European Union (Amendment) Act 2008

William Cash Excerpts

Wednesday 16th March 2011 Commons Chamber

[Mr Lidington]

I had better invite the hon. Gentleman to read the Hansard record of the debates on the European Union Bill in which he took part—both in Committee and on Report. If he does read them, he will see that the Government introduced an amendment precisely to make explicit the requirement for this proposed treaty change to be subject to more rigorous parliamentary scrutiny than would have been permitted if the current statutory procedures under the Constitutional Reform and Governance Act 2010 had been allowed to stand and to suffice. I hope that he was not asleep when we debated that amendment. If he examines Hansard, he will find that we have covered that point in some detail.

The previous Government left the country with a system of control that was grossly inadequate. Section 6 of the European Union (Amendment) Act 2008 requires that when a draft decision under the simplified revision procedure—under article 48(6) of the treaty on European Union—is proposed, a Minister must introduce a motion and have it passed by both Houses without amendment before the Prime Minister can signal his agreement to its adoption at a subsequent European Council. That is the point in the decision-making process that we have reached tonight.

There is an option, under the 2008 Act, for the Government of the day to insert a disapplication provision into this type of motion. Such a provision would enable the Government to agree to subsequent amendments to the draft decision to amend the treaty without having to come back to the House for approval. The options were put before me by my officials and I was absolutely clear from the moment I read the papers that to introduce a disapplication provision of that kind would be completely unacceptable and would give Parliament absurdly little control over such an important matter. For that reason, there is no such provision in the motion.

Let me make it clear: if the House approves the motion, it is authorising the Prime Minister to agree to this draft decision—this text alone—at the European Council. Should there be any suggestion of amending the draft decision at the European Council—there is no such suggestion from any quarter at present—the Prime Minister could not legally agree to it at the European Council without first coming back to this House and the other place for additional approval after a further debate. The draft decision that is referred to in the motion will be the version that is agreed at the Council and there can be no other version of the treaty change without the further approval of the House in a debate such as this.

The European Scrutiny Committee has rightly assessed the draft decision as politically important and has recommended it for debate on the Floor of the House. We are scrutinising the draft decision, as the Committee has requested, and debating whether the Prime Minister may signal his support for its adoption at the Council on 24 and 25 March.

[Mr William Cash (Stone) (Con)]

My right hon. Friend is going through all the procedures and the technical side of things, but, as he knows, that is not really what the treaty is about. I hope he will agree that it represents a huge change in the relationship between the United Kingdom and the European Union. Anyone who cares to look back at what those of us who have argued this case before have said, and to look in particular at The Economist this week, will know that the treaty is a hybrid one that is being devised, driven and pressed forward by Germany and those countries that wish to acquiesce in Germany’s dictated terms. Does he agree?

[Mr Lidington]

No, I am afraid I do not agree with my hon. Friend on that point. As I have said, it is in the interests of the United Kingdom for there to be stability in the eurozone. To some extent, the measures that the eurozone countries are now taking are a response to the kind of critique that he and other Members of this House made 10 or 11 years ago when the euro was first created. They—I was very much in this camp—argued that it would cause huge difficulties to create a currency union involving a single interest rate and single monetary policy that did not have some way of reconciling very different rates of growth, inflation and unemployment in the countries in that single currency area.

I want to finish on the procedural points and then move on to the content. If the draft decision is adopted by the European Council, all 27 member states will have to approve the treaty change and ratify it in accordance with their respective constitutional requirements before the decision enters into force. The treaty amendment cannot come into effect until we—and everybody else—ratify the adopted decision.

My right hon. Friend the Foreign Secretary and I have already given an assurance at this Dispatch Box that this and every other future treaty change will be considered in accordance with the terms of the European Union Bill, once that enters into force. That Bill will require Ministers to lay a statement before Parliament within two months of the commencement of part 1 of the Bill, explaining whether the treaty change would fall within clause 4 of the Bill—namely, whether it would involve a transfer of competence or power from the United Kingdom to the European Union.

The treaty change will then have to be ratified by primary legislation—a full Act of Parliament—before the United Kingdom is able to say formally that it has completed the ratification process, so even when we get to that stage, the final version, agreed by all 27 Heads of Government, has to come back to Parliament for ratification and will be debated in all the stages of primary legislation. Tonight is therefore not the only opportunity that my hon. Friends will have to debate the measure.

