The 2011 Act provides that a decision under article 48(6) is not subject to a referendum if its provisions apply only to member states other than the United Kingdom, and that is the case here. The decision amending article 136 applies only to member states whose currency is the euro, and therefore not to the United Kingdom. It therefore falls within the exemption provided for in section 4(4)(b) of the Act. My right hon. Friend the Foreign Secretary laid a statement before Parliament under section 5 on 13 October 2011 stating that in his opinion the decision amending article 136 fell within the exemption in section 4(4)(b) and therefore did not attract a referendum. To comply fully with the exemption

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condition, the Bill includes the provision in clause 1(3) stating that the decision does not fall within section 4 of the 2011 Act. I commend the clause to the Committee.

Mr John Baron (Basildon and Billericay) (Con): I stand briefly to question my right hon. Friend the Minister—I, too, welcome him back to his post—on whether he believes that the European stability mechanism risks prolonging the agony of the eurozone crisis. Although we are not members of the ESM, is it drawing us in yet further and adversely affecting us as a result? The eurozone crisis was caused by excessive debt—that is well established; it was Governments borrowing beyond their means. Being built on debt, we all accept that we cannot borrow our way out of this problem and crisis, yet numerous summits have basically moved debt around the system and between banks or Governments and, quite rightly, the markets are getting tired of that.

I suggest to the Minister that the best solution to the problem is economic growth, and to grow our way out of the problem for the sake of all eurozone countries and the EU as a whole. Where are the measures to encourage greater competitiveness? Where are the supply-side reforms? They are simply not there. I therefore put it to the Minister that he should consider whether the ESM prolongs the agony and delays the inevitable, and whether our interests, as such, are being adversely affected by the position we are taking on this treaty change.

Mr MacShane: If I may, I will try to speak to the clause. I might make other comments on Third Reading, but I hope not to detain us long. What is extraordinary about this clause is its sheer impertinence. Our Eurosceptic friends in the Conservative party are for ever telling us that we do not want Europe interfering in our affairs. The proposed legislation, however, says that we should wait until every other national Parliament has made up its mind—

“laid an order certifying that the constitutional requirements of all the members states of the EU have been complied with.”

What business or right is it of this Committee to demand that the constitutional requirements of every other sovereign nation state be met before we make up our minds, and until

“all the related and legal challenges have been disposed of”?

Let us imagine each of the other 26 fellow EU member states adopting the same clause and waiting for their Parliament to ratify the ESM treaty and all legal challenges to be completed.

The First Deputy Chairman of Ways and Means (Mr Nigel Evans): Order. The right hon. Gentleman is talking about amendment 1 as opposed to clause 1.

Mr MacShane: As ever, Mr Evans, you are right. I will not repeat my speech but I think the Committee has got the point.

Keith Vaz: I, too, wish to be brief, and my point arises from the comments made by the hon. Member for Basildon and Billericay (Mr Baron). I hope that the Bill will proceed, because I support the Government’s proposals, and the hon. Gentleman may know that the Home Affairs Committee has written on a number of occasions about the problems facing countries such as Greece in dealing with migration. Will the Home Affairs Committee

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have any say or be able to make suggestions about how funds will be deployed under the European stability mechanism? If we feel that not enough attention is being paid to the borders of Greece and Turkey because they do not have sufficient funds, will we be able to make such comments? I gather from the Minister that we cannot be part of the process but will we, at the very least, be able to comment on how the funds are to be spent?

Emma Reynolds (Wolverhampton North East) (Lab): It is a great pleasure, as ever, to debate with the Europe Minister.

As my right hon. Friend the shadow Chancellor and I explained on Second Reading, we are in favour of the Bill and clause 1 specifically, which provides for article 136 of the treaty on the functioning of the European Union to be amended to allow the eurozone to set up a bail-out fund—to be financed and operated by the eurozone—to support eurozone countries when they need it.

The permanent bail-out fund, whose establishment was agreed by EU leaders at the European Council in March 2011, will replace the two existing temporary funds. The Opposition have concerns on conditionality, which I will go into in some detail later, but we believe that the ESM will enhance the stability of the eurozone if it is used appropriately. Given that our economy is so closely connected to eurozone economies through both trade and the exposure of our banks, we believe it is in the UK’s national interest that the fund is allowed to be set up.

Mr Lidington: I rise to respond briefly to the points that have been made. I am grateful to the hon. Member for Wolverhampton North East (Emma Reynolds) for her support for clause 1 and I shall respond to the points to which the right hon. Member for Rotherham (Mr MacShane) alluded when we debate amendment 1.

I should tell the right hon. Member for Leicester East (Keith Vaz) that the purpose of the ESM is not to provide an addition to structural and cohesion funds or any of the spending instruments to help with any problem, including Frontex, which rightly concerns him. The ESM is a way of providing a firewall or bail-out facility for a eurozone economy that might run into serious economic problems and have difficulty financing itself.

The direct answer to the right hon. Gentleman on the UK opinion is that we are not a member of the euro and have no intention of joining it, and therefore would not qualify for membership of the ESM. However, there are plenty of ways in which British Ministers and officials, both bilaterally with our fellow member states and at EU gatherings, can make constructive and informed suggestions and have good ideas. It is important that we acknowledge that the eurozone countries are potentially putting their taxpayers’ money on the line in the stability mechanism. Therefore, any suggestions that we might choose to make in future need to take account of that very important truth.

My hon. Friend the Member for Basildon and Billericay (Mr Baron) will forgive me if I do not follow him by giving a detailed analysis of the origins of the eurozone crisis. There are a number of different reasons behind it.

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In some countries, the problem is public sector debt, but in other stricken countries, the banking system is at the root of the difficulties.

However, I should take my hon. Friend up on his point about economic growth. He was right that the Bill is not the answer to Europe’s economic problems. I have said repeatedly—and, much more importantly, my right hon. Friends the Prime Minister, the Chancellor and the Foreign Secretary have said repeatedly—that the salvation for Europe must lie in its restoring competitiveness and economic growth, and above all in its becoming competitive in a world in which economic power and influence is shifting dramatically to Asia and Latin America. The inventiveness of European nations can stand them in good stead, but we need the right policies at both national and European level to restore competitiveness. I ask my hon. Friend to take note of the European Council commitments made in the March and May summits which, in terms, called for the further development of the single market, and in particular the creation of a single market for the digital economy, and for deregulation measures.

Last year, the Government achieved something of a breakthrough—a new precedent was set—in the European agreement to spare micro-businesses from future European regulations. We are taking that campaign forward with like-minded member states to get Europe collectively to address the burden and complexity of regulation imposed on businesses large and small at an EU level, just as we are committed to reducing the costs and complexity to business of regulation here in the UK.

4.45 pm

Finally, I say to my hon. Friend the Member for Basildon and Billericay that the Prime Minister intervened personally to break the deadlock at the end of 2010 to achieve an EU-South Korea free trade deal, which will benefit British companies and families enormously over the coming years. We are now devoting our energy to supporting efforts to achieve EU free trade agreements with countries such as the US, Canada, Japan and India. I would be the first to acknowledge that a great deal of work still needs to be done—I am by no means an uncritical admirer of the EU and its works—but there are some good and encouraging things about the picture in Europe today, as well as the problems and challenges that he rightly identified.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

The First Deputy Chairman of Ways and Means (Mr Nigel Evans): We now move to clause 2, amendment 1, for which Mr MacShane has already whetted our appetite.

Clause 2

Extent, commencement and short title

Mr Clappison: I beg to move amendment 1, page 1, line 14, leave out subsection (2) and insert—

‘(2) This Act shall not come into force until the day after the Secretary of State has laid an order certifying that the constitutional requirements of all the member states of the EU have been complied with and all the related legal challenges have been disposed of.’.

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I am grateful to the right hon. Member for Rotherham (Mr MacShane) for giving the Committee a perhaps unintended trailer of the film, as it were, but I hope to persuade hon. Friends that the film is rather better than his trailer for it. The gist of his argument was: what business is it of ours and how dare we lecture Europe on what it should do? But there is a difference between what he said and the amendment, which is concerned with what Europe has decided and how it takes effect in this country. That is rather a different matter, and I hope that I will persuade the Committee that important questions arise from it.

The amendment, which I do not intend to press to a vote, is designed to probe some of those questions. In the negotiations leading up to the amendment to article 136 of the EU treaty, the Prime Minister secured a good deal for Britain. It was a good deal for reasons I shall explain shortly. I do not want to go into the background of how in May 2010 the country became committed to the European financial stabilisation mechanism, which was different from the European stability mechanism, which we are talking about now, and from the European financial stability facility—there is no shortage of such acronyms and measures. In fact, I asked the House of Commons Library this morning how many attempts the EU had made since 2008 to resolve the euro crisis, but it said that it was difficult to say in the time available because there had been so many and it was so complex. However, it gave me a rough estimate of 17, including the latest one from Mr Draghi—we must hope that the 17th is more successful than the previous 16.

Kelvin Hopkins (Luton North) (Lab): I agree with the hon. Gentleman. Some say that these repeated measures to try to save the euro are like kicking a can down the road, trying to fend off the inevitable for a little longer. Is that a fair assessment?

Mr Clappison: I pay tribute to the hon. Gentleman, who has been consistent in his analysis. I have not yet heard anyone who has convincingly contradicted his analysis of the underlying economic problems.

Martin Horwood (Cheltenham) (LD) rose

Mr Clappison: The hon. Gentleman has had many goes in the past. I will give him another one now to see whether he can do any better.

Martin Horwood: I actually rather agree about the underlying financial and economic problems not being tackled, but that is not what these measures are intended to do. The hon. Gentleman talked about the different mechanisms that have been introduced, but one of those in respect of which the UK has the greatest liability is the EFSM. The whole process being undertaken here will reduce our liability to that mechanism, which will cease to function, so surely he should be welcoming this process, not trying to lay obstacles in its way, however well meaning they might be.

Mr Clappison: I am doubly lucky now, because I have two trailers for the film. Neither is entirely accurate, but the hon. Member for Cheltenham (Martin Horwood) is slightly more on the right lines than the right hon. Member for Rotherham. I hope that I made it sufficiently clear earlier that I believe the Prime Minister negotiated

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a good deal for Britain, so far as it goes, in that he extracted us from our liability under the EFSF, which is the European financial stabilisation facility—

Martin Horwood: It was the EFSM.

Mr Clappison: I am sorry. It was the EFSM—the European financial stabilisation mechanism. That is different from the EFSF. Britain had liability under one of the two measures agreed in May 2010; it was the EFSM, not the EFSF.

I do not want to make many further points about this matter, because we went into it in the previous debate, but it was agreed in May 2010 that, under the EFSM, this country would have liability in relation to the eurozone which would have resulted in British taxpayers having to fork out with no prospect of Britain receiving any benefit from the EFSM because it was not a eurozone member. [Interruption.] If the hon. Member for Cheltenham can just contain his enthusiasm, he will see the point that I am trying to make on the timetable for all these measures to take effect. That is what the amendment relates to. He will know that there is agreement that, as soon as the European stability mechanism is in force, Britain will no longer have any such liability. It is not yet in force, however, and there are important issues regarding the timing of these events. That is what the amendment deals with. The Bill will come into force on the day it receives Royal Assent.

Mr MacShane: If, as seems possible, Ireland were again to find itself in the terrible trouble that it did two years ago, would the hon. Gentleman support help being given by Her Majesty’s Treasury to try to stabilise Ireland, as we did very generously—led by the Prime Minister—in 2010, or is he against any help being given to any other European country?

Mr Clappison: The main problem affecting the eurozone is the existence of the euro itself. It is the euro that is causing the loss of competitiveness across Europe, inflicting misery on the southern European states and, indeed, all the countries that have had to apply for a bail-out. The right hon. Gentleman must put his hands up and say that he has consistently argued in favour of British membership of the euro. He must take his share of the responsibility. How these matters are to be mitigated is a different matter, but I believe that the ultimate solution will involve a reconfiguration of the eurozone itself. [Interruption.] The right hon. Gentleman says he thinks that that is a slur on his character. He will have a chance to put that right in due course, but as I understand it, he is still in favour, in principle, of British membership of the euro, as, I think, are members of his Front Bench, although they do not tell us exactly when that should take place. But this is going wider than the matter in hand, and I should like to return to amendment 1.

