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Just because Schedule 1 and Clause 6 are detailed does not mean that there will have at some point to be a separate referendum on each of the provisions listed. Although that point is to me self-evident, I am not sure that it is accepted or understood by all noble Lords who have spoken. All the items in Schedule 1 are wired into the major issues, the six red lines to which the noble Lord, Lord Grenfell, rightly referred. I have in front of me and could share it with the House, although that would be very tiring and boring, the way in which every one of the articles in Schedule 1 relates to one of the six red lines which successive Governments have stood by and which are of great interest to ordinary citizens. One is left asking: what are the extra powers or extra veto surrenders which the Opposition and others of your Lordships seem to want and are too nervous to put to the people? We have given up past vetoes on the annual budget, with disastrous results. We gave up a veto on Article 122, which made us liable for the European financial stability mechanism, with disastrous results. What are these new vetoes that are required to be given up to make the European Union work? We have never had a clear answer to that question.

Lord Hannay of Chiswick: On one small point of fact, the noble Lord, Lord Howell, said that we have just given up the veto on the annual budget. The annual budget has been adopted by a majority vote by a provision of the Treaty of Rome which was negotiated before we joined, which we have applied. Therefore, it has been taken by a majority vote throughout the period of our membership. It really is not wise to adduce changes which have not taken place during the period of our membership.

Lord Howell of Guildford: I totally disagree; I think that it is pertinent and a healthy reminder of what happens. We can contribute all we wish to in all these vital areas. The surrender of the veto can lead to consequences which can be extremely dangerous.

Finally, I should like to say a word on common defence, because that has come up and it is important. Amendments 15 and 16 suggest that the only controversial element of a decision to move to common defence would be a decision to develop a single integrated military force-in other words, that it is only that particular interpretation of common defence which is of real concern.

Successive Governments and successive Ministers, including noble Lords sitting here now in the Chamber, have rightly said that we do not support the introduction of a common defence. A Minister said:

"We oppose the introduction of common defence either at 25"-

there were 25 members when this was said-

We do not support,



13 Jun 2011 : Column 589

which,

have agreed. That comes from a Minister in a previous Government. It is extremely telling and sums up the case very well. However, there would be confusion about any decision that resulted in the establishment of a single integrated military force. For example, would the establishment of an integrated command structure or integrated units or the achievement of integrated budgets count? It is just that lack of clarity that allows for the sort of competence-creep which caused so much distrust and which we are trying to overcome in the Bill.

In addition, we have concerns about a move to a common defence that goes beyond the establishment of a common force. A decision to move to a common defence could lead to the loss by the British Parliament of final decisions over whether to send our troops into harm's way. Like the previous Government, we think it is vital that the UK is able to maintain an independent defence policy. Indeed, it was one of the red lines during negotiation of the Lisbon treaty, and I cannot understand the Labour Opposition wanting to move away from that today. I accept that a common defence is ill defined but that problem would not be solved with this amendment, which could apply only to the UK. Instead, our promise is that any decision to move to a common defence should be subject to the full scrutiny of the British public.

I have gone on for a long time but this has been a huge debate. There are many vital issues to address and it would be wrong to ignore them. I am pleased that noble Lords recognise the utility of the referendum lock in its application to any proposal to abolish our border controls or adopt the euro. However, I ask your Lordships also to consider the sheer inconsistency of seeking to remove from Clause 6 other measures that would transfer further competence and power from the UK to the EU. They are directly related to the crucial six issues on which successive Governments have insisted they want to protect Britain while being forward and active in encouraging the European Union within their full competences. This is a good European policy and the Bill reinforces it. It should be supported and the amendment should be withdrawn.

Lord Hannay of Chiswick: My Lords, I am most grateful to all noble Lords who have contributed to this lengthy and interesting debate. I hope that I may be forgiven for saying that there were moments during the afternoon when I thought we were moving back to the future-namely, heading rapidly towards a Second Reading debate. A fair number of contributions bore little relation to the amendments on the Marshalled List but a great deal to the discussions that we had during Second Reading. However, I shall not follow that road now, when we need to focus on the amendments in a much more controlled way.

I thank the noble Lord, Lord Howell of Guildford, for his very thoughtful response and for being so frank about the fact that, although those in whose names the amendments stand were introducing an element of

13 Jun 2011 : Column 590

compromise, he did not intend to do so. That was made extremely clear and I hope that all those who listened to the debate will draw the appropriate conclusions from the lack of flexibility on the part of the Government.

There are not many detailed points that need to be referred to. A certain amount of a meal was made by those who spoke against the wording of the amendment relating to an integrated military force. What we are talking about is fairly obvious. We are talking about our old friend-much beloved of the Daily Mail-the European army. We are talking about, for example, our treaty commitment in NATO under which we are part of an integrated military force. I only say to the noble Lord, Lord Waddington, that he will know very well that the NATO obligations apply in exactly the same way to the Navy and the Air Force as they do to the Army. The use of the word "military" is not exclusive to the Army. Therefore, it is obvious what the amendment tries to do: it tries to ensure that, if we were ever to have a British Government who wanted to move in that direction, they would have to submit the matter to a referendum. That is a recognition by those in whose names the amendments stand that the Government are right to have identified that issue as one of fundamental constitutional significance. However, I am afraid that issues such as whom we fought alongside in Iraq are totally irrelevant. We did not fight in Iraq on the basis of any treaty whatever; we fought on the basis of a coalition of the willing without a legal base. Therefore, we should not get muddled up with that issue. There seems to be less trouble about the euro and Schengen. Then, ultimately we come back to the question of whether we should be trying to reduce the number of potential individual referendums. The arguments for that are very strong.

I have been a little saddened by the way in which so many of the protagonists of the Bill and the opponents of the amendments have denigrated the parliamentary process. They have, in fact, thrown up their hands and said that it is completely useless. They seem to have discovered the whipping system, which I think has been in effect since the 18th century or perhaps even earlier, as being at the root of all this evil. That is pretty sad. There are quite a lot of former Whips sitting here and I do not see them covering their heads in sackcloth and ashes and saying that they made terrible mistakes by doing so. It has been part of our constitutional practice for a very long time and we have managed to achieve greater constitutional stability than a lot of countries that do not have it. It is a bit sad that we should be heading off in the direction of plebiscitary democracy-a-go-go instead of thinking about how to make our parliamentary institutions work more effectively. That is why one of the most important points made by the proponents of the amendments is the fact that you need primary legislation for every single change in the Bill. That is really important. It is the way to make parliamentary scrutiny more effective and that is what is needed-not a dash towards plebiscites, which is a very revolutionary approach. I have to say that it comes from a rather unlikely band of revolutionaries from a party whose name suggests that they are counter-revolutionaries. Nevertheless, I think that it is a move in the wrong direction and I should therefore like to test the opinion of the House.



