The EU Bill: Restrictions on Treaties and Decisions relating to the EU - European Scrutiny Committee Contents



Examination of Witness (Questions 79-106)

Sir John Grant KCMG

15 December 2010

Q79 Chair: Sir John, welcome to the Committee. As you know, we've been taking evidence from constitutional experts on the sovereignty question, and we've also had some political scientists to give a broader analysis. What we'd like to do today with you, if we may, is to look at the question of what goes on inside the system. It's somewhat opaque to many of us, but no doubt your evidence will throw some interesting light on what is going on and how you see it going on under this Bill. So I'll ask the first question, which is basically this: how would you describe the United Kingdom's influence as a negotiator in the Council when you were the Permanent Representative? Did we actually punch above our weight? What factors do you think gave the UK credibility and influence in the Council, and what would take that credibility and influence away?

Sir John Grant: I'm not sure I'm a neutral witness on that point, Chairman, but I'll do my best to be one. This is a subject I've thought quite a bit about over the years, so I hope I can give you an answer. My answer might strike you as a little long, but it may be relevant to some of your other questions judging by the evidence session with Professor Hix, which I've read. On this question of punching above our weight, I think it's quite important to be clear about the metaphor. In other words, is it one boxer versus another in a ring, or is it something slightly more unruly—a whole bunch of people fighting with one another?

I think the most important point of departure for understanding the UK's position in the European Union is to recognise that on a range of quite big issues, which tend to define Member States' political positions, we start off in a natural minority. Let me just give you two or three examples. The first point is I think the most important and most relevant to the deliberations of this Committee. If you look at the development over an extended period of the national political institutions of the Member States of the European Union, it's clear that very, very few—a handful—of those Member States have national political institutions that historically have been a success and have endured. The United Kingdom is one. If you look at Europe and the history of the 20th century, there are very few others. Now I think that's been very, very decisive in shaping the attitudes of other Member States of the European Union and the United Kingdom's attitude to questions of political integration.

I could give you quite a long list of similar considerations: the structure of our agricultural sector, the fact that we have a Common Law system, the structure of our economy, the role of the City, our relations with the rest of the English speaking world, the nature of our foreign policy etc. So we start off in a different place to the majority of our partners on a lot of big issues. Now that's changed a bit with enlargement and I suspect we'll come on to enlargement—judging by your exchanges with Professor Hix—and I'll touch on that then. Nevertheless, it remains broadly true. Given that, I think that we have often been able to exercise influence disproportionate to that starting position. I'll give you a couple of examples in a moment.

I think that influence derives from three main things: first of all, the efficiency and effectiveness of our diplomacy—in other words, our arguments and our ability to work the system. I think we've been good at that, and I think if you were to go to Brussels or Paris or Berlin, you would find that everybody thought that we'd been a bit too good at that actually. We can come back to that if you like. This is not a smart comment on anything to do with the current Government, I absolutely assure you of that, but when I was in Brussels the Prime Minister of the day had some strong political relationships in other European capitals. Not so much the obvious ones such as Paris and Berlin but others, and he used these to effect. Now, what did that mean in practice? I'll give you a couple of examples. I was in Brussels during the period of the no votes, one of the many crises of the European Union—and they're very frequent of course. There was a lot of hesitation about continuing with enlargement because it actually suited quite a lot of people in the European Union to ascribe the no votes, the lack of support for the constitutional treaty, and the general sense of malaise to the enlargement project. We succeeded, not alone but working with the Commission and some other Member States, in maintaining momentum behind enlargement when a lot of other Member States would have liked to slow it down or stop it.

Secondly, if you look back at the records, climate change became a top priority for the European Commission in the autumn of 2006, leading to the decisions of the March European Council of 2007, under the German Presidency, to set the targets that the European Union has on climate change. Now that was a very rapid change. If you look back at the public statements for instance of the President of the Commission in the middle of 2006, climate change was not a factor. By the autumn of 2006, it had become one, and by March 2007, we'd taken some very far­reaching and significant decisions. I like to think that British diplomacy and influence was behind that.

So there are some examples. I don't think this is open and shut; you can't demonstrate it beyond doubt. My best test is if you go elsewhere in Europe and say, "Do the Brits get a better deal than they deserve?" most people will say yes.

Chair: Thank you very much.

Q80 Penny Mordaunt: I wanted to ask you what difference you think part 1 of the Bill would have made to the way you operated as the UK's Permanent Representative?

Sir John Grant: I think very little. By definition, the working groups of the Council, the Committee I sat on, and indeed the Council of Ministers, are working within the competence of the European Union. Now that doesn't mean there aren't disputes about competence. There have been occasions when the United Kingdom, for instance, has taken a different view from the majority of Member States and the Council Legal Service on where the EU has competence, but you can't negotiate on legislation if there isn't competence. Since the Bill concerns itself with changes in competence or changes in voting procedure, I think it would have made no difference. If I can just add a point that may be implicit in your question: except at political level, principally in the European Council, occasionally in Ministerial Councils, but certainly among officials, negotiations in Brussels take place on the merits of the issue. We form alliances of convenience in order to pursue the national interest. So, if this was behind your question—and it might have been—a Permanent Representative of another Member State doesn't sit there thinking, "Those Brits have got this unpleasant piece of legislation and therefore I'm not going to support them on this issue." If it happens to suit him for his negotiating purposes he will do so, and vice versa. So I think it would have made very little difference.