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[Mr Lidington]

No, I am not giving way again at the moment.

A number of my hon. Friends were also keen to be reassured that the proposed treaty change does not and will not transfer any competence or power from the United Kingdom to the European Union, and I want to reassure them now. As I have mentioned, the treaty change involves an amendment to one of the provisions that applies only to member states whose currency is the euro, not to others. Therefore, we cannot be part of the ESM without joining the euro itself.

The change is also being undertaken using article 48(6) of the treaty of the European Union, which explicitly states in its provisions that it

“shall not increase the competences conferred on the Union in the Treaties”.

All member states are agreed on that point and stated so, in terms, in paragraph 6 of the recitals to the draft decision. The opinion of the European Commission, dated 22 February, reaffirms that the proposed treaty change does not affect the competences conferred upon the Union.

Some hon. Members have questioned whether the Government should be required to hold a referendum even when the United Kingdom is not directly affected, and this starts to address the point that my hon. Friend the Member for Stone (Mr Cash) made in an intervention. As I highlighted earlier, the European Union Bill, after our seven days of debate on it, will ensure that any treaty changes constituting a transfer of competence or power from this country to Brussels will be subject to a referendum. But this treaty change will enable no such thing, and it does not make sense to try to insist on a referendum on agreements that concern only other member states. It makes sense no more than it would have made sense for Germany to hold a referendum on the recent defence treaty between the United Kingdom and France.

The treaty change under discussion is in our national interests, but on top of that, to come to the point that my hon. Friend the Member for Basildon and Billericay (Mr Baron) made, the Prime Minster during the course of the negotiations achieved two further important objectives. First, as the conclusions of the December European Council and, more importantly, the preamble—the recitals, as they are known—to the draft decision itself confirm, once the ESM is established to safeguard the stability of the euro area, article 122(2), on which basis the European financial stability mechanism was established, will no longer be used for such purposes. Therefore, our liability—bequeathed by the previous Government—for helping to bail out the euro area through EU borrowing backed by the EU budget, under the EFSM, will cease. That was an important achievement for British interests.

[Mr Cash]

As my right hon. Friend will know, according to Reuters and many other news agencies Portugal is on the brink of needing a bail-out because its economy is imploding. Does he accept that, as this debate continues, we will be exposed under the EFSM to the tune of up to whatever is the proportion that we should contribute under the proposals until 2013, and that we should have insisted that that was repealed and revoked when the other arrangement was entered into? That is the concession that we should have got, and the Government did not even seek to achieve it.

[Mr Lidington]

We inherited from our predecessors a legislative measure that was brought in under an existing competence and treaty base and that was, from that time, legally binding. My hon. Friend will understand that I am not going to be drawn into speculating about the position of other individual member states. My understanding, on the basis of the most recent information that I have, is that no other member state has been asking the EU authorities for additional financial help.

As the Prime Minister has made clear many times in this House, securing a tight and disciplined budget for the future is the highest priority for the European Union. At the last European Council meeting, Britain led an alliance of member states to unprecedented success in limiting the 2011 EU budget increase to 2.91%—a very marked improvement on our predecessors’ performance in the previous year. Crucially, in moving forwards, working alongside key partners such as France, Germany, Netherlands and Finland, we are committed to a real-terms freeze in the EU budget in the new perspective, which we expect to run from 2014 to 2020, and we have written collectively to the President of the European Commission setting out our position.

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[Mr William Cash (Stone) (Con)]

The essence of this debate is not just the technicalities, which we heard about at great length from the Minister, but something far more fundamental—the political landscape of Europe. The Minister knows it and the Foreign Office knows it. To give an example, there was a massive row between Nicolas Sarkozy and Mr Kenny about the terms of European economic governance only a few days ago. Furthermore, as was said this week in The Economist:

“Mrs Merkel has struck a Faustian bargain with France’s Nicolas Sarkozy.”

He knows that France is losing influence, and as one senior EU official commented:

“France needs Germany to disguise its weakness, and Germany needs France to disguise its strength”.