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5.56 pm

Division on Amendment 14

Contents 213; Not-Contents 209. [See col. 612 for explanation of mistake in voting figures.]

Amendment 14 agreed.


Division No. 1


CONTENTS

Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Alli, L.
Alton of Liverpool, L.
Anderson of Swansea, L.
Andrews, B.
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Beecham, L.
Berkeley, L.
Best, L.
Bhattacharyya, L.
Bilston, L.
Boateng, L.
Bradley, L.
Brennan, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Browne of Ladyton, L.
Browne of Madingley, L.
Campbell of Surbiton, B.
Campbell-Savours, L.
Carter of Coles, L.
Chichester, Bp.
Chorley, L.
Christopher, L.
Clancarty, E.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cobbold, L.
Collins of Highbury, L.
Condon, L.
Crawley, B.
Crisp, L.
Cunningham of Felling, L.
Davies of Coity, L.
Davies of Oldham, L.
Davies of Stamford, L.
Dean of Thornton-le-Fylde, B.
Donaghy, B.
Donoughue, L.
Drake, B.
Dykes, L. [Teller]
Elder, L.
Elystan-Morgan, L.
Falkender, B.
Falkland, V.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Fellowes, L.
Filkin, L.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Freyberg, L.
Gale, B.
Garel-Jones, L.
Gibson of Market Rasen, B.
Giddens, L.
Glasman, L.
Golding, B.
Goldsmith, L.
Goodhart, L.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Grantchester, L.
Grenfell, L.
Griffiths of Burry Port, L.
Hannay of Chiswick, L.
Harries of Pentregarth, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hilton of Eggardon, B.
Hollick, L.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howe of Aberavon, L.
Howells of St Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Stretford, B.
Hughes of Woodside, L.
Hurd of Westwell, L.
Irvine of Lairg, L.
Jay of Ewelme, L.
Jay of Paddington, B.
Jones, L.
Jones of Whitchurch, B.
Jordan, L.
Kennedy of Southwark, L.
Kerr of Kinlochard, L.
King of West Bromwich, L.
Kingsmill, B.
Kinnock, L.
Kinnock of Holyhead, B.
Knight of Weymouth, L.
Layard, L.
Lea of Crondall, L.
Liddell of Coatdyke, B.
Liddle, L.
Lipsey, L.
Lister of Burtersett, B.
Lloyd of Berwick, L.
Low of Dalston, L.
McAvoy, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
Macdonald of Tradeston, L.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Maclennan of Rogart, L.
Mandelson, L.


13 Jun 2011 : Column 592

Martin of Springburn, L.
Masham of Ilton, B.
Massey of Darwen, B.
Maxton, L.
Meacher, B.
Mogg, L.
Monks, L.
Montgomery of Alamein, V.
Moonie, L.
Morgan, L.
Morgan of Drefelin, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Morris of Yardley, B.
Neuberger, B.
Nye, B.
O'Neill of Clackmannan, L.
Pannick, L.
Patel of Blackburn, L.
Patel of Bradford, L.
Pendry, L.
Peston, L.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prashar, B.
Prescott, L.
Prosser, B.
Puttnam, L.
Quin, B.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Reid of Cardowan, L.
Rendell of Babergh, B.
Richard, L.
Robertson of Port Ellen, L.
Rodgers of Quarry Bank, L.
Rooker, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B.
Sawyer, L.
Scotland of Asthal, B.
Sheldon, L.
Sherlock, B.
Smith of Basildon, B.
Smith of Finsbury, L.
Snape, L.
Stern, B.
Stevenson of Balmacara, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taverne, L.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Temple-Morris, L.
Tenby, V.
Thomas of Swynnerton, L.
Thornton, B.
Tomlinson, L.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turnberg, L.
Turner of Camden, B.
Wall of New Barnet, B.
Walpole, L.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Williams of Crosby, B.
Williams of Elvel, L.
Williamson of Horton, L.
Wills, L.
Wood of Anfield, L.
Woolmer of Leeds, L.
Young of Hornsey, B.
Young of Norwood Green, L.
Young of Old Scone, B.

NOT CONTENTS

Addington, L.
Alderdice, L.
Allan of Hallam, L.
Anelay of St Johns, B. [Teller]
Ashcroft, L.
Ashdown of Norton-sub-Hamdon, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Avebury, L.
Baker of Dorking, L.
Ballyedmond, L.
Benjamin, B.
Berridge, B.
Blackwell, L.
Blencathra, L.
Bonham-Carter of Yarnbury, B.
Boswell of Aynho, L.
Bottomley of Nettlestone, B.
Brinton, B.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Browning, B.
Burnett, L.
Buscombe, B.
Byford, B.
Cathcart, E.
Chalker of Wallasey, B.
Chidgey, L.
Colwyn, L.
Cormack, L.
Cotter, L.
Courtown, E.
Craigavon, V.
Crickhowell, L.
Cumberlege, B.
De Mauley, L.
Dear, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Doocey, B.
D'Souza, B.
Eaton, B.
Eccles, V.
Eden of Winton, L.
Edmiston, L.
Elton, L.
Empey, L.
Falkner of Margravine, B.
Faulks, L.
Fearn, L.
Feldman, L.
Feldman of Elstree, L.
Fellowes of West Stafford, L.
Fink, L.
Flight, L.
Fookes, B.


