Treaty on Stability, Co-ordination and Governance

William Cash Excerpts

Wednesday 29th February 2012 Commons Chamber

[Mr William Cash (Stone) (Con)]

I beg to move,

That this House has considered the matter of the legal and other action now to be taken by the Government in upholding the rule of law and protecting UK interests in respect of the nature and content of the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union.

Thank you, Mr Speaker, for approving my application for this debate. I am also deeply grateful to all those Members—some 100 or so—who rose so spontaneously and strongly to support the proposal that I put to the House yesterday afternoon. This is only the fifth emergency debate since 2001. The debate is about the rule of law: not only the rule of law as it affects the United Kingdom but, inevitably, the rule of law in Europe as a whole. The Prime Minister, to his great credit, rightly exercised the veto to protect UK interests, but this is not simply a question of the single market and financial services, however important they may be to the UK economy.

The rule of law is inseparable from democracy, which, based on freedom of choice, leads to the making of law through general elections in line with the wishes of the voters. That is as important as it is simple. Unfortunately, the European Union, despite its much-vaunted claims and aspirations, has increasingly departed from democratic principles and from the rule of law in the pursuit of ideology. We are now witnessing ever-increasing tendencies towards bureaucracy, and even the imposition of technocratic Governments on individual member states, as in Italy and Greece. Yesterday, as it has in the recent past, the Bundestag voted on European bail-outs. According to opinion polls, about 80% of the German people are against the bail-outs, yet the German Government and the Bundestag passed the proposals by a massive majority.

[Mr Denis MacShane (Rotherham) (Lab)]

This line about European technocrats imposing technocratic Governments all over the place is very fashionable. However, the truth is that the current crisis, which is very serious—the hon. Gentleman is right to hold this emergency debate—is about the raw power of politics. It is about the politics in Germany in not wanting to bail out Greece; the politics here; the politics in Greece, where people voted pretty overwhelmingly to accept the bail-out package, with parties splitting up; and the politics in Italy, where people dumped the wretched Berlusconi and put in quite a good guy, Monti, for the time being. The Commission is not involved in this; the technocrats are out of the game; the Eurocrats are off the pitch. It is about raw politics. We are in the driving seat, and the hon. Gentleman might be as well.

[Mr Cash]

I am grateful to the right hon. Gentleman, who makes an important point. However, this is not merely about technocrats but about the brutal fact that the political game as it is now being played is increasingly coercive. That is part of the problem that I shall address.

[Henry Smith (Crawley) (Con)]

Following yesterday’s announcement of the Irish referendum, does my hon. Friend share my concern that if the result is the wrong one as far as the European establishment are concerned, it will be ignored and overruled by some method or another?

[Mr Cash]

I do indeed. A new rule is being imposed through the arrangements under this treaty which involves a kind of qualified majority voting for referendums whereby if member states do not have the requisite number of referendums in which they say that they do not want the treaty, they will simply be ignored. I hope that when it comes down to it and the Irish people have this explained to them, that will be a spur to their voting no, because people are being taken for a ride.

[Mr John Baron (Basildon and Billericay) (Con)]

I congratulate my hon. Friend on securing this emergency debate. Does he share my concern that with democracy having been suspended, in effect, in two countries, with a deepening democratic deficit across the eurozone as rules are bent, and with a eurozone fiscal compact that seems to undermine the EU institutions, we could fast be reaching a tipping point as regards the EU’s credibility and legitimacy?

[Mr Cash]

Absolutely. For those of us who have been critical of the European Union, but not of Europe, because we believe that we need stability and prosperity in Europe, my hon. Friend’s remarks are entirely justified. We are now facing the breaking of the rule of law through the imposition of European rules. It is an extraordinary paradox that the law should be used to break the principle of law itself.

[Chris Bryant (Rhondda) (Lab)]

How is the hon. Gentleman going to vote on this motion? As I understand it, his idea is that the treaty should not go forward, but if the motion is agreed to, we will have decided that we have considered the matter, and the Government will therefore be able to proceed with the treaty.

[Mr Cash]

The hon. Gentleman is rather missing the point. The question before the House is that we should have a proper debate about legality. There will not be a vote, as far as I am concerned, because we need to have an open discussion among Members of Parliament, not only in the European Scrutiny Committee, as has been the case so far. We have heard evidence from many distinguished lawyers and economists, and from the Minister for Europe, although sadly, and deeply regrettably, not from the Foreign Secretary, who has twice declined to come before us. He did say that he would come on 27 March, but that is far too late for the purposes of our proceedings. The most important thing is that we have an open and transparent debate about questions that otherwise would not get across to Members of Parliament, let alone to the people at large.

