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In rejecting the amendment on the grounds that we do not believe this would be a good use of government time or resources and we see no value in it, we are mindful of ensuring that we know exactly where we

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are in the European Union and are very clear in our desire to recognise the importance for the interests of this country in being part of it. The noble Lord referred to the cost in terms of the contribution to the European Union budget. I say to the noble Lord, Lord Willoughby de Broke, that it is indeed £12.4 billion. We get a £3.6 billion abatement and public sector receipts of £4.9 billion, so the net contribution to the EU budget is £3.9 billion. I hope those figures will alleviate any concerns the noble Lord might have about understanding precisely what the budget does.

I hesitate to reiterate much of what has been said about the benefits of membership of the European Union. As far as this Government are concerned, EU membership is central to the pursuit of stability, growth and employment. It is clearly in our national interest, both economically and in a wider political and strategic context. It has brought benefits in jobs, peace and security. Through it, we belong to the world’s largest trading block with a single market of over 490 million people. Half our trade is now within the EU, and we estimate that about 3.5 million British jobs are linked to it, directly and indirectly. Fifty-seven per cent of total British trade in goods is with the EU, 62 per cent of our total exports go to the EU and British investments in the EU totalled £17 billion in 2005, the last year for which I have detailed figures.

As noble Lords will know, I feel very strongly that membership is not only about the rights of British companies to buy and sell across the single market, but that it also allows our citizens to work, study, live and travel in the European Union and to receive free medical care if they fall sick. Improved maternity pay, the right to paid holidays and the reduction in the cost of mobile phone calls when abroad are just some of the practical benefits we have by being part of the European Union.

We benefit as consumers from being part of the Union. The EUoutlaws price fixing and stops companies agreeing with each other to restrict competition. Cartels in industries as diverse as vitamins, banking, airlines and energy have been targeted by the European Union in recent years to ensure that the benefits are passed on to consumers. British firms benefit significantly from the enlargement of the EU: exports to the 10 countries that joined in 2004 rose from £4.66 billion in 2004 to almost £8 billion in 2006.

Our view is that these benefits would be unlikely to be available to the UK on the same, or even more favourable terms, if we left the European Union. If we left, we would be subject to customs controls and we would need export certificates. The abolition of customs duties already saves British businesses about £135 million a year. Our agricultural exports would be subject to tariffs that would be payable on some of our goods. There is a host of reasons why this would not work.

Just for completeness, there have been suggestions that perhaps what we should do is negotiate some access to the single market from the outside in the way that Norway and Switzerland have done. I begin from the premise that we are not Norway or Switzerland. We are one of the largest economies in the world. We

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have a bigger, more diverse economy, and we should be clear that if we tried to negotiate on that basis, we would have to accept many of the laws that already govern the operation of the single market, which is what Norway and Switzerland do. Norway accepts 85 per cent of single-market legislation. We would not, however, be part of the negotiations that determined what those laws would be. Moreover, we might have to contribute to the EU budget. Norway is a net contributor to the EU budget. The difference, as I have already indicated from the figures, is that we get a lot of money back from the European Union. As an EEA member outside it, we would not.

In essence, for all the reasons that I have given and for all the reasons that noble Lords know about—the benefits for citizens, and the co-operation, which we talked about earlier, on asylum, on counterterrorism, on illegal migration, on serious organised crime and so on; I could go on at length—we believe that being part of the European Union is extremely important. We hope, on that basis, that the noble Lord will withdraw his amendment.

Lord Pearson of Rannoch: My Lords, I am most grateful to all noble Lords who have spoken, particularly to those who have supported the amendment. It is strange, is it not, that the Conservative Party does not have a view on it? It would have been interesting to hear that. Does it think that a cost-benefit analysis of our EU membership would be helpful, a good thing? Does it agree with the Leader of the House, or does it simply not know? I imagine that our rules of procedure do not allow the Conservative Front Bench to intervene now, so I suppose we will just have to continue in ignorance of its position.

