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Needless to say, that amendment failed. That is not surprising because, as my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) pointed out last Tuesday, of the 40 or so amendments in justice and home affairs that were tabled by the Government at the Convention, only two succeeded, one of which was to change the word “safety” to “security”. Unfortunately, the Government were hardly any more persuasive at the Convention in their arguments regarding competition policy.

What are the effects of the treaty on UK competition policy of which the Government originally disapproved? For the first time, the treaty characterises

as an exclusive competence of the EU. Where there is an exclusive competence, the treaty explains that

Therefore, unlike under current treaties, the UK will not be able to legislate on its own initiative to complement Union competition rules. It would not even be able to vary rules temporarily or permanently to protect the health or safety of UK subjects. The effects of the changes are wide reaching, so it is no wonder that the right hon. Member for Neath tried and failed, not once, but twice, to carry what we agree was a measured and sensible amendment.


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In practice, the treaty will mean that UK authorities will no longer be able to supplement EU competition rules if they believe that EU competition law does not go far enough. That could lead to cases where distortions in UK markets go untreated while the UK waits as it tries to push through new competition regulations in Brussels. An example of that sort of situation may be found in the UK financial services industry, which is particularly pertinent to many of my constituents who commute into the City. If the UK decided that aspects of the industry required further competition laws or regulations, it could not legislate in that area on its own because the matter would be an exclusive competence of the Union. Likewise, if our Government found that they did not have sufficient rules to encourage competition policy in, for example, the UK’s airports, they would have to argue for rules at an EU level, having given up the ability to legislate in that area.

A second problem was identified by the right hon. Member for Neath—he was prescient. Once competition becomes the exclusive preserve of the EU, the ability of the Government to legislate to protect health and to engage in consumer protection will be compromised. A persuasive example given by the Government in 2004 concerned a case brought against them at the European Court of Justice by tobacco companies, which was initiated in December 2002. The case highlighted the conflict between the implementation of health standards, such as maximum tar and carbon monoxide levels in cigarettes, and the EU’s competition policy. In 2004, the Government argued that had competition policy been an exclusive competence rather than a shared one, they would not have been able to influence that important area of health policy.

Given all of those factors, I have three questions for the Minister. First, the wording of the competition laws regarding the abuse of dominant positions states that it will apply in any case that

Given that the legal interpretation of the word “may” is extremely wide, will the Minister explain what that wording will encompass if the treaty goes through? Secondly, what discussions have the Government undertaken with the UK Competition Commission with regard to the treaty’s provisions? Thirdly, with regard to the danger highlighted by the right hon. Member for Neath concerning the inability of the UK to safeguard health and consumer protection, has the Minister received any further reassurance during his negotiations with EU partners?

Turning to amendment No. 239 on customs co-operation, under the treaty, EU laws could lay down conditions under which UK Customs could check to ensure compliance with national criminal law regarding items entering the UK. That could oblige Customs to report its compliance with such matters to the Commission. Such laws could import all of the EU’s human rights general principles, such as the charter of fundamental rights, into the applications of our Customs procedures, with unknown effects. We tabled amendment No. 239 to prevent that situation from arising.

I said to the House that I would be brief, so I shall conclude speaking on our amendments as follows. Amendment No. 237 would do only what the Government
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wanted to achieve but failed to secure when they negotiated the European Convention. It would allow the UK to complement EU competition policy when that is necessary and protect the UK from regulation when it is not. It would strike out elements that are full of unknown consequences. It would also preserve the House’s ability to promote health and consumer protection, as the Government wished to do.

The First Deputy Chairman of Ways and Means (Sylvia Heal): I call Mr. Tim Farron.

Mr. Jeremy Browne (Taunton) (LD): Jeremy Browne.

The First Deputy Chairman: I apologise.

Mr. Browne: It is not the first time that that mistake has been made. However, I believe that my hon. Friend is a full fortnight younger than me, so he is obviously not ageing in the right way.

