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The logic of this very pragmatic position is that if we find in future years that the European Community is doing a good job in these fields, we will be prepared to rid ourselves of that emergency brake provision. Those who are disposed by nature to see everything that the EU does as a threat will never believe that anything can work, but those of us who think that it can be an opportunity should be open-minded about the possibility of the changes that are provided for in the Lisbon treaty.

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I argue that these three areas are issues that are not of the highest national importance, like whether we join the euro, but are of significant importance where change might be necessary in processes that the Government might want to agree to. However, the Bill will require an automatic referendum. Look at them: first, social security legislation, which, as we know, is tied up with the right to work, study, and settle for retirement wherever you want in the EU, which is one of its most appealing citizenship rights; secondly, judicial co-operation, which is essential if we are going to effectively tackle the terrorist threats of the kind that the noble Lord, Lord Strathclyde, talked about earlier in his Statement on Osama bin Laden; and thirdly, cross-border crime, in terms of which we are all aware of the increasing problems of criminal gangs operated from outside the EU but often on its borders, in countries like Russia and some parts of the Balkans.

Surely we want to retain the flexibility to make Europe effective in those areas. That may require changes in these so-called emergency-brake provisions but, on a narrow but significant point, the Government are saying, "Oh no, we can't do anything for at least seven years or so because we have to have a referendum and we are certainly not going to do anything about that this Parliament". The argument from this side of the House is a different one: let us not tie ourselves up in these knots but have the confidence that in a representative democracy Parliament should deal with these questions; there is no place for a referendum on them.

Lord Blackwell: My Lords, I must apologise to the House and the Minister for having been unable to contribute to the debate on the Bill so far. I feel compelled to contribute at this point by the extraordinary speech of the noble Lord, Lord Liddle.

When the Government of the day brought the Lisbon treaty to this House, one of their proud claims was that they had protected the red lines that they had set out, including the red lines on areas such as social security and judicial co-operation, through the introduction of these emergency brakes. If legislation was brought forward in the European Union that was seen to be against our national interest in these areas, or against things that we could tolerate, we had the right to say, "We will not go along with this. We don't think this should be applied to the UK". Effectively, we have a veto. The other member states can proceed without us if they wish, but it gives us a cast-iron guarantee that in these very sensitive areas the EU cannot override the UK Parliament and the UK people in legislating in what are regarded as areas of national importance. For the noble Lord to say that we should now throw these emergency brakes away-

Lord Liddle: I am not saying that at all. I am saying that we should not tie ourselves up indefinitely in the need to have a referendum to make this change. That does not mean that I am in favour of immediate change in these things; I am not. But I want to hold open the possibility of flexibility in order that we can meet new circumstances if necessary.

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5.45 pm

Lord Blackwell: I am grateful to the noble Lord for his clarification. However, he talks about trust, and I have to say to him that the reason why the British people have lost trust in politicians to represent them in Europe is that over many years they have seen politicians stand up and say, "Minor changes. These won't affect you", but cumulatively those changes have added up to a huge shift in powers.

These brakes were put in the treaty, which was agreed by Parliament. The noble Lord may not want to remove them this year, but when does he want to do it? If he wants to do it at some time, that would be a substantial weakening of the current treaties. In the spirit of the Bill, which I wholly support, I regard anything that removes a veto or anything akin to one as a major change to the treaty that should not be carried through by Government without the provisions of the Bill requiring that as a major change it should be put to the people in a referendum.

In his speech, the noble Lord attempted to confuse the House by suggesting that the referendum would make it difficult for the UK to use these powers. I should make it clear-the Minister can correct me if I am wrong-that nothing in the Bill requires a referendum for the UK to use, or not to use, the emergency brake. The Bill is entirely silent about the use of Articles 48, 82 and 83. It simply says that if the EU seeks to amend the terms of the treaties under which we can use those emergency brakes, that will require a referendum. Whether or not the use of the emergency brakes itself required a referendum would depend on the substance of the matter that was contemplated being brought forward under those provisions, which would fall under other aspects of the Bill.

Removing the subsection, as the noble Lord is attempting to do, would mean that at some point in time a future Government could give away these vetoes without requiring that to be brought back to the people. That is exactly the kind of action that has led to the loss of trust of people in politicians and, unfortunately, in this Parliament, to protect them in this matter.

Lord Hannay of Chiswick: I am sorry that the noble Lord's absence from earlier debates has not enabled him to catch up with where this debate has got to. Some of us were attempting to reduce sharply the number of provisions that require a referendum, for a number of reasons that are not the ones that the noble Lord, Lord Stoddart, gave but are related, as the noble Lord, Lord Liddle, said, to whether or not you believe in representative parliamentary democracy and the powers of Parliament. A number of us who have done so have put forward amendments that would effectively leave in the Bill the strengthening from the ratification of Lisbon powers, which means simply that if these changes were to be made there would need to be a resolution in both Houses, but would leave intact in the Bill a requirement for primary legislation before Britain could agree to that. That would be a strengthening of parliamentary authority in areas such as this, which in any case require unanimity. The idea that there is not a lock there is completely aberrant. What there is not, if you follow the amendments, is a lock plus a

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referendum, and that is for principled reasons that I have briefly attempted to explain. I am sorry to interrupt the noble Lord, but really and truly the situation is not quite as he suggests. Those of us who are trying to reduce the number of referendums are not trying to weaken the power of Parliament but to strengthen it.

Lord Blackwell: I thank the noble Lord for his intervention. Actually, I am fully aware of the nature of these amendments, all of which attempt to undermine the purpose of the Bill, which is to require a referendum if there is a major change to the treaties or a major shift in power. That is a principle that I fully support and which the noble Lord is attempting to undermine.

I hope that there will never be a referendum under the Bill because I hope that no Government will ever seek to transfer further power to the European Union in a way that would require the referendum requirement to be enacted. In hoping that we will never have such a referendum, I probably agree with the noble Lord. However, if we are going to restore the trust of the people of this country in the EU, we have to give them the cast-iron guarantees that the Bill provides and not undermine it in the way that the noble Lord, Lord Liddle, seeks to do.

Baroness Falkner of Margravine: I seek some clarification on the amendment of the noble Lord, Lord Liddle. It seems to wish to get rid of three emergency brakes but leave in place the one that includes the common foreign and security policy. That seems somewhat inconsistent; the noble Lord has mentioned several areas of co-operation where he believes it would be important, if the EU were to proceed in a manner that would be conducive to our interests, for us to do so. I suggest that the common foreign and security policy would be one area in which we have rather more expansive interests than in those of social security, judicial co-operation and cross-border crime.

Since the noble Lord gave a few examples, may I caution him on, for example, judicial co-operation? He thought that it may well be essential to have improved judicial co-operation if we are to tackle terrorist threats. That is an important point, but I also urge caution regarding the other direction. It is not that long ago that in this House the former independent reviewer of terrorism legislation, my noble friend Lord Carlile, warned us regarding the proposals for 60 days' detention without charge that the previous Government wished to introduce. We must not go in the direction of the French legal system, for example, under which people have been interned for several years without charge. It cuts both ways: we may want enhanced co-operation but we may well not want it.

The previous Government negotiated the treaty and put in the emergency brakes. It is unclear what these moves would achieve and why that change of position has come about. Will the noble Lord reassure me on my understanding, which is that the Bill does not require a referendum before the EU can act in areas where the emergency brake exists? Co-operation is a good thing which can benefit the UK, but I thought that this was about making it clear to the British people that a referendum would be required if

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there is a move to abandon these important safeguards. Can the noble Lord explain what has caused this quite significant change in thinking?

Lord Pearson of Rannoch: There has been much support in our debates so far against referendums for all but the most important issues such as the euro, and the noble Lord, Lord Liddle, echoed that in his speech. The speech of the noble Lord, Lord Deben, comes to mind, and many others. As this is a theme running through so much of our debate, I felt that I should make just one comment.

To put it mildly, we, the political class, are not particularly popular. I fear I detect a feeling out there among the people, in many discussions and in many fora, that our system of representative parliamentary democracy has, to some extent, broken down, or at least that it is not the great instrument it was before, the one which was exported all over the world. I think that there is now greater support for more of a plebiscitary democracy. Our system of representative parliamentary democracy worked very well in the 17th, 18th, 19th and even early 20th centuries, when many, if not most, people could not read and often led lives of endless drudgery and when better educated people were elected to Parliament to take their decisions for them. But now the people can read and, on the whole, are just as good and capable as their politicians. I believe that something like the Swiss democratic system, with its referendums-not, perhaps, going quite as far as the Californian system, with its difficulties over tax and the rest of it-really is now the only way in which to restore their democracy to the people. To those of the political class who laugh at this and decry such a prospect, I merely say, "They would, wouldn't they?".

Lord Flight: My Lords, it seems to me that the three areas where the noble Lord, Lord Liddle, is suggesting the lock-in of the referendum should be removed are fundamental to the argument about needing to have the requirement for referenda to lock in the position as it now is. They are about our common law system, our criminal justice system and our social security provisions. These are crucial areas and, as others have pointed out, because of their importance we negotiated, and were satisfied to get, the emergency brakes at Lisbon.

Some may not agree or be comfortable with the use of required referenda to act as a lock-in to the position that we are in; that is their view. But the whole point of the Bill is to protect citizens against UK Governments, as they have done over the past 20 years, gradually ceding more and more powers without any form of consent from the electorate or from changes in Europe to which the Government are not necessarily a party having the same effect. It would be completely illogical for the Government, having decided to embark upon this Bill, suddenly to say, "We are quite happy after all not to have the lock-in on the crucial area where we have emergency brakes". The amendment is rather, dare I say, a waste of time, because it goes to the heart of what the Bill is about.

Lord Williamson of Horton: I pose a question to the Minister and not just to join side 1 or side 2, which is a feature of Committee. We are dealing with Clause 4,

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which is headed, "Cases where treaty or Article 48(6) decision attracts a referendum". The purpose of the amendment is to remove some elements from that requirement. We will soon discuss a whole series of amendments-Amendments 23B to 23M-which relate to different subjects but have the same single purpose. They identify areas where, if a proposed decision is considered beneficial to the UK, it could be decided by Parliament without a national referendum. That is what we are talking about on this amendment and will be talking about on many more amendments, which will probably take us right up to dinner time.

Of course, some of these questions could probably be decided in any case under existing powers without any treaty change-that is quite possible in many cases-or any decision under Article 48(6). However, areas such as cross-border crime, which is the subject of a couple of amendments, might require such a decision. For this reason, I pose this question. I emphasise that it is a question, not a statement of opinion. If the Government, or more importantly Parliament, consider a small change that would require the operation of, for example, Clause 4(1) or Clause 6(5), and they thought that it was advantageous to the United Kingdom to do so, can the Minister envisage any circumstance in which it could be adopted without a referendum? I exclude from the question codification, which we will come to; measures applying to other member states but not to the UK; and accession treaties covered by Clause 4(4). That last point might be disputed, as it was earlier in the Committee. However, I pose my question. It is important for the further consideration of the Bill that we should know whether future decisions that are favourable to the UK but that would require these changes can ever be decided without a referendum.

6 pm

Lord Wallace of Saltaire: My Lords, we have had a series of rather general debates, some of which relate to the amendment under consideration. However, I fear that several speeches have not referred at all to the amendment that we are discussing.

I first answer the broad and appropriate question that the noble Lord, Lord Williamson, posed. The Government's case is that, under the terms of the Lisbon treaty, we now have considerable flexibility to do a great deal more within the current competencies of the European Union, some of which will be of definite advantage to this country, without needing further treaty change. The amendment seems to be based on an assumption that there is very little flexibility in the treaties, and that Britain is being pushed to the margins, stands alone, and will somehow be trapped by this. The coalition Government are making the case that we wish to make the best of our position in the European Union, but there is now a good deal of headroom and we are not cramped by current conditions. We are, as we will come to later, taking part in at least one exercise in what might become enhanced co-operation on the EU patent. The EU and Britain can work together within existing competencies for some considerable time to come.

On the previous day in Committee, I quoted David Miliband as saying clearly that, with the acceptance of the Lisbon treaty, we should now be entering a stage

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of consolidation in which we do not need further treaty change for some five to 10 years. If that turns out not to be the case, we will all have to deal with the situation as it then comes.

Lord Lea of Crondall: This is the most important point in the Bill. Are the Government now saying that if the Lisbon treaty says X, Y and Z, none of these clauses can in any way undermine it?

Lord Wallace of Saltaire: I was not aware that any of these clauses in any way undermined the Lisbon treaty. The noble Lord, Lord Kerr, who was much involved in the EU convention, is not here. Those of us who have read, as I have, a certain amount on the EU convention and the Lisbon treaty, which followed it, are well aware that the clauses on the emergency brake and passerelle were agreed after hard negotiations, in which it was not the United Kingdom versus all the others. Several member Governments in this now rather large and complex European Union wanted some reassurance that, as they touched on such sensitive areas as national sovereignty, law, finance and welfare provision-some of the issues covered by these emergency brake provisions-they would have, at the back, the ability to say, "No, we are not happy with what is proceeding". That is what the emergency brake is about. It is not the case that Britain stands alone against 26 other member states that are determined to integrate further and sweep more powers into Brussels.

The United Kingdom and several others are pushing for further co-operation in a range of areas. Coalitions across the European Union differ according to each subject on which we negotiate. The noble Lord, Lord Liddle, knows better than me what it looks like once you are inside government. The emergency brakes are there to reassure member states-their public and their Governments-and those who care not just about the peculiarities of English criminal law and justice but about those of Polish and Romanian criminal law and justice. I have read what the then Foreign Secretary, Jack Straw, said about this when he gave evidence to the House of Commons European Scrutiny Committee on the Lisbon treaty. He said that the Government hoped that the emergency brake would never have to be used, but that it was there as a reassurance to national Governments. I emphasise "Governments"; this was not just about the British.

