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I did not accept many of the arguments of the noble Lord, Lord Borrie, although I was interested in his reference to caution on EU enlargement. Yes, people inevitably were cautious when there was a sudden splurge of additional countries joining—not just the two Mediterranean islands—and when Bulgaria and Romania jointed latterly. Those who have observed these processes in the member states, from the original expansion of the EU from six to nine member states, then beyond that to 12 and 15, and then from 15 to 25 and 27, have seen the justification in each case and just how those individual countries change. From the initial period of entry to the transitional period, when they do not have to accept the full acquis, it is interesting to see just how they begin to change and accept the onerous responsibilities that EU membership imposes on them—both from the acquis communautaire itself and with all those things that in the case of Bulgaria and Romania were deemed essential in creating a civilised civil society after past experiences. Those things include judicial matters, transparency over government figures, the full democratisation of political election processes, judicial matters and police supervision matters and so on. Spain and Portugal, too, are dramatic examples of countries where there were rapid changes when membership began, changes that accelerated subsequently. That is the great blessing of enlargement, because it washes over to the

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existing older and bigger member states in a remarkable way. We see the extraordinary acceleration and mobility of populations and diasporas in EU member states, putting an end to the American mythology that they were very mobile and Europe was not.

I agreed with what my noble friend Lord Maclennan and other noble Lords, including the noble Baroness, Lady Park, said about the timetable being all wrong. Might there not be a compromise in future so that we avoid scrutiny excess and exhaustion? There is too much to cover in an exercise that—with the House of Lords as the upper House of the British Parliament, apart from the Danish Parliament and the special arrangement in Holland—is probably the most profound exercise in scrutiny, of which we can be justifiably proud. We might consider the possible merger of the seasons, whereby we take February to September for the APS and ALWP clusters and, shortly after that, have a major debate. One day for it might be too long, but we need a major debate in government time, perhaps coinciding with the new Session of Parliament. It could be part of the Queen’s Speech content, along with foreign affairs, common foreign and security policy and European affairs. Those things could be combined so that there is a proper appraisal and scrutiny of those segments. But things have improved, it is fair to say, and, as the noble Lord, Lord Bowness, rightly said, the Commission has made creditable attempts to get its act together in a very complicated field.

I conclude my remarks with a couple of quick references to some sections of this excellent report, which caught the attention of other noble Lords in this debate. As the noble Lord, Lord Grenfell, said with regard to paragraph 18, policy strategy needs to be led from the top, not flowing upwards from all the lower sections of the Commission’s administrative body. The report says that,

Paragraph 19 continues that theme, saying:

There is a link-up with the budgetary developments as well. That is right, although it should not necessarily be taken in terms of some MEPs’ appraisal, as that might mean the insertion of ideological aspects of their own party-political views, both of their national homeland and in the European context. It is more important for this to reflect the promulgation of the balanced series of policies by the Commission, which covers all policy areas and must be dealt with by the European Parliament in a very balanced basis.

Paragraph 25 says:

Has the Minister had a chance to discuss those matters with representatives from the European Parliament? Could he report back to us today on whether any progress has been made in that regard? Forging the

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links between all that and the budgetary process is quite difficult and remains an open seam as regards proper solutions.

We must also remember that, in contrast to national budgets, which are not virtuous in terms normally of having substantial deficits and therefore requiring both taxation and bond fundraising on an extensive scale, the EU budget, although large now in comparison with the past, remains virtuous in the sense that its payments are equal to its outgoings—and they have to be under the procedures.

In concluding with the evidence given to the committee, that from the City of London Corporation, at the end, was very interesting. I refer to page 49. It said that the United Kingdom would suffer if it was not present at some of the decisions on eurozone subjects because we are not members of the currency and the Central Bank eurozone system. In the bottom two lines, the City of London Corporation says:

At paragraph 17 on page 50, it says:

I speak of course against the background of the euro having reached its highest ever level against the United States dollar at over 1.50, and of course it is only four or five percentage points below the highest ever levels reached with the yen and the Swiss franc. So again it is a moment to reflect on how sad it is that the Government have not long since joined the euro, which has now inevitably become the most successful currency in the world. But that is a different subject; I will leave that out. However, I ask the Minister to comment on those matters as well if he has time, because that is a worrying assertion in the City of London’s evidence.

