European Union Bill

Lord Hannay of Chiswick Excerpts

Tuesday 3rd May 2011 Lords Chamber

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, I begin by welcoming the noble Lord, Lord Triesman, to the forefront of the Opposition's concerns about this Bill. I think that he and I exchanged views from the Dispatch Box during the passage of the Lisbon treaty. We covered a great deal of ground then, and I think that we learnt a great deal from that process. Indeed, the British people learnt a great deal from the Lisbon treaty process, as did the whole of Europe. I look forward to lively debates with him in the future.

I have to say in parenthesis that should this Bill become law, the future will not be at all as the noble Lord describes it. The picture of a dribble of referenda on small issues completely misunderstands the way in which the European process works now or will work in the future, whether this Bill is on our statute book or not. I have obviously explained that insufficiently because the message has not got over, but as we continue our debates I hope to be able to make clear that the pattern will not be dissimilar to the pattern of the big treaty packages in the past, the difference being that if they contain matters that might look small but could be highly significant for this nation because they involve a transfer of competence or powers beyond the level of insignificance, that certainly requires consulting the British people. That is a very widespread view which this Government believe is important to satisfy in order to build a better consensus for the European Union than we have today from the British public.

However, that is for other debates: debates that we have already had and debates in the future. On this issue, we have had a very elegant exchange on the two sides of the argument. It is a debate in which the Government’s position is quite clear, as I shall make plain in a few moments. I find that when your Lordships tackle this sort of issue we put up a superb performance and all sorts of aspects are developed that do not necessarily emerge in the pattern of debates in the other place.

The amendments would alter Clause 4 to create an automatic requirement for a referendum in the UK to approve the accession of a new member state to the European Union. As your Lordships know, the UK has never required a referendum on accession treaties in the past, and this Government have been clear that there should be no referendum requirement merely for the accession of any new member state. That was the position also taken by the previous Government, of which the noble Lord, Lord Triesman, was a member. Why is that so? The simple point is this: the accession of a new member state alone does not constitute a transfer of competence or power from the UK to the EU. The transfer of powers or competence to the EU would be from the member state joining the European Union, not from the UK. Of course, there are some effects, possibly including a change in bilateral relations if a country becomes a member of the European Union. No one disputes that, but we are not really talking about effects or impact; we are talking about the transfer of powers and competences.

I apologise if that sounds narrow, but that is the limitation of the provisions of the Bill. Of course, we are aware of the need to avoid providing a loophole in our referendum provisions in case there is a proposal to use an accession treaty to transfer power or competence from member states other than the acceding state. That could occur, so this Bill provides for a clear requirement for a Ministerial Statement to be laid before Parliament about whether an accession treaty constituted a transfer of competence or power from the UK to the EU in accordance with Clause 4. If the Minister decided that such a transfer was proposed, a referendum would then be required, but if there was no such transfer no referendum would be required. I hope that reinforces the point that I was making earlier.

[Lord Hannay of Chiswick]

My Lords, as the Minister has touched on this point so clearly, will he make it quite categorical that if a Croatian treaty of accession in the next year or two is brought before Parliament and it contains the provisions on Ireland and the Czech Republic that were agreed as part of the ratification process of Lisbon, in which it was stated, by us as well, that they will be included in a future accession treaty, that will not give rise to a referendum requirement?

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[Lord Blackwell]

I am grateful to the noble Lord for his clarification. However, he talks about trust, and I have to say to him that the reason why the British people have lost trust in politicians to represent them in Europe is that over many years they have seen politicians stand up and say, “Minor changes. These won’t affect you”, but cumulatively those changes have added up to a huge shift in powers.

These brakes were put in the treaty, which was agreed by Parliament. The noble Lord may not want to remove them this year, but when does he want to do it? If he wants to do it at some time, that would be a substantial weakening of the current treaties. In the spirit of the Bill, which I wholly support, I regard anything that removes a veto or anything akin to one as a major change to the treaty that should not be carried through by Government without the provisions of the Bill requiring that as a major change it should be put to the people in a referendum.

In his speech, the noble Lord attempted to confuse the House by suggesting that the referendum would make it difficult for the UK to use these powers. I should make it clear—the Minister can correct me if I am wrong—that nothing in the Bill requires a referendum for the UK to use, or not to use, the emergency brake. The Bill is entirely silent about the use of Articles 48, 82 and 83. It simply says that if the EU seeks to amend the terms of the treaties under which we can use those emergency brakes, that will require a referendum. Whether or not the use of the emergency brakes itself required a referendum would depend on the substance of the matter that was contemplated being brought forward under those provisions, which would fall under other aspects of the Bill.