Jack Straw went on to say to the House of Lords European Union Committee:

"So it is an additional protection and I think really rather an important one".

Perhaps the noble Lord, Lord Liddle, drafted this. Jack Straw then said:

"Again, it is quite a paradoxical point but I think the effect of it may be to provide greater confidence to British Government to get involved in opting into instruments, which is actually in principle what we want to do, and having done that then some additional surety which will get a satisfactory answer so that we do not have to apply the emergency brake".

The noble Lord, Lord Liddle, said that sometimes the arguments around all this are arcane and of mind-boggling complexity. That sentence was not the easiest to read. However, the whole purpose of the emergency brakes is precisely to reassure national Governments on sensitive

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issues. It is not intended that they should be regularly used. It is highly unlikely that any Government will wish to remove them in the foreseeable future. Therefore, I suggest humbly that this amendment is one of the least useful that we have to consider.

Lord Liddle: I think the noble Lord, Lord Wallace, is trying to distort the position that I have put forward. I am not in favour of removing the emergency brakes. I am saying that the flexibility is there in the Lisbon treaty to do this. Those of us who have doubts about the Government's Bill are saying that since this flexibility could be exercised only by Act of Parliament, why does it have to be done through a referendum? That is fundamentally the point. We heard the argument about what the former Foreign Secretary, David Miliband, said about the Lisbon treaty late at night in the previous session of the Committee. The point is that David Miliband recommended the Lisbon treaty to the other place on the basis of the flexibilities that it contains. However, the problem with the Bill is that it tries to tie up all those flexibilities with its wretched referendum lock.

The noble Lord, Lord Wallace, is trying to cover up the fact that his party is allowing the Conservative Party a second bite at the cherry on the referendum on the Lisbon treaty that it failed to secure. That is what much of the Bill is about. It is to my great regret that the British party that has been the strongest supporter of Britain's membership of the European Union has gone along with what the Conservatives are asking for in this case. They are after a re-run of Lisbon. The amendments that we on this side of the Committee have put forward say, "Let us take the Lisbon treaty as it is and accept that the flexibilities within it do not require referenda".

Lord Wallace of Saltaire: It is my great regret that for 13 years under the previous Labour Government the balance of public opinion in this country became steadily more sceptical about the European Union and that the Government of Tony Blair and then of Gordon Brown failed to make a positive case for European Union engagement. That has left us with a very sceptical public and a deeply sceptical and antagonistic press. That is the problem with which this Bill deals. It is another problem that we have inherited from a succession of previous Governments. The noble Lord, Lord Liddle, might well have tried to do something about that at the time from inside government, but unfortunately he did not succeed.

Lord Liddle: We can have academic debates about these questions in other places, and I do not want to delay the Committee. However, on the facts, there has been no great swing of British public opinion against the European Union over the past 15 years or so. It has fluctuated with circumstances over time. The Eurosceptic press was not created by the previous Government; unfortunately, it has been with us for a lot longer than that.

We on this side fundamentally object to the idea that plebiscitary democracy is the way to restore public trust. I am surprised that the noble Lord, Lord Wallace,

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is going along with this. I do not know what the noble Lord's views are on the current referendum campaign, but there does not seem to be a high quality of public debate on referenda, given the way in which some of the people involved in the referendum campaign have argued that we are missing out by not having these issues decided in Parliament, where there would at least be a more balanced consideration of them.

I will, of course, withdraw this amendment. However, we on this side have moved several amendments on these lines, and we see no give whatever on the Government's part. On subsequent Committee days I will refer to the question asked by the noble Lord, Lord Williamson, to which the Government must face up: namely, if they think that something has to be done in the national interest, would it still require a referendum, and what would be their position on that? That question is highly relevant.

Lord Lamont of Lerwick: What sort of policy proposals would the noble Lord want the emergency brake lifted for? Given that the emergency brake is there purely as a defensive mechanism, to be used rarely on occasions of national interest as a negative power, what circumstances can he envisage in which he would want to get rid of it? In all the areas that he has mentioned on which there might be co-operation, we can agree to co-operate anyway.

Lord Liddle: The noble Lord is right, of course, but it seems to me that on judicial co-operation, for instance, we had established the confidence that the former Foreign Secretary Jack Straw talked about and that Europe was important and effective in these areas. We might wish at some stage-I am not saying that we would but we might-to see some change in the processes. After all, it might be not only us who want to apply the emergency brake. Other member states might wish to do so, and that might be detrimental to the possibility of getting agreement on these questions. If we look back to Maastricht, we see that justice and home affairs were included in the European treaties for the first time on the basis of unanimity. However, by the time we got round to Lisbon there was an overwhelming consensus among member states that these matters should not be in a separate pillar but should be part of the main business of the Community, and that in the vast majority of cases there should be majority voting. Opinions change in the light of circumstances. Therefore, why should we tie ourselves up in referenda?

6.15 pm

Baroness Williams of Crosby: I hope that I may suggest a response to the noble Lord. One example that we on this Bench have discussed is the growing incidence of piracy, which might stop a great deal of traffic passing through the Red Sea and affect the interests of our country and of others. Secondly, in the immediate aftermath of the freezing of assets of a number of non-democratic leaders following the Arab spring, money laundering might be regarded as an urgent issue.

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Lord Liddle: The noble Baroness comes to my aid and makes good points, for which I thank her. I shall withdraw the amendment, but the Government should think hard about flexibility in the Bill. At the moment it is profoundly damaging to the British national interest because it gives our Ministers no flexibility whatever in their dealings with the European Union.

Amendment 21 withdrawn.

Amendment 22 had been withdrawn from the Marshalled List.

Amendment 23 not moved.

Amendment 23ZA had been withdrawn from the Marshalled List.

Amendment 23ZB

Moved by Lord Waddington

23ZB: Clause 4, page 4, line 3, leave out paragraph (a)

Lord Waddington: My Lords, I will not detain the Committee for very long. At first sight one might think that this amendment was a bit of a fuss about nothing. Why should anyone fuss about the codification of the practice of an existing competence? However, when one comes to examine the matter, the implications are serious. They were spotted by the House of Commons European Scrutiny Committee, which reported in these terms. It said, referring to the exception in Clause 4(4):

"In our opinion, this exception is significant: it would cover the practice of EU institutions pushing at the boundaries of their competence (competence creep), sometimes supported by judgments of the ECJ, and subsequently codified in a revision of the Treaties".

I give your Lordships a simple example of what I am talking about. We are talking about, for instance, converting a non-binding intergovernmental agreement, which can be revised or revoked by another simple intergovernmental communiqué, into a treaty law which can never be changed except with the unanimous agreement of all member states. We are talking about what is in effect a transfer of power or competence because we are enshrining in the treaties an obligation that was not in them before. All this is not fanciful: conversion of simple agreements into what is to all intents and purposes permanent and irreversible Community law, backed up by sanctions against backsliders, has happened and does happen. In particular, parts of the Lisbon treaty were justified as mere codification of practice.

For instance, our own European Union Select Committee, in the 10th Report of the 2007-08 Session, on its assessment of the impact of the Lisbon treaty, found that new Article 43(1) of the Treaty of European Union, inserted by Lisbon, which set out the task for which the EU could deploy military and civilian missions under the common security and defence policy, codified in the TEU the tasks that had been agreed by member state Governments in 2003, as part of the European security strategy. However, the wording of the report, which I have here, hardly demonstrates that the committee

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had a clear understanding of what was happening. Rather surprisingly, at paragraph 12.127, the report stated:

"The Treaty will not change the scope of the CFSP or transfer any additional powers to the EU in this area. The new provisions in the Treaty could lead to a more active role for the EU in the area of CFSP, but much will depend on the degree of consensus among Member States regarding such a role".

In fact, a non-binding intergovernmental agreement that could have been revised at any time by a simple intergovernmental communiqué was becoming virtually irreversible treaty law. It was not a mere codification, but a clear example of well concealed competence creep.

We are not debating whether the common security and defence policy is good or bad; I am pointing out that Clause 4(4)(a) would allow the conversion of a non-binding practice into binding and irreversible community law. The Bill is saying that when that happens, there is no need for a referendum.

Finally, the amendment and the situations that I have described should make us wonder whether the provision in the Bill for referendums, far from being an attack on parliamentary democracy, may mean that Governments have to take more care to ensure that they are open with their own Parliaments as to the implications of proposals, because of their statutory obligation to hold referendums, if there is a transfer of power or competence. I shall certainly not press the amendment to a vote, but I hope that Select Committees will in future be alert to the possibility of new law being made under the guise of codification, and report accordingly.

Lord Dykes: I apologise for interrupting. Can the noble Lord give any other examples, apart from the CFSP?

Lord Waddington: That is the example that comes to mind. There are three or four of them in the Lisbon treaty, but I do not have that information and, unfortunately, I cannot give it to my noble friend, but I will write to him, if he wants it. There were two or three other occasions; I am not saying that they were earth shattering, but it is alarming that the Select Committee did not spot that new law was being made here. That is the point I am making. It is alarming that new law could be made without holding a referendum, and it is doubly alarming that one of our expert Select Committees in this House did not spot what was happening on that occasion. It should not happen in future.

Lord Hannay of Chiswick: As a member of the EU Sub-Committee that was the author of that example, I should enlighten the noble Lord on the process. First, what he has said in the past few minutes is based on an interpretation that is a complete fantasy, whereby if this Government and country are party to an intergovernmental agreement, they can walk out of it when they like. They cannot do that. It is a matter of good faith and the law on treaties, and you cannot do that.

The noble Lord is quite right to say-and the text he read out demonstrates this-that we were perfectly well aware that the CFSP and the ESDP were being

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shifted from an intergovernmental basis on to a treaty basis. That is what we said in our report, but the key point was that the provisions for taking decisions within the Lisbon treaty in this area require unanimity, and there would be no surrender of powers or competences whatever. I am sorry-I will speak to the amendment in a moment, but I wished to correct that point.

Lord Waddington: With the greatest respect to my noble friend, he is in error. There was an intergovernmental agreement. You can say that that gave a competence to the EU, but it could have been withdrawn in a moment by just a communiqué between the member states. The noble Lord is surely not saying that it was a matter of insignificance to transfer an intergovernmental agreement into cast-iron treaty law. He is surely not saying that the report from which I read out made clear to its readers that, in fact, new law was being made on that occasion. The report does not say anything like that. It was certainly not a clear statement that an intergovernmental agreement was being transferred and converted into community treaty law.

Lord Radice: I thank the noble Lord for giving way, but what the noble Lord, Lord Hannay, made clear was that this position, even if it is in community law, is protected by veto. I do not think that the noble Lord, Lord Waddington, understood that.

Lord Waddington: That is nothing to do with the case that I have raised. I am saying that the Bill deals with all sorts of situations where it is said that there is a transfer of competence, and that there should therefore be a referendum. I am pointing out that, in this clause, what is dressed up as a mere codification can often be a transfer of competence and the conversion of an agreement between members states that could be altered at the drop of a hat into binding treaty law. That is what I am talking about. I beg to move.

Lord Lamont of Lerwick: My noble friend Lord Waddington is to be congratulated on and thanked for raising an extremely important point on which I should like the Minister's reassurance. I should like him to address the points made by my noble friend.

Of course I understand that the Bill deals only with future treaty change, not the existing provisions of the treaty. If a power of competence has already been conceded to the EU from the UK, the decision obviously cannot be reversed by the Bill. Under it, codification does not require a referendum in any case, including a codified transfer of power or competence. Why? I know that the Government's argument is that if codification takes place by the granting of a formal treaty base for an action, the transfer of power has already taken place, either under the treaties or through a different general article, such as Article 352.

However, the point that the noble Lord, Lord Waddington, raised is important. I know that some members of the Committee dislike the phrase "competence creep", but a transfer of powers could happen through codification and the interpretation of existing treaties. I return to the point to which I referred previously,

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when challenged by the noble Lord, Lord Tomlinson, about an example of competence creep. I cited the use made of Article 122 of the Treaty on the Functioning of the European Union to set up the European financial stability mechanism. That article, as many Members of the Committee are aware, states that financial assistance can be granted to a member state where the state is,

It is very difficult to argue that the case of the financial difficulties which Portugal got into were a natural disaster or entirely beyond its control. At the very least, it seems to me that there was a significant failure of regulation, and, other people would argue, of budgetary and other policies as well.

I do not want to go into that but, to many people, that seemed a bizarre interpretation of Article 122(2). It is that sort of thing that gives rise to the anxiety that the noble Lord, Lord Waddington, articulated. Of course I understand that there is a case for codification and that it will be necessary. Perhaps a significance test could be allied with that when assessing whether codification could be misused in that way. What the noble Lord, Lord Waddington, said, is not a fantasy or an imagined danger-it is very real when one looks at how legislation has happened in the past.

6.30 pm

Lord Brittan of Spennithorne: With great respect to my noble friends Lord Waddington and Lord Lamont, I do not think that they are correct in this case. The test of what is codification and is therefore excluded from a referendum provision is an objective one. It does not depend on the procedures used to achieve the codification; it depends on whether there has been actual codification or something going beyond it. Codification, in the normal use of the word in English law, which is how the provision would be construed, means not a change in the law but the assembly in a convenient form of existing law. Of course there can be room for argument as to whether in a particular case there has been a change or merely a codification in the sense of an assembly of existing law, but the test is an objective one, not what procedure has been-

Lord Waddington: I-

Lord Brittan of Spennithorne: Just one moment-not the way in which that has come about either in this country or elsewhere. In the last analysis, the test of whether what has happened is codification and is therefore exempt from a referendum would be applied in the normal way by the British courts applying common-law principles.