I want to speak about the lead amendment and amendment (a) to amendment No. 195. I do not intend to speak at length, partly because others wish to speak and partly because some of the arguments were rehearsed earlier today.

My party enthusiastically supports the single market and regards it as one of the great successes of the European Union. I am not as worried as the Conservative spokesman about the inclusion of the word “exclusive” in the treaty. Indeed, our interpretation is that, if we do not try to enforce a single market and we allow people to pick and choose an opt-out when it pleases them, that may be detrimental to the United Kingdom, which tends to be an enthusiast for enforcing the free market principles of the EU with some rigour. We support powers that will enable the single market in the EU to function as effectively as possible. It does not take a huge leap of imagination to envisage some of our partner nations in the EU dragging their feet to the detriment of people in Britain. We cannot prevent them from doing that unless we give the EU some powers. It still means that the UK can have, for example, an Office of Fair Trading. “Exclusive” does not mean that the British Government can no longer make policies and apply them to the UK. However, that does not detract from the value of rigorous rules that are enforceable throughout the EU.

Rob Marris (Wolverhampton, South-West) (Lab): Does the hon. Gentleman agree that, were amendment No. 237 to be passed, it could disadvantage British business that was trading elsewhere in the EU because other EU countries would have protective measures, which we would find more difficult to dismantle or oppose unless we kept the wording as it is?

Mr. Browne: I am grateful for that intervention because I agree with it. It is worth emphasising the hon. Gentleman’s point. It is fair to say that different views exist in the EU about the way in which western advanced capitalist economies should go. That is a slight simplification but it helps explain matters. I believe that most members of all three main parties have much sympathy for what is regarded as the Anglo-Saxon model of rigorous competition. That view is not universally held but our Government and Conservative and Liberal Democrat Front Benchers subscribe to it. Competition and free trade create wealth and jobs and it is in our interests to promote such values throughout the European Union.


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That view is not held at such high levels of government in some other European Union countries. France is commonly cited as an example of a country that has a political and cultural attachment to a social model, but many people in Britain would feel that that model restricted business. A great irony of our debate is that the Conservative party, which used to be the pro-business party in the UK, is now trying to make British businesses less able to exploit opportunities to expand elsewhere in the EU.

Jon Trickett (Hemsworth) (Lab): At least we have a clear idea of where the Liberal Democrats intend to place themselves in the next election campaign, and possibly afterwards. By associating themselves so clearly with the principles of competition and the open market, they ignore the resultant inequities and inequalities. Does the hon. Gentleman accept that, if markets are to be a mechanism for disputing goods and services, strong social protections should be in place to prevent the breakdown in social cohesion that might otherwise occur?

Mr. Browne: I am grateful for that—it was not so much an intervention as a statement. I hope that I can say with some confidence that the Liberal Democrats will favour free market economics in our manifesto at the next general election. Indeed, one of the reasons I am a Liberal Democrat is that I am an economic liberal. Economic liberalism has much to teach everyone across all three major parties in the House. At the risk of being pulled up short, I think that the great ideological debates of the 20th century about whether competition and free market economics are successful or whether there is a preferable alternative model was resolved fairly decisively in about 1989.

Mr. Francois: I understand the hon. Gentleman’s dilemma with regard to Liberal policy. Indeed, the whole House sympathises. If experience is any guide, the eventual outcome is that the Liberal Democrats will be pro-competition in some constituencies and against it in others.

Mr. Browne: What I can say? If one wants to observe protectionism, one need only watch the Conservative party defending its vested interests. I am a keen advocate, as is my party, of rigorous competition, economic growth and British companies being able to trade throughout the European Union, which has been greatly to our benefit. Indeed, I am surprised that this position has proven so controversial—I thought that it was just a statement of the obvious.