I have just spent two days in Brussels as Chairman of the Committee, with my hon. Friend the Member for Hertsmere (Mr Clappison). We had an extremely constructive dialogue with members from the national Parliaments and Members of the European Parliament. The only remedy that is provided in this time of economic and, I submit, political crisis in Europe is more Europe, not less. That completely misses the point.

As I discovered only a few months ago at the multi-annual surveillance framework meeting, some people want further European institutional change towards greater political union. In effect, they say that the solution to the problem is the European Parliament, rather than the national Parliaments, although they do want us to be involved so that we can sign our own suicide note. On economic matters and the multi-annual surveillance framework, they want more money to be spent, irrespective of the failure of the European economic systems that they have put in place. The Minister for Europe, who was at that meeting, will recall that he, I and others who were being realistic about this matter were simply astonished by the continuing stream of determination to seek more and more money for the European Union, through the financial transaction tax, by increasing its resources and through the common commercial tax base.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

No one can beat the Chairman of the European Scrutiny Committee for diligence. However, I will not be staying to take part in this debate for one reason: I am disappointed at his timing. The Committee has yet to hear from the Financial Secretary to the Treasury, we have not yet finished our evidence sessions and we have not yet presented our report. I know that the Government are desperate for something to fill the gap in this debating hall, which has frankly turned into a disappointing—

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[Mr Speaker]

That is an interesting point, like many of the hon. Gentleman’s points, but it is not a point of order for the Chair, as he knows perfectly well.

[Mr Cash]

That was not really a point worthy of comment, but I will certainly reply to the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who is my colleague on the European Scrutiny Committee. The question of legality has already been canvassed. The Government have demonstrated that in the letter written by Sir Jon Cunliffe, on their instruction, to the secretary-general of the European Council, which expresses severe reservations about and, in effect, disputes the advice of the legal adviser to the European Council. Without wishing to prejudice what the European Scrutiny Committee may conclude in our report, the fact is that there is already sufficient notice of the concerns over legality for the matter to be considered by the whole House, rather than just in the Committee, as important as that is. There is one simple reason for that: silence or acquiescence can be assumed to be consent. I will explain that point in a moment.

While the question of legality is allowed to continue without challenge, and while it is decided whether the European Court of Justice should be called upon to make a judgment about this matter, which will itself take time, we are depending on the action, legal or otherwise, of the Prime Minister, who is going to the Council tomorrow. It is therefore important for us to at least indicate our view in this debate, in amplification of what the European Scrutiny Committee is considering and what it may yet conclude. I cannot make any assumptions about what its conclusion will be. We have certainly had the most powerful evidence from the likes of Professor Paul Craig, who is by no means unknown in European Union circles as a person of immense stature.

[Michael Connarty]

I am about to leave the Chamber, because I believe that this is not the right time to debate something that we are considering in the European Scrutiny Committee. I am used to all-party Back-Bench Committees being run as the fiefdom of the Chair. However, as a former Chair of the European Scrutiny Committee, I think that it is extremely discourteous, when we have not finished our inquiry or published our report, to have a debate on something that the Chair of the Committee sees as a matter of interest. It is wrong to do that and I think that it should be discussed in the Committee. I am now going to read my papers for the Committee sitting at 2 o’clock so that we can have some debate.

[Mr Cash]

I will reply to that point simply by saying that it is important that we, as a House, consider matters as they are going on concurrently. There should be no presumption that other Members of the House necessarily know the detail of the matters that we are discussing.

[Mr Robert Buckland (South Swindon) (Con)]

May I reinforce my hon. Friend’s point that it is important for the House as a whole, and indeed for departmental Select Committees, to have thematic debates about issues that arise from the EU? Such debates should happen at an earlier stage than they do, which so often seems to be at the last minute. I agree with him on that point.

[Mr Cash]

There is also the important question of whether action might need to be taken on the advice of the Attorney-General in relation to the ratification process, which, as I shall explain in a moment, was initiated by the German vote yesterday.

[Mr John Redwood (Wokingham) (Con)]

It is quite right to have this debate as it is urgent and on a matter of great moment. Does my hon. Friend think that there is any way in which 25 countries can construct a treaty that presumes to use the EU institutions that belong to the 27 member states as a whole, without having an adverse or substantial impact on the UK? Should we not be warning our Prime Minister of that threat before he negotiates?

[Mr Cash]

Absolutely. Given that the Prime Minister is going to the Council tomorrow, where it is inconceivable that this matter will not be raised, and that the ratification process is under way, it is important to get that point on the record. I believe the arguments to be self-evident.