As to the contributions that have been made, I take issue with the noble Lord, Lord Dykes, who was somewhat overcritical of eurofacts magazine, which is one of the shining lights of truth and reason in the whole debate about our membership of the European Union. The noble Lord suggested that I had written most of it. I stand to be corrected. I may have written one article some time in the past 10 years, but I am ashamed to say that I have not written more, because I would like to be more associated with this truly significant publication.

The noble Lord, Lord Dykes, and others who objected to the amendment trotted out—I am afraid I have to use that expression—the usual Europhile line, as I said they would in my introductory remarks, that membership is hugely beneficial. He even dropped a clanger when he suggested that 3 million jobs depend on our membership of the European Union as opposed to our trade with it, which is a very different thing. He wisely said that a number of figures are being bandied about, although he put the net cost of our membership in 2006 at £3.9 billion, which was not all that far from the figure of the noble Lord, Lord Stoddart, of £4.5 billion. If these figures are being bandied about, why do we not earth them? I assure the noble Lord, Lord Dykes, and the Leader of the House, who suggested otherwise that my friends and I would of course accept an unbiased cost-benefit analysis of our membership of the European Union.

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I am afraid that the noble Lord, Lord Dykes, also produced the old canard that the European Union has brought us jobs, peace and security. He is presumably not prepared to consider the suggestion that that is an emperor with no clothes. I have dealt with the jobs. We owe peace and security to NATO and our friends, the United States of America, since the end of the last war. He thinks that youth is swinging towards the European Union, but opinion polls show that youth is actually swinging away from it. The most Eurosceptic sector of British society is the 18 to 25 year-old group, according to many present polls. Whether noble and Europhile Lords like it or not, there is no European Demos. There cannot, therefore, be any European democracy—not for a very long time, or long after this project has failed, as it surely will.

The noble Lord, Lord Tomlinson, produced the line that the value of Spain, Portugal, Greece and others joining the European Union and getting rid of their dictatorships is unquantifiable because of the money we have thus saved by not having to support NATO, and so on. That is a difficult debate, but there is of course no reason why any cost-benefit analysis should not look at and pay due credit to it. It is likewise for the new countries of eastern Europe, who owe their membership of the European Union more to the interest of their political classes—many of whom went to work in Brussels, and all on the Brussels pay scale at 10 times their former salaries—than to the real, informed opinion of their peoples.

I come to the noble Baroness the Leader of the House, who I am afraid produced again the only line that she can—that the benefits are overwhelming. We had jobs, again: peace and security, we got all of that. We had an estimate of the net £3.9 billion but, as my noble friend Lord Willoughby de Broke said, that is not the point. The gross is the point: we pay £12.4 billion gross a year, according to her, to this absurd arrangement that is then filtered through Brussels. Some of that is given back to us, not on projects that we would necessarily choose, but always on projects designed to enhance the reputation of the project.

I am afraid that I do not have time to take detailed issue with the noble Baroness on some of the statistics she produced. She says that half our trade is with the European Union; that is what the Europhilic establishment tends to say, but it is of course not true. She means that it is, I am afraid, somewhat less than half of our exports of manufactured goods. If we take the whole of the economy—the export of manufactured goods, our services and transfers, and the return on our investments worldwide—it is acknowledged that around 10 per cent of the British economy trades with its clients in the European Union, some other 10 per cent trades with the rest of the world, and 80 per cent stays right here in the domestic economy. It really is not fair, then, to produce these bland, unchecked and unquantified statements. This amendment tries to quantify them; it would be really reasonable to do that.

When I mention Switzerland, the noble Baroness replies that it is not reasonable to suggest that the benefits that Switzerland gets from staying out of the European Union—it is not in the European Economic Area, unlike Norway, or part of the fax economy—would

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be very similar to those that we could expect. We could do even better because, as she says, we are bigger. As a bigger client of the European Union, we could clearly do better.

Finally, I must ask the Minister: what benefits have we had in any matter she has mentioned, from our membership of the European Union, which we could not have had from simple free trade and friendly collaboration with our neighbours across the Channel? That is a question that needs to be answered, and one which this amendment sought to answer. However, time is moving on and I cannot imagine that your Lordships wish me to divide the House, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 15 had been retabled as Amendment No. 26.]

