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Lord Triesman: My Lords, I, too, start by thanking the noble Lord, Lord Pearson of Rannoch. He has provided me with an object lesson about looking at amendments in Committee. I confess that I have been wasting my time poring over figures and the economic prospects of the EU, looking very carefully through the Treasury figures. I now appreciate that I should have been looking at fish, at pollution of the sea bed, at the visual image of 40-ton lorries in this Chamber, at various issues of climate change, renewable energy, the desirability of pumping carbon into the atmosphere from coal-fired power stations and so on. I have to tell the House that I have not looked at any of those things. I have been focusing on the EU budget, so I hope noble Lords will forgive me if I return to that and to the amendment itself.

May I say to the noble Baroness, Lady Nicholson, I realise that some of the figures may have appeared daunting? Incidentally, I am not going to join her in saying anything disobliging about the Burkina Faso economy or its exchange rate; I leave that to one side. However, looking at the financial details, I am confounded by some of the figures produced by the noble Lord, Lord Pearson, not because they are complicated or big or there were a lot of them but because fairly elementary mathematics leads to rather different conclusions to those that he presented. For example, he suggested that the £10 billion that is being spent on trying to induce some stability in other economies is 50 per cent of the spending cuts, which run at £80 billion. In short, it is not 50 per cent but 12.5 per cent; but he is only 400 per cent wrong. I guess that is within the levels of tolerance that anybody should allow in a debate of this kind.

I, too, went over the Treasury figures and I do not know that there is very much alternative but to look through the detailed figures that it produces, which are cross-referenced to other studies that have been done not only in the EU but in the World Bank and so on. They are not regarded as peculiar or anomalous in that sense but are well cross-referenced. The fact of the matter is that at 2004 prices, the contribution to the EU budget was £3 billion. I shall work in pounds, not euros, so that there is no question about what I am saying. It was £3 billion in 2008-09 and is expected to be £4.7 billion in 2009-10. These contributions, particularly in 2009, were relatively low-particularly low, the Treasury said. The contributions would rise in future years and it is not the Treasury but the Office for Budget Responsibility that is forecasting a net contribution of £7.7 billion in 2010-11-but that is at 2004 prices.

That is why I come back to the point that the noble Baroness, Lady Nicholson, made because it is extremely important to find out whether we are talking about anything in these figures that is indexed. Because of movements in these indices, you can so easily end up with a completely fictional figure when you look at it in relation to the original baseline calculation. The date mentioned by my noble friend Lord Tomlinson, 2004, is particularly relevant as that figure has been used to deal with the whole of the financial perspective from 2007 to 2013. When the Committee looks at how this Bill has been framed, the idea that there is to be a change during the course of this perspective-particularly

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as there is no strong belief that we are in fact going to have referenda on anything-seems to me to make the proposal all the more fanciful.

It is absolutely true, as a couple of noble Lords have said, that this is nothing to do with competences. I went back and read Article 311 again, in the rather fanciful way that one does when trying to address the amendment, and it is completely clear that the competences are already there. They are set out absolutely and plainly. The Council is acting in accordance with the special legislative procedure and it would require a unanimous decision in relation to changes across a financial perspective. There is no change at all in the competences covered by this amendment. The amendment is not about whether the EU is spendthrift, as some noble Lords including the noble Lord, Lord Pearson, have suggested. It is not to do with failures about timely or robust reports on budgets. It has nothing to do with any of those things but is about whether the EU has the competence in this area. It plainly does, so that is a straightforward matter.

I have also been looking at other referenda, particularly Californian referenda, where they have touched on budgets. What you can guarantee, because the populist character of this is so plain-I do not mean popular; I mean populist-is that if you put any increase in any budget to anybody in a referendum, or even spending the same budget, the odds are that the people who do not want to spend it will win that referendum. That is a fairly straightforward matter. On the basis of what we have heard this evening, it would be sensible to put any proposals in the Budget of the United Kingdom to a referendum, whichever Government were in power and whatever their majority might be, to see whether they would get warm acclaim through a referendum for any changes they made which took a penny piece out of people's pockets. Maybe on occasions they might, but I doubt that it would be frequent. If California and some other referenda are anything to go by, I suspect that nobody in general will vote for increases-whatever the data on the proportionality of the sum or in any other matter.

Lord Stoddart of Swindon: The noble Lord quotes California but the Californians had referendums about their internal taxation and expenditure. What we are talking about in this amendment is taxpayers' money not being used within the taxpaying area but being exported outside that area, so I hope he will agree that there is a difference.

Lord Triesman: My Lords, I entirely understand the difference. I truly had appreciated it. My point is that in a popular sense, putting to people the opportunity to vote on whether more money should be taken from them will almost invariably lead to them saying no. I do not think there is much doubt about that. It is precisely why, for example, in the run-up to general elections-which are a vote on policies, including future financial policies-most of the serious parties will say that they are going to do absolutely nothing to anybody's taxation or financial well-being. They will make a point either of saying nothing or pledging to do only what the last Government had put in train. This whole proposition is a significant distortion of the character of the debate that we should have.

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At the end of the speech of the noble Lord, Lord Pearson of Rannoch, having said most of the things that I have already tried to cover, he dealt with what his amendment asks in one sentence. We have no objection to a wider discussion on money or greater clarity, particularly in relation to the European Union. That can only benefit us and our democratic practice. However, the notion that we should embark on a process of this kind in this, or any other Bill, is a recipe for trying to make sure that there is no progress whatever in a European context.

Lord Wallace of Saltaire: My Lords, I start with an apology to the noble Lord, Lord Stoddart, and other noble Lords that we have started much later than we had hoped today. There were two Statements, one of which was a good deal longer than intended and that pushed us back. I assure noble Lords that on Monday this will be the first and only business for that day. If we require more time, I remind the noble Lord, Lord Stoddart, that the House will meet at 10 o'clock on Wednesday and that will allow us a good deal of time during the morning. The purpose of a Committee stage on a Bill is to discuss the amendments-

Lord Willoughby de Broke: Briefly, and on a point of order: will there be an adjournment for those Members who have been lucky enough to secure places to listen to President Obama's address in Westminster Hall?

Lord Wallace of Saltaire: If needed and if we are still discussing the Bill, there will of course be an adjournment. Some of us hope that we might possibly-if we manage to stick to the subject of the amendments-have finished the Committee stage by then. I want to address the amendments, I do not wish to divert into fish and-

Lord Stoddart of Swindon: After the apology the Minister has made for the late start and the Bill being put on again on Wednesday, the eve of the Whitsun Recess, why on earth do the Government have to do that? It has been pointed out time and again by the Government themselves that the provisions of this Bill will not take effect until the end of this Parliament. We also have a Session which goes through until next May. So what on earth is the hurry? I could understand it if the Government were short of time and had a lot of Bills to get through quickly, but this is a Bill that does not have to get through so quickly. There is no reason why they should inconvenience Members as they have been doing.

Lord Wallace of Saltaire: My Lords, I shall resist going down that great sideline. We have a certain amount of time remaining in this Committee stage if we manage to keep to the subject and avoid talking about great trucks, fish, rifles, minarets and Britain standing alone in 1940 before the United States and the Soviet Union came in-and I think those countries had a little to do with the United Kingdom's victory over Nazism. I want to address myself to the amendment.

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The noble Lord, Lord Pearson, suggested that the total cost may amount to £100 billion a year. I thought that was rather modest. Daniel Hannan MEP, who I know the noble Lord knows well, suggested in his blog the other week-I had heard him say it previously-that withholding our contribution to the EU would enable us to cancel every spending cut and still knock a third off council tax. That must be an estimate of around £160 billion a year. The Treasury estimate is that the UK's net contribution to the EU budget will be £7.7 billion in 2012-13, rising to £8.9 billion in 2014-15, and then falling to £8.2 billion in 2015-16. These are unavoidably estimates, partly because, as noble Lords will be aware, a surplus is routinely entered into the EU budget each year that serves to reduce member states' contributions the following year. The initial estimate of the British contribution might therefore be rather higher than the net result declared the following year. As the noble Lord, Lord Pearson, demonstrated in the figures that he so dazzlingly threw out, the exact calculation of how much each member state gives is itself a matter of some controversy.

Lord Pearson of Rannoch: My Lords, perhaps it would be helpful if I intervened. As I mentioned in my earlier remarks, there seems to be quite a difference between the Treasury figures and the Pink Book figures, which include items that are not included by the Treasury. That is why the noble Lord, Lord Sassoon, in response to the noble Lord, Lord Vinson, yesterday gave a figure of £4.7 billion for the current year, whereas the Pink Book puts it at £8.3 billion. I agree that there is considerable confusion in this area. The Office for National Statistics, for instance, has suggested that the figure is £9 billion already. I come back to the same boring old point: we would solve all this if we had a proper cost-benefit analysis. We would know where we were.

