European Union Bill

Lord Kerr of Kinlochard Excerpts

Monday 13th June 2011 Lords Chamber

[Lord Davies of Stamford]

My Lords, the second point to which I wanted to draw attention is a theme that has come through in all these debates. All I shall say in a few sentences is to try to make explicit in Hansard what should be implicit for anyone who reads our proceedings with any degree of attention. A clear difference is emerging between those of us who are in favour of the Bill and those of us who are against it as regards the role of Parliament and our view of Parliament’s constitutional importance, functioning, efficacy and efficiency. It is clear that the coalition Government and those who support them in this Bill do not really believe in Parliament in the same way that those of us on the other side of the argument do. That is a sobering thought, because until now, for hundreds of years, there has been no distinction between the parties about Parliament and the fact that it is the best way of taking complex decisions on behalf of the country. That is why most of us came into politics and public life in the first place. It was because we wanted to be part of that process and to influence it in one way or another. All parties in this country and all of us who have stood for public elected office have always believed that Parliament was the best possible mechanism for achieving good governance and for making sure that complex arguments had been viewed from their different perspectives and debated, and that we came to a mature and considered conclusion on difficult issues. I am very proud of being here in the mother of Parliaments.

Now half our Members in this House this afternoon—perhaps more than half; I do not know, but we will see what happens in the vote—are sceptical about Parliament. They pay lip service to it and, no doubt, see some role for it, but they are clearly very sceptical indeed about Parliament. They do not think that Parliament is mature enough or sufficient for the purpose of deciding complex questions in the future. They want to go back to this Napoleonic concept of the plebiscite or referendum as a mechanism that is superior to that of parliamentary government. That is a sobering thought. I will not go further into the constitutional implications or the historical significance of that because it would take me well outside the amendment we are debating. However, it has been a theme which, unambiguously, has emerged from the debates we have been having on this Bill. It is something that we should all reflect on carefully because the long-term consequences of such a split in what has always been a constitutional consensus in this country are to my mind very sobering indeed.

[Lord Kerr of Kinlochard]

I support the final point made the noble Lord, Lord Davies, and the final point made by the noble Lord, Lord Goodhart. My point is a Burke point. I hope that the noble Lord, Lord Waddington, is listening: I am addressing it to the rising hope of the stern, unbending Tories. It seems to me really important that we should try not to undercut Parliament. As the noble Lord, Lord Goodhart, said at Second Reading, as he has said again today, what we are doing with these referenda, the ones talked about in this clause and in this Bill, is asking the simple question: do you wish to overrule Parliament; do you wish to disallow an Act of Parliament? In every case, the Act will be on the statute book and the question for the electorate will be: do you want overrule Parliament? What, I ask the noble Lord, Lord Waddington, would Burke have said?

[Lord Waddington]

As the noble Lord has been kind enough to bring me into this debate, is there not a difference between this situation and the situation which has normally appertained in the past? Is it not right to say that in the eyes of the public people are elected to Parliament to exercise the powers which are going to be bestowed upon them? The difference which has taken place over the past years is that people who have been elected to Parliament to exercise specific powers have thought that they are entitled to give away those powers in perpetuity to others. That is the great change which has come about and must be acknowledged when we are talking about Burke. Burke never envisaged that representatives in Parliament would give away the powers which they have been given—quite the contrary.

[Lord Kerr of Kinlochard]

I could repeat my Burke quotation with which I thought I had skewered the noble Lord, Lord Waddington, in an earlier debate but I will not. It is of the essence of Burke’s theory of parliamentary democracy, in which the Conservative Party used to believe strongly, that the people were consulted about who should sit in Parliament. The decisions of Parliament reflected the judgment of the people whom they had chosen. That seems to me to be quite a good rule and the point made by the noble Lord, Lord Goodhart, is a strong one. I support these amendments with the exception of the wording of the amendment on the euro, on which I have a separate amendment to which we will come later.

[Lord Flight]

I thank the noble Lord for giving way. I spent eight or nine years as a Member of the House of Commons when one particular side had a large majority. I felt that I was simply going through the motions and that there was no prospect of the Opposition members being able to stop that which the Government of the day wished to do. It was an elected tyranny by a large majority.

[Lord Kerr of Kinlochard]

I look forward to hearing the noble Lord express that view in the debate on the reform of the House of Lords.

