Examination of Witnesses (Questions 1
- 19)
MONDAY 21 JANUARY 2008
Angela Eagle MP, Mr Peter Curwen, Mr Andrew Olive
and Mr Stuart Glassborow
Q1 Chairman:
Welcome and thank you all very much for coming. You know the form,
we are on air and, indeed, on television. I do not mean national
television, we are on the parliament website and everything you
say will be written down and you will be offered an opportunity
to look at the transcript afterwards. I have a feeling that we
may be interrupted by a division and, if so, I am afraid we may
have to go and vote. If I may, I will get started. Minister, it
is very good of you to come, particularly since it is not your
subject and you are having to bat for all sorts of other people.
Would you like us to start on the questions or is there an opening
statement you would generally like to make?
Angela Eagle: I have a brief opening statement
if that will assist the Committee or if you prefer just to get
on with the questions if you are going to vote, it is entirely
up to you.
Q2 Chairman:
Try the opening statement; it will probably be as illuminating
as the answers to the questions.
Angela Eagle: Thank you for inviting me to assist
the Committee with its inquiry into the impact of the Treaty of
Lisbon. I would like the three Treasury officials who are here
with me today just to introduce themselves to you.
Mr Curwen: I am Peter Curwen, I am HM Treasury
Director of Europe.
Mr Glassborow: I am Stuart Glassborow. I am
an EU policy official working in Peter's directorate.
Mr Olive: I am Andrew Olive. I am also a policy
expert on the EU budget.
Angela Eagle: The Prime Minister signed the
Lisbon Treaty on 13 December and today, of course, marks the start
of the Second Reading of the European Union (Amendment) Bill in
the House of Commons, which contains the necessary institutional
reforms to accommodate a European Union of 27 Member States. The
Bill includes the safeguards we have negotiated to protect the
national interest, the so-called "red lines". The Lisbon
Treaty will enable the enlarged European Union to work more effectively
and efficiently. This amending treaty provides the Union with
a stable and lasting institutional framework which will allow
the European Union and its Member States to respond positively
to the challenges of globalisation. The United Kingdom has secured
full and watertight safeguards on each of the red lines set out
by the Government ahead of the June 2007 European Council which
include a protocol on the Charter, a declaration on foreign policy,
an opt-in on criminal law and police co-operation initiatives
and protection on social security measures. I understand that
the Committee is exploring the detail of these issues with other
ministerial colleagues as well as outside experts. The noble Lords
will know that agreement on the Lisbon Treaty marks the culmination
of several years of discussion on institutional questions. I think
it is also worth noting the agreement at the December European
Council that Member States: "expect no change in the foreseeable
future, so that the Union will be able to fully concentrate on
addressing the concrete challenges ahead". These challenges
were set out in detail by the Government in a document Global
Europe, which was published on 22 October last year. Many
of these challenges and the priorities for the European Union
and Member State action to address them may be of interest to
members of this particular Sub-Committee: growth and employment,
promoting external openness, tackling climate change and energy
security, and tackling global poverty and development. The Prime
Minister elaborated on these points in his speech on British Priorities
for a Global Europe on Monday. To address these challenges, the
Government is committed to pursuing reform of the European Community
budget in the forthcoming budget review. The Commission's budget
review consultation is now underway and the next step will be
the publication of a Commission White Paper this or next year,
likely to describe a set of possible high-level visions for a
future budget. The White Paper will be followed by a Council response
and then a period of negotiation for the next Financial Perspective
due in 2011-12. The Economic Secretary to the Treasury has agreed,
I believe, to come to see you to discuss the budget review. The
Global Europe pamphlet sets out the Government's early
priorities: the key message is that the fundamental review of
the EC budget provides an important opportunity to progress towards
a reformed European Union.
Q3 Chairman:
Thank you very much, Minister. We are confining ourselves very
much to the financial implications of the Treaty and some of our
questions may strike you as slightly man on the Clapham omnibus
but we have felt it necessary, as it were, to take the man on
the Clapham omnibus into our consideration on this Committee and
to ask perhaps his questions about it. May I start with a question
which is, can you confirm that the Reform Treaty will not introduce
any changes to the means by which the EU is funded or the size
of the UK contribution?