On the day on which the Bill is passed, the European stability mechanism might not yet have come into force. Its ratification has been held up in at least two member states, with significant challenges having been mounted in their constitutional courts, and there is a possibility of challenges in other member states as well. We know that such a challenge is before the constitutional courts in Ireland, as well as in Germany, where important hearings are to take place later this week.

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It is significant that the need to satisfy German constitutional concerns seems to have been one of the reasons for proposing the amendment to article 136 of the treaty in the first place, in order to shore up the legal position of the European financial stabilisation mechanism when there was doubt about whether it was actually needed. That amendment to the European treaty, which was introduced through the simplified revision mechanism, served to shore up the treaty and give legal comfort to the German constitutional court, among others.

I should like to ask the Minister some specific questions, and I would be grateful if he dealt with them in his usual able and comprehensive way. Will he tell us, in the light of those factors, whether Britain will remain liable for any new commitments entered into under the original EFSM, which we entered into in May 2010, until the European stability mechanism takes effect after the ratification procedures have been completed by all the member states? Will that be the case, and even though this Bill might have come into force in the meantime, will we nevertheless retain liability under the EFSM—the original EFSM—until the ESM comes into force? What will be the position if the ESM does not come into force as a result of ratification problems? In that case, could we still have liabilities—new liabilities—under the EFSM? Will the Minister say a few words, too, about existing liabilities under the EFSM? As I have already said, I believe the Prime Minister got a good deal for Britain in the original negotiations, but what is the position on existing liabilities under the EFSM? Will the Minister quantify for us what the Government view as possible future liabilities under the terms of the EFSM?

The Minister will understand a wish for us to have as much detail and certainty as possible in respect of the legal and financial arrangements of the European Union, the institutions of which—including the European Court—have shown themselves to be somewhat flexible in the past, if not completely elastic in their legal interpretations, particularly of treaties. No better example of such flexibility can there be than the so-called legal justification for the EFSM in the first place. As the Minister will recall, this was article 122, which allows financial assistance to be given to a member state facing difficulties

“caused by natural disasters or exceptional occurrences beyond its control”.

As I have already indicated in response to interventions, I believe that the current crisis affecting Europe—the European debt crisis—is not an act of God, but an act of man in the shape of human fallibility over the European single currency. The Government are right to restrict our liability for this, but I would like Ministers to go further in their analysis of the problems. I understand the diplomatic reasons that might restrain them from doing so, but I have heard the incantation so many times before—that “a stable eurozone is in the interests of the United Kingdom”. We hear it all the time. It is inherent in the structure of the eurozone that we see the problems arising throughout Europe today, and that incantation is really quite meaningless and bears no relation to the problems that Europe faces. The truth remains that the euro lies at the root of the economic problems presently ravaging Europe and of all the misery caused throughout Europe but particularly in the southern European countries in the shape of very high levels of unemployment, debt and uncertainty, which is ravaging the prospects of a generation. It is

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the euro and the political ambitions that lie behind it—ambitions for a centralised, unified European state—that lie at the very root of these problems.

Mr MacShane: In responding to how the hon. Member for Hertsmere (Mr Clappison) has introduced his amendment, one might as well say that the pound is the fault and the root cause of all our problems. In my Rotherham constituency, 25% of young people are without work. There is economic and social misery there, but do I attribute it to the fact that we have a certain currency? The notion that a currency causes bad Government policy is absurd.

Dr Julian Lewis (New Forest East) (Con): Argument by analogy is never terribly wise, but when the analogy is between a single currency across different countries with different economies and a single currency such as the pound that applies within a single country with a single economy, that analogy is not only false, but completely risible.

Mr MacShane: I have respect and affection for the hon. Gentleman, but he might as well have said that when the US and Canadian dollar was the same, one country’s economic difficulties were caused by having the same currency when their social, taxation and economic policies were completely different. The same applies to when Britain’s pound and the pound of Ireland were exactly the same currency.

When I went on holiday to Ireland as a small boy, we took our English sixpences, threepenny bits and half crowns, and the currency was exactly the same there. It is the decisions of individual countries that decide their economic future, not the currencies that they choose. There are many, many countries using the euro that we might be advised to copy in terms of economic output, exports, social investment and long-term strategic thinking, and many of those countries are governed by parties of the centre right—Conservative parties— although, of course, the Conservative party here has broken all political links with its sister parties in Europe.

5 pm

Kelvin Hopkins: I am astonished that my right hon. Friend should say that the value of a country’s currency is not important. If that is so, why did Britain recover after 1931 only by coming off the gold standard? We devalued our currency in 1949 and in 1967, we allowed for a big depreciation after the crisis of the early 1980s, and after the collapse of the exchange rate mechanism we recovered simply because we devalued our currency substantially to bring it into line with the needs of our economy.

Mr MacShane: I do not know whether my hon. Friend has spent much time holidaying in Europe in recent years, but there has been a substantial devaluation of the English pound against the euro since, roughly, 2008, and what have we seen? A recovery in Britain? An increase in exports? A decrease in imports? An increase in the creation of firms and jobs? In fact, we have seen the very opposite. My hon. Friend is right historically—he is always right historically—but I prefer to live today rather than in history.

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The main problem with the amendment is that it is a wrecking amendment, and I hope that when the Minister replies he will have the honesty to say so, although the amendment was tabled by his hon. Friend the Member for Hertsmere. The notion that nothing can be ratified until every other country has ratified it and disposed of putative legal challenges is a circle that can never be broken. If the same rule were adopted by even one other EU member state, nothing could be ratified until we had agreed to ratify it, and we could not agree to ratify it until other Parliaments had done so.

Not only are we, as usual, condescendingly and patronisingly lecturing other Parliaments on what their constitutional settlements should be, but this is nothing short of a wrecking amendment, and I wish that Conservative Members would have the intellectual honesty to say so.

Martin Horwood: It is generally a pleasure to follow the right hon. Member for Rotherham (Mr MacShane) in European debates, as he and I share a broad enthusiasm for the European Union and its development. However, I think that on this occasion he is being a little unkind to our hon. Friends on the Conservative Benches. I do not think that this is a wrecking amendment; I think that it asks legitimate questions about the timing of the transfer between the European financial stability facility and the European financial stabilisation mechanism and the new European sustainability mechanism—although I think that by demonstrating that we know the difference between the EFSF, the EFSM and the ESM, we are probably all showing that we need to get out more.

The right hon. Gentleman asked whether the old EFSM, which made Britain liable for the financial bail-outs, could be brought back. That is an interesting question, and I too would like to hear the Minister answer it. I assume that a vote by the Council, probably with unanimity, would be required to bring the EFSM back into operation, given that the Council voted to end it, or at least not to involve it in any new bail-outs. If that is the case, I think that it would reassure Conservative Members considerably to know that the EFSM is, in effect, dead and buried, at least in respect of new bail-outs.

There are two problems with the amendment. The right hon. Member for Rotherham pointed out one of them in what was a rather pre-emptive intervention. This amendment ties the triggering of United Kingdom legislation to actions of other countries—to events in Berlin, Dublin or the European Court, for instance. That is a strange principle for Members who have generally been rather keen to emphasise the unique sovereignty and independence of the United Kingdom Parliament to be trying to introduce into a British Bill. It raises a constitutional question, too: should we be putting clauses into British legislation that are entirely dependent on events in other countries?

The second problem is the political roundabout problem. If other countries follow our example and make their ratification of the treaty dependent on others finishing their processes, we will be like cars at a roundabout, with everybody waiting for everybody else to go, and the whole process will completely logjam. I am not sure whether that is what was intended, but it would make the amendment something of a wrecking amendment,

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in practice if not in theory. I think this is an impractical amendment—albeit perhaps a well-meaning one, which has produced an at least mildly illuminating debate.

Kelvin Hopkins: First, let me say that I entirely support what the hon. Member for Hertsmere (Mr Clappison) said, and I was pleased to sign his amendment.

The idea that we are being difficult by talking about delaying our effective support for this European Union measure is wide of the mark. We are being asked for a favour in respect of something that does not technically affect us, because we are neither contributors to nor beneficiaries from this new mechanism. We as a country are being gracious by putting this Bill forward, as we are helping out. It is absolutely sensible that the eurozone countries, who are very different from this country, should make sure that they have approved this mechanism and that there is no possibility of legal challenges before we say, “Yes, okay, as you’ve all approved it, we’ll sign on the dotted line to help you out”—and we should do that at the end of the day rather than at the beginning.

If we were to rush ahead and do this, the left-wing Eurosceptics in Holland would rise up to derail the Dutch situation, or the German constitutional court would decide it did not like the system, and we would be left having approved something that the eurozone countries do not even like very much themselves. We would be in a very silly position. It is therefore entirely sensible that we and other countries outside the eurozone should only go along with any decisions once the eurozone countries have agreed to them.

However, I must say that I still believe this mechanism is simply another measure for kicking the can further down the road and putting off what some think of as the evil day when the euro comes to an end. I do not say that simply because I have been sceptical about the euro from the beginning and disagree with the whole principle of the single currency, because it is not just me saying this now; other people agree. Indeed, this week George Soros said that Germany should leave the euro. It would be daft of the Germans to do that, however, because if they did, the new Deutschmark would immediately appreciate in value and Germany would become very uncompetitive in comparison with other member states.

Emma Reynolds: I read reports of that George Soros quote as well, and will my hon. Friend clarify that what he actually said was that Germany should either lead or leave, and that he would prefer the former, not the latter?

Kelvin Hopkins: I stand corrected, but George Soros leaves open that possibility of leaving, and by talking of Germany leading he presumably means the country putting vast amounts of German funding into saving the euro.

Others have also been looking at the future of the euro—which I think is doomed. There was an interesting article by Anthony Hilton in last Tuesday’s Evening Standard. He said that, in a sense, the euro is already dead, because a genuine currency has a number of features. It should be a medium of exchange, and some people are starting to mistrust it as a medium of exchange and want to be paid in other ways. Indeed, some economic advisory bodies are advising their clients not to accept

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especially long-term payments in euros, but to accept other currencies—sterling or dollars, for instance. That is understandable.

Currencies should be a store of value. Even Greek politicians, as I understand it, are buying gold because they do not trust the euro. Greek people do not want their euros to be devalued into drachmas overnight, so quite sensibly, they are buying gold. Trust in the euro as a store of value is dying by the day; so, let us wait a little. This could all happen very quickly, of course. It could happen over 10 days or over a year, but at some point a decision will be made that the euro is no longer going to function.

Dr Julian Lewis: Is not the real choice that is going to have to be faced that the euro will be dismantled in an orderly way, or will collapse in a disorderly way? Is not the danger that we feel that we cannot be seen to be sabotaging this project, in which so many of our colleagues in the European Union have invested so much energy and treasure, and yet, by not speaking the truth about the matter, we are making more likely a disorderly collapse, rather than orderly dismantling?

The First Deputy Chairman of Ways and Means (Mr Nigel Evans): The hon. Gentleman will answer that intervention through the prism of amendment 1, please.

Kelvin Hopkins: Of course, Mr Evans. Amendment 1 is essentially about delaying our approval of this measure until such time as the eurozone countries have agreed, signed and sealed it. That is a very sensible way forward. The hon. Gentleman is right, and I and others have made the point a number of times that there are examples of single currencies that have been dissolved in an orderly and managed way. When the Soviet Union was dissolved, the first thing its countries did, wisely, was to create their own currencies. Such countries were able to choose an appropriate parity and interest rate, and to do what was necessary to make their own economies work well in relation to others. That is obviously the way forward, and in the journals it is increasingly being said that the dismantling of the euro, which would enable countries to reflate their economies, would be far less painful than what is happening now in some of the eurozone’s weaker countries, which is dreadful for working people. There is mass unemployment and falling living standards, and growth in Greece has fallen by upwards of 20%. They really are in serious pain and difficulty, and it could not be worse if they re-created the drachma, devalued and started selling cheap holidays to British people who want to enjoy the sunshine of Greece. That is their way forward, and the same is true for other countries.

There has been talk about how to help our Irish friends. I have many Irish friends and constituents, and I have said before—even last week—that the way forward for the Irish is to persuade them to re-create the punt, depreciate and come to a sensible parity with sterling. We are their major economic partner, and they belong much more in the sterling zone than the eurozone. That would be massively beneficial to the Irish, including the relatives of many of the people who live in my constituency.