10 pm

Clause 6 [Parliamentary control of decisions]:

Lord Howell of Guildford moved Amendment No. 16:

The noble Lord said: My Lords, I used to think sometimes, especially late at night—having attended, over the years, hundreds, if not thousands, of meetings concerned with European affairs—that the stronger pro-integrationist, European federalist case would eventually sink itself in its own verbosity. I have to say that after the past half an hour or so, I feel that the anti-European case might also sink itself in its own verbosity. I hope that we can now focus on a particularly important issue, although it is a late hour. It is a matter that we covered to some extent in rather a hurried way in Committee, but it is one to which we should now turn maximum attention because some very important issues are at stake.

The issue is how our Parliament is to deal with and to address matters of treaty changes that come through the passerelle arrangements. We know that there are passerelle arrangements in past treaties and that in this treaty there are some that require the approval of Parliament. But there are also the new provisions which do not require the approval of Parliament, so treaty changes can be made without that. The Government have met that by suggesting there should be debates in, and the approval of, both Houses before such treaty changes are validated. We have said that that is not enough.

The amendment was moved in the other place, not I think by a Member of our Front Bench, but by a Back-Bencher, and it was heavily supported by other parties, including the Liberal Democrats, whose leader, deputy leader and Chief Whip voted for it, and many others as well. So I live in hope—I shall probably be frustrated—that we might get a little support for the amendment, although it is a late hour.

It is important to emphasise that we are dealing with matters which can—they do not necessarily always—

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involve the transfers of powers away from national Parliaments and changes in the treaty. During our debate, a number of strange, slightly mysterious aspects arose. The noble Baroness spoke at considerable length and in great detail about how these kinds of changes should be handled. She said:

That was her view, which—obviously—is not ours.

Then we got on to a discussion of which, frankly, I do not understand every word. I hope that the noble Baroness will be able to explain it more fully. She said:

We have to ask what that new power is. When we talk about powers, we usually talk about Acts of Parliament to validate and give credence to them. Can we please be more clear about this new power to be given to your Lordships’ House?

The difficulty here is that our amendment is not specifically about your Lordships' House. It is about Parliament and the role of both Houses, including the other place, in addressing these possible changes in the treaty. Although it is very interesting to hear the noble Baroness’s views about how things might change in your Lordships' House, that is not the main issue. It is how Parliament handles these matters. There seems to be some confusion in all this.

The former Home Secretary, now the Minister of Justice, said in very graphic terms—admittedly a few years ago—that he was nervous of all these possible passerelle changes because,

He spotted that there was deep concern here and that that kind of arrangement was simply not acceptable.

When I reread what the noble Baroness had said, there seemed to be some confusion. On the one hand are the normal rules, regulations, directives and other instruments flowing from, or originating in, the EU institutions. We seek, on the whole, to handle these through filtering in the committees of the other place and the distinguished committees of your Lordships’ House. That process has maybe been improved, and overlaps with scrutiny, and so on. That is one story. On the other hand are the changes in the treaty. These are changes to the powers of our Parliament. These are important matters, which could arise through the passerelle provisions. I do not think that anyone denies that. This is what the passerelle provisions could do. Admittedly, in the earlier treaties, they could only do so with the approval of Parliament, but in this treaty and the constitutional treaty—and the provisions here are identical with those in the constitutional treaty—they could do so without the approval of Parliament.

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The noble Baroness spoke about her plans for filtering through the committees of this Parliament and giving them “new powers”. I am not sure how these ideas would apply in the other place. None of these new powers can possibly substitute for the basic requirement, which is a proper Act of Parliament before the treaty is altered in ways which transfer or reduce the powers of Parliament. I hope that we can focus on that, and possibly hear more about the new powers—which the noble Baroness has discussed, or is discussing, or plans to develop—for filtering various matters through the committees of this House and improving scrutiny procedures. That is very interesting, but not the main point.

