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6 Feb 2008 : Column 1065

As I was saying before I was diverted by my right hon. Friend the Member for Suffolk, Coastal, the Union will grab and maintain new areas of exclusive competence. In particular, the Union will dictate competition rules, misleadingly justified under the functioning of the internal market as an exclusive competence. Currently, article 5 of the treaty on the European Union stresses that in areas that do not fall within its exclusive competence, the Community shall take action in accordance with the principle of subsidiarity

That represents a big problem, because it makes certain assumptions. First, it assumes that subsidiarity can be applied, but as I have said in previous debates, I simply do not believe that it ever has been. Secondly, there is the problem that somebody has to judge what is being “better achieved”. Indeed, it has not been determined in which areas the Community has exclusive competence, which has inevitably led to legal disputes.

The European Court of Justice has been recognising the exclusive power of the Community within certain areas where it had not previously had competence. Now it has those competences and the new article is a reflection of ECJ practices and existing case law. The European Community common policy approach will take greater precedence than British obligations to third countries and Commonwealth countries, for example. That matter relates to what the hon. Member for Elmet (Colin Burgon) said a few moments ago about third countries and Commonwealth countries and the representations of non-governmental organisations. I take a great interest in matters pertaining to aid, as does my right hon. Friend the Member for Suffolk, Coastal and my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), who chairs one of our policy groups on international aid. We should take very careful note of the way in which economic partnership agreements are working and of the damage that that is doing. As I was saying, European Community common policy will take greater precedence than British obligations to third countries and Commonwealth countries, and the European Court of Justice has said that we would

to maintain existing relations.

That is the seriousness of the situation. The European Court has said, in relation to our obligations to third countries and Commonwealth countries, at the very time when we should expand our interest in the globalised economy—particularly in relation to India and its new-found opportunities, Malaysia, the all-party group on which I chair, and all the other Commonwealth countries with which we have a common heritage—that we will no longer have the right to maintain our existing relations. Control over the customs union, establishing the competition rules necessary for the functioning of the internal market, monetary policy, common commercial policy, the conservation of marine biological resources under the common fisheries policy—all are locked into the Union. On the last of those, the Union will be allowed further to regulate catches or ban fishing in
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several areas. To conserve stocks, therefore, fishing quotas will be further reduced. Moreover, the Lisbon treaty introduces the Union’s exclusive competence to conclude an international agreement when

Against that background, this is not a game. In relation to the realities of competition, it involves the whole question of the extent to which we are able to succeed as a country. As I said in an intervention on my right hon. Friend the Member for Suffolk, Coastal, I simply do not agree that the whole of the European Union has been a success. As many statistics and figures demonstrate, regrettably, the European Union is dropping down the league. The predictions are that, largely because of over-regulation, the failure of initiatives such as the Lisbon agenda, and the failure of the integration process, by 2020 the EU’S actual GDP will take us even further down the league table. That will affect our constituents. We must therefore spring the trap and start renegotiating the treaties, and get ourselves into a relationship of an association of nation states.

I would strongly recommend to Members a fascinating book that has just come out by Professor Paul Taylor, recently a professor of international relations and director of the European Institute at the London School of Economics. He has written about the failure of the European Union integration process. He gives examples of how the European Union has failed in relation to trade and other matters, and effectively argues that that failure has demonstrated that the Eurosceptic arguments, which have been developed over the past 20 years, have been proved right.

Do I take great satisfaction from that? Twenty years ago, I did make this speech on the Single European Act, and I have not repented of the speech but I have repented of the vote. I take no satisfaction, and never have done, from the failings in the European Community or the European Union. In its origins, it was a good idea. In 1945, people probably would have thought that the European Coal and Steel Community and all the rest of it was the right thing to do. The bottom line, however, is that it has gone in the wrong direction.

For example, on the question of exclusive competence, I would refer to another European Court of Justice case, Commission v. Council, case 22-70, concerning a European agreement on road transport, better known as the ERTA case, in which the ECJ delineated the concept of exclusive competence. It stressed that

This provision in the treaty, with the single personality, will remove from the member states most of their current treaty-making powers in those areas.

