Select Committee on European Scrutiny Minutes of Evidence


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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