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What is wrong with a supranational umbrella that tries to give directions to the member states of the European Union—as far down as Bulgaria and Romania, by the way? [Interruption.] I have a feeling that my hon. Friend might agree with me on that. We need a common energy policy. I agree with my hon. Friend; of course it would be better for there to be harmony in our approach to all the suppliers. What is wrong with that? I cannot imagine.

Kelvin Hopkins (Luton, North) (Lab): Is my hon. Friend not concerned that the Germans have been doing quiet deals with the Russians to make sure that the pipelines come across Germany, so that at least they have their hands on the taps? Those countries take a nationalistic view of things and look after themselves. I do not want to promote nationalism between different countries, but let us be realistic. If we want secure energy supplies, we have to take command of that ourselves as a nation state.

Sir Stuart Bell: My hon. Friend knows full well that the German border is close to Russia, with Poland in between. As one who has spent some time reading about the downfall of Berlin in 1945, I think that the Germans would be happy to have gas supplies from Russia, and that Russia would be happy to receive their euros in exchange. I assure my hon. Friend that we have full security of supply from Norway, Qatar and Algeria, apart from our own North sea oil coming on stream. There is no problem with our security of supply at the moment, but, as I said in an earlier speech, we must prepare for the worst while hoping for the best. We must prepare for a day when a difficulty with supply may be caused by disruption, prices or outside events. Conflict in some part of the world may affect our energy supply. My right hon. Friend the Member for Leicester, West (Ms Hewitt) mentioned various particularly unstable parts of the world that supply us with energy.

We have already dealt with the provision in article 176A on determining the conditions for exploiting energy resources. I imagine that that would cause no difficulty to the Opposition, and that there would be no difficulty over the provision that states:

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So what is the problem with competence? What is the problem with solidarity? What is the problem with article 176A? Why, as the hon. Member for Cheltenham asked, were these wrecking amendments tabled? The answer is, of course—and there were murmurs from the Opposition Back Benches to this effect—that it was part of the process of wrecking the amending treaty. The artful dodger of politics is trying to undermine the treaty by undermining energy. If the day were to come when we had a Conservative Government with the hon. Member for Rutland and Melton in charge of energy policy, the hon. Gentleman would be living with this. It would be in his bible. He would be carrying it around with his pocket wherever he went.

The Committee should take account of the fact that these are wrecking amendments which have no real significance in the great scheme of things. They reflect again the opposition to the European Union in all its shapes and forms that has developed through the hon. Member for Stone (Mr. Cash)—I gave him credit for it earlier—and the closing in on themselves of the Britons whom we used to called little Englanders. Once the Conservative party moves away from that and we engage in a genuine debate on the future of Europe, the Conservatives will be the better for it, the Government will be the better for it, and so will the country.

Mr. Peter Lilley (Hitchin and Harpenden) (Con): I bring the Committee’s attention to my interests as declared in the Register. However, I shall draw on neither my experience as director of an oil company nor my experience as an oil analyst in the City, but on my experience as Secretary of State for Trade and Industry in the lead-up to the single market. At that time, I urged Britain to take the opportunity that we would be offered by the liberalisation that the single market would bring about. I argued that the common market had given a particular advantage to Germany, whose relative strength was in manufactures, and that the common agricultural policy had given a particular advantage to the French, who had great strength in agriculture. It was our turn now, I suggested: we had a relative strength in services and the privatised utilities, and the liberalising measures in the single market should help us to fulfil that.

Admittedly, in the ensuing 15 years progress has been rather slower than I hoped then, but—along with, I think, the whole of my party—I still believe in the liberalisation of energy markets in Europe. We have no objection to the liberalising provisions that are in the existing treaties and are, to a degree, mirrored in this treaty. We see no point in changing them, and we see no gain in reaffirming or altering them. If we were to stick with existing treaties, we would have all the liberalisation that we would have if we proceeded with this treaty. However, this treaty goes further than that.

Mr. David Drew (Stroud) (Lab/Co-op): Does the right hon. Gentleman agree that, while we may have that liberalising agenda—over which some of us have nothing but fears—the French have made it absolutely clear that they will not liberalise their energy markets? That is why they have been so successful.

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Mr. Lilley: I agree. The one change that this treaty makes is to reduce the liberalisation, not through the clauses that we are currently debating but through the change secured by the French President which removed the pre-eminence of competition policy from the preamble of the original treaties. This treaty lessens the liberalising force that we would have if we stuck with the status quo.

I want to focus on the new powers, and above all, the new references to security of energy supply. That is to be a shared competence, and has been pointed out, we can legislate only in so far as the European Community chooses not to. Decision making will primarily operate through qualified majority voting, and therefore we will have no veto, except in certain circumstances to which I shall refer later.

