Overseas Countries and Territories

The Committee consisted of the following Members:

Chair: Mr Christopher Chope 

† Barwell, Gavin (Croydon Central) (Con) 

† Elliott, Julie (Sunderland Central) (Lab) 

† Gapes, Mike (Ilford South) (Lab/Co-op) 

Hepburn, Mr Stephen (Jarrow) (Lab) 

† Hilling, Julie (Bolton West) (Lab) 

† Horwood, Martin (Cheltenham) (LD) 

† Kirby, Simon (Brighton, Kemptown) (Con) 

† Kwarteng, Kwasi (Spelthorne) (Con) 

† Morris, James (Halesowen and Rowley Regis) (Con) 

† Rees-Mogg, Jacob (North East Somerset) (Con) 

Shannon, Jim (Strangford) (DUP) 

† Simmonds, Mark (Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs)  

† Thomas, Mr Gareth (Harrow West) (Lab/Co-op) 

Anna Dickson, John-Paul Flaherty, Committee Clerks

† attended the Committee

European Committee B 

Wednesday 23 October 2013  

[Mr Christopher Chope in the Chair] 

Overseas Countries and Territories

2.30 pm 

The Chair:  Does a member of the European Scrutiny Committee wish to make a statement? 

Jacob Rees-Mogg (North East Somerset) (Con):  On a point of order, Mr Chope. Regarding the timing of the sitting, it has been brought to the Government’s attention before that scheduling sittings on a Wednesday at 2.30 pm clashes with the European Scrutiny Committee’s weekly meeting. As these sittings always include two representatives of that Committee, that presents particular problems. I hope that the Government will reconsider their timetable. 

The Chair:  The hon. Gentleman raises an important point of order. In so far as I have any influence on those matters, I urge strongly that the usual channels negotiate a time for them that does not clash with the regular meetings of the European Scrutiny Committee. 

Jacob Rees-Mogg:  Thank you, Mr Chope. If I may, I shall make an opening statement, as it might be helpful to the Committee if I explain the background to the document and why the European Scrutiny Committee recommended it for debate. 

Non-European countries and territories of Denmark, France, the Netherlands and the United Kingdom are as associated with the EU via articles 198 to 204 of the treaty on the functioning of the European Union. Those territories, listed in annex 2 to the treaty, include Greenland, Polynesia, the Netherlands Antilles, the Cayman Islands and the Falkland Islands. To make matters clear, Gibraltar and the sovereign base area in Cyprus are European territories; the treaty applies to Gibraltar, but not to the sovereign base area. Bermuda is outside the scope of the association. Those that are covered are known as the overseas countries and territories, or OCTs. 

The treaty on the functioning of the European Union contains the basic provisions of that association, but the detailed rules and procedures are laid down by the Council, by way of a Council decision. The basic aim of each overseas association decision is to promote the OCTs’ economic and social development and to establish close economic relations between them and the EU as a whole. That is achieved through co-operation, grants from the European development fund, loans from the European Investment Bank and technical assistance. The decision includes provisions on economic co-operation, trade, human and social development, regional co-operation and cultural development. The current overseas association decision is due to expire on 31 December 2013. This draft Council decision is a successor to link in with the next EDF. 

In early 2008, the precursor Commission Green Paper was debated in a European Committee. That launched a consultation process as the first step in preparing the new overseas association decision. In 2010, a follow-up

Commission communication was debated in a European Committee, which provided an overview of the public consultation outcome and set out the Commission’s standpoint on the essential elements for that new decision. 

The draft decision was deposited just over a year ago. From the outset, the Committee had in mind the need for that to be debated before adoption. At that time, the Government noted that the main themes in the Commission’s proposal as set out in the draft Council decision were consistent with the Government’s June 2012 White Paper, “The Overseas Territories: Security, Success and Sustainability”. Other aspects, however, needed clarification and negotiation. The Minister noted that the proposal was broader in scope than previous Council decisions: 

“We are looking carefully at the proposal to ensure both that it falls properly within the scope of Article 203 and to examine whether any of its provisions might engage the UK’s opt in under Protocol 21.” 

The Government set out their view and concerns in the two Committee reports that form part of the debate pack. No doubt the Minister will explain them in detail. 

For its part, the Committee felt that with the new decision on the point of being submitted to the Council for adoption, the time had come to give interested Members the opportunity to question the Minister and debate this important Council decision so as to explore fully its implications for the UK and her overseas territories. 

The Chair:  I call the Minister to make the opening statement. 

2.34 pm 

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds):  I am pleased to be serving under your chairmanship, Mr Chope. I thank my hon. Friend for his clear introductory remarks. I note the point he made on the timing of the sitting. I will ensure that it is fed back into the system through the usual channels. 

My hon. Friend set out clearly the history of this particularly important issue. I shall try to update the Committee on where we have got to since the Committee last had an opportunity to discuss those important decisions made by the European Union. 

It is right that the EU, like the UK, should value and support the special relationship with the overseas territories. Most inhabitants of the UK territories are British citizens and therefore European citizens. I also welcome the EU’s move to a partnership approach to engage with the territories’ sustainable development. That is comfortably in line with the vision and strategy that the UK Government set out in the overseas territories White Paper of June 2012, to which my hon. Friend correctly referred. 

I want to use this opportunity to touch briefly on the relationship between the territories and the UK Government. As set out in the 2012 White Paper, the Government are as ambitious for the territories as we are for the United Kingdom. We want communities to flourish in partnership with strong and sustainable local economies. We and the territories Governments share significant challenges: building diverse economies, cutting public sector deficits, regulating financial services

businesses effectively, and protecting biodiversity and natural resources. We have a broad responsibility to support them and to ensure their security and good governance. 

The economic success of many territories is a tribute to the endurance and ingenuity of their people. The UK is determined to support successful economic development, including through strengthened economic planning, management of public finances and the promotion of free trade. Overseas territories Governments continue to explore the options for developing economic resilience. Doing that in the context of a robust economic plan ensures that the feasibility and impact of development options are fully assessed and understood. The exploration of technology, geology and the richness of the environment all provide opportunities for development, as do, importantly, improving trading links. 

We want greater engagement between the UK and the territories, and I am pleased that today’s European debate offers an opportunity further to boost the profile of the territories in the House. We want to see stronger political links between the territories and the UK. Since 1999, the elected leaders of the territories and UK Ministers have met in an annual consultative council. We strengthened that to a joint ministerial council with a clear mandate to review and implement the strategy set out in the 2012 White Paper. 

I welcome parliamentary engagement with territories leaders and encourage Members to meet those leaders during the joint ministerial council in late November. The relationship between the EU and the overseas territories is critical to building economic resilience, increasing trade and investment, and protecting trade rights and preference. Our objective throughout the negotiation of the decision has been to ensure that the EU continues to contribute to the well-being of overseas territories, recognises their vulnerabilities, acknowledges their uniqueness, and respects their constitutional relationships and that between the UK and each individual territory. 

The UK Government recognise a fundamental responsibility and objective to ensure the security and good governance of the territories and their peoples. Our territories, and those of other countries, face particular challenges, such as geographical isolation, small communities and a narrow economic base. In some cases they face hostility from their nearest neighbours. They are also guardians of some of the most unique biodiversity in the world. 

The decision recognises the challenges, but also looks to the opportunities for the territories. The trade advantages from the previous decision are maintained and improved by the inclusion of more flexible rules of origin and by offering most favourable treatment to territory citizens and companies wishing to trade in services in the EU. That was not a feature of the previous decision and it is most welcome. 

The fragility of the territories’ environment is explicitly recognised, including their vulnerability to the effects of climate change, as is their dependence on imports for most essential commodities, including energy. The decision foresees co-operation among territories, member states, the EU and other countries to address those issues. Not least, the decision recognises the significant role that the territories can play in contributing to the EU’s commitments under the multilateral environmental agreements. 

The decision also sets out the criteria for development assistance, although the territorial allocations have yet to be decided. The territories that do not qualify for individual allocations of development aid because of their GDP per capita or other factors will still be able to benefit from regional funds. They will all be entitled to apply for other EU funding streams, including the education and young people’s mobility funds such as Erasmus and da Vinci. 

I would also like to highlight the decision’s commitment to focusing on developing capacity in the territories in the fields of human resources and skills, the diversification of economic sectors, developing small and medium enterprises, and promoting a business climate that is conducive to inward investment. Those key facets were highlighted in our White Paper, “The Overseas Territories: Security, Success and Sustainability”, as priorities for our relationship with the territories. 

A couple of particular concerns were raised when the Committee met previously to discuss those matters, which I shall quickly address. On financial services, there is an implicit recognition of the commitments our territories have made to aligning with the recognised international standards on tax and transparency, anti-bribery and banking supervision. Our territories can be proud that they lead many other jurisdictions in that field. 