Q81 Michael Connarty: Sorry, I was slightly late. Welcome, and thank you for taking the time to come and see us. I'd like to ask about the idea of having a whole wedge of issues that are subject to a second control mechanism, like our referendums and all these things in section 4 and section 6. In your experience, do you think that they will be viewed by other members of the Council and the people you worked with in COREPER as an extra barrier and difficulty in dealing with what in many cases will be qualified majority votes, eventually, on a lot of these issues? I'm trying to get into my mind, if we pass this Bill and into an Act, what that will do to the way decisions are made in the Council. I don't know if you've thought about the new environment where there's clearly a lot more influence from the Parliament and a lot more troika meetings. Is it troika meetings where they actually get together and deal with final difficulties of final drafts?

Sir John Grant: Yes.

  Michael Connarty: How do you think this will affect that process? The Government says it's signalling to people that Ministers are not free agents. When they go to the Council, they may be called back to put their views to a vote of the people.

Sir John Grant: I understand exactly why—and I've tried to do this in my mind too—it would be good if one could give a general answer to that. But I think it is quite difficult, because the only way of doing it is to look at the specific areas of competence covered by the Bill; in other words, those areas where, in practice, it seems extremely unlikely that we will be able to make a transition from unanimity to qualified majority. At least, that is the conclusion that other Member States and Commission will draw.

The question you then have to ask is: are any of these issues ones to which the rest of the EU, if we can call it that, is going to attach a very strong political priority? Or are they going to shrug their shoulders and say, "Well, we are not going to be able to make progress on this. Does it really matter? Is it existential, either for us as a Member State or for the European Union?" I think at the moment the answer would be that none of those issues fall into that category. I am, as it were, looking at this from a technocratic point of view, but in the end this is a political—I was going to say this is a political union, but I shouldn't use that expression in this Committee. But the European Union is driven by politics, and if you go through the specific issues that are caught—if that's the right word—by the Bill and say to yourself, "Well, where are the interests in Brussels that are going to rise up and feel like the United Kingdom is frustrating an essential piece of legislation?", I think, subject to one point, which I'd like to make now, if I may, we are not in that situation now. I can't rule it out for the future, because anyway, this Government has been fairly categorical about its refusal, irrespective of the Bill, not to countenance this. So I'm not sure it changes very much on a view of a few years.

What is it that the European Union is preoccupied by at the moment? It's the financial crisis and the future of the euro. The reason, therefore, that I don't think this Bill will impact on the major preoccupation inside the EU at the moment, on my reading of it and my reading of the treaties—remember I'm out of the game now, so I've had to mug up on this—is it doesn't seem to me the Bill will have the effect of frustrating that, because of the arrangements that apply to the United Kingdom and the terms of the Bill. I think that's the fundamental point. But I'm not absolutely certain about that, because I haven't had the chance to get expert advice, but I think that's the key issue.

  

Q82 Michael Connarty: You were going to enter a caveat; you said "with one exception."

Sir John Grant: That's my euro point. If you look at the politics of, let's call it Brussels by shorthand—the rest of the European Union as a whole—the issue is the euro and the future of the euro. For instance, on Saturday in the Financial Times, there was an article, I think from a Franco-German summit the previous day, saying that Angela Merkel and Sarkozy had called on their eurozone partners to draw fundamental lessons from the debt crisis and take steps towards political integration. When you read the article, it wasn't political integration in the historical sense of the world, but that's the issue of the day and I suspect several years to come. If a situation were to arise where the United Kingdom by virtue, for any reason, was to set an immovable roadblock in the way of changes that the members of the eurozone thought were necessary, then I think that that could have a very significant impact on our relationship with our partners and on work in a broad range of contexts in Brussels. Subject to that, I myself don't see a major issue. There may be specific issues, but I can't identify them I'm afraid.

Q83 Chair: Could I perhaps offer you one? I have an amendment down to the Bill relating to the proposals for having an Act and a referendum. This relates to the treaty proposal relating to the application of the financial stability mechanism. What I've proposed is that any extension of the use beyond the Republic of Ireland—i.e. down the road to Portugal or Spain—would require an Act or a referendum, where you would therefore have a natural convergence of political and economic requirements in our national interest, together with something that does impinge on the euro and its stability in terms of whether or not there would be a bail-out for Portugal and for Spain or anybody else. Now, don't you think that is the kind of situation where—I am asking you for an opinion about whether there should be a referendum—there would be quite a lot of very serious reaction on the basis that the UK was going to say "so far and no further," in terms of financial bail-out.

Sir John Grant: Yes, I mean, the devil is always in the detail of these things, and I'd have to think it through. I go back to my general point: if by virtue of either this Bill or anything else the United Kingdom was going to act in a way that was, as I described it, an immovable roadblock, then I think that that might create a significant reaction from our partners, as I think you'd expect it to.