Delay is absolutely sensible and the right thing to do. I ask that, even now, the Government consider delaying our ratification until such time as the eurozone countries have all signed and sealed the deal.

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Kevin Brennan (Cardiff West) (Lab): On a point of order, Mr Evans. The Minister for Education and Skills in the Welsh Government has announced this afternoon that there is to be a regrading of English GCSE for those candidates in Wales who sat the Welsh Joint Education Committee examination board. As you will be aware, there are also many candidates in England who sit their English language GCSE on that examination board. Have you or Mr Speaker received notification from the Secretary of State for Education of an intention to come to the House to respond to this development, in relation to the controversy about GCSE English grading this year?

The First Deputy Chairman: Thank you for that point of order. No indication has been received that a Minister wishes to make a statement on that matter or any other, but should that change, I am sure that the House will be informed in the usual manner; and those on the Treasury Bench will have heard the point of order.

5.15 pm

Mr Baron: I rise to support my hon. Friend the Member for Hertsmere (Mr Clappison), and to question my right hon. Friend the Minister for Europe on a number of what I consider to be design flaws in the ESM.

First, although £500 billion in lending capacity sounds like a big figure—and it is—it would be a drop in the ocean should an economy the size of Italy need help. That is especially the case as the ESM’s mandate will be broader than was initially envisaged. In fact, it could be argued that the perception that the eurozone rescue funds could run out of money could drive borrowing costs higher for the Italian and Spanish Governments and raise the likelihood of such an outcome.

Another design flaw, and perhaps a more fundamental one, concerns the circularity of having the facility guaranteed by the same group of countries that might need to draw on it. What will happen if one of those countries needs to draw on it? The burden on the remaining countries will increase, thereby increasing the likelihood that they, too, will face a debt crisis. That is another potential flaw that I wonder whether the Minister has considered.

A further flaw is the reliance of the ESM on the creditworthiness of all its guarantors. The triple A credit rating that it aims to achieve, and hence the low borrowing costs, hinge on a sufficiently large number of eurozone countries maintaining their credit ratings. We have seen in the past the effects of ratings downgrades, such as in January 2012 when Standard and Poor’s downgraded nine eurozone countries, including France. That was followed by a downgrading of the European financial stability facility only four days later. Has the Minister considered those potential but fundamental flaws in the design of the ESM?

Finally, I put it to the Minister that the ESM would not exist if were it not for the political will to maintain the euro. It is quite obvious to many, and certainly to many eurozone leaders, that one cannot have monetary union without fiscal union and, in large part, one cannot have fiscal union without political union. As many of us on the Conservative Benches and, to be fair, some on the Opposition Benches, have long argued, the

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euro endeavour is a political initiative to move towards closer political union, and the chickens have finally come home to roost.

If the politicians were not interfering so much, we would have something similar to the Asian debt crisis at the end of the 1990s. For a short period, that was a pretty bloody affair, but as nations’ sovereign debt was allowed to be reneged on, as countries defaulted and as currencies were allowed to depreciate, there was a rapid bounce back in economic growth. GDP was higher two to three years after the start of the crisis than it was at the beginning, because market forces kicked in, currencies devalued and growth rates picked up because of the greater competitiveness. The Asian crisis moved on and the countries involved are in a much better state than at that time, because their currencies were allowed to depreciate.

What do we have? We have a system by which countries are locked into a single currency and cannot devalue, which prolongs the agony. What Greece needs now, desperately, is to devalue its currency so that it can become more competitive and can grow its way out of its problems. Holidays for British tourists, for example, would be 25% cheaper with a 25% devaluation, which would help the economy. The goods that Greece manufactures would be 25% cheaper, which would help it to export its way out of its problems. However, the euro is sealing its fate in many respects, and prolonging the agony. My concern is that the ESM is part and parcel of the package to preserve the euro and prolong that agony.

Kelvin Hopkins: To return to the hon. Gentleman’s earlier point about the Asian crisis, the Asian countries were strongly advised by the International Monetary Fund not to do what they did in the end. They ignored the IMF, did what they thought was right—rightly—and of course they recovered, as he said.

Mr Baron: The hon. Gentleman is absolutely right, as he has been so many times; he has a long track record of being fundamentally right on this subject.

Although it can be argued that the ESM does not really affect us, that this is just a treaty change and that we should not get involved, I ask the Minister to reflect on the fact that we are actually playing a small part in prolonging the agony of the euro. We need some fresh thinking on this issue, because, to return to a point made earlier, by not facing reality we risk a very disorderly break-up of the euro, which cannot be good for this country or, indeed, eurozone members generally.

Emma Reynolds: The hon. Gentleman has outlined the case for Greece leaving the euro. What is his response to the fact that opinion poll after opinion poll shows that the Greek people, by a very significant majority—about 85%, according to a recent poll—want to stay in the euro?

Mr Baron: That is up to the Greek people. Unlike many initiatives relating to the eurozone crisis, one is not trying to replace the democracy that exists in Greece, although if we look at what has happened in Italy and, it could be argued, to a certain extent in Greece, we see that it is very much the bureaucrats who are in charge. However, ultimately Greece will have to make a decision;

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it cannot have it both ways. We have seen the high social cost of Greece remaining a member of the euro, and it is very saddening, with the suicide rate going through the roof and the economy collapsing. Perhaps someone needs to explain to Greece that a course of devaluation would do its economy a power of good.

Neil Carmichael (Stroud) (Con): I want to develop that point, because it seems to me that Greece has effectively decided to stay in the euro—the Government are committed to that—so exactly what business do we have trying to tell the Greeks how to run their economy, especially since we are not in the euro?

Mr Baron: One is not trying to tell them how to run their economy at all. I am afraid that my hon. Friend was obviously not listening. What one is suggesting is that the experience of past cases illustrates the merits of devaluation. Since the second world war there have been about 40 occasions when currency blocs have broken up, and in the vast majority of cases—I struggle to think of an exception—the countries that left currency blocs benefited. Their growth rates picked up because they became more competitive, their currencies devalued and, most importantly, their peoples benefited. If my hon. Friend can think of one exception to that general rule, I would be delighted to hear it, because I cannot think of one. In summary, I believe—

Neil Carmichael rose

Mr Baron: If my hon. Friend does not mind, I am about to finish. Interruption.] All right, I will give way, if he can think of an exception.

Neil Carmichael: I was casting my mind back to 1967, when the Labour Government devalued the currency, but can see no evidence at all that the decision brought about any improvement. In fact, it was followed by the creation of the Department of Employment and Productivity, and by 1970 that was an unmitigated disaster.

Mr Baron rose

The First Deputy Chairman of Ways and Means (Mr Nigel Evans): Order. We are going a little wide of amendment 1.

Mr Baron: I take your point, Mr Evans. My hon. Friend was clearly not listening, because I was talking about currency blocs, and to the best of my knowledge we were not a member of a currency bloc in 1967. However—I throw this back at him—I do not for one moment believe that he is arguing that our exit from the exchange rate mechanism in 1992 did this country any harm at all. In fact, our economic recovery kicked in, almost to the day, because we left what was in effect a currency bloc.

In summary, I fully endorse the comments made by my hon. Friend the Member for Hertsmere. We should delay the introduction of the ESM. There are too many questions that need answering. I would very much welcome some clarity on the points that I have raised, particularly about the design flaws in the ESM. I would also ask the Minister for Europe to address the fundamental point: why the Government continue to believe that by joining in the political mantra that we need to save the

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euro, we are doing our eurozone partners any favours. I would point out to him that all the economic evidence suggests that by sticking to that mantra, and indeed by implementing the policy, we are prolonging the agony and delaying the inevitable.

Wayne David: I profoundly disagree with the previous contribution. I am no fan of the Government, but it is simply sensible for the Bill to be agreed and the amendment to be defeated, because it is sensible for us to introduce the European stability mechanism as quickly as is practicable. That is in Europe’s interests, but more importantly it is in the United Kingdom’s best interests. I say that for one simple but important reason: about 40% of the United Kingdom’s trade is with our eurozone partners, so it is in our best interests for stability and eventually prosperity to be achieved and maintained inside the eurozone.

Kelvin Hopkins: I absolutely agree with my hon. Friend that a large portion of our trade is with the rest of the European Union. Of course, we have a massive trade deficit, and one of the reasons why is the effective undervaluation of the German currency. If the eurozone broke up, the new Deutschmark would appreciate and we would become much more competitive with Germany, which would help our manufacturing.

Wayne David: I am afraid that I do not share that confidence. If that course of events took place, it would be a massive step into the unknown. Nobody could say with any definiteness what would happen. Indeed, the converse of what my hon. Friend says could also be true, and there would be greater economic difficulties. It is therefore important to recognise the size of the single market and of the eurozone, and to recognise that much of our trade is dependent on the success of the eurozone.

Mr Andrew Love (Edmonton) (Lab/Co-op): Contrary to what a number of previous speakers have said, the UK currency has devalued by around 20% over the last two years, yet we have had little or no benefit from our trade with the eurozone area, because of the instability. Would not passing this Bill lead to greater stability and a net benefit for the British economy?

Wayne David: The likelihood is that that would indeed be case. I am not one of those who subscribes to the Government’s recent mantra that all the problems in the United Kingdom are due to the eurozone. However, it is undoubtedly a fact that for this country eventually to increase its economic prosperity with enlightened policies, we need a successful market in the eurozone that will draw in the products we make.

I could cite numerous examples from economists, but I will focus on important examples from my constituency of Caerphilly, which is still a manufacturing constituency, although it has taken a pounding in recent years. Much of its manufacturing is dependent on exports to the eurozone. I do not suggest for one moment that my constituents are enthusiasts about the eurozone, or indeed about the European Union, but I recognise, in purely bread-and-butter terms, that a stable and prosperous eurozone is in their best interests. Ultimately, their jobs depend on the products they make being exported to the eurozone and being bought there.

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Kelvin Hopkins: I thank my hon. Friend for giving way again. The problem is a lack of demand—the great chasm where there economic demand should be. That is the case because all the countries in the European Union, including ours, are in a process of fairly savage deflation, including deflation of demand, which means that we cannot sell anything. If the eurozone were to be dissolved tomorrow and all those countries were able to reflate, we would sell more and everyone would be better off.

Wayne David: Indeed; I have some sympathy with that last comment, but it is not an argument against the European stability mechanism. It is an argument, which I fully support, for having austerity and the European stability mechanism, but it is also a reason for having a positive, stimulating policy, across the European Union as a whole, to ensure an increase in demand and in the activity of the economy, which is sadly lacking at the moment.

5.30 pm

One of the great ironies in the whole debate about the future economy of Europe is that one of the biggest supporters of the kind of policies that our current Prime Minister is employing is Angela Merkel, who believes that the way forward is for rigid austerity to be imposed ruthlessly. That is having a debilitating effect in the eurozone, just as the Government’s policy is having a debilitating effect in this country. That is not an argument against the ESM, but an argument for getting on with the ESM and for realising that it has limitations but accepting that it is nevertheless a crucial ingredient for ensuring stability. Then we also need to go beyond that, to make sure that there is a radical expansion programme for Britain and the rest of the European Union.

I very much hope that the amendment will be rejected. In essence, it is less than honest—it clearly opposes what the Government are proposing, but does so in a technical and bureaucratic way. It worries me that, if it were passed, we could be enshrining in British law a stipulation that what happens in this country depends on what happens in others, as the hon. Member for Cheltenham (Martin Horwood) pointed out. It is important for this country not to be the last nation in the European Union to respond. We should play our positive role within a reasonable time scale, as is suggested by the Bill.

Mr Stewart Jackson (Peterborough) (Con): I had not intended to contribute to the debate, but frankly I am astonished by the insouciant comments and complacent remarks of some Opposition Members. They ask, “How can this country have the temerity to make a value judgment on legal proceedings with regard to this mechanism?”

There seems to be a fundamental dichotomy for those unable to see the wood for the trees and who will support any initiative from the European Union. They tell us, “Well, this is just one more signature, treaty or concordat that we need to sign up to for us to be at the top table of Europe, and it may be in the UK’s interests or to the contrary.” Yet they then ask us, how dare we make a value judgment on the Pringle case at the Irish High Court—on which, incidentally, the European Court of Justice constitutional decision may hang?

