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It is a great pleasure to introduce this important debate about energy. That is, of course, its theme. The twin challenges of tackling climate change and energy security are perhaps two of the biggest challenges that this generation of European politicians and leaders must resolve. If we are to succeed in resolving them, we will need tough and effective action, at both a national and global level. In particular, if we are to respond to those challenges, they call for closer co-operation between members states of the European Union. That is why I strongly support ratifying the treaty of Lisbon. I want the United Kingdom to continue to play a leading role in shaping our response to both those significant energy challenges. It is the view of Labour Members and, I believe, of other hon. Members that we can best do that by passing the European Union (Amendment) Bill and by ratifying the treaty. The case for doing so is compelling.

The treaty enables the European Union to move on from years spent debating institutional reform to look out on the world, not in on ourselves, and to deal with the issues that matter to the people of Europe. The efficient and secure supply of energy will be critical to our economic performance in the coming decades. Building European Union institutions that are better able to function more efficiently, negotiate more effectively and respond more quickly to the needs of its citizens must be our collective aim. However, that chance will be squandered if Opposition Members are allowed to get their way. We cannot afford to spend the next decade looking inward or retreating to the margins of influence in the European Union, as some would like.

Mr. Mark Harper (Forest of Dean) (Con): Given that the Secretary of State says that there is a compelling case, will he explain why the Government originally opposed the powers and wanted them removed from the treaty, and said that they were completely unnecessary because all the necessary powers were already in existing treaties?

Mr. Hutton: I shall come on to that point. The important thing about the treaty of Lisbon—I hope that this reassures the hon. Gentleman—is that all the energy red lines are fully reflected in it. Let me set out the three most important ones. First, the treaty protects and secures our rights over our national oil and gas reserves. I would have thought that he supported that. Secondly, it will make sure that we can always act to ensure security of supply in emergencies. I would have thought that a Conservative Member of Parliament supported that. Finally, the new article will not impede
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progress in opening up EU energy markets. We hear a lot—rightly so—from Conservative Members about the importance of energy liberalisation. That is why the treaty of Lisbon is important and why we are right to introduce it in the way that we have.

Mr. Harper: May I come back to the Secretary of State on that?

Mr. Hutton: No.

Mr. Mike Weir (Angus) (SNP): I am interested in what the Secretary of State says about the liberalisation of markets. Clearly, that is the important issue from the European Commission’s point of view. How will the treaty encourage that given the Commission’s proposals for unbundling ownership are being strongly resisted by France and Germany?

Mr. Hutton: I shall come on to energy liberalisation. It is right to point out that the Commission’s current proposals are being strongly resisted by a number of member states. The important lesson that I draw from all of this is that we would not have reached this point in what I hope will be a substantial transformation of the EU energy market if it were not for qualified majority voting. It has provided a strong stimulus for reform of this important sector of our European economy. As I said, it would not have been possible to have reached this stage if it had not been for qualified majority voting.

If we were to follow the advice of those on the Conservative Front Bench—I accept that not all Conservative Members feel the same way—we would be looking forward to a decade of introspection in the European Union, which would be damaging both to the EU and also, in particular, to the interests of the United Kingdom, which is my principal concern. I find it genuinely hard to understand the position that the Conservative party—officially, at least—is taking for two reasons. First, it wants to disown its role in relation to the Single European Act and the Maastricht treaty, both of which were in Britain’s long-term economic and political interests and both of which rightly involved, in my view, extensions to majority voting in the Council. We would not have seen the opening up of markets in Europe without qualified majority voting.

However, if that were not bad enough, there is the second problem with the Conservative party’s position, which is that it now wants to blight Britain’s future in the new enlarged European Union by renegotiating the basis of Britain’s membership. It is that deadly combination of disowning the past and blighting the future that shows how grotesquely out of touch those on the Opposition Front Bench have become. [Interruption.] I believe that howling at the moon, which is the best description that one can give of the Conservatives’ policy on Europe, is no rational substitute for a sensible policy on Europe, but I am afraid that that is all we hear today from most Conservative Members.

Mr. Harper: Will the Secretary of State give way?

Mr. Hutton: No. The hon. Gentleman has had his go.

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An enlarged but more effective European Union, because of the treaty, can help to support our national and global energy priorities.