Lord Wallace of Saltaire: I recognise the familiar themes of the noble Lord's argument. I will say just a little about the EU budget, which remains in many ways unbalanced to the disadvantage of the United Kingdom. It was, in the late 1970s and early 1980s, a very sore issue in the United Kingdom's relations with the other member states of the EEC. Things have changed a good deal since then. I was encouraged to see that agriculture spending has now fallen to 40 per cent of the EU budget. I was appalled to note that, in terms of net contributors and net beneficiaries, Luxembourg and Belgium are still listed among very substantial net recipients, while the UK has now been joined by Sweden, the Netherlands, Germany-the largest single contributor-France and Italy as a net contributor. We now find ourselves as part of a bloc that is pushing for economy and a restrained approach to EU spending.

We contribute to EU spending for shared purposes. The Foreign Secretary made a speech in which he talked about increased European contributions to democratic transition across the Mediterranean. The most useful dimension of the EU budget in many ways has gone to that investment in security and development in eastern Europe through the structural funds which has helped to consolidate democracy and

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build a market economy in Poland, the Czech Republic, Slovakia, Bulgaria, Romania and elsewhere. We want to achieve a decade of spending restraint in Europe and we have partners-France, Germany, Sweden and others-that are also committed to that.

8.45 pm

I wish to say a little to the noble Lord, Lord Pearson, and his colleagues about the option of leaving. Non-EU members also contribute to the EU budget. Norway contributes some €350 million a year. Switzerland, which is not a member of the European economic area, nevertheless contributes some €645 million a year under a bilateral agreement with the EU. There are wider issues of contributions to and through international organisations, which the noble Lord, Lord Grenfell, has raised. I note that the noble Lord, Lord Pearson of Rannoch, seems to object to Britain contributing to stabilisation in Europe through the EU but not through the IMF, through which we also contribute. Given that the IMF is now receiving rather more publicity than it was last week, he might like to turn his fire also on the IMF. We contribute to the common budget of NATO. As the noble Lord has suggested, we contribute to the common budget of a large number of UN agencies. There are also issues of accountability and value for money there, but that is a wider debate for another time. I suggest that-

Lord Radice: Will the noble Lord confirm that the countries outside the EU that are contributing to the EU budget are not able to influence decisions about the budget in the way that the bloc he has mentioned, and, of course, all the other members, can? That is a great disadvantage for them.

Lord Wallace of Saltaire: The noble Lord is, of course, correct. One trades the purity of complete sovereignty for the lack of influence over shared decisions. I was about to close by saying that this seems to us to be outside the purposes of the Bill. Indeed, much of the discussion has been outside the theme of this amendment. I encourage the noble Lord to withdraw the amendment.

Lord Pearson of Rannoch: My Lords, I am grateful to all noble Lords who have supported the amendment and to those who have been good enough to speak to it. I said right at the start of my remarks that the amendment was designed to give the British people a referendum on the economic cost of our EU membership. That may not be strictly within the terms of the Bill, as some noble Lords who find that prospect uncomfortable might wish. However, I merely say that I was advised on the amendment by the staff at the Public Bill Office, and they were content with it. If it is not perfect, I apologise, but it has served its purpose.

Both the noble Baroness, Lady Nicholson, and the noble Lord, Lord Risby, for some of whose remarks I was very grateful, suggested that money is not a power. It may not be technically a power within the terms of this Bill, but money is energy and power and is something that the British people mind about very much. The

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noble Baroness, Lady Nicholson, also chided my noble friend Lord Stoddart about Churchill's position in these matters. One can cite many sayings of Churchill, but the one that I and other Eurosceptics prefer is:

"We are with Europe, but not of it".

I think he said that rather more often than he said some of the other more ambivalent things about the European Union.

The noble Lord, Lord Triesman, was good enough to query some of my figures. I think he said that I got one of them 400 per cent wrong. We do not need to go through that now but I will read Hansard and, if necessary, come back to that. An overall cost-however you come at it-to the United Kingdom from our EU membership of around £100 billion is probably not far out.

Lord Lea of Crondall: We need to get to the bottom of this. Is the noble Lord implying that that is an annual figure, because it bears no relation to reality?

Lord Pearson of Rannoch: As a matter of fact, it is real. We have £10 billion that are only loans at the moment; we have £10 billion for the cash we hand over, going up; we have £26 billion for food; we have £18 billion for climate change; and we have £60 billion for overregulation. These are the figures.

Lord Hannay of Chiswick: I hesitate to intrude into the noble Lord's game of tiddlywinks with statistics, which he has been playing for the past hour or so. Can he settle on one set of measurements, rather than playing around between net contributions, gross contributions-both to the budget-trade effects, and loans to the investment bank? He plays around with these all the time. Would it not be a bit simpler if he stuck to the net contribution per capita in each country? We would then come to quite startling results, one of which is that Britain is by no means the highest net contributor per capita to the EU budget any longer, and that other countries are more so. It would be simpler if he stuck to one lot of statistics and stopped playing tiddlywinks at this late hour of the evening.

Lord Pearson of Rannoch: I do not know whether the British people would agree with the noble Lord, Lord Hannay, that the figures I have mentioned are tiddlywinks. I am aware that Holland pays a greater per capita ransom to the European Union than we do, but that is not the point. I am trying to look at this from the point of view of the United Kingdom. I am not looking at it from the point of view of the corrupt octopus in Brussels.

I was about to conclude by commenting on the remarks of the noble Lord, Lord Wallace, when he mentioned the figures paid into the budget by these other countries which are in the European economic area. I should just mention that the countries in the European economic area are not afflicted with the common fisheries and agricultural policies. They are not part of the customs union; they are not afflicted by the common trade policy; they are not in the common foreign and security policy. They are not worried about justice and home affairs being overtaken

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by Brussels, and of course they are not in EMU, so they are in a very different position from us. They can negotiate all their own foreign trade arrangements. There is a recent report from the Swiss Government comparing their present bilateral arrangements from outside the European Union with what the costs would have been had they been in the European Union. It is not a wild Eurosceptic making these suggestions; it is the Swiss Government who said that membership of the European Union would have cost eight times what their bilateral arrangements cost.

As to the IMF, I did not bring it in. Of course, I agree that we are also supporting problems in the European Union-the eurozone-through the IMF. I think that the tally, if we take it through the financial facility, the loans to Ireland and others, comes to around £4 billion a year. I was good enough not to mention that because I was not suggesting that we leave the International Monetary Fund. I was merely trying to concentrate on our costs as members of the European Union. This was a probing amendment, as I wanted to discuss the prospect of the British people getting a say on the cost of European Union membership. I am very grateful to all noble Lords who have spoken, and I beg leave to withdraw the amendment.

Amendment 41 withdrawn.

Amendments 42 to 44 not moved.

Debate on whether Clause 6 should stand part of the Bill.

Lord Tomlinson: My Lords, Amendments 42, 43 and 44 have already been debated. I remind the Committee that the three amendments relate to Clause 6, and would delete successively paragraphs (c), (d), (e), (f), (g), (h), (i), (j) and (k). That is why I have given notice of my intention to oppose Clause 6 standing part of the Bill. I merely rise to say those few words now, and do not propose to press the matter now, but it is something to which we might return later.

Lord Taverne: My Lords, I have taken part only occasionally in this debate. I have been fascinated by the display of knowledge manifest in this House of the workings and procedures of the EU. However, regarding the clause as a whole, at least three important points have emerged. The first applies very much to the Liberal Democrats. The noble Lord, Lord Liddle, was absolutely right when he pointed out that the coalition agreement does not in any way countenance our support for, or compel us to support, referenda on passerelles or non-treaty changes that transfer power. The agreement is explicit on this and talks about transfer by treaty amendments.

That concession was made during the coalition negotiations. It is something that we have to put up with. Personally, I deeply regret it, because we have heard time after time from government spokesmen that it is necessary to have these referenda in order to restore trust. There is no evidence whatever that having referenda improves trust. The Netherlands had a referendum on the constitution, and trust has not increased since then, but anti-EU sentiment has grown. France had a referendum on the constitution. Again, since the referendum, there have been no demands for more referenda, and opposition in France to the European

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Union has grown. It may grow even more after events in the Sofitel hotel. It is very important that on the Liberal Democrat Benches we recognise that we are not in any way compelled to support Clause 6, with its stream of referenda.

Lord Hamilton of Epsom: Before my noble friend leaves that point, is it not true, however, that Euroscepticism is increasing in places such as Finland and Germany, and right across Europe, whether or not referenda are held?

Lord Taverne: That is perfectly true, but it is not as if having a referendum suddenly changes the mood and makes people pro-European-especially not if they will have to vote on all sorts of minutiae. That brings me to my second point. The noble Lord, Lord Howell, in his very eloquent defences of, in many cases, the indefensible, kept on telling us that there will not be a stream of referenda-or referendums; on the whole, I prefer "referendums"-because particular changes will be postponed and we will then have a package of referendums all in one, which will lead to a new treaty amendment. If, as has been pointed out by many people, that kind of package is to be put to a referendum, how can you possibly have a simple yes or no vote? It makes an absolute nonsense of the question. There may well be some good changes that one would want to support, while others would be bad and one would want to oppose them.