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Whatever happened to subsidiarity? Whatever happened to the autonomy, authority and independence of the 27 EU nation states’ own judicial systems? I am concentrating on the amendment tabled by my hon. Friend the Member for Hertsmere (Mr Clappison) in saying that it is absolutely right for us to be certain of our facts and for us to respect the decisions taken by other countries.

I defer to no one in my admiration for the hon. Member for Luton North (Kelvin Hopkins), who is the Nostradamus of Eurosceptics. He has ploughed a lonely furrow on the Labour Benches for many years. He has been saying unfashionable things. The unfortunate thing, from the point of the view of the Labour party, is that he is a socialist and can see the catastrophic economic calamity being visited on working people in Portugal, Spain, Greece and Italy. For what? For a Franco-German political construct. The lives of millions of our fellow Europeans are being sacrificed for the sake of a dead idea and the creation of a political entity called Europe.

It ill behoves the hon. Member for Wolverhampton North East (Emma Reynolds) to quote opinion polls. There was an opinion poll on the Lisbon treaty that said that we should have a referendum and give the people their say. That was the policy of her party in the previous Parliament, and her party reneged on it. Opinion polls say consistently, as they have over a number of years, that we should have a plebiscite on giving the British people the right to make a decision as to whether they wish to remain part of the European Union. That decision is coming, because the people’s voices will be heard by the end of this Parliament. Any party, including my own, that disregards the voice of the people and thinks that they know better will pay a very heavy price at the ballot box.

This is about kicking a can down a road. It is about putting the welfare, careers, vision, energy and lives of a plutocratic Euro-elite before the lives of real people. Real people’s lives are being wrecked. Children in Greece are being adopted because their parents cannot afford to feed them. People are going hungry in Greece because of the economy. That is the human cost of the words of a desiccated calculating machine, as Aneurin Bevan put it, that came out of the mouth of the right hon. Member for Rotherham (Mr MacShane). It is not just about a political idea; it is about real people. It is time that the House of Commons understood what the European Union is doing to the lives of those people, because we are complicit in that crime in allowing it to go on.

It is time that Her Majesty’s Opposition and the Government understood that this is not an academic issue or a matter of simply saying that it is in our interests to support the continuation of the euro at any price There is a world out there—Latin America, south Asia, the far east. We are a global trading nation, but we are locking ourselves into a sclerotic, backward-looking, high-tax, high-regulation customs union. It is destroying people’s lives, and we have a moral obligation to say that. It is appalling that the Government do not have more courage and determination to say that what is going on in Europe is wrong and we should not be part of it.

Emma Reynolds: When EU leaders agreed to set up the permanent bail-out fund, the ESM, the intention was to introduce it earlier this year. Regrettably, the

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original date has been delayed owing to the constitutional issues mentioned by the hon. Member for Hertsmere (Mr Clappison), such as the court cases going on in Ireland and Germany. I agree with him to the extent that he raised some important issues about the EFSF and the EFSM on which I look forward to the Minister’s response. However, while it is important that those constitutional issues are ironed out, they should not in themselves delay the UK’s ratification of the treaty change. As the hon. Member for Cheltenham (Martin Horwood) suggested, if each member state were to delay their ratification in order to wait for the ratification of the next member state, we would have a mass stalemate. Ultimately, that would produce an inertia that perhaps the supporters of the amendment would like to produce—but I will not make any judgment on that. I do not want to intrude on the private grief of Conservative Back Benchers and the Minister, but there seems to be a contradiction between saying on the one hand that the Government got a good deal while on the other arguing for a delay. I am sure that the Minister will tackle that.

On the ESM and more widely, it is regrettable that there have been several delays and that there has been a lack of political leadership and inertia and inaction at a European level which has served to deepen the eurozone crisis. As my hon. Friend the Member for Caerphilly (Wayne David) set out, we believe that the stability of the eurozone is in the UK’s national interest and that the ESM will, if used appropriately, contribute to that stability. Any further delay, such as that proposed by the amendment, would act manifestly against that stability and our national interest. It is complacent to suggest that we should not ratify the Bill, so we oppose the amendment.

Mr Lidington: The purpose of the amendment, which was moved with characteristic courtesy and understanding of the issues by my hon. Friend the Member for Hertsmere (Mr Clappison), is to delay the coming into force of the Bill until the constitutional requirements of all EU member states have been complied with and all related legal challenges have been disposed of. I am grateful to him for saying that this a probing amendment, intended to examine various issues connected with the Bill, and that he does not intend to press it to a Division. I am happy to accept that his points are significant and worthy of debate.

It is the Government’s view that to accept the amendment and the consequent delay in the ratification of the change to article 136 would harm the interests of the United Kingdom. It would also not achieve the purpose lying behind the amendment. I will respond in detail to the points that my hon. Friend and others have made.

As my right hon. Friend the Foreign Secretary and I both stated on Second Reading, the decision to amend article 136 is in the interests of the United Kingdom. It benefits the UK in two ways. First, the Prime Minister has secured agreement that once the decision enters into force and the ESM is established, no further commitments will be made under the European financial stabilisation mechanism, which is the mechanism under which the United Kingdom has contingent liability.

Secondly, the Bill and the creation of the ESM serve the interests of the United Kingdom because they will provide euro area member states with a permanent financial assistance mechanism to assist in their quest

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for stability. My right hon. Friend the Prime Minister has talked frequently about the need for the eurozone countries to put in place an effective and credible firewall. The creation of the ESM is a significant step by the eurozone countries in the direction that my right hon. Friend and this Government have been advocating. We therefore believe that it is in the interests of this country that this treaty change is ratified and the ESM set up as soon as possible.

Mr Love: Does the Minister also accept that it is to the benefit of this country that we seem to have a better, more partnership-type relationship with the rest of Europe, and that passing the Bill will assist in that process?

Mr Lidington: I think that is true. As I said in an intervention, I am by no means an uncritical admirer of everything that the European Union does or of every aspect of how it is constructed, but whatever the aspirations of any individual Member of this House with regard to the United Kingdom’s relationship with our nearest neighbours and most significant trading partners—the other members of the EU—we are more likely to achieve our national objectives if we conduct ourselves in a way that involves a grown-up appreciation that those other countries also have legitimate interests. If we ask them, rightly, to take account of our interests, it matters that, where we can, we respond sympathetically when they identify vital interests of their own as being at stake.

5.45 pm

The debate has touched on the process of ratification in other European Union member states. The majority of member states have approved the decision in accordance with their constitutional requirements. Most member states require parliamentary and then presidential or royal approval. Germany and the Czech Republic remain to complete their constitutional requirements. That is largely an administrative process. Both countries have to gain presidential sign-off for an agreement that has been taken through the appropriate parliamentary processes. Germany is waiting for a ruling by its constitutional court, which is due later this week.

There is a further stage once the national constitutional procedures have been completed, in that each national Government has formally to deposit the instruments of ratification in Rome. Poland and Italy, as well as Germany and the Czech Republic, have yet to deposit those instruments. However, that is just a formality and it is merely a matter of when that happens. Despite the ongoing case before the Irish courts, which was brought by an individual citizen, Ireland has not only completed its national constitutional procedures, but has formally deposited the instruments of ratification.

All member states, including those that I have mentioned, where one or other aspect of the process has not been completed, are confident of approval by early autumn. We are already one of the later member states to approve the decision. There is nothing to be gained—indeed, there is a bit to be lost—by trying to ensure that we are the last.

I say to my hon. Friend the Member for Hertsmere that it is not clear from the amendment what exactly is meant by “related legal challenges” or what cases might fall within its scope. We think that it is in our interests that the treaty change decision is ratified and that the

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ESM is established. There are legal challenges, to which a number of hon. Members have referred, in Germany and Ireland, but we do not consider them to be a reason to blow us off course in getting the decision ratified as soon as possible. We judge it to be in our interests to do so and have committed ourselves to the task. In return, we will see the closing off of any future programme of financial assistance under the EFSM.

The Irish case was mentioned in detail by my hon. Friend. My right hon. Friend the Foreign Secretary stated on Second Reading last week that there is a legal challenge to the validity of the decision amending article 136. That case has been referred by the Irish Supreme Court to the European Court of Justice. Our analysis is that we do not expect the ECJ to find against the decision in any way.

In the event that the ECJ did rule the decision invalid, the decision, and therefore the amendment of article 136 of TFEU, would simply not take place. That result would also follow automatically from a decision by any member state not to ratify. The Irish litigant is claiming that the entire decision has followed an incorrect procedure and should be ruled invalid. If, hypothetically, the ECJ decided that that was the case, the whole process would have to start again from square one, if the EU member states so wished. In the event of the ECJ making an adverse ruling and striking down the decision, we would not need amendment 1, because the amendment to article 136 that flows from the decision would automatically fall.

We are also aware that the German constitutional court is due to deliver a ruling on 12 September on whether the ESM treaty and the fiscal compact are compatible with the German constitution. I stress that it is those two things on which the court is due to rule, not the separate decision to amend article 136. The UK is not a party either to the ESM treaty or to the fiscal compact, and I am not persuaded that we should say that the ratification of the article 136 treaty change should depend on a domestic German case dealing with two other international legal instruments to which this country is not a party.

One difficulty I have with some of the arguments made in the debate is that too often there has been a tendency to elide the ESM treaty, which is an intergovernmental matter among members of the eurozone, and the amendment to article 136, which we are asked to ratify. Even if the amendment to article 136 were thrown out by the United Kingdom or any other country, the eurozone countries could still decide to press ahead with the ESM treaty that they have created among the 17. They would lack the legal and constitutional certainty for that action that they are seeking by asking for a reference in the European treaties to the possibility of an ESM, but they concluded the ESM treaty on 2 February and are now ratifying it. It will come into effect as soon as member states representing 90% of the ESM’s capital have ratified it.

I was asked how much money had been contributed under the EFSM so far. Of the €60 billion assigned to it in 2010, €22.5 billion has been made available to Ireland and €26 billion to Portugal, leaving €11.5 billion notionally still available. As the House knows, the UK has contingent liabilities—we have not actually paid out any money—amounting to about 15% of that overall total.

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I was asked whether not ratifying the article 136 change would make a difference to our ability to extract ourselves from future liabilities under the EFSM. In all the decisions made by the Council of Ministers and the European Council that are included in the recitals to the decision that we are debating, the extinction of our future liabilities under the EFSM has been expressly linked to the establishment of the ESM.

This is taking us into hypothetical territory, but it seems to me that if the ESM is set up—that is ultimately a matter for the 17 eurozone countries—the decision made by Heads of State and Heads of Government will click into place and our liabilities under the EFSM will end. I do not think it would be sensible for us simply to chuck away on a whim the prize of extinguishing our liabilities, or put it at risk in any way, by taking a decision that would place the ESM on a less secure constitutional and legal basis than if the article 136 change were to go through.

Mr Clappison: I am grateful to my right hon. Friend for his careful answers to my questions. I am grateful to him for giving the figures confirming that the majority of the contingent liabilities that could have been allocated under the EFSM have indeed been allocated, and that we already have a significant liability. However, I do not think he has quite answered one of my questions—he may be coming to it. If the ESM is not ratified, or until it is ratified, could we be liable for new liabilities entered into under the EFSM out of the remaining unallocated portion? If so, would that come about as a result of qualified majority voting or would it require unanimity?

Mr Lidington: The legal position is that yes, that is possible, and it would be by qualified majority voting. That flows from the decision taken on the final day of the last Government’s time in office. It may be some reassurance to my hon. Friend, though, if I say that the EFSM has tended not to feature in the discussions over the past year. The discussion has been very much about the EFSF, which can draw on a much larger sum and can therefore command much more credibility with the markets.

I say to those of my hon. Friends, and Opposition Members, who have been extremely critical of the European Union, that I have found that there is an understanding in other member states, whether among Heads of Government, Finance Ministers or Europe Ministers, that the EFSM is a sensitive and delicate subject for the United Kingdom and particularly for the House. I do not get the impression that our European Union colleagues want to push us into a corner for the sake of it. What they hope for, and reasonably so, is our co-operation, not in sacrificing our vital interests but in helping them solve the existential financial and economic crisis that the single currency area faces.

