Genuine Economic and Monetary Union (EUC Report)

Debate between Lord Hamilton of Epsom and Lord Davies of Stamford

Wednesday 2nd July 2014 Grand Committee

[Lord Davies of Stamford]

I repeat that you cannot at the same time complain about something when it is absent and then complain when it is present; that does not make any sense to me at all. Equally, I do not think that I have heard any response to my points about democratic accountability. If there is a desire for more democratic accountability in the EU, which there is, and if it should be addressed, which in my view it should be, then you cannot turn down every possible proposal that is made in order to achieve that, which is what the Eurosceptics tend to do.

I think that our report makes three conclusions. The first is that the general direction of genuine monetary and economic union is probably right. We support it and think that it is a sensible thing for the eurozone to be engaged in. We feel that it should go further and be completed. We think that it is troubling that one or two elements of the agenda have not been implemented and will not be in the immediate future, notably the retail bank deposit insurance system that we have just referred to and which has been referred to several times today; we are broadly in favour of that and think that it is a very good scheme.

The second general conclusion is that this process is not without risks and costs for our country. That point is made very clearly in paragraphs 185 and 186 of our report, to which I draw the Committee’s attention. It is also made in another document, the British Bankers’ Association report, which we have obviously all been sent. I have been sent a copy, and it has already been referred to and quoted from. I shall quote from it in case some people here have not received it:

“EU, government and industry studies have shown that deepening the Single European Market offers a growth potential that is achievable without further increasing public debt … However, the understandable moves towards stronger Eurozone governance may make it more difficult for the UK financial sector to play a full role. For example, development of Eurozone caucusing, outside the EU-28 format, on matters that impact directly the Single Financial Market could, even unwittingly, damage its integrity”.

The document goes on to raise other risks, not just caucusing but the risk of the eurozone having a permanent president, the risk of the new configuration of the European Parliament being less likely to defend British interests—largely because the Conservative Party withdrew from the EPP, so that is entirely its fault—and other risks.

The fact is that the British public have been bamboozled, and this report goes some way towards redressing that and illuminating them, which is very necessary. They had been persuaded to believe that somehow we can have a half-in and half-out approach, with one foot on one side of the fence and one on the other in our relations with the EU at no cost, or that we can gain all the benefits from the EU without actually subscribing to all its programmes and disciplines. The sheer fact is that you can never do that in life, and you cannot do it in this case. Personally, I would prefer any measure of relationship with and access to the European single market and the EU than none. I am the sort of person who would always prefer half a loaf or even a quarter to no bread at all. However, I am very conscious that we are losing some portion of the loaf by the course that we are adopting. That comes out very clearly in the conclusions to the report, and we have fulfilled a useful function in writing it.

[Lord Hamilton of Epsom]

As the noble Lord, Lord Kerr, said, we are not part of the eurozone group, so are we not inevitably half in and half out, whether we want that or not?

[Lord Davies of Stamford]

As the noble Lord, Lord Kerr, said, as I shall say myself and, indeed, as the report states, we are not just out of EMU. We could not join EMU if we wanted to because we do not qualify under the fiscal provisions. Our fiscal deficit is excessively high—more than twice the level required the last time I looked at the figures. We cannot join anyway; we just have to face that.

Quite apart from that fact, it is true that the public in this country have been poisoned against the whole notion of EMU by a very effective press campaign, and it would be quite difficult to join EMU in the short term even if we qualified, which we do not. As we do not, it is a theoretical issue. Quite apart from that, we could, if we wished, join a banking union. We appear, for reasons which are unconvincing to me, to have decided not to join a banking union. As a result, we will find that we are not really, truly in the single market.