6.45 pm

The Lisbon treaty has formalised the idea that member states’ competences will be limited once the Union has acted. Article 2C includes the internal market as an area of shared competence. My right hon. Friend the Member for Wells and my hon. Friend the Member for Forest of
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Dean touched on these issues. The article lists as areas of shared competence the internal market; social policy; economic, social and territorial cohesion; agriculture and fisheries; environment; consumer protection; transport; trans-European networks; energy; the area of freedom; security and justice; common safety concerns in public health matters; research; technology development and space; development co-operation; and humanitarian aid. Energy and space are new Union competences. A vast range of activity that should be in the remit of this Parliament and this Government will be handed over to European control.

I believe, in a nutshell, that the European Union as a customs union will continue to prevent us from pursuing an independent trade policy. I believe that the rules establishing the internal market will remain the same and that an uncompetitive Europe will continue, with very serious consequences of the kind illustrated by my hon. Friend the Member for Forest of Dean. The internal-market question is being internalised, and it is not being understood that we live in a global economy in which India, China, Malaysia and other countries are developing just as we developed in the 18th century. We want to work with them in a peaceable fashion.

Free trade is the essence of peace and prosperity, as Cobden and Bright demonstrated in the mid-19th century. This is the key: we should understand that the rules that are being developed—involving the concentration of power, the apex of decision making being taken away from the free markets and the decisions becoming the arid, dry, desiccated decisions of the European Court of Justice—are not the way to go. They will not allow us to secure the flexibility in trade that I know is desired by my right hon. Friend the Member for Witney (Mr. Cameron). He wants economic competitiveness, and I wholeheartedly support him in that aspiration. That and the sovereignty issue are two of the reasons why I voted for him in the leadership election.

We must put our money where our mouth is. We will only secure that economic competitiveness if we change the basis on which the European Union functions, alter the rules relating to the customs union and the internal market, and return to the EFTA system. That has not yet been mentioned today. We should bring back the European Free Trade Association in a modified form. We need an association of nation states working peaceably together, within a framework that enables us to trade not only among ourselves but throughout the global order, as I said in my speech in April 1986.

My hon. Friend the Member for West Worcestershire (Sir Michael Spicer) has just entered the Chamber. In 1996, with great prescience, he wrote a book about all these issues and the necessity to maintain free trade. He and I had such a firm alliance with others during the entire Maastricht proposals, in part because we eschewed the idea of a European Government and we wanted free trade, liberalised markets and to ensure that the internal market did not become protectionist. That is why we fought that battle.

The politics of the treaty of Lisbon, the deceit that lay behind its origins, and the manner in which the mandate was imposed upon the people of this country and other European states in defiance of referendums in France and Holland, demonstrate that the politics has been leading the economics. I believe that
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democracy and freedom of choice must lead, and that this House represents the democracy of this country through its representatives. The politics of choice in politics must, however, be paralleled by the politics of choice in economics. That is what this debate is really about, and I totally agree with the exceptional speech of my hon. Friend the Member for Forest of Dean, because he identified the real problem that we must face up to in this globalised world.

Michael Connarty: I am a humanist, not a confessional person, and I must say that because the hon. Member for Stone (Mr. Cash) is a member of my Committee, I feel that I have a duty of care towards him, but I can only stretch to sympathy—I cannot offer him empathy for his speech or for his views on the European Union.

Judging by the Opposition Front-Bench speech, the point of amendment No. 237 is either to allow the United Kingdom to apply protectionist policies because the Opposition are afraid of the Commission carrying out the functions given under sole competence, or to allow the social structure of this country to be ripped apart by a return to the Conservative policies of the 1980s. I remember the damage done by competitive tendering, when there was an unbelievable imbalance fuelled by the fact that local authorities could not compete for services that other local authorities were providing, but only the private sector could compete to take services away from the public sector. It is a good aspect of the treaty that, along with the protocol which I shall mention later, the Commission are given a duty to secure a balance between competitiveness and the destruction of services by unfair competition.