6.45 pm

Kelvin Hopkins: I thank my constituency neighbour for giving way. He is talking about security of energy supply, and there has been much emphasis on the need for us to develop a degree of independence in energy in the longer term. His party—perhaps he himself—privatised our energy sector. Much of it was sold off to foreign companies, so not only do we not have the supplies, but we do not have control of the supplies because they are in the hands of foreign companies. Would it not have been sensible to keep those companies in public ownership in Britain?

Mr. Lilley: I am happy to reply to that point because I have some experience relating to it. If a foreign-controlled company acts against the interests of this country, we can intervene and take control of it. I was probably the last Minister in this House ever to nationalise anything—I nationalised all the companies owned by the Iraqis when Saddam Hussein invaded Kuwait in 1991. We retain such powers over companies operating in our country, but would cede some of them to European institutions under this measure. It will give the EU competence to control, plan, influence or ration the supply of energy. That is what it is all about.

For the Liberal party, the hon. Member for Northavon (Steve Webb) complained that we in the Conservative party were worrying our little heads unnecessarily, thinking up remote and unpleasant possibilities of what might happen to this country. But thinking about security requires one to think about unpleasant things that may happen. It is a bit rich for the Liberal party, having castigated the Financial Services Authority for not thinking about the remote possibility that Northern Rock might go under, and that there might be a run on a bank, which had not happened for the previous 140 years, to castigate us for thinking about what might go wrong in the sphere of energy. In the past, we have seen the Suez crisis, the OPEC embargo, the Iranian embargo and the Russian interruption of supplies to Ukraine. We know that energy can be used for political means, and can cause insecurity of supply. In such circumstances, it is important to know how to respond, and to have the powers to do so. Such issues are important, and we have to think about what might happen if we transfer authority for such decisions to the mechanism of qualified majority voting, and about how that would affect this country.

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One of my hon. Friends said that we are all in it together, so it is worth pooling our sovereignty, or at least sharing risks, with other countries because we would then all be able to help each other. Logically, it is only worth a country sharing risks with others, and sharing its energy supplies, if those countries face fewer risks than it does, or have more energy supplies. In any other circumstance, one is simply exposing oneself to other countries’ risks, and may be sharing one’s energy resources with them without gaining anything in return.

Mr. Philip Hollobone (Kettering) (Con): My right hon. Friend makes an excellent point, but member states do not need to be in the European Union to achieve that end. One reason that wind power is so successful in Denmark is that it has an arrangement with Norway giving it access to Norway’s hydro-power when the wind is not blowing in Denmark, and the same is true the other way round. Norway is not in the EU and Denmark is, so the Lisbon treaty is not needed to effect such arrangements.

Mr. Lilley: That is true and my hon. Friend makes a good point. However, I was trying to focus on interruption in supply that is politically conceived or perhaps caused by a natural disaster, and whether we should retain our independent power to respond to that emergency or transfer it to collective decision making in the European Community, as the treaty of Lisbon requires.

Ms Hewitt: Will the right hon. Gentleman give way?

Mr. Lilley: I shall do so in a moment after making a little further progress, when the right hon. Lady, as a fellow former Secretary of State for Trade and Industry, may realise that my arguments require no qualification by her.

We in this country have the biggest reserve of oil and gas in Europe. We would therefore share something positive with countries that face risks but do not have the same resources to share with us in the event of our needing their help. We have also diversified slightly more than other countries, especially in opening up to achieve 20 per cent. of our gas supplies from Qatar. That will relieve at least some of our dependence on future gas supplies from Russia and central Asia. I do not therefore understand the logical case for us, in our specific circumstances of being the principal oil and gas producer, to share risks and supplies with other countries.

Mr. Bernard Jenkin (North Essex) (Con): Does my right hon. Friend recall that the potential of the then Common Market to take over our oil was one of the key issues of the 1975 referendum? Those in favour of joining gave copious assurances that it would never happen. Yet the treaty explicitly provides for that.

Mr. Lilley: I confess that I had forgotten that, although I participated in the referendum. I campaigned ardently for a yes vote, having been persuaded to overcome any reservations by the attractive young lady who ran the Britain in Europe movement, and whom I subsequently married. I must therefore declare the further interest that I have done well out of Europe.

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Mr. Jenkin: What is her view now?

Mr. Lilley: It has changed considerably—about Europe, though I hope not about me.

The right hon. Member for Leicester, West presented the argument that our reserves are declining and we are therefore losing the advantage that I described. They are, indeed, declining, but we will still have more domestic supply than any other country in Europe for a long time. My arguments will therefore continue to prevail for a long time over those that the right hon. Lady advanced.

Ms Hewitt: I am grateful to the right hon. Gentleman and fellow former Secretary of State for Trade and Industry for giving way. I have followed his argument with great care, but he simply misrepresents the Lisbon treaty. He talks about our being required, in an emergency, to hand over our supplies. As the right hon. and learned Member for Rushcliffe (Mr. Clarke) pointed out some time ago, the relevant article simply provides that, in the case of a severe interruption in supply in some part of the European Union, the Commission may present a proposal and the Council of Ministers—comprising member states’ Governments, including the UK Government—may decide to do something about it. If agreement is not reached, action can be taken or not taken, unilaterally or bilaterally.

