Examination of Witnesses (Questions 1-19)
Mr Jim Murphy and Mr Ananda Guha
15 JULY 2008
Q1 Chairman: Minister, thank you very much indeed
for joining us to discuss the results of the June Council. We
are being broadcast and you will of course be receiving the transcript,
as you know. Welcome also to Ananda Guha; it is very nice to see
you here, sir, too. Would you like to make an opening statement,
or would you like to go straight to questions?
Mr Murphy: My Lord Chairman, I am delighted
just to go straight to questions. If it is not considered impolite,
I am happy to do so.
Q2 Chairman: That is fine, and I
know that has been your customary approach to our meetings, to
go straight to questions, so we are happy to do so. Let us get
the ball rolling. Of course you will not be surprised to know
that we are interested in the post-Irish referendum situation.
What are the options now? Have you got anything that you can say
to us about where we go from here?
Mr Murphy: I think there are a number
of publicly floated, speculated scenarios, contortions and possibilities,
none of which is helpful to the Irish government at the moment
as it reflects on its way forward, so, certainly on a reading
of the kind of moderate balance to be taken on this issue, I think
a number of commentators see that there is a variety of ways ahead.
Perhaps I could just reiterate the Government's policy on this,
that, first of all, we still believe that the Lisbon Treaty is
an important and good Treaty for the UK, it is in our national
interest and we think it is in Europe's interest, but the people
of Ireland have taken a different view and, as the Foreign Secretary
said, we have to reflect on the decision taken by, and judgment
of, the Irish people. The Irish government have themselves at
the European Council asked for more time to reflect on the way
ahead, but we are pretty clear, as Her Majesty's Government, that
we do not wish to, or not that we do not wish, but we will not
support the reopening of the Treaty text, so with those kinds
of parameters, I think, your Lordships can then speculate as to
what options are left open, but we have no intention of reopening
the Treaty text and re-ratifying this through this process.
Q3 Chairman: I am assuming that,
if the mooted option of some declarations to reassure the Irish
people at some stage, and, one assumes, not too soon, came to
reality, this would not call for any reopening of the Treaty itself,
they could simply be attached and they would carry no legal base,
but they would be strong political statements which could be helpful?
Mr Murphy: That is right. We are open
to whatever reasonable suggestion the Irish government wish to
make which would not require the UK Government to reopen our processes,
so I think on the Nice Treaty, for example, the declaration on
neutrality was considered necessary and helpful, so that type
of thing may be one possibility, but I just wish to underscore
again to your Lordships that the starting point of this, our starting
point, put colloquially, is that, whatever the solution, it has
to be seen to be made in Ireland and any solution that is identified
as from London, Paris, Berlin or any other European capital, I
think, would be entirely counterproductive, and that is the tone
that we have tried to set. I am pleased that, almost universally,
that has been the tone that has been followed across all of the
other 26 European capitals.
Q4 Baroness Howarth of Breckland: There
are obviously, Minister, a number of contentious issues within
the Treaty, but, at its core, it was the reorganisation that enabled
the Commission and the Union to work with a much larger number
of countries than before. Can you see what difficulties there
are going to be now that that reorganisation is not possible,
and whether or not there are other ways of making sure that the
management of Europe is improved?
Mr Murphy: I think this issue of enlargement
and the consequential reorganisation because of enlargement was
perhaps about the only issue of actual Treaty content that was
a part of the debate on the Irish referendum, which was about
Ireland losing its Commissioner. The fact is that we are going
to have to address the number of commissioners anyway, with or
without a Lisbon Treaty, and there was the commitment, as your
Lordships are aware, to already do so. The question is: can Europe
continue to function at this size or even a larger size with,
as the UK Government continues to support, the continued expansion
and accession? I think nowhere near as effective as it could have
done if Lisbon were passed, but we have not given up on Lisbon,
I think we have paused in this process. Now that 21 countries
have concluded their parliamentary processes, so the vast majority,
we continue to believe that the European Union could be much more
effective, except primarily externally, with a smaller Commission,
an end to the rotating Presidency, the much closer working relationship
with the External Action Service, the High Reps and the Commission.