Michael Connarty (Linlithgow and East Falkirk) (Lab): The problem with the Liberal Democrats is that one has to look at the policies that they espouse in other quarters to see what they are really talking about. Do the Liberal Democrats still take reference to the “liberal free market” in their policies to mean that they would sell the shares in the Post Office, a public service?

The First Deputy Chairman: Order. That really is rather wide of the amendment under discussion.

Mr. Browne: It is rather wide, but it emphasises yet again that the Liberal Democrats are at the centre of the national debate on such issues. I shall be happy to
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take further questions when we have a more widely framed debate—indeed, perhaps I should apply for an Adjournment debate.

Alan Simpson (Nottingham, South) (Lab): Clarity is obviously the keystone of all Liberal Democrat thinking. Will the hon. Gentleman be absolutely clear on his party’s support—or lack of it—for the EU agency workers directive?

Mr. Browne: Again, I fear that that would lead us astray and I anticipate being pulled up short.

We have strayed a long way, so let me bring the debate back to amendment No. 237. Does my party believe that it is in the interests of British business to have a properly and consistently enforced free market, where we can trade in goods and services, and does that add to the likelihood of British companies generating both wealth for their shareholders and extra employment? Yes it does, in my view and that of my party. Do we therefore need rules and regulations to ensure that we and other countries comply with those basic criteria? Yes, in my view, we do. Is it therefore unwise for the Conservative party to try to act to the detriment of British business, by making it possible for other European Union countries to restrict the operation of the free market? In my view it is. The Conservative party’s pro-business credentials have been taken over by their Eurosceptic credentials. That is a mistake.

Rob Marris: Will the hon. Gentleman give way?

Mr. Browne: I am extremely generous and will continue to be so.

Rob Marris: I have some sympathy with the position set out by my hon. Friend the Member for Hemsworth (Jon Trickett), but I do not see that as necessarily contradictory. However, I should be interested to hear the hon. Gentleman’s views on this. Through the rules governing the internal market, one can have levelling up, but it is too often assumed that there will instead be a levelling down, which is not what I want. I want levelling up, so that we can have free and open competition, but within a framework, so that we do not have, literally and metaphorically, “beggar thy neighbour” downwards competition, but instead move up together. British companies can compete by having good standards here, but also good standards on the continent.

Mr. Browne: Perhaps we should write a pamphlet together on that subject, as I completely agree with the hon. Gentleman. It is crude to see us as advocating either completely unfettered capitalism or as going down the opposite path. I am in favour of enlightened social policies, but conducted within a framework of rigorous competition taking place within a European single market. That is a position that some people in the Labour party have come to view sympathetically, which is why we agree with the Government on this point and disagree with the Conservative party.

5.15 pm

Before that fascinating question and answer session— [Interruption.]—fascinating for some, as I cannot speak for everyone in that regard, I was speaking to our amendment (a) to amendment No. 195. That amendment, tabled by my hon. Friends and me, is constructive: unlike many of the Conservative amendments, it is not
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designed to wreck the treaty, but to strengthen it. I do not anticipate that the House will decide on it, as that would require amendment No. 195 to be passed first, but I do not anticipate that that will be successful either.

The nub of the amendment is our concern about the concession widely recognised as having been made to placate the French Government regarding the taking out of the phrase “free and undistorted competition” from the original document when the revisions were made. We hear it said frequently by the Conservatives that the two documents are almost identical—indeed, so similar that no distinction can be made between them. On this point, there is a distinction to be made. I was in favour of “free and undistorted competition” in the earlier constitutional treaty and I regret its having been taken out. Yet again, I am in the unusual position of outflanking the Conservatives by being more pro-business than they are.

Mr. Mark Harper (Forest of Dean) (Con): Having attended our earlier debate, I am now a little confused. The amendment tabled by the hon. Gentleman and other Liberal Democrat Members clearly demonstrates concern about taking out the phrase “free and undistorted competition”. Earlier, however, the hon. Member for Twickenham (Dr. Cable), while conceding that we had a point on that issue, chastised my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), the shadow Chief Secretary, for labouring that point. However, given the spirit of the amendment, the hon. Member for Taunton (Mr. Browne) seems to be saying now that our argument had rather more force than his hon. Friend suggested.

