EU Referendum: Assessing the Reform Process (EUC Report)

Lord Hamilton of Epsom Excerpts

Tuesday 3rd November 2015 Lords Chamber

[Lord Hamilton of Epsom (Con)]

My Lords, when I was a member of European Union Sub-Committee A, we produced copious reports. Most of them were pretty dull and boring as far as most people were concerned, but I must say that this report takes the biscuit—it really does. This is the most fantastically missed opportunity. I know that it is the convention of this House that I should congratulate my noble friend Lord Boswell on such a wonderful report, but I am not going to do that. I am actually going to address the report; I am not going to rerun the campaign, which is what we have been doing over the past few days in Committee on the European Union Referendum Bill. It is quite interesting that there are 19 members of the Select Committee, and only one is here tonight to debate the report—and that is the chairman of the committee, my noble friend Lord Boswell. I am not surprised that the other 18 have copped out; I would not want to put my name to this report, because it is a very dreary contribution to the debate.

Let us look into all this, because what is being negotiated in Europe is extremely complicated. People do not understand—or I, certainly, do not understand—what the different options are facing the Government if they want to get concessions out of Europe. There are three categories. There is the sort of stuff that can come through as a press release, which basically makes no difference to anybody and is probably stating the obvious. There are then certain measures that have to be taken which involve treaty change but, as I understand it—and I am more than happy to be put right on this, as we have great experts here this evening—if we are amending an existing treaty, and that is all that is involved, that can probably be ratified by national parliaments and does not involve a referendum. On the other hand, if what we are talking about involves a new treaty, at that stage we are in the business of ruling the thing out completely. The reason for that is, as stated by President Hollande of France, that he is not going to countenance the idea of a new treaty, because under the French constitution he has to hold a referendum and, if he holds a referendum in France on a new treaty he thinks—and he is probably right—that Le Pen would beat him. That seems to be sensible, logical politics. The Dutch would have to have a referendum, and I should think that they want one like a hole in the head, and the Danes are in the same position. The Irish would be extremely reluctant, and under their constitution they have to hold a referendum on a new treaty. So anything that is a concession given to our Prime Minister that involves a new treaty is actually not going to happen.

On top of that, I would have hoped that the committee would have looked around Europe and seen where we had friends and where we had enemies in terms of measures that we might put forward—what countries might support us and what countries would be against us. That would be a constructive element in this report, in response to the very vexed questions that we face. One big question, as raised by my noble friend Lord Lawson, is on the free movement of labour, which as I understand it involves a new treaty. On top of that, I do not think that a renegotiation has the support of member states of the EU. So on two questions, it is actually ruled out as something that can be negotiated, so we can forget about free movement of labour. I suspect that the Social Chapter and employment legislation would fall into the same category—that they would need a new treaty and, therefore, that is not going to happen. Also I doubt whether there is support for that within the EU.

We have to clarify what is going on here, what is negotiable and what is not. When the Government discovered that free movement of labour was completely unnegotiable, they started talking about depriving immigrants who come into the country from the EU of benefits. I gather that that has had a certain amount of flak from the Poles, who are not very keen on it. I am speaking off the top of my head, and I am happy to be rectified—I had rather hoped that the report might put one straight on these things—but I gather that that would involve amendment of existing treaties and therefore could be ratified by national parliaments. Then we go through all the things that have been raised by the Government, which they say they are negotiating about, such as ever-closer union. I must admit that, in my ignorance, I thought that John Major years ago negotiated that we did not have to be involved in ever-closer union, but I am told that that involves treaty change as well. Then there is the support for the single market and the financial services. It seems to me rather amazing that a number of countries in Europe have managed to exempt themselves from the single market in financial services, but that seems to be what happens. I thought the single market was designed to cover all areas of activity, but quite clearly it does not.

Then there is great determination that defence policy should remain the sovereign responsibility of this country. I am not sure an awful lot of negotiation needs to go on about that because that is the position as it stands now, and although there have been efforts to pool defence capabilities in Europe, I do not think they are getting very far.

There is lower EU spending. The noble Lord, Lord Kerr, will remember the times when we used to look at the reductions in the EU budget and compare it with the great undertakings. For some reason, whenever it had been reduced, we found it had actually gone up, and there was some very magical form of accounting which meant that lower spending meant that you spent more.