[Neil Carmichael (Stroud) (Con)]

I am enjoying this interesting debate. It is an opportunity to air some key issues. Why does the European Scrutiny Committee meet in private? It would be more helpful if it was open to us all more often.

[Mr Cash]

We have periodically sat in public, but then the position has been reversed. That depends on what is decided by the House as a whole, because these matters relate to the Standing Orders. I see that the Leader of the House is here. He knows how vexed this question is. We have gone backwards and forwards on it. However, the issues that we are discussing have been discussed extensively in public. My hon. Friend is more than welcome to come along if he wants to listen to any of our sessions. [Interruption.] As my hon. Friend the Member for Rochester and Strood (Mark Reckless) has just indicated, if he does not want to come along, he can read the transcript. I have copies of it here if he wants to look at it. I do not think that anyone can dispute the fact that the information is out there.

The question of when action needs to be taken is highly relevant in determining whether the Government are seen to acquiesce in decisions that are being taken by other Parliaments, which, as my right hon. Friend the Member for Wokingham (Mr Redwood) said, will affect us vitally.

[Mr Nigel Dodds (Belfast North) (DUP)]

rose—

[Mr Dodds]

I congratulate the hon. Member for Stone (Mr Cash) on securing the debate. I think that it is right and proper that the whole House considers such matters. On the Irish referendum, will he confirm that the rules have been rigged so that if 12—never mind the rest—eurozone countries approve, the pact will be deemed to be ratified?

[Mr Cash]

Absolutely. I do not know whether the right hon. Gentleman was in the Chamber at the time, but I referred to that in reply to another colleague. We are effectively having a new qualified majority voting system for referendums.

The catalogue of breaches of the spirit and the specific legal requirements were epitomised in Madame Lagarde’s remarks on 17 December 2010 about the first bail-out fund, otherwise known as the EFSM—the European financial stabilisation mechanism. She said:

“We violated all the rules because we wanted to close ranks and really rescue the euro zone.”

That is the objective and the method. She is now head of the International Monetary Fund, and we are faced with the prospect of the United Kingdom being expected to contribute to the IMF for what everybody knows is a back-door arrangement to underpin and guarantee the bail-outs in the European Union, which the IMF was not set up to provide, as the United States and other countries have made clear.

Indeed, Germany and France broke the stability and growth pact as it was originally instituted. Now we have a new feature in the big political landscape: in the pursuit of a tax and fiscal policy and compliance with a so-called golden rule to balance their budgets by a form of coercion, 25 member states of the European Union have now come up with an agreement to increase the powers of the stability and growth pact as it applies to them, irrespective of whether a country held a referendum and voted no, as the right hon. Member for Belfast North (Mr Dodds) just suggested. The vote would simply be swept away by a majority vote of the other countries, which insisted on applying the golden rule. One is bound to ask what kind of golden rule it is and whether it is not possible for individual countries to balance their budgets out of self-interest and through their own democratic decisions, rather than having a rule imposed on them in pursuit of the ideology of economic and political union. Indeed, the imposition of such a rule will, of itself, not balance the budgets anyway, as has been found in the past. This is using rules of law to breach the rule of law.

The real solution to the European crisis, which is not confined to the eurozone and deeply affects the United Kingdom, is that the levels of public expenditure, which led to the breaches of the criteria in the treaties, can be solved only by generating growth and giving oxygen to small and medium-sized businesses, for example, through deregulating the massive over-regulation and multiplicity of laws, such as the working time directive, among many others. The list is vast.

Yet again, the whole treaty is a vain attempt to sacrifice practicality and democracy on the altar of ideology, just as the referendums in Ireland, France, Holland and so on were all simply thrown away.

[Martin Horwood (Cheltenham) (LD)]

Will the hon. Gentleman give way?

[Mr Cash]

I will not give way again. I have listened to what Mr Speaker has said and I have no intention of giving way. I have given way a great deal already, as I am sure Mr Speaker appreciates.

Even today, the European Central Bank is departing from its established rules in providing what some suggest is as much as a trillion euros of guarantees, and flooding the markets with unearned money to support countries which are failing to run their economies properly. There is a further problem, which is an increasing trend towards coercion, again in pursuit of ideology.

