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Lord Renton: My Lords, can the noble Baroness say why only half a dozen Members of her party were present to hear her interesting speech?

Baroness Amos: My Lords, given that we have discussed the European Union over many debates—indeed, we discussed it yesterday on a Statement—perhaps Members of our party considered that they had other priorities today. That is their decision.

Moved, That this House takes note of developments in the European Union.—(Baroness Amos.)

4.19 pm

Lord Howell of Guildford: My Lords, I thank the noble Baroness the Lord President for setting out so clearly the wider issues, as she sees them, arising from the present situation in Europe. She has done so from her point of view, which I respect, but I will take a different approach in my intervention.

Not since 1945 has Britain been so favourably placed to influence the future shape of Europe. Like the Lord President, I will not dwell on the rebate row, important though that is—it has, of course, been raised in part as a diversion—and valuable though it has been to this nation from the moment it was so brilliantly secured by my noble friend Lady Thatcher. However, on the present row, during the past weekend the British position appeared to be staggeringly ill prepared and seems to have been inspired more by Lastminute.com rather than by serious policy work, preparation and insights.

Nor am I going to harp on the Anglo-Saxon model, and the European social model, as I believe that the differences of approach are at least somewhat exaggerated by the fevered caricatures beloved of the economists, as the noble Lord, Lord Kerr, who I am afraid is not in his place today, rightly implied yesterday. Anyway, whether we like it or not—and I do not—the concept of the UK as a low-regulation, low-tax, competitive system is rapidly being eroded as we sink daily into a mire of new regulations and higher taxes this side of the Channel as well.

I will not even dwell on the failed constitution, which has so obviously capsized, except to allow myself this expression of some anger: three years, not to mention forests of paper, have been wasted on this flawed project. One wonders now why we should heed the advice of all the commentators—and, indeed, the Prime Minister himself—who until last week were telling us that the constitution was good for Britain and good for Europe, when the whole attempt has obviously done so much harm and has ended up not
 
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bringing the Union closer to the people, which was the insight and rightful demand of the Laaken declaration, but has taken it further away from them than ever.

No, my Lords, let us leave the media to have their say on all these issues, as they are certainly doing at the moment. This is not a time for prolonging divisions or trading insults, although some of us have had to bear our share of those—especially a good deal of genial vituperation from the party sitting to my right. I do not want to respond in any way to that. For those of us who genuinely want to see Europe strengthened and effective in this new world, this is not a crisis—not for the people, although it may be for some governments with egg on their faces. It is a colossal opportunity for all of us. It is a time for a new vision and a new and different kind of arrangement, possibly a new treaty, in Europe.

This is the moment when, as never before, we need creative leadership and for setting out why a new direction for the European Union is essential and why it is now possible. Why does it turn out that things we were always breezily told were not on are now on? Outdated EU thinking has been fatally holding back Europe's economic development, while Asia—the Lord President mentioned the rise of India, China and Japan—races ahead, as has the United States. Actually, the US economy remains precariously placed.

We should proceed with reform on the basis of the following points. I want to offer a number of detailed points because this is not a time for generalities but for hard work. I am going to offer 16 points to your Lordships which I hope will do better than President Woodrow Wilson's 14 points, which did not eventually carry the day. Whether these are called, in the new spin of the Government, pro-European reform or whether they are called reform as suggested by more sceptical Europeans, does not matter a hoot because they amount to the same thing. There is not much choice except to go forward on constructive reformist lines.

First, there must, obviously, be a fresh IGC and a new treaty which accommodates enlargement and improves on the Nice Treaty. That was full of faults, as we pointed out at the time. We need a set of rules which genuinely simplifies EU procedures and organisation, as the constitution did not. It should not be called a "constitution"—a name which utterly misleads and confuses and has caused much grief. The need is for new club rules which ease further enlargement—for instance, for Bulgaria and Romania and perhaps other Balkan candidates—and make it possible to embrace dynamic Turkey, instead of freezing out that remarkable nation, as the present mood seems to imply. That would be quite wrong.

Secondly, the new treaty must restore and confirm inter-governmentalism for large areas of Union activity to give member states room to breathe. I refer, for example, to foreign and security policy; judicial trans-national co-operation, which is going ahead satisfactorily without any treaties; social policy, which is far more sensitive and closer to people when conducted nationally instead of in general and stratospheric terms; the bulk of farm
 
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support; all fiscal and, for those lucky enough not to be trapped in the euro-zone, monetary issues; and all areas where the EU fails to add real effectiveness and convenience to our life and policies.

As the OECD recently pointed out, the European Union now represents,

"a chronic pattern of divergent activity".

Those who want Europe to stay together will recognise and adjust to that, rather than pretend it does not exist. As former Commissioner Bolkestein urged, the Charter of Fundamental Rights, embedded in the defunct constitution, should be scrapped. He said that it is unnecessary and full of potential friction and vapid rhetoric. It has nothing to do with social dimension or improving the lot of workers throughout Europe.

