Examination of Witnesses (Questions 20-32)
RT HON
MARGARET HODGE
MP, MR NIGEL
HICKSON AND
MS EVE
RACE
28 FEBRUARY 2007
Q20 Nia Griffith: That is your estimation
of the timetable, is it? You would guess the timetable would be
within the June period?
Margaret Hodge: What we would
like is for agreement at the June Council of Ministers, and if
we get that then you will see by the early autumn prices falling.
That is what we are aiming to do, and the German presidency is
very keen to complete this negotiation around this regulation
by June. Whether we get there depends very much on what happens
in the next few weeks.
Q21 Chairman: Can I just ask you
to clarify, because I think the question on everyone's mind is
if the UK seems to be in a different position from others, will
the UK in any way try to block the agreement in June?
Margaret Hodge: Interestingly
enough, we think we are not in a different position. These are
Anglo-French principles which were laid down. I do not know where
you got this article from, but we think we have driven the compromise
consensus proposition which is now being actively discussed and
we think, bar details which we have got to sort out, that actually
the two committees in Parliament are broadly in the same place
also. We are unclear at present quite where the Commission stands,
but if we can get agreement in the Council in June, which we think
we can, and if the two committees come along with us, we will
be fine. It is a majority voting issue anyway, but I do not think
we are going to be in the position of even having to try to block
this because we think we have won the argument, or we think we
are winning the argument.
Q22 Chairman: I am sure you will
inform this Committee before the Council what the UK position
is intended to be.
Margaret Hodge: We will.
Chairman: Thank you. Can we move
on to the question of the legal base, which we have indicated
has caused us some concern?
Q23 Mr Cash: When you wrote in December
2006 you said you were not quite sure about whether Article 95
would be adequate as a legal base and that you had sought legal
advice from the Commission. Article 95—and your legal adviser
will confirm this—is not dissimilar in many characteristics
to the famous or infamous Article 308, on which we are doing a
separate inquiry, and we have just been to Brussels to meet up
with not only the legal advisers to the Commission but also the
Council of Ministers, and so on, and we are doing a report on
that. So we are taking a very acute interest in the legal base
of these over-extending (as I would put it) provisions in the
Treaty. Have you actually heard back from the European Commission
on the point I am making?
Margaret Hodge: No.
Q24 Mr Cash: Could I put it to you,
in that case, have you asked the Government's lawyers for their
view about the legality of the proposed regulation and what answer
did you get from our own lawyers?
Margaret Hodge: I have had very
clear advice, which will no doubt reassure you today, that Article
95 is an appropriate base for this particular regulation on this
particular issue. We have not yet heard from the Commission.
Q25 Mr Cash: Could I therefore ask
the legal adviser to explain how she comes to that conclusion,
given the fact that at the moment we are having this inquiry into
Article 308 as well?
Ms Race: We have been considering
the appropriateness of Article 95 on a Whitehall-wide basis. You
are probably aware that the UK did oppose the use of Article 95
in a couple of cases because we were concerned to ensure that
it was used appropriately for harmonisation measures essentially.
Those challenges were defeated last year and the European Court,
in doing so, took a very wide view of the meaning of Article 95
and the meaning of harmonisation measures which could be adopted
using Article 95 as a legal base. Having considered those judgments
and considered the particular context of this regulation—the
mobile roaming market is quite a distinctive market—we have
reached the view that it is appropriate, that there are exceptional
arguments to use Article 95, bearing in mind the very wide definition
of harmonisation measures which the European Court has now laid
down.
Q26 Mr Cash: So you are taking the
view that under s.3 of the European Communities Act 1972 you are
bound by what the European Court says in these other cases and
therefore you are applying that for the purposes of construing
this provision in the context of roaming?
Ms Race: We certainly feel that
we must take into account the views of the European Court on what
this particular treaty measure says, what it means, yes.
Q27 Mr Heathcoat-Amory: I am sorry,
I went out for a mobile call, but not a roaming one!
Margaret Hodge: You would have
to pay a lot even if they had roamed into you!
Q28 Mr Heathcoat-Amory: On the question
of Article 95, the Article is reasonably precise and has to meet
two conditions, that is to say if Article 95 can be adopted. The
first one is about approximating national legislation, but there
is also a slightly more subtle requirement that it can only be
used where national legislation has or is likely to diverge, in
other words it cannot be used simply to approximate prices. It
seems in this case that it is all about price controls across
Europe. Is Article 95 therefore the correct legal base?
Margaret Hodge: The advice I have
been given and upon which I am acting is that this is the most
appropriate Article on which to pursue this regulation. You missed
the questioning. We have spoken to the Commission and asked them
to satisfy themselves that this is the right basis on which to
pursue the regulation. We have yet to hear from them, but the
advice from across Whitehall lawyers is that this is the right
basis.
Q29 Mr Heathcoat-Amory: Can I say,
though, that the Commission has an inbuilt fondness for Article
95 because it is majority voting and they want to harmonise pretty
well everything, and because everything can be traded in theory
it can be used for almost everything, according to them, but this
Committee takes a more literal interpretation of Article 95. It
certainly seems to me and to our advisers that this does need
to be tested and really what I am suggesting is that you do take
a rather literal approach because there is a general feeling amongst
the public that the Treaties and the Articles are sort of bent
this way and that to suit the requirements of the Commission,
or indeed national governments, but we are sort of the guardians
of the Treaties, as it were, and we are really asking you to test
that advice. I know this is your preliminary view, but to what
extent are you confident that you can mobilise support in other
Member States to ensure that you have the correct legal base?