What are the obligations on the territories? They are, of course, obliged to follow the rules on trade and to account transparently for the spending of EU funds. They are also asked to make the association with the EU known among civil society, although that is not obligation. I am pleased to say that our territories play a strong role in the EU’s overseas countries and territories association, and they have broadly welcomed the decision. I am also pleased that Bermuda has agreed to join the decision from 2014. 

Finally, I would like to say something about competence. The decision does not extend the EU’s competence and does not confer extra powers on the Commission. In fact, the final decision reduces the number of areas in which the Commission can act unilaterally compared with the original proposal, and it does not replace the constitutional relationship that member states have with their territories. For those reasons, I commend the decision to the Committee. I look forward to Members’ comments and questions. 

The Chair:  We now have until half-past 3 for questions, which should be brief. 

Mr Gareth Thomas (Harrow West) (Lab/Co-op):  The draft decision will be implemented through financial assistance provided by the EDF and through the trade benefits that are implicit in the deal. Will the Minister set out the provisional allocations that will be available to our overseas territories in the next EDF, which will come into force on 1 January? 

Mark Simmonds:  The decisions have not yet been made about the specific allocations for the funding from the requisite funding streams. It is too early to do that. The hon. Gentleman will be aware that a complex formula details the mechanism by which funds are deployed. It may be helpful if I outline the state of

affairs of the allocations in the current financial year that have been made under EDF 10. The indicative allocations to the UK overseas territories are as follows: the Falkland Islands receives €4.13 million; Anguilla, €11.7 million; the Turks and Caicos Islands, €11.85 million; Montserrat, €15.66 million; St Helena and linked islands, €16.63 million; and Pitcairn, €2.4 million. In addition, €40 million has been allocated to the regional strands of the EDF and €15 million to humanitarian support and disaster relief, should that be necessary. 

Mr Thomas:  I am grateful to the Minister for his response. I have already had sight of the EDF allocations to our overseas territories for 2008 to 2013. I am a little surprised that he cannot give us an indication at least of the provisional allocations to the overseas territories from 1 January. Will he say, either later in the debate or after the sitting, what has been provisionally allocated? I accept the point about the final decision, but we ought to know at least the provisional allocations. 

Mark Simmonds:  The Commission has said that programme guidelines for the overseas territories for EDF 11 will be changed to make accessing funds easier for our overseas territories—an extremely positive development. Final decisions about specific allocation to territories from the EDF decision will not be made until December. However, I can provide the hon. Gentleman with the total amounts available under EDF 11: €364.5 million to finance territorial and regional programmes—an increase of €26 million over the Commission’s original provisions; €229.5 million will be allocated for territorial programmes; €100 million for regional co-operation and integration programmes, and a non-allocated reserve of €21.5 million. 

Martin Horwood (Cheltenham) (LD):  It is a pleasure to serve under your chairmanship, Mr Chope. I am sure overseeing the scrutiny of European legislation decision making is one of the roles to which you were born. 

I want to ask the Government about the timing of this Committee and the scrutiny in good time of European legislation and decision making. Will the Minister confirm the date of the final decision? 

Mark Simmonds:  I want first to put on record an apology to the Committee for the oversight in not updating it in the timely fashion that was hoped for. It was an oversight. We have made sure that all aspects of the Foreign and Commonwealth Office are now aware of the importance and necessity of updating the European Committees. Work is continuing in my Department to improve the scrutiny performance and to ensure that consistently prompt and high quality explanatory memorandums are in place. We significantly value the Committee’s role. I hope that, from here on in, the Committee will approve the recommendation that I hope to move later in this sitting. It will then go to a Council meeting, probably in November, and ultimately will be approved by the Commission. 

Martin Horwood:  I am grateful for that reply. I am sure there might be some comment on that later in the sitting. 

I also want to ask about a comment in the Government’s position paper that said that they were, 

“concerned that the proposal that the Member State”— 

in other words the UK or other member states— 

“responsible for a Territory would be liable for any loss incurred to the EU Budget as a result of that Territory making an error in issuing certificates for the trade of goods”. 

Quite rightly, the Government made the point that this reduced any incentive whatsoever for the territory itself to try to follow the rules accurately or appropriately. Can the Minister update us on what progress was made in putting that point across? 

Mark Simmonds:  I am grateful for that question. My hon. Friend goes to the heart of one of the challenges that the UK Government found in negotiating this particular issue. We have removed completely from this decision any mention of individual states taking responsibility in terms of trade certification for their overseas territories. That is very positive, for exactly the reason that my hon. Friend highlighted. It would potentially remove the responsibility in-territory to make sure that they put in place the necessary trade certification requirements before they were involved in exporting the goods. 

Mike Gapes (Ilford South) (Lab/Co-op):  I have three questions for the Minister. The first relates to the great big pack of documentation that we have before us. Within it, there is a reference, on page 273, to the Turks and Caicos Islands, which is clearly out of date, because elections have been held in TCI since this was drafted. Will the Minister confirm that any decision we take today will in no way preclude updating any consequences which might flow from this?

The second question is related to that. I have visited a number of overseas territories, including, in September, Greenland with the NATO Parliamentary Assembly. It is quite clear from this document that they are in very different states. There is a reference on page 277 to the French territory of Mayotte in the Indian ocean. Although it is now an overseas department of France, it will become an outermost region of the EU from 2014 onwards.

Could the Minister clarify what an outermost region of the EU is in this context and what the implications are for British overseas territories? Does it mean that British overseas territories will be treated in a less friendly and supportive manner than outermost regions of the European Union? Does it mean that we might need to reconsider our own relationships with regard to our overseas territories to make sure that they do not lose out from the provision of European Union funding? 

That raises another issue, which I do not think is for the Committee, about the whole status of overseas territories, their representation, and the fact that they are not represented, unlike the French territories, in their national Parliament. The Minister encouraged us to engage with the overseas territories. In my former role as Chair of the Foreign Affairs Committee, I did so, and I still do. But they are frustrated about the lack of direct representation. They often write to the Foreign Affairs Committee on that basis. Finally— 

The Chair:  Order. I will ask the Minister to answer those two questions and then the hon. Gentleman can come back with another one. 

Mark Simmonds:  Thank you, Mr Chope. To address the hon. Gentleman’s point about the document and pages 273 and 277 in particular, that is an historic EU document; it is dated 12 July 2012 and has been superseded by subsequent documents that have updated matters. I know that he takes a particular interest in overseas territories. If I may remind the Committee, it was under his chairmanship that the Foreign Affairs Committee did a fantastic job in ensuring that some of the allegations that are now being worked upon were brought to light. The UK therefore had to take back control of the governance of the Turks and Caicos Islands. I am delighted that, last year, the islands returned to democratic accountability. 

The hon. Gentleman was absolutely right on his second point about the different relationships that exist between overseas territories, both within the ambit of the United Kingdom and other international relationships. He will be aware, both from his experience chairing the Foreign Affairs Committee and his ongoing interest in overseas territories, that each overseas territory has a different relationship with the United Kingdom. Each constitution is slightly different. Some are inhabited. Some are uninhabited. None of what we are talking about today applies to either Gibraltar or the uninhabited territories. Therefore the same difference applies to many of those territories that have a relationship with France or Holland or Denmark. 

I do not wish to bore the Committee, Mr Chope, but if it would be easier, I would be happy to write to the hon. Gentleman. Otherwise, I could talk to him about the differences that exist between the French overseas territories. I can assure the Committee that officials and Ministers, including myself, have tried to ensure that the decision we are discussing today is an advancement to the benefit of the UK’s overseas territories in their relationship with the European Union. It is an advancement in terms of the trade mechanisms that we talked about and in allowing overseas territories enhanced preferential access to the EU market. That is access to services as well as simpler access to funds coming from the European Union because of the complexity that existed in some of the funding bidding procedures and also the lack of capacity in some of these small island states. 

Finally, I have heard the hon. Gentleman and others make this point about direct representation of the overseas territories in the UK Parliament, but I have yet to hear anybody in an overseas territory demand that at either a political or a civil society level. I suspect that is because they value their independence. They do not want to have to adhere to all the facets of the UK legislature and certainly would not want to have to abide by all the directives that come out of the European Union. 

Mike Gapes:  I shall not delay the Committee, but I have one other question, which relates to the Falkland Islands. The Minister referred to some countries in difficult regions with difficult neighbours. For the purposes of these decisions, does the European Union accept collectively the view of the British and Falkland Islands

Governments concerning the latter’s territorial waters and the possible exploration and fishing rights within those waters? 