13 Jun 2011 : Column 593

Forsyth of Drumlean, L.
Fowler, L.
Framlingham, L.
Fraser of Carmyllie, L.
Freeman, L.
Freud, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
Glasgow, E.
Glendonbrook, L.
Goodlad, L.
Goschen, V.
Greaves, L.
Greenway, L.
Grey-Thompson, B.
Griffiths of Fforestfach, L.
Hameed, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Harris of Peckham, L.
Harris of Richmond, B.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Home, E.
Howard of Rising, L.
Howe, E.
Howell of Guildford, L.
Hunt of Wirral, L.
Hussain, L.
Hussein-Ece, B.
Imbert, L.
James of Blackheath, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
Jones of Cheltenham, L.
Jopling, L.
Kakkar, L.
Kilclooney, L.
King of Bridgwater, L.
Kirkwood of Kirkhope, L.
Kramer, B.
Laming, L.
Lamont of Lerwick, L.
Lang of Monkton, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Lexden, L.
Lindsay, E.
Liverpool, E.
Loomba, L.
Lucas, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
McNally, L.
Maddock, B.
Maginnis of Drumglass, L.
Maples, L.
Mar, C.
Marks of Henley-on-Thames, L.
Marland, L.
Marlesford, L.
Mawson, L.
Mayhew of Twysden, L.
Moore of Lower Marsh, L.
Morris of Bolton, B.
Moynihan, L.
Naseby, L.
Newby, L.
Newton of Braintree, L.
Nicholson of Winterbourne, B.
Noakes, B.
Northover, B.
O'Cathain, B.
Palmer, L.
Palmer of Childs Hill, L.
Palumbo, L.
Parminter, B.
Patten, L.
Perry of Southwark, B.
Randerson, B.
Rawlings, B.
Razzall, L.
Reay, L.
Rennard, L.
Ribeiro, L.
Risby, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rowe-Beddoe, L.
Ryder of Wensum, L.
Saltoun of Abernethy, Ly.
Sassoon, L.
Scott of Needham Market, B.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Shackleton of Belgravia, B.
Sharkey, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shipley, L.
Shutt of Greetland, L. [Teller]
Slim, V.
Smith of Clifton, L.
Spicer, L.
Steel of Aikwood, L.
Stewartby, L.
Stoddart of Swindon, L.
Stoneham of Droxford, L.
Stowell of Beeston, B.
Strathclyde, L.
Sutherland of Houndwood, L.
Taylor of Goss Moor, L.
Taylor of Holbeach, L.
Thomas of Gresford, L.
Thomas of Winchester, B.
Tonge, B.
Tope, L.
Trefgarne, L.
True, L.
Trumpington, B.
Tyler, L.
Tyler of Enfield, B.
Ullswater, V.
Verma, B.
Waddington, L.
Wakeham, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Warsi, B.
Wasserman, L.
Wei, L.
Wheatcroft, B.
Wilcox, B.
Willis of Knaresborough, L.
Willoughby de Broke, L.
Wilson of Tillyorn, L.
Younger of Leckie, V.


13 Jun 2011 : Column 594

6.10 pm

The Deputy Speaker (Lord Geddes): Amendments 15 to 21 moved formally en bloc, Lord Hannay?

Baroness Anelay of St Johns: My Lords, it is my understanding that these amendments are not consequential on Amendment 14, on which the Government have just suffered a defeat. I understand that the Public Bill Office did not notify these amendments as being consequential. They were not put forward as being consequential by the noble Lord, Lord Hannay, in opening, and they were certainly not accepted by the Minister in winding as being consequential. I can understand that the noble Lord, Lord Hannay, might consider it desirable to insert Amendments 15 and 16 as a policy objective, but they are not consequential on the amendment that has just been decided.

Lord Hannay of Chiswick: My Lords, if I may, I will respond to some extremely mysterious words from the Government Chief Whip that I am afraid I do not altogether understand. I was perfectly clear when I introduced this set of amendments-which were grouped together by the Government Whips in a way with which I had no trouble at all-that I was introducing the whole body of the amendments, and nobody gainsaid that at all.

Baroness Anelay of St Johns: My Lords, the procedure when seeking any agreement on consequential amendments is, first of all, that they should be clearly consequential; these are not.

Secondly, grouping of course is for the convenience of the House. It does not indicate that all the amendments in a group are consequential. Indeed, if that were the case, there could be an invidious position whereby a noble Lord might have an amendment in a group led by a government amendment, and they would not be able to vote on later amendments in that group. Grouping is not of itself an indication of consequentiality. I remind the noble Lord, Lord Hannay, that the Minister did not accept the other amendments as being consequential. I am advised that the Public Bill Office did not give prior indication that these amendments were to be considered consequential.

Indeed, there are matters that are consequential in later groups. It is for the Government to consider whether they wish to bring different policy objectives to bear in another place as a result of Amendment 14. Amendments 15 and 16 may indeed be seen by the noble Lord, Lord Hannay, as desirable in policy terms, but those two amendments are not consequential on the Government's defeat regarding Amendment 14. The noble Lord may wish to consider whether to take the matter further. There will, of course, be the opportunity to deal with the matter in another place and it may return here on another occasion.

Lord Triesman: My Lords, in almost all other circumstances I would not have dreamt of getting to my feet to argue this point, but I genuinely do not believe that a single Member of your Lordships' House did not think that that was a debate on one set of

13 Jun 2011 : Column 595

matters that were plainly related. The speeches all dealt with issue after issue and the total consequence of them. The noble Lord, Lord Hannay, introduced the group by saying that attention had been given to questions described by the noble Lord, Lord Howell, as the big issues-I am not trying to argue that he said that what some of us described as smaller issues are not important. I cannot believe, in all conscience, that anybody in this House was under any misapprehension about the character of the last debate. It would be tragic if we got into a position where game-playing took over from the decencies of proper politics.

Baroness Anelay of St Johns: My Lords, in 13 years of opposition, we never thought to press an amendment that was not consequential when it had not formally been agreed to as being consequential by the Bill team and by the Minister, who always checked in advance. The noble Lord, Lord Triesman, talks about matters being related. Of course matters are related in debates on groups of amendments. That is why amendments are grouped. It is part of the constructive way in which this House works.

The Government cannot accept that Amendments 15 and 16 are consequential simply because they are not. They may be the policy objective that the noble Lord, Lord Hannay, feels is sensible and advisable, but it may not be what the Government accept as sensible and advisable. The Government may wish to take a different view. It is not a matter of the Government being recalcitrant. If something is not consequential and has not been accepted by the Government as being consequential, it is not. It is procedural, and it is something to be considered in the future if the Opposition wish to have amendments accepted as consequential when they are not. It is a matter of negotiation beforehand; not for announcement on the Floor of the House.