More than 50 years ago, the founders of the European Union recognised the critical importance of energy, then in the form of coal, to the economic and political security of Europe. Coal and steel were identified as the two raw materials crucial to power and industry in the Europe of the time. Today, against an increasingly competitive and politicised energy landscape, energy sources are even more critical to the continued economic success of European Union member states.

In recognition of that, the Lisbon treaty establishes a specific article—176—for energy policy, to give any energy measures passed at the EU level a specific legal base for the first time. Previously, the European Union could introduce directives on energy only by using other related articles, the most common of which were article 95, to do with the approximation of laws for the internal market, and article 175, dealing with the environment. Existing legislation passed under other articles include directives on the internal market in gas and electricity, under articles 47(2), 55 and 95, directives on the promotion of renewables and co-generation and on energy end-use efficiency and energy services, and the directive on the EU emissions trading scheme, all of which were made under article 175. Without a separate article, considerable time has undoubtedly been spent by the Commission, officials, national institutions and lawyers on looking inward at the bureaucracy of the EU rather than on discussing how we can deal with our energy challenges.

I believe strongly that there is therefore a need to turn the aspiration of open competitive markets that secure affordable energy supply while working towards a global low-carbon economy into increased and better-focused action at an EU level.

Supply disruptions to any one member state affect the European market as a whole and demonstrate that long-term bilateral contracts alone cannot wholly insulate countries from the impacts of supply tightness across the EU. The new separate article will make it easier for member states to discuss the issues in more depth and to work on delivering the energy solutions that we need. It will help to ensure that EU energy policies are clear, coherent and, we hope, mutually reinforcing.

The new article will aim to do four things: ensure the functioning of the energy market; ensure security of energy supply in the EU; promote energy efficiency and energy savings and the development of new and renewable forms of energy; and promote the interconnection of energy networks.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Will the Secretary of State clear up some confusion? There seems to be an argument over the security of the energy supply, the stocks being held and the oil supplies, but it seems to me that the provision is perfectly reasonable. Can he tell me why it is coming under criticism?

Mr. Hutton: I shall try to deal with that point, but I think that the criticism is coming from others, not from us. It is important to emphasise that it is clear that
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matters such as energy stockpiles are taken under QMV. That has been the position since the treaty of Nice. Perhaps this will answer my hon. Friend’s point: the European Union will not have control of the UK’s energy stockpiles. We will be required, rightly and sensibly, to maintain such supplies, but they will remain under UK control and nothing in the treaty affects that. I know that the Opposition Front-Bench spokesmen, at least, want to make such an argument, but those who have done so have not understood article 176 and its clear and express provisions.

We have also been able to ensure that the UK continues to have the right to determine the conditions for exploiting our natural energy resources, our choice between different energy sources and the general structure of our energy supply. Article 176 secures Britain’s energy red lines in the way that I have described, safeguarding the British national interest in the process.

Mr. Graham Brady (Altrincham and Sale, West) (Con): Obviously, we are here in an effort to understand the detail of article 176 and its implications for the United Kingdom. Can the Secretary of State explain his interpretation of what would happen in the event of a conflict between the goal of energy security at an EU level and at a national level, given that the EU would be given legislative powers under the article?

Mr. Hutton: It is important to understand that this section of the treaty of Lisbon is essentially a consolidation exercise in relation to QMV rather than a significant extension of it. The importance of article 176 has to be properly understood by Conservative Members if they are to sustain their criticisms.

The treaty contains a proper recognition in the laws of the EU, for the first time, of the sovereignty of member states over their national resources. That will trump any other provision in the treaty and ensure that the powers on QMV have to be exercised against the background of the clear wording of article 176.

Mr. David Heathcoat-Amory (Wells) (Con): The Secretary of State says that this is a consolidation exercise, but he knows that there are two new solidarity obligations—one in article 175 and one in amended article 100—to deal with periods of crisis. Given that the obligation could incur infraction proceedings by the Commission and, if judiciable, by the European Court of Justice, how does the Secretary of State think it might affect our freedom to supply oil, for example, to an non-EU member state in times of crisis—perhaps to another NATO member—rather than to other member states under the solidarity clause?