Mark Simmonds:  The decision that we are discussing has no implications whatever for the sovereignty or otherwise of the relationship between the Falkland Islands and the United Kingdom or between the Falkland Islands and the European Union. The UK Government, I think with cross-party support, are clear that the future of the Falkland Islands will be decided by the Falkland islanders themselves. Argentina’s attempt to strangle the Falkland Islands economy and damage our important bilateral relationship will not succeed. 

The economic relationship between the UK and Argentina is important, contributing to the prosperity and growth of both countries. The UK is a major direct investor in Argentina, which continues to enjoy a surplus in its bilateral trade with us. I would argue that it is not in Argentina’s economic interest to put up barriers to trade or to impede the oil exploration and hopefully, ultimately, the oil production that will take place in Falklands territorial waters. 

Jacob Rees-Mogg:  I wonder whether the Minister could comment on protocol 21, to which the European Scrutiny Committee drew attention at an earlier stage, and the Government’s view that it is not engaged by this process. Will the Minister explain what it would do and why the Government think it is not engaged? 

Mark Simmonds:  It might be helpful if I set out where protocol 21 fits into the overall architecture of the EU. The particular decision that we are discussing is governed by part four—articles 198 to 204—of the treaty on the functioning of the European Union. That part delineates the relationship of association with overseas territories for the UK, and also for the Danish, Dutch and French. The detail of the relationship is laid down by the Council under article 187 and the overseas association decisions have been adopted since 1964. Obviously, the UK was not a member in 1964, so our overseas territories were added when we joined the European Union. 

The Government have carefully considered the successor to EDF 10 as it relates to EDF 11. We have carefully considered whether the Justice and Home Affairs opt-in applied to the mode 4 provisions in the decision. We concluded that to assert the opt-in would deprive the territories of the benefits of the mode 4 provisions by restricting territory citizens’ freedom to establish trade in services. We did not believe that it was feasible and felt that it would create a discrimination against EU citizens. One of our main focuses relating to the decision was simplifying matters, not complicating them. 

Jacob Rees-Mogg:  I thank the Minister for that answer. I would like to ask some questions on the policy implications listed in the explanatory memorandum. Point 14 on page 441 says: 

“The Proposal covers a number of areas relating to trade. The Territories will no longer benefit from preferential arrangements under the General System of Preferences”— 

but they will— 

“retain duty free and quota free access to the EU”. 

What is the difference between retaining duty free and quota free access and not benefiting from preferential arrangements? 

Mark Simmonds:  The former is a greater liberalisation than the latter. Particularly in the service sector, it allows trade from overseas territories to take place within the European Union: it allows businesses from the overseas territories in the service industry sector to set up offices in the European Union, which was not the case under the previous decision. It also allows the rules of origin to be slightly looser than they were before: as long as some part of the process takes place in an overseas territory, free access into the European Union market will be allowed. The rules of origin are necessary to establish whether a particular import originates in a preferential partner country, so as to prevent goods from other countries from being routed via a preferential partner country to attract preferential duty rates. 

In synopsis, the conclusion and the strategy set out in the decision that we are discussing today give overseas territories greater access to the European Union single market than before. 

Jacob Rees-Mogg:  Two questions arise from that. First, on setting up service businesses, some people from overseas territories are full citizens of the United Kingdom. Do they not have rights as such, just as an ordinary British subject living here would? The Falkland islanders, for example, are given full British passports. How does the decision differentiate between the full British passport of someone living here and that of a Falklands Islander? 

Secondly, on duty-free trade, page 427 of the documentation lists the exports of fish from the Falkland Islands. Those are subject both to common external tariff duties and to duties under the General System of Preferences, which run to €11 million on a total trade of €108 million. It therefore seems as if trade in fish with the Falkland Islands is not very free. Fish is their major export. 

Mark Simmonds:  I will come to the specific points on fish in a moment. I will give another example of where there could be a significant positive impact from greater access to the European Union market for overseas territories, namely tourism. Many of our overseas territories, particularly in the Caribbean, are heavily reliant on tourism for their economic base. To give the service industries that support such tourism free access to the market will be extremely helpful. 

In the past, it is fair to say, the overseas territories have not always taken advantage of some of the preferential treatment to which they have been entitled to the extent that they could have done. As such, one issue I want the joint ministerial council at the end of November to focus on is making sure that territory leaders understand the ability to access the EU market that they now have. To that end, I am inviting somebody from the European Union to come and discuss with our territory leaders exactly what access they have. 

The overseas territories decision is an economically integrated agreement. As such, it improves access to the European Union. The implications for the fishing industry are just as they would be for tourism and for other service industries. 

Jacob Rees-Mogg:  If I may, I shall follow up on that. Is it the case, then, that the document that lists the tariffs on fish from the Falklands—as I say, it is page 427 of the total pack of documentation—is an historical document and there will not be tariffs on fish post this agreement? 

Mark Simmonds:  If my hon. Friend will bear with me, I am waiting for inspiration, particularly about the issue of fish and the Falkland Islands. While I am waiting, it might help if I set out one of the important elements of the preferential origin rules, which is cumulation. That allows inputs from other preference partners to be used while still maintaining the eligibility for preference of the exported product. In that case, the OCT countries can import from other OCT countries, economic partnership agreement countries or the EU for processing and still benefit from preferential EU access. I suspect that the answer is found in that: if they are processing fish, they will have greater access than before. 

Mr Thomas:  The hon. Member for North East Somerset makes an important point, because the documents suggest that this deal represents a significant improvement on rules of origin for the Falkland islanders in particular. It would be useful to hear the basis for that assertion. 

I gently draw the Minister’s attention back to the funding allocations to our overseas territories under the EDF. I never had to use this tactic, but I am told that the classic way for a Minister to answer a question to which they do not know the answer is to provide lots of information that is close to, but not, the answer. I gently suggest to the Minister that that is what he did in response to my first two questions, in which I asked for sight of the provisional allocations that will be made under the EDF for our overseas territories. I had responsibility for EDF negotiations for a period under the previous Government, so I am aware that our officials in the Department for International Development will have had sight of those allocations by now. I appreciate that the Minister does not represent DFID and may not have access to that information today, but will he commit to write to members of the Committee with that information? 

Mark Simmonds:  May I address the hon. Gentleman’s first point, which relates to the important progress on access for territories to the EU market? The rules of origin will be loosened, as I outlined already, and access to the EU will be improved for the services sector, which could be a significant step change in the ability of the overseas territories to access a large single market. 

I have not had sight of the specific territory allocation to which the hon. Gentleman keeps referring. I remember that when our positions were reversed—when he was in government and I was the Opposition spokesman—he was always courteous and helpful to me, as I will be to him. If we can provide that additional information about draft specific allocation to him and the Committee, I will be happy to do that. My understanding is, however, that we have not seen the provisional allocations and the Commission will inform us of those in December, as I said earlier. 

To answer the point made by my hon. Friend the Member for North East Somerset on the relationship for those citizens living in overseas territories, they do not have the right to live and reside in the UK, even

though many of them are UK passport holders, but they have the right to work temporarily, which is why the mode 4 provisions are so important. 

Mr Thomas:  I am grateful to the Minister for his assurance that if he does have access to the provisional allocations through other Departments, he will provide those to us. It would be surprising for the Government to have agreed the terms of the decision and the EDF without knowing whether the Falkland Islands, St Helena and so on have got, if not a higher budget, at least a matched budget. Nevertheless, I welcome his assurance. 

The Minister will be aware that a problem often faced by overseas territories is in the programming of that money: their ability to spend the money allocated to them under the EDF. In paragraph 13 of the Government’s original explanatory memorandum in August 2012, they noted the difficulties and said that the Commission had committed to making the implementation arrangements simpler. It would be useful to hear what progress has been made in those discussions. 

Mark Simmonds:  I am not sure that the hon. Gentleman’s recollection of his time in ministerial office is in this instance entirely accurate. The decision is about putting in place the architecture that will enable overseas territories—both those related to the UK and other European countries—to access the various funding streams available. I think it would be the wrong way round to have the specificity of the allocations agreed before the architecture is agreed by the respective EU states. However, I stand by what I said earlier, that I will provide him with the information as and when we have sight of it. 

There is something I can provide him with, though I will not bother reading it out today. I am happy to provide the hon. Gentleman and other members of the Committee with the allocation that goes from the Department for International Development currently to our overseas territories. That may go some way to assuage and assist the hon. Gentleman. 

