European Union Bill
Debate between William Cash and Austin Mitchell(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Cash
The hon. Gentleman is absolutely right on that important point, and I was immediately coming to it—I have in my hand the explanatory memorandum, to which I referred before he intervened, precisely for that purpose. It stands in the name of the Economic Secretary to the Treasury. A scrutiny matter is still outstanding, so paragraph 26 comes under the heading of “Other observations” and states:
“The Government regrets that the Scrutiny Committees”—
those of the Commons and the Lords—
“did not have time to consider this document before it was agreed at Council.”
I can tell the House that that happened because we were in a caretaker period and the European Scrutiny Committee, as such, was not sitting in that interregnum. The memorandum continues:
“It should be noted that whilst agreement on behalf of the UK was given by the previous administration, cross-party consensus had been gained.”
That is why I made the point that the responsibility lies with both this Government and the previous one.
Austin Mitchell (Great Grimsby) (Lab)
I am following the discussion with great interest and some concern. As I understand it, we are talking about a decision that could have been taken, and was being taken, by a majority vote, and our outgoing Chancellor could not have stopped it anyway. Is that correct?
Mr Cash
People keep saying that, but let us examine the actual operation of the European financial stability mechanism. The final decision is taken under the regulations concerned—this is what happened in the context of Ireland—only after the request has been made by the member state. I do not know whether this is one of the reasons why the current Taoiseach—only for the time being, it appears—is in deep trouble, but that is possible. What I do know for certain is that the prescribed procedure laid down under the regulations made under article 122 of the treaty on the functioning of the European Union was infringed by the manner in which the International Monetary Fund, the European Central Bank and others moved into Dublin before a request had been made. As we can recall, the Irish Government were saying that they had not made a request and that they did not need the money. It is also true to say that Mr Socrates is saying much the same at the moment.
Austin Mitchell
The hon. Gentleman is being very patient with us and the serious explanation he is giving is well worth considering. I also understood that article 122 was intended to apply to a destabilisation of the euro because of some kind of natural disaster. The destabilisation that took place was caused by the inherent faults in the euro, so why has article 122 been extended to cover a destabilisation resulting from the cracks and failures of the euro itself, given that it should have applied only to natural disasters?
Mr Cash
The hon. Gentleman and I have engaged in debates on the European question since we first met. I have the greatest respect for him and he has hit the nail right on the head here, because this problem does not just arise because of our exposure to what happens in Portugal and Spain in the future; it also arises from the lack of a sound legal base for the decision taken in the first place by the outgoing Chancellor and endorsed subsequently by the incoming Chancellor. We know that there was a consensus and that an agreement was reached—that answers the question put by the hon. Member for Ilford South. I would not be going about this if I did not believe that substantial matters of principle and of huge cost to the taxpayer are involved.
Mr Cash
I was not necessarily here when an impression was being given one way or the other. What I do know is that I have an accurate record of what did take place. I also have with me an article from Monday 10 May containing what are clearly accurate descriptions of the position of the then Chancellor—I believe he was just still the Chancellor then, because the coalition agreement had not been entered into. I recall writing to the Prime Minister on that day, suggesting, among other things, that he should go for a minority Government. I also said that if he was determined to go down the route of a coalition, he should require the Liberal Democrats to abstain on any matters relating to Europe that came up. That possibly explains some of my concerns as matters have developed and more and more European decisions, roadblocks and other difficulties in respect of the decisions we took in our manifesto have emerged.
Austin Mitchell
I am grateful to the hon. Gentleman for giving way; he is very patient. I normally agree with his views, even though I usually express them in rather shorter compass. He still has not answered my question, however, about whether what was agreed at the meeting was a distortion of the original purpose of the machinery, which was intended for coping with natural disasters and should never have been extended to destabilisation and problems caused by the euro.
