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the establishment of the competition rules necessary for the functioning of the internal market,
The Member States shall exercise their competence again to the extent that the Union has decided to cease exercising its competence.
It is as though the Opposition think that the Commission has a blank sheet and can write any law, which will then somehow be enforced. It is not a blank sheet. There are 27 columns that contain the parts of the Union: the 27 Prime Ministers, Chancellors and Foreign Secretaries. They write the script for the Commission, in the main, and the proposals are carried out on their behalf. The Commission can think up and propose ideas; it cannot carry them through without the Council or the European Parliament, if co-decision
making applies. It is as though some organisation out there gives us instructions without our participation, which is nonsense.
The Council, on a proposal from the Commission, shall determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned.
That is what happens in the creation of an internal market. The Council decides after a proposal from the Commission what should be put into the internal market rule. Let us consider article 22, under title II of the consolidated treaties, which is entitled, Free movement of goods. It is important that we accept that it says clearly that there should be free movement of goodsand of people. Let me ensure that I make it clear, as I do not want to misquote these wonderful and important articles. Article 28 says that we will provide a customs uniona move that was criticised roundly by the hon. Member for Stoneand that there should be a free movement of goods in that union.
How can anyone say that the EU is a failure, as the hon. Member for Stone did? It is clear that when the barriers to trade in the EU were brought down, many companies came to the UK so that they could trade in the EU. That was certainly the case in my constituency. At one time, Scotland was the source of more televisions and computers for Europe than any other country in the EU. Those were boom years for the Scottish economy, using the free movement of goods title.
Mr. Cash: Why does the hon. Gentleman believe that a customs union is necessary in order to be able to trade between different countries, whether in Europe or in the rest of the world? We need free trade throughout the world to enable people to do exactly what he would like; we do not need a customs union or a European Union, with all these exclusive competences, to do so.
Michael Connarty: If that is the case, why was Scotland a bit of a wasteland for manufacturing under the Conservative Government until we joined the EU? When we joined the EU, Scotland was suddenly part of a larger union with free movement and clear rules about tariff barriers. The treaty contains rules about not only tariff barriers but other technical barriers that tried to stop the free movement. We had the benefits about which I am talking because we moved into the larger free market zone. [ Interruption. ] The hon. Member for Stone can protest from a sedentary position if he likes. He does not like the other parts of the EU, and maybe he does not like parts of the customs union, but it is a fact that his constituents and mine benefitedand continue to benefitfrom being part of that larger union.
We had some controversy about service liberalisation, which is dealt with in articles 56 to 61 in chapter 3 of title IV. I would be worried about that too if we did not have the protocol on goods of common interest to which I referred earlier, but we need free markets, without barriers, in goods and services, and in services provided by individuals.
Articles 107 and 108 in chapter 1, section 2 of title VII deal with state aid. They are fundamental to what the Commission will do, and they make very clear what will happen in respect of state aid. Article 107 states:
Save as otherwise provided in the Treaties, any aid granted by a Member State or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall...be incompatible with the internal market.
Michael Connarty: I see that the hon. Member for Stone has the relevant papers. I shall not read from them, but it is the Commission that will break down the barriers and make sure that, in the absence of joint competence, countries will not get away with subsidising their steel industries or transport networks so that they can undermine people in our jurisdictions.
In the consolidated text, chapter 1 of title VII contains rules on competition. Along with section 2, article 107 of the same title, it is fundamental to what we believe in. My hon. Friend the Member for Hemsworth (Jon Trickett) referred earlier to the rules on competition policy. The text also states that the Council shall act unanimously, and then lists the areas in which it has unanimity when it comes to controlling the instructions given to the Commission on matters of competition, and especially international competition.
We have a framework for policy making that ensures that the Commission is driven by the interests of all 27 countries, including the UK. To take that away would mean that increasingly we would become a victim of economic patriotism and protectionism. That is why I am happy to support the Government in accepting this element of the treaty.
Mr. Lilley: It is always a privilege to follow the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who brings enormous knowledge to these matters. He focused on the way in which the single market works and, unlike the other Labour Members who have spoken, he did not try very hard to portray the amendments as being fundamentally opposed to the single market.
Conservative Members are not fundamentally opposed to the single market. We have always believed in it, and even my hon. Friend the Member for Stone (Mr. Cash) has confessed that he voted for it. I was moved to look up some of the speeches that I made when I was a Minister. When I was still Financial Secretary to the Treasury, I said that Britain had been a most enthusiastic and consistent supporter of the single market, and that we led in implementing the single programme. I added that the philosophy of the single market was very much compatible with Britains vision of the future of the European Community.