I put that the other day—this is a matter of public record because it was an open committee session—to the chairman of the Financial Reporting Council, Sir Win Bischoff. He agreed with me unequivocally that, as a result of what is happening, we will have a fragmented single market. We will have our own banking regulation based on our own bank regulation Bill. We have secured a derogation from the bank regulation directive, which I think is very undesirable. That means that, although there will be no fundamental differences in the way that banks are regulated in the eurozone and here, there will be small differences from time to time. There will be different responses because different people will be doing the regulating. There will be greater compliance costs. British banks such as HSBC and Barclays with major operations on the European continent will have to go through parallel procedures in different countries, whereas they could have just reported in one coherent way on a consolidated basis to one regulator, which would have been much more desirable.

More serious than that, there will be regulatory arbitrage, with distortions: people being tempted—no, being driven—to practise certain operations and activities in some markets merely because regulation there is slightly lighter than in other areas within the single market. That is not a single market at all. There will of course be a great lack of clarity and, therefore, investor and depositor confidence as a result of the confusion and complexity, which is, again, quite unnecessary.

It is a perfect example of how you can impose costs on yourself for no useful purpose. We all say that we want a single market. We are all in principle against regulatory arbitrage—all British Governments always have been—but we have deliberately created a fragmented structure which has higher costs and prevents a single market taking place. That really cannot make sense. It is about time that we realised that our policies—I say our policies; I mean the policies of the Government of the day, the coalition Government—contradict the national interest. Because we are not in the eurozone, we face the danger that problems may be created for us by the eurozone itself through its members caucusing for meetings of ECOFIN or other bodies due to the greater weight given to the eurozone organisations—a point made by the British Bankers’ Association. Not only may we be the victims of other people doing things that we do not like very much but we are creating problems for ourselves, which seems particularly irrational.

The report is a very useful piece of work and it deserves wide consideration. I hope that it may be the beginning of a reconsideration of the rationality of our policies in this area, because it is a great shame that for reasons of, I think, essentially party politics or emotion, we are often dysfunctional in our pursuit of the national interest.

Defence Reform Bill

Debate between Lord Hamilton of Epsom and Lord Davies of Stamford

Wednesday 26th March 2014 Lords Chamber

[Lord Hamilton of Epsom (Con)]

My Lords, I very much echo the sentiments of my noble friend Lord King. I think there is a general feeling that in the latest cutbacks in the forces the Army seems to have taken a rather greater cut than the other two services. Considering that the Army has been deployed almost continuously since the Troubles began in Northern Ireland in 1969, one has slightly to question the wisdom of the Army seemingly taking rather more punishment than the other two services.

However, I do think that the Opposition have a bit of nerve in tabling this amendment, which somewhat echoes the amendment withdrawn by the noble Lord, Lord Dannatt, because, at the end of the day, we are paying now for the legacy that this Government inherited when they took power at the beginning of this Parliament. If you have £40 billion of procurement that has not been funded, you obviously at that stage have a serious problem. Something went badly wrong. When the aircraft carriers were ordered by the previous Government the roof had fallen in on the economy and there was clearly no money to pay for them. It does not matter whether they were a good idea, the money was not there and the Defence Council went ahead and ordered them. For some extraordinary reason, there was no ministerial override from the Permanent Secretary saying that the money was not there. That strikes me as a very serious shortcoming in the way in which our affairs are being run. Let us face it, there is always a temptation for politicians to order things that they cannot afford. On the other hand, we look to our civil servants to preserve the integrity of the finances of the department, and that did not seem to happen. I consider that the Army is suffering from some very bad decisions that were taken in the previous Parliament and the legacy of an overhang of unfunded procurement. Savings had to be found somewhere; and it is the Army. It is extremely regrettable that the Army has to take the punishment in this way.

