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Lord Bruce of Donington: I am grateful to the noble Lord for his reply. The whole trouble is that the old Article 209 to which he refers makes no mention at all of any duty put specifically upon the Commission. Reference to the Commission is avoided absolutely in any part of that article. The duties are laid on the member states, and responsibilities are laid upon the Council. But there is no part of the treaty as quoted to me which presently enables the Community to deal with matters where irregularity and fraud are connived at either by the Commission itself or by parts of the Commission. There is at the moment nothing in the treaty that enables the Community to deal with its own Commission. In framing its proposals for the new clauses, the Commission has undoubtedly succeeded in avoiding any responsibility being laid upon itself. It is vital that that should be possible.

I do not for a moment question the zeal with which my own Government are proceeding in the matter, or the zeal of the previous government, perhaps subject to one reservation. When a member of your Lordships European Communities Select Committee, I had the opportunity to question a former Chancellor of the Exchequer as to why no effective action was being taken on this matter. I gathered from his reply that the question was rather pushed to one side as being

21 May 1998 : Column 1824

something that was examined but upon which no definite action was required. That can be verified from the answers he gave to my questions in the evidence published by the Select Committee.

All I ask is that action should be taken at governmental level to prevent and extinguish the evil of bad faith, of lying and of cheating within the organisation. That evil must be tackled, and I sincerely hope that the Government will tackle it.

I am reassured to learn of some of the latest steps being undertaken. As one who was partly responsible for drawing up the financial regulations, as a member of the budget committee of the European Parliament, together with the noble Lord, Lord Shaw of Northstead, I should be interested to receive particulars as to the progress that has been made in trying to amend the financial regulations. That would save much time and enable further, more fruitful inquiries to be made.

In view of the fact that the other place has not arranged for itself an opportunity even to discuss these matters in Parliament, I shall press the amendment standing in my name, which will compel consideration to be given to some of the arguments that have been presented today. I look forward to unanimous support, including that of the Government, for the amendment.

3.42 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 50; Not-Contents, 100.

Division No. 3


Alexander of Tunis, E.
Annaly, L.
Attlee, E.
Belhaven and Stenton, L.
Birdwood, L.
Brentford, V.
Brougham and Vaux, L.
Bruce of Donington, L.
Charteris of Amisfield, L.
Clanwilliam, E.
Colwyn, L.
Cope of Berkeley, L.
Cross, V.
Denbigh, E.
Denham, L.
Eden of Winton, L.
Elton, L.
Erne, E.
Harlech, L.
Jenkins of Putney, L.
Kenyon, L.
Long, V.
Mackay of Ardbrecknish, L.
Miller of Hendon, B.
Monk Bretton, L.
Monson, L.
Mountevans, L.
Moynihan, L.
Newall, L.
Oxfuird, V.
Park of Monmouth, B.
Pearson of Rannoch, L.
Rawlings, B. [Teller.]
Renton, L.
Rowallan, L.
Ryder of Wensum, L
Shore of Stepney, L.
Soulsby of Swaffham Prior, L.
Stoddart of Swindon, L. [Teller.]
Strathcarron, L.
Strathclyde, L.
Strathcona and Mount Royal, L.
Swinfen, L.
Taylor of Warwick, L.
Tebbit, L.
Waddington, L.
Walker of Worcester, L.
Weatherill, L.
Wharton, B.
Young, B.