Mr. Hutton: I think I understand the point that the right hon. Gentleman is trying to make. In this context, we are essentially talking about situations with which we have become all too familiar—those in relation to terrorism, and so on. I would have thought that there was a palpable case for co-ordinated action across the EU to deal with such issues. In relation to his point about social cohesion and solidarity, of course it was Maastricht that extended the activities of the Community in many areas, including in the field of
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energy. I am sure he will correct me if I am wrong, but I understand that he voted for the Maastricht treaty and supported it.

Mr. Heathcoat-Amory: The Secretary of State is missing the point. It is nothing to do with social solidarity; this is a specific, new obligation in the treaty to act in solidarity with other member states, both in normal market conditions and at times of crisis. Given that that the obligation is judiciable and can incur infraction proceedings, it is very serious and might—in my view, it will—affect our freedom of choice to supply energy to non-member states, that is, to our other military allies. We might need or decide to do so at the appropriate time. The Secretary of State did not answer that serious point, which has nothing to do with Maastricht as the obligations are new. Can he answer it now?

Mr. Hutton: I do not want to prolong the exchange unnecessarily. As the right hon. Gentleman can see, I have rather a substantial speech to make.

Several hon. Members rose

Mr. Hutton: Let me make it clear that I shall not give way at this moment in time. I want to come back to the point made by the right hon. Member for Wells (Mr. Heathcoat-Amory).

The solidarity provisions to which the right hon. Gentleman referred have been designed to deal with national emergencies, including terrorism. With great respect to him, I would have hoped that he could find some common ground with us, on that point at least.

Mr. Brady rose—

Mr. Weir rose—

Mr. Hutton: No, I shall not give way—

Peter Luff (Mid-Worcestershire) (Con) rose—

Mr. Hutton: I shall give way to the Chairman of the Select Committee on Business, Enterprise and Regulatory Reform in a minute.

On the specific point about energy, it is important to bear in mind what the treaty says. It states:

Those are important guarantees to have in the treaty and the body of European law that were not there before. Given the perspective held by the right hon. Member for Wells, I would had thought he would be able to support them.

Peter Luff: My concern, too, is about paragraph 87 of the treaty—this new paragraph 1 of article 100—with its reference to a

When I read that, I imagined that it referred to the problems with the supply of Russian gas to eastern
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Europe, for example, and the consequences for the British and western European markets. The Secretary of State is saying, almost by implication, that it is restricted to subjects such as terrorism. Will he be a little clearer about the range of circumstances in which he thinks the provision will apply?

Mr. Hutton: I would prefer to make a little progress with my speech, but I shall ensure that the hon. Gentleman receives a proper answer as the debate proceeds.

Rob Marris (Wolverhampton, South-West) (Lab): Article 122 of the consolidated texts, which is, I think, the article 100 that is being discussed, states in paragraph 2 that the Commission, having consulted people,

Surely the article about emergency situations is to do with financial assistance from the EU, and not to do with diverting supplies from one country to another, or anything else.

Mr. Hutton: May I say how much I appreciate my hon. Friend’s support? I am grateful to him for providing a clarification that we all regard as very helpful.

I do not believe that a fair-minded person could regard the provisions in the treaty as being of anything other than a positive benefit to the UK and the EU as a whole, unless opposition to this article is being used as a proxy by those who do not believe in tackling climate change or who want us to get out of the EU altogether. People will form their own opinion about that.

In the move to a separate article, the treaty confirms the role of QMV, and its retention is unequivocally in the UK’s national interest. For years the UK has been working to achieve energy priorities, such as the liberalisation of Europe’s energy market. We believe that the competitiveness of Europe’s energy markets is fundamental to the economic performance of the EU over the next 50 years. Although progress and agreement have been possible without a vote, the potential for a decision to be taken under QMV has removed many of the incentives for an individual country with protectionist instincts to try to block progress against the wishes of the majority.

It seems certain to me that without QMV we would have made little or no progress in liberalising EU energy markets. In fact, it is arguable whether the Commission would even have proposed them in the first place. We would certainly have had no chance of securing the latest package of liberalisation measures, which those on the Opposition Front Bench have repeatedly called for us to support—the so-called third package of energy liberalisation, which is being negotiated. The UK strongly supports those proposals, which represent a real breakthrough in opening up Europe’s energy markets. The aim is to prevent incumbent energy players from keeping others out of the market, and to promote competition. That would benefit energy consumers—individuals and businesses—in the UK. We are working with the Commission and our member state allies to make sure that that happens.

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