5.26 pm

Lord Howell of Guildford: My Lords, we are very grateful to the noble Lord, Lord Grenfell, for yet another very interesting report from his committee. This has been a thoughtful and useful debate, even though the noble Lord, Lord Maclennan, rather penetratingly asked why we were having it at all.

I know that the noble Lord, Lord Grenfell, is anxious that we should concentrate, and that the intention of his committee’s report was to concentrate, on the procedures by which the annual policy strategy is put together rather than on the detailed contents and the issues contained in the strategy, which of course we will be debating at considerable length over the coming months when we deal with the renamed constitution treaty, Lisbon treaty, reform treaty or whatever it is be called. Then we will go over these things until we are all blue, red or possibly green in the face as we deal with them in colossal detail.



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Nevertheless, while trying to concentrate on the logistics of this kind of report, it is of course true that the way it is put together explains to some degree the tone of the report and the relative incoherence—that is what your Lordships’ report is really saying—of the APS and its rather other worldly priorities. For instance in the original document, the Commission’s report itself, I noted its statement that 2008 would be,

That is way off the frame; it is not going to be that kind of year at all. The reply from the Commission is also interesting; that is the reply that has just been issued to your Lordships’ report. The Commission agrees with the report, rather hastily, that it would like it to present a more unified vision and greater simplicity.

The Commission is rather half-hearted on the budget issue and has slight reservations about the extent to which it should link its observations to the unfolding budget because it says that there is a time problem, that its ideas are way ahead, that the budget is next year and that they do not really match. In its response to the correct plea of the noble Lord, Lord Grenfell, and others that there should be more simplicity and clarity, the Commission comes up with the proposition that its simplification work is programmed within—wait for it—the “multi-annual rolling simplification programme”. I am afraid that does not make my heart leap at all and I should not think it makes anyone else’s heart leap either. I wonder whether my noble friend Lord Grenfell—if I may call him that—sometimes wonders whether all this work is really worth it when that kind of result comes up.

As the noble Lord, Lord Maclennan, asked, what is this report for? Frankly, I should think that one in 10,000 people in the United Kingdom has ever heard of the APS, let alone read the document. Having followed European Union, European Community or Common Market matters in great detail for well over 40 years, I have to confess that the whole concept of the APS is pretty new to me as well. So I do not think this will be a bestseller in the bookshops. It clearly is a document aimed very much at internal procedural assistance and help. The question is posed in our report—is it an aspiration or is it an assessment? Is it meant to be a vision or snapshots of what is going on? Or, as the report of the noble Lord, Lord Grenfell, puts it a shade crudely, is the Commission’s job to juggle balls or to pitch them? These are very good questions and they are all raised by the relative inadequacy of this APS report.

As I promised, I shall not say much on the issues within it except to note that the four key issues that the Commission identifies for 2008 are all areas which are, to put it kindly, very seriously in need of repair. The report speaks of climate change. We all know that the EU’s impulsive strategy on biofuels had to be sharply checked because it turned out to be promoting environmental degeneration and adding to carbon emissions rather than the opposite. We all know that the Commission’s commitments for increasing the energy costs of European industry are running into a political brick wall at this moment. Certainly, they are leading to the absurd outcome,

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which we should all deplore as should the Commission, that some interests are now saying that taxes should be raised on imports from developing countries—by which their economic growth will be achieved—to prevent unfair competition with the European industries which have all had their costs increased by 15 per cent for carbon emissions reasons. These are “absurdity” areas where we need far greater clarity and there certainly needs to be some concentration on repairing them.

We all pay lip service to competition and a more competitive energy policy, particularly the Whitehall Government here in London. But, of course, others are not playing that game. The monopoly champions of energy in many of our neighbouring EU member states are moving around with more confidence than ever and indeed taking over our own industries. Iberdrola is moving into Scotland and e.on and EDF are moving into England and Wales. This is what is actually going on even while we are talking about competitive energy policy, so that needs a bit of repair.