Acton, L.
Addington, L.
Alderdice, L.
Archer of Sandwell, L.
Bassam of Brighton, L.
Bath, M.
Berkeley, L.
Blackstone, B.
Blaker, L.
Borrie, L.
Braine of Wheatley, L.
Burlison, L.
Butterfield, L.
Calverley, L.
Carlisle, E.
Carter, L. [Teller.]
Chandos, V.
Clinton-Davis, L.
David, B.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dholakia, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Ezra, L.
Farrington of Ribbleton, B.
Gallacher, L.
Gilbert, L.
Gilmour of Craigmillar, L.
Gladwin of Clee, L.
Graham of Edmonton, L.
Gregson, L.
Grenfell, L.
Grey, E.
Hamwee, B.
Hanworth, V.
Hardie, L.
Hardy of Wath, L.
Hayman, B.
Hilton of Eggardon, B.
Hollick, L.
Holme of Cheltenham, L.
Hoyle, L.
Hughes of Woodside, L.
Irvine of Lairg, L. [Lord Chancellor.]
Jacobs, L.
Jay of Paddington, B.
Kilbracken, L.
Kirkhill, L.
Levy, L.
Lockwood, B.
Ludford, B.
McIntosh of Haringey, L. [Teller.]
McNally, L.
Maddock, B.
Mar and Kellie, E.
Meston, L.
Methuen, L.
Milner of Leeds, L.
Monkswell, L.
Morris of Manchester, L.
Newby, L.
Nicholson of Winterbourne, B.
Ogmore, L.
Perry of Walton, L.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prys-Davies, L.
Puttnam, L.
Ramsay of Cartvale, B.
Rea, L.
Rendell of Babergh, B.
Richard, L. [Lord Privy Seal.]
Rodgers of Quarry Bank, L.
Russell, E.
Russell-Johnston, L.
Serota, B.
Shepherd, L.
Simon, V.
Smith of Clifton, L.
Steel of Aikwood, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Thomson of Monifieth, L.
Thurso, V.
Tope, L.
Tordoff, L.
Turner of Camden, B.
Walker of Doncaster, L.
Wallace of Saltaire, L.
Watson of Invergowrie, L.
Wedderburn of Charlton, L.
Whitty, L.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L.

Resolved in the negative, and amendment disagreed to accordingly.

21 May 1998 : Column 1825

3.50 p.m.

Baroness Rawlings moved Amendment No. 4:

After Clause 1, insert the following new clause--

Report on progress towards enlargement

(" . No later than one year after the passing of this Act, and at annual intervals thereafter, a Minister of the Crown shall lay before both Houses of Parliament a report assessing the progress of institutional reform of the European Union in preparation for enlargement.").

The noble Baroness said: My Lords, the European Union is in danger of living in the past, rather than embracing the challenges and opportunities of the future. In order to do so, it has to become more outward looking and dynamic on a number of fronts, in particular on enlargement. So, shortly after the G8 summit, I feel I must mention the launch of the Transatlantic Economic Partnership to promote further trade liberalisation between the European Union and the United States. I applaud this initiative, which owes much to Sir Leon Brittan's ground-breaking proposals for a new

21 May 1998 : Column 1826

transatlantic market place, on which I spoke at Report stage. I would also like to pay tribute to Sir Leon who has done so much to shift the European Union away from protectionism and towards a more open liberal trade policy. I urge the Government to pursue with vigour the new initiative.

As Fortress Europe is unsuited to an increasingly global economy, so is an exclusively Western European club unsuited to the post-cold war world. The European Union has clearly acknowledged this. Indeed, there is a widespread agreement that enlargement is not only our "historic" duty, but in the words of William Hague,

    "as much a question of hard-headed interest as of Western altruism".

Eastern enlargement is very different from the previous ones, not just in terms of dimensions, but in its significance. The European Union that is emerging now, with the EMU grouping at its core, is very different from the EU of the 1970s and 1980s. Adding a large group of former communist countries to the European Union is very different from adding yet another medium-sized peripheral Western European country within the same geo-political parameters. I accept that it is a complex operation, but I feel that the European Union has not lived up to the rhetoric of enlargement. In so many fields I detect reluctance and delays in acting upon the words repeatedly uttered.

The Government appear satisfied with the pace at which the European Union is progressing towards enlargement. We are not. I accept that much depends on the rhythm of adaptation of the applicant countries, but the European Union is by no means ready for it. I feel very strongly, however, that the Union is not making adequate progress in reforming its policies, and in particular its institutions, in preparing for enlargement.

It is important that enlargement should take place at a faster pace, in order not to create new divisions across our continent that the fall of the Berlin Wall gave the opportunity to overcome. In particular the risk of further delays to institutional reform may well be used by other member states to block enlargement.