Lord Waddington: Is not my noble friend at loggerheads with the noble Lord, Lord Hannay? The noble Lord, Lord Hannay, was arguing a short time ago that there was an existing competence. It was not at that time enshrined in treaty law but, as the result of an intergovernmental agreement, there was a competence. Clause 4(4)(a) refers to the codification of a practice

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in relation to the present exercise of an existing competence, so I think that I am right and that my noble friend is in error.

Lord Brittan of Spennithorne: I do not think that that is the case. The question is: is it codification or not? That is the question, not how it has come about. If it is not codification but the creation of a new law, the provision exempting the requirement for a referendum does not apply. If it is codification, which will be determined by an objective test applied by British courts in accordance with normal common-law principles, it applies. That would mean that there has been no change in the law of England, however that may have come about.

Lord Waddington: Is my noble friend therefore saying that in the new article inserted in the treaty by Lisbon there was in fact no codification, although it was stated to be a codification?

Lord Brittan of Spennithorne: I am not making any statement about whether or not any particular provision was codification. I am talking about the correct interpretation of this provision in this Bill with regard to the future, which determines whether or not a referendum is called on the question. The test is an objective one: whether what occurs in future amounts to a codification, however it has been achieved, or goes beyond a codification and involves a change in the law. It is as simple as that.

Lord Blackwell: This is the one amendment this evening with which I confess that I have some sympathy. My interpretation of Clause 4(4)(a) is that it talks about the codification of practice under an existing competence. It does not talk about the codification of an existing competence but the codification of practice. As my noble friend Lord Waddington said, the EU has a history of stretching the practice of exercises of competence to take on ways of applying it that may not have originally been envisaged by those who agreed to the competence in the treaty. The example burnt in my mind is the notorious use of the health and safety provision to legislate from the EU on UK employment law a decade or so ago.

Lord Brittan of Spennithorne: I assure my noble friend that whether or not that is a good thing or a bad thing-I have a lot of sympathy with the view that excesses happened there-by no wild stretch of the imagination could that be described in English law, and we are in the process of creating a British statute, as codification. It might be wonderful; it might be disastrous; it might be neither; but it is not codification and therefore the provision would not apply.

Lord Blackwell: I said that I had some sympathy with the amendment, and I very much hope that the Minister will be able to reassure me. To my mind, that was an example of a practice coming into effect which could then be claimed was an existing practice that simply needed to be codified. I am not a lawyer, but if something can be done under an existing competence,

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why does it need to be codified? The EU already has the power to do what it needs. If something is then codified, the danger is that it creates a new base, or ratchets up the base, from which we can then have further ingenious development in practices. I am therefore very nervous about allowing codification of this sort to take place when, if the EU is already doing it, codification does not seem to be needed. I would very much welcome the Minister explaining and perhaps thinking again about whether that exemption is required in the Bill.

Lord Hannay of Chiswick: My Lords, I will now argue against the amendment on substance, having dealt with the ancient history to which we were all subjected previously; I do not want to go back on that.

A common-sense application to the amendment would lead one to regard it as bizarre. The object appears to be to ensure that if the European Union, with the agreement of the British Government-which is required under unanimity-conducted an act of genuine codification, we would have a jolly referendum about it. All I can say is that if noble Lords really want to go around this country stirring up apathy about the codification of some obscure piece of European law, common sense has flown out of the window.

The amendment is being moved, and support for it being given, on the basis of fear that a British Government will not know enough about the process to distinguish between a real codification and-in the parlance of noble Lords who support the amendment-competence creep. It is not sensible to add to the 56 other matters, to increase the number of referendums on a subject on which it is frankly just not credible that you could have a sensible political campaign involving the whole electorate of this country. I am not in favour of that.

Lord Waddington: I hope that the noble Lord will appreciate from the very fact that I am not pursuing the amendment that I use it as an opportunity to point out the severe error committed by members of his Select Committee when it carried out its study into the impact of Lisbon. I hope that he will always bear that in mind in future and that the error will not be repeated.

Lord Hannay of Chiswick: I am afraid that the noble Lord is going to be disappointed.

Lord Howell of Guildford: My Lords, if there are no further comments from your Lordships on this issue, it remains for me to seek to allay the fears of my noble friend Lord Waddington on a matter which is undoubtedly complex. Indeed, as the noble Lord, Lord Liddle, remarked earlier, the entire area is complex because the interface between the powers and competences of the European Union and the powers, rights and obligations of the nation state members is vastly complex and, in some senses, is in a somewhat fluid state. Indeed, it is that very fluidity that gives rise to the unease for which I believe there is substantial evidence, and I speak as someone who has been involved for just short of 50 years-even before the UK joined the then European Community-in trying to see that the European

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Union works in a balanced, effective and beneficial way. Over the past few years, not only in this country but in many countries we have seen an appalling record of declining confidence in, support for and public consensus over the whole construct of the European Union. In my view, the EU has conferred considerable benefits on its members and on the peace and stability of the whole world in the past, and, provided it proceeds in a sensible way with good public support, it will do so in the future in a number of, although not unlimited, areas. This is a perfectly sensible aspiration and one which I think the Bill and its aims reinforce, although I realise that that is not understood or accepted by noble Lords opposite.

The amendment would remove the provision setting out that future treaty changes which serve to codify practice under the treaties, in relation to the previous exercise of an existing competence, should not in principle require a referendum. My noble friend is concerned, as he says Members in the other place were during debates on the Bill, that codification could be used as a vehicle for transferring power or competence from the UK to the EU and that this provision might provide a loophole to allow such a transfer under a future treaty change without a referendum. If a treaty change is merely a codification of the previous practice of existing competence and nothing else in that treaty would fall within Clause 4(1) of the Bill, the Government do not think that a referendum should be required and the matter would proceed on that basis. Genuine codification-I emphasise "genuine"-is not a transfer of power or competence. The EU competence in question already exists and the EU has already acted to that effect. Even if the UK did not agree to codify existing practice by means of a treaty amendment, the EU would be able to continue to act within the relevant existing competence. Therefore, in effect there would be no point in attempting to go down another path because the EU would already be doing what it was doing within the existing competence.

An example of a treaty change which we would consider to be codification would be the introduction of a separate legal base for action previously taken to provide macro-financial assistance to some third countries. Article 352 of the TFEU, which we all know well, was used in April 2004 to provide macro-financial assistance to Albania. It was then used a further seven times to provide macro-financial assistance in a similar way to other countries. When the Lisbon treaty came along, it codified this use by providing a separate legislative base under Articles 212 and 213 of the Treaty on the Functioning of the European Union, which cover economic, financial and technical co-operation with third countries.

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That change was, in our view, a genuine and sensible codification of existing EU practice within existing EU competences. Under this Bill, such a codification would not have required a referendum, and indeed the whole discussion leading up to whether it would have triggered a referendum would have been in that light. Therefore, the codification would have gone ahead smoothly. Other aspects of the Lisbon treaty did of course involve competence movements and power

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transfers, and that is why under this Bill the Lisbon treaty would certainly have triggered a referendum-in my view, rightly so. The European constitution had many similarities with the Lisbon treaty and the previous Government were happy to see a constitution proposed on that, so their worries about "undermining representative parliamentary democracy" and other fine words that we have heard did not arise on that occasion. One has to be clear that, just because one proposes a referendum or a referendum on a set of proposals, that does not necessarily undermine parliamentary democracy. To claim that it does and to set it up as a polar argument between one extreme of Parliament and another extreme of consulting people in this internet age is, I believe, an absurd way of looking at the real situation.

I return to the amendment. We come to the matter on which great legal minds have been playing over the past few minutes-whether a codification is a codification is a codification and objectively so, or whether only a genuine codification is an okay concept but in certain circumstances a codification might not be genuine. The Government take the view that ministerial decisions on codification are thoroughly tested and scrutinised to establish their genuine nature, as should be the case with all proposals for treaty change. The Bill provides for that careful examination. I have heard the views-they are very distinguished views backed by considerable experience-that the codification concept is clear-cut. However, like many things in life, not everything is what it seems. Some codifications may indeed be absolutely beyond peradventure clear-cut but others may have fuzzy edges, where it is not quite clear whether the codification is genuine or whether it could lead to treaty change and shifts in competence. That is precisely what my noble friend Lord Waddington is concerned about.

Under the Bill, any proposed treaty amendment or Article 48(6) decision would require an analysis by the Government of whether it involved any one of the criteria in Clause 4(1). A statement to that effect, with reasons, must be laid before Parliament. The existence of the first part of Clause 4(4) on codification does not remove the obligation on the part of the Government to make this statement. Therefore, Ministers must still assess whether a treaty change transfers power or competence from the UK to the EU and explain the reasoning in a statement to the House. Where a Minister was of the opinion that a treaty change went further than codification of existing practice in an existing competence and therefore would transfer power or competence from the UK to the EU, Parliament would need to pass an Act and the British people's consent would be needed. This would mean that, for reasons which I am not at all clear about, although the Opposition think that this could occur-I very much doubt it myself-there would be an expansion of the European Union's powers through a treaty change, which in this case might be somehow related to a codification. Therefore, Parliament would have the opportunity to scrutinise the Minister's assessment during the progress of the necessary Act and, as with all ministerial decisions, the reasoning would be subject to challenge by judicial review. There is thus a strong process, which I hope meets the concerns of my noble friend Lord Waddington.

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If a Minister decided that a treaty change was purely codification and that therefore no power or competence had been transferred and a referendum was not needed, the Government would introduce an Act of Parliament to ratify the proposal in the usual way with which we are familiar. I am therefore confident in saying to your Lordships that the provisions in the Bill will provide the appropriate level of scrutiny for treaty changes, subjecting genuine codifications to parliamentary scrutiny but not weakening the fundamental requirement that a referendum must be held before the UK can agree to any treaty change transferring power or competence from the UK to the EU. These are the prospects of continuous treaty change which noble Lords opposite have put forward.

We have heard the phrase "multiple treaty changes" again and again. I can only repeat that a treaty change is a vastly complicated, long-term matter which most countries, most sensible negotiators and sensible Ministers in all Governments will go to great lengths to avoid in order to carry forward, within their existing, very extensive competences, the wide range of changes on the social front, on the judicial front, on a vast number of fronts which can be achieved without treaty change. The concept that continuous detailed treaty change has been part of the pattern of the EU in the past, the present or the future is completely false. That is not the way it has worked; it is not the way it does work; and it is not the way it will work in the future.

In due course, I suspect that there will come a time when the European Union wants major reform and perhaps, in a few years' time, a major treaty will lie ahead, but I do not know. It may be one that transfers competences or it may be one that reassesses certain distribution of powers and competences. That is in the future, but in the mean time, this continually depicted pattern of a multiple series of referenda is a complete fantasy and does not relate to what will happen. However, with the passing of the Bill, we are reminded that the dangers of a smaller trickle of competences and powers unnecessarily creeping to the European Union, against the wishes of the British people, would be checked. There would be great reassurance and a strengthening to the European Union and what we have tried to do over the years would be achieved. That is why I advise my noble friend to withdraw the amendment.

Lord Pearson of Rannoch: My Lords, can the Minister give us any idea of the quantum at stake in this amendment, given the European Union's well known capacity to take power by whatever method it can? He mentioned the use of former Article 308 and the noble Lord, Lord Blackwell, mentioned how we were deceived in the Maastricht negotiations over the working time directive which, in the end, turned out to be part of the social policy. How many existing competences are being practised which might require codification? Is this a big area or is it something that will not happen very often because there is not much left to codify or to put in the treaty or to agree?

Lord Howell of Guildford: I do not think it is possible to quantify what will happen, what is happening or what has happened. Codification has occurred from

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time to time and I described one or two instances where it has occurred. There have been more. I would love to be able to say to the noble Lord that it has happened 15 times and it will happen 15 more times, but that would be completely unrealistic. I have no idea how it will occur, but it is important to ensure that we understand what genuine codification is. It will occur again and, as my noble friend Lord Brittan said, it is an objective legal concept but it is a bit like an Omega wrist watch that seems to be genuine but turns out to have nothing inside. There are non-genuine codifications and we have to watch very carefully to see that they do not join the genuine move towards competence creep, which is a phrase that people do not like. The phrase that people like in relation to the European Union is "knowing where they stand", believing, as I think the majority of people in this country do, in the value of the European Union but feeling thoroughly uneasy about it continuing to take too many powers away from the nation states. Most nation states in Europe do not want that and we do not want it either.

Lord Waddington: I beg leave to withdraw the amendment.

Amendment 23ZB withdrawn.

Amendment 23A not moved.

Amendment 23B

Moved by Lord Triesman

23B: Page 4, line 7, at end insert-

"( ) provisions that strengthen the effectiveness of the European Union single market"

Lord Triesman: My Lords, with some regret, I think I am bound to irritate the noble Lord, Lord Howell, but I hope I do not irritate him so much that he regards what I say as being entirely in the world of fantasy. I hope he knows that I have a high enough regard for him not to use his time in that way.

In introducing the amendment I would like to reflect briefly on the debate on the previous amendment. Eminent Members of your Lordships' House-and eminent lawyers-had a very clear difference of view about whether a codification exercise, which was intended to be non-binding in practice, had become a substantive change and a move of powers. I do not want to put words into the mouth of the noble Lord, Lord Waddington, but in essence I think that was his argument. The noble Lord, Lord Brittan, countermanded that argument by saying that it depends on the actual codification or whether what is being undertaken goes beyond the codification. I hope I have understood him correctly-that codification is not a change but an assembly of existing law in a convenient form. That argument is readily understood.