The hon. Gentleman is absolutely right on capacity building. A key focus of my relationship with the UK overseas territories—as it was for my predecessor—is trying to provide them with support for governance and building capacity to enable them to diversify their economic base and upskill and train their civil service, through what was called the Jubilee programme. One focus of the decision today is that the EU is alive to that particular challenge. The EU accepts that many territories find it difficult to access other EU funding streams because of their limited resources—a point I made earlier—and their relatively small size. From his time as a Minister at the Department for International Development dealing with small island states, the hon. Gentleman will clearly remember the real challenges that they face. 

Overseas territories should not rely on specific time scales for the disbursement of funds, and the strict criteria for disbursement need to be met. There also needs to be transparency to ensure that EU funds are spent wisely and for the purposes intended, in exactly the way as DFID UK taxpayers’ funds need to be transparent. The Commission has said clearly that the programming guidelines for the overseas territories for EDF11 will be changed to make accessing the funds simpler, so that overseas territories can combine to

access some of the regional funds rather than individually having to bid where they perhaps lack the capacity to do so. 

Mr Thomas:  It would be surprising if the Minister, or other Ministers, has not at least sought an assurance from the Directorate-General for Development or whoever is dealing with the EDF that the allocation for the Falkland Islands, for example, will at least be similar to that allocated for the previous EDF. I do think it would be surprising if we have not had at least that type of discussion. 

I wanted to address the point made by the hon. Member for Cheltenham and the concern that the Commission appears to have had about the ability of some of the overseas countries and territories to ensure that the correct procedures for completing trade certificates were fulfilled. As the hon. Gentleman rightly said, the Government have pushed back on the Commission. The Commission must clearly have had some concerns about some overseas territories and their capacity in this area. Can the Minister assure us that the Commission did not have any concerns about British overseas territories’ ability to fulfil their obligations under the trade parts of the agreement? 

Mark Simmonds:  I can give the hon. Gentleman that assurance. I am not aware of the EU raising any specific problems related to a UK overseas territory, but the UK Government were determined to ensure that the UK was not responsible for the trade certification that my hon. Friend the Member for Cheltenham raised earlier. That is a positive development because it will incentivise—and the UK Government will certainly help if it is necessary and if requested—building capacity in territories and making sure that they do not fall foul of the trade certification that will be required. 

Mr Thomas:  I am grateful for that reply. Sticking with the trade issues, the Minister will be aware that the proposed decision goes further than the previous decision in terms of the trade in services. It would oblige the UK to offer overseas countries and territories the best terms that have been offered in any trade agreement. The Minister makes it clear in his updated note to the Committee that they are comfortable with that in the context of our overseas territories. But have the Government considered whether this has implications for future EU trade agreements in services: for example, with the African, Caribbean or Pacific countries, where there have been extensive trade agreements negotiated, many of them considering services? 

Mark Simmonds:  To be absolutely clear about the point the hon. Gentleman has just made about improvements in trade in services, under this new decision we offer service suppliers from the overseas territories the best commitments on market access that there are under any trade agreement. In effect, this means that service suppliers from the overseas territories can be physically present in Europe to run or establish their businesses. This does not breach the Government’s declared approach not to go beyond the WTA general agreement on trade in services. 

As for the hon. Gentleman’s second point, I remember he and I discussing this in some detail five or six years ago. He is well aware of the complexity of some international trade agreements and arrangements, not just in terms of WTO trade agreements but also the economic partnership arrangements, many of which have still not been finalised between the European Union and different regions both in the Caribbean and parts of Africa. However, I can give him an assurance that this is something that both I and my colleagues in DFID and other parts of the Government—just as he did when he was in government—are pushing, to ensure that they are concluded. This would be to the benefit both of the United Kingdom and of many parts of Africa and the Caribbean. 

However, the hon. Gentleman will be well aware of some of the nervousness that exists and some of the arguments for protectionism and protecting infant industry that go alongside this. I strongly believe that free trade is an essential part of economic development and growth, poverty alleviation, sustainable job creation and all the other important things that we believe in. I do not believe that what we are discussing—and hopefully agreeing—today has any detrimental impact on any of the other trade discussions that are taking place, particularly relating to developing countries. 

Mr Thomas  rose—  

The Chair:  One more question. 

Mr Thomas:  I have two more. 

The Chair:  It is open to me and my discretion to allow another half hour for questions beyond 3.30. It looks as though it may be necessary to do that. In that context, I invite the shadow spokesman to ask a couple more questions. 

Mr Thomas:  I am grateful to you, Mr Chope. When the European Parliament was consulted about this decision, it set out a series of suggested amendments. At first glance, some appear to be quite helpful. For example, there was a suggestion that the text of the decision might include reference to tourism and the need to support overseas countries and territories exploiting the potential of heritage sites. One thinks of St Helena and the way it was used to keep a particularly tricksy Frenchman under control. To what extent has the Minister looked at the European Parliament’s suggestions about that issue, and perhaps about impact assessments of trade deals with third parties on overseas countries and territories? This is perhaps a point linked to the concern of the hon. Member for North East Somerset about fish exports from the Falklands. 

In what will seem like gobbledegook to many, the European Parliament suggested that the institutionalised technical dialogue needed strengthening. We were instinctively suspicious of such jargon, but it seems to be a discussion between overseas territories, senior staff responsible for spending EDF money following the implementation of the decision and the relevant EU officials overseeing the spending of EDF funds in overseas countries and territories. At first glance, that looks like a sensible suggestion, so what assessment did the Minister and his officials make of the suggestions by the European Parliament, in particular the ones that I have highlighted? 

Mark Simmonds:  I want to reiterate that, while trade access in the ways that we have discussed is an important part of this decision, the overseas association decision is not a free-trade agreement. It is an economic integration agreement. Free-trade agreements are governed by other mechanisms. 

The hon. Gentleman is right to highlight the importance of tourism as a key component of not only the economic sustainability, but also the economic growth of many of our overseas territories. The example he provided was St Helena and he is aware of the significant UK taxpayer contribution towards building the airport. More than £200 million was provided for construction and for the wider support mechanisms, such as design, that were necessary to ensure that the airport gets built. We hope that that will enable St Helena to access additional levels of economic activity, possibly including tourism. 

I confirm that we have looked carefully at the European Parliament proposals, some of which have been agreed. For example, we will work closely with Members of the European Parliament, in particular as members of UNESCO, when there are specific elements in the territories where we can take up the suggestions made by the hon. Gentleman and the European Parliament. 

The hon. Gentleman asked again about fish exports and I will write to him, my hon. Friend the Member for North East Somerset, to whom I apologise for failing to answer his specific question, and the Committee with details relating to fish and the Falkland Islands. 

Mr Thomas:  This is my last question. All hon. Members are aware of the debates that are taking place in the House about the possibility of Britain voting to leave the European Union. The period in which the Government want that vote to take place is halfway through the period of the next EDF. What discussions has the Minister had with the overseas territories and officials in the European Union about what would happen to the EDF funding and the trade benefits that overseas countries and territories enjoy through our membership of the European Union should the British people vote to leave the European Union in 2017, as many Conservative Members hope? 

Mark Simmonds:  I am slightly surprised that the hon. Gentleman raised that issue, in particular given that his party is not currently willing to give the British people a say on the future of the European Union. I strongly believe that the British people should be given a say in what sort of relationship they want to have with the European Union and whether we stay in. 

The issues that the hon. Gentleman raises relate to the EDF, and the broader issues of the pros and cons of the United Kingdom’s trade relationship, and will be part of the debate that will take place in the run-up to what will hopefully be a referendum in 2017. The Committee needs no reminding that only a Conservative-majority Government will deliver an in/out referendum for the British people. 

Jacob Rees-Mogg:  I have one specific point and a final question about the Minister’s answer on the citizenship of people in the overseas territories. As I remember, the British Nationality Act 1981 removed their right to reside in the United Kingdom. However, an exception

was made for the people of the Falklands, who had full British citizenship restored to them after the events of 1982. Will the Minister tell the Committee whether they do have full rights, and whether they are also—although they probably do not want to be, as I do not—citizens of the European Union? 

My final question is about the text, and relates to compliance with international standards in financial services. In the initial explanatory memorandum the Government said that the territories should 

“have the resources and expertise in place to apply and enforce them.” 

How realistic is that for territories that are particularly small? Are the Government completely satisfied that the European Union will not interfere in taxation and financial services? The Prime Minister recently said that all our overseas territories are now compliant with the highest international standards, and it is therefore not suitable for the European Union to be interfering in those areas. 

Mark Simmonds:  If my hon. Friend allows, I will deal with his questions in reverse order. He is right to highlight the importance of financial services to some of our overseas services, particularly those in the Caribbean. He is also right to highlight the importance of the overseas territories’ response to the Prime Minister’s G8 agenda of tax, trade and transparency. Without exception, the overseas territories that have strong financial services sectors responded positively and expeditiously to the requests that were made. They did that in terms not only of joining the growing international consensus about the free flow of information for tax purposes, the multi-taxation framework, but of agreeing to put in place action plans for the consolidation of beneficial ownership—in other words, who really owns companies—and to put that information into a central register to enable tax authorities to ensure that the appropriate tax is being paid in the appropriate jurisdiction. We all know what happens when that is not in place. In my view, the overseas territories responded extremely positively to the requests by the Prime Minister. 