All of that makes the European Union Council a much better actor
on the world stage, particularly at a time of change in the US,
renewed confidence in Russia and a re-emergence of China and then
the remarkable and positive development of greater confidence
in South Africa, Brazil and other countries, so I think externally
the work of the European Union is the particular kind of difficulty
we face if we do not pass the Lisbon Treaty, but, if the Lisbon
Treaty is not given effect, we just have to live with the structures
that we have, albeit with their inherent structural inefficiencies
of this rotating Presidency, in particular.
Q5 Lord Dykes: Thank you, Minister,
for your words so far. In the analysis which the Irish have been
doing themselves on the referendum result, one is struck by the
fact that most of the factors really referred to by the respondents
are non-Treaty, non-European matters, but they are really to do
with all aspects and formats of Irish politics and the problems
there and so on, plus the overall economic situation in our part
of Western Europe, so your reference to the idea of some `protocolaire'
addition might be the way forward, subject to the Irish deciding
income tax is their business, as you quite rightly said, rather
than a tremendous upheaval. Do you feel that is the way forward,
depending on how they gradually unravel that analysis?
Mr Murphy: I think Lord Dykes makes an
important point which is that it is difficult, I think, to accurately
grasp why the result ended up the way that it did, and I think
it has often been just important for them to question the judgment
of the electorate. They made their decision because they made
their decision and the Irish government are now trying to understand
it, but, somewhat like your Lordships, I have watched the debate
in Ireland very carefully. My family are all from Ireland and
I spoke to family in Ireland and tried to persuade them to vote.
I thought that was a tolerable level of external interference
on the telephone to family members! They said, "I don't understand
all of it, but, if you are asking me to do so, then okay".
I said, "Yes, it'll be pretty embarrassing if you don't do
it"! The Irish government are now trying to get a greater
granular understanding as to why it happened, so, watching from
London, when the `no' campaign perhaps predictably, but, nevertheless,
very effectively puts up the story about the threat to Irish neutrality,
Irish taxation and abortion, in particular, then it is difficult,
and it is for the Irish government to suggest the way forward,
as we keep saying, but it is difficult to get a declaration on
an issue that is not contained within the Treaty, and that is
a difficulty we would be in, but we are looking forward to the
Irish Government and the Taoiseach coming back in October with
initial recommendations and perhaps with some agreement on the
way forward at the December Council.
Q6 Lord Tomlinson: Minister, I am
just reflecting that if only you had a bigger family! As we are
stuck with the Irish referendum, as it is, do you consider that
there are any parts of the Lisbon Treaty provisions, and you have
mentioned many of them that are entirely desirable, and we would
think particularly perhaps of the role of national parliaments,
which can be applied, whether legally or in spirit, despite the
possible failure to ratify the Treaty within the prescribed timescale?
It is the sort of salami-slicing of the Treaty to take bits of
it which could be introduced by consent.
Mr Murphy: First of all, as I reflected
earlier, we have 21 who passed the Treaty and I think an increasing
number are formally ratifying it, and it is our intention to continue
doing that and I suspect that we will conclude that work over
the next couple of days, that ratification process. In terms of
salami-slicing, we have said that to speculate about that in advance
of the Irish suggesting a way forward, we think, would be unhelpful,
but our general posture is that we are not interested in salami-slicing
or cherry-picking. There is a discussion evolving as to whether
we rely on the existing Nice Treaty or whether we try and take
something out of Lisbon and put it into Nice, the existing Nice
processes, and call it the kind of dreadful parlance of "Nice
plus" or whether we wait for an accession treaty most likely
for Croatia next or whether we do "Croatia plus". Our
general view is that the Lisbon Treaty was a package and we do
not wish to unpick it and then to seek to renegotiate elements
of the Lisbon Treaty through the Croatian accession process or
decouple parts of it and bolt them on to the existing Nice arrangements.