Unfortunately, often when I listen to Conservative Front-Bench Members they seem to have to drag in the negotiations on the Convention and the constitution. This is not the constitution; this is the Lisbon treaty, because many things have moved on in Europe since then. The great debate on the services directive was fought and won to exclude the destruction of public services, particularly the health service, from that directive. The protocol that has been added to the treaty was not in the constitution; those protections were not there. The debate that my right hon. Friend the Member for Neath (Mr. Hain) had in the past reflected a fear of unbridled competition with no protection. It is important that we focus on what we have now, rather than praying in aid past debates and negotiations, because we are in Europe, now and in the future. Unfortunately, Opposition Front-Bench Members often fail to recognise that. I have great respect and affection for the hon. Member for Rayleigh (Mr. Francois), but he does keep talking about the past rather than the future.

I now turn to amendment No. 195 and the Liberal Democrat amendment (a) to it, tabled by the hon. Member for Twickenham (Dr. Cable). The Liberal Democrats are the Janus party—the party of the god with two faces facing in two directions at the same time. The dilemma for the Liberal Democrats is that what we are being shown tonight is the uncaring free-market face, which wants to look towards the more right-wing Conservative voters.

Mr. Jeremy Browne rose—

Michael Connarty: I shall let the hon. Gentleman in when I have finished my analysis, because he has the right to take in what I have to say. He said that we
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should have had the provision in the original treaties and in the original constitution—undistorted competition. When I asked his opinion about the protocol that has been added on services of general interest, which protects the services that would be damaged by undistorted competition, he could not tell me whether the Liberal Democrats supported it or not. His own opinion would appear to be that he does not. It would appear that he wanted what was contained in the unbridled, and I believe destructive, competition policies contained in the four great freedoms in the past. One of those freedoms must be constrained or people are damaged because they are the users of the services that are destroyed.

Mr. Browne: I merely observe something about the Labour party. I believe that the hon. Member for Elmet (Colin Burgon), who made his speech about neo-liberalism, was elected in the same general election as Tony Blair, who was elected Prime Minister three times. The idea that the Labour party speaks with one voice on all these matters is absurd.

I believe in free market economics, but of course they should be tempered with social constraints to ensure that we live in a civilised society. Free market economics are an important way of generating wealth, and that is why I am in favour of competition within the European Union.

Michael Connarty: I remind the hon. Gentleman that he speaks as a member of the Liberal Democrats Front-Bench team. Neither I nor my hon. Friend the Member for Elmet, who spoke from the Labour Back Benches, have ever been on the Front Bench. Perhaps I should try to temper the Liberal Front-Bench team’s enthusiasm for the free market with the same social concerns that he expresses today. If I have moved on the hon. Gentleman’s thinking and that of his party in the right direction, I am happy, because at least I will have done some good work this evening.

The phrase “a duty of care” springs to mind when I think of the right hon. Member for Wells (Mr. Heathcoat-Amory). When I hear his description of the EU, I am traumatised. If I were to think about his view, I would not sleep well when I go home tonight. I know that he had a distinguished career in the Conservative Front-Bench team. I can only suppose that the Convention was a traumatic experience for him, because he returns again and again to the things that happened. We must talk about what this treaty says and offers, rather than about what happened in the Convention. I do not know whether this is a cathartic experience for him, and for the hon. Member for Stone, but if it rids him of that obsession and removes the worry presented to him by the Convention, I would be pleased for him.

Mr. Heathcoat-Amory: The hon. Gentleman said that the Convention was a traumatic experience, and indeed it was for everybody, because it totally failed. It failed because it did not stick to its instructions, which were to create a more democratic and simpler Europe, and a Europe closer to its citizens. Instead, it went down the centralising route and it failed at the hands of the French and Dutch electorate. We all ought to be
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thoroughly ashamed of how that Convention was conducted and of its outcome. I was not traumatised—Europe was.