[Lord Davies of Stamford (Lab)]

My Lords, I was not intending to intervene in this debate but feel that I must, in order to correct some of the myths—which is a polite way of putting it—just purveyed by the noble Lord, Lord Hamilton. I was of course the Minister responsible for defence reform in the last three years of the last Government and, indeed, possibly the Minister to whom the noble Lord was referring when he talked about ministerial responsibility. I must tell him that during that time we always stayed within our annual cash limits. So far as the longer-term financing programme was concerned, we were fully and adequately funded on the basis of a 1.5% real terms increase in the defence budget, which was our policy at the time. It was a correct policy and I wish that it had been continued. It was very regrettable that this Government came in and made excessive cuts in public spending, which drove the economy down. The economy was reviving before we left office. The House will recall that in the first half of 2010 the economy grew, at first, by 0.3% and then by 0.7%. When this Government came in with their excessive spending cuts, the growth fell away again. The economy has been in the doldrums, more or less, ever since. That was a mistake made entirely by this Government.

In my view, the decisions of the previous Government on defence procurement were thoroughly responsible. It was very necessary to provide for two carriers; it is an essential arm in our ability to intervene around the world, irrespective of whether we have friendly powers that are willing to provide us with airfields a suitably close distance to where our troops might be deployed or where we need to bring influence or physical power—kinetic power, if necessary—to bear. That was a right decision.

It was a crazy decision to cancel those aircraft carriers—or, at least, to cancel the carrier strike capability of the nation for 10 years. Of course we need two aircraft carriers, because otherwise we cannot be absolutely certain that when we need an aircraft carrier it will be available and will not be in refit. The decisions of the last Government on defence procurement were thoroughly responsible. They were certainly funded. I am sorry to see that, after all the denials that have been made over the last few years by everybody who actually knows the facts, the noble Lord, Lord Hamilton, should still be purveying a completely untrue account of events.

Armed Forces

Debate between Lord Hamilton of Epsom and Lord Davies of Stamford

Monday 5th November 2012 Lords Chamber

[Lord Hamilton of Epsom]

My Lords, I should start by saying that I work for an American defence company called Curtis Wright. The Wright in Curtis Wright was the Wright brothers. Curtis Wright supplied many fighter aircraft to the US Air Force during the last war. After the war somebody came along and said, “We think you should look very closely at the whole idea of jet propulsion for fighter aircraft”. Curtis Wright looked at it very carefully and said, “No, this is not the answer”. Your Lordships will not be surprised to know that Curtis Wright are not in the production of fighter aircraft any more, but they are involved in a number of other technical areas in defence supply. It is always a great pleasure to follow the noble Lord, Lord Davies of Stamford, because—let us face it—he does not lack chutzpah when it comes to defending the actions of the previous Government.

I will deal, firstly, with the question of defence specialisation. This has a certain allure to it because what it means is that different countries in Europe would take over the sole supply of the capability of certain bits of defence. The very obvious answer to that would be that armour should be in the hands of the Germans. If the noble Lord, Lord Davies of Stamford, talks to his honourable friend in the other place, Gisela Stuart, who is German, she will tell him that the Germans have become completely pacifist. If we had this arrangement, and we decided we wanted to fight an armoured conflict somewhere, we could not do it because the Germans would not fight. There seem to be enormous problems. The noble Lord says that when this great unification of European forces was put together, they would have to sign up to looking after our colonies. The Spanish are extremely hostile to the idea of us defending the Falklands at all, and I am not sure that they are going to sign up to that in any way. There are enormous shortcomings.

I will move on to the great debate, which was raised by the noble Lord, Lord Davies of Stamford, about the size of the deficit inherited by this Government. Was it £37 billion or £38 billion of unfunded procurement over 10 years? Or was it a smaller figure? It must have been a pretty massive figure because otherwise we would not have had the devastating review of our whole procurement programme, cutting out ranges of procurement. The Harriers had to go, as did the maritime patrol aircraft and so forth. That would not have happened if there had not been a very serious problem which this Government had to address. I do not expect the Minister to answer this when she sums up, but perhaps she could write to me about it. Last Tuesday, my noble friend Lord Trefgarne gave lunch to Sir Clive Whitmore, who used to be the Permanent Secretary in the Ministry of Defence when I was there and in the time of my noble friend Lord King. Clive Whitmore, who understood politicians very clearly, was famous for saying all the time, “I have to remind you, Ministers, that I am the chief accounting officer of the Ministry of Defence, and if you want to spend money you have not got, I want a ministerial override”. As your Lordships know, a ministerial override is something that comes from the Permanent Secretary and has to be signed by a Minister. It basically says that “I, as a Permanent Secretary, advise against this particular procurement because the funds are not available and they have to be signed off by a Minister”.