Reform of the common agricultural policy and structural funds are another area on which the Government are apparently looking for concessions. I remember when half our rebate was given away by Tony Blair in return for reform of the common agricultural policy. Of course, nothing has actually happened since, so I do not think we have to worry about that too much.

At the end of the day, we have a big problem—this has been alluded to by my noble friend Lord Lawson—that if the eurozone is going to survive, it has to have fiscal and political union. It has to come together, and inevitably we are going to be outside that, in which case we will be excluded. Decisions will be taken by the members of the eurozone who have a majority in the Council of Ministers. We have this great debate on whether we are going to be like Iceland or Norway, but at the end of the day if we stay in the EU we will be like Iceland and Norway because what will happen is the eurozone will hand down decisions that have been made by the eurozone members of the Council of Ministers and we will have to go along with them. It is extraordinary that we seem to be going on endlessly about the awful fate of being outside the EU and being like Norway and in fact we are going to be inside the EU and still have the fate of Norway.

A great deal has been made of the signing of trade deals. This is one of the other things the Government are very keen on getting agreement on. There are a number of trade deals. There are trade deals with the United States of America, China, India and Japan, and to date none of them has been ratified or signed. We hear constantly about how it is so much better to be a large unit representing 28 different countries to achieve trade deals, but when it comes to the main countries in the world that we want to do business with, to date we have not signed a free trade deal with any of them.

We are going to get concessions from Europe that we can remain a multicurrency EU. Is that not a wonderful thing? As long as you have people who are outside the eurozone, they will have their own currencies and we will inevitably be a multicurrency EU, so I do not think that is much of a concession either.

It would have been nice if this report had explored these issues. We know what has been debated, but the reality is that the committee, about which I have the gravest doubts, made up its mind. It did not want to say that our Prime Minister is an emperor with no clothes, so therefore it produced this perfectly absurd report which has not addressed any of the issues that are of any interest to anybody whatever. I am very sorry that I cannot support my noble friend Lord Boswell and congratulate him on producing it.

--- Later in debate ---

[Baroness Morgan of Ely (Lab)]

My Lords, it feels as if we have been here for weeks, talking about the same issues for days and days, and we have more to come tomorrow, of course.

I, too, thank the noble Lord, Lord Boswell, and his committee for the report, which is very good as it talks about what is in the title—the reform process. It is not about the content of the negotiations themselves, but rather the process and mechanics of the reform negotiations. The report highlights a number of important areas on which the Government should focus their attention. The Government have not given us much back in terms of anything new or exciting, or any vision. They have kept their cards close to their chest, as they have done throughout the negotiation process.

The committee focuses on a few issues, including the timetable, and on the fact that the French and German elections have to be avoided. However, it has missed out the fact that a lot of other elections will take place in Europe between now and 2017. Spain will hold elections this December. Next year, Ireland, Slovakia, Cyprus and Lithuania will hold elections, as will the Czech Republic, Luxembourg and Holland. We ignore these countries at our peril. This is about not just how Germany and France feel about the British desire for change, but how every single member state feels about it. It is a shame that that was not alluded to in the report. We should please remember that every country is important in this negotiation.

We know, and hope, that David Cameron has learned the lesson that squaring matters with the German Government does not guarantee delivery, as we saw when he failed to stop Juncker being nominated as President of the Commission. He thought that was all sorted out because he did some nice little deal with Germany, but he did not manage to deliver on it. You have to go beyond Germany and France. Let us please learn that lesson. It is incredible to think that we are in line to take the presidency of the EU in the second half of 2017. What a situation that would be if we had just voted to come out of the EU. It would be absolute chaos, as the report rightly points out.

The killer point of the report is that the internal Whitehall process for handling renegotiation is unrealistic and unaccountable. There is no mechanism for keeping Parliament informed of the discussions, so we are all fumbling in the dark until the white smoke appears, when we are expected to cheer and celebrate. The report is highly critical of the complexity of the negotiations, and questions who is in charge. The noble Lord, Lord Desai, rightly brought to the attention of the House the question that Henry Kissinger used to ask: “Who do I phone if I want to call Europe?”. We have an answer to that now: Donald Tusk.