Mr Baron: My right hon. Friend rightly referred to the fact that the ESM is much larger than its predecessor. Will he therefore address the questions that I put to him about the weakness of the fundamental design of the ESM? By agreeing to it, we are signing up to a system that has many flaws. Does he recognise those flaws, and if not, why not?

Mr Lidington: I think my hon. Friend is trying to draw me into writing my own blueprint for a permanent European stability mechanism. I will not be tempted on

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this occasion, because it would be pretty extraordinary if British Ministers were to start laying down the law in public about the design and scope of a mechanism to which we have chosen not to be a party and into which we do not propose to put a penny of our taxpayers’ money. We should not give such lectures to countries that have decided to put their taxpayers’ money on the line, because they will have to deal with any political reaction among their own electorates. As a democratic House, we need in this instance to respect the sovereign, democratic decisions of the eurozone member states.

Mr Love rose

Wayne David rose

Mr Lidington: I want to make progress.

There would be an irony to accepting the amendment. I will not use the type of language used by the right hon. Member for Rotherham (Mr MacShane), but it would be a bit odd if we passed an amendment that constrained the freedom of the House of Commons to ratify a treaty that the Government had agreed to. It would have the consequence of allowing the German constitutional court, the European Court of Justice or other courts to determine when our legislation, which we judge to be definitely in the interests of the UK, should come into force. I do not think that delaying this legislation would serve any purpose or help our national interests, and it may do some harm. I therefore hope that my hon. Friend the Member for Hertsmere will be willing to withdraw his amendment.

6 pm

Mr Clappison: I am grateful to the Minister for his careful reply, and to hon. Friends and the hon. Member for Luton North (Kelvin Hopkins) for their speeches in support of my amendment. This has been a worthwhile debate because it has clarified a number of issues relating to the United Kingdom’s liability under the arrangements agreed in May 2010 to the European financial stabilisation mechanism, the European financial stability facility, and the new European stability mechanism. There will doubtless be many more such bodies in the future.

I have heard the Minister’s reply. It remains the case—I have been making this point throughout the debate—that the Bill will become an Act and be law in our country before the ESM has taken effect. The ESM will not have been ratified before this Bill is enacted. That is hanging in the wind, and I am sure that all questions that arise from that, and from the Minister’s reply, will receive careful analysis in the future.

I agree with the line taken by the Government. As I have said throughout the debate, it is clearly in Britain’s interest no longer to be liable under the EFSM, and I regret that that has not yet come about. I appreciate the line taken by the Minister, and as I have said, there are sound diplomatic reasons for the Government’s continual incantation that a stable eurozone is in this country’s interest. I understand all those who say that and we do not want to lecture our European neighbours on the point. However, let me say gently to the Minister that the more I hear that phrase uttered—even if the Minister is right to do so and there are sound reasons for it—the more it brings to my mind the image of a witch doctor making his incantations over a prostrate patient in

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some village in remote parts. The witch doctor makes the incantation, the credulous draw comfort from it and there is perhaps a wider feeling that traditions have been complied with, but it makes no difference to the patient who lies prostrate and as sick as ever. That, I am afraid, will be the case with the European economy for as long as we are afflicted by the present eurozone.

The Minister made a point about listening to electorates, but leaders of the European Union—the European Commission in particular, but other leaders too—have never distinguished themselves in doing that in the past. Referendums have been held, European treaties have been turned down and electorates have been told to go back and think again. Even when public opinion has been overwhelmingly in favour of a particular course, or not in favour of something the European Union has proposed, the European Union elite has paid absolutely no attention.

I do not mind discomforting the European elite; I have nothing to lose because I am elected to represent my constituents and I am happy for them to hear my words and judge me accordingly. The European political elite has pressed the cause of European integration without bothering to seek the consent of electorates, and it put in place the European monetary union project as part of that process. Members of that elite must now be held to account for all the sad economic consequences that flowed from that decision, which have been outlined by the Conservative party, and they must be made to face up to their responsibilities, as no doubt some of them will in future. There are few ways in which we can influence the European Commission and organisations of the European Union in a democratic way—I wish it were otherwise—but the European elite must face up to the consequences of its poor decision making.

Bob Stewart (Beckenham) (Con): How can we make those people face up to their responsibilities and take the blame for what they have done?

Mr Clappison: My hon. Friend makes a good point. The point I was making is that in many respects we cannot, because they are above and beyond the control of our electorate. That has always been the problem with the European Union. Some in Europe sought to impose their project without bothering to take account of the views of the electorate. That problem lies at the heart of the matters we are discussing today and is one of the reasons we are afflicted by the eurozone. It is time people began to listen and reflect on what electorates have to say and on the lamentable economic consequences of the euro. However, as I indicated I would, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr Lidington: Clause 2 simply declares that the Bill extends to the whole of the United Kingdom and will come into force on the day on which it is passed, and gives its title.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

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New Clause 1

Impact of the European Stability Mechanism on the UK

‘The Chancellor of the Exchequer shall make a report to Parliament within one year of the Act coming into force and annually thereafter setting out an assessment of the impact of the European Stability Mechanism on the risks to the interests and obligations of the United Kingdom from eurozone instability.’.—(Emma Reynolds.)

Brought up, and read the First time.

Emma Reynolds: I beg to move, That the clause be read a Second time.

The Temporary Chair (Mr Joe Benton): With this it will be convenient to discuss new clause 2—Report on the use of the European Stability Mechanism

‘The Secretary of State shall, whenever a loan is made to a beneficiary Member State by virtue of the decision in section 1(2), lay before Parliament a report setting out the nature and terms of the use of the European Stability Mechanism and its potential effect, both direct and indirect, on the interests and obligations of the United Kingdom.’.

Emma Reynolds: It is a pleasure to serve under your chairmanship, Mr Benton. We are seeking to add two new clauses to the Bill to underline the importance of the European stability mechanism to the British economy. New clause 1 would require the Chancellor of the Exchequer to provide an annual assessment of the impact of the ESM on the British economy. For instance, in the best case scenario we would hope that if ESM funds were needed and used appropriately, they would enhance the stability of the specific member state they were put in place to support, and therefore also have a positive effect on our economy.

We have some concerns about the conditionality of the ESM, for example if the conditions attached to granting ESM support were too harsh. It would, therefore, be beneficial to have an assessment of the impact of that austerity on the eurozone member state in question and—importantly for new clause 1—of the knock-on effect on the eurozone more widely, and on the British economy. Given that 40% of British exports go to the eurozone, and that our financial sectors and banks are closely connected, it is important that the Government provide systematic assessments of the operation of the ESM and its impact on our economy.

New clause 2 would introduce a specific and timely requirement for an analysis of each instance of ESM activity, without having to wait for the Chancellor’s annual report that is provided for in new clause 1. For example, if the ESM is triggered to provide support for Spain, Italy, Ireland or Greece, there will be varying levels of economic impact on UK trade and growth. An analysis of the downstream impact that each instance of ESM activity might have on the UK would give Members of this House and the other place, as well as the public, a clearer sense of the nature of the conditions imposed and the indirect impact of the ESM’s operation on our economic prospects.

The ESM conditions are to be detailed in a memorandum of understanding between the European Commission and beneficiary member states that will outline specific economic policy and fiscal adjustment conditions. The Committee should be informed of those conditions,

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and should have the opportunity to debate and scrutinise whether they are fair and reasonable, and whether Ministers should make their own representations on the nature of those terms and conditions.

It is imperative that any conditions imposed are not detrimental to the fragile recovery of the economy of the member state in question, and that any effects of those conditions do not have an indirect negative impact on our economy.

Regrettably, the Government have isolated themselves to such an extent that they might be unable to exert the requisite leverage in debates on conditionality. Nevertheless, the Europe Minister is conducting a charm offensive—he has written various articles, including one written in beautiful French for Le Monde and one written in Swedish for a Swedish newspaper—with the intention of rebuilding bridges with our European partners.

The Opposition applaud the Minister for that initiative —Conservative Back Benchers might not applaud him, but we do not want to intrude on private grief by going through the differences of opinion between those on the Treasury Bench and Conservative Back Benchers who do not agree with them—but we fear that the charm offensive might be too little, too late. We wish the Minister the best in his endeavours.

Mr Love: It is important that the Minister speaks seriously to his European counterparts in his charm offensive about the role that austerity can play in depressing the eurozone economy to our detriment. Is it not critical that the Minister speaks up for growth strategies so that Europe can grow and we can grow off the back of that?

Emma Reynolds: I could not agree with my hon. Friend more and I recommend that the Minister takes his advice. The Government would have more authority to speak to our European partners about the importance of European growth if our economy were growing, but unfortunately it is not—it is one of two G20 economies to be back in recession, which is a great shame. That unfortunately diminishes the authority of our Government’s voice in proposing the useful measures that my hon. Friend suggests.

I mentioned the Minister using his multilingualism to build bridges with our European partners, which the Opposition believe is essential. Even if it runs against the wishes of Conservative Back Benchers who are nervous about the Government’s continued commitment to European membership, the Minister is right to reassure our European partners that our place is firmly in the EU.

Wayne David: On dialogue, which I agree is extremely important, our dialogue with Ireland, which has the same language, is vital. Will my hon. Friend speculate on what would happen to our good relationship with Ireland if the closeness of our two economies were not fully realised? What detrimental impact beyond the economic could that have on our long-term relations with Ireland?

Emma Reynolds: Our relationship with the Republic of Ireland, which is incredibly important, is testament to the temporary mechanisms put in place in May 2010, which had cross-party agreement. Conservative Members like to tell Labour Members that the mechanisms were

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agreed unilaterally, but there is proof in a note by the former Economic Secretary—she is now Secretary of State for International Development—of cross-party agreement on setting up the EFSM at a time when the eurozone looked like it might collapse. The EFSM has been incredibly important to Ireland’s recovery, so much so that Ireland has been able to sell Government bonds on the international markets again since July this year.

Mr Love: Have the Government not recognised that? They were critical of the previous Government’s decision, but subsequently gave a substantial loan to Ireland because of its critical position in relation to the British economy?

Emma Reynolds: I could not agree more with my hon. Friend. There were some naysayers on the Government Benches who thought the Government were wrong to give a bilateral loan to Ireland, but Opposition Members agreed with the Government, because our economies and financial systems are so closely intertwined. It was therefore incredibly important to make that bilateral loan to Ireland. As I said to my hon. Friend the Member for Caerphilly (Wayne David), it pleases all hon. Members that Ireland’s economy looks like it is getting back on track. That is important for the Irish people—our neighbours—but, given the close links between our economies, it is also important for people in our country.

Given the Minister’s fantastic charm initiative, we hope the Government are in a better position to influence conditionality on the use of ESM funds, as I have suggested. The Opposition do not believe that harsh conditions would be in our interests or in the interests of the member state to which support is given.

6.15 pm

Wayne David: Both new clauses call for reports to be made to Parliament. There is a strong case to be made for in-depth reports to be debated on the Floor of the House, but there is also room for debate in Committees, and particularly the European Scrutiny Committee. Does she envisage that the debate should be conducted not just on the Floor of the House, but elsewhere?

Emma Reynolds: I agree with my hon. Friend. New clause 1 would mean an annual report by the Chancellor on the economic impact to the UK economy of the operation of the ESM, and new clause 2 would mean the Foreign Secretary submits a report when a loan is made. As my hon. Friend suggests, the reports would be discussed not only on the Floor of the House and the other place, but in the European Scrutiny Committee and other Committees that deem them important.

The success of the ESM is in our national interest. If it is used effectively and appropriately, it could have a positive effect on our economy as well as on the member states to which it gives support. However, what if the ESM’s conditionality is misguided and imposes austere measures?

Mr Love: On conditionality, there is currently a discussion on easing the conditions of receiving support from the European Central Bank. Would my hon. Friend welcome Government support for such easing? Will she go further, and suggest that it could spark growth in the southern European economies?

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Emma Reynolds: Conditionality should not be too severe. The ECB’s initiative to buy Government bonds, which was announced by Mario Draghi last week, would be linked to support provided by the ESM. That is why it is vital that the reports asked for in the new clauses are made to Parliament—there is an interaction between the ESM and the initiatives announced by the ECB last week.

Wayne David: That is important. The situation is volatile, nobody knows with any certainty what will happen next, and the interrelationship and co-ordination between different financial instruments—the ECB bond market initiative has a relationship with the ESM facility—are important. That makes a regular, ongoing review to find out how compatible they are in practice all the more important.