The Commission says that it will relaunch the Lisbon strategy. I refer to the Lisbon strategy as opposed to the Lisbon treaty. This is the third time that it has been relaunched. Of course, it will be relaunched again and again because it is a fundamentally flawed idea born of top-down thinking on industrial policy, which never produces results. Hope has to come from bottom-up innovation and enterprise. My noble friend Lord Grenfell reminded us that his report talks about the need to formulate the annual policy strategy from the top down. That jars a bit with me. I am not quite sure what top he wants to form it at. If he means drawing on the wisdom of the member states at the top of their Governments, that is fine, but if he means something rather different such as more abstruse ideas from the top of the European Commission, I am not so happy about that. As for the fourth key area in the APS, which is managing migration, the less said about that the better. Clearly, it is not being managed at the moment and there are very serious deficiencies.

One is left feeling that we are dealing with EU institutions and a Commission which are worried about their own legitimacy and reputation, and rightly so. They are not really focusing, as they would if they followed the advice of the noble Lord, Lord Grenfell, on the myriad of ideas for co-operation and practical work together in Europe that could carry forward so many of the things that we want to do in the European region without necessarily getting in the way of our wider aspirations in the more important parts of the world such as Asia.

The Annual Policy Strategy, which I confess I read only very recently—I was hardly aware of its existence before—gives me no confidence at all that the realities of the new international scene are really understood by the Brussels officials who penned these words. They certainly give me no confidence that we should entrust our vital national interest to the authors of these documents. I very much warm to the words of my noble friend Lady Park, who said something very much to that effect. The suggestion in our report that there should be proposals for an explanatory memorandum when we look at these things—that is a

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memorandum from our Government commenting on the Commission’s ideas—is a very important idea indeed, and I hope that it will be adopted next time. I hope, too, that there will be much better communication of the European Commission’s intentions as my noble friend Lord Ryder rightly referred to, because there too there clearly is a big deficiency.

We have heard from the noble Lord, Lord Maclennan, that there is a later document for the coming year—2008-09 presumably—and that it shows some improvements. All I can say, having looked at this very carefully, and having listened to the wisdom of the noble Lord, Lord Grenfell, is that there is plenty of room for improvement.

5.37 pm

The Minister of State, Foreign and Commonwealth Office (Lord Malloch-Brown): My Lords, I join other noble Lords who have thanked the noble Lord, Lord Grenfell, for his work and its culmination in today’s debate, which has given us the opportunity to touch on a wide range of issues, some of which were rather wider than the annual policy strategy that we are discussing. That the noble Lord, Lord Grenfell, has been able to bring so much attention and detail to the review of the document reflects a man whose career has been spent in international organisations. He enjoys a dangerous passion, which I understand too well, and almost an unnatural—some might call it a ghoulish—fascination with the inner workings of international organisations. He has found his nemesis in this document and this organisation. By doing so, he shares a lot of wisdom and detail with us.

I have some sympathy for those noble Lords who have implied that this document is more of a carthorse than a racehorse. Let me at least start on the high road, by reiterating that the Government support both the broad aims of this document, the focus on key priorities and the need to produce a cohesive strategy, which were all points made in the report. As Commissioner Wallström commented in her evidence to the House of Lords European Union Committee:

But it is clear to me that it is equally important that this House offers input into the debate on hat the Commission is trying to achieve. Here, I turn to the point about being more carthorse than racehorse. Documents of this kind are enormously difficult to get right. It is a long process, even without the delays in debating it. We are talking about a document that was prepared a long time ago, because of the inevitable internal processes inside the Commission and the consultations involved in preparing the document. We are left with a situation whereby its communications goals for this year bear little relation to the real discussion of this year. It was as though the Commission had not foreseen the dominant discussion of the treaty in the debate about Europe, not just in this House, but in this country and across much of Europe. The document assumed that the

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Doha development round would have been finished and that we would be busy discussing its implementation.

So this document is, if you like, dated, not just because of the delay in holding this debate, which I acknowledge, but more generally because it is what it is—a document produced through an extended process of consultation with different stakeholders inside and outside the Commission and it suffers from the inevitable slightly ponderous lowest common denominator of that. But I would argue that that means that while we treat it for the carthorse that it is, we need racehorses as well, and we need sharper, more crystallising ways of setting the objectives of Europe as a whole, which this Commission document is a contributor to, but does not itself provide that answer.