These are the main reasons why I am moving this amendment yet again today. It is designed to keep tabs on the pace of institutional reform. Furthermore, I believe that we have to return to this matter because of the Government's attitude. I was disturbed by the Minister's response in Committee and on Report to both my noble friend Lord Moynihan and myself. The Minister suggested that the institutional reform, as it concerns,

    "the leftovers of Amsterdam ... can be achieved relatively easily ..."


    "a relatively simple IGC process".

The Minister went on to say,

    "We believe that it can take place well before any accession of a new member state. There is talk of it happening during the German or Finnish presidency next year. Perhaps that is true; perhaps it will take a little longer, but it will take place before there is any accession of a new member state".

We were also castigated at Report stage for wanting to slow down the pace of enlargement. The Minister appears to suggest that the EU is set on a path and it is

21 May 1998 : Column 1827

trundlingly slowly, but surely, to its predestined destination. Therefore, the Minister counsels not to do anything because it will only slow down the process along that path.

I was astonished by the attitude betrayed by the Minister's words. It is the attitude of a disengaged bystander, surely not of political leadership. The Minister appears to acquiesce in the plodding incremental approach to reform set by the Commission. Yet this approach is clearly inadequate. Institutional reform has been dodged again and again.

I do know how complicated it is. I remember very well the final session in Strasbourg as an MEP in 1994. The main debate at the time concerned the enlargement towards Austria, Sweden and Finland. It was probably one of the most interesting and exciting debates we had in the Foreign Affairs Committee and it went on late into the night. I am afraid that we failed and voted for enlargement alone rather than grasping the nettle of the necessary institutional changes. It was a great shame and it will be an even greater shame now.

The Minister's words also betray the lack of appreciation of the range and highly controversial nature of the issues involved. He appears to ignore a vast agenda ranging from the reform of the presidency of the Council of Ministers to the reduction of the number of official languages which was not touched on at Amsterdam. He calls a "leftover" achieving a fairer distribution of power between member states' governments. In a Europe of nation states, I believe it is the main course!

Finally, by refusing repeatedly to be drawn on the substance of institutional reform, the Government appear to be singularly unfocused on, and lacking full-fledged proposals for, it. Why let the French do the running on the proposal to set up a wise men's group on the future of Europe linked to enlargement? Why not work for an IGC on institutional reform for early next year?

As Lional Barber recently wrote in the Financial Times:

    "Britain has little to lose and everything to gain by a bolder stance on institutional reform".

We must press ahead. We must work for a European Union to tear itself fully away from the old, small protective and corporatist club it was during the Cold War years. It must not join Rimbaud in saying,

    "je regrette l'Europe aux anciens parapets!"

I beg to move.

4 p.m.

Lord Renton: My Lords, I warmly support this amendment. Indeed, I think that it is perhaps the most important amendment that we have had before us during the whole of our discussions on the Bill. I say that because--I am sure that many noble Lords would agree--although the great majority of British people are not Euro-sceptics, they do not want a close-knit federal Europe. Like most people, I keenly support the concept of a grand alliance of independent nations, co-operating with each other economically, but with the minimum pooling of sovereignty.

21 May 1998 : Column 1828

The larger the alliance becomes, the less feasible it is to create a European superstate. As I have said several times during these proceedings, we already have a Union of 15 nations, with 11 different languages and a number of different types of constitution. We know that seven more nations would like to join. That means another half-dozen more languages. In those circumstances, having the wrong treaty, as it largely is, basically unamended but modified under the Maastricht provisions and to some extent implemented under the Amsterdam provisions, is not feasible for an enlarged Europe. It is not feasible even for a European Union of this size, but it would be utterly unsuitable for a Union containing yet more nations.

It is right that the Government should be asked to report to Parliament from time to time on the efforts which they may be making to attempt to achieve the right situation for an enlarged Europe. Indeed, what should be achieved? One could go into this in great depth, but I shall be as brief as possible. Two main steps must be taken. The first is to get away from the concept of a federal superstate. The second is ancillary to the first: let us finish once and for all the ridiculous concept of harmonisation. It is not working now, even as a fudge and even on the basis of ridiculous compromises. It would work still less effectively with seven more nations in the Union. I hope that the Government will reply sympathetically to this important amendment.

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