Angela Eagle: Yes, I can confirm that is the
case. The Reform Treaty does not introduce changes to the means
by which the European Union is funded or the size of the UK's
contributions and Article 269 confirms this. Own Resources decisions
continue to be made by unanimity through a Council decision and
then approved by all Member States.
Chairman: Thank you very much.
Q4 Lord Kerr of Kinlochard:
"Approved by all Member States". Could I ask the Minister,
I think the language that is in the new Treaty is the language
in the old Treaty and it also includes a requirement that approval
should be given by member states "according to their own
constitutional requirements", which in our case means that
there could be no change to the ceiling on the EU's income without
an affirmative vote of both Houses of Parliament.
Angela Eagle: That is my understanding of the
case, yes.
Q5 Lord Kerr of Kinlochard:
Thank you. Could I ask about a much smaller point which is about
the CFSP and the Start-Up Fund? Having gone from huge sums like
the UK contribution we are now down to the very small sums, but
it is the requirement on this Sub-Committee to have a look across
the board. How do you envisage that the Start-Up Fund contributions
would be agreed among Member States? It is by definition outside
the budget, so the normal procedures would not apply. How would
they do this?
Angela Eagle: Lord Kerr, you are quite right
to observe that we have gone from the very, very big sums to the
very small sums. The Treaty as it is written at the moment does
not specify how contributions will be weighted. It does not by
definition go into that kind of detail. It states that: "The
amounts allocated to the Start-Up Fund and the applicable procedures
for financial control and administration are to be agreed by the
Council acting by QMV on a proposal from the High Representative
of the Union for foreign affairs and security policy." We
suspect that this will be pretty similar to the arrangements that
have been in place for these occasions so far. We are not expecting
there to be any change.
Q6 Lord Kerr of Kinlochard:
Obviously one cannot give a concrete answer, I quite understand
that, because, as you have explained, the Council will be waiting
for proposals from the High Representative, Mr Solana, but would
you expect that he would be proposing procedures which would require
contributions from Member States not contributing to the CFSP
operation in question or would it be, in effect, a whip-round
among those engaged in the operation in question?
Angela Eagle: I think it is probably worth saying
at this point that the Common Foreign and Security Policy can
have civilian or military actions and that civilian and military
actions are funded differently. Expenditure arising from civilian
actions is generally funded by the EC budget and tasks having
military or defence implications cannot be charged to the EC budget
and, therefore, have to funded by I suppose what you have just
referred to as a whip-round, which would be the way to talk about
it. It would depend what the action was, how it split into civilian
and military, as to how it might be assumed or suggested by the
High Representative that it be paid for. You can see from that
that it is done on a case-by-case basis and in general sense prevails,
people do not try to force EU countries who perhaps do not want
to get involved in particular issues to have to pay for them.
It is all done in general by agreement. I am not aware that we
have had massive controversy in the past in the nine different
examples we have had of actions, both military and civilian, under
this heading in coming to conclusions about how to fund them.
Q7 Lord Kerr of Kinlochard:
So you, Minister, speaking not just for the Government but for
the Treasury, are perfectly happy with this Start-Up Fund provision
in the Treaty and are waiting to see what the High Representative
will propose for the detail but are not waiting in fear and terror?
You are not worried?
Angela Eagle: We certainly are not waiting in
fear and terror and we do not have any nightmares that it will
somehow turn into some huge financial drain that comes from nowhere.
We see these things coming along the track, they are discussed.
The High Representative will not just come up with his or her
favourite thing to do for next month, we get sight of it very
early and get involvement in it very early and we can decide whether
we wish to participate or not and do our budgeting accordingly.
We are not expecting big surprises or huge sudden liabilities
to land on our lap as a result of the Start-Up Fund.
Lord Kerr of Kinlochard: Thank you very
much.
Q8 Lord Moser:
A couple more points on the Start-Up Fund. One is whether there
is a risk that the work undertaken during the normal budget negotiations
to reduce the size of the Common Foreign and Security Policy,
or a Member State's net contribution, might be undermined by the
existence of the Fund, by negotiations about it. It is the relation
between work on the Fund and the existence of the Fund and the
normal budgeting negotiations. Secondly, related to that, will
the Start-Up Fund be subject to the same controls and inspections
by the Court of Auditors that apply to normal budget expenditure?