I was struck by the fact that in the previous year, the President of the Commission, President Barroso, who was new to office at that time, set his own objectives and this document did not occur for a year because he had set them. In a sense, they had the power and clarity of being the head of the institution’s priorities for action, but they were weak in not having the same buy-in that a process like the APS allows. So we will continue to struggle with how you get something that represents broad consultation and broad agreement, but does not lose its strategic clarity and has a timeliness which makes it relevant. In that sense, we should seek ways of doing anything that we on the government side can do to advance the time when we debate the APS. Equally, we should consider the suggestion that the Government respond to the document to allow that response to become part of that debate, because the interaction that the noble Lord, Lord Dykes, referred to between European institutions and our Parliament in improving the accountability and democratic transparency of what goes on in Europe is something that all of us, friends and critics of Europe alike, can agree is a valuable and worthwhile objective.

This Commission report, even if it plods a bit, highlights four key challenges that we could all agree are priorities for the institution in Brussels—tackling climate change, ensuring the availability of sustainable, secure and competitive energy, implementing the Lisbon strategy for growth and jobs, and managing migration flows to the EU. These are issues that go to the heart of how to face up to the vision of an outward-looking global Europe and the challenges and opportunities that that brings. The UK fully supports that vision and we are ready to work with the EU to ensure a stronger, more focused approach to our future work. This report on the annual policy strategy is a welcome document that will help our engagement in this annual process—I hope in a more timely way in the future.

The Commission report, as the annual update of policy direction, requires proper parliamentary scrutiny to ensure that its direction continues to dovetail with the UK’s own priorities. We applaud and agree with the priorities set in this report and it is good news to hear that they carry over to the report for next year. It is essential that the EU focuses on delivering recognisable benefits and tangible policies that really matter to its citizens. Obviously, we particularly welcome climate change now being well up the Commission’s agenda.

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With great respect to the noble Lord, Lord Howell, I hope that Europe’s performance on climate change is more that of an innovator and leader, and not quite as disappointing as he suggests. Along with the Lisbon agenda and better regulation, these are important things to focus upon.

I certainly take the point made by the noble Lord, Lord Ryder, that the best kind of regulation is, usually, deregulation—the cutting of red tape. I will come back to him in more detail, but there is an agreement across most of us in this House that in looking to the future, the European policies of Her Majesty’s Government should put greater emphasis on encouraging growth and making sure that there are more inclusive labour markets across the EU under light regulation. This year will be important for the future of most of those priorities—both for the Lisbon process, and thanks to the EU budget for 2008-09 offering an important opportunity to progress toward a reformed EU, better able to deliver those benefits.

A number of noble Lords raised issues that were, I think, trailing their coats for the debates to come in months ahead; they will, therefore, forgive me if I do not touch upon all of those issues. I say to the noble Lord, Lord Dykes, that while the City of London may regret the lack of UK involvement in some of the financial decision-making in Europe, we nevertheless do extremely well, as the noble Lord knows. For the last year for which we have figures, of the £130 billion of direct foreign investment in the UK, £115 billion of it came from Europe. If we can see further financial market liberalisation in Europe, the gains to London will be even greater—with an inflow estimated in tens of billions of dollars, euros or even pounds.

To my noble friend Lord Borrie and the noble Baroness, Lady Park, I say that in order to do justice to the scope of this debate I do not think that I can answer all of the questions raised, although I will, with great pleasure, brief the Leader of the House on what lies ahead for her as she carries the treaty debate through this House. I had hoped that there would be a better punch-line to the example from the noble Baroness, Lady Park, of a Bulgarian issuing a British visa. While I will not provide that punch-line, I want to reassure her that we very much understand our sovereign responsibilities as the British Government, whether on visa issues or consular protection. There will be the opportunity, in the treaty debate, of debating Article 20, which says that in third countries where states have no diplomatic and consular representation, they are entitled to consular assistance from the authorities of another,

We welcome that, seeing it as extending consular assistance to countries where we have no consular presence, without handing over power over consular matters to others. As I say, there will be an opportunity to return to that at greater length in forthcoming debates on the treaty.

Like all who have spoken today, I recognise that the APS is a good start. It sounds as though it is a

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work in progress, with perhaps a modest improvement prize for the next issuance, although “Headmaster Howell”, has not yet agreed to grant it that prize. I congratulate the noble Lord, Lord Grenfell, and all the members of his committee on providing us with the interpretation and an elegance of report which avoids the terms that have been pointed to during the debate. At least his report is in plain English, which contributes to our understanding of the importance of European strategy. It is important that we debate it in this Chamber, in a timely, transparent way to contribute to the democratisation of Brussels.

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