Mr. Browne: I recommend that Conservative Members always listen to my hon. Friend the Member for Twickenham (Dr. Cable), who is able to provide economic master-classes for them all. They should heed his words. I listen to them and I am slowly improving as a result of hearing his wise words.

I am asked whether the change has made a material difference. No, because the phrase I mentioned was not part of the status quo in any case and was not in the original documentation of the European Union. Do we welcome the fact that it was added to the constitution? Yes. Do we therefore regret that we have gone back again to the original status quo when we thought that the position put forward in the constitutional treaty was preferable? Our view is yes again. It does not make a material difference. In our view, we have taken a step forward and a step back to where we were. But does it send out a slightly unwelcome signal about protectionism, which we want to see less of, and about free trade and competition in the EU, which we support? Yes, our view is that it does.

Mr. Peter Lilley (Hitchin and Harpenden) (Con): Will the hon. Gentleman explain to us and his constituents why he proposes not to vote for a referendum on the constitution, which he promised he would vote for at the election, even though he thinks that this treaty is slightly worse? How can he justify that?

Mr. Browne: The problem with Conservative Members is that when I am trying to talk about the interests of British business, all they seem to be interested in is their hang-up on the issue of a referendum. I risk being pulled up short, but let me try to take the House
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through the incremental steps in response to the question. Everyone recognises that this issue of the referendum is a rather small aspect of the overall treaty— [Interruption.] I see that the Minister for Europe, who virtually lives in the Chamber nowadays, probably feels that this conversation is taking up another 20 minutes or half an hour more of our time in the days and weeks of debate about the different aspects of the treaty. I would not see this aspect as the linchpin of the treaty.

Our view on the referendum issue is that the constitution superseded all previous treaty agreements and that the treaty is different in nature. The content—

The First Deputy Chairman: Order. I understand that the hon. Gentleman is responding to an intervention, but I must point out to him that we are not now dealing with the constitution or the referendum. Will he return to the amendment under discussion?

Mr. Browne: I was trying to be helpful, Mrs. Heal, but I made a mistake in doing so. All that I observe is that the Conservatives had 18 years in government to hold as many referendums on the European Union as they wished, and never once sought to do so, which many of my constituents regret.

The First Deputy Chairman: Order. May I remind the hon. Gentleman of my ruling? We are not debating the matter of a referendum this afternoon.

Mr. Browne: What a relief that is, I am sure, to us all, but not least to the exceedingly tedious people on the Conservative Back Benches.

Michael Connarty: I have followed the hon. Gentleman’s argument against this amendment and for his amendment to amendment No. 195. If he regrets the previous constitution being changed to the new Lisbon treaty, and the removal of the reference to undistorted competition, do the Liberals therefore not support the protocol on services of general interest, which fundamentally changed the previous position on undistorted competition? That seems to be the logic of his argument.

Mr. Browne: I will make an unusual concession in the House, which is that I do not feel that I have the same degree of expertise as the hon. Gentleman to give him as good an answer as I would wish. I can only look at the overall principles and say that free and undistorted competition is a value that the British Government are right to seek to promote in the European Union. We regret that it is not contained in the treaty, as it was in the previous constitutional arrangements.

Mr. Siôn Simon (Birmingham, Erdington) (Lab): On the question of values, can we be clear about exactly what has happened? Free and undistorted competition has not been taken out of the treaty; it has been moved from the section dealing with objectives. Although it is very important, it is not an objective. Does the hon. Gentleman agree that prosperity is an objective, and that free and undistorted competition is a means by which one achieves the objective of prosperity? That is why it has been taken out of the section dealing with objectives but left in the treaty in a protocol, with the same legal status.


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