The final signing off of the aircraft carriers was in 2009. The roof had fallen in on the whole economy, and we had complete disaster in every direction. It was obvious to a child of five that there was going to be no more money coming into the defence budget. At the same time, two aircraft carriers were ordered at a cost of around £5 billion. That was on top of a mass of other equipment which had been ordered but for which there were no funds whatever. What happened in the Ministry of Defence? Why were there no ministerial overrides? We look to our Civil Service to guarantee the continuity and solvency of departments of state. What went wrong that that did not kick in? What provision has now been made in the Ministry of Defence to ensure that this sort of thing does not happen in the future? Perhaps that could be put in a letter. We should be seriously concerned if we reach a position where things are being ordered in this way. This is always going to happen in political life as politicians believe they can buy people’s votes by putting out enormous orders and there could be no better way of buying votes than to have two aircraft carriers being built simultaneously in every shipyard in the country so the largesse could be spread as widely as possible. Why was there not a ministerial override saying, “The funds are not available for this, I therefore do not recommend it, and I am doing it only because I am ordered to by the Minister”?

[Lord Davies of Stamford]

Perhaps I can help the noble Lord and also defend civil servants whose reputations might otherwise be tarnished by what he has just said. We had the most conscientious and able Permanent Secretary and finance director in my time. There was no ministerial override because there did not need to be one as the carrier programme, like other parts of our programme, was funded and properly provided for within our defence budget.

[Lord Hamilton of Epsom]

That no doubt explains why the first thing this Government tried to do when they got in was to cancel the carrier programme, only to find that it could not be cancelled because BAS is very good at tying up such incredibly tight contracts that it would have cost more to cancel than to go ahead with it. I do not totally buy that: there is something seriously wrong here, and I do not think we would have the current difficulties if there had been a few more ministerial overrides in the past. Critics of my right honourable friend, Philip Hammond, the new Secretary of State, say that he is just a number cruncher who does not know anything about defence priorities. He understands very well the first defence priority, which is that you do not order kit if you do not have the money to pay for it. His second priority is balancing the budget, and he therefore takes total care that we are not going to run into any major crisis, such as the one we have experienced recently. His business experience will be valuable, and he is the ideal man to be holding the position of Secretary of State.

It is not just a shambles that we find in the administration of the Ministry of Defence. We used to be able to rely on men in uniform to do the right thing, but what have we seen? We have seen the humiliation of the retreat from Basra, which raises serious questions about the intelligence given to our military commanders before they went in. Was it a complete surprise that the Iranians decided to get involved in all the Shia militias there? The result was that we had to pull out. In terms of safe passage to get back to the airport, we had to do a deal whereby we would not go back in. The Americans were, to put it mildly, dismayed, and eventually the Iraqi Government took the view that such was the appalling shambles left behind in Basra that they had to go in with the Iraqi Army and US Marine Corps. Once they went back in, they certainly sorted out the problems there, and there has not been much of a problem there since.

Almost as a reaction to Basra, the British Army afterwards decided to deploy 3,500 men in Helmand province. What was the intelligence there? Did they not know that the Pashtuns in Helmand loathe all foreigners, and the foreigners they loathe more than any others are the British, because they still have not forgiven us for the wars we fought against them in the 19th century? The result was that we nearly lost that whole force of 3,500 men, but for the fantastic air power provided by NATO, which pulverised all the mud villages in front of it but would not have done an awful lot for hearts and minds in Afghanistan.