We think that they are relatively incongruous, some of the ways
forward that are being suggested, so, for the time being certainly,
we are wedded to the Lisbon Treaty to try and implement it in
full, which is why we will ratify it.
Q7 Chairman: As you know, we debated
at great length in this House, and I think it was debated also
in the other House, the question of the JHA opt-in decisions and
how Parliament was going to hold the Government to account on
these. I know that you told the House of Commons Scrutiny Committee,
and I have it in a letter from the Leader of our House, that this
was specifically linked to the changes introduced by the Lisbon
Treaty pillar collapse and that it would not be appropriate to
decouple these opt-in-specific scrutiny arrangements from the
Lisbon Treaty and introduce them for existing treaties. Now, the
fact of the matter is that opt-ins are already part of the game
and we are wondering, since the arrangements that were agreed
in the House for enhanced scrutiny of opt-in decisions was a matter
for the House and that they could stand, in our view, independently
of the Lisbon Treaty, why it is that you are so anxious not to
allow or, rather, you are against the two Houses introducing enhanced
methods of scrutinising opt-in decisions, which we already have,
although there are very few, in the absence of the Lisbon Treaty?
Mr Murphy: Well, your Lordship, our view
is that, first of all, we always have to continue to find new
ways to hold the Executive to account on European business, and
I think I have perhaps reflected on that in my first opportunity
to be with you shortly after becoming the Minister for Europe,
and that is borne of an experience serving on standing committees
in the Commons for three years, the European A, B and C standing
committees, which I did not think was proper scrutiny, it was
scrutiny which, in the end, was not sufficient, so we do have
to find better ways and continue to find better ways. The issue
with the specific proposals in the Lisbon Treaty in terms of the
yellow and red cards, subsidiarity issues and the JHA opt-ins
is that, first of all, it is captured by this continuing posture
of not decoupling or cherry-picking the Lisbon Treaty on the basis
that, I think, if we were to start doing that, other European
capitals may start to do different parts and create a different
chemistry around the expectation of the Treaty being implemented.
Very quickly, I think, the argument would be allowed to grow that
London, the UK Government, has accepted the demise of the Treaty,
which we have not, it is up to Ireland to suggest the way forward,
and that, as proof of the acceptance of the demise of the Treaty,
we have started to implement parts of it on the fringes in terms
of the powers of Parliament. However, we do accept there are further
ways in which we should enhance the scrutiny of European business.
On the specifics on JHA opt-ins, you are of course right that
there are existing opt-ins, but our offer, if you like, and that
is clearly put of course by our other approach here, was that,
as your Lordships are aware, because of the collapse of the Pillar,
the move of Pillar 3 to the community method, the kind of decision-making
process around Pillar 1 was so substantially different on these
JHA issues that we thought that a move to QMV away from unanimity
required giving Parliament additional powers and protections,
so additional powers and protections were offered in the context
of the pillar collapse and the community method, even though we
retain our opt-in/opt-out arrangements at the point of transition.
Therefore, I agree with the Leader of the House that that opt-in
scrutiny process which has been identified was part of a package
around the general change, and we do not want to speculate at
this time, because we consider the Lisbon Treaty to be very much
alive, the contingency measures if the Lisbon Treaty is not implemented
in full.
Chairman: Well, I think that, as long as the door
is still open for us to enhance our scrutiny of opt-ins, that
is all right because we did note in our impact assessment of the
Lisbon Treaty that no such arrangements existed for scrutinising
opt-ins, and we thought that the results of the debates in the
Chamber, which involved the Constitution Committee, our own Committee
here and the Government of course, came up with a very reasonable
solution to this which did not involve affirmative resolutions
with enhanced scrutiny. Anyway, I raised this point because I
was not terribly happy with the wording which suggested that nothing
could be done on this because it was linked to the collapse of
the pillars when in fact the opt-ins already do exist. Anyway,
we will leave it at that for the moment.
Q8 Lord Powell of Bayswater: Just
briefly on the more general point, I understand entirely, Minister,
what you say about the Government's attitude to Lisbon now, but
can you reassure us that some serious contingency-planning is
being done in the Foreign Office in the event that the Irish `no'
stands? I quite see you will not want to say what it is, but can
you tell us that definitely contingency work is in hand?