In 1992, I was Secretary of State for Trade and Industry, with responsibility for supervising the introduction of the single market and the response to it. I said that the single market programme had been a success, in part thanks to our enthusiastic and consistent support. I added that we had fought successfully to keep the single market open to the rest of the world rather than building a fortress Europe, and noted that we had seen
off proposals to refuse foreign banks licences in Europe if they did not reciprocate to European banks. I also said that we had argued successfully against giving favours to certain firms as Euro champions.
We were somewhat over-optimistic in those days. The European Commissions Cecchini report forecast that the single market alone would add a minimum of 4 per cent. and a maximum of 7 per cent. to Europes gross domestic product. I looked on the internet for reviews of how the Cecchini report had worked in practice. Reviews showed that there was no sign of any impact on the growth rate across Europe, and certainly no sign of growth of the magnitude forecast in the report.
I do not say that the single market has been a failure. It has not been as successful as we hoped, but it has made a contribution. However, we must ask why it did not make as much of a contribution as the European Community, the European Commission and optimists such as I hoped it would. That bears heavily on the amendments before us. There are a number of answers to the question. First, the single market was over-hyped. That is fair enough; people always over-hype things, and I think that we can forgive that, in retrospect. Secondly, sadly, we did not foresee the over-regulation of the single market. Far from being a purely deregulatory removal of barriers and borders between countries, it became a mechanism through which the European Commission could regulate, harmonise and introduce new burdens on business. That has offset many of the gains that we hoped would result from the removal of barriers to business.
Thirdly, we overstated the size and scale of barriers to business between countries. The barriers had already been removed through the general agreement on tariffs and trade and successive trade reforms, so there was not much gain to be made. I can demonstrate that by referring to a speech that I did not give. When I was Secretary of State for Trade and Industry, I planned to give a speech emphasising the benefits that British companies had gained from the introduction of the single market. I asked my officials for specific examples of what British companies were doing as a result of the introduction of the single market that they had not been able to do previously.
My officials came up with lots of examples of things that British companies were doing that they had not done previously, but on inspection it was found that the companies could have done them earlier. It was not the single market programme that had opened up the possibility of doing those things. I said, Well, lets get lots of businesses in and ask them, so that Ill have examples to put in this speech. We asked businesses from the service industries, where we hoped the greatest gains would be made, the privatised utilities and other sectors. I am afraid that none of them was able to give a single example of anything that they were doing that they had not been able to do before. However, lots of them were doing things that they had not done before, so the psychological impact of the single market was wholly beneficial. It gave British companies the aspiration and the vision to see that there were opportunities on the continent that they could take, but the actual measures were not as beneficial as we hoped.
It would be sad if the single market had taken peoples eyes off the other markets in the world that offered greater opportunities. As my hon. Friend the Member for Stone said, one of the sad things about todays debate is how few, if any, references there have beenapart from those made by the hon. Member for Forest of Dean (Mr. Harper)to India and China, the really big markets on which our industries ought to focus, as they are fast-growing and offer enormous opportunities.
It has been suggested that if the amendment is made, it will have no effect. It is claimed that if we persist with it until the bitter end, it will lead to us not ratifying the Lisbon treaty; the treaty will therefore fall, and we will gain nothing. However, the impact of making and persisting with the amendment, thereby not ratifying the Lisbon treaty, would be much the same as the impact made by the French and Dutch peoples rejection of the constitution. They won major changes. I know that they are major, because the Government say that there are major differences between the constitution and the treaty. Funnily enough, they have resulted in major improvements for Britain, although the Dutch and the French wanted to make changes that take us in the opposite direction to that which we tend to want to take. Or are the Government saying that negligible gains resulted from the rejection of the constitution, and that we would therefore get negligible gains and improvements if we sent our negotiators back to gain improvements?
The Government cannot have it both ways. They cannot say that when the Dutch and the French were given a referendum and rejected the original constitution they secured major improvements, but that if we, through the House passing amendments to the Bill, were to cause the Lisbon treaty not to be ratified, we would not in the subsequent renegotiations be able to get significant improvements to the single market and other aspects of the Bill.
I hope the House will take seriously the amendments tabled by my hon. Friends and the amendment tabled by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), and that it will have no compunction about passing them, amending the Bill and amending the treaty. That can only lead to an improvement in what is still the European constitution implemented by other means, and it would be our duty and, above all, the duty of Government Members, who promised a referendum. If there is to be no referendum, the very least they can do is amend and send the treaty back for renegotiation.
