davies of Stamford]

I am most grateful to the noble Lord for giving way. With the greatest respect, this amendment is about having a referendum, or not having a referendum, on matters the effect of which—to quote the Bill—

“in relation to the United Kingdom is not significant”.

Nobody in the world would argue that setting up a finance ministry for the European Union was not significant for the United Kingdom; the question is why we should have referenda on matters which are not significant. The noble Lord has cited a lot of possible scenarios, all of which involve dramatically significant events which would obviously be significant events for us, but the big issue concerns why we should have a referendum on matters which are known not to be significant for the United Kingdom.

[Lord Howell of Guildford]

I think that we are arguing in a circle because the Bill provides the significance test and matters in paragraphs (i) and (j) of Clause 4(1), which I have described, might well be ruled by Ministers not to be significant, and therefore there would be no referendum. Furthermore, in Clause 4(1) there is a whole string of exempt conditions where no referendum will occur. Therefore, I do not see what the noble Lord is worried about. As regards issues that are deemed to be insignificant, or issues that are deemed to fall under Clause 4(4)—sorry, I said Clause 4(1), whereas I meant Clause 4(4)—Clause 4(4) states that:

“A treaty or Article 48(6) decision does not fall within this section merely because it involves one or more of the following”.

There is your list. There are the things that are not significant which will not attract a referendum. The noble Lord was speaking with great feeling and fervour but I cannot see that his worry is well founded. I am clear that this amendment would not assist the purposes of the Bill and would undermine certain values and aims of the coalition’s European policy. On that basis, I strongly urge the noble Lord to withdraw it.