I am actually seriously worried about where the Ministry of Defence has gone in the past. My right honourable friend the Secretary of State has a serious problem of getting this thing back into some sort of order, both in terms of finances and, I hope, in getting involved in operational matters, because serious problems have been created for which we are paying a hefty price. I wish I could say that I looked to the future with confidence as regards the serious challenges facing my right honourable friend. He has an awful lot of work to do.

European Union Bill

Debate between Lord Hamilton of Epsom and Lord Davies of Stamford

Monday 13th June 2011 Lords Chamber

[Lord Davies of Stamford]

My Lords, I am deeply grateful for the consideration which the House has given to my amendment and for the warm and supportive words of the noble Lords, Lord Hannay and Lord Triesman, and the noble Lord, Lord Kerr, who seized on an argument that I was about to deploy myself in response to the noble Lord, Lord Howell. I will address the points of the noble Lord, Lord Howell, in a moment and bring my remarks to a conclusion by addressing the Government’s response. I am grateful too for the contribution of the noble Baroness, Lady Nicholson. Frankly, I did not understand her argument that somehow possession of veto was going to help us in any circumstance in advancing the cause of reform of Article 346. I shall correct her on a practical point: she says that since I was involved with defence there have been a lot of changes in the world, including the end of the Cold War. I think she is going back to the time when I was a defence spokesman in the Conservative Party. My experience of defence in government ended 13 months ago, in May last year.

I always enjoy the contribution of the noble Lord, Lord Hamilton, to these debates. He deployed an argument today which I have heard him deploy in other contexts. It is, “If it is such a good idea, why not have a referendum and you will win it? The public will support you”. I am not sitting close enough to see whether he has a twinkle in his eye when he says it but I think he has. He knows as well as I do that there is no prospect of having a referendum on a subject as esoteric as Article 346. If we have a serious opportunity to change it, it is no use saying to our partners, “For once we have got the chemistry right—there is an opportunity to go for QMV on this, and then maybe there will be a consensus and we’ll get some reform. But sorry, chaps, you’ve got to wait for two, three, four, five or six years, when it is particularly convenient for us to have a referendum with a whole package of measures”. Even then, as I have said before in these debates, it would be quite unsatisfactory for the British electorate to do their homework on a whole series of rather technical matters. It is just not practical politics. The noble Lord, Lord Hamilton, knows more about politics than I do; he has been involved in politics longer than I have, and I am quite certain that he had his tongue in his cheek when he said those things.

I move to the points made by the noble Lord, Lord Howell, on behalf of the Government. He started off by saying that Article 346 had been in the treaties in one form or another—of course, it had different numbers—since 1957. What is new is the idea of having a referendum on a change. That is brand new. It has not come in yet—it is in the Bill before us. That is what I want to change. It is not an argument against changing this new measure that the instrument that we might want to use to reform Article 346 is now under threat from a new provision in this Bill, so it would be sensible for us to remove that threat. I do not think that there is a logical argument there against my proposal.

Like the noble Lord, Lord Kerr, I really wondered how serious the noble Lord, Lord Howell, was when he said that it may be in our interests to prevent protectionism to have a veto, because then we could stop our partners from being even worse protectionists than they were before. As the noble Lord, Lord Kerr, pointed out, in that case the noble Lord, Lord Howell, would have logically opposed the whole single market programme. It would not have made any sense at all. So the noble Baroness, Lady Thatcher, and Lord Cockfield were actually doing something very dangerous in threatening greater protectionism by agreeing to have qualified majority voting in the Single European Act.