However, we should be under no illusions. The UK territories that have financial services are well regulated anyway. When I visited Bermuda I asked people in the insurance and reinsurance industry why they are based in Bermuda, not the United Kingdom. They responded that Bermuda is a better and more consistently regulated jurisdiction than the United Kingdom for the reinsurance market. There are other reasons as well. 

My hon. Friend was right to highlight that there has been recognition in the European Union, after lobbying by us, of the importance of the financial services sector to many of our overseas territories. Therefore, the obligation that was in one of the earlier drafts of the decision for overseas territories to compulsorily align their financial services, regulations and laws with those of the European Union has been removed. It was negotiated away successfully by the UK Government. We continue to encourage our overseas territories with a financial services sector to meet the highest standards of international regulation, and they continue to do so. 

The EU and the overseas territories have a shared agenda in ensuring that all jurisdictions continue to meet all international standards on tax co-operation,

financial sector regulation and combating financial crime in particular. I can reassure my hon. Friend that this is not just particular to overseas territories: there is also a significant push from countries in the developing world to try to ensure that their financial services sector, particularly the banking sector, is not used to launder money or finance terrorism. Indeed, I attended a conference in south-west Africa recently to make sure that the UK was helping to ensure that capacity was in place to enable that to happen. 

My hon. Friend’s first question was about the relationship of overseas territories citizens. To reiterate the point that I made earlier, overseas territories citizens do not have the right to live and reside in the UK, hence the mode 4 provisions. The British Overseas Territories Act 2002 restricted full British citizenship for overseas territory citizens, which I think applies to the Falkland Islands as well. If it does not, I will correct the record and write to my hon. Friend. 

Mike Gapes:  May I take the Minister back to his answer to my hon. Friend the Member for Harrow West? The Minister said earlier—he is quite right—that the overseas territories have a big interest in the European Union’s trade relationships. Given that there is an intention from at least part of the Government to hold a referendum, why would the Government-supported Bill not allow citizens of the overseas territories to have a vote in that referendum? 

Mark Simmonds:  Citizens of the overseas territories are not allowed to vote in general elections in the United Kingdom. They are not represented in the UK Parliament. It is the inverse of no taxation without representation. It is no representation without taxation, and it is one of the anxieties that overseas territories Governments and citizens have about being represented in this House. I do not think there is a question of citizens living in the overseas territories having a say in any future EU referendum. Certainly, I would very much hope that citizens of the United Kingdom would be able to have their say at an appropriate time after the next election as to what sort of relationship they want to have with the European Union. 

Martin Horwood:  To return to the issue of financial services, the Minister partly answered what I wanted to ask about when he responded to the hon. Member for North East Somerset, although my question is almost the flipside of his. The relationship between EU regulation and, I suppose, potential regulation and UK law, the overseas territories laws and emerging international agreements on financial services is obviously complicated. The Minister is right that territories like Anguilla, the Cayman Islands and the British Virgin Islands clearly derive quite a lot of income from international financial services. I was a little puzzled that page 272 in annex 10 of the EU documents states that the British Government are responsible for offshore finance in all these territories. I will not press the Minister on this immediately because it may just be a drafting thing, but I would be interested to learn how far the UK’s responsibilities go in this respect and whether this is really a matter for the overseas association agreement or something to do with the relationship between the UK and the European Union. 

My substantial question relates to the statements in the Government’s documents which suggest that they were trying to argue the Commission away from the phrase “convergence with EU law” on financial services and towards regulatory alignment. I can understand why “convergence with EU law” might set off alarm bells among the Eurosceptic tendency in the Conservative party, but it should not do. Convergence does not mean forcing the application of EU law. This is in itself does not mean that EU law is becoming any more acquisitive in the area of financial services. I am interested in why the British Government thought it was important to have not convergence, but just regulatory alignment. In the context of the emerging G8 and wider agenda on international financial transparency on things such as beneficial ownership, it implies a looser relationship, raising the worry that we are perhaps trying to protect loopholes or a different kind of regulatory regime in the overseas territories, which runs counter to the emerging international agenda. The British Government have said that they are very much in favour of the international movement towards greater transparency and accountability, and the European Union should be too. Can the Minister reassure me and the Committee that we are not arguing for any loopholes that might, one day, in small but perhaps significant ways, help to undermine that agenda? 

Mark Simmonds:  The first thing to say is that the regulation of the financial services sector for overseas territories is ultimately a matter for the jurisdiction of individual territories. It is not controlled by the UK Treasury. Secondly, overseas territories want appropriate regulation and not overly burdensome regulation. The two are not the same thing. 

The focus of the Prime Minister’s tax, trade and transparency agenda for the G8, particularly as it related to tax and transparency, was to ensure that the appropriate amount of taxation is paid in the appropriate jurisdiction. Part of that involves greater transparency, particularly in the formal exchange of information between different tax jurisdictions, with which our overseas territories have engaged willingly and quickly. We must also ensure that there is a central register of beneficial ownership. Debate and consultation are taking place about whether central registers should be public or private—held within jurisdiction for access by tax authorities and Governments. 

I can assure the hon. Member for Cheltenham that there is absolutely no intention to protect loopholes or to find mechanisms to hide funding in some of our overseas territories. We must de-conflate two issues that have got mixed up. The first is ensuring that financial services sectors, whether in overseas territories, in the United Kingdom or elsewhere in the world, are properly and appropriately regulated, which they need to be. The second is that there is nothing wrong with competitive tax jurisdictions. Some people like to conflate those two issues—indeed, the hon. Gentleman might—but I think they need to be separated out. There is nothing wrong with tax competitiveness. Indeed, in some instances there is quite a lot of evidence that it drives economic growth and development. 

As the hon. Gentleman points out, what has been agreed is convergence with international standards. There is no resistance to that from the overseas territories, but it is not the same as European Union law, and that is an important distinction to make. 

Mr Thomas:  Let me bring the Minister back to the answer he gave to my previous question. I thought he gave a very sweet summary of Lynton Crosby’s lines on the European Union (Referendum) Bill, and I hope that the Whip will pass back his appreciation of the Minister’s fluency to the high command. 

Nevertheless, let us assume for one second—this was the point of my question—that the Prime Minister has his way, a referendum takes place in 2017 on whether Britain should stay in the EU, but those making the Eurosceptic case persuade the British people to vote to leave. Have any discussions begun with overseas territories about the possible loss of EDF funding and their beneficiary trade deals with other European countries? If not, why not? 

Mark Simmonds:  As the hon. Gentleman will know, talking about hypothetical situations that are years away is dangerous, and asking questions based on assumptions, however real they may or may not be, is not necessarily a good use of time. He will be well aware that the Government have put in place a thorough review of the balance of competences that exists between the European Union and the UK Government. That work is ongoing. As part of that review of the relationship between the EU and the UK, the benefits and liabilities will be balanced up to enable the United Kingdom to have an informed debate when the correct time comes—I hope, in 2017—about the relationship that the UK needs with the European Union. 

The hon. Gentleman will not be surprised to hear that when I talk to leaders of overseas territories they sometimes ask me about the relationship that the UK wants to have with the European Union. The response that I give to them is the one I will give to him: ultimately, it is up to the British people to decide. However, I assure him that whatever the British people decide once they are given an opportunity, as I hope they will be, to voice their opinion on the EU—whether we are in or out of the European Union—the United Kingdom will support the overseas territories, as set out in the 2012 White Paper. That is what the overseas territories want from the United Kingdom: a continuing, positive developmental relationship. 

Mr Thomas:  Will the Minister confirm that he expects the Government to be able to give an assurance to the overseas territories that, were the British people to vote to leave the European Union in the referendum that the Prime Minister wants to happen, if his party were in power the British Government would make up the lost income from the last three years of the 11th EDF? How would the Government replicate the trade benefits that the overseas countries and territories currently enjoy? 

Mark Simmonds:  I am not sure what that has to do with the decision we are discussing. The hon. Gentleman is stretching the envelope as far as he can. He will not be surprised to hear that I am not going to answer that

hypothetical question. The point I would make to him is that if we were to make the decision to leave the EU, which is a matter for the British people, clearly the money that currently goes from DFID through the multilateral developmental mechanisms to the European Union would not do so. That would give opportunities for Ministers to decide where that money should be allocated. It may be the case that that decision will be made in the future, but that is not a matter for today’s debate. 