  Chair: As was intended. I think you've answered the next two questions. Jacob, would you be kind enough to refer to question five?

Q84 Jacob Rees-Mogg: Thank you very much. If there were to be new treaty negotiations, so beyond dealing with the existing competencies, do you think the Bill would strengthen or weaken the position of the United Kingdom—increase or decrease its credibility?

Sir John Grant: One of the reasons I hesitate is because I've taken the view for some time, and by some time I mean a number of years, that there wouldn't be, after this treaty, a new wide­ranging treaty for very many years to come. The whole history of the Constitutional Treaty and then the Treaty of Lisbon suggests to me that, quite apart from the position of the United Kingdom, there isn't a readiness in the rest of the European Union collectively to have such a treaty. My own view is that it is a hypothetical question. Perhaps the best way to answer it is to look back a bit.

The Prime Minister of the day, Mr Blair, announced a referendum before we completed the negotiations on the constitutional treaty. We had a number of red lines; we maintained those so­called red lines. I think the assumption that other Member States drew was that Mr Blair thought he could win a referendum and that if they met his points on the red lines that would be enough. So in that particular case it didn't make an enormous difference in the endgame. I think this is the right answer: if you're seeking to prevent something, and the general expectation is that it will be extremely difficult to win a referendum in a country, then it makes it easier for you to prevent the things you are trying to prevent.

  Chair: Could I just ask on that? Andrew Duff, in his evidence, says that actually the European Union, he uses I think it is the Walter Hallstein analogy of the bicycle, and if you want to keep it going you have to keep on pedalling. So is it so hypothetical?

Sir John Grant: I don't agree with the analogy—well, I agree with it up to a point, but that doesn't necessarily mean treaty change. The European Union started as an exercise in using treaties to create institutions. That approach to the development of the European Union has historically been very strong, is still strongly held in what I now believe is a minority of Member States, and that view is held by a not insignificant number of Members of the European Parliament. But I don't think that it has to mean the development of institutions and process through treaty change. For instance—and this is a slightly slippery argument; I will try and make it clearly—the Treaty of Nice wasn't a perfect treaty, but the assumption in what I'm generically calling Brussels was that the reasons that the European Union quite frequently wasn't acting as effectively as the Member States and those involved in it would wish was because there was something wrong with the institutions or the voting procedures. I don't take that view. The accumulation of legislation is not axiomatically a route to the effectiveness of an organisation or a set of institutions.

What seemed to me to have happened, probably starting in the late '90s but certainly was the case by the beginning of this century, was that Europe was being measured by a different series of tests. It was being measured by a test, for instance, of whether it was contributing to the economic success of the individual Member States in the European Union as a whole. The reaction of quite a lot of people was, "We need another treaty." In my view it is not likely to make an enormous amount of difference to that particular test; nor—well, we'll see—to some other things. I know Andrew, and in many ways I certainly respect him and I admire him for some things, but I think that's a slightly depressing conclusion to draw, that the only way that the European Union can succeed into the future is to have more treaties. I simple don't buy that.

Chair: Okay, thank you very much. Now, Professor Simon Hicks claimed in his evidence that there was evidence that backed up his claim that where there were significant domestic constraints on the Government in negotiations on treaty change, the Government can credibly threaten that an agreement will be rejected domestically if it doesn't gain sufficiently in the negotiations. The consequence, at least in his view, is that the greater the constraints on domestic Governments in any such negotiations, the more likely they are to gain in bargains unanimously. Now, Denmark and Ireland he gave as examples of this, but he also went on to say that France and the United Kingdom strengthened their hand in negotiations on the Convention on the Future of the Europe when they announced that referendums would be held. James, would you like to take up the next question on that?

  

Q85 Mr Clappison: Yes, I think you've already touched on this, but when you draw on your experience of what happened after the Prime Minister of the day, Mr Blair, announced that there'd be a referendum on the Constitutional Treaty, I think it was implicit in your answer that you thought that States were then looking to see how they could accommodate him, if they could, within their negotiating positions.

Sir John Grant: Yes, what other Member States would want to know in that case is what do you need to win the referendum, and they got an answer. It wasn't an answer that was radically different to the answer they were getting—indeed, not significantly different to the answer they were getting three or four months earlier. Remember, and this is etched on my memory, we had a negotiation in the autumn of 2003. There was then a hiatus after the European Council of December 2003 collapsed. Everybody was expecting an agreement. President Chirac and Chancellor Schröder weren't ready for that. We all collectively gave up for a bit, and then we came back to it under the Irish Presidency. In the interim, the Prime Minister announced his intention to have a referendum. Most of the negotiation was done. So that is completely different from going into a negotiation with a referendum requirement behind you. It is different in concept.

Q86 Mr Clappison: We're also requiring various procedures to be followed in the case where a passerelle clause is implemented and there is a change in the voting referendum requirements on internal Council procedures. Do you think this will have an effect in negotiations as far as that's concerned or not? Will the same thing happen?

Sir John Grant: No, I don't think so. I think two things can happen then. I may not have been listening carefully enough; are we talking about the movement from unanimity to QMV or the simplified?  