The contribution of the noble Lord, Lord Hannay, also readily understood that. I know from past experience in the area of employment law that in trying to make sense of a codification of different elements of law, it is necessary on occasion to reconstruct the language, to some extent at least, to ensure that the assembly adds to the process rather than produces confusion.

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I do not think it is fanciful at all to think into the future and to consider that there may be a number of occasions-not rare occasions-when a lively discussion will take place about whether some new movement of competence is taking place or not. As they have today, noble Lords-and no doubt many in the other place and in the country as a whole-will take part in that discussion. Some will argue fiercely on one side that there is a change that requires a referendum, subject to having gone through a parliamentary process and subject to the possibility of judicial review-I understand all those points perfectly well-and others will argue that it is no such beast, that it does not require any of those kinds of steps because it is merely a tidying up in the sense of assembling the changes into a convenient form under the existing law.

I do not intend to be disagreeable about the points that the noble Lord, Lord Howell, has made, but I put to him this thought: that were the world a very tidy place, and were everyone to come along with changes that they wanted to see to arrangements in European law with a declaration that they were indeed changes to European law, and there were a movement of competence from one place to another, I have no doubt that we would see each of those events as a major event and everyone would understand the process in exactly the way that he describes it. But I do not think the world is like that. I think it is a much more muddled place in which people move and nudge existing arrangements to try to gain some advantage out of them or to tidy them up, in the course of which someone will say that an advantage is being gained and the argument will rapidly emerge that this is precisely what this piece of legislation was designed to prevent. That is what was called creep earlier in the debate. That is why I do not think it is reasonable, with the greatest respect, to say that it should be blatantly obvious to the Opposition or to anyone in your Lordships' House that one set of circumstances applies and that everyone can see that it would plainly happen very rarely and would require a special arrangement, rather than that there are things happening which many people will think pretty much continuously require some sort of special arrangement, because that is the nature of political life. With the amendments in this group, we are making a legitimate attempt to say that it would be helpful if Ministers had scope to move: a capability to do the necessary political work under certain circumstances and within the constructs of United Kingdom law, and to respond to the circumstances that they face.

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I will illustrate those circumstances. Some of the core arguments concern these three amendments. Because all noble Lords want to make progress, I will not tire the House by going into them separately, except to give illustrations in each case. For example, in discussions on the first amendment-it is on the effectiveness of the European Union single market-someone may argue that under the existing body of European competition law, there is already more than enough law to deal with most competition issues. I would be inclined to agree. However, I have also observed that there are some environments in which competition issues have become much more acute and much harder to resolve.

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For example, in the digital environment, the effectiveness of full competition is extremely hard to resolve. We see processes whereby one technology or one source-coding system becomes dominant and it is extremely difficult for others who wish to use that to create and generate new businesses-and we all want to see those new businesses created and generated-to break in.

Is it impossible for them to break in or to use existing competition law? Arguably it is not. However, I observe that it takes years to do and the situation is seldom resolved in a way that it is regarded as completely satisfactory to all those involved. Those who have the proprietary right, particularly to source code, seem to resist making it available if they possibly can, largely because having it creates monopoly conditions. I understand completely why they want to retain such monopoly conditions if they can. A noble Lord may say in this debate that competition law is strong enough in those circumstances for us to be able to resolve these issues through domestic and principally European courts. However, I invite the House to think about that process. It takes years and, broadly speaking, the resolution at the end is regarded as unsatisfactory.

When cases in the area of competition take years, by the time that they are resolved-if they are resolved-it is too late. The SMEs-which largely are the bodies trying to use the new technologies in order to develop and are precisely the kinds of business that we want to encourage, because the future of our economy probably will be more dynamic in their hands-have gone out of business because they have lost the capacity to build on those technologies or that source coding. That is an example of a digital platform which, if it is subject to the arrangements as they stand, is extremely unlikely to work. It may be that in media concentration similar issues will arise: the capacity to deal in a timely way with the risk of monopolies emerging in what should be a competitive market.

Noble Lords should not take this point the wrong way. I do not believe that any noble Lord or anyone else would be negligent about wanting to resolve such a matter. I am simply expressing the difficulty that we can observe empirically in resolving such a matter. While it may be felt in the European Union that an extension of the legal arrangements that it has to deal with these very rapidly moving economic and financial models-and they move very rapidly-would be valuable, what sense would there be in a Minister of the United Kingdom being unable to take part in such a discussion, or agreeing to take part but only under conditions where it was too late to take part?

Baroness Falkner of Margravine: Perhaps I may interpose a thought on this important point. My noble friend Lord Lamont several times mentioned the European financial stability mechanism. Does the noble Lord accept that, when it comes to financial crises arising and bailouts being instituted, the mechanism will take some years to come into effect? While I agree that technology can drive an impetus for change, in general I do not see any decision-making processes in the EU being affected by this. The bailouts were urgent for the countries involved, yet they will take about two years to implement.

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Lord Triesman: My Lords, I appreciate the question. With respect, I think that the noble Baroness is conflating the first amendment in this group, which concerns the efficiency of the operation of the single market, with the second, which I will come to in a moment and which concerns the strengthening of financial regulation. The issues that have just been raised may be more relevant to that.

I hope I have made the point about the steps that might be needed in order to ensure that proper competitive arrangements are in place in a business environment that changes rapidly and in which the potential for monopolistic behaviour is considerable.

I turn to Amendment 23F, which concerns the strengthening of financial regulation. I accept the point made about the time that would be taken. However, we also know about the speed at which the degradation of financial institutions took place, not just in Europe but in the United States and elsewhere; and that the aim of most of the major policy-makers in a period that was both extremely troubled and extremely complex was to intervene where they felt that they could as rapidly as possible and not necessarily against an 18-month to two-year timeframe. There was a very early consideration of whether the role of the central bank in Europe should be considered. Many nations in Europe urged each other-but not very effectively-to look at the balance sheets of the banks across Europe; at the consequences for one another of the weaknesses in their balance sheets; at the issues that have since arisen from the ridiculous ways in which a great deal of interbank lending took place; at the collapse of liquidity when it could no longer take place; and at the fact that many of the institutions were deeply indebted to each other for toxic derivative products that they traded largely among themselves, and which had in many instances destroyed their balance sheets.

I would like to think that almost everybody in this House, had they been in a position to take a view, would have said that that way lay lunacy and ruin. Almost all of us would not have gone there. Therefore, while it is true that some arrangements would take a good deal of time and some states would pore over them exactly as the noble Lord, Lord Howell, said, some emergency arrangements could have assisted in circumstances of severe financial meltdown, had they been in place.

In those circumstances somebody may very legitimately say, "This is not only a European problem-it is a worldwide problem. You would have had to engage many others as well". Of course I accept and understand that international canvas. However, it would most certainly have helped had Europe and the European nations with considerable financial power been able to go to the original G20 conferences and make points in a very much better, co-ordinated way. You do not need treaty change to make a point in a co-ordinated way-of course you do not-but it is certainly true that had they gone and urged that they wished to use powers which were perhaps a little beyond the set of powers they had, that might have had a significant effect in the G20. From those who were at the G20, I believe that that is empirically true as well.

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Finally, to sweep up this group of amendments, I turn to Amendment 23H, which addresses,

I promise that I will say only a little about this. However, I think that everyone has seen the enormous difficulties in achieving any successful outcomes from the Doha round and the huge difficulties in co-ordinating a European position let alone a world position. Yet everybody has believed that the success of the Doha round would be one of the fundamental drivers of a huge amount of international growth and, just as important, the elimination of a great deal of poverty around the world.

There is another case, where you can imagine small arrangements at the edge-which some will say are a codification of existing arrangements and you can bet that some will say are not-which might have made a real difference and enabled us to move faster, or may in the future enable us to move faster.

Lord Lamont of Lerwick: I agree with every word that the noble Lord has said about trade and the importance of getting a world trade agreement, although those have proved extremely elusive. However, given that trade is an exclusive-exclusive-EU competence, what is the effect of his amendment?

Lord Triesman: My Lords, the intention of the amendment is to provide the scope for further adjustments to the trade arrangements and the powers of the Commissioner dealing with trade arrangements, given that Commissioners who have dealt with trade arrangements have expressed their anxiety about the limitations that have been placed on them during the negotiations in these trade rounds. It is entirely possible-it may be part of the noble Lord's point-that these powers exist in any case and can be handled in any case. However, the experience of the difficulty in making progress leads me to believe that there may on occasions be adjustments that would make the process easier, more helpful and capable of moving faster.

My point is not that these are all world-shattering changes-they may be small changes. The scope to make those changes, to respond to circumstances, seems to me to be a power that would strengthen the people of the United Kingdom and strengthen the EU rather than weaken the people of the United Kingdom.

Lord Blackwell: I confess that I am having some difficulty following the noble Lord's argument on this point and I wonder whether he can help me. As my noble friend Lord Lamont has said, the EU already has exclusive competence in the area of international agreements. It has competence over the single market. It has competence over regulation. It can legislate in these areas using the normal provisions of the EU-that is what the competence gives it; that is under the existing treaty-so we are not talking about stopping it legislating. I am trying to understand what it is the noble Lord thinks might require treaty change to enable the EU to do something; and why, if it requires treaty change, that will not in any case take several years to accomplish, in the way that treaty changes normally do. I fail to understand what is the restriction to act in areas where the EU already has competence.

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7.15 pm

Lord Triesman: My Lords, I apologise if what I have said is not clear enough. My point at the very beginning of my comments was that when you begin to talk about the latitude to move in any of these areas, you can guarantee that one set of people will say that it is a new arrangement and demand the conditions which the Bill establishes for a referendum, while others will say that it is simply in the areas of competence: they can do it with a degree of codification, were that to be necessary, or they can do it under the rubric of the codified arrangements. It will always be the subject of conflict between those who believe that it is a subterfuge to extend the powers of the EU and those who believe that it can be done legitimately. I am saying that you cannot run a proper political process that way, with that much obscurity and that many arguments and with the prospect of many things not only going through our Parliament but through judicial review, and with fierce arguments around the country about the need for a referendum in those circumstances. It just strikes me as being a way of tying the hands of those who you hope and expect will be competent to conduct the discussions in the European environment to a successful conclusion in the interests of this country.

Lord Pearson of Rannoch: My Lords, I speak against these amendments. Amendment 23B assumes that the EU single market is a good thing for this country. That is a common misconception among the political class upon which I should like to cast a little doubt. This is a big and detailed subject and I recommend that any serious student should consult the briefing notes on the website, which demolish the whole myth of the EU's economic usefulness and that of its single market.

The background point, which is not generally understood, is that the single market is more than a free trade area, it is a customs union. This means that a single customs barrier surrounds all the countries in the Union, whose international tariffs and trading arrangements are negotiated and decided centrally by the European Commission. In a free trade area, on the other hand, the countries concerned enjoy free trade among each other, but they remain able to make their own tariff arrangements with countries outside that area. They have their own seats on the World Trade Organisation and they are also able to make their own domestic law in areas such as working time, health and safety at work, part-time workers and so on.

So a country does not need to belong to the EU to enjoy free trade with it. According to a recent government Answer to me, the EU and its single market already have free trade agreements with some 63 countries outside the EU and are on their way to having similar agreements with another 75 countries, or roughly 80 per cent of the other countries in the world. It is perhaps worth noting that both Switzerland and Norway, not in the EU or its single market, both export more per capita to the single market than we do; Switzerland three times as much and Norway five times.

Lord Hannay of Chiswick: I am grateful to the noble Lord for giving way, but I fear that he is in danger of misleading the House fairly elaborately in

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this matter. He is talking about three things, not two: the first is a free trade area, the second is a customs union and the third is the single market. Norway, he has just stated categorically, is not part of the single market. I am afraid that he is in error. It is part of the single market, and it applies single market legislation by receiving fax messages from Brussels telling it what it has to do. The members of the European economic area are in the single market but are not in a customs union. However, I am not totally sure that this line of argument is going to get us very far-but it would be useful.

Lord Pearson of Rannoch: I do not want to delay the House, but that is why I made the distinction between a customs union and a free trade area.

The worst aspect of our membership of the EU single market is its sheer cost. Like their predecessors, this Government are determined to avoid an official cost-benefit analysis, and so we are left with the eight analyses that have been produced since the turn of the century, four of which are pretty much official, and which put the cost of our single market membership at anything between 4 per cent and 10 per cent of GDP. Indeed, the highest cost estimate came in 2005 from the Treasury itself in a paper entitled Global Europe: Full-Employment Europe under the signature of Mr Gordon Brown when he was Chancellor of the Exchequer. It put the cost of EU regulation at 6 per cent of GDP and of EU protectionism at 7 per cent. In March 2006, the French Conseil d'Analyse Economique, which is attached to their Prime Minister's office, found that France had gained nothing from the single market or, indeed, the euro. In June 2006, the Swiss Government published their finding that joining the EU and its single market would be nine times more expensive than staying with their current sectoral free trade agreements with Brussels. Later in 2006, the EU Commissioner for Enterprise and Industry, Mr Günter Verheugen, said that EU regulation was costing its members some €600 billion a year, or around 6 per cent of GDP at the time.

One of the troubles with being in the single market is that this EU overregulation, whatever it costs, applies to the whole of our economy, not just to the 9 per cent that trades with clients in the rest of the EU. So the 11 per cent of our GDP that goes in trade with the rest of the world and the 80 per cent that stays in our domestic economy-91 per cent of our GDP-has to carry the burdens of Brussels's overregulation. There are, of course, those who fear that were we to leave the EU and its single market our trade would somehow suffer and that, to quote the propaganda, 3 million jobs would be lost. The truth appears to be the opposite: trade would expand and jobs would be created. It is, of course, true that we have 3 million jobs exporting goods and services to clients in the EU, but they have 4.5 million jobs exporting goods and services to us. We are, in fact, the EU's largest client. Would the French stop selling us their wine or the Germans their cars just because we had left the single market and were no longer bossed around by Brussels? Of course not. There are also the points that the World Trade Organisation would prevent any form of retaliation

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were we to leave and that the EU's average external tariff is now below 1 per cent. Our trade is going up faster with the rest of the world than with the EU, both inwards and outwards. Our exports to the EU single market are declining. The single market is sclerotic and overregulated and its demographic trend is against it. It is the "Titanic".