Martin Horwood:  I have an interesting question to follow on from that discussion, although it is not the one I originally planned to ask. Since the overseas territories are not members of the EU, would it automatically follow that the arrangements would not stand if Britain itself left the EU? That is an interesting constitutional point. The Minister may not be able to answer it straight away, but I am interested to hear his answer. 

The question I planned to ask follows up on the Minister’s reply to me earlier about financial services. I support the idea that the register of beneficial ownership should eventually emerge and become public; that would bring all the resources of good investigative journalism, concerned private citizens and civil society organisations to the aid of tax authorities, criminal investigation authorities and others. I think that would be a good thing. However, will the Minister clarify what he means when he says that the overseas territories would be encouraged through this agreement to aim for convergence with international standards? If, for instance, those international standards included the publication of registers of beneficial owners of companies in jurisdictions, would we expect the British overseas territories to comply with that standard of public registration of beneficial ownership? 

The Chair:  Order. Even with the most liberal interpretation of the ambit of this discussion, the hon. Gentleman’s first question is outside it. I invite the Minister to answer the second question. 

Mark Simmonds:  Thank you for your guidance, Mr Chope. The decision as to whether beneficial ownership registers should be made public is a matter of ongoing consultation. The response from our overseas territories has been extremely positive and they have engaged with this important agenda. There are, of course, issues to consider about making the central register public. It could cause problems in persuading people to invest in certain industries—defence is perhaps the most obvious example—even though it is necessary to have funds coming into those areas. Even in some of the more vociferous parts of the NGO community, if I can put it like that, there is an understanding that it is not a simply a matter of everything needing to be made public. 

As to the relationship between the EU and the overseas territories concerning international standards, I do not think there is any reluctance or resistance from the overseas territories to being highly and professionally regulated. If my hon. Friend the Member for Cheltenham had had the opportunity to meet the gentleman in charge of the financial services regulatory authority in the British Virgin Islands, as I have, he would have found an extremely impressive individual who wants to

ensure that the British Virgin Islands has the highest possible international reputation. He wants it to be seen as a well regulated jurisdiction in order to encourage, rather than inhibit or hinder, further investment. I do not see any mutual exclusivity. The importance of international standards being paid the highest regard is acknowledged in our overseas territories. 

The Chair:  There being no more questions, we now have the opportunity for debate for one hour and 14 minutes maximum. Does the Minister wish to make an opening statement? 

Mark Simmonds:  Do I get an opportunity, Mr Chope, to make a closing statement? 

The Chair:  Yes, you can make a closing statement as well, if you want to. 

3.47 pm 

Mark Simmonds:  I beg to move, 

That the Committee takes note of European Union Documents No. 12732/12 and Addenda 1 and 2, a draft Council Decision on the association of the overseas countries and territories with the European Union; notes the progress that the UK has achieved against its key negotiating priorities in Council negotiations; and further notes the trade advantages and access to European Union funds that the Decision provides. 

I will make two or three key points in opening the debate. The first is that we see this as a very significant step change in the positive relationship between the UK overseas territories and the EU. The decision we are discussing today is firmly in line with our own strategic framework as set out in the White Paper of June 2012. It supports the aspiration and ambition of the UK overseas territories in diversifying their economies, ensuring that sustainable jobs are created, building governance capacity, allowing them to access funds from the EU and protecting their significant biodiversity and important environments. 

We have discussed at some length the benefits to trade of both the loosening of the rules of origin and access to service agreements. If used properly and fully, those things could make a major positive contribution to the overseas territories diversifying and developing their economic base. I hope that the Committee will respond positively to the decision that we have been discussing. I will welcome hon. Members’ further comments as we enter the debate. 

3.49 pm 

Mr Thomas:  I rise to support the draft Council decision on the association of the overseas countries and territories with the European Union, albeit that I have some continuing concerns and one or two further questions. 

As has been mentioned, the relationship of overseas territories with the EU is governed by articles 198 to 204 of the treaty on the functioning of the European Union. A special procedure requires unanimity in the Council and European Parliament consultation. As the Minister mentioned, this draft Council decision updates an earlier overseas association decision, which comes to an end at the end of this year. That is at the same time

that the 10th European development fund comes to an end, so the draft Council decision will come into force at the same time as the 11th European development fund, which will last from 2014 to 2020. 

With that decision, and the associated funding from the EDF, our overseas territories will continue to benefit from quota and duty-free access to European markets, preferential rates of origin and financial assistance. Clearly, securing agreement for a replacement regulation and the many benefits that come with that is critical for the people of our overseas territories. I commend the Minister for the work that has been done so far and the positive spirit that has endured in discussions with both the European Parliament and other member states. 

As the Minister said, and as our questions highlighted, the devil is always in the detail of a regulation’s implementation. I therefore commend any efforts that he has made through the Foreign Office, and indeed the efforts of Ministers and officials in the Department for International Development, to help our overseas territories maximise the benefit that they can get from both the trade provisions and financial assistance on offer from the 11th EDF. 

It is worth touching on our overseas territories and giving the Committee a flavour of the importance of this decision and the associated financial assistance decision in the context of the 11th EDF. The Pitcairn Islands are probably our smallest overseas territory, home to just 50 people now. They clearly depend partly on assistance that DFID continues to provide, but they also depend on assistance provided by the European Union via the EDF. I understand that the Pitcairn Islands once earned a significant income from the sale of commemorative stamps, but that has dwindled, making the EU’s assistance all the more significant. As the Minister said, some €2.4 million was made available to the Pitcairn Islands through the last EDF. I hope that he will eventually be able to assure us that at least a similar amount has been achieved in discussions with the European Union on the 11th EDF, which will have increased significantly in size from its 10th iteration. 

Montserrat is somewhat bigger, with almost 6,000 residents, some of whom, I am told, are descended from prisoners exiled to the Caribbean island by none other than Oliver Cromwell. Some Members will be aware that a huge volcanic eruption took place in 1995, which continues to leave just over half the island uninhabitable, and volcanic activity is ongoing. Unsurprisingly, the economic challenges facing the people of Montserrat are significant. They too will have appreciated the almost €16 million that EDF 10 provided to them as a consequence of the previous decision. 

Mike Gapes:  I have several constituents who had to flee Montserrat owing to those circumstances. I have found over the years that, because of the environment they had been in, many of them have found it hard to adjust to living here. Through the debate, I hope we can raise the fact that that matter is ongoing for those who were made homeless and destitute and are still unable to return to their homes because part of the island is still not secure for habitation. Plymouth, the capital, was completely wiped out. 

Mr Thomas:  I had the opportunity to visit Montserrat when I had responsibility under the previous Government for our aid to the overseas territories. The scale of the devastation on the south of the island is quite shocking when one sees it, so my hon. Friend’s point about the trauma experienced by many of those who felt that they needed to leave Montserrat to come to the UK is well made. 

The Falkland Islands, with all its history, has just under 3,000 people. It has benefited in particular from the trade advantages of being linked to the EU. The hon. Member for North East Somerset made a particular point of addressing the trade advantages in terms of the fish that is exported. The Falkland Islands received just over €4 million from the last EDF. I hope that the Minister can give us an assurance that the Falkland islanders have not suffered a cut in EDF funding. 

The last overseas territory that I shall highlight is St Helena, Ascension and Tristan da Cunha, which has a combined population of just under 8,000 people. St Helena housed Napoleon Bonaparte and Ascension Island continues to be strategically important. Together, those places benefited to the tune of some €16.6 million from EDF 10. Again, that was a direct consequence of the predecessor decision to the one we are debating today. 

In short, for Britain’s overseas territories, some of which face long, ongoing economic struggles and many of which face considerable environmental and social challenges, the funding and trade advantages that the decision will underline and allow to continue are hugely significant. 

The document that Ministers have provided offers a series of encouraging messages about support for a better legislative regime and technical assistance in the fields of, for example, human trafficking, dealing with child sexual abuse, terrorism and organised crime. I welcome that. Similarly, it offers further support for sustainable development and has a particularly welcome focus in part, this time, on the environment and dealing with climate change. Over time, it would be helpful to hear, either from the Minister direct or from DFID Ministers, how Britain’s overseas territories intend to put EDF 11 funding to use. 

One challenge that some of our overseas territories have faced is, to put it crudely, hanging on to their young people, so the proposal’s interest in facilitating an exchange of ideas for co-operation in relation to the accessibility of the islands to what many see as the parent body, support for young people and better education is welcome. 

Inevitably, the scale of service that we in the UK benefit from with our NHS would be extremely challenging to replicate for many of our overseas territories, many of which are so far away from the UK, so the proposal’s provision for exchanging ideas on how to improve health is also welcome. 