[Lord Faulks]

My Lords, the amendment seeks to remove the referendum lock from all potential transfers of powers and competences, with the exception of the euro, Schengen and defence, in the sense that it is defined in the proposed amendment. Noble Lords might have thought, after the amendment proposed by the noble Lord, Lord Williamson, and its 40 per cent threshold, that the principle of a referendum lock had received acceptance, albeit without much enthusiasm except for those who are constitutionally opposed to referenda as a whole. This amendment goes much further. It takes outside the lock all potential transfers included in the big five, as they have been identified by my noble friend Lord Howell, with the exceptions that I have already described. I shall mention just one, referred to by my noble friend Lord Goodhart, the European Public Prosecutor's Office.

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Moved by

[Lord Kerr of Kinlochard]

22: After Clause 6, insert the following new Clause—
“Decision to join the euro
(1) No notification shall be given to the Council of the European Communities that the United Kingdom intends to move to the third stage of economic and monetary union (in accordance with the Protocol on certain provisions relating to the United Kingdom adopted at Maastricht on 7th February 1992) unless—
(a) the notification is approved by Act of Parliament, and(b) the referendum condition is met.(2) The referendum condition is that set out in section 3(2), with references to a decision being read for the purposes of subsection (1) as references to a notification.”

[Lord Kerr of Kinlochard]

This is a slightly different order of amendment from those that we have just considered. I fear that it is Osric or Malvolio, but it is not much ado. It does not address any of the great questions that we have been debating. I promise your Lordships that I shall not mention Burke versus Rousseau. I promise you that it has nothing to do with the underlying debate about flexibility versus dealing with the disconnect; it has nothing to do with whether there should be a referendum should the Government wish us to join the euro—that is agreed—it is merely about the timing of the referendum in relation to the process of our joining the euro.

The Bill ties the referendum to a decision under Article 140(3) of the TFEU, which irrevocably fixes the rate at which the euro shall be substituted for sterling and takes the other measures necessary for the introduction of the euro as the single currency of the United Kingdom. It explains that this will be a proposal from the Commission which will be the subject of consultation with the European Central Bank and then decided by a unanimous decision of the existing eurozone member states and, of course, the UK.

The Government say that the referendum on our joining the union should be taken on that draft decision about the modalities and the rate. My contention has been—I spoke on this matter at Second Reading and on our fifth day in Committee—that to wait until there is a negotiated draft decision on the modalities of joining the euro and the rate at which we join would be a mistake. I argue that the decision that is appropriate to a referendum is on whether the pound is to be replaced by the euro, not the decision, as in the EU text drafted by the Commission, on the detailed arrangements for the transition, the timetable or the rate. My contention is that the referendum should be earlier in the process and not the last stage.

I was grateful to the Minister for a letter which he sent me and copied to a number of other noble Lords this morning dealing with my arguments at Second Reading. His contention is—and I hope that I in no way misinterpret his letter—that it would be possible for the Government of the day to prepare a draft decision on the modalities before making the initial notification to the Council and Commission in Brussels and make that text available during the referendum campaign. He states in the letter that the “detail of the decisions” could be prepared,

“prior to the UK’s initial notification to the EU of its intention to adopt the euro. The question of the UK’s notification would then be subject to a referendum, by the time of which a draft decision … would be available for public discussion”,

and,

“form part of the public’s consideration”.

I do not want to exaggerate the difference between us; my point is rather small. I accept that the sequence that the Minister has set out might work; I am not saying that it is unworkable. What I am saying is that it is a little unwise.

The process in Brussels starts with a notification by the member state that wishes to suppress its currency and join the euro. When that is received, it is the task of the Commission to make the proposal, the ECB in Frankfurt to express a view on it and the Council to reach a decision. On the Minister’s scenario, we would draft it here. I confess that I can think of several precedents where it has been possible to get the Commission to put forward a text precisely in the language which the British Government wanted it to do—I happened to glance at the noble Lord, Lord Lamont of Lerwick, as I said that. I can think of no precedent for us publicising such a text in advance, passing it by Act of Parliament, as we would do, making it subject to a referendum and still hoping to persuade the Commission to present it as its own. Nor can I think of anything more likely to risk some discussion among the existing eurozone member states than our announcing the rate at which our currency was going to join theirs and giving it to them to buy—giving them the text, the decision, the modalities, the transition, the timetable. One would expect to go through some process of negotiation. It would be easier for everyone to save face if the text had not been published in advance from the start.