The third point I want to make was made by the noble Lord, Lord Stoddart. The Bill refers to the next Parliament. It was made clear in the coalition agreement that there would be no transfers of powers during this Parliament. The Bill is only for future Parliaments. It is unheard of to put forward legislation that would not have an effect in the current Parliament and is solely designed to bind future Parliaments. This provides an overwhelming case for the flexibility that was argued for in the amendment moved by the noble Lord, Lord Liddle. We need flexibility because in the next Parliament we may have a different Government. If the Conservatives are in power-whether or not as part of a coalition-their attitudes may have changed. Attitudes to Europe can change fairly fundamentally. In 1973, I was an independent Social Democrat and was appointed as an MEP-that was before elections for MEPs-because the Labour Party boycotted the democratic processes of the Union. There was not a single Labour Party representative, which meant that the socialist group had far less power than it would otherwise have had, and I was invited to join the socialist group.

Of course, the Labour Party changed completely. I remember the noble Lord, Kinnock, being a very strong opponent of our joining the European Community, as it then was, and he then became a very strong proponent of the European Union. Therefore, Labour changed fundamentally and there is no reason why the Conservatives should not do so too. The experience of power can often have a very important effect when Governments have to face reality.

I think that the Government should look again at Clause 6. There is a very strong case for greater flexibility and, indeed, the whole rationale behind it is based on a fallacy.

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9 pm

Baroness Williams of Crosby: My Lords, I support what my noble friend has said, and I promise to keep entirely within order. My speech will be directed to why Clause 6 should not stand part of the Bill.

As my noble friend said, we have had a string of amendments trying to limit the scope of Clause 6. I shall not go through them all. We all know them and they have been tabled by various Members of the Committee. We now have another group of such amendments relating to Schedule 1. Again, they cover a very wide range of issues which at least some Members of the Committee feel should not be subject to the referendum lock procedure. I want to draw the Committee's attention for a moment or two to one particular aspect of this, as it goes far to show how difficult the Bill will be to carry out in practice.

Earlier today, we heard from the noble Lord, Lord Marland, about a carbon emissions programme. At the very beginning of his Statement, he said-I wrote it down-that we would need to keep in line with the targets of the European Union. Why, some Eurosceptic might ask? I am not currently addressing the noble Lords, Lord Pearson of Rannoch or Lord Stoddart of Swindon, because I do not have the eloquence of a Pericles and, even if I had, I do not suppose that I would persuade them. However, the reasons why we want to stay aligned with the European Union environment targets are quite straightforward: if we do not, others will compete with us and override us by cheating on those targets. Therefore, we have a profound national interest in ensuring that the targets are maintained by all our European Union partners. The UK is trying-and I think that most of us feel very pleased that she is-to be the greenest state in Europe. If there were no such EU understanding, the UK, instead of carrying others with her, would simply be competed into the ground by other countries which decided that they would not be bound by such targets, and, not being bound by them, they would be more competitive in energy-intensive industries. This is the most central national interest. If we are to address the single most troubling problem that confronts us-that of climate change and greenhouse gases-we desperately need to have agreed targets that the whole EU will buy into.

However, what do we find when we look at the list of Schedule 1 proposals? We find the amazing proposal under Clause 6(5)(g) that a decision that would replace the ordinary legislative procedure with a special legislative procedure would be subject to the referendum lock. I ask Members of the Committee to consider for a moment a referendum question which asked, "Do you agree that if the special legislative procedure replaces the ordinary legislative procedure, there should be a veto on this?". Frankly, I do not think that one person in a thousand, however intelligent or thoughtful they might be, would have the faintest idea about the difference between the ordinary and the special legislative procedures. However, in Clause 6(5)(g) we find that that is subject to the lock. It would not be in our interests if that were agreed because, as I have already explained, on issues such as the environment we have a profound interest in finding common ground for the basis of our targets and practice.

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I will not speak much longer in Committee, in which, if I might say so, some Members have spoken at very considerable length, except to draw the attention of the Committee to two things. First, I commend the noble Lords, Lord Triesman and Liddle, for attempting in our discussions yesterday to put forward a genuine compromise that might enable both sides, probably excluding the more extreme Eurosceptics but including most people of a middle and moderate position, to find common ground. That proposal was for a special legislative committee of the two Houses of Parliaments, which was a serious attempt to narrow down the scope of the referendum and to do it entirely within the spirit of the involvement of Parliament. It received no response of an understanding kind from the Government so that one begins to wonder whether there is any room at all for a meeting of minds over this Bill or whether we are simply wasting time because nobody was persuaded of anything.

This is not good for the United Kingdom. The more that we have a common position in the European Union, the more notable our influence is bound to be. The last election showed that this country is not united on this issue or even on the issue of who should be the majority Government. We do not want to weaken our position in Europe by exemplifying divisions that are not absolutely necessary. I fully understand the Government's commitment to the referendum lock on the treaty issues. The noble Lord, Lord Hannay, and his colleagues have conceded the need for a referendum on the euro as a currency as a gesture to show that they understand the necessity for some tougher turns before agreements are reached. However, it is high time that the Government began to think about whether they could not meet at least part of the way the Members who put this position in Committee. That would mean limiting and narrowing down the number of the issues on which the referendum lock applies, to make sure that it goes in relationship to the most serious issues and to move toward the idea of a stronger parliamentary contribution to what is done over the rest of the exercise.

I say this with due feeling. I do not think that, if what comes out of this Committee is a failure to agree on anything, we will do ourselves or the cause of our position in Europe any good at all.

Lord Pearson of Rannoch: My Lords, there are a growing number of us who know that the planet's climate has been changing for millions of years-and will doubtless go on changing for as long as the planet has left-but have the very gravest doubts as to whether it is changing as a result of man-made emissions or activity. In view of the noble Baroness's powerful peroration that we have to be in the European Union seriously fighting for these environmental targets and so on, what chance does she think there is of our European partners meeting these targets? Are they not already quite a long way behind? Are they not likely to slip even further behind as time goes on?

Baroness Williams of Crosby: I will not be lured very far by the noble Lord, who is always very polite in the way that he attempts to broaden out the debate in Committee. I do not think that is what most people

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want to do. I will simply say that we have clean beaches in Britain. We have clean rivers. We have cleaner air. The first two of these owe a very great deal to the European Union's requirements, which we should meet.

Lord Stoddart of Swindon: I understand exactly what the noble Baroness, Lady Williams, is saying and I can understand the reasons why she is saying it. However, the reason we have this Bill is because of the betrayal-if I might use that strong word-of promises which have been made and not kept.

I refer first to the promises that were made by the Government and, indeed, by the Opposition about having a referendum on the constitution, later to be known as the Lisbon treaty. There is very little difference. Even Giscard d'Estaing says that there is very little difference. However, I do not want to get into that argument. I want to try to explain why I believe we have reached this point where such detail has been put into a Bill. It is because people join political parties and have an influence on them. So many times promises have been made, such as on the five red lines that were all crossed, and not kept. Increasingly, people in this country have lost trust in the Government's promises that we are not, ratchet by ratchet, going into a federal European state.

Lord Lea of Crondall: Is the noble Lord not giving the game away that this is an exercise in trying to destroy the Lisbon treaty by the back door when in fact the country has signed the treaty? He thinks that this is an opportunity to take, bit by bit. He wants a referendum on everything they have tried to do under Lisbon and it can be blocked because we do not want to have a referendum or because it can be defeated in a referendum. Is that the point he is now making?

Lord Stoddart of Swindon: The noble Lord has misunderstood what I am trying to say. The Lisbon treaty is in operation, and I am not suggesting that that can be reversed. I am trying to explain why this Bill has come about. It is because people have lost trust in the leadership. I think the reason why it is so detailed is probably because this coalition Government-it is not a Tory Government, but a coalition Government-have been trying to set out their red lines that can be crossed only if the people of this country agree to it. I hope people will reflect on that and realise that, out there, ordinary people are very unhappy about the way the European Union is proceeding. I think they have already said, "So far and no further". This Bill is complicated because the red lines that have previously been put forward have not been kept to, and perhaps this Government are trying to put them into an order where they cannot lightly be set aside.

Lord Triesman: My Lords, I want to express very real appreciation for what the noble Lord, Lord Taverne, and the noble Baroness, Lady Williams, said and to say how strongly we agree with that. We greatly appreciated the comments about what we were attempting to do yesterday. The aim was not to make life impossible in the terms of the Bill but to try to inject some rationality and proportionality so that it would have a genuine

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sense of balance about giving people the opportunity to deal with major issues in the way that the Bill describes and not to mix into that so much detail that it could not conceivably achieve that objective.

I want to add one further thought because I think it bears very strongly on the style of work that we try to achieve in the House. The noble Lord, Lord Hannay-and I am going to be very cautious about putting words into his mouth-said, I think it was yesterday, although the days begin to blur into one after a while, that when he is making a proposition he prefers it to be in his own words rather than in words that are put into his mouth.

I felt very strongly that that was absolutely the right and correct way of dealing with things that were being put to him. Some of the things that we are supposed to believe-or rights of the people of the United Kingdom we are alleged to be prepared to give up-have been a travesty. In no circumstances were we making propositions of that kind.