Mr Murphy: We are working pretty hard
on all of the different scenarios and, as your Lordship has reflected,
it would be unhelpful on all sorts of levels to discuss or air
that publicly. It is our responsibility to look at all of these
options and these are options we looked at in advance of the Irish
`no' vote in case it was someone else that did not ratify, but
our position at the moment is very strongly that Lisbon is a package
and we do not want to unpick it. One consequence perhaps which
your Lordships may find helpful for me to share with the Committee,
and I have already shared it with the Commons Committee, is that
it is as a consequence of the `no' vote in Ireland that one of
the things we did, and this was announced of course by the Prime
Minister in the Commons, was that our work on the External Action
Service has now been suspended on the basis that that was a substantial
amount of work and a substantial amount of planning on capacity,
on Civil Service transfers, on secondees and all of the work that
would go with the External Action Service, and, on the basis of
the Treaty at the moment, implementation has been delayed or suspended.
We thought it was only right to respond to the Irish referendum
and postpone that work until such time as either the Irish suggest
a way forward generally on the Treaty or until such time as the
French, as the new Presidency of the EU, suggest a way forward
on the External Action Service, so it is important to acknowledge
that that work has now stopped within the Foreign and Commonwealth
Office.
Q9 Lord Sewel: Can we go on to high
food prices, which is perhaps of more immediate concern to some
people. In the Conclusions, there was reference to biofuels and
the importance of the sustainability of biofuels, which of course
there are certain question marks about. We have had the Gallagher
Report, which again mentioned the connection between biofuels
and the impact they have on food prices. Where do we stand? What
is our policy position in Brussels on biofuels?
Mr Murphy: Our general policy position
is to take a relatively cautious approach. If there were a spectrum
of opinion, from ambitious/adventurous to cautious, we would be
on the more cautionary wing of that spectrum.
Q10 Lord Sewel: A very sensible position
to be in! In the same sort of context, GMOs, it made no reference
to GMOs in food production in the Conclusions. What is our own
thinking of GMOs, do we support them, our own thinking internally,
but our own thinking in relation to Brussels because at the moment
it is particularly the Council that is in a bit of a mess on GMOs?
Mr Murphy: On GMOs, it may be a cliché,
but it is nevertheless, I think, a fair way to summarise our position,
that we will be led by the science. We think there are undoubtedly
long-term benefits to GMOs, undoubtedly, but there has to be improved
reassurance about the safety and the unintended consequences,
and that is the work that we are going through with the Council
and other partners in the European Union, but, in principle, we
think there are potentially great benefits. Now, I hope your Lordships
do not think it is disrespectful to offer such a short answer
on biofuels, but what I mean by "cautionary" is that
as much effort as possible into sort of stage two, stage three
biofuels, arid, semi-arid, and then the stage three, level three-type
would be algae and investment in that sort of research.
Q11 Lord Sewel: Do not worry about
short answers; I am all in favour of short answers, especially
when I agree with them! Can we have a bit more on GMOs because
I think the sort of formal Council position is to be led by the
science and that is clearly not what is happening all the time,
so how can we improve really the performance and consistency of
the Council?
Mr Murphy: I think another short answer
in that spirit would be speeding up the GMO approval process;
it is far too slow at the moment. The process and the time-line
for approval is inordinately long. There is also, I think, some
proof of again unintended consequence and this zero-tolerance
approach to the import of GMOs, I think, leads to risk-averse
importing. Now, it is fundamentally important that there is transparency
in terms of the source of imports, particularly on cattle feed
and others, but this zero-tolerance, in the absence of absolute
certainty on some aspects of the science, is the correct approach,
but it nevertheless leads to a kind of risk-averse importing policy
which, I think, is unhelpful. In general, the main point is to
speed up the GMO approval process; I think that would help.