It is also hard to think of any other customs unions along the lines of the EU. There was the Soviet Union, and there may be something similar in the Caribbean, but nowhere else. Mercosur in South America does not count because its members are free to agree their trading relationships with non-members. Can the Government advise us of any other customs unions like the EU? If not, does that not suggest that it may not be such a great idea?

As to Amendment 23F, I do not think we need the EU getting more involved in financial regulation. Commissioner Barnier has openly said that he does not favour what he calls the Anglo-Saxon model, and we have yet to feel the damage done to the City of London and its ability to pay tax by the new EU supervisory bodies. When the movers of the amendment say that they do not want it to interfere with the UK's general approach to financial regulation, I ask whether they have Monsieur Barnier's agreement? The deed is done. Overall financial supervision has passed to Brussels. No provisions in this Bill will prevent that.

As to Amendment 23H, I fear that those of us who come from the Eurorealistic perspective would rather that the unelected Commission did not continue to negotiate on our behalf in a new global trade round. As the world's fifth-largest economy, we would rather do it for ourselves.

Finally, is it not really grotesque that an organisation that has so dismally failed to look after the vast sums entrusted to it by the taxpayers of Europe should have its powers strengthened, or made more effective, as the amendments have it? More will certainly mean even worse, and I oppose the amendments.

Lord Empey: My Lords, I think we are straying back to a Second Reading debate, because we seem to have moved somewhat from the amendments. I shall return to what the noble Lord, Lord Triesman, said about emergencies and new technical developments that could arise and that are reasons that he is using to justify his amendment.

Of course emergencies will always arise-they are part of life's rich panoply-and there will always be new developments, but even if they did require changes to treaties and so on, we know that that will take a considerable time. Emergencies can be dealt with by multilateral agreements, bilateral agreements or in a range of other ways, and we deal with them that way all the time. I have worked with an international treaty: the Belfast agreement. We had specific arrangements with the Irish Republic. They were codified. I suspect that people on the streets of Britain talk of little else but codification from what I have been listening to this afternoon.

The debate is so complicated that it causes the eyes to glaze over. We had specific areas of co-operation set out in an international treaty and discovered that an

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emergency arose. It was the prospect that we would not have enough gas on both sides of the Irish border. What did we do? Because we did not have it codified and it was not part of a treaty, the two Ministers-I was one of them-reached a bilateral agreement that we had ratified through our existing processes. We were able to do the job and get the pipeline built in a fraction of the time that it would have taken had we taken it through a formal process. I believe Governments will always be able to find a way to work together in an emergency and that when things are part of an elaborate process, that does not guarantee speed.

The amendments talk about the effectiveness of the single market, effectiveness in mitigating climate change and effective financial regulations. Effectiveness, like beauty, is in the eye of the beholder. If you talk about all these issues, you are talking about pretty well everything in modern life and policy. Not an awful lot is left if you include all these issues.

A fundamental underlying mistake is being made here; nations that require referendums as part of their existing constitutions are not rendered useless negotiators in Brussels. A number of our fellow members of the European Union have referendums as an integral part of their constitutions. Do we mean that the Danes or the Irish are unable to negotiate? Of course not. They are able to do it, and they sit down with fellow Ministers who might not have that requirement. Does that mean that the Danes, the Irish and others are hogtied and unable to negotiate? Over the years, they have sometimes done a jolly good deal. The recent referendum in the Irish Republic on the Lisbon treaty was initially rejected. They went back to the table and got a better deal, and then it was passed. I do not believe that that indicates in any sense that, just because a referendum might be required, a Minister, or a Government, is paralysed. In fact, the evidence is to the contrary. Of course, if it gets far too detailed and concerns trivial matters, I would agree, but I do not think that we are facing that.

In any event, this Bill is about the future. It is not about the past. I believe that there is sufficient wriggle room in the existing treaties and that you would be a pretty bad Government or a pretty weak Minister if you could not find something on which to hang a hook to move a particular measure forward. I am not confident that this Bill will be a showstopper for the European Union. Of course it will not. The European Union will continue. We have many treaty obligations in it, which I believe will be honoured, but this Bill is about preventing expansion and trying to restore public confidence. It is precisely because people do not believe politicians any more that this sort of Bill is necessary.

7.30 pm

Lord Taverne: My Lords-

Baroness Williams of Crosby: My Lords, my noble friend Lord Taverne and I have a difficulty. A number of speeches addressing this group of amendments have moved somewhat between the groups. There have been references to later amendments. We are not quite sure whether this debate is meant to comprise the list of things being put forward by the Front Bench of the

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Labour Party, including this amendment as well as the others that fall within the same general area, or whether we are supposed to limit ourselves entirely to the single market. In that case, a great many speeches have been rather close to being out of order. Perhaps the Government will indicate whether they wish this debate to be limited to the single market or to take a number of these amendments together, in which case my noble friend Lord Taverne and I both wish to say something.

Lord Wallace of Saltaire: As the noble Lord, Lord Triesman, recognised, and perhaps I may suggest, as this group and the groups that follow cover similar themes one might talk about this group and those that follow, which will save time later when we get to the others.

Baroness Williams of Crosby: I am grateful for that, which is exactly my view. Perhaps I might refer to what the noble Lord, Lord Triesman, said. I also associate those concepts with some of the later amendments. I will not keep the House for long. The noble Lord's good argument was made strongly on the basis of the need in some cases for urgent decisions to be made. He pointed out that the formal procedures are long-winded and slow and that therefore in some cases it would be irrelevant to the issue that had come up because it would take so long to deal with the procedures.

I now refer to a second group of amendments, which is what I might call the Canute group. What is the Canute group? Those of us who remember the early history of Britain will remember that the king at the time ordered the tide to turn back. In other words, he insisted on not seeing the world as it is. The amendments in this group are about insisting-

Lord Willoughby de Broke: My Lords-

Baroness Williams of Crosby:Perhaps I may finish my sentence before I give way. The amendments in this group insist, to some extent, that the urgent and very troubling issues that confront us now can somehow be put off and not dealt with at the present time.

Lord Willoughby de Broke: All I want to say is that King Canute did not order the sea to go back. He was demonstrating to his courtiers that he did not have the power to turn the sea back, so the analogy that the noble Baroness was making is incorrect.

Baroness Williams of Crosby: I defer to the noble Lord's deep knowledge of history, but he will accept that metaphors and similes are sometimes rather broader than a deep knowledge of history would insist on them being. I insist on keeping my metaphor going for a few more minutes. The point that I want to make strongly is that issues are coming up that clearly will require a degree of competence on the part of the European Union that is not embraced in the present treaties. Unless we exclude some of these issues from the elaborate procedure of the referendum lock, we will find ourselves hobbled in trying to deal with them.

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I shall give two illustrations. I particularly urge my noble friends in the Conservative Party to consider one of them very carefully. In the past couple of months we have seen some of the consequences of the Arab spring. One of those consequences has been the placing of substantial sums of money within the structures of the European Union because there is very little control over how the European Union at present deals with inflows of money from other quarters. Members of the European Parliament have shown a great deal of sense about this and have urged the European Union to take additional action, which, as I understand the Bill, will probably require the referendum lock procedure to be met.

One of the most vociferous and articulate Members of the European Parliament on this issue of how one deals with what one might believe to be illegitimate funds-funds that have been stolen from a nation by its leader or funds that have been deliberately laundered through Europe-was the spokesman of legal affairs in the European Parliament. Mr Karim is a Conservative Member of the European Parliament, and I will quote what he said because it is extremely relevant to this debate. He said:

"I would ... invite Baroness Ashton, as a key architect of the EU's new plan for north Africa, to implement strong anti-money laundering provisions as an important part of the future EU strategy in the region. More broadly, the ... Commission must act to urgently address the deficiencies in the current arrangements regarding funds originating overseas. The EU cannot continue to be a savings account in which leaders of developing countries deposit their ill-gotten funds".

Mr Karim went on to call for urgent action by the European Union, which under this Bill will of course be caught by the referendum lock.

I think that my second example will stir a number of Members of this Committee as it certainly stirs me: namely, the relative unwillingness of the United Kingdom to address the issue of human trafficking. According to the International Labour Organisation, human trafficking has now become the third largest common illicit business in the world. It is valued by the ILO at approximately €32 billion in the past year. It is third after the drug trade and the arms trade. It has burgeoned and mushroomed in the past few years.

The United Kingdom was unwilling to sign and agree to an EU directive on the trafficking of children. It refused to do so on the grounds that the United Kingdom had its own measures and did not require a European Union directive on the issue. As many will know, the argument went on month after month, with only Denmark and the United Kingdom refusing to agree to the proposed directive. In this country, the official figures are said by the Home Office, the Metropolitan Police and the UK Border Agency to be far higher than the official figures that are given. Recently, the Home Office said that the official figure for child and human trafficking was around 250 cases a year. One area of the borough of Westminster alone has found something like 1,120 children who are being trafficked. It has announced that it is having to strengthen its own steps strongly to try to deal with the issues.

I will not bore the House with telling it-

Lord Pearson of Rannoch: My Lords-

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Baroness Williams of Crosby: I will not give way at the moment. I am in the middle of an argument. I will gladly give way to the noble Lord afterwards. I will not bore the House by going on about some of the unspeakably awful cases. For example, a boy from the middle of Africa was brought to this country at the age of 16 by a man who pretended to befriend him. Day after day, he was locked up in a house with just one meal a day being served to him and was repeatedly sexually abused by older men. A young mother of several children was trafficked to this country and used by up to 15 men a day against her own will. That was the price of the people who trafficked her in order not to reveal that she was an illegal immigrant.

I will not go on about this, but the cases are bloodcurdling, frightening, terrible. People are trafficked for three purposes: first, sexual exploitation; secondly, direct slavery, often in domestic work; and, thirdly-this is not unfamiliar to those of us who, like me, live in East Anglia-fruit and vegetable picking; young men and women, often children, are used in fruit and vegetable fields, often with almost no wages at all, in conditions of near slavery. We do not like to observe these issues. We like to think that that does not happen here and we reject the concept that such things can happen in an orderly and well policed state, but we are wrong. Unless we can get some international agreement, or at least a European-wide agreement, we will not be able to stop the sources that are being dealt with in other European countries in such a way as to bring this kind of thing to an end. It took 10 months for the British Government and the Prime Minister, under pressure from a group of women who organised visits and petitions to No. 10 Downing Street, finally to agree to this directive a couple of weeks ago. The Prime Minister did not want to do it because he did not want to agree that this extension of the competence of the European Union was essential to deal with this disgusting trend.

I have mentioned these things, and I shall now stop arguing them, to point out that there are what I call-I am sorry, but I shall repeat it-Canute cases, where we try to pretend that the massive structure of organised crime, ranging from the drug trade to human trafficking to money laundering, is not there. When you weigh these issues in the balance, it is right for the noble Lord, Lord Triesman, and his colleagues on the Labour Front Bench to press for certain issues not to be subject to the referendum or to the inevitable delays that follow it. These issues affect our fellow human beings, many of them British, in ways that we should never accept as a country. They require at least a reasoned reaction; they can no longer be dealt with on a purely national basis.

Lord Pearson of Rannoch: Without wishing to detract in any way from the terrible situation to which the noble Baroness has so brilliantly spoken, does she have any statistics on how many of these people come here from Europe through the European open border? Would it not be easier for this country-which is, after all, an island-to police its borders more effectively if we had control of those borders? I suspect that the majority of these people come through from other countries in the European Union.

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Baroness Williams of Crosby: In the case of prostitution, quite a lot of the entries are from eastern Europe. Indeed, some of the more disagreeable people have exploited the fact that the eastern Europeans are not aware of where they are going. They are offered jobs in the catering trade-hotels and so on-and then find out that they have been sold into prostitution. They are not aware of how to deal with the situation or of the safeguards that should be open to them. However, that is not the case with the other two examples I gave of domestic slavery and agricultural exploitation. In those cases, most of them come into this country, rather amazingly, straight from third countries and not by way of other member states of the European Union.

Lord Stoddart of Swindon: On the first intervention, I got the impression that the noble Baroness thought that all five groups of amendments were being taken together. Is that correct? If we are taking all five groups together we will be here for a very long time and noble Lords will miss their dinner. Could we have clarification on this?

7.45 pm

Lord Wallace of Saltaire: I understood the noble Lord, Lord Triesman, to say that as this group and the following group of amendments cover a number of similar issues he had touched on some of the broader issues behind them. It was not my intention to go into the detail on all of them as the noble Baroness has just done.

Lord Taverne: My Lords, some very important issues are raised by these amendments. If they are now to be considered and debated, I do not see how we can possibly break for dinner.

Lord Triesman: My Lords, we have been urged by the usual channels to make sure that the business is handled as effectively as possible. For those reasons I spoke to group three, which has broadly related economics based arguments. I spoke to nothing else. I was kindly reminded that I would need to move the amendment at the end and, in due course, formally move the next two amendments. However, I spoke to the economic group, group three. I hope I have now made it clear.

Lord Wallace of Saltaire: My Lords, in that case, perhaps I may give the Government's response on this group. We will then be able to break for dinner and return to the others later. All afternoon this has been a rather untidy debate. I almost congratulate the noble Lord, Lord Pearson of Rannoch, on actually mentioning in his speech the amendment under discussion. In the previous debate he did not mention the amendment we were supposed to be discussing. We are in a Committee stage debate at the moment in which one is supposed to address one's remarks to the Bill under discussion rather than to the state of the world, the wickedness of the EU as such and all the other things he touched on in his interventions.