Removing the subsection, as the noble Lord is attempting to do, would mean that at some point in time a future Government could give away these vetoes without requiring that to be brought back to the people. That is exactly the kind of action that has led to the loss of trust of people in politicians and, unfortunately, in this Parliament, to protect them in this matter.

[Lord Hannay of Chiswick]

I am sorry that the noble Lord’s absence from earlier debates has not enabled him to catch up with where this debate has got to. Some of us were attempting to reduce sharply the number of provisions that require a referendum, for a number of reasons that are not the ones that the noble Lord, Lord Stoddart, gave but are related, as the noble Lord, Lord Liddle, said, to whether or not you believe in representative parliamentary democracy and the powers of Parliament. A number of us who have done so have put forward amendments that would effectively leave in the Bill the strengthening from the ratification of Lisbon powers, which means simply that if these changes were to be made there would need to be a resolution in both Houses, but would leave intact in the Bill a requirement for primary legislation before Britain could agree to that. That would be a strengthening of parliamentary authority in areas such as this, which in any case require unanimity. The idea that there is not a lock there is completely aberrant. What there is not, if you follow the amendments, is a lock plus a referendum, and that is for principled reasons that I have briefly attempted to explain. I am sorry to interrupt the noble Lord, but really and truly the situation is not quite as he suggests. Those of us who are trying to reduce the number of referendums are not trying to weaken the power of Parliament but to strengthen it.

[Lord Blackwell]

I thank the noble Lord for his intervention. Actually, I am fully aware of the nature of these amendments, all of which attempt to undermine the purpose of the Bill, which is to require a referendum if there is a major change to the treaties or a major shift in power. That is a principle that I fully support and which the noble Lord is attempting to undermine.

I hope that there will never be a referendum under the Bill because I hope that no Government will ever seek to transfer further power to the European Union in a way that would require the referendum requirement to be enacted. In hoping that we will never have such a referendum, I probably agree with the noble Lord. However, if we are going to restore the trust of the people of this country in the EU, we have to give them the cast-iron guarantees that the Bill provides and not undermine it in the way that the noble Lord, Lord Liddle, seeks to do.

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[Lord Waddington]

That is the example that comes to mind. There are three or four of them in the Lisbon treaty, but I do not have that information and, unfortunately, I cannot give it to my noble friend, but I will write to him, if he wants it. There were two or three other occasions; I am not saying that they were earth shattering, but it is alarming that the Select Committee did not spot that new law was being made here. That is the point I am making. It is alarming that new law could be made without holding a referendum, and it is doubly alarming that one of our expert Select Committees in this House did not spot what was happening on that occasion. It should not happen in future.

[Lord Hannay of Chiswick]

As a member of the EU Sub-Committee that was the author of that example, I should enlighten the noble Lord on the process. First, what he has said in the past few minutes is based on an interpretation that is a complete fantasy, whereby if this Government and country are party to an intergovernmental agreement, they can walk out of it when they like. They cannot do that. It is a matter of good faith and the law on treaties, and you cannot do that.

The noble Lord is quite right to say—and the text he read out demonstrates this—that we were perfectly well aware that the CFSP and the ESDP were being shifted from an intergovernmental basis on to a treaty basis. That is what we said in our report, but the key point was that the provisions for taking decisions within the Lisbon treaty in this area require unanimity, and there would be no surrender of powers or competences whatever. I am sorry—I will speak to the amendment in a moment, but I wished to correct that point.

[Lord Waddington]

With the greatest respect to my noble friend, he is in error. There was an intergovernmental agreement. You can say that that gave a competence to the EU, but it could have been withdrawn in a moment by just a communiqué between the member states. The noble Lord is surely not saying that it was a matter of insignificance to transfer an intergovernmental agreement into cast-iron treaty law. He is surely not saying that the report from which I read out made clear to its readers that, in fact, new law was being made on that occasion. The report does not say anything like that. It was certainly not a clear statement that an intergovernmental agreement was being transferred and converted into community treaty law.

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[Lord Blackwell]

I said that I had some sympathy with the amendment, and I very much hope that the Minister will be able to reassure me. To my mind, that was an example of a practice coming into effect which could then be claimed was an existing practice that simply needed to be codified. I am not a lawyer, but if something can be done under an existing competence, why does it need to be codified? The EU already has the power to do what it needs. If something is then codified, the danger is that it creates a new base, or ratchets up the base, from which we can then have further ingenious development in practices. I am therefore very nervous about allowing codification of this sort to take place when, if the EU is already doing it, codification does not seem to be needed. I would very much welcome the Minister explaining and perhaps thinking again about whether that exemption is required in the Bill.