Chairman: I hope that can be done, but my impression
is that those who are in favour of GMOs say that all those assurances
have already been given on a scientific basis and those who are
against it will never agree that, so there is this feeling that
the debate will go on and on until somebody puts their foot down
and says, "We will now make a decision on this".
Q12 Lord Jopling: Can I make a comment,
first of all, on GMOs, that the Commission have a history of ignoring
the science and playing the politics, and I am thinking of the
situation we had when I used to go to the Council of Ministers
years ago over growth-promoting hormones, which were abolished
totally against the science and purely for political reasons within
the Community. Going back to food prices, was there a recognition
that the rather hysterical comments which were made about food
prices a few months back really no longer apply? If you take the
case of UK agriculture, I think I am right in saying that, of
last summer's harvest, 60% was sold forward for less than £100
per tonne, which is priced probably less than the cost of production,
and all the hysterical comments a few months ago came when the
price went up to £200 per tonne temporarily and of course
the price is now today, I guess, £130/135 per tonne, really
much less than when there was all the hysteria. Was it acknowledged
that really the situation is not as bad as it looked as though
it was going to be four or five months ago?
Mr Murphy: I am not sure if that is what
was acknowledged, Lord Jopling. What was acknowledged and what
is increasingly acknowledged, and I do not know if this would
meet with Lord Jopling's assessment, is that this problem we have
on food and fuel, in particular, it is not a cyclical problem,
it is a structural one, and it is not based on speculation, it
is not based on the behaviour of equity speculators or otherwise,
but it is entirely a global disconnect around demand and supply.
That is this Government's assessment and it is one that is increasingly
shared by others. I am not sure if the specific set of analyses
that Lord Jopling is offering was discussed in any great detail,
although I would simply reflect that today's inflation figures
show that the food and non-alcohol drink price increase has far
outstripped the average inflation rate as published today.
Lord Jopling: I should have made clear that I am
a producer of wheat.
Chairman: It is important you declare that!
Q13 Lord Maclennan of Rogart: Minister,
in all the discussions of the Council on climate change, which
have followed from Hampton Court on, there has always been a caveat
about the fuel choice being a matter for the sovereign Member
State. On this occasion, it appears that the British Government
indicated to the Commission that they might take a lead in bringing
forward an incentive mechanism for carbon storage and capture.
Does this reflect any view about the competence of the Union in
this field and, secondly, what sort of an incentive did the Government
have in mind?
Mr Murphy: I do not think it reflected
a change in competence because that is a whole other question,
but what we have in mind of course is the commitment to have these
12 carbon capture and storage plants by 2015, and the fact is
that it takes perhaps five years, I think, to actually commission,
build and have one of these plants operational. On the basis that
we have not got any up and running really, the UK Government basically
has accepted its responsibility to help fund one of these plants,
and I think the figure that is often quoted is that it would cost
about £700 million. There are nine bids currently in, bids
in terms of the operation of the UK plant, and we are determined
to make progress on it because I sense that, if there is not that
degree of European leadership, it is remarkably difficult to move
China or persuade China, parts of the United States and others,
so that is why we have basically forced the pace on this carbon
capture issue by doing that.
Q14 Lord Maclennan of Rogart: Sorry
to come back to the issue of competence, but whose responsibility
is it? I do not quite understand what the approach to the Commission
was about.
Mr Murphy: Well, there is agreement and
the European Council has agreed unanimously to have 12 of these
plants and we have simply stated that we wish to invest in one
of these plants in the United Kingdom and be amongst the first
to do so. We think it gives us a competitive advantage and I do
not think it throws up issues of competence in the way in which
some have suggested. Perhaps we could reflect on it this way very
briefly, that I was in the US last week at the launching of Public
Diplomacy, a Foreign Office publication, but I also took the
opportunity with the Utah senator, a state that is nearly 90%
reliant on fossil fuels and dirty fossil fuels, and I simply take
the view that, if the United Kingdom was to lead the way on this
technology, there is a global market for us to exploit and that
is the opportunity that we are seeking to exploit, so it is not
an issue of competence, but it is an issue of determination to
make progress. If we are going to meet this 2015 target on these
12, colloquially put again, we have got to get cracking.