Emma Reynolds: I agree with my hon. Friend. The new clauses would introduce annual systematic assessments of the impact on our economy of the ESM and, in specific cases, of loans granted by the ESM. As he suggests, that is becoming ever more important, given the complicated interaction with the ECB’s other initiatives. If ESM conditionality is too harsh, we fear that it could have a detrimental effect not only on the member state to which the support is being granted but indirectly on our own economy, and could shrink the eurozone economy.

Mr Love: Are the British Government not in an ideal position to make this case, given that they introduced too harsh an austerity programme, the result of which has been a double-dip recession?

Emma Reynolds: It is regrettable that, in a way, we are a test case for the detrimental effect of severe austerity. Since we left government, the economy has slipped back into recession and we have seen high unemployment, including an unemployment crisis among young people. My hon. Friend is right that unfortunately Europe is looking to the UK to see what it should not do in its economic policy. I am glad that there has been a shift, to a certain extent, within the European Council, in that member states on the centre left, such as the French Government, are now arguing for growth and job creation, not austerity alone. His suggestion is critical.

Mr MacShane: Are not the IMF and World Bank loans, to which Britain fully subscribes—we will be subscribing absolutely nothing to the ESM—also worthy of scrutiny? Would it not be a good idea to extend this concept and invite the Chancellor of the Exchequer to present to Parliament an annual review of all IMF and World Bank loans, the conditionality of which has a huge impact on the British economy and worldwide developments? I am interested in this notion that we are now advancing, which I fully support, that Parliament should debate all the external loans and financial instruments that Britain provides to help other economies get going, as well as those in Europe to which we do not subscribe a penny.

Emma Reynolds: My right hon. Friend makes a good suggestion, but I would not want to comment in too much detail on other external loans, given the remit of the debate. I am sure, however, that those on the Treasury Bench will have heard his suggestion.

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In either scenario—whether best or worst case with regard to the operation of the ESM—it would be reasonable and enhance scrutiny in this House and the other place were the Chancellor to provide an annual report of the economic effects on the UK, as set out in new clause 1.

Mr Love: Would it not be critical for the Chancellor’s report to Parliament to indicate what the British Government had done to make the ESM a success and to relate it to the benefits received by the British economy?

Emma Reynolds: That would be important, but, for reasons I have set out, I fear that the Government’s voice and influence will not be as strong as it should be on these matters, because unfortunately they have chosen, through their actions, to isolate themselves—I think of the walkout at the European Council meeting last December and the Prime Minister winding up the French President by telling him, for some reason, that he would roll out the red carpet for French taxpayers. I am not clear why he thought that that would be in the national interest, given that he had already refused to see the French President earlier in the year. For all those reasons, it is clear that the Government place much more importance on keeping their party together—the Conservative party—than on the British national interest. Regrettably, therefore, our influence over ESM conditionality is severely weakened.

Andrew Bridgen (North West Leicestershire) (Con): Is the hon. Lady saying that her party supports UK taxpayers’ money being used, through the ESM, to support the eurozone?

Emma Reynolds: It is nice that the hon. Gentleman has made a late entrance but, had he been here from the start, he would have known that the Opposition are not in favour of the Government paying into the ESM. He was not here when I mentioned it, so I shall say again that in May 2010 the then Economic Secretary, the now International Development Secretary, admitted that there was cross-party consensus that if the eurozone collapsed, we would have to agree to the emergency measures drawn up at the last Council, when the then Labour Chancellor, in the interim period after the election, was still in place. So there was cross-party agreement—I can show him the documentary evidence, if he wants to see it.

On new clause 2, it is also important that the Foreign Secretary provides a report whenever a loan is made under the ESM. Both reports will enhance scrutiny in the House.

Wayne David: There is one important element of the ESM with which I am not familiar—I frankly admit—and that is the degree of private sector involvement. In this respect, the IMF is an example of good practice, but given that I and—I suspect—many other Members are not familiar with this element, an effective annual report would be crucial.

Emma Reynolds: I agree that it would be important. It is not clear when the ESM will be introduced—the constitutional court in Germany will rule on Wednesday —or what the significance or extent of the interaction with the private sector will be. It is important for those

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reasons as well, therefore, that the Chancellor and the Foreign Secretary produce reports in the way suggested by the new clauses. It would enhance the scrutiny of these important subjects in the House and the other place and make it clearer to the general public exactly how the ESM will operate and how its operations will affect the British economy.

Martin Horwood: I will not trouble the Committee for long. It is sometimes tempting with a simple Bill to think of things to put in amendments to provoke debate—it can be helpful—and asking someone to make a report is always quite a good one, but we need to be a little careful with civil servants’ time. To ask the Treasury to make a report to Parliament annually on

“the impact of the European Stability Mechanism on the risks to the interests and obligations of the United Kingdom from eurozone instability”,

and to ask the Foreign and Commonwealth Office

“whenever a loan is made”

to report on the

“potential effect, both direct and indirect, on the interests and obligations of the United Kingdom”,

will involve days and days of civil service time.

Emma Reynolds: Will the hon. Gentleman give way?

Martin Horwood: No, I will not. I am not going to take up a lot more of the Committee’s time.

The proposals are superfluous, given that we endlessly debate the impact of the eurozone and of the various bits of European constitutional and financial architecture on the United Kingdom and its economy. We also endlessly debate the individual bail-outs, and there are always statements to the House on such matters. If these reports were produced by the Treasury and the Foreign Office, I suspect that Her Majesty’s Opposition would disagree with them anyway. There will be plenty of opportunity to question Ministers on what they think of the indirect or direct implications of any bail-outs.

6.30 pm

Technically, separating the indirect or direct impacts of the ESM from the impacts of previous bail-outs, from the existing EFSF or EFSM actions, from other initiatives by the ECB and the IMF and from the general operation of the eurozone economy would be an activity worthy of an academic PhD. Civil service time should not be taken up preparing reports to Parliament on the matter.

The proposals have provoked another interesting debate—we have had a lot of that this afternoon—but this is essentially a simple, straightforward, technical piece of legislation, and I urge the hon. Member for Wolverhampton North East (Emma Reynolds) to consider whether there is any value in pressing the new clause to a vote. I urge her to withdraw it.

Wayne David: I strongly support the new clause. We need to be frank and recognise that this Bill represents a new departure. Inevitably, therefore, we cannot assume that every dot and comma in the European stability mechanism will be absolutely correct, or that there will be no scope for change in the future. There might well be change, and who can tell, in this fast-moving situation,

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what the demands of the immediate future will be? It is therefore entirely sensible to call for full, comprehensive reports to be provided to the House on an annual basis.

Mr Love: Does my hon. Friend believe that the plea that we have just heard from the hon. Member for Cheltenham (Martin Horwood) was a signal that he does not want another row between the coalition partners?

Wayne David: My hon. Friend could well be right. Who knows? I would not be entirely surprised if that were the case. However, it is important that we rise above any internecine squabbles.

We are concerned about the well-being of the country, which is why it is important to conduct comprehensive reviews and to debate them on the Floor of the House. As was pointed out earlier, much of the legislation is of a technical—almost esoteric—nature, and the reports will need to go into some detail. It will therefore be insufficient simply to present them on the Floor of the House. They should also be debated by the European Scrutiny Committee, which is well led by the hon. Member for Stone (Mr Cash). Surprisingly, he is not in the Chamber. This must be the first time in a long time that he has missed a European Union debate. I hope to goodness that he is not ill.

Mr Love: For what is probably the first time, I agree with the hon. Member for Stone (Mr Cash), in that he insists that the House should do more to scrutinise European matters. Does not my hon. Friend agree that the new clause presents an ideal mechanism for so doing?

Wayne David: I absolutely agree with my hon. Friend.

This is an important matter, and it should be debated not only on the Floor of the House but by the European Scrutiny Committee. We should also encourage other Select Committees—the Treasury Committee in particular —to debate these issues. It is one of the weaknesses of the House that, all too often, we tend to put European issues into a neat compartment without fully appreciating the fact that they are cross-cutting, cross-departmental and cross-Committee in nature. If we are fully to appreciate their impact, and the need for them to be changed, we need to discuss them in a number of different Committees.

Emma Reynolds: Does my hon. Friend agree that it is regrettable that the Liberal Democrats—who are now in government, not in opposition—should not want increased transparency and scrutiny of the effects of the ESM on our economy? Had they still been in opposition, I am sure that they would have been calling for that today.

Wayne David: I can see that the hon. Member for Cheltenham (Martin Horwood) is straining at the leash to intervene on me. I will give way to him, so that he can give my hon. Friend a comprehensive answer. She has made an astute point.

Martin Horwood: I would like to put on the record, on behalf of the Liberal Democrats, my belief that this House should indeed carry out much more scrutiny of European affairs. I also agree with the hon. Gentleman that that should be done on a broader basis, and that

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the departmental Select Committees should be involved. Indeed, we have suggested as much in our submission to the current discussions on European scrutiny. I am not sure, however, that we need ever more reports being discussed in addition to all the legislation and everything else that we debate, interminably, on the Floor of the House. He cannot possibly argue that we do not spend enough time debating Europe in this Chamber, as we are doing now.

Wayne David: I do not want to labour this point. I welcome the Liberal Democrats’ desire for more transparency and scrutiny, but experience shows that, all too often, those words come to nothing unless there is a focus on something. The importance of the new clauses is that they would provide that “something” for the debate to focus on. Nothing concentrates the mind better than a report that has a distinct niche in the parliamentary calendar to enable that debate to take place.

Mr Love: This is not just a matter of having a focus for the debate. It is also a question of the sheer importance of these aspects of the European Union. Their influence on the eurozone and the British economy make it imperative that we hold such discussions.

Wayne David: My hon. Friend makes an extremely good point. We would not be holding a debate for the sake of it, and we are not talking about transparency for the sake of it. We are trying to underline the importance of the ESM, which is being developed for the first time. It is imperative that we have an ongoing debate.

Geraint Davies (Swansea West) (Lab/Co-op): Is my hon. Friend aware that, only last week, members of the Welsh Affairs Committee were in Brussels to talk to MEPs and Commissioners about this important issue? Does he agree that that is symptomatic of the enormous appetite for discussion of these strategic issues that have a direct impact on the economic future of Britain?

Wayne David: I was not aware that the Welsh Affairs Committee had been in Brussels, but that underlines my point that this issue is absolutely central to the European Union at the moment. Debates in Select Committees should not be confined to the European Scrutiny Committee; other Committees should debate these matters as well. I have to say that I would not immediately have thought of the Welsh Affairs Committee as an appropriate vehicle for that, but I imagine that much of the discussion in Brussels focused on how Wales would be impacted by the developments in the European Union.

Geraint Davies: As my hon. Friend has questioned the legitimacy of the Welsh Affairs Committee in that regard, I should make him aware that the Committee has recently published an excellent report on inward investment and prosperity in Wales. A key part of that economic activity involves inward investment from and trade with Europe. That is why we adopted a nationally based view—in regard to the nation of Wales—as opposed to the departmental silo-based views. We have a crucial locus on this matter.

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Wayne David: I am pleased that my hon. Friend made that intervention, as it takes me neatly to my next point.

The ESM is important for all parts of the United Kingdom—including Wales—because it will help to ensure that the eurozone becomes a stable and attractive market to which we can take products made in our constituencies of Swansea, Caerphilly and elsewhere. That is central to the debate, and it concerns me greatly that some—although not all—Government Members actually want the eurozone to collapse. They want that outcome for a pathological, ideological reason, without realising the immediate material consequences that it would have for jobs in our constituencies.

Jacob Rees-Mogg (North East Somerset) (Con): I would classify myself as one of the people who does want the eurozone to collapse, because I think that only with the collapse of the euro can the economies of Europe begin to grow again. It was the same when the Asian crisis hit, and the economies that devalued were the ones that grew again fastest and soonest.

Wayne David: I simply do not agree, and there are plenty of academics and learned people who do not agree either. Most importantly of all, plenty of workers and employers in my constituency do not believe it. As I said, I am not suggesting for one moment that the EU and the eurozone are particularly popular with people—they are not, and I fully understand why not—but in the end people are concerned about their livelihoods and their prosperity, which depend on jobs. That is why it is important for this country to do everything we can to ensure that the eurozone is helped to get over its present difficulties and made prosperous once again.