Mr Cash
The short answer is not at all—that is the problem. That is why I tabled the amendment. I am very sad that more people do not have the opportunity to listen to this, because we are talking about a grand total of £8 billion of British money, which is a vast amount given the austerity that is expected of people. After the Irish bail-out payment has been excluded from the same zone, there is also the completely unwarrantable notion to which the decision commits us, unless it is unlawful and is challenged. I invite the Government to challenge it in the European Court—that is the route they should be adopting. That is what I have recommended to the Chancellor. I said, “You must vote against this and challenge the legality of it.” Whether or not he entered into some understanding at the time is a matter to be unravelled, but what is certain, to come back to the point made by the hon. Member for Great Grimsby (Austin Mitchell), is that the decision does not come within the framework of article 122—and the European Scrutiny Committee believes the same.
Austin Mitchell
I am puzzled, because the hon. Gentleman is attaching his faith to the €400 billion fund, which would mean that the new arrangement, which was agreed by the then Chancellor and the European Council on 9 May, would not be necessary. That is a puny fund compared with the scale of the problems. If Portugal goes and Spain follows, all that fund will be absorbed and will be necessary, and we will have to fall back on the provisions of article 122. The Irish loan has been portrayed by the hon. Gentleman and the Chancellor as a one-off loan between friends and business partners, but it must have been paid under the article 122 arrangement, so we have already sold the pass.
Mr Cash
The hon. Gentleman is not wrong to say that the situation has already taken place for Ireland, but that must be seen in light of what has yet to be established—whether or not it was lawful. More investigation is needed on whether that payment would ultimately be ultra vires, or beyond the law, and therefore reclaimable. I do not want to go too far down that route other than to say it needs to be looked into. Furthermore, the financial stability mechanism has not yet passed the scrutiny of the European Committee that is meeting on 1 February, so it is still subject to a decision of the House, although some might argue that the Rubicon has already been crossed.
Austin Mitchell
This is an important amendment for which I shall certainly vote, and I hope that the hon. Gentleman pushes it to a Division so that I have that opportunity. The legality of the decision and the use of article 122 in this way—for a purpose for which it was not intended—is subject to a decision by the European Court, which is a federal institution and always rules in favour of the federal side of the argument. So, I am afraid that his hope that the decision will be ruled illegal will not prevail.
Mr Cash
That is a general proposition with which one might agree in many instances, but analysis of the use of article 122 in this case, if it is examined as carefully as it should be, would give rise to so many uncertainties that the Court would have grave difficulty in trying to justify its use. However, that is looking to the future.
Austin Mitchell
That is true. Under the old system, the inflation rates in France and Italy were higher than that in Germany, so they were constantly getting out of kilter and becoming uncompetitive. They constantly resorted to devaluing, which brought them back to a competitive level because it reduced their costs of production in terms of foreign currencies. There is a history of France and Italy devaluing. They cannot do that when they are in the euro.
Mr Cash
Would the hon. Gentleman be interested to know that the Library has given me some figures showing that our balance of payments deficit with Germany was £12 billion in 2009? Heaven alone knows what it is now. Between 1999 and 2009 there was a deficit of £5 billion between the other 26 EU member states and ourselves, but we have a surplus of £11 billion with the rest of the world. His point is extremely sound—the EU is just not working.
Austin Mitchell
I am grateful for that point, which is absolutely true. We are earning a surplus in the rest of the world, which then goes as a tribute to finance our deficit in Europe. Before we entered the Common Market in 1972, we had a surplus in our trade with Europe. It then became a deficit, which has become ever heavier as the years have gone on because of our economy’s uncompetitive nature compared with the German economy. All the other weaker European economies face the same problem, and there is no way for them to get around it without facing a diet of cuts, freezes and squeezes for decades, and having to depress the living standards of their own people to keep costs down. That strain is built into the system, which Germany dominates and swamps because of its competitiveness and low inflation. Good luck to it—it has worked for that and run its economy in a very sensible fashion, but a common currency cannot be maintained in that situation. There will therefore be crises.