6.15 pm

Baroness Williams of Crosby: My Lords, from these Benches I support the view that most of us believed that these amendments were taken together for the convenience of the House. We had a very long debate, which ranged over the whole group of amendments. I have to say to the Chief Whip, for whom I have great admiration-she is a person of great ability-that most of us took that vote to be about the whole group of amendments taken together. I find it difficult to see how we can explain to the world outside that this group of amendments has now somehow got lost when it seemed clear that, admittedly by a relatively small majority, the House chose to support these amendments.

Lord Elton: My Lords-

Lord Hannay of Chiswick: My Lords, I wish to protest, frankly, at what I can only describe as an extremely underhand manoeuvre. I cannot believe that, if it were the intention of the Government to argue as they are now doing, it was not the right, proper and fair thing to do to warn the House before this debate started, on the basis of a grouping of amendments

13 Jun 2011 : Column 596

that the Government had made themselves and that were agreed to, that whatever we decided on Amendment 14 would not apply to the rest. We would then have had a completely different sort of debate. No warning was given of that sort at the time. No indication was given. If the noble Lord, Lord Howell of Guildford, seriously intended to do that, he could have said that, but he did not. He did not say one word of that. He in fact addressed all the amendments in this grouping in the debate, and when I asked to test the opinion of the House, there was no indication by any Member of the House that we were not testing the opinion on the whole group. I hope that, on calm reflection, the Government Chief Whip will consider that this is an unwise course to go down and one that is likely to lead to bad blood and accusations of something less than fair play. I will sit down now. We can have one more round at this, and afterwards I will speak.

Baroness Anelay of St Johns: My Lords, it may be helpful if I just point out at this stage that it is for each individual Peer to make their own view about how they present amendments. When a debate is held, it is not for the Government to warn the House as to whether any amendments may be consequential if the Government lose a Division. That is not how this House has been run. It has been a matter for those in charge of an amendment to be able to determine its fate and then to give advice to the House as to whether it considers other matters consequential. I have made it clear that the Government do not consider Amendments 15 and 16 to be consequential on Amendment 14. That is exactly the procedure that the noble Lord, Lord Bassam, would have carried out when he was the Government Chief Whip, because it is the way that this House works. It is not for the Government at the beginning of each debate to say that a number of amendments are grouped together and, if the House decides on the first of the amendments, we will not consider the rest consequential. It is for the person bringing the debate to make that statement.

However, I can feel the strength of feeling on some Benches that noble Lords wish, in a sense, to change the way in which this House works on the hoof, which is what the request is today. I am going to listen to that. The House has heard the argument. It is a matter that will need to be considered by the usual channels and perhaps the Procedure Committee. If the House is to change the way that it groups amendments and then deals with consequential amendments, it should be done after calm consideration; it cannot be done here and now.

The Government will not object to the noble Lord, Lord Hannay, moving his next two amendments, although I state again that I do not accept the policy that he proposes within them. That should not be taken as proof that the Government consider them consequential or in any way acceptable. On that basis, the House can proceed knowing the Government's view that the remainder of the amendments in this group are not acceptable. We will not resist them, because the House has already been tested in its patience almost beyond endurance by the length of this debate on Report.



13 Jun 2011 : Column 597

Lord Bassam of Brighton: My Lords, I have great respect for the noble Baroness, Lady Anelay, in these matters. While it is clear that she disagrees with the views being expressed around the House, she has acknowledged that, on this occasion, it would perhaps be wise to draw a line under where we are so that we can move on. It would also be wise for this matter to be one of those issues to which both the usual channels and the Procedure Committee should give further consideration. I can see that there is cause for question and dispute, although I take the view which has been expressed on this side of the House. However, I thank the Minister for clarifying issues for the House in the way in which she latterly has.

Lord Hannay of Chiswick: My Lords, I thank the Chief Whip for having come to a very statesmanlike conclusion on this matter. I shall certainly not say anything to exacerbate matters-quite the contrary. I have always found the Chief Whip to be a very good person who has helped the House in its deliberations. In this last decision that she has taken, she has once again done that. Since we are talking about the European Union, perhaps it might be the moment to bring out that most time-honoured of phrases used in all European Union agreements: this agreement creates no precedent.

Amendments 15 to 21

Moved by Lord Hannay of Chiswick

15: Clause 6, page 4, line 38, after "defence" insert "that permits a single, integrated military force"

16: Clause 6, page 4, line 41, at end insert-

"( ) Where the European Council has recommended to the member States the adoption of a decision under Article 42(2) of TEU in relation to a common EU defence which is not covered by subsection (2), a Minister of the Crown may not notify the European Council that the decision is adopted by the United Kingdom unless the decision is approved by Act of Parliament."

17: Clause 6, page 5, line 4, leave out from "Parliament" to end of line 5

18: Clause 6, page 5, line 5, at end insert-

"( ) A Minister of the Crown may not vote in favour of or otherwise permit a decision under Article 140(3) of TFEU which would make the euro the currency of the United Kingdom unless-

(a) the draft decision is approved by Act of Parliament, and

(b) the referendum condition is met."

19: Clause 6, page 5, line 5, at end insert-

"(3A) A Minister of the Crown may not vote in favour of or otherwise permit a decision under Article 4 of the Schengen Protocol that removes any border control of the United Kingdom unless-

(a) the draft decision is approved by Act of Parliament, and

(b) the referendum condition is met.

(3B) In subsection (3A) "the Schengen Protocol" means the Protocol (No. 19) on the Schengen acquis integrated into the framework of the European Union, annexed to TEU and TFEU."

20: Clause 6, page 5, line 22, leave out paragraph (e)

21: Clause 6, page 5, leave out lines 45 to 49

Amendments 15 to 21 agreed.



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Amendment 22

Moved by Lord Kerr of Kinlochard

22: After Clause 6, insert the following new Clause-

"Decision to join the euro

(1) No notification shall be given to the Council of the European Communities that the United Kingdom intends to move to the third stage of economic and monetary union (in accordance with the Protocol on certain provisions relating to the United Kingdom adopted at Maastricht on 7th February 1992) unless-

(a) the notification is approved by Act of Parliament, and

(b) the referendum condition is met.