The noble Lord, Lord Triesman, raised large questions about global markets and global governance. As we address these amendments, we all recognise that what

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the EU does in competition policy, in negotiating on world trade and so on is part of a rather complex system of different intergovernmental organisations, of which the EU is one. I remind the noble Baroness, Lady Williams, that money laundering is largely dealt with, for example, under the financial action task force, which is more closely associated with the OECD than with the EU. It does it rather well. Indeed, I have read a volume by one of the noble Baroness's close relatives which refers to how well the financial action task force does in this respect. The EU is not responsible for all of the issues involved in managing a global market. However, it has a number of extensive powers, some of which have been discussed on this occasion.

This group of amendments and the ones that follow seem, in general, to contain a number of assumptions about the Bill, the EU and what the Government think about the EU which, I repeat, are erroneous. First, the EU has competencies in all of these areas. We are not talking about extending competencies. Opting in to the human trafficking directive does not extend competences; it merely uses the available competencies in a more effective way. The treaty of Lisbon provides ample scope for EU action in the areas cited in the amendments tabled under this group and the group that follows. The assumption that the United Kingdom is tying itself up in knots and is thus unable to act and that we are the only Government who wish to go through constitutional procedures of the kinds listed in the Bill is also erroneous. As we have said, the UK Government are in the forefront of pushing for new policies in a number of areas. As the noble Baroness said, we have just signed up to the human trafficking directive.

On the Doha round, it is not the EU that is causing the problem, as the noble Lord, Lord Triesman, knows. Incidentally, when Britain first joined the European Community as it then was, one of the first things that I and many others learnt about it was Article 113 and the 113 committee, and the exclusive competence of the European Community in external trade. I am not sure what one can provide more than exclusive competence -perhaps super-exclusive competence is needed next.

We are now negotiating on services as well. The assumption that the EU is unable to act in all of this is part of the misunderstandings that others are raising. There is also the question that if the European Union suddenly found that it lacked these powers then it could rush through a treaty change in two months. Actually, we have discovered that urgent treaty changes take somewhere between 18 and 24 months. That is part of the process we have gone through. The noble Lord, Lord Empey, rightly pointed out that in a crisis you are better off negotiating rapidly in an ad hoc framework, as we often find ourselves having to on a global level-G20 has emerged as part of this-rather than attempting to go through all of these very complicated programmes.

On competition policy, the European Union has now emerged as one of the two most important forums for competition policy in managing global multinationals. Until the EU developed its competition competence, the United States effectively managed the competition policy of multinational companies and operated through extra-territorial jurisdiction in imposing its judgments

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on multinationals operating elsewhere. The record of the EU in competition policy has on the whole been very good. The noble Lord, Lord Triesman, is quite right to point out that innovation constantly raises new problems. That is true for all jurisdictions and there is a constant race between one international organisation and another. So far, the EU has managed as well as the federal United States in that respect.

On the lack of competences, I have looked at what used to be Article 113 and is now Articles 206 and 207. There are two areas of reserved competence in Article 207. One is on audio-visual and cultural relations-not inserted by the British but by the French-and the other is on limitations on negotiations in health, welfare and social services-not inserted by the British but by the Germans. We are not always the ones who are hesitant about giving way on sovereignty; it is often others. On the single market and global trade agreements, the EU is well supplied with competence.

On financial regulation, the EU is one among many actors. The Bank for International Settlements, the financial action task force and the range of other bodies to which the United Kingdom belongs and in which the UK is a full participant also play a role in this area. Our EU partners play a large role as well. The Government want to see-we will stress this on all these amendments-the European Union using the tools it has under existing treaties and its now very extensive competence more effectively, bringing about the benefits that we want to see the EU delivering for the British people and everyone across the European Union. The noble Lord, Lord Mandelson, made an excellent speech on our previous Committee day precisely expressing those sentiments. Those are sentiments that the Government share. Having said all that, I hope that the noble Lord, Lord Triesman, will be willing to withdraw his amendment. Then we will return to the next group on similar arguments after dinner.

Lord Davies of Stamford: I did not want to interrupt the noble Lord's flow while he was speaking, but I have a rather important question. He referred to Article 207 and the derogation in that from the usual procedures on the common foreign policy that the council needs to act unanimously in these two matters involving, first, trade in cultural and audio-visual services, which he said was a provision put in at the demand of the French, and secondly, the field of social, education and health services, which he said was put in at the demand of the Germans. The noble Lord was really saying that here was a case when the treaty needed to be amended to accommodate the particular requirements of those two countries. They were not our requirements and we would rather have had no derogation in the common foreign trade policy. Let us suppose that the French and German were prepared to remove those two derogations or obstacles to freer international trade. Is it the case that under the Bill we would then require a referendum to allow the Germans and the French to agree to give up concessions which they had previously obtained?

Lord Wallace of Saltaire: I have spent a good deal of my adult life studying and teaching on the European Union. I struggle to imagine a situation in which the

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French Government would suddenly decide, on their own and as a single action without asking for any concessions in any other area, to give up that. Hypothetically, in a parallel universe inhabited by the noble Lord, Lord Pearson of Rannoch, and a number of other people, it is always possible that these things might happen. In the practical life of the way that the European Union works, that seems completely inconceivable.

Lord Davies of Stamford: I am grateful for that response which seems to reveal that there is potential for a complete absurdity, which must also exist elsewhere in the treaty. We would force a referendum on ourselves simply because some other member state was prepared to adopt more communautaire policies in the future and to withdraw concessions that previously they had insisted upon.

8 pm

Lord Triesman: I thank all noble Lords for the contributions to the debate, in particular the noble Baroness, Lady Williams. I know we will get to people-trafficking in a later group. It is a critical issue. The examples around money laundering and the massive theft from states of their assets by their erstwhile and in some cases current leaders are also huge issues.

Of course I understand that the EU is not the only player in the global marketplace. It is not responsible for managing the whole of the global market place. I am sure there is a balance of weaknesses and strengths, but one of its strengths has been that when it has been able to act together and in a competent way its impact on other international bodies has been enormous. That is the solid evidence that has come from commissioner after commissioner, particular in the areas of competition and trade. It has been the commissioners in the areas of competition and trade who have pointed most frequently to the empirical evidence for the weaknesses when it is impossible to move effectively because of restrictions on activity. That seems to be quite central to this general proposition.

I understand where the competencies lie. I can read the texts in exactly the same way as any other Member of your Lordships' House but I am mightily impressed by the debate that we had just before this one started and other debates of a similar kind that I have heard over the years. I know that people do not go to the pub to talk about codification-quite rightly and nor should they. Yet one party says that something that is a tidying-up exercise of one kind or another is a fundamental change and it produces what it regards as overwhelming evidence of that. Other people say-I have probably done it myself-that that is nonsense, that it is simply a tidying up and how could anyone else read that much into it?

We have heard today and on so many occasions that, because this is the EU, this will be the subject of major contention. It will be the subject of real arguments and people urging the use of powers. In those circumstances, as we try to proceed within the realm of what many of us believe are the competencies, we will find that someone will argue or powerful bodies will argue that it is a fundamental change-more fundamental, at least, than I or indeed the government Front Bench

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have argued that it should be-and the lock will become a threat to doing it at all. That is how it will be played out. It will be the tactical opportunity that anyone would take in the circumstances. It would be naive to believe that that is not true when it is exactly what will happen.

I seek leave to withdraw this amendment but I do so by predicting that if this Bill proceeds as it is written, the scope for Ministers to behave effectively will be reduced and in some cases-in the current climate, money laundering is a very good example-they will be left way behind the game. That will lead to a very negative judgment about our sometimes rather meagre capacity for foresight.

Amendment 23B withdrawn.

House resumed. Committee to begin again not before 9.02 pm.

Statement of Changes in Immigration Rules

Copy of the SI

Motion of Regret

8.02 pm

Moved By Lord Hunt of Kings Heath

Lord Hunt of Kings Heath: My Lords, this Statement, HC 863, makes a number of significant changes to tier 1 and tier 2 of the points-based system to implement the Government's strategy for reducing non-EEA economic migration. The change follows a public consultation and a number of other notable statements of changes in immigration policies.

The key changes to tier 1 are as follows: to close the in-country category, other than for extension applications for migrants who are already in the UK in that category or one of the categories now proposed that preceded the introduction of the points-based system; to create a new category in tier 1 of the points-based system for exceptionally talented economic migrants with a limit of 1,000 grants of entry clearance in the first year of operation; and to implement changes to the tier 1 categories for entrepreneurs and investors, including provisions for accelerated settlement.

The key changes to tier 2 are: first, to implement changes to the tier 2 intra-company transfer category, including differing requirements for transfers depending on whether they are to be for more or less than 12 months; secondly, to implement changes to the tier 2 (general) category, including a limit of 20,700 overseas applicants who can be sponsored under it in the first year; and, thirdly, to revise minimum skill, salary and English-language thresholds.

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The Merits Select Committee has made the point that the parliamentary scrutiny process for this type of instrument is unusual, yet with any policy changes of this importance the Government should always be aware of the need to allow the House full opportunity to scrutinise the changes. The committee was previously critical of the lack of information presented to Parliament to explain why HC 698 effectively ended tier 1 (general) to overseas applicants. As a result, the Merits Committee wrote to Damian Green, the Minister for Immigration, saying that it would have expected to see an evidence-based explanation of why the Government were changing tier 1, some measurement of the impact of the changes and a more comprehensive explanation of the findings from the consultation on which the changes were based. The committee also asked for assurance that a better package of supporting information would be provided when the full migration limits were introduced in April.

The House will be aware of the Opposition's concern about the approach that the Government have taken and the impact of the migration cap on business, the arts and the university sector. Indeed, we have debated that on a number of occasions in the past few months. We have also been concerned about the reputation of the UK and the potential advantage that we are giving to other countries to recruit highly skilled migrants. Tonight, however, I want to focus specifically on the points raised by the Merits Select Committee, to which the House is once again indebted for the quality of its scrutiny and the advice which it gives to the House on matters which it considers ought to be debated by your Lordships.

The Merits Select Committee, as I have already said, has been consistently concerned about the lack of evidence-based information provided by the Government. It is a matter of great regret that, despite the committee writing to the Minister to ask for a better package of supporting information, the fact is that, as the committee has reported, the Government have made only limited information available from the outcome of the consultation on this policy. The Explanatory Memorandum says that the changes to tiers 1 and 2 have been developed following a full public consultation. It refers to Limits on non-EU Economic Migration-the title of the consultation, which ran from 28 June to 17 September 2010-with a summary of the findings published on the UKBA website.

However, the summary shows that there is a high level of interest in the development of the policy, since more than 3,000 responses were received to the questionnaire during the consultation period from a range of organisations including accountancy firms, manufacturers, telecommunications, universities, transport, retail, the media, the health sector, third sector organisations, trades unions and professional bodies as well as private individuals. Yet the summary is limited to a two and a half page numerical breakdown of the responses, with a few unattributed suggestions, and an annexe providing a list of the 571 responding organisations that provided their details. Unfortunately, as the Merits Committee says, there is no information about the rest of the respondents who were the great majority of those more than 3,000 respondees. The

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committee goes on to say that it considers that this does not provide a sufficiently detailed account of what has been learnt from the consultation exercise, and therefore allows only a limited understanding of the resulting decisions.

I would be grateful if the Minister would specifically respond to that criticism and perhaps give the House a rather fuller flavour of the consultation outcome. I put it to her that the paucity of information might perhaps reflect that the Government did not find much support for their proposals from respondents to the consultation. I would also like some reassurance that the Government will respond to the committee's request for fuller information.

I would also like to ask the Minister about the impact assessment. The Merits Committee thinks that, because of the challenging nature of the policy objectives, the impact assessment has an important role in providing reassurance that the migration cap policy is indeed based on solid evidence. The problem is that the assessment does not provide that, as the committee identified; there is inadequate information about the relationship between migration and social cohesion, little evidence of the impact on employers and silence on how the Government will manage any perceptions of unfairness as a result of the changes and how that would apply particularly to the Indian subcontinent. I would be grateful if the Minister commented on those criticisms. How will the changes made by this Statement be monitored and reported to Parliament in due course?

I invite the Minister to comment on some of the points raised in the incredibly useful briefing that noble Lords have received from the Immigration Law Practitioners' Association, which is particularly concerned about the process for selecting migrants for inclusion in the tier 1 "exceptional talent" category and for the identification of highly trusted sponsors in relation to tier 2. The association's concern is the absence of a structured framework in which judgments can be exercised so that cases can all be treated in a like way. Any help that the Minister could give on this would be much appreciated. I should also say that the ILPA has raised a number of other interesting points, and I would welcome the Minister's assurance that her officials will commit to discussing them with the association.

It is concerning that a Statement introducing a significant change of policy in such a sensitive and important area is being introduced on the basis of less than adequate information being given to Parliament. This is not the first time that this point has been made to the Minister about the Home Office's approach to statutory instruments and rule changes-I am indebted to the Merits Committee for identifying these issues-and that approach means, inevitably, that there will be a prayer against those changes or SIs and we will have these debates. It would be appreciated if the Minister gave some sense that the Home Office has reflected and is reflecting on these criticisms so that fuller information is given on SIs in future, which would then mean that we would not necessarily have a continuation of these prayers, which at the moment are on what seems to be a weekly basis, on the number of SIs that are coming through to your Lordships' House. I beg to move.