Angela Eagle: I suspect that the Start-Up Fund
is outside of the budget, so I do not expect that the Court of
Auditors would have a role to play independently in auditing amounts
of money that are outside of the budget. I presume it could do
so if members wished and pulled it in, but since it is outwith
the budget I do not think there is a link between the Court of
Auditors looking at it and the use of the money. In terms of your
first question, I am not quite sure what you are trying to get
at with respect to the budget, Lord Moser. What was the question
that you were asking?
Lord Moser: Other people here are more
expert than I am, but the main point I suppose is the form of
control and inspection of the Start-Up Fund.
Q9 Chairman:
If I may, Lord Moser, the question that I think was not entirely
understood was if you negotiate out some of the CFSP funds in
the main budget negotiations, is there a risk they will pop up
as Start-Up Fund?
Angela Eagle: No, I do not think so. The Common
Foreign and Security Policy is supported by the Government and
we consider that it represents value for money. The Start-Up Fund
is there to finance preparatory activities only for tasks, not
charged to the European Union budget, which have military or defence
implications, so there should not be an impact on the Common Foreign
and Security Policy budget within the EC budget or, therefore,
by definition the UK's net contribution to the European Community
budget. There should not be duplication since one is off budget
and is designed to be precisely what it says it is, start-up funding.
On the Common Foreign and Security Policy budget itself which
is within the EC budget, I presume some process once preparations
had been agreed unanimously, might take over, but the two do not
coincide.
Q10 Chairman:
The analogy that struck me was that the Treasury, for example,
funds the defence budget and anything really beyond Trooping the
Colour is funded off the special Treasury budget and one has always
wondered whether the one leaks into the other.
Angela Eagle: That is not the way it is designed.
The Start-Up Fund is designed to be preparatory and off-budget,
the Common Foreign and Security Policy has its own recognised
chunk of the European Community budget and it would be pretty
bad form for the one to leak into the other and I do not see any
reason why that should come to be the way that things happen informally.
I do not see what benefit that would confer.
Q11 Lord Kerr of Kinlochard:
Minister, would you not think it slightly implausible? In their
budget negotiations the pressures to increase spending tend to
come from the European Parliament and the Commission and it is
the Member States in Council who tend to be exerting a downward
pressure on the budget. Here we have a CFSP operation which by
definition is run by the Member States with no role for the European
Parliament and no role for the Commission, so it seems rather
unlikely that they would be using it to get round what they have
just been doing in a budget negotiation.
Angela Eagle: I agree with you. I have not found
it often the case that the Council of Ministers connives to break
its own budgetary rules. I do not think that happens very often,
if ever.
Q12 Chairman:
I accept logically the Court of Auditors will not audit this,
but does anybody audit the Start-Up Fund? Are there any provisions
for auditing?
Angela Eagle: I do not think I know of standing
provisions for audit. In most of these instances there would be
the normal budgetary disciplines that each country would have
with respect to its own contributions, but I do not think that
I know of a standing audit procedure which would go across all
of them. In Council discussions on financial control procedures
the UK would certainly join with likeminded Member States in making
the case for a sound and adequate financial management procedure
to be put in place. The ad hoc nature of the Fund at the moment
means there has not been one, but that does not mean to say we
should not have that.
Q13 Lord Kerr of Kinlochard:
I agree with the Minister, particularly with the Minister's first
answer. I think there are precedents—Mostar was one of them—where
the Court of Auditors was involved on an ad hoc basis at the request
of the Member States. Because it is not the Community budget,
the Start-Up Fund expenditure would not, as the Minister has explained,
be directly and normally in the purview of the Court of Auditors,
but I would imagine there is nothing to stop the Member States
asking for further ad hoc scrutiny by the Court. Is that
right, Minister?
Angela Eagle: That is right, and presumably
all the Member States' own audit capabilities are brought to bear
on their particular parts.
Q14 Chairman:
On their contributions, yes.