(2) The referendum condition is that set out in section 3(2), with references to a decision being read for the purposes of subsection (1) as references to a notification."

Lord Kerr of Kinlochard: This is a slightly different order of amendment from those that we have just considered. I fear that it is Osric or Malvolio, but it is not much ado. It does not address any of the great questions that we have been debating. I promise your Lordships that I shall not mention Burke versus Rousseau. I promise you that it has nothing to do with the underlying debate about flexibility versus dealing with the disconnect; it has nothing to do with whether there should be a referendum should the Government wish us to join the euro-that is agreed-it is merely about the timing of the referendum in relation to the process of our joining the euro.

The Bill ties the referendum to a decision under Article 140(3) of the TFEU, which irrevocably fixes the rate at which the euro shall be substituted for sterling and takes the other measures necessary for the introduction of the euro as the single currency of the United Kingdom. It explains that this will be a proposal from the Commission which will be the subject of consultation with the European Central Bank and then decided by a unanimous decision of the existing eurozone member states and, of course, the UK.

The Government say that the referendum on our joining the union should be taken on that draft decision about the modalities and the rate. My contention has been-I spoke on this matter at Second Reading and on our fifth day in Committee-that to wait until there is a negotiated draft decision on the modalities of joining the euro and the rate at which we join would be a mistake. I argue that the decision that is appropriate to a referendum is on whether the pound is to be replaced by the euro, not the decision, as in the EU text drafted by the Commission, on the detailed arrangements for the transition, the timetable or the rate. My contention is that the referendum should be earlier in the process and not the last stage.

I was grateful to the Minister for a letter which he sent me and copied to a number of other noble Lords this morning dealing with my arguments at Second Reading. His contention is-and I hope that I in no way misinterpret his letter-that it would be possible for the Government of the day to prepare a draft decision on the modalities before making the initial notification to the Council and Commission in Brussels and make that text available during the referendum campaign. He states in the letter that the "detail of the decisions" could be prepared,



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and,

I do not want to exaggerate the difference between us; my point is rather small. I accept that the sequence that the Minister has set out might work; I am not saying that it is unworkable. What I am saying is that it is a little unwise.

The process in Brussels starts with a notification by the member state that wishes to suppress its currency and join the euro. When that is received, it is the task of the Commission to make the proposal, the ECB in Frankfurt to express a view on it and the Council to reach a decision. On the Minister's scenario, we would draft it here. I confess that I can think of several precedents where it has been possible to get the Commission to put forward a text precisely in the language which the British Government wanted it to do-I happened to glance at the noble Lord, Lord Lamont of Lerwick, as I said that. I can think of no precedent for us publicising such a text in advance, passing it by Act of Parliament, as we would do, making it subject to a referendum and still hoping to persuade the Commission to present it as its own. Nor can I think of anything more likely to risk some discussion among the existing eurozone member states than our announcing the rate at which our currency was going to join theirs and giving it to them to buy-giving them the text, the decision, the modalities, the transition, the timetable. One would expect to go through some process of negotiation. It would be easier for everyone to save face if the text had not been published in advance from the start.

6.30 pm

Moreover, subject to the views of three distinguished former Chancellors, with all of whom I have worked, I argue that it would be rash to set the rate before you produce a text in Brussels on which you are going to ask Parliament to pass an Act and you are going to ask the country to approve by referendum. "Events, dear boy"-things happen in the currency markets. It would be wiser to set the rate at the end of the process when you are ready to have sterling join the euro rather than some months before the end.

I urge the House to consider the law of the land now, the 1993 post-Maastricht Act. The wording of my amendment replicates the wording of the post-Maastricht Act with the addition of the referendum requirement. We are talking about the European Communities (Amendment) Act 1993, this bit of which was drafted in Her Majesty's Treasury-nothing to do with me; I was in Brussels. The wording of the Act is:

"No notification shall be given to the Council of the European Communities that the United Kingdom intends to move to the third stage of economic and monetary union (in accordance with the Protocol",

and so on, which is the same language we have now,

a draft of the notification, not of the decision. Article 140 was there in the Maastricht treaty, under a different

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number. Article 143 was there but the Government of the day chose to make the issue for Parliament not the Act, the modalities, the transition details and the rate, but the question of whether we should join the euro. It was the notification that would trigger the parliamentary procedure. Therefore my amendment is in line with the precedent and the statute book.

I also think it is the honourable course. To try to force our partners to negotiate on a UK draft on the modalities of our adopting their currency, before this Parliament and this country have decided that we want to join the euro, seems quite difficult. I would not like to be the negotiator who had to attempt that task. Some of them might be inclined to say, "Go away and decide whether you want to join. We will focus on your draft text once you are clear whether you wish to join the euro". To seek to drive through the Brussels process the text that we want with the modalities and rate that we want because it had been approved by referendum is equally unwise.

I am not arguing that the course dictated by the Bill and the specific reference to Article 143 is an impossible course. It is even possible that the rate you chose months before might still be right on the night, but why risk it? My amendment would not preclude the Government doing what the Minister said in his letter to me-which I tried to summarise a moment ago-would be the Government's preferred course. It would be possible to negotiate and draft your decision in Brussels or publish your decision to the country during the referendum campaign, though were I still in some of my old jobs I would advise against it. However, given that this is merely about the modalities and not the principle, it would be much wiser to ask the country to take the decision of principle first.

The question for a referendum must surely be, "Do we want to join the euro?". The Government lose nothing by adopting my amendment because they could still let events follow the sequence described in the Minister's letter to me if that is what they prefer. I therefore believe that precedent, honour, prudence and common sense point to the language of Amendment 22. I beg to move.

Lord Garel-Jones: As the noble Lord, Lord Kerr, has already said-he has more experience than me-there are three very distinguished ex-Chancellors sitting below me. Would not the rate at which we enter-such a delicate matter as far as markets are concerned-normally be decided after markets had closed, say on a Friday, and revealed before markets opened on Monday? The risk of doing it any other way would be substantial. Perhaps former Chancellors have something to say on the matter.