9.15 pm

My appeal to noble Lords opposite is this: it would be helpful to address the arguments that we put. It may be easier, and it may indeed be tempting, to stand up a complete fiction of an argument because it is easier to knock it over. I seem to remember that that was the style of debating societies in schools for 13 year- olds, but it was scarcely the way in which we got a serious discussion. We mostly learned that you did not get a serious discussion that way, and we matured out of it. I hope, as we pursue this discussion in Committee, and later at Report, that we do each other the courtesy of addressing the points that we are actually making, rather than some fictional point that is easy to destroy. That will not carry this Bill any further whatsoever. That is why so many issues around this clause-and indeed the issues that are likely to come up around the schedule-are so telling.

Lord Wallace of Saltaire: My Lords, I think we all understand that Clause 6 is at the heart of the Bill. We have spent considerable time on Clause 6 and we will return to it on Report. No doubt we will have discussions between Committee and Report on aspects of it.

I will just say a few things on Clause 6, how it fits in the Bill, and where it fits in the coalition agreement and so on. The coalition agreement was, of course, a headline agreement, and on that basis the coalition partners negotiated the detail that came out of it. We have seen this evening-and those of you who read the debates in another place will be well aware-that this Bill is a compromise between incompatible positions. It is doing its utmost to draw a line underneath the long argument about keeping competence and centralisation in Brussels, which has run through British and other national politics for a long time.

It is our case, in putting forward this Bill, that the Lisbon treaty provides extensive competencies that we can use. I say to the noble Lord, Lord Lea of Crondall, that this is not in any sense an attempt to destroy the Lisbon treaty by the back door. It is based on the understanding that the Lisbon treaty does indeed provide a great deal of headroom for us all to achieve the

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objectives that we seek. As the noble Baroness, Lady Williams, was speaking, I had a quick look at Articles 191 and 192 of the Treaty on the European Union, because I wanted to check how much headroom the Lisbon treaty gives us on environmental policy. It is quite clear that EU carbon emissions targets are agreed under existing competencies, and largely under qualified majority voting. All the Bill does is to say that if the UK wants to give up its veto over the environmental matters listed in Article 192(2), including fiscal matters, town planning and the structure of our energy supply-that is to say, if we wish to move from unanimity to qualified majority voting-then we have to bring it back to Parliament, and, if necessary, for a referendum.

We are now going to move on to Articles 7 to 10, which will deal with a range of issues that will not be subject to referendums, where parliamentary scrutiny- parliamentary approval-is set down. That is very much an indication that we have done our utmost to distinguish between sensitive and significant issues and other issues on which we can move. However, I am not persuaded that we need endless flexibility, which we do not have, to be able to achieve the objectives which we as a constructive member of the Union wish to pursue over the next few years. The Lisbon treaty gives us that flexibility.

Lord Liddle: The Minister mentioned the coalition agreement, which is obviously a compromise between parties that have different views on Europe, but did not the Liberal Democrat party conceive of what it was signing up for in the coalition agreement in the following way? The Lisbon treaty had gone through and been ratified; the Liberal Democrats had supported that in Parliament. That is why the coalition agreement clearly states that the passerelles should be subject to proper parliamentary approval but not to referenda. The Liberal Democrat view was that the flexibilities contained within the Lisbon treaty should be subject to proper parliamentary scrutiny but not to referenda. New treaties of the conventional type were a different matter where the Liberal Democrats were prepared to accept a case for referenda. I am not speaking for the Liberal Democrats, but it seems to me on any objective reading of the coalition agreement that that is what was intended. However, that is not what this Bill says; this Bill is not what was agreed.

Lord Wallace of Saltaire: My Lords, I do not wish to get into a lengthy disquisition either of passerelle or of the coalition agreement. We attempted to negotiate also with the Labour Party. I have no doubt that those negotiations, had they been pursued further, would also have led to a very carefully and painfully crafted coalition agreement with a party which itself has some divisions within it about Europe. I saw a Bruges Group advertisement last week which had Kelvin Hopkins, Mark Seddon and a number of other people speaking on the case for leaving the European Union. Let us all be a little realistic about the political circumstances under which we are all operating. Having answered some of the questions, I encourage the noble Lord, Lord Tomlinson, not to oppose the clause standing part.

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Lord Hannay of Chiswick: The Minister explained very patiently that the Bill was a compromise. He admits that it was not provided for in the coalition agreement, which provides only for referendums on treaty change. I shall not gainsay that. It was a compromise between the Government and a noisy minority of one of the two parties in the Government who made all the running in the House of Commons. We are just waiting for the compromise with the rather large majority of those who have spoken in this House-I think it was 35 at Second Reading-of which there has been from the government Bench no sign whatever.

Lord Tomlinson: I shall not oppose the clause standing part, but have one slight comment to the Minister. He referred to compromise, but I remind him that he said earlier that the Bill was a compromise between incompatible policies. We shall come back to this later, because there is incompatibility. At the moment, I can see it being removed only by the withdrawal of Clause 6. However, I am content to accept his advice.

Clause 6 agreed.

Schedule 1 : Treaty provisions where amendment removing need for unanimity, consensus or common accord would attract referendum

Amendment 45

Moved by Lord Goodhart

45: Schedule 1, page 13, leave out lines 12 and 13

Lord Goodhart: My Lords, we have now moved on from Clause 6 to Schedule 1. I am speaking to Amendments 45 and 47. I selected them because they are related to law and I am, of course, a lawyer.

Amendment 45 would exclude TEU Article 19(2) from the list of articles where a referendum would be required to approve a treaty which removed the need for unanimity, consensus or common accord with respect to that article. Amendment 47 seeks to exclude TFEU Articles 82(2)(d), 83(1), 86(1), 86(4), 87(3) and 89 from a similar list. None of these articles is remotely appropriate for a referendum.

TEU Article 19(2) is concerned with judges and advocates-general of the European Court of Justice. This subject is miles outside the interests or knowledge of anyone other than a few legal specialists.

TFEU Article 82 deals with the principle of mutual recognition of judgments, with judicial and police co-operation in criminal matters having a cross-border dimension. TFEU Article 83 deals with the establishment of minimum rules concerning the definition of criminal offences in the field of particularly serious crimes with a cross-border dimension. TFEU Article 86 deals with the EPPO, which I discussed in a previous debate and do not need to repeat. TFEU Article 87 deals with police co-operation between states involving the prevention, detection and investigation of criminal offences. TFEU Article 89 concerns conditions under which competent authorities subject to Articles 82 and 87 may operate in agreement with authorities of another member state. These involve cross-border agreements

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which are a matter of specialist information and would have a minimal effect on any citizen of the United Kingdom.

All these articles are already operative and require unanimity, consensus or common accord. There is nothing in these articles which provides for anything other than unanimity. As I read it, Schedule 1 would apply if-but only if-an amendment to the TEU or the TFEU is in future introduced to allow QMV or other modifications of unanimity. These amendments apply only to judicial and police systems and would have virtually no effect on the United Kingdom judicial or police system.

The circumstances in which a Government might wish to agree to removing the need for unanimity are entirely uncertain and unpredictable. It might be patently in the interests of the United Kingdom to switch to QMV so as to block the future misbehaviour of some other member country. The alteration involved might be trivial. Would it not be better to leave it to the Government of the day to decide whether or not to call a referendum?

Referendums are expensive and time consuming. They should be used only for matters which are of real interest and importance to the community which is called upon to vote. None of the provisions that these two amendments would delete can be said to fall into that category. I beg to move.

Lord Williamson of Horton: My Lords, I have waited rather a long time to come into this debate. Having spent 16 years extremely closely involved in the European Union, more so than any other Member of the House, I thought I might come in briefly on this point in particular. We have had a presentation by the noble Lord, Lord Goodhart, which is quite specific to the proposal-a unique experience in some days of this Committee-and therefore we can concentrate on the point specifically, and that is what I would like to do.

We have now come to Schedule 1. The amendments to Schedule 1, which are all grouped together, are what I might call an à la carte menu, in that they all refer to separate issues but are grouped together. The amendments, including the one that has just been moved, would affect Schedule 1 quite substantially. They would have quite different effects but, they would reduce the extremely long list of 40 items in Schedule 1 which would be subject to the referendum block. If we examine them-if these referendums ever happened, which I do not think will be the case-there could be well over 40 referendums as a result of this schedule because some of the points cover various different issues within one article. Let us take it that Schedule 1 provides for 40 potential referendums dealing with issues such as the appointment of judges and other European Court of Justice personnel.

The whole of Part 2 of Schedule 1 would be deleted by Amendment 46. Specified issues relating to criminal procedure are the subject of Amendment 47. We also have the reverse, in that we have a proposal to add to the list in Schedule 1. Of course, we shall then come to whether Schedule 1 stands part. Therefore, the whole of Schedule 1 is in issue here.

The specific points under discussion require examination. This Chamber is the type of body that should look at these things in detail, and we should do

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that rather than just discuss broad issues about whether we are for or against the European Union. We should look at the proposals in front of us. The possibilities presented here should cause us to reflect on whether it is right to have a single mechanism-that is, a referendum-as the method of dealing with any possible changes in all the articles that are referred to in Schedule 1.