Angela Eagle: But clearly there is also an argument
for having some arrangement at some stage to look at the overall
efficiency of expenditure in a particular case.
Q15 Lord Woolmer of Leeds:
Good afternoon, Minister. As you know, in the Treaty and in the
amended treaty provision is made for Member States that are faced
by an emergency situation arising from a sudden inflow of migrants
from outside the European Union for financial support for those
Member States. In the Treaty before it was amended this was limited
to a six month period but now that limitation has been reduced.
Could I ask two questions on that? First of all, as it is an emergency
situation and emergency support, what is your expectation of how
long emergency funding might last because it now takes away any
constraints?
Angela Eagle: Well, it takes away the old provision,
you are quite right, of a six month limit but it makes it clear
that measures taken under this Article 63(3) will be taken on
a provisional basis, which is still temporary but it is not as
rigid as saying six months. Presumably if there were an emergency
with respect to a sudden inflow of migrants which went on longer
than six months this would give the flexibility to continue the
emergency assistance, or perhaps even for a shorter period. We
think this leaves more flexibility in the system but there is
a clear statement that such expenditure should be taken on a provisional
basis and our understanding of that legally is that it is time
limited. There is a loss of the rigidity of six months and nothing
else. Say an emergency had lasted seven months, under the old
procedures one would have had to stop the support after six, which
did not seem to make much sense.
Chairman: Lord Woolmer, we have a division
and I think, therefore, if the Minister will excuse us, we will
suspend for the minimum time possible.
The Committee suspended from 3.39pm until
3.46pm for a division in the House.
Q16 Chairman:
Minister, I am sorry for that interruption but here we are again.
You and Lord Woolmer were halfway through.
Angela Eagle: Yes. I was just talking about
the shift from the six month limit in the old Treaty to this provisional
arrangement. I was mentioning that the Government understands
"provisional" as meaning that any measures agreed will
be strictly time limited.
Q17 Lord Woolmer of Leeds:
So not in this policy itself but in the funding there is no inherent
danger that provision could become quite a long time, in effect
it is around readdressing priorities within the normal budgetary
process?
Angela Eagle: No, that is not likely to happen.
The change in wording does mean that should something go on longer
than six months in an emergency there is at least the flexibility
to continue to address it.
Q18 Lord Woolmer of Leeds:
One final question on the Chapter dealing with border checks,
asylum and immigration. The UK has an opt-out for policies in
this Chapter. Would this extend to an opt-out on the fair sharing
of financial implications described in Article 63B, which is effectively
saying that policies are set out in the Chapter and implementation
should be governed by the principle of solidarity and fair sharing
of responsibilities, including financial implications? How does
the opt-out from the Chapter relate to our financial obligations?
Angela Eagle: The Treaty does actually allow
us an opt-out. Article 5 of the Protocol means that unless we
specifically opt-in we will not bear any financial consequences
of decisions taken with one notable exception, and that is we
will be liable for some admin costs, but the admin costs under
that area of freedom, security and justice policy I am told are
eight per cent of total spending. So we may be liable in some
instances to small amounts of administrative money but we certainly
would not have to pay for issues or the financial consequences
of anything that was agreed that we had not opted into.
Lord Woolmer of Leeds: Thank you very
much.
Q19 Chairman:
I would now like to ask about Article 270a. Is the Government
content that Article 270a gives the institutions sufficient flexibility
to renegotiate a Financial Framework in the event of unforeseen
circumstances which require new budget lines? The only example
I can think of at the moment is the Galileo Project.
Angela Eagle: We argued quite strongly to get
Article 270a in because it provides a Treaty basis for the multi-annual
Financial Framework which has become the norm in agreeing budgets
over the five to seven year period and we wanted that reflected
in the Treaty, so we are pleased it is in. We do think it is the
case that any revision of the Financial Framework should only
be agreed in exceptional circumstances and after all attempts
have been made to reprioritise budgets. The fact that the Galileo
Project was one such example of that demonstrates how rare it
is, in fact. We are quite happy with the powers that Article 270a
grants the institutions. We think it is the right balance between
flexibility and maintaining budget discipline over the period
of the Financial Framework.
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