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[Lord Garel-Jones]

As the noble Lord, Lord Kerr, has already said—he has more experience than me—there are three very distinguished ex-Chancellors sitting below me. Would not the rate at which we enter—such a delicate matter as far as markets are concerned—normally be decided after markets had closed, say on a Friday, and revealed before markets opened on Monday? The risk of doing it any other way would be substantial. Perhaps former Chancellors have something to say on the matter.

[Lord Kerr of Kinlochard]

I agree with the noble Lord, Lord Garel-Jones. I was Private Secretary to the noble and learned Lord, Lord Howe of Aberavon, when he used to chair EMS realignment conferences as Chancellor of the Exchequer when we were not a member of the EMS. The standard form is exactly as the noble Lord, Lord Garel-Jones, lays down. One tries to avoid a market rumour on a Friday—that would be quite difficult if we had held a referendum on the Thursday—ECOFIN would meet on the Saturday, and one would have a decision on the rate very early on Monday morning or late Sunday night as the Japanese markets open. In this case it would be highly desirable to move fast after our referendum because there would be a lot of movement in the market. However, if you have decided that the rate is to be a matter for an Act of Parliament and a referendum, you are stuck with several months of volatile movement.

[Lord Lea of Crondall]

I wonder if there is a special case in this. Some of us approach this question from the hypothetical case that in a few years we might join the euro when it has parity with the pound. It might be relevant to the referendum that people might think, “If you can’t beat them, join them. It’s been around a long time—you might as well join”. Frankly, that is the way referendum decisions are probably made—in the pub. We are talking about making something quite technical into a demotic sort of fact.

Might the discussion in the press get a debate going? Something like the new clause proposed by the noble Lord, Lord Kerr, might be relevant, maybe with some adjustment, to the idea that we need to have the proposition about parity with the euro as part of the question. Could somebody enlighten me as to how that scenario—it is probable rather than possible; it has some common sense about it—would fit with this Bill and with the amendment?

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[Lord Wallace of Saltaire]

That, of course, is partly why, in all three British applications to join the European Economic Community there were informal conversations before Britain made a formal application—we needed to know what potential terms were available before we formally declared our hand. For the reasons I have outlined, we conclude that Clause 6(5)(c) is not legally deficient and that there is no risk of the Bill requiring more than one referendum on the issue, the second referendum being on the rate at which the UK would join the single currency. I therefore urge the noble Lords to withdraw their amendment.

[Lord Kerr of Kinlochard]

I always listen very carefully to what my former bosses say and I take very seriously the advice of the noble Lord, Lord Lawson, but I did not hear from the Minister any suggestion of thinking further or looking again. I agree with the noble Lord, Lord Lamont, that there is not a great deal between the Minister and me. My language, which is the language of the existing Act plus the referendum requirement, would permit the Government to do everything that the noble Lord, Lord Wallace, has said they would wish to do. It is perfectly permissive; they could do that because the notification could be done informally and the formalisation of the notification could be saved up till the end. They could do absolutely as the noble Lord, Lord Wallace, says.

[Lord Wallace of Saltaire]

I was using the language of the consolidated treaty. The noble Lord was using the language of the Maastricht treaty, and I suggest that the current consolidated treaty might provide the more appropriate language.

[Lord Kerr of Kinlochard]

I was using the language of our Act, the Act in force in this country now. I am talking the 1993 Act language, which is replicated precisely in my amendment. I am very glad to hear the Minister agree that we must avoid a second referendum and that we must avoid the crisis weekend drama, but in a plain reading the Bill says that what should be put to Parliament and the people is the draft of the decision under Article 140(3), which sets out the rate. That is the decision that we are going to take over a weekend, and it is going to be a busy weekend if ECOFIN starts on Friday, Parliament sits on Saturday and the referendum is on Sunday. It is not going to be fun.

I agree that under my language the Government could do exactly as they want. Under their language, I believe that the country would think it very odd if they did not see the draft decision including the rate, because that is what Article 140(3) of the consolidated treaty says. It uses the rate; the rate is there in the treaty. So although I regret that I have taxed your Lordships’ patience long enough, I think that I really have to test the views of the House.