Q15 Lord Maclennan of Rogart: But
then is it wrong that the British Government did not ask the European
Commission to bring forward an incentive mechanism to deal with
this issue?
Mr Murphy: In terms of the incentive
for governments or the incentive for business to do the right
thing on carbon capture?
Q16 Lord Maclennan of Rogart: I am
just asking what the Government's position was vis-a"-vis
the Commission. Maybe it would be easier to provide a note, I
do not know.
Mr Murphy: If your Lordships would find
that helpful, I would be happy do so, but the approach to colleagues
in Europe is about saying that we are willing to play a leading
role in this technology. There are three stages of technology,
as your Lordships are aware, and at least 12 plants are essential
to get the framework right, and the UK will basically be in a
position to place one of these plants in the United Kingdom and
that is our intention. Of course, if your Lordships would find
it helpful for me to provide a note about the incentives around
carbon capture and storage either for Member States or for businesses,
I would be happy to do so.
Chairman: That would be helpful. I am afraid we do
have to move on and thank you very much indeed, Minister, for
that helpful offer. We come now to questions of international
financial instability and high inflation rates.
Q17 Baroness Cohen of Pimlico: What
were the European Council discussing in terms of the current international
financial instability which was largely caused by high oil prices?
How did the discussion go?
Mr Murphy: Well, there has been acknowledgement,
different levels of acknowledgement, about this disconnect between
demand and supply, particularly on fuel. There was an acknowledgement
which led to a number of suggestions about better co-ordination
between states that supply and states that are net importers of
fuel in terms of demand, a renewed commitment to some of the things
we have just spoken about, carbon capture, energy efficiency and
much more, and acknowledgement that the European Union has a responsibility
to poorer countries in this global context and a realisation,
I think, that this volatility is structural, as I have already
alluded to, but the main thing is a greater realignment of demand
and supply in global energy markets, and that would be the main
conversation in the Council, so the contaminating effect on other
prices that the doubling of fuel prices has had would be the primary
discussion.
Q18 Baroness Cohen of Pimlico: Did
they talk about high inflation rates?
Mr Murphy: Not per se in terms of trying
to set, and have a conversation about, a preferred European level
or rate or the optimum European level or rate because, as Lord
Maclennan raised the issue about competence, that then would of
course raise issues of competence, so not in the context of the
definition or the economics of inflation, but certainly the causes
of inflation in terms of food and fuel, absolutely, but not on
the economics of inflation per se.
Q19 Lord Dykes: The agony now confronting
the central banks and governments too is about whether inflation
is more important or the recession is more important because it
is inflation across the board in terms of statistics and the press
exaggerate, so, if it goes up from 3.7 to 3.8, they use the verb
"soar", and I love the way the newspapers in Britain
and elsewhere do that, whereas the recession in the physical economy
is perhaps limited in certain sectors and so on, particularly
housing and the other things, and people are not really quite
sure what is going to happen. The European Council must have alluded
to these matters and, although you said there was not time for
a substantial discussion, did they begin to reach any conclusions
about supporting the ECB, the European Central Bank, in their
strategy because the Bank of England has made a straight move
towards the European Central Bank and there is agreement that
inflation is a problem?
Mr Murphy: I think this debate about
the European Central Bank was one that was particularly lively
perhaps three or four months ago with President Sarkozy offering
his assessment of the behaviour of the European Central Bank,
but the aggregate view of European leaders is that the European
Central Bank strategy is the right one and that it should be allowed
to go on to deploy that strategy free from unhelpful, high-profile
comments. In terms of the specifics on inflation and the Central
Bank, recession versus inflation, all those sorts of issues, the
conversation really was not framed in those contexts. I think
the starting point of the conversation was from the basis of what
the citizen was feeling, the consumer, the person putting the
petrol in their car, the person doing the shopping, or the person
trying to buy or sell a house. It was that context that was usually
the process or the prism through which European leaders had the
conversation rather than the role of the ECB.
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