Lord Kerr of Kinlochard: I agree with the noble Lord, Lord Garel-Jones. I was Private Secretary to the noble and learned Lord, Lord Howe of Aberavon, when he used to chair EMS realignment conferences as Chancellor of the Exchequer when we were not a member of the EMS. The standard form is exactly as the noble Lord, Lord Garel-Jones, lays down. One tries to avoid a market rumour on a Friday-that would be quite difficult if we had held a referendum on the Thursday-ECOFIN would meet on the Saturday,

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and one would have a decision on the rate very early on Monday morning or late Sunday night as the Japanese markets open. In this case it would be highly desirable to move fast after our referendum because there would be a lot of movement in the market. However, if you have decided that the rate is to be a matter for an Act of Parliament and a referendum, you are stuck with several months of volatile movement.

Lord Lea of Crondall: I wonder if there is a special case in this. Some of us approach this question from the hypothetical case that in a few years we might join the euro when it has parity with the pound. It might be relevant to the referendum that people might think, "If you can't beat them, join them. It's been around a long time-you might as well join". Frankly, that is the way referendum decisions are probably made-in the pub. We are talking about making something quite technical into a demotic sort of fact.

Might the discussion in the press get a debate going? Something like the new clause proposed by the noble Lord, Lord Kerr, might be relevant, maybe with some adjustment, to the idea that we need to have the proposition about parity with the euro as part of the question. Could somebody enlighten me as to how that scenario-it is probable rather than possible; it has some common sense about it-would fit with this Bill and with the amendment?

Lord Howe of Aberavon: Since my name stands on the Marshalled List below that of the noble Lord, Lord Kerr, it is right that I should intervene at this point. There is a certain diffidence about my approach, because I am in the presence of two propositions with which I have been closely familiar for a very long time indeed. I refer personally to the noble Lord. As he has already hinted, our relationship with each other is antique. I first came across him as a bright young man in my early days as Chancellor of the Exchequer; he did not necessarily appear to know a great deal about the Treasury or economics at that stage. I learnt that he was on secondment from the Foreign and Commonwealth Office. He was already serving me very well in the more sophisticated Treasury environment and therefore in due course became my principal private secretary in that department. He continued in that job to serve my noble friend Lord Lawson. I do not think that he lasted in that humble job for long enough to be with my noble friend Lord Lamont. Certainly, we came to establish a respect for each other and a familiarity.

The noble Lord is a young creature in my memory, who has already made a lucid and compact presentation to this debate, which is frankly not a hugely politically controversial one. It is a debate directed to the ostensible, practical way of approaching this particular proposition -our accession to what used to be called the European monetary system. That also is a symbol of my antiquity. My two noble friends Lord Lamont and Lord Lawson, who are alongside me, will not need much prompting to remember that our manifesto for the European 1979 election, preceding our own manifesto for the general election later on, had this quotation:

"We regret the Labour Government's decision-alone amongst the Nine-not to become a full member of the new European Monetary System. We support the objectives of the new system,

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which are currency stability in Europe and closer co-ordination of national economic policies, and we shall look for ways in which Britain can take her rightful place within it".

I am still looking, with an enthusiasm that has fluctuated over the years, as the stability of the currency has fluctuated as well.

In this context, I support the amendment. Although my relationship with the ERM, as it was then called, has been insecure, it was the cause of the less than friendly relationships between my noble friend Lord Lawson and myself and our noble friend Lady Thatcher before the Madrid summit, where our paths certainly divided. Remarkably, not many months after I had been subsequently moved on from the Foreign Office to become Leader of the House of Commons, a decision was taken for us to enter the European monetary system-

6.45 pm

Lord Lawson of Blaby: Will my-

Lord Howe of Aberavon: Not at this point, in the middle of a sentence, although I have often given way to my noble friend in circumstances like this.

The news that we were joining the system reached me in rather a remarkable way. In my role as Leader of the Commons, on that day it was my job to go to Balmoral with a number of ministerial colleagues for a formal meeting for which I was Lord President of the Council. When I arrived in the presence of Her Majesty, before having a chance to talk to anybody else, her first question to me was, "What do you think of the news today, Sir Geoffrey?" I said, "What news, your Majesty?" She said, "Haven't you heard?" I had not, indeed, but we had joined the European monetary system on that day. Although my private office in London had tried to get the message to me before I met Her Majesty, that had failed. So I found the whole thing embarrassing-but I was in a way a pioneer, because I first commended it to the other place as long ago as when I was Shadow Chancellor, on 29 November 1978. So I am quite impatient to see it fulfilled, as long as it is fulfilled on the right terms at the right time, but fortunately that is not for me to decide.

I see my noble friend is looking anxious. I have said all I need to say-

Lord Lawson of Blaby: I am sure that the whole House is fascinated by my noble friend's trip down memory lane. I share a number of those memories with him, including sharing the noble Lord, Lord Kerr, as principal private secretary when I was Chancellor of the Exchequer. He was the first of a number of principal private secretaries whom I had as Chancellor, because I was there for quite a time. They were all good in different ways, but none of them was anything like as Machiavellian as the noble Lord, Lord Kerr. That makes one wonder what he is really up to with this amendment.

This trip down memory lane, fascinating as it was, is about the exchange rate mechanism of the European monetary system, which is a currency arrangement. This debate is about abandoning your own currency. There is absolutely no similarity whatever. So although

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I say with great respect and affection for my noble friend that what he said was of interest, it has absolutely no relevance to the amendment that we are discussing.

Lord Howe of Aberavon: With great respect to my noble friend, who always has a more ruthless and intellectual analysis of these questions than I do, it is broadly speaking the same thing. It was important, while that was the question, whether or not we joined the monetary exchange system; it is even more important whether we join the euro. Either way, we have reached the point where there has been a general acceptance of the need for a referendum on our accession to that currency. That arises not within the context of this Bill or this debate alone but has been on the agenda for a long time. The only question that we are actually debating now is the rather technical one of when precisely it should be required in the context.

I see my noble friend Lord Howell looking at me. When I reflect on his wisdom over many years, I am sure when he comes to wind up that he will recognise that is the flavour of the decision. Perhaps he is not winding up-he may be too nervous to handle this issue.