The noble Lord, Lord Howell, tried to justify that approach with the distinctly implausible suggestion that different rules applied to defence. I do not think that different rules applied to defence; I think that the argument is rather different from that. That is why, for two reasons, I think there might be an opportunity to achieve QMV, if only the British Government have not deprived us of that opportunity in advance, ab initio. First, there is a positive incentive on Governments to reduce the costs of their defence procurement—and protectionism, as we know, is extremely expensive. If they opened their markets they would be able to purchase more cheaply, given a measure of defence capability. When I was the Defence Procurement Minister—and I was very proud of this, because I did it for the first time—I introduced a unilateral open market in the EU. I said, “Sorry, we’re going to buy the cheapest and the best, wherever it is. We’re not going to be protectionist”. It is only when there is inequality of quality and price between the British supplier and non-British supplier that I will favour the British supplier. I made that absolutely public, and it was what I operated on. For example, I bought the 42-millimetre cannon for the Scout vehicle and potentially for the Warrior upgrade from France. Why? Because it was the best. The French were obviously delighted. There was no quid pro quo. I said to my French colleague, Laurent Collet-Billon, “You know, you and I must do something”. He said, “Of course, mon cher collègue, we will see what we can do”. But of course nothing has come through. Unless we do something about this protectionism, it will probably not.

[Lord Hamilton of Epsom]

As the noble Lord was responsible for the posting of the aircraft carrier orders, why were they not submitted to bids from all round Europe? Why were the bids all placed with British shipyards in this country?

[Lord Davies of Stamford]

As a matter of fact, I would be very proud to take credit for those particular contracts, but that contract was let before I came into my job in the MoD. However, I did manage to save that project when it was under very severe threat, in similar circumstances as last year. But unfortunately the new Government decided to throw in the project and deny us carrier strike capabilities for at least the next 10 years—disastrously so. Let me answer the question hypothetically, therefore, and say what I would have done had I been there at the time. Undoubtedly, I would have been delighted to have had those carriers procured on the best bid from within the European Union basis, as long as it was reciprocal and we had some chance of getting an order for a French frigate from a British shipyard. It has to be reciprocal. That was a particularly big order, and the protectionism the French afford to their shipyard, the Chantiers de l’Atlantique, is particularly great, so there would have been a situation in which competition would have been completely false.

I would have been delighted to have had the opportunity to procure on a common EU basis because that would have enabled us to bring the costs down further and it would have meant that our yards, over time, would have done very well. If you just look at two—the Type 45 destroyer and our submarine-building capability in Barrow—I am convinced that they are the best in the world, including the United States, when it comes to building very sophisticated warships. We would have done very well with that solution.

As I said, there are two reasons why there is a chance of Article 346 being reformed. It is particularly unfortunate, therefore, that we should be about to make it much more difficult for that to be achieved through QMV, if that seems the most likely way forward, which I think it is. The second argument is that, unlike us, our continental partners always have a sense of guilt in acting in a non-communautaire fashion. They are signed up to the principle of the single market. They find it very difficult and embarrassing to argue for derogations, though of course they do so when they are under great political pressure. Therefore, it is the sort of situation when agreeing to the intermediate stage of going to a QMV decision-making process has some hope—I do not put it more strongly than that—of achieving the substantive change that we all want.

I put to the Government, in my last comment on the subject, that when you have some realistic hope of something—it does not matter whether it is 20 per cent or 50 per cent or 70 per cent or even 10 per cent—but there is no downside, logically you do it. In this case there is a real hope of moving forward. There is no possibility whatsoever of extending the list under Article 346. The list is already far too great, as somebody has already said in the debate. Nothing that could conceivably be argued to be military materiel is not currently included, and this clause has been used to cover things like trucks, notably in the case of the Italians—I do not mind embarrassing them by mentioning this now—who claimed that because they were military trucks they were military materiel. There is no chance; I am quite convinced that the European Court of Justice would rule out any further use of Article 346 because such a use would no longer be consistent with the description in the article itself.

There is no downside. I ask the Government to look at that point again. There is a potential upside through using QMV, and the stake is important. This is a major national industrial interest for one of the major British industries in which we have a worldwide capability. There is a direct benefit to us—the taxpayer—as well, because if we can expand the sales which carry the overheads, including R&D, of the British defence industry, it will mean that we can achieve given levels of military capability from that industry when we procure from them at lower cost. It will be a win-win situation if we can break through here and we would be very foolish to deny ourselves any opportunity or instrument which made it even slightly more likely that we would achieve that.