[Lord Hannay of Chiswick]

My Lords, I will now argue against the amendment on substance, having dealt with the ancient history to which we were all subjected previously; I do not want to go back on that.

A common-sense application to the amendment would lead one to regard it as bizarre. The object appears to be to ensure that if the European Union, with the agreement of the British Government—which is required under unanimity—conducted an act of genuine codification, we would have a jolly referendum about it. All I can say is that if noble Lords really want to go around this country stirring up apathy about the codification of some obscure piece of European law, common sense has flown out of the window.

The amendment is being moved, and support for it being given, on the basis of fear that a British Government will not know enough about the process to distinguish between a real codification and—in the parlance of noble Lords who support the amendment—competence creep. It is not sensible to add to the 56 other matters, to increase the number of referendums on a subject on which it is frankly just not credible that you could have a sensible political campaign involving the whole electorate of this country. I am not in favour of that.

[Lord Waddington]

I hope that the noble Lord will appreciate from the very fact that I am not pursuing the amendment that I use it as an opportunity to point out the severe error committed by members of his Select Committee when it carried out its study into the impact of Lisbon. I hope that he will always bear that in mind in future and that the error will not be repeated.

[Lord Hannay of Chiswick]

I am afraid that the noble Lord is going to be disappointed.

[Lord Howell of Guildford]

My Lords, if there are no further comments from your Lordships on this issue, it remains for me to seek to allay the fears of my noble friend Lord Waddington on a matter which is undoubtedly complex. Indeed, as the noble Lord, Lord Liddle, remarked earlier, the entire area is complex because the interface between the powers and competences of the European Union and the powers, rights and obligations of the nation state members is vastly complex and, in some senses, is in a somewhat fluid state. Indeed, it is that very fluidity that gives rise to the unease for which I believe there is substantial evidence, and I speak as someone who has been involved for just short of 50 years—even before the UK joined the then European Community—in trying to see that the European Union works in a balanced, effective and beneficial way. Over the past few years, not only in this country but in many countries we have seen an appalling record of declining confidence in, support for and public consensus over the whole construct of the European Union. In my view, the EU has conferred considerable benefits on its members and on the peace and stability of the whole world in the past, and, provided it proceeds in a sensible way with good public support, it will do so in the future in a number of, although not unlimited, areas. This is a perfectly sensible aspiration and one which I think the Bill and its aims reinforce, although I realise that that is not understood or accepted by noble Lords opposite.

The amendment would remove the provision setting out that future treaty changes which serve to codify practice under the treaties, in relation to the previous exercise of an existing competence, should not in principle require a referendum. My noble friend is concerned, as he says Members in the other place were during debates on the Bill, that codification could be used as a vehicle for transferring power or competence from the UK to the EU and that this provision might provide a loophole to allow such a transfer under a future treaty change without a referendum. If a treaty change is merely a codification of the previous practice of existing competence and nothing else in that treaty would fall within Clause 4(1) of the Bill, the Government do not think that a referendum should be required and the matter would proceed on that basis. Genuine codification—I emphasise “genuine”—is not a transfer of power or competence. The EU competence in question already exists and the EU has already acted to that effect. Even if the UK did not agree to codify existing practice by means of a treaty amendment, the EU would be able to continue to act within the relevant existing competence. Therefore, in effect there would be no point in attempting to go down another path because the EU would already be doing what it was doing within the existing competence.

An example of a treaty change which we would consider to be codification would be the introduction of a separate legal base for action previously taken to provide macro-financial assistance to some third countries. Article 352 of the TFEU, which we all know well, was used in April 2004 to provide macro-financial assistance to Albania. It was then used a further seven times to provide macro-financial assistance in a similar way to other countries. When the Lisbon treaty came along, it codified this use by providing a separate legislative base under Articles 212 and 213 of the Treaty on the Functioning of the European Union, which cover economic, financial and technical co-operation with third countries.

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[Lord Pearson of Rannoch]

My Lords, I speak against these amendments. Amendment 23B assumes that the EU single market is a good thing for this country. That is a common misconception among the political class upon which I should like to cast a little doubt. This is a big and detailed subject and I recommend that any serious student should consult the briefing notes on the globalbritain.org website, which demolish the whole myth of the EU's economic usefulness and that of its single market.

The background point, which is not generally understood, is that the single market is more than a free trade area, it is a customs union. This means that a single customs barrier surrounds all the countries in the Union, whose international tariffs and trading arrangements are negotiated and decided centrally by the European Commission. In a free trade area, on the other hand, the countries concerned enjoy free trade among each other, but they remain able to make their own tariff arrangements with countries outside that area. They have their own seats on the World Trade Organisation and they are also able to make their own domestic law in areas such as working time, health and safety at work, part-time workers and so on.