Michael Connarty: The right hon. Gentleman laboured the point about regulation. I shall give him a book that I have read called “The Mad Officials”. I kept it because it is worth referring to again and again. It was written in the 1990s by a former senior UK civil servant who pointed out that the regulation madness was actually driven by the UK civil service, because it gold-plated everything that came from Europe. That practice made the regulation weigh much more heavily on our firms and on our legal procedures than it did in other parts of Europe.

I have seen that effect at first hand in respect of a big petrochemical refinery and petrochemical plant in my constituency. It was formerly a BP plant, but it is now owned by Ineos. The regulations on the gases coming out of its flares are four times stricter than they were in the European directive, because our Departments decided to quadruple the severity of their application. That happens again and again, and it is not necessarily the fault of the EU, but of the way its regulations are added to the law in this country.

7 pm

We will be protected from some things if the Commission has sole competence, and some of them have already been mentioned. The new phrase going around Europe is “economic patriotism”, but it is protectionism. We introduced liberalisation of domestic energy, but that means that the power needed to switch the lights on in this august place, in No. 10 and in the rest of the Seeboard Energy area comes from EDF. But the French had to be threatened with infraction by the Commission before they would liberalise their markets, and that was after the last day of the last month in the directive to which they had signed up. That is why the Commission needs the power. We should not let countries have shared competence, because they will use economic patriotism and obstruction to block the free market that we argue about every time I go to COSAC.

I will go to Brussels during the recess to argue about energy production and distribution unbundling under the Lisbon agenda. Resistance is now building to the domestic patriotism excuse, but it can be broken down only by giving power to the Commission and not allowing Governments to block it. Our Government will not try to block it very often, but all over Europe other countries will form alliances to try to block the very liberalisation and free market that Conservative Front Benchers say that they want. They can only get it if they give up the power for this country to block changes, so that other countries cannot block changes.

The postal services directive should be due to be introduced in 2009 throughout Europe, but we introduced it a little early in 2006. That has caused us all problems in our constituencies, but it will not lead to the collapse of the Post Office, as was suggested in the general debate by the hon. Member for Carmarthen, East and Dinefwr (Adam Price). There will be a postal service in the UK, but it should have been able to enter a wider market, using its new slimmed down abilities to win work, in 2009. The general agreement might not come in until 2011, and some countries will not implement it
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until 2013. That is what happens if the Commission does not have the power to force through the market that we want to work in, as well as live in.

In the international sphere, the Commission will be responsible for driving forward commercial agreements with the Council, in unanimity. There has been much talk about how the EU has slowed up the benefits for other countries, but the World Trade Organisation is driving the liberalised market internationally. It is the WTO that has been threatening other countries’ ability to benefit, but the EU has, for example, been defending the African, Caribbean and Pacific countries by giving them time to move out of their lock-in on certain products. Even at a later stage, they need only be 80 per cent. of the way to a completely liberal market, and that will give them some leeway. The European Union and the Commission are doing a good job in that respect.

It is important to talk about what the treaty is about and why the amendments tabled by the Liberal Democrats and by the Conservatives are inappropriate and unnecessary. I have been going to conferences in Europe for some time now and I have been on the European Scrutiny Committee for nine years, with one year as the Chairman. I have regularly attended meetings, often with officials, to see how matters are developing. For all that other Members say that they wish to challenge what happens or how they are interested in the strategy, I am often alone in attending those conferences. There are no other volunteers from this Parliament to go. I know that the one I am going to in a few days is during the recess, and people will be off having a holiday somewhere. It may demonstrate that I am sad, but people do not even want to go when Parliament is sitting. If they did, they could argue their case on the development of the market face to face, across the table with colleagues in the European Union. I commend the Chairman of the Treasury Committee who also often goes alone to argue the case for the UK in those forums.

I turn now to amendment No. 237 and article 3 of the consolidated treaties, which is called article 2B in the amendment. I am not sure what it is that scares those on the Opposition Front Bench. Even when sole competence is given to the EU, it is quite clear that if we say that we do not want article 2B, which is about

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