Those inevitable crises have, under article 122 of the Lisbon treaty, now been portrayed as the results of a natural disaster. That means that we, who have wisely stayed out of the scheme and warned of the consequences of going ahead with that insane regime, must also contribute to cost of clearing up the mess that is implicit in the system. That is a monstrous imposition.
I take it that at his last Council of Ministers meeting on 9 May, our previous Chancellor was conned. He was told that article 122 would apply under qualified majority voting, so it was no use his opposing it because we would be bound by it in any case. That was just not true, because if it applies to mutual support in the event of natural disasters, it cannot apply to faults inherent in the structure of the euro itself. That is not a natural disaster; it is a folly of man.
Mr Cash
I add a point that I really ought to have made in my own contribution. When the European Council arrived at the new mechanism that it has just set up, which the Prime Minister announced the other day, it used the most extraordinary language. It used the expression that there was “no need” for the continuation of the mechanism that was set up last May. It is not anything to do with need, however; it is about the fact that they know perfectly well that it was unlawful.
Austin Mitchell
Absolutely right. We need to be intellectually devious in trying to read through European documents, because they are extremely cunningly written and always cover up the reality very well. The same is true of Government statements on matters European. The Government do not want the full horror to emerge, so statements are rewritten to make them safe, saleable and acceptable. Once again, the hon. Gentleman is correct, and he has done the Committee a great service today in warning us of the situation and pointing out the consequences if it is prolonged. I believe that the arrangement extends to March 2013, or is it May?
Austin Mitchell
Right, and then it will lapse. Until then, we could be liable for enormous sums. Imagine what the British electorate would say. We have already extended a massive loan to Ireland, even though the Chancellor tells us that our country is over-borrowed and cannot borrow any more because world markets will cancel our credit cards and stop our credit on the bond markets. Suddenly, however, he can borrow huge sums—billions—to help Ireland. He says that it is a one-off and not a precedent, but if it is carried out under article 122 of the Lisbon treaty, it is a precedent for acceptance of a mechanism that is designed to deal with natural disasters.
The hon. Member for Stone hoped that the mechanism would be ruled illegal by the European Court, but I have given up faith in the European Court. It never rules how I want it to rule, whereas our courts do sometimes. It is probably composed of Liberal Democrat jurists, for all I know. It certainly gives that appearance.
Fixed-term Parliaments Bill
Debate between William Cash and Austin Mitchell(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Cash
Oh, I see. I am extremely grateful to hear what the hon. Member for Rhondda (Chris Bryant), that fierce defender of British liberty—when it suits him—has to say. In the light of what my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) has said, it would not cause me any concern if my new clause were passed simply because it would require a rethink, when there would be a completely new situation. Does my hon. Friend want to intervene again on that? No.
Austin Mitchell
The hon. Gentleman should not lack confidence about his ability to rally this House behind an important measure. Let me ask, since no Parliament can bind its successor, are not both the Bill and his new clause otiose because a new Parliament will simply wipe the plate, and if it wants to dissolve early, it will do so?
Mr Cash
That is a noble aspiration, but I am not at all convinced that that is how it is intended to operate in practice, mainly because there are other people involved who are called Whips. Unless provision has been made for expiry, there will be a natural locomotion towards a future coalition, which I strongly resent, and towards fixed-term Parliaments, in the plural, and we will be in “a new kind of politics”. I see in their places at least one or two of my hon. Friends who, from what we read, would strongly advocate such a proposal. They have some constitutional ideas so perhaps they will elaborate on them during the debate. I rather doubt it, but we shall see.
New clause 5 is designed so that section 2 of the eventual Act will expire. It also provides for the circumstances that might obtain in the first month after Parliament has returned after a general election, when it might have a totally different complexion and composition. We have no idea who will be sitting on the Government Benches at that time. In that first month with Members reconvened for the first time—leaving aside the constitutional doctrine about successive Parliaments—would it be right for those Members to be saddled with something with which they did not agree? It is a simple as that. That provides another reason, quite apart from the constitutionality of the issue, for the new clause.