Q87 Mr Clappison: Yes, unanimity to QMV where there's a requirement in the Bill dealing with that. Would that have an effect on the Member States in their approach towards the UK, or not?

Sir John Grant: A bit. So let's take a hypothetical example where the Commission bring forward a proposal under unanimity for a piece of legislation that is desirable. The United Kingdom supports it; most Member States support it; but two don't. Then the next question is: will those two be prepared to agree to move to Qualified Majority Voting, so they can be outvoted? It's inherently unlikely, but I suppose it could happen. I don't think it's very likely in practice. So the other possibility is that in anticipation of such a problem an attempt is made to engineer the move from unanimity to QMV, so that you can outvote somebody who'd be opposed to it under unanimity. It's on the margin—isn't it?—once you think it through.

Q88 Mr Clappison: On a different subject, drawing on your experience, you referred earlier on to the Franco-German meeting that took place. Looking at it from the outside, this always seems one of the curious things as far as the EU is concerned, that those two countries have their own meetings where matters are discussed between them, as arguably the two most powerful members of the EU. What effect do you think those meetings and the message that comes out of them has on other states, particularly smaller states?

Sir John Grant: It depends on the message. It's quite a pragmatic world. People have got used to the idea of close Franco­German co-operation, and it's become clear over a number of years that that co-operation isn't always trouble free. It is a commitment by both those countries; it's institutionalised.

  Mr Clappison: But there is a recognition on each side that it is of their benefit to keep that going.

Sir John Grant: It is, and they are both prepared to compromise in order to keep it going, which is the crucial element in it. So do people resent it? Yes, sometimes, and I think recently they may have, from what I read in the press—for instance, over the question of a new treaty, if I understood what happened between Merkel and Sarkozy correctly. But it's a fact of life, and so people sometimes resent it.

  

Q89 Mr Clappison: But pragmatically, is there an effect upon smaller states that they see the message coming from there and they then want to fall into line with what's been decided or take advantage in whatever way they can of the message that's coming out?

Sir John Grant: Yes, because if something has the support of France and Germany, it has enormous political momentum, and therefore people look at it and say, "There is a high probability that this will happen. Can we frustrate it?" It doesn't always happen. If you go back, for instance, to June 2004, when there was very clear Franco­German support for Mr Verhofstadt as President of the Commission, that didn't happen.

Q90 Chair: Could I follow that by asking a question relating to the manner in which majority voting applies, where those countries economically dependent upon Germany have a tendency to vote with her. Ronald Vaubel of Mannheim University has written quite extensively about what he called "regulatory collusion"—the application of majority voting to secure a comparative advantage to certain blocs—and of course Germany does have economic ties with the Czech Republic, Hungary, Poland and the rest of it. Do you think that in general, despite the Franco­German alliance if you could put it that way, there is an inevitable centre of gravity which we've seen recently in relation to the euro questions, where Germany does have a predominant influence when it comes to economic questions?

Sir John Grant: I think its influence reflects the size and success of its economy. The point you make is very interesting; I have never noticed it, but perhaps I've been looking in the wrong place.

  Chair: I'll send you the paper if you're interested.

Sir John Grant: Yes, I would be interested. People tend to vote in the Council, in my view, in relation to their interest on the question, so countries will look at the piece of legislation and say, "Does it suit us?" There's very little, in my experience, of people saying, "We'll vote for that, although we don't like it very much, because we're dependent on another Member State for something else." In my experience, there's very little of that. But I think that, given the success and the size of the German economy and its importance for the work that's going on in the eurozone, what has happened is very logical. It may be that if you take a snapshot of the past 12 months, where the preoccupation of the EU has been the eurozone, and for the reason I've given Germany has played the absolutely decisive part in decisions on that, that doesn't extend to the rest of the EU. Britain retains very significant influence in Europe, despite the fact that it's not a member of the euro. Sweden was able to conduct a successful presidency of the European Union despite the fact that it's not a member of the euro. I never felt in COREPER—and I hope I speak on behalf of the Swedes—nor I think did I sense at least that the Swedish negotiating position suffered on other issues outside the Ecofin sphere, and indeed not always within the Ecofin sphere, because it wasn't a member of the euro. My point, Chairman, is that I think you're quite correct to identify the decisive German influence. It will always be very significant because of the country's size and importance, but it's disproportionately high in relation to the euro.

  Chair: And, of course, there is Thomas Mann's remark about whether it would be a European Germany or a German Europe? Perhaps we'll go on from there.

Q91 Kelvin Hopkins: What is your view of the credibility with which this threat of the Bill's referendum locks will be viewed by other Member States?

Sir John Grant: Well, I think that is very credible, because if the United Kingdom passes legislation that requires it to have a referendum then people will assume that it will. Forgive me if I'm going to be anticipating incorrectly what lies behind that question. There was a point in Professor Hix's evidence where he thought there would be a point at which people wouldn't think it was credible. I think that he might have referred to environmental taxation in that respect.

  Chair: Carbon tax.