I am more than content to follow the wisdom and enlightenment of that splendid retired principal private secretary sitting over there. It was quite fun when we were together and I was presiding over the realignment of the European monetary system. It was quite nerve-wracking. We had one marvellously exciting day when it was agreed between the Germans and the French that there should be a 9 per cent realignment between those two currencies-2 per cent up and 7 down, or 3 per cent and 6 per cent down. That question, unhappily, for the first and only time, ran into a time when the currency markets were open on a Monday morning. That was our only failure. Apart from that, I am confident to give my backing to the noble Lord, Lord Kerr of-I can never remember the other half.

Baroness Williams of Crosby: My Lords, I am reluctant to intervene, even briefly, in this marvellous ballet of Chancellors, which has taught us all a very great deal. I apologise for having stepped in before the noble Lord, Lord Lamont, because I am sure he too will have a major contribution to make.

I want to raise one other issue before we move on to what one hopes will be the final remarkable occasion of this ballet, which we will all appreciate much. I want to talk for a moment, if I may, about being straightforward about the implications of this amendment. The noble Lord, Lord Kerr, talked with a degree of technicality I am incapable of following, and I am sure that he is probably right. It looks as if his former Chancellors, all of whom he managed to be a mentor to, will give him the full support that he needs on this amendment.

My point reflects more on our debate up to this point. We are showing an inclination to look more at the ways in which we can escape from some of the consequences of the growing interdependency of the world economy of which we are part. Quite simply, we

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all know that it is highly unlikely that there will be movement under this Government towards the eurozone or the euro. It will be important to take account in the future of the amendment of the noble Lord, Lord Kerr.

We will not be able to escape the presence and the problems of the euro by not joining it. I recognise that most people in this Parliament and probably most people in the country at the moment would not wish to join the euro. However, I also recognise that the euro's future and its strength are of crucial importance to this country whether we join or not. We now do something like half our trade with the eurozone. The positions taken by the eurozone are of major influence in global financial meetings. Therefore, although we may not belong to it we do not escape all the consequences of it. We should make it quite clear as we continue to discuss this part of the Bill that time and again we will be caught in the gradually increasing interdependency of the economic world whether or not we happen to already belong to some of its institutions.

Why did we help to support the Irish in the desperate situation that they encountered last year? Quite simply because there were so many British interests-banking interests, shareholder interests-affected by what happened to the banks of the Republic of Ireland that we felt it irresponsible and unwise to stay out of the discussions about it. In just the same way, we will find it irresponsible and unwise to regard the possibility of a major crack in the eurozone between its richer and poorer nations as if it did not in any way affect us.

We know already how close this is. Already there is much closer investigation of the European stability pact, with the possibility of mounting greater surveillance on those who are within it as well as the possibility of moving towards some degree of control over the group of countries within the eurozone. I will not go into all that now because there is not time and it is not appropriate, except to say very directly that this is bound to have implications for Britain as well. We simply cannot stay wholly outside these things.

When my noble friend Lord Goodhart was talking earlier about the European prosecutor's office, one of the things he might well have pointed out, though he was too nice to do so, was that already we in this country had been caught up in the OECD's Financial Action Task Force very directly on the issue of when we moved and finally passed the bribery convention. We cannot escape from some of the massive international institutions-the G20, the OECD and many more-which are bound to affect our sovereign right to do as we will. To pretend that we do not live in such a world, that it is not becoming more and more that kind of world, is to live in a world of illusion which we cannot possibly afford to. I simply make the point on this discussion on the euro that we have to look all the way through at how the United Kingdom will survive, strengthen and prosper in a world which, like it or not, is becoming increasingly global, increasingly interdependent and increasingly without room for people taking pure sovereign attitudes because those are no longer possible, whether you live in China, the United States or anywhere else.



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Lord Martin of Springburn: I thank the noble Baroness. I have listened to her not only here but in the other place and I have always had great respect for what she has to say.

I recall when we spoke here about the help that we would give Ireland, a country of which I am very fond, and everyone in this House, to their credit, supported that move. However, there is a big difference between helping out a friend and neighbour and taking on the same currency as that neighbour. The men and women, particularly in the west of Scotland, which I know well and which is so near Ireland, hear the stories of how difficult things became for Ireland when they entered the euro and gave up their punt. Those stories will have a big impact on any decision. I do not think that anyone, any Member of Parliament in the House of Commons, would want to join the euro at this particular stage.

Baroness Williams of Crosby: I agree with the noble Lord, Lord Martin, but I think he misunderstood my point. I was not advocating that we join the euro-indeed, I went so far as to say that I saw no possibility in the near future of our doing so or even wishing to do so. My point was that we cannot walk away from the plight of Ireland because we do not happen to belong to the euro. We have to address those issues whether or not we belong to the euro, and that is an issue on which I would have thought the noble Lord and I would find ourselves sharing a very strong sense of agreement.

Lord Lamont of Lerwick: My Lords, I hope the noble Baroness, Lady Williams, will forgive me if I do not entirely follow her down the road of her argument and her thoughts. Of course I agree that what happens to the euro has a profound impact on us and I certainly want to see the crisis resolved in as orderly a manner as possible.

I shall be extremely brief. I am not intervening in this debate simply because two other Chancellors have spoken, although I did feel under a certain obligation, like both of them, to speak when the noble Lord, Lord Kerr, had tabled this amendment-not only tabled this amendment but talked to me, dare I say it, incessantly in the bars about it and written me a letter about it. I have the greatest respect for the noble Lord, Lord Kerr. In fact, he, I and, above all, the Prime Minister, John Major, all worked hard over the piece of paper that we are debating now: Protocol 15 of the Maastricht treaty. Although I spent a large part of my life poring over this, I have spent what seems an eternity this afternoon poring over it again trying to work out what on earth it means and trying to work out how some parts that seem to contradict it actually come together. Of course I owe it to the noble Lord to consider very seriously what he said, because he gave me great support when I was Chancellor, although when I knew that the noble Lord was putting forward this amendment, the story of Talleyrand came to mind-having been told that someone had died, he asked whatever had he done that for.