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Lord Judd: My Lords, I am particularly grateful to my noble friend for his perceptive intervention. I want to underline two points that I thought were particularly important. The first was that any move in this sphere-indeed, in any sphere of government-should be evidence based. It is very dangerous when one starts meddling in human affairs without a convincing analysis of the implications and of what the outcomes are likely to be.

The second point is the impact. We all know that one of the difficulties with immigration policies is that so often the weight of immigration falls upon communities that are already underresourced in terms of education, health, social provision and indeed employment. It is those areas that find themselves on the front line and this, understandably, can lead to tensions. It is therefore very important to see how any move in immigration policy is linked to social policy and economic policy so that the whole thing stands convincingly together. Those were two crucial points made by my noble friend.

I would like to raise a slightly wider issue which is very pertinent to these proposals. We talk about the importance of joined-up government. I am very glad that the Minister who is replying has the portfolio she has, because, whether she agrees with me or not, she will understand why I am making this point. She has heavy responsibilities in security matters, which she discharges very convincingly. We are concerned about global stability and global security. Anyone who is concerned about those issues must recognise that they are related to the economic situations that prevail in various parts of the world.

8.15 pm

A lot of the pressure of immigration has arisen because of the failure to achieve convincing economic performance in the countries from which those people come. Now we seem to be moving into a rather illogical situation: we say that we are going to stop the people who suffer from the absence of good economic opportunities and conditions from coming here but we will encourage the people who could help to overcome that by their entrepreneurial and professional skills to come here, and we will make special provision for them. This matters, of course, in terms of rationality and justice, but it matters very much in the sphere of security. Are we inadvertently exacerbating economic conditions within which instability arises and extremists can begin to recruit? This needs a bit of attention, and I would like the Minister's reassurance that in approaching a matter of this significance there have been discussions between those responsible for security and those responsible for immigration-between those in the Department for International Development and those responsible for immigration-to consider the implications of what is being proposed. Having said that, as I look around the Chamber, I would be surprised if any noble Lords would disagree that, practically and factually, immigrants have made a tremendous contribution to the British economy, and skilled, well educated immigrants have made an outstanding contribution to this country in many spheres.

In my days in the other place, many years ago, there were all the issues of central and east Africa, and the pressures of Asians being pushed from that continent.

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One now looks at the British pharmaceutical retail trade and wonders how on earth we coped before Ugandan Asians came to this country. I often used to remark that perhaps the late Ted Heath, as Prime Minister, was actually encouraging this because he saw it as the final hope for the success and dynamism of British capitalism. Certainly there has been a tremendous contribution, but that must in no way be allowed to mask the more profound issues which I have tried, however inadequately, to raise.

I hope that in her response to this debate, the Minister, for whom I have considerable respect, will be able to say something about the wider context and the wider consultations that have taken place.

Lord Avebury: My Lords, I am not going to follow the noble Lord, Lord Judd, down the road that he travelled, except to say that the impact assessment covers a multitude of subjects in great detail in the areas of statutory equality duties, economic impacts, environmental impacts, social impacts and sustainability. However, I do not think that it addressed the question of security. It will be interesting to hear what my noble friend has to say on the matter when she winds up.

I thank the noble Lord, Lord Hunt, for introducing this Motion and enabling us to debate a very important set of rules, as well as for his useful explanation of its purpose and of the Merits Committee's comments. I add one point to the many useful ones that he made in his speech-that these changes to the Immigration Rules came into effect on 6 April, 15 days after the statement was laid and one day into the Easter Recess. I thought there was a convention that rule changes had to be laid 21 days before they came into force. I ask my noble friend why that seems to have fallen into disuse. Does she not find it incongruous that we are considering this instrument when it is already the law and, whatever we say, it is too late to alter any of its provisions?

As the noble Lord, Lord Hunt, rightly said, the Merits Committee report complained about the level of supporting information when the Government foreshadowed the termination of the tier 1 (general) order for applicants from overseas, and asked for this to be rectified when the full policy on caps was introduced. However, the Government still have not published the full report on the consultation on tiers 1 and 2, a month after publication of the Merits Committee report. I hope my noble friend will explain the reasons for the delay, which, as the Merits Committee says, makes it difficult to understand why the Government took the decisions that they did and whether the changes to tiers 1 and 2 will achieve their policy objectives.

Again, as the noble Lord, Lord Hunt, pointed out, the abolition of the tier 1 (general) category affects a wide range of organisations, as evidenced by the 3,200 responses to the consultation. These are summarised in very general terms in a two-page annexe to the impact assessment, but there may be large differences between the impact on, say, the universities on one hand and the health service on the other, to pick just two of the employers that have relied on tier 1 (general) in the past. There is the new category, which the noble Lord mentioned, of "exceptional talent" for internationally recognised scientists and cultural achievers, the criteria

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for which are to be agreed between the UKBA and "designated competent bodies", which are yet to be listed on the UKBA website as the Explanatory Memorandum proposes. We are told nothing about these DCBs. Presumably there will be different ones for each speciality, such as the Royal College of Surgeons if the applicant is a surgeon, or the Institution of Mechanical Engineers if the applicant happens to be a mechanical engineer.

The 700 scientific and 300 cultural endorsements are to be divided among the DCBs, according to the standard note by the Library in another place-presumably by the UKBA in consultation with the DCBs. The note says that each of them will set its own criteria. Apparently there is no system to ensure consistency between the criteria, or to decide who the lucky winners are if the number of endorsements exceeds the allocation for a particular DCB. A crude way of dealing with that problem might be to provide in the guidance that each DCB should stop looking at applications once it has awarded the number allocated. However, that could mean having to turn away candidates who are even better qualified than the ones who have already been approved. Unlike for tier 2, there is no division of the total number of allocations by month, so the total could be exhausted very early in the year.

We welcome the amendments to the rules resulting from challenges in the courts to the Government's right to add to or modify the rules in guidance that is not subject to parliamentary approval. Unfortunately, this means that more frequent statements of changes to the Immigration Rules, which are already fairly prolific, as the noble Lord has pointed out, are likely to come before your Lordships in the future. As Lord Justice Sedley said in his judgment on the Pankina case, this is an issue of constitutional importance. I pay tribute to ILPA's briefing, as the noble Lord did. Its briefings are always extremely thorough and readable. ILPA suggests that there should be an audit of guidance to ensure compliance with the Pankina case. Perhaps my noble friend could say whether the amendments dealt with in paragraph 7.16 of the Explanatory Memorandum indicate that the UKBA has already carried out such an audit, to the extent that she can assure your Lordships that no further scope exists for litigation asking for judicial review of refusals that are based on guidance only, and not on the rules.

Tier 2 is divided into two: jobs which are exempt from the new limit because they are on the shortage occupation list or have been advertised in accordance with the resident labour market test, for which an employer can issue an unrestricted certificate of sponsorship; and jobs that are on the graduate occupations list of jobs eligible for tier 2, for which the employer has to ask the UKBA for permission to issue a restricted certificate of sponsorship. On 11 April the first monthly allocation of certificates of sponsorship took place and 1,028 were issued compared with the 4,200 that were available, meaning that the balance of more than 3,000 was carried forward to be added to May's 1,500.

At first glance one would suppose that the demand by employers for highly skilled workers from overseas had tailed off partly because of the recession but also because the applicants are required to have a better command of English and to have a degree-level

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qualification. If there are shortages of workers at the previous threshold of NQF level 3, they will have to be satisfied by stepping up the number of apprenticeships in this country. The Merits Committee reports that concerns were expressed by employers about whether the tier 1 cap would enable them to get the staff they need, but since a worker who had previously satisfied the tier 1 (general) criteria would qualify under the new tier 2 (general) conditions, it should have been possible for the affected employers to switch from tier 1 to tier 2, and evidently that did not happen, at least in the first month of the scheme's operation. As the Merits Committee says, there was not enough evidence from the consultation to enable us to look at particular sectors to see where the shoe was pinching. I wonder whether my noble friend can tell the House what she is hearing from particular employers' organisations now that the scheme is actually in operation.

There is a known shortage of skills in the NHS, with a third of all medical staff already having qualified overseas. A leading medical recruitment agency says that cuts across the board in the healthcare sector have led to a decline in medical jobs across the UK but there are still job opportunities for GPs, nurses, midwives, and community nurses, for example. However, with the cuts biting, hospital trusts may be forced to look harder for doctors and other professionals in the European Union or to postpone recruitment, even at the cost of lowering standards of healthcare.

Tier 2 includes special provision for ministers of religion, which includes in this context members of religious orders. The rules assume that any minister coming to the UK is employed by their church, mosque, gurdwara or temple, but this creates a problem for Theravada Buddhist monks-perhaps this applies also to monks of other faiths-who are not employees and do not touch money. The rules also require that the post to be filled should be advertised to demonstrate that there is no suitably qualified candidate available on the UK labour market. It is manifestly absurd that temples should be required to advertise in the UK for a monk who is unpaid, has to speak Thai, Sinhala, Vietnamese or Burmese, as the case may be, is required to eat only one meal a day, remain celibate, abstain from alcohol and other mind-altering substances and be able to teach the dhamma. For some monks here it is not necessary to be proficient in English because their duties will be almost entirely with the diaspora from the particular country where they were ordained. There are monks of British origin here but they do not move from one monastery to another as a result of competitive forces because the vinaya or discipline is the same in all Buddhist monasteries.

I should perhaps declare an interest as patron of the Buddhist Prison Chaplaincy Organisation, which has a close association with a Buddhist monastery where these difficulties have arisen. The ultimate authority on these matters is the Buddhist Sangha UK, which was established in 2006 to speak for the body of Theravada monks, but was not consulted when the details of tier 2 were formulated. Clearly, the needs of Buddhist monasteries and the Immigration Rules for ministers of religion are mutually incompatible, and this needs to be discussed with the Sangha.

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8.30 pm

Lord Haskel: My Lords, I join other noble Lords, my noble friend Lord Hunt and the Merits Committee in regretting that the Government have not published a comprehensive explanation of the findings from their consultation. Could that be because the consultation showed that the changes were a mistake and there was little support for them, as my noble friend Lord Hunt suggested? Let me put on record some of the consultations that I have carried out.

I shall quote from a briefing note dealing with the impact on the Imperial College Business School of the changes in the work permit regulations, particularly the recent decision to abolish the two-year post-study visa. The briefing note states:

"The UK's main competitors in the higher education sector use post study work options to attract the best students. Without post study work options the UK and HE will lose valuable revenue, talent and impact our reputation".

The school polled its non-EU graduate students, who comprise more than 50 per cent at that college. Of those, three-quarters indicated that they would not have chosen to study in the UK without the availability of these post-study visas. I put it to the Minister that this decision was inconsistent not only with the interests of Imperial College, but also with the policy of the Department for Business, Innovation and Skills.

In March, along with the Budget, the Department for Business, Innovation and Skills issued its Plan for Growth. Page 6 states that Britain should be the,

Surely, Imperial College must be part of that ambition. Was BIS consulted as well as Imperial College? On page 91 of the Plan for Growth, the Government speak of healthcare and life sciences as key contributors to our future economy. Paragraph 2.185 states:

"Innovation is a key driver of long-term growth in the sector".

I recently visited Professor Molly Stevens at Imperial College. She is its professor and research director for biomedical materials. Perhaps noble Lords will join me in congratulating her on being ranked by the Times Eureka magazine as second among the UK's top 10 scientists under 40. She carries out exactly the type of work that the Government's Plan for Growth identifies as a key driver of long-term growth. I shall quote what she said to me:

"In my particular group I have several very talented postdoctoral fellows. Ten of these come from outside Europe. I have absolutely no doubt that it is this combination of highly skilled people that has helped to make my group so successful. If I had not been able to take on those 10 international fellows then our work would have been of significantly lower impact. Facilitating visas for these people to work for us would bring so much value and advantage to our UK universities-they are completely invaluable. These staff, although highly skilled, will typically have earned very little during their PhD studies, making it even more difficult to qualify for some high skilled visa categories".

If her work is a key driver for our long-term growth, were she or any of her colleagues consulted?

Was BIS consulted, because that is part of its policy? What about other parts of government? Were they consulted? Last Thursday, we had an interesting debate in your Lordships' House on soft diplomacy. Noble Lords spoke about building relationships with

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the next generation; how people who work and study here become our best ambassadors; how we build lasting ties in that way-just the sort of relationships that Imperial College is operating. Winding up, the Minister, the noble Lord, Lord Howell, agreed with all of those comments. Indeed, he told us that the FCO had nearly completed a UK soft power business plan to reinvigorate and promote that very thing. Was the FCO consulted?

My noble friend Lord Judd spoke of joined-up government. Was there any joined-up government? Were the findings of the consultation just ignored? If they were properly considered, surely the Government would have found a way for the Borders Agency to control immigration in such a way that it did not help to defeat the stated aims of other government departments and cause difficulties for institutions on which the Government's policy depends.

I support my noble friend's Motion because my consultation and the Government's decision are incompatible. I urge the Government to think again. Perhaps the most valuable role that this House performs for any Government is to provide a pathway for them to think again. I hope that the Minister will take advantage of that.

Baroness Valentine: I first declare that I am the chief executive of London First. I acknowledge that the Government have done a lot to address business concerns about the immigration caps. I remain, however, a sceptic on the benefits of a tier 1 and tier 2 cap and I certainly remain a sceptic about a net migration target where the Government have so little control over the factors influencing it. They cannot control immigration; they cannot control relative economic performance of countries or EU in flows and out flows. However, we are only one month into the new scheme, and we now need some stability and the opportunity to monitor the scheme's impact.

I make one plea of the Minister. Will she consider conducting a thorough economic and social impact study towards the end of this year so that we can improve the scheme based on evidence?

