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To ask Her Majesty's Government what assessment they have made of the legality of the European Commission's decisions on the future of banks in the United Kingdom owned or partly owned by the Government, in the context of the expiry of the present Commission's term of office on 31 October.
Lord Davies of Oldham: My Lords, the Commission may act in a caretaker capacity after the expiry of its mandate on 31 October to protect the interests of the EU, to fulfill its obligations under the treaty and to ensure the continuity of public service. The Government have agreed packages of measures in principle with Commissioner Kroes in respect of the restructuring of Lloyds Banking Group and the Royal Bank of Scotland. These are now subject to state aid approval by the college of Commissioners.
Lord Willoughby de Broke: My Lords, while I am grateful to the Minister for that reply, I am afraid that I am not satisfied by it. Nowhere does the treaty, under any article for the reappointment of the Commission, allow for reappointment in a caretaker capacity; there is simply no legal basis in the treaty for that. It therefore follows that, in all its actions since 31 October, the Commission has been acting beyond its powers. That includes the restrictions that have been put on the Royal Bank of Scotland in relation to the payment of dividends, for example, which disadvantages shareholders and pension funds. Can the noble Lord confirm that the Commission has not been legally reappointed according to the procedures laid down in the treaties and that, therefore, its actions are ultra vires?
Lord Davies of Oldham: My Lords, the Commission has not been legally reappointed because there is no need for it to be. What is happening at present, as has happened on two occasions in the past, is that a caretaker Commission has continued beyond the expiry date of the mandate. Its decisions have been ratified by case law and decided to be entirely valid in circumstances in which, as the House will appreciate, a vacuum could not be allowed to occur because of delays with the treaty that would lead to a situation in which no decisions at all could be taken by the Commission.
Lord Kinnock: My Lords, is my noble friend aware that, under Article 216 of the treaty, provision is made to ensure that a Commissioner-and therefore a Commission-stays in office unless and until a replacement is appointed through due process, and that consequently the decisions taken by the Commission since 31 October are completely within the law? Is he further aware that the competition rules operated by the Commission have existed unchanged since 1958, and that the banking restructuring required under the state aid rules set down since then is completely consistent
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Lord Davies of Oldham: My Lords, I have been grateful to my noble friend in the past, but perhaps never so much as on this occasion, when he speaks with all the authority of having occupied the Commissioner role.
Lord Pearson of Rannoch: My Lords, do Her Majesty's Government agree that the EU's emerging common financial policy-illegal though it may be, as your Lordships' Select Committee has found-will prove a worthy companion to those planetary disasters, the common agricultural policy and the common fisheries policy?
Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for broadening the discussion. It gives me the chance to emphasise that not only British banks, but two German banks and a Dutch bank, are subject to the requirements. The background to this is phase 1, in which the Commission acts and there is a right of appeal against any position that it takes. So far, no one has appealed against the decisions of Commissioner Kroes, largely because they make a great deal of sense.
Lord Foulkes of Cumnock: My Lords, will the Minister confirm that, irrespective of what decisions are made about the future of the banks, the three separate Scottish banknotes will continue to be issued and the holders of such banknotes will be protected against any potential future insolvency?
Lord Davies of Oldham: My Lords, I am delighted that my noble friend was able to attend the Committee yesterday when we discussed these issues, and I am pleased that I am able to confirm today what I was able to confirm yesterday.
Lord Newby: My Lords, does the Minister accept that the real question concerning the banks is how best to restructure them in order to prevent them taking undue risks in the future? Would he accept that simply flogging off a few hundred branches does not get to the root of the problem, and that what the UK Government should be doing is discussing with the banks how to split their utility functions from their casino functions on a permanent basis?
Lord Davies of Oldham: My Lords, the noble Lord has strayed from the Question, which concerns the decisions taken by the Commissioner being implemented by the Government for the necessary increase in competition in the British financial sector. He is going on to the broader role of banking, and will know that the Government are addressing themselves to that with all the urgency required.
Lord Hannay of Chiswick: My Lords, does the Minister agree that it is a trifle odd that two noble Lords opposite are seeking to undermine the powers of the Commission as regards competition policy when what this country requires is for the Commission to operate those rules in a rigorous and even-handed way, which it has been doing, because that is what is in our national interest?