Sir John Grant: Yes. If every other Member State of the European Union was ready to take a unanimous decision to move to Qualified Majority Voting, so that legislation could be passed on a carbon tax, then I think what was really behind Professor Hix's point, if I can reinterpret him, is that people would say "Surely, you can't be serious?" If the United Kingdom was one of those countries that wanted to pass this piece of taxation then all the more so. I think in that quite narrow respect, this issue of "Surely, you can't be serious" might well arise. It seems to me the answer would have to be: "Well, we are absolutely serious." But I think you have to look at the specific issues, and I think on the issue of carbon taxation, for instance, we have an emissions trading scheme in the European Union, it's several years since I looked carefully at it, but I'd be very surprised if the issue of a carbon tax in addition to that was actual, and the emissions trading scheme, any adaptations to it are decided by qualified majority. So, hypothetically, it raises an interesting issue. I just wonder in practice how pertinent it is.

Q92 Kelvin Hopkins: Supplementary to that, if I may Chair, I would guess this would depend to a large extent on the previous position of the Government of the day to the European Union in general. A Eurosceptic Government would use the threat seriously, and there's also the likelihood that the introduction of any kind of referendum in present circumstances, with a high degree of Euroscepticism amongst the public, would imply a no vote. But if there were a Government led by somebody like Tony Blair, a Euro-enthusiast, they would use every trick to make sure we got round the problem. I speak as a Eurosceptic of the left, I may say.

Sir John Grant: I think I knew that already, but I certainly deduced it.

  

Q93 Kelvin Hopkins: This is how I would have seen it. The previous position of the Government of the day, plus the threat of referendum lock, together would make a difference.

Sir John Grant: About whether others perceived this as credible?

  Kelvin Hopkins: Yes, yes.

Sir John Grant: Well, yes, but for the reasons I gave, I think, that we're talking probably five years ahead, at least. We're talking about a situation where we were the only Member State seeking to stand out against a move to Qualified Majority Voting, so that somebody else could be outvoted. The point about the passerelles is that—they're significant in a way, of course they are, they're there for a reason—but it's very difficult to use them, whether or not there is a referendum Bill. It seems to me that what the Government is seeking to do is to put beyond any doubt its position on the matter and its assessment of the relative importance of that and the way it wants to deal with it, but the reason passerelles aren't used very much is that everybody's got to agree that some of them are going to be outvoted. Let's say, I'm sitting in COREPER and I'm blocking something. I promise you, it did happen.

  Chair: That's very encouraging.

Sir John Grant: I thought you'd say that, Chairman, and I can provide lots of witnesses to confirm that to the Committee. And there's a passerelle clause, so one of my very irritated colleagues says, "This is absolutely intolerable. We must use the passerelle clause. John, will you agree to use the passerelle clause, so that you can be outvoted?" I wouldn't have felt uncomfortable.

  Chair: Can we move on to enhanced co-operation?

  

Q94 Michael Connarty: It is interesting that you mentioned the one example of carbon tax and the fact that we have an emission trading scheme, which is a form of taxation of businesses.

Sir John Grant: I didn't say that.

  Michael Connarty: It's an interesting one because I did point out, when that was being discussed in evidence, we had actually passed in the Committee an agreement by the Government to the Eurovignette, which of course is a carbon tax on lorries over a certain weight. I've been talking to my road haulage industry in my constituency since and it's exactly what they see it as. But it went through without anyone calling for anything. Even the people in the industry would say they were consulted but ignored, because they didn't want to have to pay extra taxation on their lorries for the benefit of the EU climate change agenda. The interesting thing having you here is that you've been in the COREPER situation where these negotiations go on, where the things are ironed out, and according to one of the past Commissioners who came here in a previous Committee, she said that basically, if a couple of big countries object to something, then the Commission take it away and find another way of doing it so that you don't have a major fall-out. But what the Government seems to be doing with this Bill is saying there are a number of issues. One, the Government will have to want to do it, because they won't call a referendum on something they're opposed to, because they will vote it down in the House. But then we have to have a referendum before we can agree. I'm trying to get the scale on which this will cause changes in behaviour in the way Europe makes its policy, and particularly, will there be, in your opinion and from your knowledge, a tendency to go for more enhanced co-operation and leave the UK behind if the UK won't play ball?

Sir John Grant: I note, incidentally, on enhanced co-operation that Professor Hix said that he thought that referendum locks strengthen your position, but he also predicted that there might be greater use of enhanced co-operation. There is a slight contradiction between the two. There can only be enhanced co-operation where there is competence. So those provisions of the Bill that relate to the transfer of competence to the EU are not relevant to enhanced co-operation. That's, in my view, the guts of it, because, partly for the reason I've given, passerelle clauses—I'm not saying they can't and won't be used—can only be used a limited number of times. So enhanced co-operation will only arise where there is unanimity full stop—there is no scope for a passerelle, and at that point the question of the Bill is not relevant because, if we are blocking something, we're blocking it—or where we are blocking the move to a passerelle.