I have intervened only once to pose a question to the Minister. I do not think he actually replied but he is reflecting on it, no doubt. I will put the question again. Will the Minister consider, between now and Report, whether there are any items in Schedule 1 which could be removed from it and treated in the traditional manner in which we deal with issues in our system, namely by an Act of Parliament? We will come on later to articles where there are decisions to move by Act of Parliament, to which the Minister has already referred. It is our duty as a revising Chamber to decide whether all the items in Schedule 1 should remain there or whether some of them could be dealt with, as was recommended by the noble Lord, Lord Goodhart, by the traditional method. That is an issue which should not just be put aside but should be reflected upon and referred to again on Report to see whether any changes should be made there.

I have one other point. Irrespective of the disagreements that we have seen demonstrated in this Committee about whether we are for the membership of the Union or wish to leave, or at least wish to have a public opinion on that point, we need to look at these quite specific points. When you look at the scale of this schedule, we are taking what I think is really a step change in the way in which we deal with issues by referendum or by parliamentary discussion and parliamentary Act. This is a really enormous change. It goes beyond the scope of this Bill, in my view. To tell the British public that we are presenting and perhaps passing a Bill which has the potential to give rise to 40 or 50 referendums on issues which a large number of people think are not very important is in fact quite an important issue.

I am sure that in future years people will say, "Well, we've moved over quite a bit towards a system of operating by referendum, so why do we not have referenda on other important things that involve our resources going outside the country?". A good example would be international aid, which would be quite an interesting choice of the sort of issue that is being dealt with in the Government's proposal in this Bill. We could have one on immigration or quite a lot of other things. In my view, there will be pressure in future years for more referenda on many of these issues because, by taking this Bill through, we will have accepted that we are abandoning the system of decision by Acts of Parliament on a large number of issues. We are accepting that and changing very basically how we do things. We may think that we are just dealing with this Bill; in my view, we are dealing not just with this Bill but with an important precedent for the use of referenda elsewhere.

I would like to make that point because it is customary in the Committee stage of this Bill to make points that go rather wider than the immediate issues. I thought I should like to have my chance to do that before we

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come to the seventh, or possibly eighth day, of Committee. I welcome what the noble Lord, Lord Goodhart, said on the specific amendment.

Lord Flight: My Lords, I congratulate the noble Lord, Lord Williamson, on his summing up of Schedule 1 from where he stands. As noble Lords will be aware, there are very much opposing amendments within the amendments that have been grouped together for Schedule 1. I have tabled Amendment 47A, which is really at the other side of the table from Amendments 45, 46 and 47, which I do not support.

Amendments 45 and 47 seek to remove JHA vetoes, including on police co-operation and the EPP and the veto on the appointment of judges, which I would argue are precisely the type of treaty changes that would extend competence from the UK to the EU in sensitive areas and which actually warrant a referendum. Amendment 46 removes all vetoes in TFEU from the referendum lock covering sensitive areas such as social security, social policy, employment policy, justice, home affairs and some tax and defence issues.

Amendment 47A, to which I am speaking, raises a further area of potential transfer of powers from the UK to the EU and proposes the requirement for a referendum which has not been included in the Bill. This is really an illustration that the Bill has not, as some have argued, covered every conceivable territory of transfer of powers but aims to pitch the requirement for a referendum on what the Government perceive as major red line areas.

As noble Lords will be aware, few aspects of trade agreements are now subject to unanimity post-Lisbon. The norm is now a majority. Amendment 47A would subject to a referendum an amending treaty or Article 48(7) TEU ratchet decision, which abolished the veto over negotiation and conclusion of EU trade agreements with non-EU countries and international organisations in the three main areas that were exemptions in Lisbon and covered sensitive issues and thus remained subject to unanimity. First there are the agreements which cover trade in services, the commercial aspects of intellectual property or foreign direct investment, where the agreements include provisions for which unanimity would be required for the adoption of equivalent internal EU rules. That is the most important of the three. Secondly, there are the agreements covering trade in cultural or audiovisual services that,

Thirdly, there are agreements covering trade and social, education or health services that risk seriously disrupting the national organisation of such services and prejudicing the responsibility of member states to deliver them.

EU international trade agreements are binding on member states. The removal of the national veto in some or all of these areas would represent a transfer of power from the UK to the EU in politically sensitive and economically important territories.

Lord Hannay of Chiswick: My Lords, I thank the noble Lord for giving way. I wonder whether he is conscious of two matters. First, the placing of these

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articles in the TFEU was done expressly at the sole insistence of the Government of France and that successive British Governments, both the Government of Mrs Thatcher and Mr Major and the Government of Mr Blair, in successive treaty negotiations, tried to remove these obstacles to making change through negotiations on a reciprocal basis. They concluded-and I concur-that it was in Britain's interest that these matters should be negotiable without a French veto. I wonder whether the noble Lord is aware of that. Secondly, is he also aware that the provision for majority voting on trade matters was in the treaty that was signed in the 1960s, which was in force when we joined the European Community? At the moment, he is speaking as though he might have landed from Mars.

Lord Flight: I thank the noble Lord for his, as ever, instructive intervention. The noble Lord, Lord Kerr, who is sadly not here today, was very involved in the convention on the constitutional treaty and therefore, I believe, is the best informed Member of this House about how these issues were left as exemptions qualifying for unanimity in the Lisbon negotiations.

Secondly, with regard to the position of past UK Governments, those were the positions at that time. The point that I am seeking to make is that we have three areas that, whatever the position of past Governments, could result in transfers of power from the UK to the EU. The point of my amendment is, as I said at the beginning, to illustrate that the Bill does not cover every potential transfer of power; it has been limited to that which the Government consider to be the major issues. However, I believe that the noble Lord, having educated us in the history of this, would not deny that the situation is such that, in these three areas, there could be transfers of power without any treaty so requiring them. As I have already said, this amendment is illustrative and I am sure that there are many other areas where this Bill does not put forward requirements for a referendum on matters that potentially transfer powers because those matters are not deemed to be of prime importance.

Baroness Williams of Crosby: My Lords, I want to address briefly-

Lord Davies of Stamford: My Lords, I have the greatest regard for the noble Baroness, but I think no one has spoken from this side of the Committee recently. The noble Lord, Lord Flight, will not be surprised to learn that I rise to speak on the other side of the argument and do not support his Amendment 47A. However, I rise in support or Amendments 45 and 46 and against Schedule 1 standing part. Before I do that, perhaps I could give a word of personal explanation to the noble Lord, Lord Howell. I did say to him that I would not be able to take part in today's proceedings and I regretted that. I assure him that I made that comment entirely in good faith because, as I explained to him, at the time I had an engagement that I thought I ought to attend but I have managed to extricate myself from it. I hope he is not too disappointed to find that I have returned to the fray here.

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I shall speak directly to these amendments, particularly Amendment 46, but before I do I must repeat that the whole progress of this Committee has thoroughly reinforced the conviction which I expressed at Second Reading: that the effect of this Bill, if it becomes law, will be twofold. First, there will not be any referenda. The idea that we are going to have referenda asking the British public to decide on moving from the ordinary to the special legislative procedure in relation to something involving the procurator-general is absurd. It was never going to happen and still less do I think it likely to happen that we are going to have 10, 20 or 30 referenda. The Government, in response to my Second Reading speech, said in desperation that these referenda would be grouped but you cannot possibly ask the British public to answer 10 questions of that kind in the course of one referendum, so there is no doubt about it: there is no intention to have any referenda and there will not be any.

The intention must therefore be, as I have said before, to adopt what I call a frozen policy in the EU. It is quite frightening that this country should adopt a frozen policy in any international organisation of which it is a part. It is not only deeply destructive of the national interest but not at all in accordance with public opinion in this country. Public opinion may well be sceptical in many ways about the European Union but it expects the Government to respond flexibly, pragmatically and intelligently to the challenges of the hour, not to adopt frozen policies.

This schedule has a whole list of absurdities in it. If I dealt with them all, although I should be delighted to do so in many ways, I would take up much too much of the Committee's time. Perhaps I might focus on two, because I want to illustrate how misconceived the approach encapsulated in the Bill is. The first item in Part 2 of Schedule 1 is:

"Article 19(1) (measures to combat discrimination based on sex, racial or ethnic origin, religion or belief, age or sexual orientation)".

If one looks up the relevant reference, Article 19 goes as follows:

"Without prejudice to the other provisions of the Treaties and within the limits of the powers conferred by them upon the Union, the Council, acting unanimously in accordance with a special legislative procedure and after obtaining the consent of the European Parliament, may take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation".

It is, unfortunately, not impossible that there should be problems with discrimination in the European Union, particularly racial or religious discrimination. Racial discrimination is, sadly, not absent from any part of the human race and we have had some disturbing incidents and tendencies in the European Union, for example in Romania and Hungary-and, surprisingly and rather shockingly, in France-in relation to the Roma. We have had racialist remarks made by members of the current ruling party in Hungary and by prominent members of parties in Poland and Latvia who are now partners of the British Conservative Party in the European Parliament.