Lord Davies of Oldham: My Lords, I would never suggest that expressions that emerge from noble Lords opposite are odd but they certainly do not fit in with received public opinion in this country. People know only too well that the Commission's role with regard to competition policy has been hugely backed by public opinion and by Governments of all persuasions in this country because it is very much in our interests. To that extent, therefore, I am extremely grateful to the noble Lord for identifying those issues.
Lord Tomlinson: My Lords, rather than inflict on the House a second question from the noble Lord, Lord Pearson, I invite my noble friend to hypothesise on what the damage to European economies would have been if co-ordinated action had not been taken at the European level. Does he agree that today throughout Europe we are seeing the benefit of that co-ordination in the fact that economies are coming out of the recession and growth is showing quite strongly, so that even papers such as the Daily Telegraph yesterday are full of praise for the prospects of this country?
Lord Davies of Oldham: My Lords, my noble friend, in his usual trenchant terms, has identified the strange feature of arguments opposite that somehow in this global crisis, with Britain so exposed because of the significance of our financial sector, we could have pursued a policy of go-it-alone.
Lord Willoughby de Broke: There is time. As the noble Lord, Lord Hannay, said, the question is not whether the Commission has done a good or a bad job; it is whether it is legal. I do not accept the point made by the noble Lord, Lord Kinnock. I should like him to quote Article 216 to see whether the Commission is legal. I do not believe that it is; it may have to be tested in the courts.
Lord Davies of Oldham: My Lords, it is always open for that to happen in a democratic structure, to which I know that the noble Lord subscribes so far as the European Union is concerned. I emphasise that on two previous occasions Commissions have had to extend their periods of office for a short time. Test cases indicate their right and duty to do so, and the same applies here.
Lord Woolf: My Lords, it has been drawn to my attention that there may be two matters for which I should apologise to the House in respect of a question that I asked spontaneously a short time ago. The Cross-Benchers, of whom I am one, are always grateful for the hospitality that is received in the position that I now occupy. The question certainly did not indicate that I intended any allegiance to Her Majesty's Opposition, but apparently the hospitality extends only to sitting on this side of the House and not to asking questions from it. If that be so, I apologise and shall try to forbear doing so again.
Regarding the second matter that was drawn to my attention, I am grateful to the Leader of the House, who indicated that perhaps I should have referred to the fact that I am engaged for profit in seeking to establish a court in another Gulf state, Qatar. My question was directed at what the Government should be doing and had nothing to do with Qatar. However, in so far as I should have mentioned that matter, I do so now and apologise.
The Chancellor of the Duchy of Lancaster (Baroness Royall of Blaisdon): My Lords, the whole House will be aware that tomorrow is Armistice Day. At 11 o'clock tomorrow morning the House will not be sitting. Members of the House, their staff and the staff of the House will nevertheless be going about their work outside the Chamber. I hope that the House will agree that it is appropriate that we observe the two-minute silence at that time so that we might remember those who have made the ultimate sacrifice of giving their lives for this country. If the House is content, instructions will be issued to heads of department so that members of staff who wish to observe the two-minute silence will be enabled to do so.
Lord Lucas: My Lords, I am extremely grateful for the help that I have received on the regulations from the noble Lord-and, most particularly, from his officials-on behalf of the pedlars, who are affected by one clause in it. His officials have been exceptionally gracious and helpful, and I hope that we have approached a resolution. However, I encourage the noble Lord to
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The Chairman of Committees (Lord Brabazon of Tara): My Lords, I beg to move that the fourth report from the House Committee be agreed to. This report has been put before your Lordships because of the decision taken by the House of Commons in October to stop granting parliamentary security passes to UK Members of the European Parliament. However, because both Houses have the power to issue security passes, the decision to deny MEPs passes granting access to the parliamentary estate can take effect only if this House also stops granting passes. This in turn can happen only if your Lordships agree to overturn the resolutions referred to in the second paragraph of the report. It is for the House to decide whether our previous resolution should be rescinded, and this report is a mechanism to allow the House to take that decision.
I have noted the amendment tabled by the noble Lord, Lord Tomlinson. If the amendment is accepted, the House Committee will of course reconsider the matter. Any subsequent decision that this House should continue granting passes to UK MEPs would present obvious practical difficulties, but officials of both Houses would doubtless strive to identify a mutually acceptable way forward.
Finally, I should highlight one error in the report. UK MEPs are not in fact entitled to access to the Peers' Guest Room. Although they were granted that privilege for the 1992-97 Parliament, it was not renewed thereafter and has consequently expired. I look forward to hearing the views of the noble Lords and I beg to move.