On the basis of that, you would expect me to put my amendment to a vote. However, I am conscious that we are after dinner and that the Whip has been withdrawn, so there may be an uncharacteristic result from any particular vote, and I am also anxious not to take up too much time. We have already had a very good debate. I think I have said enough and colleagues have said enough. I trust to persuade the Government to look at this again. The noble Lord, Lord Howell—I am very grateful for this—was kind in his remarks about my intervention and he said that there were strong arguments on my side, though he said there were strong arguments on the other side as well. I understand that. That indicates to me that despite what is in the Bill the Government are a little bit more open-minded, perhaps, than one might have thought at the beginning of this debate. On that basis, I beg leave to withdraw my amendment.

European Union Bill

Debate between Lord Hamilton of Epsom and Lord Davies of Stamford

Wednesday 8th June 2011 Lords Chamber

[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.

European Union Bill

Debate between Lord Hamilton of Epsom and Lord Davies of Stamford

Wednesday 25th May 2011 Lords Chamber

[Lord Hamilton of Epsom]

Of course—but the noble Lord will know well that the late Lord Hailsham described government as an elective dictatorship. I view what will happen as being very much more in the hands of the Government than of Parliament. I take the point that we are talking about Parliament rather than the Government. However, it is an entirely different matter when you give powers to people in the form of a referendum, because if you then take them back you are taking them from the people. That is different from all the other sunset clauses that we have in our legislation.

[Lord Davies of Stamford]

My Lords, I put forward five simple propositions. Many of them will be regarded by noble Lords as entirely unexceptionable. The first is something that most people would regard almost as a platitude; every human institution must be able, in order to survive, to adapt to changing circumstances, and to change from time to time its decisions, procedures and way of doing business. I think people would accept that proposition for the private and public sectors, and for any realm of life. The Government have not attempted to argue that this principle does not apply, for some extraordinary and miraculous reason, to the institution known as the European Union, and no such argument could cogently, coherently or credibly be made. I will leave the proposition there in the hope that it will not be challenged; I shall be fascinated if any noble Lord chooses to.

My second proposition is one that I have already put forward in these debates, and about which the Government have not succeeded in persuading me that I am wrong. It would not be credible, or possible in practical politics, to have a referendum on 90 per cent of the issues listed in Schedule 1, such as the appointment of judges or the prosecutor general or something of that sort. The British public would consider these matters to be of tertiary importance and interest. We all know how difficult it is to get a respectable turnout in general elections, even when they are the high point of political controversy in a five-year parliamentary period.

The Government have not attempted to argue that I am wrong about that. They have said that, in practice, referenda issues would be bunched. There would be a referendum on six or 12 issues—they have not come up with a figure—at one time. That is not practical politics, either. You cannot ask the British public to answer yes or no to a dozen different questions; you would have to ask for a dozen different considered responses, which would mean that you would have to have a campaign running in parallel on a dozen separate questions, many of which will have a complex technical background. That is not a practical proposition at all.

That is my answer to the noble Lord, Lord Hamilton. I often agree with the noble Lord in this Chamber and always appreciate his interventions. He asked why noble Lords on this side should be worried about referenda, because if we think that something is in the national interest, the public will vote for it. That was the noble Lord's argument; there will be a referendum and it will be won, and the result will be in favour of, for example, greater integration in a particular area. My response is that those referenda will not occur, because it would not be practical politics to have a referendum on at least 90 per cent—or some such very high figure—of the issues set out so conveniently in Schedule 1.

--- Later in debate ---

[Lord Hamilton of Epsom]

I thank the noble Lord for giving way. Is he suggesting to me that it is in the national interest that we should integrate more greatly with Europe?