The Earl of Sandwich: I came in to say only a word in support of the noble Lord, Lord Hunt. I am very concerned about these rules going through without discussion. As the noble Lord, Lord Avebury, said, this is a water-under-the-bridge debate; we do not have time to have any impact. I have read the Merits Committee report and note the committee's disappointment about the lack of information all over the place. The Government are proposing major changes to the Immigration Rules which under the previous Government and the one before would have been the subject of serious debate- I have taken part in many of those debates.

The noble and learned Baroness, Lady Butler-Sloss, and I went to a meeting this evening at which we heard reports of the Government's hesitation about a proposed new convention on domestic labour. The noble Baroness, Lady Williams, in the earlier EU debate, said that the Government were reluctant about the EU directive on trafficking. The Government, whether it is in the Department for Work and Pensions or the Home

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Office, must pay careful attention to their international reputation in all these categories and, above all, ensure that the proposals are given the fullest public attention before they come into effect. As the noble Lord, Lord Hunt, has already emphasised, these are sensitive issues. We must not have immigration policy by stealth.

The Minister of State, Home Office (Baroness Neville-Jones): My Lords, a number of points have been made in this debate, which inevitably I suppose has evolved into a discussion on the operation of policy. I am not in a position to answer all the questions that were raised, some of which were quite detailed, but I shall do my best, and I promise to write to noble Lords on other points if I am not able to cover them.

The issue at hand is whether the Government should have published a more comprehensive analysis of the outcomes of the consultation. The Merits Committee, to which the noble Lord, Lord Hunt, referred, felt that the evidence published with the report was not adequate, and the Government take serious note of what the committee has said. However, I should like to begin my reply by putting the matter into context. I confess to being a little surprised that the noble Lord has brought forward this Motion, given the Opposition's record in this area. Perhaps I may give an example or two.

In March 2010, the previous Government made significant changes to tier 4-they said they were significant-concerning the student route. Despite taking the views of key partners, they did not publish any formal explanation of the findings. In March 2009, they also made stringent changes to tier 1 concerning the general and post-study categories, and tightened the resident labour market test. On that occasion, the Government did not undertake any consultation and consequently could not set out any employers' views because no views were sought, so I do not think that that is much evidence of policy-based evidence, which we have been told this evening is so important. In March 2006, following consultation, the previous Government published their policy for a points-based system, which we are following, branding it as,

Again, the noble Lord has just said how important it is to base this policy on evidence and to make that evidence available. However, I think that the House will note that the previous Government did not publish the 517 consultation responses that they received at the time. I am not going to continue in this vein but it would be remiss of me not to expose double standards. Frankly, I think that it is a bit of a case of pots and kettles.

What have this Government done? We have gone to some lengths to set out our findings. The process began on 28 June last year, when the consultation paper was published. As has been said, we received more than 3,000 replies, and officials also spoke to 1,500 employers during the consultation period. That is a considerable volume of paper and consultation, and it was studied very carefully. My colleague, the Minister for Immigration, launched the Home Office research report entitled The Migrant Journey. This

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report, drawing on all the consultation, provides for the first time a great deal of useful evidence about migrants' behaviour and their pathways to settlement. As the Minister said at the launch, the information showed that we needed to look harder at who can qualify in both the work and study categories to make sure that we attract the right people. I think that this country should be about attracting the brightest and best people. In November last year, the Home Secretary made a speech to business leaders setting out the Government's broad objectives and strategy. She referred to the evidence that we received and how we would be acting on it. In November, she made a full Statement to the House setting out the details and giving figures on the basis of which the decision had been informed.

8.45 pm

I set all this out because it is not right to imply, as has been implied, that this policy is lacking in evidence. On the contrary, the evidence taken has been extensive. In March, we made the changes to the Immigration Rules and the Minister for Immigration made a Statement to the House on the day on which the statement of policy was published. It contained the reasons behind the policy decisions-what we had been told in our consultation-and the UK Border Agency has published a full impact assessment to accompany those changes.

It is perfectly fair to say that, like the previous Government, we have not published every single consultation response. We thought that a helpful way of treating the evidence was to put out a summary of the responses and to quantify, as we did, the level of support. We thought that was the honest and straightforward way of indicating what the reaction to our proposals had been. We indicated that to every single question and answer in the consultation document.

Having said that, we take on board what the Merits Committee has said. Like noble Lords present, the Government attach great importance to and value the service that that committee provides to Parliament and to the public. Its ability to provide that service to us is dependent on access to information. I wish to reassure the chairman, the noble Lord, Lord Goodlad, and the committee that the Home Office will always be happy to provide the committee with more information where that is possible and reasonable, within the normal limits of government time.

I should like to answer some of the points that have been made. The noble Lord, Lord Hunt, asked whether we would discuss with the Immigration Law Practitioners' Association the progress of our policy and the answer is yes. Officials speak to the ILPA regularly and they enjoy a very constructive relationship, I am told, on these matters. They are always ready to talk to the association.

The noble Lord made the point that the paucity of details, as he described it, suggest that the Government did not receive support for the package. More than one noble Lord appeared to suggest that that is so but it is absolutely not the case. The Government listened to the employers. Perhaps I may quote the director-general of the CBI, who expressed his satisfaction that,

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The director-general of the British Chambers of Commerce said:

"Business will be pleased to see that the Government has taken its concerns on board".

It is not as though there was a failure to listen. I do not think it is right to suggest that the reason there is not adequate evidence to satisfy everyone in the Chamber is that the policy does not have support in crucial parts of the economy.

The noble Lord, Lord Hunt, also asked what the process would be for selecting exceptionally talented migrants. This is a matter of what the competent bodies might be. We are working with a number of bodies, including the Arts Council, to develop an effective process. One of the principles of this policy is that we should work with the relevant sectors of the economy rather than expect immigration officers somehow to know who should be selected. We need to ask those who know who are the sensible immigrants to give work permits to.

The noble Lord, Lord Hunt, also commented that there was no information about the respondents who were not listed in the summary. That is because the individuals either did not wish to, or at least did not, state their organisation. We did not conceal the information; they did not give it. He also said that the impact assessment did not provide an adequate evidence base for how the Government would address accusations of unfairness. He referred in particular to the Indian subcontinent. The policies have been designed to be fair and to apply to all nationalities equally. We aim to attract the brightest people, irrespective of nationality.

In answer to other noble Lords, we are committed to reviewing both the scope and the level of the limit before next April, and we will seek again the advice of the Migration Advisory Committee. I assure noble Lords that we constantly monitor the effect of the policy and will not blindly proceed if it is not appropriate. The noble Lord, Lord Hunt, also asked what the process would be for designing a highly trusted sponsor scheme for tier 2. We are working on that and will test ideas with stakeholders over the summer.

The noble Lord, Lord Judd, took a slightly different tack. Whereas some noble Lords were concerned to ensure that we would always be able to attract the brightest and best people and would not put impediments in the way, the noble Lord, Lord Judd, was concerned that we might be swiping too much of the talent from parts of the world that could employ it at home. I take the point that the economic impact of an immigration policy goes both ways; one must consider the impact on this country and the impact on the countries from which the migrants come. An immigration policy should be designed to give people experience in this country rather than to provide them with permanent careers. That is the point of the policy, and one would hope that, as a result, the migrants will go back better equipped to their countries of origin.

The noble Lord asked me whether, as Security Minister, I was concerned about stability in the countries in what used to be called the third world from which many of these people come. Certainly I am. However, one wants to see people come and go and be able to avail themselves both of training in our universities and of experience in our markets. In the end, this will

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benefit all sides. Clearly there is a different side to immigration policy that we are not discussing this evening, and with which I am deeply concerned in the Home Office: namely, the security aspects of certain individuals. However, that is a different angle.

My noble friend Lord Avebury asked a number of detailed questions. I cannot reply to all of them; some were immensely detailed. It is not quite right to say, as the noble Lord implied, that the statement of changes was laid in inadequate time. It was laid on 16 March and came into force, as it should have done, 21 days later, on 6 April. He also asked about how closing tier 1 general impacted on various sectors. As my noble friends have said, employers have told us that they value tier 2 above tier 1. The reasons for that are fairly obvious. With regard to universities, we have given additional points in tier 2 for researchers and academics to ensure that they have a higher priority. That is a partial response to the points made by the noble Lord, Lord Haskel. With regard to the health sector, we are in continuous discussion with sector bodies, which are supportive of our proposals.

My noble friend Lord Avebury also queried which sectors had been affected by closing tier 1 general and excluding NVQ level 3 occupations from tier 2. No sectors offering skilled jobs are affected by closing tier 1 general, because if a migrant has a job offer they can obtain a permit under tier 2. The sectors affected are those offering lower-skilled jobs, primarily catering and care work, which is where we believe that the population in this country is more than able to provide the necessary pool of labour. We do not make apologies for that. Many people are looking for jobs in this country.

The noble Lord, Lord Avebury, also asked about providing a route for exceptional talent. I would say that that will depend on the competent bodies and not on the judgment of immigration officers.

The noble Lord, Lord Haskel, asked whether BIS and other government departments have been consulted. This is a government policy and I can assure the House that there were many ministerial-level discussions and meetings and, at both ministerial and official level, consultation right across the board-most particularly, I think it would be fair to say, between the Home Office and BIS.

The noble Lord, Lord Haskel, was also worried that the UK will be a less attractive place to study when we remove the post-study qualification. We will not stop, as I say, the best students coming to this country, or indeed staying. If they are offered a job within six months of graduating they will be able to stay in tier 2. As I said, I think it is right to pursue a policy that does not simply provide, under the guise of coming for study, a permanent career in this country.

The Merits Committee felt that the information supplied to it was inadequate for its purpose. We have taken note of that, and I have talked to my colleague the Immigration Minister, who is quite clear that it is right and proper to provide the Merits Committee with the information that is necessary for it to do its job. I can assure the House that that will be the case. In the light of that, I hope very much that the noble Lord, Lord Hunt, will feel able to withdraw his Motion.

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Lord Hunt of Kings Heath: My Lords, I am very grateful to the noble Baroness and to other noble Lords who have taken part in this important debate. The noble Baroness referred to the previous Government. I am sure that we can trade experiences of previous Governments, and that is always good sport, but one thing that the previous Government did do was to take the reports of the Merits Select Committee very seriously. One of the important conclusions of our debate is our asking the Government to reflect on the experience of this SI in relation to future changes that may be made in the Immigration Rules and the way in which information should be given to Parliament.

As my noble friend Lord Haskel said, this is a very important change. I am sure that he is right to reflect to the House on the potential impact that these changes might have on some of our most of successful institutions. The noble Baroness referred to the comments of the CBI director-general. Of course she is right to suggest that, as a result of the consultation, some changes were made in the Government's approach. We are very glad that that happened. She will be aware of the very high level of concern-particularly in the business, university and arts sectors-about the impact that the original proposals would have on them. However, as my noble friend Lord Haskel suggested, there are still concerns in those sectors about the impact. He referred to Imperial; he also referred to BIS and its role in promoting UK interests. Clearly there is concern that the proposals, as now enunciated in this statement of change, will none the less have an adverse effect on British interests.

I would say to the noble Baroness that my experience in the health field and in the Department of Health is that whatever the tensions-and there have been tensions-about the recruitment of overseas students into our medical schools, the fact is that for very many years the NHS has depended on those students becoming doctors and working in the NHS. Also, the evidence suggests that when those doctors go back to their home countries, the links that they maintain with UK medicine and the UK medical and pharma industries have been immensely valuable to the UK. It is very important that we do not lose those contacts. The noble Baroness, Lady Valentine, had a very good point to make about the need to analyse the economic and social impact of these measures-I think she suggested by the end of the year. I very much hope that that point is taken to heart.

9 pm

The noble Earl, Lord Sandwich, referred to a number of instances that are as relevant to the debate that will follow as they are to this debate. His substantive point was the need for strong policy evidence to be available in order to guide government and Parliament when considering whether to support these changes. My noble friend Lord Judd pointed to the need for a strong evidence base and an impact assessment. He made a particularly important point about the potential link between the lack of economic development in some developing or not-so-developing countries and terrorism and security, on which the noble Baroness has much knowledge and expertise.

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The noble Lord, Lord Avebury, in a very thoughtful speech, raised a number of issues, including that of praying time. My understanding is that Section 2 of the Immigration Act 1971 gives either House 40 days after laying a Statement-excluding Dissolution, Prorogation and Adjournment for more than four days-to disapprove it. I understand that this Statement was laid on 16 March. The issue that the noble Lord raised is what this House is to do in particular about such Statements and, indeed, about statutory instruments in general. There have been very few occasions on which this House rejected delegated legislation. It has resolved its unfettered freedom to vote on any subordinate legislation, but in practice it has chosen to do that on very rare occasions.

I say to the noble Lord that when we come to discuss substantive House of Lords reform the issue of how we deal with secondary legislation will be very important. I make the point to him that an elected second Chamber, particularly under a proportional system of voting in the event of a no vote in the AV referendum on Thursday, dealing with a House of Commons elected on a first past the post system would raise some very interesting questions about the role of a second Chamber elected under PR and what it would want or feel itself able to do in relation to statutory instruments. I suspect that such a second Chamber would feel pretty confident in voting down secondary legislation. When we come to that long-awaited draft Bill, we will discuss the important issue of how we should deal with statutory instruments and changes, particularly, as the noble Lord, Lord Avebury, said, when we debate them some days after the instrument has been brought into force.

Let me come back to the substantive issue on debate. The noble Baroness has given us a very full response in relation to the consultation and why a summary was given. I have to say that a suspicion still rests in my mind as regards the lack of a comprehensive report, although I agree that the Government moved their position as a result of the consultation. In fact, there was an overwhelming concern with the original proposals among the many institutions which responded to the consultation. It would have been better if the Government had given a much fuller flavour of those responses.

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