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Baroness Williams of Crosby: My Lords, while I very much agree with what the noble Baroness has said about employment, does she accept that with regard to poverty, to which I referred, there are quite a lot of lessons which the European Union could teach us?

Baroness Scotland of Asthal: My Lords, I am happy to accept that there are many things that we can learn from our European partners, and that together we have a much better chance of doing well.

Lord Boardman: My Lords, I am most grateful to the noble Baroness for giving way. I asked her view on an inquiry. If I understood her reply correctly, she objected to the cost of such an inquiry. If I have understood that correctly, would it help to overcome that problem if, at Committee stage of the Bill, we introduced an amendment to state that the cost of an inquiry would not fall upon the Treasury?

Baroness Amos: My Lords, I remind noble Lords that the Companion states that frequent interventions, even with the consent of the noble Lord who is speaking, are undesirable.

Baroness Scotland of Asthal: My Lords, the short answer to the question is no. Our primary reason for saying that is that we believe that such an inquiry is not necessary. If we believed that it was necessary, costs would not feature in that decision.

We have put forward several suggestions for concrete outcomes for the Council, which we think would show that Europe is ready to compete with the best in the world and that we intend to make sure that there is opportunity for everyone in our societies. We are pushing three essential components. The first is an innovation and knowledge-based economy--for example, we need to remove barriers to e-commerce and make the Internet as fast and cheap as anywhere. The second component is economic reform. We need a fully functioning single market. Thirdly, we want to renew the European social model, laying the foundations for full employment.

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Change has already taken place in the Commission. Following the resignation of the Santer Commission last year, it was clear that root and branch reform of working practices was needed. Since taking office in September 1999, Romano Prodi and Neil Kinnock have already implemented a number of reforms in the Commission. Mr Kinnock announced a comprehensive package of reform proposals, which were confirmed on 1st March.

We welcome these proposals. They represent an important programme which is an ambitious attempt to modernise the way the Commission is run. They focus on an overhaul of financial management, a much improved human resources policy, and a new system for setting priorities, allocating resources accordingly and evaluating the results. All these are objectives that we have long shared. We recognise that these reforms will take time to deliver. We look forward to regular updates on progress on the targets that the Commission has set itself and welcome the commitment to have the full programme in place by the end of 2002.

The Council of Ministers is also discussing its future. It is vital that, as enlargement proceeds, it remains effective and coherent. The Helsinki European Council in December 1999 endorsed a package of reforms designed to improve working practices, including a reduction in the number of Council formations.

The European Parliament is considering its own reforms. Negotiations are ongoing on the terms of a statute setting out terms and conditions for all MEPs. We attach particular importance to reform of the European Parliament's expenses system so that MEPs are reimbursed for the actual costs incurred in the performance of their duties. The Government hope that agreement will soon be reached.

The main reform project this year is the intergovernmental conference. Heads of state and government have already made clear that it should be relatively short and focused clearly on the institutional changes necessary for the next enlargement. It will focus on three issues discussed but not resolved at the Amsterdam European Council in June 1997: the size and composition of the Commission; the reweighting of votes in the Council of Ministers; and the possible extension of qualified majority voting. Provision was made for the inclusion of a few related and additional items. One noble Lord referred to this as the Amsterdam left-overs. There is no grand federal vision coming from the member states; nor is the UK isolated in any part of its approach to the conference. On the contrary, we have a positive agenda and are shaping the debate.

Concern has been expressed about the direction in which the Union is heading. What kind of Europe do we want to see? Do we want to see a Europe without any British presence or influence? I am sure that this would jeopardise not only the enlargement process but also the Union as it currently exists.

Is the answer the Conservative Party's interpretation of flexibility, as outlined by the noble Lord, Lord Moynihan? Again, I think not. Its

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suggestion is that individual member states should be allowed to opt out of specific pieces of legislation. This a la carte model would not be accepted by our European partners. Indeed, it would not work.

Allowing opt-outs would lead to the break-up of the single market. France, for example, would have opted out of the decision to lift the ban on UK beef. As it is, they are being taken before the European Court of Justice by the Commission for flouting their obligations. Were it otherwise, it would have been to our detriment, as the noble and learned Lord, Lord Howe, made clear. I am pleased to be able to tell the House that the Bundestag has voted to lift the ban on beef in Germany. That would not have been achieved without our being in Europe.