I recognise that the Minister wanted to engage in some party political badinage around the European Union (Referendum) Bill. I am only sorry that he was not prepared to address the substance of the question that I asked, because were withdrawal from the EU to take place, that would be hugely significant for the future of many of our overseas territories. 

I gently say to the Minister that I am sure he is not the complacent individual that he appeared to present himself as on this question, so I worry that little thinking appears to have been done in the Foreign and Commonwealth Office about the potential lack of stability for our overseas territories—the uncertainty that their Administrations would face as 2017 approached, should the Prime Minister have his way. 

Jacob Rees-Mogg:  I am extremely grateful to the hon. Gentleman for giving way on this interesting and important point. 

Two things occur to me. First, if we were to leave the EU we would have an additional £15 billion a year, a mere smidgen of which would allow the overseas territories to be paved in gold compared with what they receive from the rapacious elements of the EU. Secondly, looking through the details of where the overseas territories trade, almost none trade with European countries other than the United Kingdom. They trade with the United States and with their neighbours, but not with EU countries other than the UK, although there is one exception to that. 

Mr Thomas:  I hope that the hon. Gentleman will be present on 8 November, when I look forward to delving into some of those issues at greater length. There is potential uncertainty here and I continue to express my disappointment that the Minister has not addressed that question. I hope he will do so in his winding-up speech. The proposal is welcome and the official Opposition support its continued passage. 

4.1 pm 

Martin Horwood:  I should have welcomed the hon. Member for Harrow West to his shadow ministerial responsibilities. We are clearly going to spend many happy hours discussing European policy. 

This is a complex area. The status of the overseas territories is complicated, and there are exceptions and exemptions left, right and centre. I recommend to the Committee and to anyone reading Hansard the YouTube videos of CGP Grey, who attempts to explain the different statuses of the overseas territories. He suggests that the 12 gold stars on the European flag ought to be replaced with 12 asterisks to represent the exemptions and changes relating to all those different territories with different statuses. 

I support the European Council decision, although it is worth the Committee’s reflecting on whether the previous decision resulted in success in many of the things that it set out to achieve. On page 310 of our voluminous bundle—never let it be said that MPs do not work for their money—there is a pretty honest assessment of the success rate of the previous decision. According to paragraph 2.2: 

“The purpose and objectives of the OCT/EU association have not been fully achieved. OCTs continue to face economic and social problems and/or struggle to found their economies on a sustainable basis. They are confronted with a number of challenges related to their insular character, remoteness and rich, but vulnerable environments. For some OCTs, economic ties with the EU are of great importance, but in general OCT/EU trade tends to be one-sided, and with little diversification. For other OCTs, the economic ties between them and the EU remain underdeveloped.” 

The document makes this specific reference: 

“Micro-economies with structural weaknesses, a small production base, with exports concentrated in a few sectors”. 

It talks about the threat of “changes in trade patterns” to such economies. It would be interesting if the Minister referred to the implications of the coming free trade agreements for those quite vulnerable economies. The document mentions the 

“absence of industrial and trade policies” 

locally, and: 

“Limited capacity, expertise and infrastructure in trade and trade related areas”. 

Those are all areas of weakness, many of them generic to overseas territories. 

As the hon. Member for Harrow West pointed out, there are some specific issues for many of the territories, and certainly for the British territories. He mentioned the volcanic eruptions in Montserrat in 1995 and 1997, which have led to economic challenges that remain very much unresolved. There is still a challenge to put the economy of Montserrat back on a more sustainable basis. There are also biodiversity challenges in many of the overseas territories, including Montserrat, which is home to something called the giant ditch frog, which is rather confusingly known as the mountain chicken. I am assured that it is a frog , not a chicken, although that might give a sense of why it is endangered, as it is presumably quite tasty. I would not eat one of course, but it is a highly endangered species. Environmental organisations have highlighted the fact that the British overseas territories are a rich source of biodiversity and need to be protected, yet we are not necessarily succeeding in that in every respect. 

We have the financial services challenges, particularly in relation to Caribbean overseas territories, and the political challenge in places such as the Turks and Caicos Islands. I was interested to hear from the hon. Member for Ilford South that elections have taken place—I had not realised that—but I understand that there is still direct government of the Turks and Caicos Islands. I think we are still— 

Mark Simmonds  indicated dissent.  

Martin Horwood:  The Minister is shaking his head, which is reassuring, so perhaps more progress has been made than I had realised. However, the reasons behind that imposition of direct government underline some challenges that these very small economies and polities face. 

I welcome the broader scope of the decision, and its broadening out to include environmental issues, as well as such things as combating cross-border crime. The references to youth and education, culture and health, and so on, are all very well intentioned, but the proof of the decision will be in whether it achieves rather more than the previous one in delivering on economic development, environmental protection and many other issues that the various territories face. 

I still support the decision. Points were made at the outset about the timeliness of such matters coming before the Committee, and indeed before the European Scrutiny Committee. Although I was reassured by what the Minister said, we have raised the issue in forums such as this on many occasions, and the Government need to improve on things a little. 

There are also interesting details in some of the annexes to the documents, at least one of which should be added to the portfolio of strange EU facts held by the hon. Member for North East Somerset. There are repeated references to the Netherlands Antilles, but I thought I was up to date enough to know that the Netherlands Antilles had been abolished in 2010. [ Interruption. ] Well, they were, actually. They were replaced by two territories—Curaçao and Sint Maarten—and, I gather, by three special Dutch municipalities. On page 272, the revelation that 

“for EU law purposes the Netherlands Antilles still exist” 

is surely one of the more bizarre statements that we have ever had to consider in the House. I would be interested to know what happens if they start taking different decisions. 

With a few reservations about the detail and the timing, and the reality of the ambition behind the decision, I am happy to support it and to support the motion. 

4.8 pm 

Mike Gapes:  I wish to make two points, which are really questions to the Minister. The hon. Member for Cheltenham referred to biodiversity. Clearly, there are huge implications for climate change in many of our overseas territories, and rising sea levels could also have an impact. One of those, even though it is not really relevant to this discussion, is the British Indian Ocean Territory, where, of course, a marine sanctuary has been established, which has been used as an argument as to why the Chagossians cannot go back to their land, from which they were forcibly removed, shamefully, by a Labour Government. Successive Governments of all parties have continued not allowing them to return, which has caused serious concerns for many of us. 

My second point relates to territorial waters. I interpreted what the Minister said in his previous response to me on the Falkland Islands as meaning that nothing has changed as a result of the document before us. However, in the context of oil exploration or fishing around the Falkland Islands, are we certain that the European Union collectively and all other 27 member states will support the UK’s position in a dispute with Argentina about the status of those waters? We already know that the Argentinian Government have been trying to secure boycotts of vessels visiting various ports in Latin America, and have used the Organisation of American States and other forums for that purpose. Another issue is trade links and flights to the Falkland Islands. Will the Minister respond on the position of the European Union with regard to those matters, because it will be important in future?

Incidentally, if we were, as some Government Members wish, to leave the European Union in 2017, presumably support for the Falkland Islands would be significantly diminished in international forums, as we would no longer have European Union partners who would work with us, because they have overseas territories that might be affected and would feel some sense of solidarity. That is another factor to be considered, perhaps on 8 November. 

My final point relates to the question of Gibraltar, which has not featured in our debate, I assume because it is deemed to be a European territory, rather than an overseas territory. We define it as an overseas territory, but the European Union defines it as European. Indeed, the Gibraltarians can vote in the South West England constituency in the European Parliament. Does that mean they will also be able to vote in any referendum, should one be held in 2017, because my reading of the private Member’s Bill is that they will not? 

4.12 pm 

Jacob Rees-Mogg:  I follow my hon. Friend the Member for Cheltenham in welcoming the hon. Member for Harrow West to his post. I apologise for not doing so earlier. The hon. Gentleman’s predecessor, the hon. Member for Wolverhampton North East (Emma Reynolds), was extremely distinguished and my hon. Friend the Member for Cheltenham and I had regular debates with her. I look forward to continuing this happy tradition, although I probably will not agree with the hon. Member for Harrow West any more than I agreed with the hon. Lady. 

Following on from the hon. Gentleman’s speech about the founders of Montserrat, I wanted to mention that Pitcairn was entirely populated by the descendants of Fletcher Christian, who was one of the infamous mutineers on the Bounty and a notorious criminal. It is perhaps rather worrying that so many criminals went on to found our overseas territories. 