It took a while to get there, it has to be said, but we are there, and that proves that this is not a one-off negotiation; negotiations are constant in the European Union. We are constantly seeing reform. But imagine you are a civil servant in charge of social security in Latvia and you want to discuss in-work tax benefits; who would you call and how would you be sure that the line given by the Cabinet Office or the Department for Work and Pensions would be the same as that given by the Treasury or the Foreign Office? Can we be confident that they would give the same answer? The mechanisms of the process are unclear.

There would be a requirement for the European Parliament to approve any legislative proposals that emerged, so it would make sense for the Prime Minister to become very friendly indeed with the European Parliament very quickly. It has invited him to go and speak to it and present his desires for the nation, and I suggest that he take up that offer because it will be important for the Government to get the blessing of the European Parliament.

[Lord Hamilton of Epsom]

What should the Prime Minister say to the European Parliament when he gets there?

[Baroness Morgan of Ely]

The European Parliament has invited the Prime Minister to put forward his objectives for the reform process. It would like to know what they are—we would all like to know what they are—but it will have a say in the process. So it is about enlightening the European Parliament, and I think it absolutely right that he goes and presents to it. Once the letter has been written, we should all be in a better place, but it is taking a long time.

It is also important for us to take note of the points made by the noble Lord, Lord Hannay, about the devolved Administrations. They do not feel loved on this issue at all. It is important that they feel loved and feel involved. It is part of their nation that is being negotiated with. They need to be involved in that process, and a little visit, perhaps by the end of the year, when actually everything has more or less been decided about what we are looking to change, is probably not the best way to work with them. I suggest that the Government ignore the devolved Administrations at their peril.

The committee is also right to underline the fact that the implications of EU withdrawal would be profound for Gibraltar. The Government there have even gone as far as to suggest that this would create an “existential threat” to Gibraltar—imagine that. It is clear that Gibraltar will need some real reassurance on that matter.

We know there are four broad areas where the Prime Minister wants to see change. Of course, we are all waiting for that letter. It is true that a little more light has been shone on the situation today but the noble Lord, Lord Kerr, is right: the whole approach to this negotiation seems very odd. The Government should probably take some advice from junior doctors, who seem to have managed to negotiate a deal with the Government that the Government were not prepared to give. Taking some tips from junior doctors—or some pretty good trade unionists—would be a good place to start. This method of communicating and negotiating is not necessarily the best way to work.

I take issue with the Government’s response to the committee, especially their suggestion that they would like to reform welfare,

“to reduce the incentives which have led to mass immigration from Europe”.

I brought this to the House’s attention yesterday. It is a load of nonsense. According to the Economic and Social Research Council Centre for Population Change, a number of EU countries are as generous as Britain in terms of social security per head. France, Germany, Denmark and the Netherlands all spend more in real terms than the UK on social security. Last year, a European Commission report concluded that there was no evidence of systematic or widespread benefit tourism by EU nationals migrating within the EU, including to the UK. The UK is the only EU member state where there were fewer beneficiaries among EU migrants than among its own people. So let us stop this scaremongering and stop talking it up as an issue, when it is simply not true. According to the DWP’s own figures, 6.4% of those claiming benefits were non-UK nationals. That means that British nationals were two and a half times more likely to be claiming working-age benefits than non-UK nationals. I would like to hear the Minister withdraw that statement because I think it was misleading and wrong.

We would like to wish the Prime Minister all the best in his negotiations with the EU. The future of our country depends on it, and the stakes for the UK could not be higher. The Prime Minister does not have a great track record on working with his EU colleagues, so lots of diplomatic schmoozing will be essential in the next few months. The Prime Minister has painted himself into a corner on the EU date. While this issue might be at the very top of his in-tray, with the migration crisis unfolding in Europe, the effects of the financial crisis still unfolding across the continent and the tension between the EU and Russia, it is probably not a priority for any other member state. This year, following weeks of trailing, the start of UK negotiations was going to be on the agenda of the June EU Council meeting. How long was the Prime Minister given to bring up his ideas on the changes he wants to see? He was given 10 minutes. We were hearing for months that this was going to be the big occasion, but he was given 10 minutes. I hope, for the sake of the country, that he is given a better hearing in future. We hope and trust that he will do much better in his negotiations than he has in the past.