It seems to me that there would be a great advantage in moving from the special to the ordinary legislative procedure in this area of discrimination, so that once

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we had done that it would not be possible for one member state to hold out against a clear declaration, legal statement or piece of legislation that made it impossible to discriminate against people on those grounds. There was horror when the French Government suggested that it was a greater priority to get illegal immigrants out of France if they were Roma than if they were anything else. That is exactly the kind of problem that all of us, surely, have an interest in ensuring does not arise and does not disgrace or besmirch the European Union, to which many of us are committed. Therefore, if one had a problem involving a country there would be a real danger of a veto under the special legislative procedure.

I cannot for the life of me think why a British Government who are composed of a Conservative-Liberal Democrat coalition should want to exclude the use of qualified majority voting without the block, which we know will never be overcome, of a threatened referendum. So it seems a thoroughly perverse consequence of the Government's policy in this area.

Let me take another, very different, example, which shows how we are shooting ourselves in the foot if we pass this Bill. It is an area which I know a bit about, having been Minister for defence procurement for a while before the general election. The penultimate item in the list under Part 2 in Schedule 1 is:

"Article 346(2) (changes to list of military products exempt from internal market provisions)".

In the relevant governing article in the Lisbon treaty, Article 346 states that,

What the Government are saying is that they cannot change that and move from unanimity to qualified majority voting without a referendum. Let me explain what this clause does. It is a derogation from the single market in relation to military goods. It is a protectionist measure, which I believe was insisted upon by France at the time the original treaty of Rome was signed. For many years it was Article 46 of the treaty, but it has been overtaken by events. It is contrary to the interests of the British defence industry, which is the largest-that is not a value judgment but a fact-by volume of any defence industry in the European Union and, I think, the most competitive. It therefore suffers from this protectionist measure, which in my experience and to my own knowledge has often been abused.

Member states have argued that vehicles used for military purposes are military equipment and therefore have to be manufactured in that particular country-Italy, in this case. There are arguments the whole time about whether something is genuinely military equipment. This can sometimes be resolved, but the effect is a major derogation in the single market. I thought that it was a matter of consensus in British politics-certainly involving all three major parties-that we are in favour of a single market and we want to get rid of obstacles

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to it. Yet this Government are placing an obstacle in the way of extending the single market. This Government are using a referendum to block the removal of a derogation from the single market legislation. In effect they are supporting a restriction on the possibility of the British defence industry expanding its exports within the European Union. This is a crazy, crazy policy, there is no doubt about it. I do not know whether the Government have thought this one through. If they have, I hope that at this 11th hour they will think about it again.

I am proud that, as defence procurement Minister, for the first time I abolished protectionism. I said that Britain should buy the capability it needed, where it could get it best and at the cheapest price. I made that absolutely plain. There are certain areas where for defence purposes and strategic security reasons we would not buy military equipment. We would not buy from Russia or China, for example, because we would not know what was in it. If there was any software, we would have to be very wary indeed of allowing it into the country. Nevertheless, where security and defence considerations did not apply, we would buy equipment from the best and cheapest source.

I placed a contract for an armoured vehicle, the Warthog, in Singapore and I am glad I did. I have a record, if I may say so, of being liberal in defence procurement and it is deeply shocking to me that we have a Government who are trying to go against that liberalism and damage an important British industry. The defence industry, probably together with pharmaceuticals, is the manufacturing area in which we have the greatest international competitive advantage.

I hope that, as a result of the debates in this House-unfortunately these matters will not be explored properly in the House of Commons-the country as a whole, including, in this case, the manufacturing and defence industries, will be alerted to what is going on here. If the arguments that we bring forward from these Benches, and those of others with reasonable views on Europe on the other Benches, do not prevail, maybe the voice of British industry might be heard. If it is not heard soon, a very important piece of damage will be done. It will be extremely difficult for us to find a rational solution to this problem if we continue to have enforced unanimity in this area of single market legislation, because that is what it is.

Baroness Williams of Crosby: I shall quickly follow the noble Lord, Lord Davies, but I shall not detain the Committee for more than a few moments. I plead particularly to those Members of the Committee who are women. Article 19, the provision to which the noble Lord, Lord Davies, referred, concerns discrimination on the grounds of sex, religion, sexual orientation and so forth. The effect of what we now see in Schedule 1 is that a referendum would be needed to move from unanimity to qualified majority voting. I ask my colleagues to give a moment's thought to a position where the discriminator is one of the members of the Council.

That was exactly the example in the case of the Czech Republic when it sought to join the European Union. It discriminated viciously against the Roma; in some cases they were assaulted in small Czech towns

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and, in one or two cases, burnt. The attempt to say to the Czech Republic that discrimination against the Roma must end would have been impossible had there been a requirement for unanimity-in other words, no movement towards qualified majority voting. In those European Union members where there is clearly discrimination against women-Romania is one example of that-it would be possible for that country effectively to veto an attempt to rule out such discrimination. I cannot believe that that is what the Committee wants to see.

Essentially, one of the great achievements of the European Union-one that the noble Lord, Lord Pearson of Rannoch, totally fails to recognise-was the extension of human rights and democracy to central and eastern Europe. It is an astonishing achievement. In any country except Britain it would be recognised as such. The consequence of that, in practice, is that the Copenhagen criteria-laid down in 1993 at the European Council meeting in the Danish capital-specifically said that for a country to join the European Union it must meet requirements about human rights, democracy, the independence of the courts and the proper, non-corrupt provision and maintenance of the rule of law, all of which are fundamental pillars of democracy. All of these depended on the wishes of these countries to join the European Union, and the requirement on them to meet those political conditions in order to do so.

The success, in extending democracy to that huge part of Europe, has a great deal to do with the respect that many of us have for the European Union. I spent nine years as the head of an organisation based in Harvard University called Project Liberty, which argued time and again with the Governments of eastern European countries that they could not join the European Union unless they put right laws that were discriminatory and corrupt. I know this because I was involved at first hand. It was an extraordinarily powerful weapon.

I conclude by saying, first, that nobody in this Committee should underestimate the astonishing impact that Europe has had on democracy in this continent and beyond it. Secondly, to try now to limit opposition to discrimination by obliging it to be unanimous would be a huge step back for the European Union, and one for which I, for one, would hate to see my country be responsible.

Lord Liddle: My Lords, we have heard many fine speeches in this short debate. I shall be brief and focus on what I regard as the central problem with Schedule 1. The Government need to accept that there is a central problem, and they have to agree to some amendment to the Bill that addresses this issue.

10 pm

Schedule 1 is the most extraordinary apples-and-pears mix comprising all kinds of different issues which it seeks to subject to precisely the same treatment-the requirement for a referendum. Some of the issues contained in it are of fundamental constitutional significance. If one imagined a move to a federal Europe -which some people have advocated, and indeed there may be a case for in time-with a president of

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Europe directly elected by the people and with the European Parliament representing constituencies on an equal basis somewhat like the House of Representatives, one could also imagine future treaty revision being done by a Europe-wide referendum. That has been proposed by some people. Those issues are of fundamental constitutional significance and would, in the opinion of noble Lords on our side of the Committee, require a public debate on whether we wanted to move to that kind of Europe. Those would be proper subjects for referenda.

There are 40 potential referendums in this long schedule. The noble Lord, Lord Williamson of Horton, has counted them; I have not. However, it contains themes which, on any proportionate analysis, certainly do not pass the test of requiring a referendum. We have already been given illustrations of how some of these provisions, which we could remove only by means of referenda, have been inserted in the treaties against the UK's national interest. It is foolish to require a referendum in order to make a change that favours your national interest.

In an earlier day in Committee, the noble Lord, Lord Kerr of Kinlochard, talked about the changes to the list of military products exempt from internal market provisions. That is a classic example of an area where we might want to make progress in common defence procurement to make defence affordable for the nation states of Europe. Given the banking crisis, we might want to look again at some stage-I do not know whether we would-at the Article 127(6) provision concerning the conferral on the European Central Bank of specific tasks relating to prudential supervision. However, the problem is that this schedule comprises a total apple-and-pears mix.

The Bill needs a mechanism to measure proportionality in terms of what issues should be put to a referendum. Yesterday we suggested that there should be a parliamentary process, possibly advised by an independent committee of experts, to examine where referenda are justified and where they are not. It is not as though such a process would drive a coach and horses through the Bill, as the Bill itself accepts that for certain decisions an Act of Parliament is required. The Bill does not say that absolutely everything has to be subject to a referendum-although I think it says far too much should be-as it accepts that some changes can be made only through an Act of Parliament. Why not try to institute a process that gets a better balance between the requirement for a referendum and also an Act of Parliament and a requirement solely for an Act of Parliament?

I think that the schedule, as presently drafted, is a complete mess. It would be shameful if the Government came back with it on Report. I hope that they will be willing to give fundamental consideration to an amendment to the Bill.

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, I want to be brief, too, but I am not sure that I will succeed. This has been an immensely interesting and wide-ranging debate, as is often the way with European Union issues. All sorts of aspects have come into the debate,

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which are raised by the contents of Schedule 1, which we are debating. The noble Lord, Lord Liddle, has described it in various critical terms-was it mishmash? I cannot remember.