I shall make one point for the benefit of the hon. Member for Ilford South. In the 16th century, people in Calais had a vote and representation in the English Parliament, so there is a very good precedent—I am always looking for precedents if I can find them—for representation from the overseas territories. It was a matter of much interest and debate in the 18th century in relation to the United States—prior to its being the United States, of course; at that point it was a succession of colonies, but I would be ruled out of order if I went into too much detail. 

Mike Gapes:  We could mention the Louisiana Purchase. 

Jacob Rees-Mogg:  Indeed—we missed an opportunity there. I want to return to the point made about the trading of British overseas territories. I mentioned it in an intervention, but it is useful to put on the record what the situation is in the reports. Anguilla trades with north America, the Caribbean region, Sint Maarten and other Caribbean countries in CARICOM; the British Virgin Islands with the US Virgin Islands and the US; the Cayman Islands with the US; Montserrat with the US, the UK, Japan, TT—whoever TT may be—and PR, which I assume are not European countries— [ Interruption. ] Brilliant—it is Trinidad and Tobago, and PR might be Puerto Rico. The Turks and Caicos Islands trade with the US; the Falkland Islands has the UK, ES, which I take to be Spain, as the one exception, and CL, which could be Colombia or Chile. Again, that is not European. St Helena trades with the US; TZID with the UK, Japan and the Netherlands, so we have another exemption. However, trade is almost entirely UK trade-based if those islands trade with Europe. 

That is rather satisfactory, because as I am sure you noticed when you walked into Committee, Mr Chope, you walked past a statue of Joseph Chamberlain. Indeed, if you look through the stained glass window, it may just be possible to make out the top of his head. He was the great advocate of imperial preference, of us having arrangements with our imperial friends to ensure the greater strength of them and of our nation. Only 100 years on from that, a mere bagatelle in the history of this nation, when we speak under Alfred the Great, who was up to his great works in the ninth century, we should always ensure that we give the greatest priority to those people who are part of the greater United Kingdom nation, rather than to a narrow European fold.

I hope that the Government in their negotiations will attach enormous importance to our overseas territories. We know that they are our people. They are Her Majesty’s subjects. They deserve to be looked after and protected and have the best possible trading relations with us. Indeed, it distresses me that higher tariffs are put on our friends—our compatriots effectively—than on people from continental nations with whom we have a much less close relationship. So in supporting the Government, I hope they will think of Joseph Chamberlain, a great and distinguished figure who straddled the divide between Liberals and Unionists and who always put the British nation, in the broadest sense, first. 

4.16 pm 

Mark Simmonds:  I begin by thanking all hon. Members who have participated in the debate this afternoon. I am grateful for the support across parties for the contents of this European Union decision. I formally welcome and congratulate the hon. Member for Harrow West on his appointment to this significant and important role. He was correct to thank the Government and Government officials for their tireless work in ensuring that the UK position is protected and that the overseas territories’ position is protected and enhanced by this decision. 

Hon. Members made a series of important points about quota access, trade, financial services, citizenship and biodiversity. I should like to address some of the specific points that have been made in hon. Members’ concluding remarks. The hon. Member for Harrow West made specific references to several overseas territories. I should like to link them to a point made by my hon. Friend the Member for Cheltenham. He clearly and correctly asked about the success of the existing EDF structure. It is important that we do not start from a completely new position but are building and developing on a series of successful EDFs in the past. 

Pitcairn, for example, has used EDF towards a harbour and a road connecting both sides of the island. Pitcairn requires a significant amount of support even though the population is currently only 52 people. My hon. Friend the Member for North East Somerset was absolutely right to pinpoint their antecedents. There are significant challenges in trying to diversify the economy. 

Several hon. Members mentioned Montserrat and the significant challenges that it has faced for many years. Alongside UK Government funding, EDF funding has helped redevelop the island to a certain extent following the volcanic crisis. I want to make sure that the hon. Member for Ilford South recognises that the northern third of Montserrat is safe and open for business. Experts say that even if the volcano were to

erupt again, there would not be an impact on that area. He was right to make the point that Plymouth was completely overwhelmed by volcanic ash when the significant eruption happened. A new capital has been built, geothermal energy is being explored and the successors in DFID to the hon. Member for Harrow West are working very hard with Premier Meade and his Government to try to find ways to persuade investors to come to Montserrat, to make sure that the economy is sustainable. 

The hon. Member for Harrow West mentioned St Helena. I will not reiterate my earlier points in detail, but I will restate the importance of the work on the airport progressing on schedule and on budget. I can categorically inform the hon. Member for Cheltenham that full democracy was restored to the Turks and Caicos Islands in September last year. The Government there are making significant progress in developing the economy and ensuring that the public finances are put back into a semblance of sustainability, to enable the UK Government to get off the commitment we made to the debt that the TCI currently hold in the international markets.

On EU and overseas territories trade, representatives from the Commission will attend the joint ministerial council to talk directly with the leaders of overseas territories to help them to maximise trade opportunities, as well as ensuring that they plug in to some of the educational funding mechanisms—Erasmus and da Vinci—that I mentioned earlier. 

In answer to the hon. Gentleman’s point about the Montserrat mountain chicken—which is in fact a frog—a joint UK and Durrell Wildlife Conservation Trust project is ongoing to save the mountain chicken. I am delighted to inform the Committee that it has been successful, and we are starting to see a stabilisation in numbers. Let me reiterate the hon. Gentleman’s important point about the huge significance of the biodiversity and environment of our overseas territories. The UK plays an important role in supporting that, particularly through the Department for Environment, Food and Rural Affairs, and in trying to ensure that the overseas territories contribute to the EU’s commitments under the multilateral environmental agreements. Those commitments include a whole range of important areas: biodiversity, nature protection, climate change, management of chemicals and waste, impact assessments, access to information and public participation on maritime and river protection, and environmental liability. 

The hon. Member for Ilford South talked about the British Indian Ocean Territory. Although neither BIOT—because it is an uninhabited territory—nor Gibraltar are covered by the decision we are discussing, he might like to know that in a recent written ministerial statement I committed to conduct a further feasibility study about the return of the Chagossians to the British Indian Ocean Territory. There are clearly security and financial implications. I intend to announce the full scope of that study shortly, but I want to assure the hon. Gentleman that we are thoroughly engaged with the Chagossian community, which is located both here in the United Kingdom and in Mauritius. 

As for the hon. Gentleman’s point about Gibraltar, as I said, it is not a party to the decision we are discussing, but it will be able to vote in any referendum on our future relationship with the European Union. 

Martin Horwood:  I sat on the Bill Committee for the European Union (Referendum) Bill, and I would say that is not what is currently in the text. If that is to be the case, the Bill will need to be amended—and, as it is a private Member’s Bill, I am surprised to hear a Minister being quite so specific about it. 

Mark Simmonds:  I look forward to further debates about the European Union (Referendum) Bill, but, as I understand it, if the Bill becomes law, what I have outlined will be the case. The matter is a decision for Parliament. I will check and inform the Committee if what I have put on the record is factually incorrect.

On the point that the hon. Member for Ilford South made about the Falkland Islands, we unequivocally support the right of Falkland Islanders to develop their natural resources for their economic benefit. 

Britain’s links with the overseas territories are based on partnership, with mutual responsibilities and obligations. We very much value the partnerships with the overseas territories and I am delighted that the Committee welcome the fact that the EU is taking a similar approach to that of the UK, as set out in the White Paper. The relationship between the overseas territories, the EU and ourselves is continually developing. The overseas territories are diverse and reject micro-management, whether it is from the UK or the EU. 

I know that some of the remarks of the hon. Member for Harrow West were slightly tongue in cheek. As the new shadow Minister for Europe, would he like to put on record this afternoon confirmation that the Labour

party manifesto will not pledge to give British people the right to participate in a referendum? 

Mr Thomas:  Good try. 

Mark Simmonds:  The hon. Gentleman is not intervening to give us that clarity. I gently say to him that the Government of which he was a part had 13 years to put together a White Paper to demonstrate the importance that the UK Government attach to the overseas territories, but they did not do it. Within two years of coming to power, the coalition Government did that. That sends a strong message about the seriousness we attach to the UK’s relationship with the overseas territories. 

I assure the Committee that we will continue to support the overseas territories in their development and that nothing we have been talking about this afternoon, either in fact or in the process, affects our position on our sovereignty relationship with the overseas territories. Ultimately, we want a stable and prosperous future for the overseas territories, and getting the relationship with Europe right is an important part of securing that. 

Question put and agreed to.  

Resolved,  

That the Committee takes note of European Union Documents No. 12732/12 and Addenda 1 and 2, a draft Council Decision on the association of the overseas countries and territories with the European Union; notes the progress that the UK has achieved against its key negotiating priorities in Council negotiations; and further notes the trade advantages and access to European Union funds that the Decision provides. 

4.26 pm 

Committee rose.