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Lord Stoddart of Swindon: My Lords, will the noble Lord allow me to intervene? I too was engaged in the 1975 referendum and read what was put out by the then government. They supported our continued membership. One of the specific paragraphs stated that there was a danger that economic and monetary union would be imposed on this country which would cause a great deal of unemployment. The then government said that they had negotiated that out. Would the noble Lord like to comment?

Lord Wallace of Saltaire: My Lords, the noble Lord himself was a member of the Labour Party at the time and will be more familiar with the interstices of the Labour Party's different positions taken during the referendum debate. Economic and monetary union was already on the agenda in 1975. The question of how we built closer European union was clearly there. The British Government supported the establishment of the McDougall committee that year to discuss the idea of fiscal federalism within the European Community. Those issues were very clearly and publicly on the agenda.

The economic context has changed amazingly. Perhaps I may quote the noble Lord, Lord Stoddart. He talked about our great British industries now threatened by the Continent--by which I assume he means the Great Western rail works in Swindon. The world has changed rather a lot since the early 1960s. I drive a British-made car. It was made by Peugeot in the old Rootes works in Coventry. Alternatively, I could drive a Land Rover, now owned by Bayerische MotorWerk, of what the noble Lord, Lord Bruce of Donington, might care to call the heartland of Hitler and his henchmen. We accept that. Incidentally, the British defence industry now largely relies upon co-operative projects with foreign vehicle manufacturers for the procurement on which it now wishes to go to war. The idea that we are not already caught up in a process of economic and defence integration is clearly absurd.

In terms of integration I was even happier to read in the newspapers last week that my rail journey to the House of Lords in future will be organised by a French company that is about to buy Network South-Central. Those who are concerned about sovereignty might perhaps like to pay some attention to how much sovereignty Britain has effectively been giving away through the process of economic integration in which British companies have been taking over companies in other countries but in turn they have been expanding into Britain. That includes, I have to say to the noble Viscount, Lord Tonypandy, the City of London. Over the past few years I have worked as an academic with Morgan Grenfell. That means Deutschebank and it has involved my going to Frankfurt. We know that the future of the City of London relies very heavily on being a major European banking centre in which a larger and larger number of banks in the City of London will themselves be European or global operators.

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Many points have been mentioned during the course of the debate. Let me briefly summarise two or three more, and then pass on to the noble Baroness, Lady Blackstone. We are engaged, as the Minister said in opening, in a series of negotiations that will take place over the next 10 to 15 years. Enlargement will not happen tomorrow. The earliest we may begin to welcome the first new members will be 2001 to 2002. Time will already begin to shift the way the European Union operates. The common agricultural policy is already changing shape in the process of reform which follows the Uruguay round. The budgetary negotiations in 1999 will, as the Minister said, change the balance of the Community budget. It will take a further 10 years in transition periods for new members to come into the European Union. We are not therefore dealing with a static process. We are, however, dealing with a fundamental process in which we are attempting to build a new European order. That requires some very, very substantial shifts in British assumptions, as well as in the assumptions of our partners.

If the Government intend to push the idea of subsidiarity, they must at least recognise that subsidiarity is in itself a federal term. If we are to look for a Community that is doing less, but doing it better, we shall have to define rather more consistently what we want the Community to do. We shall perhaps even have to say to some of our largest private lobbies that the idea that the British should tell everyone else what to do about their zoos, their animal welfare and how they treat their animals in transit elsewhere in the Community is something for which one cannot consistently argue if at the same time we wish them not to tell us what to do in different ways.

In relation to the third pillar, there are a large number of issues on which the current Home Secretary and the Home Office are blocking useful and constructive approaches to further European co-operation in important areas which matter a great deal to Britain. I refer in particular to the European Convention, but there are others as well.

The question of a flexible Europe, a multi-tiered Europe, is, however, the most important. It would clearly be a disaster for Britain's long-term interests comparable to that which took place between 1956 and 1958 to allow Britain to be shut out of a core Europe. The issue is Britain's relations with Germany.

I regret very much that we did not make the same attempt at reconciliation with Germany in the 1950s as the French successfully made. I hope that the future British Government will begin again to make that reconciliation within a larger Europe in which Poland, the Czech Republic, Hungary and elsewhere will also become full partners. I look forward to discussing that with the Minister and others throughout the next 18 months and perhaps beyond.

10 p.m.

Baroness Blackstone: My Lords, I begin by congratulating the two maiden speakers on their excellent speeches. Let me say how much we on these Benches look forward to hearing from them again.

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This has been an interesting debate, though one, I am afraid, in which some of the speeches have had little to do with the IGC. They have been more of an ideological diatribe against our membership of the European Union. The noble Lord, Lord Elis-Thomas, wondered whether he was living in the same country as his neighbour the noble Viscount, Lord Tonypandy. In listening to some of the speeches, I wondered whether I live in the same century as some of those who made them.