We have never faced this situation before. Now that we do so, we must build in the proper safeguards, which are powers in Acts of Parliament to ensure that future changes are also by Act of Parliament. There is no short cut or bypass to obviate this fundamental need. Those who want to see effective parliamentary scrutiny and, more than that, want to see treaty changes go through proper parliamentary procedure, ought really to be sympathetic to this amendment, as were the Liberal Democrats and my own party in the other place. That is the requirement that we now face. This debate may flow over into further debates in the handling of this Bill, but here, tonight, this is about the need for Acts of Parliament. Mere approval of both Houses and affirmative votes in both Houses may not be enough. We have heard from the former Home Secretary Mr Jack Straw that these things can happen “late at night”. That is what he said. He is right and I support his apprehension about what could have happened under the previous constitution treaty, and which could also happen under this identical treaty before us. I beg to move.

Lord McNally: My Lords, the noble Lord, Lord Howell, referred to the position taken by the Liberal Democrats in another place. It is interesting to take note of the process that we are going through. In both Houses we go through a Committee and a Report stage. A Bill changes as it goes through, sometimes by amendment, sometimes by government assurances. Sometimes things come back again and again, totally unchanged. That is only because the noble Lord, Lord Pearson, has not read the Companion. The approach taken by my party was best expressed by my honourable friend Jo Swinson, who asked how many and which decisions should be addressed by Parliament. At the same time, we should not impose a huge bureaucratic burden that stalls any kind of process both in this House and the EU. That has been the theme of a number of our debates on the amendments.

We have had a number of amendments from the Conservative Front Bench that look perfectly reasonable in isolation. They seek a report to Parliament here and primary legislation there, but collectively it is not so much belt and braces as bondage. As Jo Swinson warned, if we took all these bits of advice from the Conservative Front Bench we would have a process that would cripple not only Europe but Parliament. Earlier the noble Lord, Lord Howell, asked for a more rational and practical approach. The Liberal Democrats bow to nobody in either House in our commitment to parliamentary accountability so far as Europe is

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concerned, but how do we develop that in this Parliament with the flexibility to reach an understanding both of how this Parliament works and how Europe works?

I have to say that whatever positions we took at an earlier stage, we have welcomed the willingness of the Government to address and clarify issues about parliamentary accountability. On the one hand, these amendments would make a draconian demand for primary legislation but, on the other hand, Amendment No. 24 would take away some of the best parts of the Bill in terms of parliamentary accountability. I do not think we are going to fall for that kind of sleight of hand.

The Lord President of the Council knows very well that we still have concerns about parliamentary accountability, and it would be interesting to know the detail in these cases. When the passerelle orders come before us, will they always be taken on the Floor of the House? Will we be told that like statutory instruments, it is not really done for this place to try to turn them down, or will being passed by both Houses be a genuine process? If we can get those assurances, plus the kind of negotiations that I know are going on with the European Union Committee and the Constitution Committee, we will approach the practicalities of the Bill much more effectively than by adopting the rather inflexible, blunderbuss approach reflected in these amendments. Certainly at this stage we will not be supporting them.

Lord Blackwell: My Lords, I suspect that I am not the only one in the House who finds it difficult to follow the twists and turns of the Liberal Democrat explanation of its position.

These are not trivial provisions. We are talking about the possibility of changing the conditions of the treaty in ways that are very substantive and which, under normal circumstances, would require a new treaty with all that goes with it. Let me point out just a few of the provisions we are talking about. Under Article 31(3) is the ability to move the common foreign and security policy on to QMV. The Government have made great play of the fact that that is to be by unanimity, but here is a provision that allows it to be agreed that it should be moved to QMV. A provision under Article 81(3) states that family law should be decided by QMV, while a decision under Article 31(2) would allow provisions on EU finance—the budget—to be decided not by unanimity but by QMV.

10.15 pm

The provision under Article 33(2) allows enhanced co-operation to be carried forward; the cost borne not just by those members who participate but by all members including those who are not participating in the enhanced co-operation. Provision 48(6) allows revisions of procedures in the treaty to be taken by simplified revision procedures; that is, qualified majority voting. We may ask why the provisions are in the treaty; is it conceivable that anyone would ever want to do that?

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