I shall attempt to explain exactly why the things in Schedule 1 are there, and I think that I will be able to show that this is not quite the random selection or lottery that has been implied. I appreciate that there are obviously a number of views on the existence and scope of the provisions in Schedule 1. I have obviously looked very carefully at the amendments tabled and at some of the arguments that have been used this evening, as we have done with all amendments tabled in Committee. I do not accept the censorious view that these matters have not been addressed seriously. Every single item in the Bill has been considered very seriously, particularly all the items in Schedule 1, just as there is a long list of less significant issues where there is unanimity at present and a veto could be removed, which are not even in Schedule 1.

The idea that there has been no consideration of these matters is not really representative of the reality. There has been immensely detailed consideration of every one in Schedule 1. Last night we went over some of the implications, which are huge, behind the nature of the different groups of items in Schedule 1. We did not go over the many other items that are not in Schedule 1, where a veto could be lifted. It is thought that although that is significant it would justify just an Act of Parliament and not the deterrent of the referendum lock. I must address the central issue-again, this will take time-put by the noble Lord, Lord Williamson. He asked whether there was any one item that one could remove from the referendum lock category down to the parliamentary Act of Parliament lock instead, or maybe even to a lower lock of merely approval of the two Houses-the sort of not very secure lock that has existed in the past over many areas. I understand that opposition spokesmen are saying that they now want to move on from that, and found not so much difficulty as they did in the past with Acts of Parliament.

Can one think of any of these areas and why the present list in Schedule 1 is as it is? It is not just the random British view of a whole series of things that people want to keep unanimity for. Many of these items are there because during the discussions leading up to the negotiation of the Lisbon treaty, which many noble Lords are very familiar with, a whole range of countries insisted that they should stay at unanimity. All kinds of other matters were moved away to QMV in the Lisbon treaty and in previous treaties, but people argued at the time-we all remember it-that the Lisbon treaty was, as it were, the high point and that many issues had been moved to QMV, but that in the national interest of many member countries a certain range of matters should be kept at unanimity, and that the veto should not be surrendered for those countries. That in itself explains why Schedule 1 exists in the form it does.

Lord Dykes: I apologise for making a brief intervention, but is that not an extraordinary suggestion? Why then are the UK Government including some of those items if they are not particularly interested in them,

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because they came from other countries? What about innocuous articles such as Article 155? Why is that in this long, provocative list of items? It is an extraordinary proposition.

Lord Howell of Guildford: The noble Lord used the word "innocuous". I do not believe that any of the matters in Schedule 1, which were put there with very careful evaluation and judgment, are innocuous. As I tried to explain last night, there are other areas of unanimity in which a veto could be removed that could be put in the less significant, if not the totally innocuous, category.

The list in Schedule 1 is not there by chance, accident or lottery; it is there because each has been evaluated and covers very sensitive issues where there would be a transfer of power. If the opportunity were taken to remove our veto in these areas-not to act, be active or develop policies in the areas-that would surrender an important power, which might greatly damage this country's future national interest. I appreciate the sensitivity of the issues concerned.

I do not want to raise any hopes, but I do not think that the amendments, some of which have been advanced with great clarity and feeling-I shall come to specific amendments in a moment-are an appropriate opportunity to remove items from the schedule. I want to set out as clearly as I can, and as seriously and in as detailed a way as I can, why that is so. Of course, I shall continue to reflect on the points raised in today's debate. As I said last night and in earlier Committee sittings, I am very happy to meet colleagues who want to discuss and analyse this or any other aspect of the Bill.

As ever, I have carefully listened to the Opposition's wish-I believe it is a central theme-that they want more flexibility. I say "more" flexibility because there is flexibility in the whole pattern, as we discussed earlier. In Clause 4, there is flexibility, through the significance provisions. There is flexibility in the sense that all kinds of issues are not in Schedule 1, and those that are included in it are there for very careful reasons. As we shall learn as our discussions in Committee proceed, there is also flexibility in that a number of issues will be suitable, if changed, for an Act of Parliament rather than the application of the referendum lock. That is the flexibility theme that the Opposition have developed. They want, as I understand it, to lift the lock on some matters of competence and power. I do not want to make a cheap debating point-the noble Lord, Lord Triesman, possibly seemed to be indirectly reproving me-but I am not 100 per cent clear where, after all the work in the Lisbon treaty and the huge range of competences that exist in vital areas, about which the noble Baroness, Lady Williams, spoke so graphically, they want us to further extend the EU's powers. My noble friend Lord Goodhart made it crystal clear, as usual, with the clarity of a fine legal mind-I say that with envy, because I wish I had the same sort of legal mind-where he wanted unanimity to be given up. I want to address his points specifically; he urged that unanimity should be given up-he used strong words, one of which was "absurd", about there being any resistance to abandoning the veto in these

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areas. It was obviously not resistance to operating in these areas-we all want to see all sorts of operations-but resistance to giving up any veto.

10.15 pm

Schedule 1 lists a number of articles in the Treaty on the European Union and in the TFEU on which decisions in the Council or the European Council are agreed by unanimity, consensus or common accord. We all agree about that. I have just made the point, but I shall make it once more, that Schedule 1 is not an exhaustive list of treaty articles where there is a present requirement for unanimity, consensus or common accord. In compiling the list, I repeat that the Government considered carefully which articles to include in Schedule 1 and which to exclude. At the risk of sounding repetitive, it was not a random selection. The treaty articles included fall in broad terms into the policy areas that are considered to be red lines, to which the noble Lord, Lord Stoddart, referred. They have been considered sensitive by Governments of all persuasions-this is not a party matter at all-and by the British people, and any proposal to give up a veto would be considered sensitive enough to warrant the application of the referendum lock which this Bill would put in place. I repeat what I said a moment ago: we are not alone in having had a lot of concerns in previous treaty negotiations about moving to QMV in these areas. We have our locks-and we will have more when, as I hope, the Bill becomes an Act-and other member states have their locks of all sorts of varieties. To my mind, as someone who wants to see the European Union receive better support and succeed more in terms of popular consensus than it has done in the past, that is a good thing.

The amendments seem to be based on a misunderstanding. The Bill and the schedule do not impact on the use of the articles to which I referred; they merely change the veto procedure. Of course, the articles cover different areas. They cannot help being different-that is the vast scope of the European Union. The articles cover areas such as foreign policy, defence, security, national security and military issues, third-country and international agreements, national economic, tax, fiscal and energy policies, provisions on the EU budget, financial management of the EU, citizenship and elections, social security and employment policy, and issues of membership and enlargement. Saying that those should not be included is not at all the same as requiring a referendum of the people every time we wish to agree any measure under any of those treaty articles. The implication seems to be that, if we do anything under these articles, we are somehow getting into referendum country, but that is not so. The referendum lock applies only if there is a proposal to give up the right to say no and the UK could make a difference to the outcome by so doing. There would be no problem before the UK agreed to act in these areas. The issue would arise only if it were a matter of surrendering the opportunity to say no when something against the British national interest was to be surrendered.

Therefore, one is left asking those who want to give up these vetoes why they want to do so. Why should we ever want to do that? What are the powers that we so anxiously need or are ready to give up that would benefit the national interest in the future? Some examples

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have been put forward but in every case that I have heard this evening they are matters where we can proceed by unanimity. If we gave up the veto, it would be very difficult to see why the countries that we were trying to get to do something that they would not otherwise do, and were resisting by hanging on to the veto, would give up the veto themselves. Obviously they would be asked to give up the veto so that they could be outvoted.

This seems to be an extraordinary convolution of the procedures that go on. It explains why countries were ready to give up certain vetoes at Lisbon but have, on the whole, said, "No more".

Let me turn to the amendments themselves. Amendment 45 would remove Article 19(2) from the Treaty on European Union from Schedule 1. This is the article that provides for the appointment of judges and advocates-general to the Court of Justice of the European Union. The amendment seems to suggest that the Bill-or the application of these provisions-will result in a flurry of referendums on decisions for minor issues. We consider-and I have to state the Government's view on this-that the requirement for the appointment of both judges and advocates-general should be agreed by common accord and consensus. This is vital to enable the UK to achieve its key policy objective of ensuring that the overall quality and independence of the EU judiciary is maintained. In contrast, to lose the ability to be able to block the appointment of judges in the future would be an issue of some sensitivity and would mean that we would not be able to uphold the effectiveness of the Court or the EU as a whole.

Lord Goodhart: Does my noble friend agree, however, that a situation might arise in which it is desired to change from unanimity to a qualified majority vote on the ground that some member states might become very obstructive to the choice of particular members of the judiciary or the advocates-general, and that it, might be the only way of ensuring that the problems did not become overwhelming?

Lord Howell of Guildford: It becomes a matter of hypothesis and judgment. This is an area where, somehow, one has to have solidarity and consensus. Given that it requires unanimity to go to QMV, it would be a pretty odd action by the country that did not want to go to QMV to act totally against its interest. It is an inconceivable situation. However, if a country did so, it would be a very bad basis for supporting the independence and overall quality of the EU judiciary and of the key figures like the advocates-general and judges. It remains the view of this Government that to move away from a consensus and concord of agreement and support for these kinds of appointments would be very unfortunate. I think this would be the view of future Governments, too. I do not regard this as binding; I simply regard it as common sense.