The fact is that we have the strength to prevent this hybrid treaty arrangement, which presents Germany with a predominant role. We have great sympathy for Germany’s predicament, given that it contributes so much to the European Union and is having to pay out so much. I have fairly regular meetings with German politicians, who tell me that if their country had the opportunity, it would almost certainly go back to the Deutschmark. There is a serious crisis in Europe, but the response is about the nature of a treaty, something in which this Government are acquiescing—it is not far short of appeasement.

The plain fact is that this is a serious moment for the future of Europe. This is a new, unprecedented situation, and it is accompanied by other proposals, which, as I understand it, will also be considered on 24 and 25 March, namely the proposals for the euro pact, which has otherwise been known as the competitiveness pact. However, nobody really knows exactly what the ingredients of it are, any more than they knew about the ingredients of the proposal that we are discussing this evening in its earlier stages. Indeed, I had to use an urgent question to extract from the Government the fact that it was even being made. That is the manner in which Europe works: by secrecy and behind closed doors. Indeed, there are already signs of committees meeting, and we are discovering—through leaks and otherwise—the manner in which they are going forward.

One element in all this is that, as my hon. Friends have rightly said, it would have to be determined by unanimity, so we would have the leverage to stop this juggernaut moving forward. I described it the other day as being like an aircraft carrier in comparison with a rowing boat, but we in Britain will not be regarded as a rowing boat by any means. If such arrangements were being made co-operatively by a voluntary association of nation states, I would be the first to say, “This is fine”, but they are not. They are being dealt with in the context of a legal treaty. We are parties to it, which is why clause 4 of the European Union Bill is such a disgrace. I say this with great respect for my right hon. Friend the Minister, but he talks about how we would be under no legal obligation and how there would be no transfer of powers or competences, but that is not the issue. The issue is whether the United Kingdom is affected. That is the point that I put to the Prime Minister repeatedly, and he cannot answer it. The fact is that the arrangements in question do affect the United Kingdom. They are matters of foreign policy; they are not just constitutional questions relating to sovereignty, competence and powers.

[Martin Horwood]

I hope that the hon. Gentleman appreciates that I am missing the Cheltenham festival to be in Parliament this week, which I do not mention flippantly. The festival is enormously important to my constituency economically, and it depends enormously on Irish euros to make it succeed. If in the long run the outcome of the stability mechanism adds some discipline and rigour to eurozone economies such as Ireland, can he not see that that would be of enormous benefit to the festival, to Cheltenham and to the whole of the UK, and should we not do everything in our power to facilitate it?

[Mr Cash]

I was one of the first—in fact, I think I suggested that we should help Ireland through the bilateral Bill that we eventually produced. However, the Irish are now being put under pressure, at the dictation of Germany in particular, to reduce their corporation tax. That will not do much for the Cheltenham gold cup.

There is a serious problem, because the Government are effectively obscuring the nature of this measure by giving the impression that it is all about institutions. It is about realpolitik. In the days of Bismarck, the German states were brought together in a customs union. That was done for understandable reasons; I do not want that to be misunderstood. However, there is now a problem for Europe. Our problem is that, in the 43 minutes that the Minister spent addressing the House, he did not deal with the politics of this matter at all. That is most unfortunate. In every serious commentary on this issue, including those in the Financial Times, the real question is whether Germany is becoming increasingly predominant, and whether that is intentional or whether it is happening by accident and Germany is making the most of it.

Germany is making the most of the financial crisis to get a greater degree of political control, and the question of whether we can influence that by entering into an arrangement of this kind—which affects us even though we are technically excluded from it—is a serious foreign policy matter for the innermost parts of the Foreign Office. It is also a matter for this House. I believe profoundly that these issues, including the euro pact itself, are not being properly disclosed. The Minister might know what is going on, but we do not. We are not being told. We do not know what the strict conditionality affecting the other member states in the eurozone will be under article 138 as amended. The plain fact is that in that conditionality a crisis lurks. If over-severe conditions are imposed, we will have another crisis in Europe.

This is a bad treaty proposal. The leverage comes now, when we have the opportunity to say no. The Government propose that this will be dealt with in a Bill, but that will be far too late. The Government are acquiescing in this, and I regard that as a form of appeasement to the modern problems of Europe in the form of a predominant Germany, which is not in the interests of Europe, not in the interests of the United Kingdom, and not in the interests of Germany itself.