So a country does not need to belong to the EU to enjoy free trade with it. According to a recent government Answer to me, the EU and its single market already have free trade agreements with some 63 countries outside the EU and are on their way to having similar agreements with another 75 countries, or roughly 80 per cent of the other countries in the world. It is perhaps worth noting that both Switzerland and Norway, not in the EU or its single market, both export more per capita to the single market than we do; Switzerland three times as much and Norway five times.

[Lord Hannay of Chiswick]

I am grateful to the noble Lord for giving way, but I fear that he is in danger of misleading the House fairly elaborately in this matter. He is talking about three things, not two: the first is a free trade area, the second is a customs union and the third is the single market. Norway, he has just stated categorically, is not part of the single market. I am afraid that he is in error. It is part of the single market, and it applies single market legislation by receiving fax messages from Brussels telling it what it has to do. The members of the European economic area are in the single market but are not in a customs union. However, I am not totally sure that this line of argument is going to get us very far—but it would be useful.

[Lord Pearson of Rannoch]

I do not want to delay the House, but that is why I made the distinction between a customs union and a free trade area.

The worst aspect of our membership of the EU single market is its sheer cost. Like their predecessors, this Government are determined to avoid an official cost-benefit analysis, and so we are left with the eight analyses that have been produced since the turn of the century, four of which are pretty much official, and which put the cost of our single market membership at anything between 4 per cent and 10 per cent of GDP. Indeed, the highest cost estimate came in 2005 from the Treasury itself in a paper entitled Global Europe: Full-Employment Europe under the signature of Mr Gordon Brown when he was Chancellor of the Exchequer. It put the cost of EU regulation at 6 per cent of GDP and of EU protectionism at 7 per cent. In March 2006, the French Conseil d'Analyse Economique, which is attached to their Prime Minister’s office, found that France had gained nothing from the single market or, indeed, the euro. In June 2006, the Swiss Government published their finding that joining the EU and its single market would be nine times more expensive than staying with their current sectoral free trade agreements with Brussels. Later in 2006, the EU Commissioner for Enterprise and Industry, Mr Günter Verheugen, said that EU regulation was costing its members some €600 billion a year, or around 6 per cent of GDP at the time.

One of the troubles with being in the single market is that this EU overregulation, whatever it costs, applies to the whole of our economy, not just to the 9 per cent that trades with clients in the rest of the EU. So the 11 per cent of our GDP that goes in trade with the rest of the world and the 80 per cent that stays in our domestic economy—91 per cent of our GDP—has to carry the burdens of Brussels’s overregulation. There are, of course, those who fear that were we to leave the EU and its single market our trade would somehow suffer and that, to quote the propaganda, 3 million jobs would be lost. The truth appears to be the opposite: trade would expand and jobs would be created. It is, of course, true that we have 3 million jobs exporting goods and services to clients in the EU, but they have 4.5 million jobs exporting goods and services to us. We are, in fact, the EU’s largest client. Would the French stop selling us their wine or the Germans their cars just because we had left the single market and were no longer bossed around by Brussels? Of course not. There are also the points that the World Trade Organisation would prevent any form of retaliation were we to leave and that the EU’s average external tariff is now below 1 per cent. Our trade is going up faster with the rest of the world than with the EU, both inwards and outwards. Our exports to the EU single market are declining. The single market is sclerotic and overregulated and its demographic trend is against it. It is the “Titanic”.

It is also hard to think of any other customs unions along the lines of the EU. There was the Soviet Union, and there may be something similar in the Caribbean, but nowhere else. Mercosur in South America does not count because its members are free to agree their trading relationships with non-members. Can the Government advise us of any other customs unions like the EU? If not, does that not suggest that it may not be such a great idea?

As to Amendment 23F, I do not think we need the EU getting more involved in financial regulation. Commissioner Barnier has openly said that he does not favour what he calls the Anglo-Saxon model, and we have yet to feel the damage done to the City of London and its ability to pay tax by the new EU supervisory bodies. When the movers of the amendment say that they do not want it to interfere with the UK’s general approach to financial regulation, I ask whether they have Monsieur Barnier’s agreement? The deed is done. Overall financial supervision has passed to Brussels. No provisions in this Bill will prevent that.

As to Amendment 23H, I fear that those of us who come from the Eurorealistic perspective would rather that the unelected Commission did not continue to negotiate on our behalf in a new global trade round. As the world’s fifth-largest economy, we would rather do it for ourselves.

Finally, is it not really grotesque that an organisation that has so dismally failed to look after the vast sums entrusted to it by the taxpayers of Europe should have its powers strengthened, or made more effective, as the amendments have it? More will certainly mean even worse, and I oppose the amendments.