The debate has also been revealing yet again, as the noble Lord, Lord Wallace of Saltaire, said, in exposing the divisions in the party opposite, divisions that we see daily manifested in the media. When the Tories lose a by-election with a swing of 22 per cent. against them, we hear on the radio Eurosceptic Members of Parliament from the Conservative side telling us that a tougher line on Europe would win them more votes, only to be contradicted by other Tory MPs claiming the reverse. The problem is that this Government have now lost the support of the British people. Their deep divisions on Europe serve only to reinforce the strong sense of a government in terminal decline now helped by the electorate.

The noble Lord, Lord Cockfield, wanted to address many of his remarks to the White Paper rather than to what the Minister had said. For exactly the same reasons, I shall do the same. The White Paper's approach to the IGC lacked not just any vision but any sense of direction. That was a view conveyed by the noble Lord, Lord Bridges, and others earlier in the debate. In fact, there is only one clearly positive proposal in the White Paper; namely, a proposal to incorporate the principle of animal welfare in the treaty. The Labour Party has no problems with that, though I suspect that it may be a cause of concern to Mr. Portillo--or perhaps I am being a little unfair. Has the Secretary of State for Defence decided to demonstrate his love for animals and make a concession on the extension of European powers on this matter?

But what about people? What about the 18 million unemployed in Europe? What about the many people in Britain who are in jobs but who live in fear of losing them? The Minister made it clear that the Government oppose any extension of Community competence over employment and, as we know, they will not give up their opt-out on the Social Chapter. Perhaps the Minister would like to comment on the fact that all our partners want an end to that opt-out and there are now growing signs that the major players in the European Union--the French and the Germans--will demand that the opt-out is terminated as a condition of remaining in the single market.

Perhaps I should make it clear that, if the Labour Party is elected, it will ratify the Social Chapter and in so doing bring the social protocol into the main text of the treaty. As the Minister indicated earlier, we favour the Swedish Government's approach of a new Title on employment. Unlike the Government, we believe in close collaboration with our European partners to try to achieve high employment rather than believing that we should merely compete with them. The fate of millions of jobless people in this country hangs on improved

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collaboration in both macro-economic policies and in such matters as infrastructure projects, which I can assure the noble Lord, Lord Elibank, do create jobs. Yet the Government believe that it is a matter on which they are not competent to act within a European framework. I can only say that what the Minister said earlier represents what seems to me to be a lack of understanding of the nature of the problem and even some indifference to the damage that it inflicts on the economy, on society and on individual members of society.

Not only does the Government's approach to the IGC lack vision, it also betrays a pathetic attempt to try to please both their Europhile and Europhobe wings at the same time. It ends up, as usually happens in those situations, by doing neither. The White Paper begins by declaring forthrightly that,

    "The European Union ... is more than a free trade area. [It is] the basis upon which we must consolidate democracy and prosperity across the whole of Europe".

Even general platitudes of that sort, with which any rational person ought to be able to agree, get the Government into trouble with sections of their Back Benches, evoking from the Member of Parliament for Southend the comment that it is "Foreign Office Euro-nonsense". The Government therefore try to get out of the mess they are in by sticking as close as they can to the status quo, hoping that by doing so they will offend the least possible number of people on their side.

But of course there would be no point in holding an IGC if all they are going to do is stick to the status quo. Moreover, all our partners in the European Union are clear that the IGC must agree a substantial number of changes, if only to allow for enlargement, which the Minister told us earlier the Government support. Indeed, as she clearly admitted, the European Union must adapt its structures to allow for enlargement, yet both the White Paper and some of what she said seem to evade the central issues.

Many speakers in the debate referred to QMV. Apparently the Government oppose any further extension of QMV and want to maintain unanimity in all those areas to which it currently applies. I say "apparently" because of the Prime Minister's equivocation--to which my noble friend Lord Richard referred--during the discussion on the Statement on the Turin Summit. Perhaps the Minister can clarify exactly what the Prime Minister meant.

As other speakers have said, no other European Union government support the UK Government's formal position. In response to the noble Lord, Lord Chalfont, most other governments recognise that without a substantial extension of QMV the decision-making of the European Union will seize up. Perhaps that is what some noble Lords on the Eurosceptic side of the debate want.

Unlike the Government, which will be isolated on the matter and therefore in danger of losing the argument where it counts, the Labour Party supports the extension of QMV to most areas of social, regional, industrial and environmental policy to which it does not already apply. There are also areas of the single market and various

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administrative and appointment procedures to which it can be extended. On the other hand, we oppose wide-scale extension to CFSP and JHA areas.

Again in response to the noble Lord, Lord Chalfont, is it not more likely that other members of the EU would make concessions to a British Government which are willing to see some extension of QMV rather than one which dig in their heels and refuse to embrace any change whatever? That was a point to which the noble and learned Lord, Lord Howe, referred in his speech.