Neither under this amendment nor under Amendment 47-which I also want to speak to because the noble Lord, Lord Goodhart, put his point so keenly and strongly-is there any question of not being able to operate or contribute to the election and appointment of advocates-general or anything else

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under any of these articles. The issue is simply whether it is right that we surrender the veto, so that in a future situation it might be possible that we would not be able to resist measures and proposals that were directly against our own national interest and judgment.

Let me turn to Amendment 47, which would remove key justice and home affairs provisions from Schedule 1 and therefore from the referendum lock. I know that the noble Lord is a keen expert in this area. As I said before, Schedule 1 does not prevent the use of these articles. This is a narrow exposition of a much broader point which I would urge many noble Lords who have spoken to comprehend. The noble Lord, Lord Liddle, talked about a meeting of minds, and I would love to see one, but it is difficult if it is not understood that the central point is about whether we abandon vetoes, not whether we use the articles and competences that are already there.

Lord Hannay of Chiswick: Perhaps the Minister would not mind going back about one minute to what he was saying about advocates-general and members of the European Court of Justice. I think that sometimes the Government seem not to be very aware of the chemistry of decision-making in the European Union. The fact of the matter is that so long as you need unanimity to appoint these judges, we will never block one because we will be terrified that somebody will block ours. The chemistry is that so long as there is unanimity, nobody blocks anything and everyone goes through on the nod. That has been true ever since the European Union was set up. If you have QMV for this, and I am not saying that we should move to it immediately, there would be no such "see no evil, hear no evil" approach because you would be terrified that if you tried to block someone on abusive grounds, you would be overridden.

I think that some of the arguments that the Minister used about-

Baroness Anelay of St Johns: My Lords, the Minister is winding. Obviously it is for noble Lords to intervene to ask a question, but not to make a speech. If the noble Lord, Lord Hannay, wishes to make a further speech in Committee-of course I am not inviting him to do so as I am not going to test the patience of the Chamber-I would indicate that he is able to make a further speech, but at the moment, if he has a question to put, he may put it.

Lord Hannay of Chiswick: I will now await the answer.

Lord Howell of Guildford: I am longing to get on. I have taken too much time already and not met in sufficient detail some of the very profound arguments that have been made. We may perhaps have opportunities later.

On Amendment 47, by including the relevant item in Schedule 1, we are ensuring that the British people would have a say before the UK gave up the current practice of voting by unanimity on these particular areas. We, as well as the previous Government, and several partners in the member states-I would suspect the majority-would view that with very great sensitivity

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indeed. That is all I have time to say on these vital issues, but that indicates that these are not chance items that were just bunged into Schedule 1, but very serious issues on which there would be a very serious situation, should it come to giving up the veto, that would certainly demand the referendum lock.

I will say a word on Amendment 46 and then I will try to close because there is a great deal more to say, particularly on Amendment 47A, tabled by my noble friend Lord Flight. Amendment 46 refers to the Treaty on the Functioning of the European Union, which is the engine room of the EU. As we know, the Treaty on European Union sets out provisions of principle in a number of sensitive areas, such as common foreign and security policy, and the TFEU sets out the bulk of policy areas and the extent of the competence in which the EU can act. It has considerable read-across to areas on which we in Parliament would otherwise legislate and which are of vital importance, such as social policy, criminal policy, tax policy, police matters and other things that the British people rightly regard as very intimate domestic issues. Some of the articles in the TFEU have been moved over to QMV. We have previously made clear that this Government have no intention of giving up any veto in the EU treaties, and nor have several other member states.

I reiterate that, for many member states and perhaps for ourselves, Lisbon was passed and is a fact, but it took a great slice of the issues into QMV and a great slice of them was also preserved. They were preserved because member states did not wish to give them up. Some vetoes are plainly not within the bracket that will be a vital issue at all-for example, Article 219(1) of TFEU on the setting of the Euro exchange rates with third countries. A number of vetoes fall within the sensitive policy areas defined by the last Government and successive administrations as so-called "red lines". Those vetoes should be subject to a referendum lock, if ever there was a proposal to give these up in the future.

Finally, I must say a word on Amendment 47A, which my noble friend moved. The provisions here, in respect of Article 207(4), are narrowly defined types of EU trade agreements, requiring unanimity. I considered this amendment very carefully, as did my right honourable friend the Minister for Europe. The conclusion was that it did not make sense-and this, I hope it will be recognised, is evidence of some flexibility-to include this in Schedule 1. That does not mean that we intend to agree to give up this veto in the future, but the treaty base is not of as great a level of sensitivity for the United Kingdom, as it is for some other Member States, for whom it certainly is sensitive. An Act of Parliament would therefore be sufficient here, rather than the referendum lock.

I hope that I have given some evidence that we are looking at these matters very carefully, and that we are acting in a proportionate way. There is a scale here. The vital issues are in Schedule 1, and the less vital issues are not in Schedule 1 or would not attract the referendum lock. We have sought to increase ministerial accountability. We have not sought-contrary to the views of some noble Lords-to squander money and time by seeking to legislate for a string of referendums

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on matters of relative insignificance. Those matters are not in the schedule. Instead, we ask for the British people's agreement when transferring further powers from the UK to the EU in areas which define who we are as a nation and as a people.

These transfers are unlikely ever to be proposed on an individual basis-whatever noble Lords may argue-and only in the context of a package, given the opposition from several member states to moves to qualified majority voting in these areas. Indeed, articles in Schedule 1, where unanimity needs to be safeguarded, are there precisely because member states-including ourselves-have resisted going to QMV to protect our national interest. That is why they are there.

In conclusion, Schedule 1 provides clarity in the Bill, not confusion. It is a definitive and unambiguous list of treaty articles that we believe should concern the British people, if ever there is a proposal to give up a veto in those areas. Under the provisions of the Bill, the Government are obliged to seek the approval of both Parliament and the people before they can agree to the removal of the vetoes present in each of these articles in Schedule 1.

It is Schedule 1 that gives Parliament and the people assurance and therefore is a key element in rebuilding trust. That underlines why the contents of Schedule 1 are the right ones and why we argue strongly against moving from these areas towards what the Opposition call flexibility. To do so would allow a number of areas to generate the kind of doubt and distrust that we have seen in the past, which is now widespread quite a lot in this country and throughout Europe.

The declining popularity for the great European Union, which many of us have worked for and in for decades, is a bad development. Sensible Europeans need to recognise that and take moves to shore up and reassure the public support for the European Union project in the 21st century. That is what this Bill is about. That is what we are trying to do. To begin picking little exemptions and holes in the Bill is the way to undermine its central purpose. I therefore ask the noble Lords to withdraw their amendments.

Lord Grenfell: Before my very good friend the Minister sits down, perhaps I may put one very quick question to him of a practical nature. He mentioned that we were not the only country in the European Union that had referendum locks. Does he agree that it would be very helpful to the House if, when we get to Report, he could provide us with the list of countries and how many referendum locks that they have. I have a feeling that their number, collectively, may not add up the number of referendum locks that are being proposed by the Government.

Lord Howell of Guildford: I must hurry because time is running out, but I have in front of me a long list of countries both which have various forms of filter, referendum lock and mandate reference and which have opposed at every point any abandonment of unanimity on a whole range of issues, many of which I have covered this evening. Under my hand, I can see 15 to 20 countries straight off. I shall try to provide for noble Lords as much information as I can on the details of other countries doing what we are doing.

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Lord Goodhart: My Lords, I have listened with considerable interest to what my noble friend Lord Howell has said, but it has not really led to any conversion of my views. I have of course recognised that Schedule 1 referendums arise only where a universal pattern has been replaced by something that is not universal but is QMV. However, that does not alter the situation.

My noble friend the Minister said that very detailed consideration has been given to this, which I entirely accept was the case. However, because it was detailed does not mean that the consideration was correct, and I find it extremely difficult to accept that it was. In the amendments that I have proposed, let us take the appointment of judges and advocates-general. This is something on which unanimity has so far been necessary. I was in fact very impressed by what the noble Lord said. In a case of this kind, it might well be in the interests of the country to have a QMV system rather than one of unanimity. This applies also to the other branches of the schedule which I dealt with.

All the treaty provisions in the schedule to which I have specifically referred are limited to cases of legal

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systems, and each of them is inappropriate for inclusion. I have not attempted to go through in detail the rest of the list in Parts 1 and 2 of Schedule 1, because the situation for some of them may be different. However, it is clear that not only in the legal systems but in a number of others it is not possible to say that the case has been made out. As I said, just because the investigation was detailed that does not mean it was correct.

In the circumstances, I will withdraw Amendment 45 -the others have not been moved-but it is likely that this issue will be brought back at a future date, perhaps not specifically limited to legal issues but with a wider list. On that basis I beg leave to withdraw Amendment 45.

Amendment 45 withdrawn.

Amendments 46 to 47A not moved.

Schedule 1 agreed.

House resumed.

House adjourned at 10.41 pm.

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