Thirdly, the Conservative approach will anchor national parliaments at the heart of the EU law-making and decision-making process. The capsized constitution protocol talked of involving national parliaments, but returning the final say-so on the suitability of new powers to the central institutions. That was called the "yellow card". We said from the start that there should have been a red card, as did many others, including leading members of the Labour Party in the other place. If a group of national parliaments objects to new or existing legislation, it should be withdrawn or repealed. That is essential if the EU is to modernise and decentralise.

Fourthly, the EU Commission should lose its absolute monopoly right of initiative for new legislation and share it with member states.

Fifthly, the idea of a five-year Council presidency—two times two and a half years—should be withdrawn and replaced not by six months, which I agree is much too short, but by a one-year rotating presidency, which will give some opportunity to the smaller countries.

Sixthly, speaking of smaller states, especially the new entrants, we should adhere to the principle of a more equal Europe in which smaller nations have more say and gain more respect for their views and gain freedom from bullying by the bigger states. It always used to be Britain's role to protect the smaller states—we were the friend of the smaller nations of Europe; indeed, we helped to found some of them. Frankly, I find it very disappointing—I would even say appalling—that over the weekend the Prime Minister and his advisers were somehow manoeuvred on to the wrong side in this respect and ended up being criticised by those such as Poland who should be our friends.

Seventhly, the concept of a Europe of different directions should be welcomed as a realisation of a flexible Europe in the network age—a genuine partnership of interdependent nations in a community which values differences as strengths and not as weaknesses. The Commission and the European Court of Justice must be encouraged to understand that these are the new imperatives, as opposed to the demands of the old hierarchical and over-centralised system.

Eighthly, the existence of separate groupings in no way validates the concept of a two-speed Europe, which is a nonsense. The implication that there is a single integration goal for the nations of Europe, at
 
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which all will eventually arrive, must be, in our view, firmly rejected. Anyway, it is the case that many of Europe's most dynamic economies are on the outer circuit. The core, if it is formed, will be the very slow part indeed of the whole structure.

Ninthly, the powers of the central institutions must be much more clearly circumscribed and the acquis communautaire must be systematically combed through and heavily reduced in line with modern circumstances.

Tenthly, the treaty-embodied laws of the Union will, of course, in many cases, as with all treaty-embodied law, take precedence, but that must be adjudged on a case basis, as hitherto. There will be and should be exceptions, as in the case of the German constitutional law. That is quite different from trying to enshrine the supremacy of Union laws in a higher legal constitution, as the draft constitution tried to do. The ECJ, as I say, must be impartial in those matters.

My eleventh point is that we all know that the common fisheries policy has failed. It should have no place in a new treaty of Europe. As for the common agriculture policy, which the Lord President mentioned, we all agree that it requires further reform. It is quite ironic and odd that M. Chirac has now well and truly reopened the matter by reopening the issue of the rebate. I believe that the Prime Minister, thinking quickly, was right to link it to CAP reform. Yesterday some noble Lords were saying that that would take a long time, but as the noble Baroness, Lady Symons, reminded the House yesterday with her usual acumen, the World Trade Organisation's moment of truth is coming up extremely fast at the end of this year in Hong Kong and urgent decisions will be required before then. This is not a matter on which we can sit around.

My twelfth point is that the reinstatement of national democratic control over an extensive range of competences is necessary to halt competence creep, about which we all know, and to enthrone the principle that democracy occurs in nation states. The European Parliament does a good job scrutinising the Commission, but it cannot connect to the thread of democracy that runs up from the grassroots via national legislatures such as ours. Greater powers for the European Parliament are not the answer to the so-called democratic deficit.

My thirteenth point is that the practice of trans-national co-operation at informal and NGO levels—between the professions—should be vastly encouraged.

My fourteenth point is that defence and foreign affairs co-operation should be defined in practical and organisational terms. There should be room for ad hoc coalitions, pan-European concerted moves in some cases where desirable and task-specific, intensified compatibility of defence equipment, but plenty of space for wider coalitions than the common foreign and security policy can hope to mobilise, especially when managing affairs with the great, but vulnerable, superpower, America, which needs real friends and partners and not querulous rivals.

We should reject absolutely the language and instruments of super-bloc or superpower rivalry as being completely out of touch with the needs of the
 
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network world. There is no point in trying to rescue the common foreign and security policy. As Mr Bolkestein also points out in an article in the Herald Tribune, it is an illusion and one that fails notably to protect or to promote our interests. It is certainly a weak and inadequate "partner"—hardly the right word—in the trans-Atlantic relationship.

My fifteenth point is that new forms of regular accountability to national parliaments certainly need to be developed. One idea is that a senior Minister should head UKRep and report back to the Commons and to your Lordships fortnightly.

My sixteenth point is that referendums on future constitutional changes by treaty, as attempted so furtively in the rejected constitution, should be obligatory.

Those are my 16 points. At some stage over the past two years, the Government, which in the beginning never really wanted the constitution—that is what the Prime Minister said—lost touch with the requirements of the situation and ended up with a lot of feeble red lines instead of a coherent strategy. Now they are paying the price. But it is not too late. M. Pompidou once said that Britain's three best qualities were humour, tenacity and realism. Now is the time to mobilise all three in the cause of a better Europe, which we all want to see.

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