[Lord Davies of Stamford]

I am suggesting that sometimes it may be and sometimes it may not be. We need to be pragmatic about these things. I believe that the noble Lord is in favour of our membership of the European Union and of the single market. I believe that he voted for the Single European Act, so he is in favour of qualified majority voting. He therefore considered that it was very much in the national interest to integrate policies in those areas. It may be that he is on record as having been in favour of other forms of integration on equally respectable pragmatic grounds. I think the noble Lord’s record would be quite inconsistent with any suggestion that it is never in the interests of this country to integrate our policies with the rest of the European Union.

I have a third proposition to put forward. Most noble Lords have had some experience of decision-making bodies in the private sector, company boards and so forth, or in the public sector. Anybody with any background in affairs of any kind will agree with this proposition as well. It is a very simple proposition. They might also think it is a platitude. In normal circumstances, it might not have been necessary to put it forward. Often in life, in order to make substantive progress in any human institution or to achieve a particular substantive decision, it is sensible and expedient to move via a procedural change. If you want to get members of your board to come to a particular agreement on a particular matter, you might suggest that you do not take the decision then but set up a committee to take it, or you have some other arrangement that will lead in the right direction.

That applies to the way the European Union works. It works as a horse-trading body. I do not think that is a disparaging comment. Human life is like that. People have different views about different questions and sometimes take some time to realise that they might have an interest in concerting and integrating their policies. It is sometimes quite difficult for Governments to change publicly the way they vote on an issue. It may be that declarations have been made in the past, in their Parliaments and so forth, saying, “We will never agree to vote this way”. We all find ourselves with that kind of commitment on our backs, in our luggage, and it is very embarrassing and trying. Sometimes when you are doing business with somebody who has this kind of problem, he would quite like to agree with you, but finds that he cannot because of some prior commitment of that kind. The way round that often is to change the procedure and say, “Let’s have qualified majority voting”. Then your counterparty may well say, “That’s fine. Nothing wrong with qualified majority voting in my Parliament. Maybe the British Parliament has neuralgia about it, but our people don’t, so we will agree to have QMV on this matter from now on”. Then you can make progress and achieve your common purposes. The single market, of which I know the noble Lord, Lord Hamilton, is a strong supporter, was achieved in precisely that way. That is why Margaret Thatcher came out with qualified majority voting in the first place. That is my third proposition. It is often sensible, if one wants to make substantive progress, to have available to one the opportunity for procedural change and for changing the method of decision-making. It therefore makes no sense to block off that possibility altogether in the way that is often suggested.

You would think that my fourth proposition would be a platitude as well, and I hope it will not be challenged. It is that it is sometimes in our interest to change things. It is sometimes in our interest to get a new decision. It would be very odd if there was a systematic and entirely symmetrical position in which the British national interest always coincided with no, if whatever the question was, it was always in the British national interest to say no. We could save a lot of money if that was the case. We would not need highly paid, highly talented people such as the noble Lords, Lord Hannay and Lord Kerr, living in Brussels. It would be very simple because the answer would always be no. That could be delivered electronically with no expense at all whenever it was required.

Parliamentary Voting System and Constituencies Bill

Debate between Lord Hamilton of Epsom and Lord Davies of Stamford

Wednesday 19th January 2011 Lords Chamber

[Lord Hamilton of Epsom]

As everybody will know, I have spoken in the debate on the first half of this Bill only against the Government and, indeed, have voted against the Government. This is a time when I intend to support the Government—or I hope that I am supporting the Minister. If he makes an exception over the Isle of Wight, the argument about communities will be rerun about every conceivable constituency around the country. It is extremely dangerous to start making exceptions. The effect of this Bill is going to be that a number of constituencies that have been a coherent whole will be broken up, but that is the result of the Bill. Once you start on exceptions, why should it end with the Isle of Wight?

[Lord Davies of Stamford]

Is the noble Lord in favour of the two exceptions that the Government have already made?

[Lord Hamilton of Epsom]

No, I am not in favour of them either. I agree that they have breached the principle, but I suppose that there is a greater argument for an enormous land mass with a very small electorate in Scotland being represented by one person.