There is an increasing tendency by Germany to impose its will on other member states, but it should not be forgotten that although Germany pays vast sums into the European Union, it benefits enormously from that, and it could be argued that both French and German banks have played roulette with the Greek economy, and are now, through the rules and the treaty, seeking to obtain repayment and bolster their own banks and their own economies by imposing new rules to suit their requirements. Germany, of course, wants to help the euro. It has an enormous investment in it, but I would argue that the tendencies to coercion are not in the interests of Germany, the European Union or the United Kingdom. Indeed, today, we read that the constitutional court in Germany yesterday blocked the powers of a special parliamentary panel to fast-track emergency decisions affecting the rescue fund.

The new treaty is described as the “treaty on stability, co-ordination and governance” in the EU, yet it is not, contrary to what the Opposition said at an earlier stage, an EU treaty. The Lisbon treaty lays down specific requirements before changes can take place. They specify that the rules shall not be changed unless everyone agrees. The false assumption underlying the new treaty between the 25 is that, despite the failure to achieve unanimity, and even though the rules on enhanced co-operation have not been used, they claim that it remains legitimate to obtain those ends by a different route. I put that to the Minister for Europe the other day—namely that the treaty is based on the dangerous assumption that the end justifies the means, and that they would argue that, even if it is unlawful, the requirement to introduce the treaty for political reasons overrides the law. The question is whether it is lawful for the EU institutions, such as the Commission and the European Court, to be involved in such an agreement.

The new treaty is the triumph of expediency over the law. Professor Paul Craig sets out his arguments in 11 pages of carefully analysed argument. I am certain that the Government know all that and I am glad that the Attorney-General is here. If he wishes to intervene, I shall be only too happy. As a former shadow Attorney-General, I am sure that my right hon. and learned Friend knows the parameters of the unlawfulness of this treaty, which is why I suggested that he should come today.

I believe profoundly that the Government know that the treaty is unlawful and, in the words of Professor Paul Craig, it is important to consider whether it can

“confer new functions on EU institutions.”

He continues:

“I believe this would be contrary to the existing Lisbon treaty and to legal principle.”

He then examines articles 7 and 8, which I have no time to go into, as well as articles 3(2) and 273. They all raise questions that are before the European Scrutiny Committee about detailed matters, which we will tackle in due course in our report.

[Chris Kelly (Dudley South) (Con)]

Will my hon. Friend encourage people who wish to find out more to visit the European Scrutiny Committee’s website at www.parliament.uk/ESCOM?

[Mr Cash]

I certainly would, as I said earlier.

Angela Merkel is quoted in The Wall Street Journal a few days ago as saying:

“As Chancellor of Germany, I should and sometimes must take risks but I cannot embark on an adventure.”

I cannot think of any more dangerous adventure than moving away from the rule of law and inviting the tendency to coercion, which is increasingly evident in German policy making. Indeed, I believe that new rules of law are being asserted to break the rule of law. I am sorry to say that in Germany they seem to believe in government by rule. We believe in government by consent.

The process will not work. We are now in the period of a phoney war. Those who have seen the play “Three Days in May”, about 1940, may well wonder whether it is now obvious that, if we were to acquiesce in imposing the new and unacceptable rules, and in using EU institutions, that would become a new process of appeasement. Fortunately for us, in those dark days, Churchill refused to accept Halifax’s advice at the end of that fateful month.

The letter that the Prime Minister has sent, through Sir Jon Cunliffe, to the secretary-general of the European Council makes it clear that we have serious reservations. We now have two Europes, both built on sand. It is essential that we have a referendum in this country so that the people can have their say because there are such profound questions—

[Mr Buckland]

On what?

[Mr Cash]

On what kind of Europe we want. It is increasingly obvious that the position has become unacceptable and that the rule of law itself is now in jeopardy. We are involved and we must have a referendum on our relationship with the EU. However, first the Government must decide what action they will take about the challenge to the rule of law in Europe. They must put referral to the European Court of Justice firmly on the agenda, follow that through and, at the same time, reassess our policy towards the European Union and insist on a renegotiation of the treaties to ensure that the United Kingdom is not found wanting.

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[Mr Buckland]

I do not disagree. My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) made a powerful point about variable geometry; we should use Europe in our national interests, and work with it where appropriate. My hon. Friend the Member for South Dorset (Richard Drax) is absolutely right about trade and the single market, which was, let us face it, a British invention. Lord Cockfield did a huge amount of work to make sure that that aspiration became a reality, and my hon. Friend is right to emphasise the issue. As for not being told what to do, again he makes a fair point. I do not accept that, at any stage, the British Government, or the people of this country, should be put in a position in which they end up doing something against their will. That is why I supported the Bill on European referendums, now the European Union Act 2011, why I agree with the mechanism that the Government proposed, and why I was happy to speak in support of that Bill on Second Reading and at other stages.