Mr. Lilley: So the right hon. Lady argues that we should give the EU powers because we do not think that they will be used. That is unconvincing.

Kelvin Hopkins: As a former Minister, the right hon. Gentleman will recall that civil servants always insist that when legislation states “may”, it means “will”.

Mr. Lilley: The hon. Gentleman is right.

It has been suggested that the treaty contains protections, where QMV will not apply. Article 176A states:

It refers to the “conditions for exploiting”, not the allocation of energy resources. That means the licensing terms under which a member state’s energy resources will be exploited, the method of allocating licences and so on. The treaty specifically does not state that QMV will not apply to decisions about the allocation of supply. Such decisions will continue to be made by qualified majority voting. Therefore, if circumstances arose similar to when Ted Heath tried to divert supplies away from the rest of Europe, which we had joined only two years earlier, to this country—he could not do so, because British law prevented him and he was not prepared to introduce new laws in the House; the French Government of course did override commercial law and diverted resources—we would not retain the right to allocate our own supplies of energy as we saw fit. That could include sharing them with our neighbours, if that was right and proper and we thought it a generous and helpful thing to do, as well as keeping them if we thought that our needs were greater.

All decisions about the control of reserves and resources in a federal system are contentious—we are of course talking about a quasi-federal system. We do
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not have to look at Iraq, whose constitutional development is held up by an inability to make decisions about the allocation of responsibilities between the federal components and the central Government, nor do we have to look at the difficulties in Nigeria to see the same thing. We can look closer to home. Within the United Kingdom, considerable pressures for devolution arose simply over who owns the oil. The question of who has power over energy resources is therefore a contentious one. Do we imagine that if that power is transferred from this place to European institutions, they will not want to use it to the advantage of the whole community, rather than allowing us to retain it and use those resources exclusively as we see fit?

I urge hon. Members to read the words in the treaty closely. When they do, they are bound to conclude that we should pass the amendment standing in the name of my hon. Friend the Member for Rayleigh (Mr. Francois) and, when we get to them, the amendments standing in the name of my hon. Friend the Member for Stone (Mr. Cash), and thereby ensure that we do not transfer powers over energy resources, which we have in greater abundance than anyone else in Europe.

Michael Connarty (Linlithgow and East Falkirk) (Lab): First, I apologise to the hon. Member for Rayleigh for not supporting him this evening. He was very warm about my speech yesterday, but unfortunately I would describe amendment No. 204 as unnecessary and amendment No. 205 as mischievous, and certainly not constructive.

The reality is that nothing will really change. That point was well made by the Liberal Front-Bench spokesman. There is already a shared competence, as the Opposition motion that we debated earlier stated. All the provisions that are now in the treaty and that were proposed in the constitution were already in parts of other treaties that we had signed and which were operating. That is the truth. There is no real change; the proposals simply formalise and clarify the current arrangements.

In effect, there is already shared competence in energy matters. The term is often used to describe areas of law making where the exercise of EU competence does not exclude the exercise of a member state’s legislative powers. That has been the arrangement in energy markets for some time. We have already been co-operating and benefiting from solidarity—the fact that we mention the word does not make the position different.

The speech that the right hon. Member for Hitchin and Harpenden (Mr. Lilley) gave was entirely wrong, because he left out the end of article 176, which says that the choice is allowed not only between different energy resources, but over the general structure of a nation’s energy market and energy supply, which means that we will indeed continue to control our energy resources.

That was the great controversy during the Convention, when there was a proposal—I spoke against it in the House—that would have prevented us as a nation from doing a bilateral deal with Norway. As the chair of the all-party British offshore oil and gas industry group, I was helping the then Minister, Brian
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Wilson, to negotiate a deal with the Norwegians on the Ormen Lange pipeline, to bring 20 per cent. of this country’s gas supplies from Norway. That would have been prevented, had the original proposal in the Convention gone through.

Dr. Gavin Strang (Edinburgh, East) (Lab): Will my hon. Friend give way?

Michael Connarty: I have only one minute left, so I cannot.

We drove that proposal out and now we have the arrangement that I have described. The Ormen Lange pipeline was launched on 6 October 2007—it was reported that the then Minister for Competitiveness, my right hon. Friend the Member for East Ham (Mr. Timms), was at the opening.

Our worry was that an attempt would be made to take the matter further than we were willing to allow, as often happens in negotiations with the EU Commission. Now, however, we have a shared competence named in the treaty. It is also limited in the treaty and it should be supported. The amendment is therefore unnecessary, because it would do nothing except reverse the situation. If we were to decide not to have shared competence, would we do this alone? Would the UK withdraw and somehow run an energy market on its own? That is not possible, acceptable or sensible.

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