The Minister referred to the re-weighting of votes. We support the Government in wishing to see their weighting in favour of large states. However, I am a little confused as to what the Government have in mind here. Although the issue was extensively discussed in the Reflection Group, I have not seen or heard any indication of exactly how votes would be re-weighted or what the threshold would be for the qualified majority. Again, perhaps the Minister can throw some light on that.

A number of speakers referred to the European Parliament. Some, including my noble friend Lord Stoddart, have demonstrated their dislike of it by totally opposing any extension of its powers. But, in emphasising the importance of national parliaments--I would certainly want to emphasise their importance--it is not necessary to reject any extension of European powers in certain areas. I agree with what my noble friend Lord Bruce of Donington said earlier. There should be a strengthening of the scrutiny role on which the Government are also insisting, though we are a little puzzled on this side of the House as to why the Government so far have done so little to respond to proposals from the Delegated Powers Scrutiny Committee for improvement.

There are some inaccurate and very unfair criticisms of the European Parliament made in the White Paper, and in particular the negative comments made about co-decision are inaccurate. Most objective commentators and most governments believe that they are working rather well. Perhaps I may make it clear that the Labour Party supports co-decision in all areas which are subject to QMV in the Council. We also believe it right that the European Parliament's power to require the Commission to initiate legislation should be extended. Surely, Members of your Lordships' House who want to see openness and democracy in the European Community, will regret the isolation of the UK Government on these questions.

Some speakers have made reference to foreign policy and European security. One of the silliest comments in the White Paper is that the co-ordination of foreign policy has progressed well. I believe that only someone on another planet without a view of earth, could make a remark like that after the debacle over the former Yugoslavia. I believe that the noble Lord, Lord Chalfont, rightly condemned decision-making failures in this regard.

I cannot believe that the Minister, who has a lot of experience in these matters, would want to endorse the White Paper's claim that,

    "decision-making has not been a major problem".

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Perhaps she will tell us later. It is not consistent with the Government's support for various changes to strengthen the CFSP and how it operates. While the Labour Party support the Government on the need for unanimity for major decisions in this area, surely there ought to be some flexibility on consequential decisions and greater use of the existing possibility of moving to QMV on joint actions.

As the Minister stated, NATO must remain the central force in European defence and on this we can agree with the Government. There should be no duplication and at present an EU competence on defence would only lead to duplication and consequential confusion. However, if, as the Government claim, European defence co-operation is desirable, closer working with the WEU is essential. Given that the Minister accepted that, as indeed we do, I wonder whether the Government's proposals for the development of the WEU are on the cautious side.

I turn now to the European Court of Justice on which the noble Lord, Lord Lester, focused, but which has featured in this debate rather less than I had anticipated. Once again, we see the Government trying to do the proverbial tightrope act. The Minister wants a strong, independent Court, yet the Government keep looking for ways for limiting its jurisdiction. For example, it wants member states to be liable only if there is a serious and manifest breach of their obligations.

I ask the Minister why any breach which is found to be unlawful should not lead to liability on the part of the member state? If governments fail to implement treaty obligations or directives which they have adopted, surely action should be taken. Since we are always complaining that we are so much more rigorous in the UK in implementing treaty obligations and directives than some of our partners, is it not in our interests to ensure that the Court of Justice has appropriate powers to deal with breaches, even minor breaches?

I cannot end without saying something about the legislative process. Let me start by saying that we support what the Minister and others have said about extending subsidiarity into the treaty although, like the noble Lords, Lord Bowness and Lord McNally, we would prefer to see reference to regional and local government as well as to national government.

However, we cannot agree that the European Court should be asked to give its views on the legal basis of legislation prior to its approval. That could seriously compromise its position later and misunderstands the need for separation of powers; nor do we think much of our sunset Government's odd proposals for sunset clauses. Except for those with an agreed time limit, such as emergency powers, no national legislature operates in the way proposed, so why should the European Union? It would seriously undermine the legitimacy of the law if everyone thought that it might expire in a few years' time.

In conclusion, as many others have said during the course of the debate, the Government's whole approach to the IGC is flawed. It is flawed because it reflects the problems of the Conservative Party rather than Britain's future in Europe. The Government's means of escape

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from the rift within the Tory Party is "variable geometry"; but as the noble Lord, Lord Ezra, mentioned, they want variable geometry without a two-tier Europe. Unfortunately, that aspiration seems unlikely to be attained, as the noble Lord, Lord Ezra, suggested in his reference to different drawers, allowing a permanently differentiated Europe in which Britain and perhaps some other states opt out of certain policy areas. That will inevitably lead to two tiers. It will undermine the Union in creating incoherence, serious economic imbalance and, I suspect, unfortunate political tension on a long-term basis. Is that what we really want?

As my noble friend Lord Richard said at the outset of the debate, can it come as a surprise to anyone that the other member states of Europe find it increasingly difficult to work with the British Government and that they look forward to the general election? The sooner the better, so that we are there in time to make a more positive contribution to the IGC than we have seen so far.

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