I'm not certain about this, because I haven't been able to talk to a lawyer about it. I don't think the question about whether the Bill will lead to more enhanced co-operation is a very big question. It's a good question—you have to ask it—but I think the answer is: maybe in the odd, relatively limited case. But because, by definition, it can't increase the competence of the EU and enhanced co-operation can only be based on the competence of the EU, it's not the big question. The more interesting question—I haven't been able to think it through and I apologise to the Committee for that—is whether enhanced co-operation will be used at some stage in the future downstream of efforts to deal with the problems of the euro.

Q95 Michael Connarty: I think then it all turns on what does Europe do? I remember during the constitutional convention when the EU had 100 amendments, all of which were rejected when Peter Hain put all these things on behalf of the EU and the UK and they were all swept aside, we still went on, and then we ended up with the Lisbon Treaty. It was quite clear at that time that we were seen as being a bit irritating, the UK. We had a particular role, we were seen to be slightly annoying, but the machine rolled on. Politically we were tolerated, in a sense, and we didn't necessarily lose a lot of friends; we just saw that as being the British way—we were being awkward. What do you think, if enhanced co-operation or some other strategy is adopted, will happen in terms of the UK's influence? We have all this list of things at which we are going to throw a spanner in the works and hold everyone back and keep having to refer to all the things of this new Act that we have to take into consideration every time we sit around a table with our colleagues in Europe. What will happen then, if, as you say, it's not enhanced co-operation? What will happen, and do you think what will happen will see us sidelined in some way, or weakened in our negotiating position, because we have all these burdens we carry now on all these matters? Of course, Professor Hix said that they were not very significant, but we're just adding them to the things we have to be awkward about in our negotiations. How do you think you see that playing out? If it's not enhanced co-operation, what will other EU countries do to get around our awkwardness?

Sir John Grant: I think that there may be some specific cases, and I can't predict them, where our awkwardness will hold something up that they will want to do. But I think that they'll be quite specific, because I don't think that they, the other 26, collectively want a new wide-ranging treaty. I do think they want to take action in relation to the eurozone and that they will be able to do so within the terms of the treaties and the Bill. We may frustrate the odd move from unanimity to Qualified Majority Voting, and there may be other cases where—again, I can't predict them—it makes sense to others to add a small piece of competence to part 3 of the treaty where we prevent it. But if you look back over the history of the past 25 years in Europe, I don't think this will be regarded by anyone in Brussels as a qualitative change in British awkwardness. You're exactly right: we think of ourselves as the grit in the oyster. There are different views on that, but we've always been the biggest problem, and this confirms that. We were a problem in a whole series of respects during the last Government's time, whatever the views of Committee members may be on the policies of that Government. The reason for that, the underlying reason and the reasons I tried to give at the beginning, is that our point of departure is different.

Can I add a point that is germane to your question? That has changed, first because of the accession of Sweden, Finland and Austria—Sweden and Finland in particular—and also because of the other rounds of enlargement, because we have a greater community of interest, not on all issues, but on a number of issues, with those new countries. It doesn't alter the fact that, by and large, we have more problems than anybody else. This is another problem, and I don't think it will fundamentally change the dynamic in Brussels in any significant way, unless I'm completely wrong in my analysis. Where it would become dramatic would be if everybody woke up tomorrow morning and said, "There's only one way to sort all of this: we need another treaty." But do you really think that there is an appetite for that in France, the Netherlands, Ireland, Denmark or the Czech Republic? I don't think so.

Q96 Chair: Can I ask a question on that, because we've already got Chancellor Kohl in the past, you referred to the past 25 years, talking about the convoy? That was at the time when they were trying to drive things forward. Now, they wanted enhanced co-operation for that purpose—in other words, there would be an inner core, which is not dissimilar to the eurozone problem as Wolfgang Münchau, for example, and others are now addressing it in the Financial Times. So that there is a question surely that we may prove to have been right, or at any rate some parts of the opinion making elite in this country have turned out to be perhaps more right than wrong. Is it not possible that, where you've got Schengen, you've got opt-outs, you've got enhanced co-operation, you are effectively beginning to witness, under the pressure of economic reality, a shift in the dynamics of the European Union, so that there is something that is approximating an association of nation states as compared with the centralised, uniform system on which the whole system has been constructed. There may be resistance to this, as you've indicated, but isn't that the direction in which the dynamics are taking the Union as a whole?

Sir John Grant: I think you had this discussion with Professor Hix. Am I right about that? I agree with his answer. His answer was that, and I'm paraphrasing it now, there is difference between a loose association of Member States and a set of supranational arrangements where not all Member States are participating; so, clearly, arrangements for the euro are fully set out in the treaty. I think the beginning of the treaty says something like the European Union shall have a currency which shall be known as the euro. Now, the fact that there are then a set of arrangements that mean there are either legal opt-outs—we have a legal opt-out—or other Member States have de facto opt-outs, doesn't alter the fact that it is supranational. I think it has been true for a long time that we have had an EU where there was—the phrase "variable geometry" was very fashionable at one point—a core of activity focused around the single market, and not only the single market, of course, but that's been the guts of it, which everybody's had to participate in, and then there have been some other parts of the project where there has been a greater degree of choice. That trend has existed for a long time. My guess is that it will be accentuated by the response to the euro crisis. So I go back to this article in the FT—I can't find it now; I should have underlined it—but anyway, this talk about if you go underneath the euro crisis, what is the problem? The problem is lack of convergence between the economies that are members of the euro. That is the underlying reason for the problem. So any long-term solution has to address that in some way.