Mr MacShane: Does my hon. Friend accept that we do not have to go to Asia, for example, to see devaluation before our very eyes, because the British pound has been substantially devalued in the last four years, and it has led to a massive loss of jobs, employment and growth, and has brought in a recession? Perhaps devaluation and a sensible Government can help, but devaluation and this Government are a recipe for disaster.

Wayne David: Yes, I agree. If we take the argument of the devaluers to the extreme, having competitive devaluation among different states on the continent of Europe is indeed a recipe for disaster. It is a mistake to believe that, because devaluation might have helped one country in one particular circumstance, we can extrapolate beyond that and assume that devaluation is a recipe for everyone.

I have generally supported the ESM, because I think it is necessary and will make a huge contribution—not an exclusive one by any means, but a huge one—to helping the eurozone in its current difficulties. I am not suggesting for one moment, however, that the EU has everything worked out perfectly, so far as the ESM is concerned. What is needed is an ongoing review, and flexibility is required so that the good things are built on and the not-so-good things altered. That is why new clauses 1 and 2 are so important.

I recently read with great interest an excellent research paper produced by the House of Commons Library, which succinctly summarised a number of the reservations

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that people have about the ESM; it is quite right that people should have some reservations about it, so let me mention a few of them.

The first relates to the amount of €500 billion being made available for lending capacity. A number of people have suggested that, given how the crisis might develop, that amount could be too small, so we need to contemplate a larger amount in future. That applies particularly if it is not just Greece and Portugal that experience difficulties and if things become more problematic in Spain or even in Italy. In those circumstances, it might be necessary to consider having a facility much greater than the currently envisaged €500 billion.

The second reservation by those concerned about the ESM is, as we touched on earlier, the fact that it is but one of a number of different initiatives designed to help the eurozone. We are particularly aware of the initiatives, perhaps belated, of the European Central Bank and of the desire to intervene in the bond markets. That is one of the terms of reference and intentions of this facility as well. We thus need to ensure that there is complete complementarity, no duplication of effort and no contradiction in these different facilities; everybody must be pulling in the right direction. Co-ordination with other lending institutions and with other bodies and initiatives is very important indeed. Linked to the size of the €500 billion facility is the fact that some people believe that in a worst-case scenario, the rescue funds would be insufficient and would run out of money. It is therefore necessary to have an ongoing review of whether that is likely to happen or not.

6.45 pm

Mr Love: Is that not recognised by the European authorities, particularly the European Central Bank, in moving part of the way to becoming a lender of last resort, which might be necessary if the eurozone is to be held together?

Wayne David: Yes, that is an important point, and the role of the ECB is central. Many of us would like to see it being more proactive far sooner than it has been in the past, but its more assertive role could be critical in the future.

Another concern is the circularity of having the facility guaranteed by the same group of countries that might draw on the fund. For example, we all know that Italy’s situation could become difficult, yet Italy is a country that is, at the same time, ensuring that resources are going into the fund that it might itself be required to draw on. That strange relationship and potential incompatibility at the heart of the ESM needs to be thought about carefully. What is important is what is being established here and now. Nevertheless, as situations develop, it becomes all the more important to review the circumstances.

The credit rating of the ESM is another issue. We all know that certain countries, including a number of eurozone countries, have been downgraded in the not-too-distant past. That includes France, which came as a big surprise to many people. The EFSF has been downgraded, too, and we must be sure that that does not develop further with respect to the ESM.

Geraint Davies: My hon. Friend and the hon. Member for Basildon and Billericay (Mr Baron) have made the point that if some countries in a group are both taking

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and giving money at the same time, it amounts to a problem. What about a simple model of a credit union and a community, from which some people put money in and some take it out? What about a marketplace in which some countries put resources in so that other countries can consume their exports? Is that not part of a system for helping broader growth, which is not a problem at all?

Wayne David: My hon. Friend could well be right, and I hope that he is, but it is an issue that needs to be rationalised and thought through carefully. My feeling is that, at this stage of the ESM’s development, it has not been given serious thought. It may be necessary and desirable, but it must, as I say, be thought through carefully. It must not happen by accident, but by proper design. The fact that it is not in the design of the programme at the moment provides all the more reason to ensure that we have a proper review and some time for the objective to be explicitly stated.

My last point is about private sector involvement. It is assumed that we are talking about public money, which to a large extent we are, but there is also a role for private sector involvement, which will be done in accordance with good practice as established by the International Monetary Fund. That is welcome, but, again, it needs to be monitored carefully. If we need to enhance our programme or provide more stipulations, those things must be done.

Mr Love: Is not the International Monetary Fund a very good example of private sector involvement? No one has ever lost any money as a result of investing in the IMF, and if we follow prudent principles, the same should apply to the ESM.

Wayne David: I agree that the IMF is an example of good practice, and I think it laudable that the ESM is basing much of its operation on the way in which it has operated, successfully, for a number of years. Don’t get me wrong: I am not against private sector involvement—quite the opposite—but I think that clear terms of reference need to be established and monitored.

For that reason, and for all the other reasons that I have given, I think that both new clauses are eminently sensible. I think they will enhance both parliamentary democracy and the role of this Parliament. I also think that, ultimately, they will send our partners in Europe the extremely positive message that we are serious not only about establishing the ESM, but about ensuring that it works effectively well into the future.

Jacob Rees-Mogg: It is a great pleasure to follow the hon. Member for Caerphilly (Wayne David), who almost made the new clauses sound respectable. In fact, they are some of the most splendidly pointless measures that we have seen in the House; they serve absolutely no purpose.

Mr Love: The hon. Gentleman seems to be arguing against scrutiny of the European Union by this institution.

Jacob Rees-Mogg: I am all in favour of scrutiny. I am a member of the European Scrutiny Committee, and I am the greatest admirer in the House of my hon. Friend the Member for Stone (Mr Cash), who scrutinises with an eye like a hawk and ensures that every aspect of scrutiny is carried out to the fullest, most proper and

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deepest effect. However, I thought that the new clause might be an example of the socialist sense of humour, which involves tabling a motion that is completely and utterly meaningless and, indeed, the opposite of what the Bill is all about.

Perhaps the Members concerned did not listen to my right hon. Friend the Minister, who explained—beautifully, elegantly and with charm—what the Bill was all about. He also explained what the treaty was about, namely getting us out of responsibility and liability for the eurozone mess so that we would not have to pay to prop up the eurozone. The new clause proposes that the poor old Chancellor of the Exchequer, who has quite enough to do—for instance, he has a growth strategy to draw up, and his infrastructure Bill will be presented to us next week—must write a report on why a fund of which we are not part, and to which we do not contribute, has had an effect on the propping up the stability of the eurozone, which is a matter for the people—

Emma Reynolds rose—

Jacob Rees-Mogg: Of course I give way to the shadow Minister.

Emma Reynolds: I could not agree more with the hon. Gentleman. The Government need to cut through the dither, and the Chancellor needs to see to that as a matter of urgency. However, I do not really understand why the hon. Gentleman objects to the Treasury’s conducting an impact assessment of the operation of the European sustainability mechanism. He takes a great interest in European matters, and I find it surprising that he does not welcome further transparency and further scrutiny of such an important issue.

Jacob Rees-Mogg: The hon. Lady flatters me. I do indeed take an interest in the issue.

It is extremely important for the Government to be scrutinised on what they do in terms of European policy, but I do not think that we should scrutinise Her Majesty’s Government in relation to what the Germans or the French do, because that is a matter for them. We are outside this mechanism. The whole point is that a new mechanism is being set up to ensure that there is no liability for the UK taxpayer. What is the Chancellor supposed to say? Must he send a letter to Parliament saying “Something over which I have no authority, something to which we have made no contribution, something which is not actually British in any sense, has worked”, or has not worked? We can read that for ourselves in the Financial Times, or in other reputable newspapers.

We really do not need the Chancellor to be bogged down in more bureaucracy. There is a difference between scrutiny and bureaucracy. Scrutiny is about challenging Her Majesty’s Government to ensure that the Government’s decisions are in the best interests of the British people. These decisions—the European stability mechanism decisions—will not be Government decisions in any sense once the treaty is passed, and once this Act is enforced. They will be decisions over which we will have no control, and that is the whole point. We do not want to have any control, because we are not part of the eurozone, and most sane and sensible people hope that we never will be. It is our aim and ambition to be out of the eurozone.

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Mr Love: If we take the hon. Gentleman’s argument to its logical conclusion, we must assume that he is urging all Government Back Benchers not to call for countries that are in the eurozone to leave it.

Jacob Rees-Mogg: The hon. Gentleman is confusing two completely different things. One is placing an obligation on Her Majesty’s Government, and the other is expressing an opinion.

I might wish to give advice to the central bank of China. I might wish to say that it was about time that it cut its interest rates—which I think it should—and used its reserve requirements for the banks. It has been putting the rates up, and it is about time that they came down. I think that China needs a monetary boost. But are the Chinese Government listening, and have they the slightest interest in my opinion of their monetary policy? I very much doubt it. [Hon. Members: “Of course!”] Hon. Members flatter me again, but I fear that even the Chinese ambassador, most assiduous gentleman though he is, will not report the opinions of the House of Commons on China’s monetary policy. I fear that even if the Foreign Office, our most esteemed and distinguished Foreign Office, that Rolls-Royce Department—possibly a Rolls-Royce made rather more recently, in the 1970s, with a little bit of engine trouble and a little bit of oil leakage, but none the less with very fine leather inside and looking very nice—sent a message to China saying what its monetary policy should be, the Chinese would not take any notice, and the same applies to the new clause. This is not our business; it is a matter for the eurozone countries. We specifically excluded ourselves, and then the Opposition came up with this wonderful wheeze.

I suppose that that is admirable, in a way. The Opposition have to think something up. As Disraeli said, the job of the Opposition is to oppose. All the finest socialist brains in England were sitting around discussing how to amend a Bill consisting of a handful of clauses saying nothing much except that Her Majesty’s Government would be saved from further liability for the euro. “What shall we do? What bold step of policy shall we take? How shall we strive to convince our electors that there will be a new dawn, the new Jerusalem that the socialists are always looking for? We must ask the Chancellor of the Exchequer for a report that is so hard-hitting, forceful and solid that it constitutes a new policy.”

Mr MacShane rose—

Jacob Rees-Mogg: The right hon. Member for Rotherham (Mr MacShane) looks as if he wishes to intervene, and I will of course give way to him.

Mr MacShane: I assume that this will only be reported in Hansard, and will thus remain a state secret. The hon. Gentleman is pretty much making my speech for me.

That said, I think that the Chinese should listen to the hon. Gentleman. I think that the clatter of chopsticks in North East Somerset should be heard in Beijing when it comes to policy. It should also be noted that we do about £48 billion-worth of trade a year with the other EU member states, and what they do matters to us. The notion that if we do not sign the treaty the continent will be cut off has been a traditional approach throughout the ages of the Tory isolationists of whom he is the most wondrous representative in today’s House.

10 Sep 2012 : Column 80

Jacob Rees-Mogg: I am grateful to the right hon. Gentleman, but I must disappoint him. I support the treaty. For once when it comes to a European issue, I think that the Government have got it right, because what they are doing gets us out of the problem. That is the whole point. Once we have got ourselves out of the problem, how Europe deals with it and funds it is a matter for Europe. Yes, it is important that we trade with them, and yes, it is important for there to be stability within the eurozone—although I would prefer a new stability without a euro and with individual currencies, as I think that that would be a better and more prosperous stability—but a report by the Chancellor of the Exchequer to the House on the matter is not going to sell an extra widget to Belgium.

Andrew Bridgen: My hon. Friend is as eloquent as ever. Does he agree that, given the speed at which events unravel during the eurozone crisis, even if this were our business—which it is not—an annual report would be at best irrelevant?

Jacob Rees-Mogg: My hon. Friend’s intervention is incredibly helpful, because it has reminded me of the one important point that I wanted to make in this little speech against the new clauses. Absolutely the only risk posed to us by the treaty is that it will not lead to repeal of the regulation setting up the EFSM, and that we will remain liable or another article 122 bail-out fund will come through. That is the only risk left to us, and if such a situation were to arise, the House would want to scrutinise it immediately, rather than wait for some pedestrian report to be delivered.