The Government would like to see the UK continuing with its constructive role, on the front foot in pursuing our positive agenda for reform and enlargement. We are not isolated in Europe. On the contrary, we are positively engaging in the debate. There is not complete agreement--others push their visions as we push ours--but we need to be part of the debate to argue our corner.

What is in Britain's best interests? The Government feel there is only one possible answer to that question. It is not to withdraw from the European Union but to remain a full and leading member. That is the only way successfully to protect and promote Britain's interests.

The Government do not feel that it is necessary to set up an inquiry to reiterate this point, but it is not the Government's practice to oppose a Private Member's Bill at Second Reading in this House.

4.8 p.m.

Lord Pearson of Rannoch: My Lords, I am grateful to all noble Lords who have spoken, even those who do not agree that an inquiry might be helpful. I am sure that much of what has been said will repay study in the columns of Hansard. I therefore do not intend to delay the House--although of course I am strongly tempted to return to the fray--but I do wish to refer to two points.

I shall even resist the temptation to complain to the noble Lords, Lord McNally and Lord Avebury, one of whom referred to me as a xenophobe and the other who referred to me as a Europhobe. I thought I had made clear that I am a Europhile but that I am phobic about the Treaty of Rome.

The first of the two points that are so important that they bear comment was mentioned by the noble Lord, Lord Sharman, and picked up by the noble Lord, Lord Watson of Richmond, and indeed the Minister. It concerns the huge importance to this country of inward investment or foreign direct investment which they believe the single market attracts, or at least our membership of the European Union attracts. I think I mentioned earlier that new research out today casts doubt on this assumption. Indeed the Department of Trade and Industry regularly asks foreign investors why they invest in the United Kingdom and publishes the answers in its papers on British competitiveness.

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I have to say that neither membership of the European Union nor access to the single market has ever figured in the 10 most frequently cited reasons for investing in the United Kingdom, according to the department's circulars. Overseas investors say that they like our workforce, our infrastructure, the absence of corruption, our language, the business-friendly climate and our low taxes. No doubt they also like the cosmopolitan nature of London and our golf courses, but they do not mention our membership of the European Union or access to the single market through our membership of the European Union as one of the reasons for coming here.

The second point I shall touch on very briefly. It was mentioned by the noble Lord, Lord Watson of Richmond, in what I thought a quite excellent speech. It is that our attitude to the European Union is very important to the United States and its attitude towards us. The noble Lord quoted President Clinton and Madeleine Albright, who appear to have a rather rosy view of this connection with the European Union and the world generally. I would only comment that a very different view was put in London by the chairman of the Senate's Foreign Relations European Committee, Senator Gordon Smith, last December. Senator Smith is clearly very worried that the new European defence initiative will undermine NATO, and he counselled heavily against it.

I agree that the Bill is not perfectly drafted and I am afraid it certainly contains one typographical error. My noble friend Lord Moynihan was right to spot that. I can see also that Clause 1(3) of the Bill, where the people who should form part of this committee are drawn up, might be thought to produce a committee too much like this debate today: one side taking one view and the other side taking entirely the opposite view so that the chairman might have an impossible job in bringing the committee to a sensible conclusion.

The point remains, however, that most speakers have supported the concept that more debate is necessary. Most speakers have supported the idea that an inquiry of this nature, even perhaps with a different composition--the Bill could, of course, be amended in Committee--would be very helpful to the national debate, which many of us feel has not yet taken place.

I am disappointed that the noble Baroness the Minister is unable to support the Bill as it stands. I think she was a little rough when she accused it of being the product of private prejudice. Certainly, she was quoting my noble and learned friend Lord Howe, but she did so with such approval that, especially as my noble and learned friend unfortunately is no longer here, I feel I can reprove her for repeating what he said. If the noble Baroness does not want to support the Bill and if other noble Lords do not want to support it, then I think they are running away from an inquiry and what the result might be. I would just say to them "Cowardy, cowardy, custard!" I commend the Bill to the House.

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On Question, Bill read a second time, and committed to a Committee of the Whole House.

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