  

Q97 Chair: And lack of growth.

Sir John Grant: Yes, absolutely, lack of convergence around things like growth, so you have an enormous difference in growth and wage costs, and all those kind of things. In order to find a solution to the problem you have to address that in time in some way. I don't understand Wolfgang Münchau's articles, Chairman; I am glad you do, because they are too complicated for me. But there will have to be a number of steps taken within the eurozone to deal with the problems that have arisen, and we won't be part of that process and a large number of other states won't be part of that process either. But that doesn't make it a loose association of Member States.

  Chair: Thank you for that.

Q98 Jacob Rees-Mogg: May I just continue on that, Chair, rather than coming immediately to the next question? I think what you are saying is extremely interesting and important. The euro has a crisis; they are not going to say the euro's failed and we go back to ordinary currencies; and therefore the argument for more integration rather than less becomes very strong, saying we've got to have a closer political Union, a closer fiscal Union, and therefore we need more of a single Government across the eurozone countries. Now we're obviously outside that, but if there were to be a move in that direction it would require a big treaty rather than a little treaty. What then happens to our position? Do we then become a satellite looking at or attached to this big central body? Do we find that there's a new body that we're simply outside and are basically irrelevant to? Do we try and block it by saying we don't actually like a treaty that leaves us so far on the outskirts? How do you think that would develop, and what effect, ultimately, would our referendum lock have or not have on that?

Sir John Grant: First of all it's very early days, and I don't think that you would need—remember, I make these remarks with real hesitation because I'm not an expert in matters related to economic and monetary union—a new big treaty. It doesn't seem to me that the kind of issues that you face would require a new big treaty. I might be wrong, but that's my assumption. Incidentally, I think a new big treaty would be very difficult, even if it only involved members of the eurozone, completely hypothetically. Of course, it would require our agreement if it was to be within these treaties; that's absolutely clear. So I think that, if I may say so, we just have to take this exercise; we have to observe what's going on not one step at a time, exactly, but we shouldn't jump all the way to the conclusion and assume that there will be a further wide-ranging move to political union via a new treaty. That doesn't seem to me to follow at all, not least because I don't see how treaty change, in other words changes to the institutions and to the voting procedures, even if you could agree it, and it was difficult enough last time, would address the kind of issues that are causing the problems of the eurozone.

Q99 Chair: I know that you have to get off, Sir John, so I wonder if we could move on. If you could give a brief answer to the question about the reasons for the passerelle clause in the Lisbon Treaty, what is your judgment about that?

Sir John Grant: The big one?

  Chair: You've done some aspects of it already, but what is your view about the reasons for the passerelle clause in the Lisbon Treaty?

Sir John Grant: The passerelle clause, if you call it that, allows you to change the treaty within the treaty, as it were; it allows you to change part 3. I think that was just a feeling that this binary situation, where either you've got to do the whole lot and chuck everything into a basket, or nothing at all, wasn't very practical. That's right, incidentally. There are some things that, objectively, probably would make sense to do without having to have a new treaty. So I think the reason for that was common sense; the reason for the other ones was that was the compromise.

  

Q100 Penny Mordaunt: Do you think it is likely that this Bill could trigger similar constitutional constraints in other Member States? If so, is there a risk that it could lead to gridlock?

Sir John Grant: No, I think, is the answer to both questions. It might do. Another Member State might feel under intolerable political pressure to do the same, but I'd be surprised. On the gridlock, I take the view that people are not going to say, "We really want a new treaty but we're not going to have one because the UK has a referendum Bill." That's my view over the next few years, not least because I don't think anyone believes that the present British Government would be ready to countenance a new treaty, even if it didn't have the referendum Bill. Nobody is knocking on the Prime Minister's door, as I understand it, saying, "This is a terrible thing, Mr Cameron, please rethink; we must have a new treaty." Again, it's a slightly theoretical question.

Q101 Chair: Thank you. We're just sorting out the next questions because of the time factor. How important, do you think, is the effect on the balance of power within the Council and the accession of new Member States? That is not intended to explicitly be a Palmerstonian question, by the way.

Sir John Grant: I'll try not to give a Palmerstonian answer. I think it's important on the balance of power. I noticed in Professor Hix's evidence that the question came up of whether accession should be covered by the Bill, and perhaps that question is coming, I don't know. Yes, it is important, because what it does is, it changes alliances. It changes alliances between the Member States of the Union. I've said earlier on more than one occasion this morning that he accessions of 1994-95 and Central and Eastern European enlargements have changed the so­called balance of power overall to the United Kingdom's benefit. In other words, we've had more allies on more issues than was the case when we were 12. So in terms of alliances, I think it is significant.