These new clauses are glorious in their way—glorious in their irrelevance and in their failing to appreciate what the whole point of the treaty is. They are a delightful effort to make sure that there is some debate, and they have given me an opportunity to speak when I had, for once, intended to be silent in a European debate. Because of their rank irrelevance, I could do nothing but speak out against them. I have every confidence that Her Majesty’s Government, with a careful operation by the Whips Office, will ensure that they are firmly defeated.

7 pm

Geraint Davies: The hon. Member for North East Somerset (Jacob Rees-Mogg) has just given us a diatribe in support of laissez-faire economics and casting Britain adrift, and the idea that whatever happens in terms of the ESM will not have any impact on British trade and jobs, which it clearly will.

Like you, Mr Benton, I am a member of the Council of Europe, and we both take very seriously the issue of Europe and our economic, political and social relationships with it. The Welsh Affairs Committee recently visited Brussels to talk to Commissioners, MEPs and others about the prospects for Europe. As we all know, the big debate there, as here, is to do with the challenge of finding the right balance between encouraging growth and making cuts in order to get us back on track. There are very different views in Europe—as there are, of course, across the Committee—about the need to get growth on track, rather than to crush it through excessive austerity measures. The setting up of the ESM will be critical, as will the terms of reference and the details of how it operates.

10 Sep 2012 : Column 81

As to the ESM providing targeted support for Greece and others, the latest debate in Europe is about the interest rate to be applied and the period over which it will be repaid. Those are the two crucial issues for Greece, alongside the question of where the money will be targeted. Instead of being directed towards paying down existing debt, if the money were targeted on solar forests in Greece to provide energy to sell to Europe, on a railway network that supported a more effective tourist industry or on providing universal broadband for Greece to link up to the world, that would provide tools for growth rather than a hammer to hit across the heads of the worst-affected Greek people.

The way in which the ESM operates, its terms of reference, how it impacts on ailing countries and their sovereign debt and its relationship with our country all have major implications for our national interest. I am amazed that those on the other side of the debate—they say they are eurosceptics, but perhaps they should be members of the UK Independence party—deny that there are any implications for our national and economic interests and the jobs of local people in having these proposed reports, and in ensuring they are not merely produced annually, but updated more often.

There is a big difference between what happened in the 1930s, when France, one of the possible locomotives of growth, did not take the opportunity to provide it and instead allowed soaring unemployment in Germany—the rest is history—and what happened in 2008, when we faced a potential depression and Obama and Brown put in place a fiscal stimulus to keep growth going. Recently, we been facing the prospect of a new winter of austerity, but people have at last woken up, and it has now been recognised that the ESM and the fiscal stimulus are about getting Europe back on track, and thereby also securing our own positive future and destiny.

I therefore make no apology for supporting these two modest new clauses, and I hope they will enjoy support across the Committee.

Mr Lidington: New clause 1 would require the Government to report annually to Parliament on the impact of the ESM on the UK economy. As the Committee will no doubt be aware by now, the Chancellor already reports regularly to Parliament on Britain’s economic performance through the Budget and the autumn statement. In addition, the Government regularly publish details on our financial relationships with the International Monetary Fund and the European Union and on our bilateral loan to Ireland. As my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) so brilliantly pointed out, placing an additional reporting burden on the UK Government in respect of information that will largely be in the public domain has no apparent gains and serves no purpose.

The other new clause proposes that the Government report on the impact of the ESM on the economic performance of the EU. I hope that Members would agree that it would not be appropriate for the UK to produce reports on the economic policy and performance of our European neighbours. I can guess what the reaction would be in this place if we were to hear about a debate in the Bundestag or the Greek Parliament about the economic policy of the UK; I can envisage the angry points of order, the protests to Mr Speaker, the early-day motions and the requests to invoke Standing Order No. 20.

10 Sep 2012 : Column 82

The new clause is not needed. The Chancellor has regularly updated the House throughout this crisis, including on developments in the euro-area assistance programmes and on negotiations over the ESM. Furthermore, the Opposition have overlooked the fact that the Commission already annually produces a report on the borrowing and lending activities of the EU, including under the different financial assistance mechanisms. The Government, under the normal scrutiny system, produce an explanatory memorandum for Parliament that summarises the report. That is sent to the European Scrutiny Committee, which, as with any such memorandum, has the option to refer the report for debate. It is also within the remit of the Treasury Committee to launch an inquiry into it, or for the Backbench Business Committee to schedule a debate.

These new clauses would create an unnecessary and burdensome obligation, with no clear benefit. As my hon. Friend the Member for Cheltenham (Martin Horwood) said, they would merely serve to tie up civil service resources in order to report on a mechanism that the UK is not even a part of, and has no intention whatever of joining.

An analogy with the Schengen agreement can be drawn. We are not a part of that, and the Government do not publish an annual report on it to Parliament. Of course, however, Home Office and Justice Ministers will answer questions and hold themselves to account if there are any important developments in that agreement that affect this country. In the event of there being any justice and home affairs measures into which the UK Government might choose to opt, the normal scrutiny system would apply, with the possibility of debates being held either in the ESC or on the Floor of the House.

The Bill is concerned only with approval of the decision amending article 136 of the treaty on the functioning of the European Union, and not with the ESM. These new clauses are therefore wide of the mark. In fact, the only reason I can conceive of as to why Parliament might wish to accept such a reporting requirement is if we were planning to be part of the ESM, which, of course, would in turn mean we were planning to be part of the euro. The logic of the Opposition new clauses is that they still have in mind that prospect for this country.

Of course, as we know, the weasel words have already been employed. In this Bill’s Second Reading a week ago, the shadow Foreign Secretary, the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), was challenged as to the prospect of the UK entering the euro, and he said there was no immediate prospect of that happening. We know, too, that when the Leader of the Opposition was pressed on this same matter, he said that whether or not the United Kingdom were to join the euro would be a matter of how long he were to remain as Prime Minister.

Not only did we hear from my hon. Friend the Member for North East Somerset a clear and devastating exposition of why the Opposition new clauses are completely otiose, but we can see in the Opposition’s decision to bring such new clauses before the Committee this evening some hint of the policy yearning which dare not speak its name: they still cherish that lingering dream of taking this country into the euro one day. The Committee should have nothing whatever to do with these new clauses, and we should reject them.

10 Sep 2012 : Column 83

Emma Reynolds: I remind the Minister for Europe that it was our Government who did not take this country into the euro, and that is a matter of fact, not opinion. I also remind him that as the shadow Foreign Secretary and I set out on Second Reading, and as I set out earlier today, we are in favour of the European stability mechanism precisely because it will be a bail-out fund operated by the eurozone for the eurozone and, crucially, financed by the eurozone.

Both new clauses introduce a requirement for the Government in the first instance to assess annually the ESM’s impact on the British economy and, in the second instance, to assess the impact on it of loans made by the ESM. I was disappointed and surprised to learn that the hon. Member for North East Somerset (Jacob Rees-Mogg) does not share our desire for additional scrutiny of European matters. We look forward to his future speeches on Chinese monetary policy. He should not underestimate himself—I am sure there is a member of the Chinese Communist party listening carefully to what he is saying, even if they do not take the advice he is proffering.

The Opposition believe that it is incredibly important that the impact on our economy of the European stability mechanism be assessed, and that both new clauses would add to the scrutiny by this House, the other place and the greater public. For that reason, I would like to divide the Committee on new clause 1.

Question put, That the clause be read a Second time.

The Committee divided:

Ayes 179, Noes 265.

Division No. 60]

[7.12 pm


Abbott, Ms Diane

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Ashworth, Jonathan

Bailey, Mr Adrian

Bain, Mr William

Banks, Gordon

Barron, rh Mr Kevin

Beckett, rh Margaret

Begg, Dame Anne

Berger, Luciana

Betts, Mr Clive

Blears, rh Hazel

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Campbell, Mr Alan

Caton, Martin

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Connarty, Michael

Cooper, Rosie

Crausby, Mr David

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Sir Tony

Dakin, Nic

Danczuk, Simon

David, Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobson, rh Frank

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dugher, Michael

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Fovargue, Yvonne

Francis, Dr Hywel

Gardiner, Barry

Glass, Pat

Glindon, Mrs Mary

Goggins, rh Paul

Griffith, Nia

Gwynne, Andrew

Hamilton, Mr David

Hanson, rh Mr David

Harris, Mr Tom

Havard, Mr Dai

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hosie, Stewart

Howarth, rh Mr George

Irranca-Davies, Huw

Jamieson, Cathy

Jarvis, Dan

Johnson, Diana

Jones, Helen

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lloyd, Tony

Llwyd, rh Mr Elfyn

Long, Naomi

Love, Mr Andrew

Lucas, Ian

MacShane, rh Mr Denis

Mactaggart, Fiona

Mahmood, Mr Khalid

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCann, Mr Michael

McCarthy, Kerry

McDonagh, Siobhain

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meale, Sir Alan

Mearns, Ian

Michael, rh Alun

Miliband, rh David

Miller, Andrew

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Munn, Meg

Murphy, rh Paul

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Seabeck, Alison

Sharma, Mr Virendra

Shuker, Gavin

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Nick

Spellar, rh Mr John

Straw, rh Mr Jack

Stuart, Ms Gisela

Tami, Mark

Thomas, Mr Gareth

Timms, rh Stephen

Turner, Karl

Twigg, Derek

Twigg, Stephen

Vaz, rh Keith

Vaz, Valerie

Watson, Mr Tom

Watts, Mr Dave

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williams, Hywel

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Wood, Mike

Tellers for the Ayes:

Susan Elan Jones and

Graham Jones


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Andrew, Stuart

Bacon, Mr Richard

Baker, Norman

Baker, Steve

Baldwin, Harriett

Barclay, Stephen

Barker, Gregory

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Bellingham, Mr Henry

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Boles, Nick

Bone, Mr Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Browne, Mr Jeremy

Bruce, Fiona

Buckland, Mr Robert

Burley, Mr Aidan

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, Paul

Burt, Alistair

Burt, Lorely

Byles, Dan

Cable, rh Vince

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Chishti, Rehman

Clappison, Mr James

Clark, rh Greg

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, David T. C.


Davies, Glyn

Davis, rh Mr David

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Doyle-Price, Jackie

Duddridge, James

Duncan, rh Mr Alan

Ellis, Michael

Ellwood, Mr Tobias

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Farron, Tim

Featherstone, Lynne

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freeman, George

Fuller, Richard

Gale, Sir Roger

Garnier, Sir Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Graham, Richard

Grant, Mrs Helen

Gray, Mr James

Greening, rh Justine

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, Stephen

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harris, Rebecca

Hart, Simon

Hayes, Mr John

Heath, Mr David

Hemming, John

Henderson, Gordon

Hendry, Charles

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Hopkins, Kris

Horwood, Martin

Howell, John

Hughes, rh Simon

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Jones, Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Latham, Pauline

Leadsom, Andrea

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Brandon

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lidington, rh Mr David

Lilley, rh Mr Peter

Lloyd, Stephen

Luff, Peter

Lumley, Karen

Macleod, Mary

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McPartland, Stephen

Menzies, Mark

Metcalfe, Stephen

Miller, Maria

Mills, Nigel

Mitchell, rh Mr Andrew

Mordaunt, Penny

Morris, Anne Marie

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Munt, Tessa

Murray, Sheryll

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Paice, rh Sir James

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penning, Mike

Penrose, John

Percy, Andrew

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pugh, John

Raab, Mr Dominic

Randall, rh Mr John

Redwood, rh Mr John

Rees-Mogg, Jacob

Reid, Mr Alan

Robathan, rh Mr Andrew

Robertson, Mr Laurence

Rogerson, Dan

Rudd, Amber

Russell, Sir Bob

Rutley, David

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Simmonds, Mark

Skidmore, Chris

Smith, Miss Chloe

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Stride, Mel

Stuart, Mr Graham

Stunell, Andrew

Sturdy, Julian

Swayne, rh Mr Desmond

Swinson, Jo

Swire, rh Mr Hugo

Syms, Mr Robert

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Walker, Mr Robin

Wallace, Mr Ben

Ward, Mr David

Watkinson, Angela

Webb, Steve

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Mark Hunter and

Joseph Johnson

Question accordingly negatived.