Margaret Hodge: I think, again,
you missed a bit of the answer. I will bring Eve Race in again,
but there have been two test cases to challenge the basis for
the regulation using Article 95. One was, I was told on smoke
flavouring, where we got the judgment in December 2005, and one
on the organisation ENISA, where we got the judgment in January
2006. It was having regard to that judgment that the advice which
all Whitehall lawyers have given me leading the negotiation on
this particular regulation is that it is an appropriate base,
a valid legal base for this proposition. That is the advice I
have had. Can I say that we take it case by case. This is not
a sort of general view and it may well be that I or another minister
will take another view on a different regulatory proposal, but
in this particular instance it is appropriate, and remember we
do actually support the Commission in trying to introduce a regulation
around pricing so that we can reduce charges to consumers and
to business users.
Q30 Ms Clark: Following on from what
you have just said, has the Government considered the possible
consequences for the scope of the Community's regulatory powers
on the wider economy of allowing Article 95 to be used as a legal
base to regulate prices in the absence of any need for the approximation
of national laws in the area?
Margaret Hodge: Do you want to
answer that because that sounds to me like a lawyer's question?
Ms Race: Yes, we have considered
that and we think that this particular case, as the Minister said,
can be looked at in its own context and we do not think that it
will prove an unhelpful precedent for future cases. This can be
looked at on an individual basis.
Q31 Chairman: One final technical
question from your original answer, Ms Race. Are you saying a
divergence of law is no longer necessary for the use of Article
95, because that advice was that there had to be a divergence
of law, which was the point pursued by Mr Heathcoat-Amory? Is
that what you are saying, that a divergence of law is no longer
necessary to allow Article 95 to be applied?
Ms Race: Certainly the two cases
I referred to gave a very wide interpretation to what would be
a harmonising measure, which does lead us to believe that it is
not always going to be necessary to say there is now divergent
national law.
Q32 Mr Cash: I think, if I may say
so, Chairman, this is frightfully important. In the court action
of the Tobacco Advertising case the position related to
the wording, and this is the wording of the court, "The emergence
of such obstacles must be likely"—that is the question
of divergence—"and the measure in question must be
designed to prevent them." Part of our problem here, I think,
is that there does not appear to be, on the basis of the Explanatory
Memorandum of the Commission alone, any reference anywhere about
the likely emergence of divergent national legislation. Furthermore,
the only relevant reference in the EM at all is a theoretical
possibility that, "the present community regulatory framework
may leave some scope for Member States to address the problems
identified in the international roaming markets by means of other
legislative measures. The Commission nowhere points to evidence
suggesting any actual intention on the part of any Member State
to adopt such supporting legislation", et cetera. So despite
the fact that you are drawn, rather as we were, in relation to
Article 308, you are falling back on the broad question of the
application of Articles 95/308 in relation to the broad objectives
of the Treaty, but there are additional criteria which have to
be considered (which is what the Chairman, I think, is referring
to, and Mr Heathcoat-Amory), which is specifically the question
of divergent legislation and the words of the court, which are
"must be likely to do so" in terms of the creation of
obstacles. So I am still left extremely unhappy about the legal
base and what you have said really refers back to a broader interpretation
of the Treaty requirements, which by the way refers to the internal
market in 1995, whereas in the case of most of the other provisions
of the Treaty refers to the Common Market. If I could just finally
say that actually in our discussions with the Council I asked
the question, "Are you saying that you are going to use the
word `market' whether it is internal market or Common Market,
where it is prescribed under Article 95 or Article 308, as a substitute
for the words `the Treaty'?" In other words, you are falling
back on the purposive approach of defining the Treaty when actually
you should be looking at the question of whether it is internal
market or Common Market. Do I make myself fairly clear?
Ms Race: Yes.
Mr Cash: What I am really saying is that
I think you are going perhaps too far down the route of looking
at the broad purposive approach to the Treaty even on the basis
of the Court's own existing decisions and that there are other
criteria which have to be built into it. I am sure that we will
want to look at that again.
Chairman: We will not take that
further. I do bow to Mr Cash's legal knowledge, but we the committee
were present at those discussions with the Commission and the
Council's legal advisers and it is clear that there are questions
of interpretation. For all of us, Minister, some who may not be
happy with the concept of regulating a free market and some of
us who wish to see these markets regulated to the advantage of
the consumers, we are aware that any of the companies which are
regulated, if they felt we had the wrong legal base, could take
this to court in Europe and strike down the regulation, thereby
denying the consumer the benefits which we hope will come from
the regulation. We therefore hope that the Commission does come
up with a very watertight legal support for you when, hopefully,
you advance to making the regulation after June. We will see how
it develops when the Commission eventually comes out with the
legal opinion, but can I thank you, Minister, and your colleagues
for coming along. I am sure the last part of our discussions will
not be the bit which will spark off interest in the public, but
I am very, very sure that the prospect of not coming back from
those Spanish holiday and finding that the kids have run up a
bill of several hundreds of pounds, which you did not expect and
cannot afford to pay, will be welcomed by everyone when this regulation
goes through, so thank you again for attending.
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