I confess that even having thought about this a little, I am not entirely convinced that there is a massive difference between the way that the noble

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Lord, Lord Kerr, wants to tackle it and the way that my noble and learned friend Lord Howe wants to tackle it. My noble and learned friend said that he was quite sure that I and my noble friend Lord Lawson needed no reminding that joining the ERM was in our manifesto in 1979. I confess that it was only when I became Chancellor that I expressed exasperation about the whole thing and the Permanent Secretary at the Treasury reminded me that it had been in our manifesto. It did not come quite so easily to my memory as to that of my noble and learned friend Lord Howe.

I turn to the subject of the debate. An extremely important point is that the referendum should not be about the exchange rate. Anxiety has been caused by whether Article 143 would give rise to a situation in which the actual exchange rate at which we joined the euro-perish the thought that we ever did-would be on the ballot. It is my understanding, and I hope that the noble Lord will be able to confirm this, that it does not follow that it will have to be on the ballot paper. It is an option but not essential. As I understand it, the Government are proposing a package approach. They are intending that the negotiation of the draft content of the Article 143 decision should take place before the Government formally notify the Council that it intends to adopt the euro; that is, that the negotiations should take place first. I do not see that as a great problem and I think it can be done that way. This is something which, as I understand it, has happened before.

7pm

In all honesty I do not really see the exchange rate and market uncertainty as an issue, given that we have a floating rate and that we would be proposing, if this ever happened, to move from a floating rate to a fixed rate. Even if it were known what the terms were, it could be within a range. I always listen to the noble Lord, Lord Kerr, but this could be done either way around. However, as I have said, the one thing that should not be on the ballot paper in the referendum, if there were ever to be one, is the actual exchange rate.

Lord Liddle: My Lords, from the Opposition's point of view, exotic as it may seem that we should at this moment be debating the circumstances in which we might join the euro, this Bill is intended to bind future Parliaments for a long time. Indeed, that is one of our major difficulties with it, which is why we will be moving the sunset amendments on Wednesday. However, given that it is a Bill that is intended to bind Parliaments for the future, it is important to get this right. We have listened to our colleague the noble Lord, Lord Kerr, at great length on this subject and are persuaded that he is right. The Opposition will therefore be supporting his amendment.

Lord Wallace of Saltaire: My Lords, no Parliament can bind its successors. That is one of the principles of parliamentary sovereignty. I am grateful to the noble Lord, Lord Kerr of Kinlochard, for following up the previous Committee discussion with his letter of 19 May, in which he outlined his concerns in more detail: namely, that Clause 6(5)(e) of the Bill might be legally defective. We have therefore taken careful legal advice.

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The Government have now been able to reply to that letter and a copy has been sent to those of your Lordships who participated in the Committee debates. A copy of the letter has also been deposited in the Library of the House. On the basis of that legal advice, I hope to reassure your Lordships that we do not judge there to be a risk of more than one referendum on the euro being required and that the provision does what we and noble Lords on all sides of your Lordships' House intend it to do.

Unlike other member states, the UK is not under an obligation to adopt the euro. Protocol 15 of the consolidated treaty begins with the clear statement that the United Kingdom,

That protocol, which needs to be read alongside Article 140 in the British case, sets out in detail the steps that must be satisfied before the UK could adopt the euro. Paragraph 9 of the protocol states that after the UK has notified,

as its currency,

of the TFEU must first be taken, to which protocol 13 is also relevant.

The process starts in practice by examining convergence criteria as set out in Article 140(2). That is bound to happen before the UK formally notifies, even if it is not part of the formal procedure. It might be helpful to consider what needs to be done following notification of our intention to join the euro. It is not a matter of negotiating terms of entry but of economic criteria being satisfied in terms of the treaty. The final step of the process is to take a decision in accordance with the procedure laid down in Article 140(3) of the TFEU. Paragraph 9(c) of Protocol 15 commits the Council,

to "take all other necessary" measures to enable the UK "to adopt the euro".

Clause 6(5)(e) is designed to catch this final step in the process, thus ensuring that as much of the complex detail as possible is available to Parliament and the public in deciding whether to join, while giving the Government of the day the flexibility to set the timetable for when to seek approval from Parliament and the British people. If I may say so, the noble Lord, Lord Kerr, might almost be old enough to remember the first applications for Britain to join what was then the European Economic Community. Before formal application was made, a number of informal negotiations established the terms for potential negotiation. We envisage something of that in this situation. It will allow the Government to seek a referendum when sufficient detail is known about the circumstances and conditions of entry, but will allow the UK to seek approval from the people before the exact point at which the exchange rate between the euro and the pound would be set. We all recognise that the exact exchange rate will have to be set at the end of the process to avoid market turmoil and speculation against the rates declared.



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In contrast, the amendment proposed by the noble Lord would require the referendum to be held and approval given before the UK could notify the EU that it intended to adopt the euro. The Bill nevertheless allows for matters to be arranged in this way if the Government so wished, again providing the degree of flexibility which noble Lords, including the noble Lord, Lord Kerr, have so often called for on this Bill. It would be open to the Government of the day to undertake negotiations with the EU in line with paragraph 9 of the protocol before the UK issued its notification. This would allow draft decisions under Article 140(3) on the rate at which the euro would be substituted for sterling and other measures necessary for its introduction to be prepared-with perhaps a range of rates being negotiated-before notifying our final intention to join the euro.

On that basis, I do not consider that the Bill would lead to what we all view as an unwelcome situation in which two referendums would have to be held on the euro: the first on the UK notifying that it wished to join; the second in a rushed weekend on determining the specific question of the exact rate at which the euro is to be exchanged for the pound. Instead, it is possible under the Bill for the Government to submit the question of adopting the euro to a single referendum.

Lord Lawson of Blaby: My noble friend mentioned the lawyers early on and I am quite sure that the lawyers worked this out. To me, this is too redolent of lawyers. The practicalities might in fact tell the other way. The noble Lord, Lord Kerr, for whom I have a high regard as I indicated earlier, has raised a point that at least merits further thought and discussion. Quite apart from the problems that might or might not occur on the currency markets, it would be very confusing to the British people if there were no referendum on the principle of joining the euro at the first stage, when the Government of the day had decided that.

My noble friend the Minister said that this can be played either way, early or late, but we cannot know what a future Government might do. They might decide to play it late, which would not be desirable. It would be most undesirable for, and, as I say, very confusing to, the people, who would not quite understand why it was happening in that way. It might therefore be sensible if the noble Lord, