European Union (Approval of Treaty Amendment Decision) Bill [Lords]

Martin Horwood Excerpts

Monday 10th September 2012 Commons Chamber

[Mr Clappison]

I pay tribute to the hon. Gentleman, who has been consistent in his analysis. I have not yet heard anyone who has convincingly contradicted his analysis of the underlying economic problems.

[Martin Horwood (Cheltenham) (LD)]

rose—

[Mr Clappison]

The hon. Gentleman has had many goes in the past. I will give him another one now to see whether he can do any better.

[Martin Horwood]

I actually rather agree about the underlying financial and economic problems not being tackled, but that is not what these measures are intended to do. The hon. Gentleman talked about the different mechanisms that have been introduced, but one of those in respect of which the UK has the greatest liability is the EFSM. The whole process being undertaken here will reduce our liability to that mechanism, which will cease to function, so surely he should be welcoming this process, not trying to lay obstacles in its way, however well meaning they might be.

[Mr Clappison]

I am doubly lucky now, because I have two trailers for the film. Neither is entirely accurate, but the hon. Member for Cheltenham (Martin Horwood) is slightly more on the right lines than the right hon. Member for Rotherham. I hope that I made it sufficiently clear earlier that I believe the Prime Minister negotiated a good deal for Britain, so far as it goes, in that he extracted us from our liability under the EFSF, which is the European financial stabilisation facility—

[Martin Horwood]

It was the EFSM.

[Mr Clappison]

I am sorry. It was the EFSM—the European financial stabilisation mechanism. That is different from the EFSF. Britain had liability under one of the two measures agreed in May 2010; it was the EFSM, not the EFSF.

I do not want to make many further points about this matter, because we went into it in the previous debate, but it was agreed in May 2010 that, under the EFSM, this country would have liability in relation to the eurozone which would have resulted in British taxpayers having to fork out with no prospect of Britain receiving any benefit from the EFSM because it was not a eurozone member. [Interruption.] If the hon. Member for Cheltenham can just contain his enthusiasm, he will see the point that I am trying to make on the timetable for all these measures to take effect. That is what the amendment relates to. He will know that there is agreement that, as soon as the European stability mechanism is in force, Britain will no longer have any such liability. It is not yet in force, however, and there are important issues regarding the timing of these events. That is what the amendment deals with. The Bill will come into force on the day it receives Royal Assent.

--- Later in debate ---

[Mr MacShane]

I do not know whether my hon. Friend has spent much time holidaying in Europe in recent years, but there has been a substantial devaluation of the English pound against the euro since, roughly, 2008, and what have we seen? A recovery in Britain? An increase in exports? A decrease in imports? An increase in the creation of firms and jobs? In fact, we have seen the very opposite. My hon. Friend is right historically—he is always right historically—but I prefer to live today rather than in history.

The main problem with the amendment is that it is a wrecking amendment, and I hope that when the Minister replies he will have the honesty to say so, although the amendment was tabled by his hon. Friend the Member for Hertsmere. The notion that nothing can be ratified until every other country has ratified it and disposed of putative legal challenges is a circle that can never be broken. If the same rule were adopted by even one other EU member state, nothing could be ratified until we had agreed to ratify it, and we could not agree to ratify it until other Parliaments had done so.

Not only are we, as usual, condescendingly and patronisingly lecturing other Parliaments on what their constitutional settlements should be, but this is nothing short of a wrecking amendment, and I wish that Conservative Members would have the intellectual honesty to say so.

[Martin Horwood]

It is generally a pleasure to follow the right hon. Member for Rotherham (Mr MacShane) in European debates, as he and I share a broad enthusiasm for the European Union and its development. However, I think that on this occasion he is being a little unkind to our hon. Friends on the Conservative Benches. I do not think that this is a wrecking amendment; I think that it asks legitimate questions about the timing of the transfer between the European financial stability facility and the European financial stabilisation mechanism and the new European sustainability mechanism—although I think that by demonstrating that we know the difference between the EFSF, the EFSM and the ESM, we are probably all showing that we need to get out more.

The right hon. Gentleman asked whether the old EFSM, which made Britain liable for the financial bail-outs, could be brought back. That is an interesting question, and I too would like to hear the Minister answer it. I assume that a vote by the Council, probably with unanimity, would be required to bring the EFSM back into operation, given that the Council voted to end it, or at least not to involve it in any new bail-outs. If that is the case, I think that it would reassure Conservative Members considerably to know that the EFSM is, in effect, dead and buried, at least in respect of new bail-outs.

There are two problems with the amendment. The right hon. Member for Rotherham pointed out one of them in what was a rather pre-emptive intervention. This amendment ties the triggering of United Kingdom legislation to actions of other countries—to events in Berlin, Dublin or the European Court, for instance. That is a strange principle for Members who have generally been rather keen to emphasise the unique sovereignty and independence of the United Kingdom Parliament to be trying to introduce into a British Bill. It raises a constitutional question, too: should we be putting clauses into British legislation that are entirely dependent on events in other countries?

The second problem is the political roundabout problem. If other countries follow our example and make their ratification of the treaty dependent on others finishing their processes, we will be like cars at a roundabout, with everybody waiting for everybody else to go, and the whole process will completely logjam. I am not sure whether that is what was intended, but it would make the amendment something of a wrecking amendment, in practice if not in theory. I think this is an impractical amendment—albeit perhaps a well-meaning one, which has produced an at least mildly illuminating debate.

[Kelvin Hopkins]

First, let me say that I entirely support what the hon. Member for Hertsmere (Mr Clappison) said, and I was pleased to sign his amendment.

The idea that we are being difficult by talking about delaying our effective support for this European Union measure is wide of the mark. We are being asked for a favour in respect of something that does not technically affect us, because we are neither contributors to nor beneficiaries from this new mechanism. We as a country are being gracious by putting this Bill forward, as we are helping out. It is absolutely sensible that the eurozone countries, who are very different from this country, should make sure that they have approved this mechanism and that there is no possibility of legal challenges before we say, “Yes, okay, as you’ve all approved it, we’ll sign on the dotted line to help you out”—and we should do that at the end of the day rather than at the beginning.

If we were to rush ahead and do this, the left-wing Eurosceptics in Holland would rise up to derail the Dutch situation, or the German constitutional court would decide it did not like the system, and we would be left having approved something that the eurozone countries do not even like very much themselves. We would be in a very silly position. It is therefore entirely sensible that we and other countries outside the eurozone should only go along with any decisions once the eurozone countries have agreed to them.

However, I must say that I still believe this mechanism is simply another measure for kicking the can further down the road and putting off what some think of as the evil day when the euro comes to an end. I do not say that simply because I have been sceptical about the euro from the beginning and disagree with the whole principle of the single currency, because it is not just me saying this now; other people agree. Indeed, this week George Soros said that Germany should leave the euro. It would be daft of the Germans to do that, however, because if they did, the new Deutschmark would immediately appreciate in value and Germany would become very uncompetitive in comparison with other member states.

--- Later in debate ---

[Emma Reynolds]

I agree that it would be important. It is not clear when the ESM will be introduced—the constitutional court in Germany will rule on Wednesday —or what the significance or extent of the interaction with the private sector will be. It is important for those reasons as well, therefore, that the Chancellor and the Foreign Secretary produce reports in the way suggested by the new clauses. It would enhance the scrutiny of these important subjects in the House and the other place and make it clearer to the general public exactly how the ESM will operate and how its operations will affect the British economy.

[Martin Horwood]

I will not trouble the Committee for long. It is sometimes tempting with a simple Bill to think of things to put in amendments to provoke debate—it can be helpful—and asking someone to make a report is always quite a good one, but we need to be a little careful with civil servants’ time. To ask the Treasury to make a report to Parliament annually on

“the impact of the European Stability Mechanism on the risks to the interests and obligations of the United Kingdom from eurozone instability”,

and to ask the Foreign and Commonwealth Office

“whenever a loan is made”

to report on the

“potential effect, both direct and indirect, on the interests and obligations of the United Kingdom”,

will involve days and days of civil service time.

[Emma Reynolds]

Will the hon. Gentleman give way?

[Martin Horwood]

No, I will not. I am not going to take up a lot more of the Committee’s time.