Q102 Michael Connarty: Turning to one of the, I think, most significant things—it's not an omission, because it's quite clearly covered in section 4(4)—the Bill excludes, and the Act will exclude, the need to use referendum on accession treaties. It seems to be one of the most fundamental questions before the EU and the UK in the next decade; for example, the accession of Turkey. Do you think it's consistent with the stated aims of the Bill and constitutional constraints placed in part 1 on other matters to have this exclusion and say we will not use referendums for accessions?

Sir John Grant: It seems to me it actually is consistent, because the Bill, as I understand it from what I have seen and what ministers have said about it, seeks to deal with this question of the transfer of power from a Member State, from the United Kingdom, to the supranational level, as it were, so transfer of competence. That idea is extended to cover voting procedures, for reasons I understand, if I can put it like that. Whereas accession: one, it takes place very clearly within the existing powers and on the basis of the existing competence of the treaties; and secondly, and I think that this is also a point, what happens when there is an accession is that a slab of your votes and of your relative weight in the Council goes to the acceding Member State. That's what happens. It's very oversimplified, but we have X percentage of the current EU; if the EU gets bigger, our percentage goes down a bit in order to ensure that the new Member State also has votes and MEPs. Now, that's not the same as transferring power to the supranational level. So I think there is a very real distinction.

  Michael Connarty: Can I challenge you in that?

Sir John Grant: You may, Mr Connarty.

Q103 Michael Connarty: Because when an accession takes place, the Single European Act means that anyone from within the new extended EU can travel anywhere. They don't necessarily have the right to work or to live, but they can travel. So suddenly you're saying anyone can come from any of these countries, and we've seen stories where there has been quite a substantial amount of what appears to be temporary migration. In reality, people come in as visitors, so­called, and stay for ever. Interrogate any of the people selling the Big Issue on the streets of London or the streets of Glasgow, and they're not working. They're here as visitors under the Single European Act. But they've quite clearly taken over that area of begging, shall we say, to allow them to remain here, but they're from countries that don't have the right to come and reside or work, but because they're in the EU—I'm talking about Romania and Bulgaria—we have no control over their movements. So we give away massive powers to the EU when we have an accession without anything to do with voting in Council or distribution of any other powers that would be specifically under section 4 or section 6. It totally gives away power, so how can it possibly be excluded from a Bill that's supposed to guarantee the people of Britain the chance to say when those powers will be transferred? You can't avoid the Single European Act if someone is allowed into the EU.

Sir John Grant: The general point, that accession is significant, I accept. I'm not sure I would have characterised its significance in exactly the way you have, but I absolutely accept the point. But the decision that the new Member States should accede is fully provided for in the existing treaties, and my reading of the evidence given by the Foreign Office Minister who came to the Committee and the other things I've read about the Government's position on the Bill suggests to me that their objective was to address the question of the transfer of competence or power as defined as a change from unanimity to Qualified Majority Voting. Given that that's the position that the Government has taken, accession seems to me to fall clearly outside those two broad definitions. That's my only point.

  Chair: Could I ask one final question? Alright, go on.

  Michael Connarty: They've said, in section 4(4), they're excluding it. Now, I don't think that's a response to the statement that they are not going to allow the transfer of power. So we will have to disagree on that one.

  Chair: There we are. James, you will have to be very quick.

Q104 Mr Clappison: Very quick question: your answer was predicated on the assumption that the Bill was just dealing with the transfer of power. If one took a different approach to it and one said one wants to give a say possibly to ordinary people, the electorate, in what happens in the European Union, which might have an effect on their lives, then you'll all take a different view. Some accessions would clearly have a very big effect on people's lives, as the last one did through migration and other things.

Sir John Grant: But that applies to a whole range of decisions that are taken in the European Union. One of the things that I noticed in your first Report was a very powerful paragraph in the introduction about the range of areas where European Union decisions and legislation impact. It's a very long list, and I'm sure it was a comprehensive list; it looked to be. So the fact is that, whether one approves of it or not, a very wide range of extremely significant decisions are taken at the EU level. You could take the view, and I think one of your witnesses did, that there should be far more referendums in the UK. I just think that what you're saying is if the bill was trying to do a different thing it should be different. I agree with that, but it's trying to do one thing and I think that the omission of accession is logical with its stated objectives.

  Mr Clappison: Yes.

Q105 Chair: I hope you'll forgive me for asking a last very brief question for a brief answer. Against the background of the daily lives issue and the impact it has on people, do you not think that it is time that we had a much more transparent way of knowing who casts which votes in the context of both COREPER and also the Council of Ministers, so we know who is calling the shots?

Sir John Grant: I'm very surprised that you don't feel you know when the United Kingdom votes in favour of a measure or against it in the Council. I am genuinely surprised.

  

Q106 Chair: Well, I'm surprised that you're surprised, in that case, but there you are.

Sir John Grant: I thought it was always in the Financial Times?

  Chair: Ah, that's another question.

Sir John Grant: No, there is a point. Yes, but if you're saying there should be a formal system for communicating to Parliament, to this Committee and to other Committees those arrangements—

  Chair: That's what I had in mind.

Sir John Grant: Yes, I think I'd prefer not to express a view on that question if you don't mind.

  Chair: I thought that might be the answer—very diplomatic. Thank you very much, Sir John.


 
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