The House may well have listened with respect when my right hon. Friend the Member for Holborn and St. Pancras (Frank Dobson), who used to be Secretary of State for Health, spoke about the potential effects of the health directive that was published in draft form in December last year. My right hon. Friend described the effects on the NHS as extremely damaging because the directive envisages the possibility that the single market will extend into health provision across the whole of
the Union, including the United Kingdom, thereby allowing citizens to cross boundaries.
Following the Watt decision in the European Court of Justice, the directive envisages that citizens of one country travelling in the jurisdiction of another may seek health care and bill back to their home country the cost of that care, whether or not their GP considered such health care urgent and necessary. The dangers of such a policy are immediately clear and I do not need to spell them out. The draft directive causes great concern. I tabled the amendment to probe the Governments position, not necessarily to press the amendment to a Division.
There seem to be two competing principles at stake. I accept that the Lisbon treaty makes it clear, as have previous legal provisions, that health is a matter reserved to the home country. In some ways that is clearer in the Lisbon treaty than it was previously. However, there are other references in the Lisbon treaty that appear to give a certain degree of competence to the Commission in relation to health matters.
The problem is that when the European Court is making decisions, as I remarked yesterday on another matter, it is asked to balance a number of competing principles. One of those principles is the one that we have been discussing all daythe internal market. Whenever goods or services are tradeable, as health now seems to be in the United Kingdomlamentably, a market in the provision of health care is being created in the United Kingdomthey become subject to the principles of the internal market directorate. There are therefore two competing principles: the principle that health should be reserved to the national Government, and the principle of the internal market. Those two principles conflict.
Then there is the intervention of the terrible twinsthe European Court of Justice and the Commission. The trade commissioners include the former right hon. Member for Hartlepool, whom we know well. We have seen the process operate in a number of ways. First, as we discussed yesterday, the ECJ has applied the principle of the internal market above other principles. The beginning of a wedge is driven into the legal provision governing how the EU operates; the wedge is then driven further by the commissioners, particularly those responsible for the internal market.
In the Watt case, a UK citizen received medical treatment abroad without having consulted her GP. The treatment was delivered and paid for; the individual must have had access to resources. She sought repayment from the NHS. The ECJ looked carefully into the matter and concluded that because health has become a tradeable service, the principles of the internal market must apply to it. That is the substance of the Watt judgment.
The commissioners dealing with the internal market then said that notwithstanding the fact that health is a supposedly reserved matter for each home Government, the court had indeed ruled that the principles of the internal market must apply. A draft directive, published in December last year, was quickly withdrawn when it was realised that it might be contentious and could cause problems for the ratification of the treaty in the UK Parliament and others. Nevertheless, we have had sight of the draft directive, which extends the principles of the free market and marketisation to health.
The principles of the NHS are that treatment should go first to those with the greatest need and that it should be free at the point of service. We have certainly rejected the principle of co-paymentthat the patient should pay something, as well as the health service.
Mr. Heathcoat-Amory: This is important. The hon. Gentlemans precise concerns about single market powers being used to interfere in health provision were spotted in the drafting of the constitution by working group 5, on which I sat. However, its recommendations to amend the single market powers to take account of those concerns were overridden and ignored in the final document. In a sense, the hon. Gentleman is too late unless he votes for the amendment to overturn that aspect of the treaty, in which case there could be a rethink along the lines proposed. Is he prepared to do that?
Jon Trickett: That intervention was slightly odd, as I have tabled precisely such an amendment; I am speaking to amendment No. 223. It says that for the avoidance of doubtto use a Government expression on another matterhealth will not be subject to the internal market provisions.
I was referring to the Commissions draft directive, which clearly extends the principle of open competition and marketisation to the health service. Perhaps the Opposition parties are perfectly comfortable with such a proposal, but it cannot be right and I cannot believe that they would support the idea that such a change should be imposed on the United Kingdoms national health service through an ECJ ruling, which I think inappropriate, and its reinforcement by the Commission. If the NHS were to distribute its services differently, that would normally be the subject of a debate during a general election. The people would decide whether to vote for a party, such as the Conservative party, that proposed such a system, or for one such as ours that rebutted it. I would have thought that Members on both sides of the House agreed that to subvert the NHSs founding principles in this way was an undemocratic and inappropriate way to change health service provision.
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