The proposals are superfluous, given that we endlessly debate the impact of the eurozone and of the various bits of European constitutional and financial architecture on the United Kingdom and its economy. We also endlessly debate the individual bail-outs, and there are always statements to the House on such matters. If these reports were produced by the Treasury and the Foreign Office, I suspect that Her Majesty’s Opposition would disagree with them anyway. There will be plenty of opportunity to question Ministers on what they think of the indirect or direct implications of any bail-outs.

--- Later in debate ---

[Wayne David]

I can see that the hon. Member for Cheltenham (Martin Horwood) is straining at the leash to intervene on me. I will give way to him, so that he can give my hon. Friend a comprehensive answer. She has made an astute point.

[Martin Horwood]

I would like to put on the record, on behalf of the Liberal Democrats, my belief that this House should indeed carry out much more scrutiny of European affairs. I also agree with the hon. Gentleman that that should be done on a broader basis, and that the departmental Select Committees should be involved. Indeed, we have suggested as much in our submission to the current discussions on European scrutiny. I am not sure, however, that we need ever more reports being discussed in addition to all the legislation and everything else that we debate, interminably, on the Floor of the House. He cannot possibly argue that we do not spend enough time debating Europe in this Chamber, as we are doing now.

[Wayne David]

I do not want to labour this point. I welcome the Liberal Democrats’ desire for more transparency and scrutiny, but experience shows that, all too often, those words come to nothing unless there is a focus on something. The importance of the new clauses is that they would provide that “something” for the debate to focus on. Nothing concentrates the mind better than a report that has a distinct niche in the parliamentary calendar to enable that debate to take place.

--- Later in debate ---

[Martin Horwood]

I congratulate the Minister on his magnificent handling of the Bill. I am very pleased that he stayed in his place in the reshuffle, because his expertise in matters European is now encyclopaedic. I am sure that the quality of our debates and his contributions has not reduced, but these European Bills are certainly going through faster, as we seem to have got through this one at great speed.

The contributions of the hon. Member for Wolverhampton North East (Emma Reynolds) have been positive and constructive, and there has been a great deal of consensus, even extending at times to some traditional Eurosceptics. I was very impressed to see the hon. Members for North East Somerset (Jacob Rees-Mogg) and for Camborne and Redruth (George Eustice) among those who have been supporting the Bill during its passage. That is as it should be, because this should not be a controversial piece of legislation. We are not going to be part of the ESM intergovernmental treaty; we are merely seeking to facilitate eurozone members in trying to find their way out of what is still an extremely serious crisis.

That has to be in the British national interest, because whether we like it or not— whether or not we are a member of the ESM or the eurozone, or even of the European Union—we are inevitably and inextricably linked to the whole European economy. Some 50% of British trade, worth £450 billion a year, is with other EU member states. Over 100,000 British firms export to other EU countries, 94,000 of them small or medium-sized enterprises. Over 200,000 UK companies trade with the EU every year. Over 50% of our foreign direct investment comes from other EU member states, worth more than £350 billion a year, and over 50% of companies investing in the UK cite the UK’s membership of the single market as a core reason for doing so. The fate of the European economy is inextricably tied up with our own fate and with our ability to grow and to recover from the financial crisis that has affected the whole continent.

This is, in its own small way, an historic Bill. It is the first use of the European Union Act 2011, which sought to strike a balance between Liberal Democrat enthusiasm to maximise the benefits of EU membership and Conservative caution that we take not one step without adequate parliamentary scrutiny and, if necessary, legislation, and without the option of a referendum if power were being transferred from the British level to the European level. No such referendum is necessary on this occasion, as this is merely a Bill to ease the passage of the intergovernmental treaty for other members of the European Union. However, the full panoply of parliamentary scrutiny of legislation has been brought to bear even on this small, technical change.

As the Minister rightly said, the treaty that will, we hope, follow the Bill at European level will not be a panacea even for ESM members and eurozone members. It will not, of itself, solve the deep and serious problems of the European economy, which relate to competitiveness, lack of growth, and debt. These complex, interacting problems still pose a real and present danger to the whole European economy, including this country’s economy. We have not in any way solved those problems in the few days that we have spent debating this Bill, but perhaps we have made one small contribution to the start of the journey towards doing so.