Lord Tomlinson: My Lords, I am very grateful to the noble Lord, Lord Brabazon, for the way in which he has moved the Motion. The House Committee performs invaluable service to your Lordships' House, and I am usually loath to disagree with it, but on this
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That is surely the case for almost every decision that the House of Commons makes. We challenge its right to make unilateral decisions in all sorts of important legislative proposals. We say to the House of Commons, "Think again. Have another look", because we think that it is not necessarily following the best course. If we can do that on anti-terrorist legislation, the abolition of certain trials without jury, identity cards or length of detention without trial, surely we are entitled to say to the other place, "Look at this rather messy, shoddy administrative proposal to deny passes to Members of the European Parliament, who have enjoyed them for past 29 years"-without, as far as I am aware, having produced any problems.
Of all the issues on which we can say, "Think again", this is one of the least significant but symbolically most important. As I said, our system has worked for nearly 30 years without problem. It is important, because one or two noble Lords suggested to me that there is no reciprocity, to know the terms of the letter written by the three party leaders in the European Parliament to Mr John Bercow, the Speaker of the House of Commons, in which they state:
"For the record, Westminster MPs visiting the European Parliament in Brussels and Strasbourg can make a one-off application for a pass which then gives them completely free access to both sites of the European Parliament".
They suggest in their letter alternative ways of approaching this problem. I do not want to go into them in any detail today, but merely say to the House Committee that it should take this back for the sake of good government and good decision-making, look at it again and suggest to the House of Commons that it does the same.
I say in conclusion, as I said at the outset, that I very much appreciate the way in which the Chairman of Committees has approached this today. With that sort of spirit, the House Committee can find a resolution for this small issue, which will otherwise become a serious irritant between ourselves and the European Parliament at a time when, with the extension of codecision in the Lisbon treaty that we have now approved, there ought to be a closer relationship with European parliamentarians, not a more distant one. I beg to move.
Lord Howe of Aberavon: My Lords, I got the impression that the way in which the Chairman of Committees explained this matter was largely sympathetic to the point being made by the noble Lord, Lord Tomlinson. I have an antique interest in the proposition because when I was Leader of the House in another place, the noble Lord, Lord Cunningham, who is not in his place, and I introduced access rights for Members of the European Parliament in response to a pressing need. Access rights became necessary as the dual
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It was in order to remedy that along the lines that are agreed by the Chairman of Committees and the noble Lord, Lord Tomlinson, that these passes were introduced. It is certainly possible that their existence in their present form gives rise to problems in the security field that need to be resolved, but I hope that the House will endorse the generous tone with which the Chairman of Committees introduced this matter. It deserves to be re-examined because a regular, fertile, free cross-relationship between the European Parliament and this Parliament is good for almost everything I can think of.
The Earl of Erroll: My Lords, this is extremely discourteous. I spent some time yesterday with Malcolm Harbour MEP who had to hurry to a meeting here afterwards. He now has to clear security properly. He probably has to do that regularly when he is in this country because he appears at European committees and is very involved in legislation. This is sending out completely the wrong message because as the noble Lord, Lord Tomlinson, said, under the Lisbon treaty, we are now much closer. The EU publication, Your Guide to the Lisbon Treaty, states:
That means there will be a closer relationship. If we want to influence some of the laws that come out of Europe that we have to implement in our local legislation, I suggest we cosy up a little bit to the MEPs, not alienate them. The German Parliament has a room that MEPs can rest in, and they are made very welcome. On a practical basis, we have to do something about this. I sometimes wonder whether the other place has removed itself to another planet.
Lord Dykes: My Lords, I thank the Chairman of Committees for his statement, which I support, and the noble Lord, Lord Tomlinson, for his sensible amendment. The real background to this is that overhasty action in another place has indicated once again that even if there are MEPs from an obnoxious party that most democrats do not like, they should none the less be given equal rights.
Lord Hannay of Chiswick: My Lords, like the noble Lord, Lord Tomlinson, I do not make a habit of contesting the opinion of the Chairman of Committees when he comes before the House. I have not done so in the eight years in which I have been here, but the proposal to withdraw certain access privileges from MEPs is a bad one. It is wrong in principle, it is quite disproportionate to the objective pursued, it is untimely, and it reflects an attempted imposition of its will by the other place that is not justified in these circumstances.
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