To come back to the reality of the debate about Europe, we are talking about real jobs. We should be talking about trade, widening the single market, the digital economy and the energy market—all things that form the subject matter of a very helpful letter, signed by the Prime Minister and 11 other Heads of Government on 20 February, which set out a plan for growth. That should be at the core of negotiations at the European Council. That should be the agenda, because that is the agenda that is relevant to my constituents and the wider country. It would be wholly ridiculous for me, an elected representative of Swindon, to say to my Honda workers, “What we need is more arcane debate about the legality of Europe,” when what they want to hear is debate and discussion about how we can grow the economies of Europe and expand the growth agenda. That is what I call on Ministers to do.

[Mr Cash]

rose—

[Mr Buckland]

I shall take an intervention from my hon. Friend, as he was good enough to allow me to intervene on him.

[Mr Cash]

I entirely agree with my hon. Friend, and it has been, in a way, my political life’s work to try to draw attention to the effect that this legal framework has on our daily lives, but it is absolutely unacceptable to suggest that we can make any changes of the kind that he would prefer to make, in order to benefit his constituents or mine, without having regard to the legal constraints imposed on us as a result of treaties.

[Mr Buckland]

I yield to no one in my respect for my hon. Friend, and he and I have had many conversations on these issues, but we cannot get away from the point that the European Union is an exercise of political will first and foremost. It is the political will of its members that drives the future course of the European Union. I accept that we all work within a legal framework, but let us be clear about where we are. The 25 have agreed to sign a treaty that is not an EU treaty. If there is to be any proposed fold-in in five years, the British veto will apply. We have the right to say no, and that is an important point that we need to underline.

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[Jacob Rees-Mogg]

I am afraid to say that I disagree with my hon. and almost learned Friend. Law is the foundation of what politicians do, and politicians use their political will through the law. Indeed, they have the ability through Parliament to change the law, but they cannot just ignore it.

That is why I want to come on to Sir Jon Cunliffe’s important letter. He makes two significant points. First, he notes that

“the EU institutions must only be used outside the EU Treaties with the consent of all Member States, and must respect the EU Treaties.”

In response to a question at a meeting of the European Scrutiny Committee last week from my hon. Friend the Member for Hertsmere (Mr Clappison), the Minister for Europe—who, if I may say so, was extremely helpful at the evidence session—said when asked whether permission had been given by the Government for the EU treaties to be used:

“No, we have not been asked so to do.”

It ought to be of grave concern to the House and to the country that the member states of the European Union, excluding us and the Czech Republic, have decided to proceed with a treaty without establishing that they are following the correct legal forms.

[Mr Cash]

My hon. Friend may be interested to know that yesterday in the European Parliament, which I attended as Chairman of the European Scrutiny Committee, in a dialogue between MEPs and MPs, one of the French representatives said from the platform to the chairman that she did not think it appropriate for me to be able to make certain comments because the United Kingdom Parliament and the United Kingdom were not part of the eurozone. My hon. Friend might find that rather extraordinary.

[Jacob Rees-Mogg]

Indeed, but one never knows what people might say in relation to the European Union.

As I was saying, it is a shocking state of affairs that our partners in Europe should want to proceed with a treaty without even bothering to go through the proper forms to ensure that that treaty is lawful under EU law. They have not even asked the question. It may be that they know what the answer will be, but if they do, they are one up on most Members of Parliament.

The other point raised in Sir Jon Cunliffe’s letter is that

“we must reserve our position on the proposed treaty and its use of the institutions”.

This, again, is very important because what we are trying to find out is whether the Government are reserving their position on the current legality of the treaty, or how the treaty will be used in practice. If it is the former—if the Government are concerned about the current legality of the treaty—it is important that they act now to establish their concern and to have a judgment from the European Court of Justice, rather than waiting. If the Government wait, as my hon. Friend the Member for Stone said earlier, he who is silent is seen to consent, and we will find that we have allowed the treaty to be implemented and we will have lost our ability to have recourse—

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[Mr Cash]

Undue delay in reserving our position on the necessity of getting concrete guarantees and an answer to the question of whether we will go to the European Court of Justice over this matter is no substitute for action. We must take action now because the advice from the legal adviser states:

“within five years…when this happens”.

His assumption is that this will happen within five years. We must take action now. We cannot allow delay to trump the necessity of getting this right. It is essential that we move, and move now. I shall speak to the Prime Minister about this shortly. I seriously hope that the Attorney-General will take the necessary action and advise accordingly so that the Cabinet is fully apprised of the fact that this is not a lawful treaty.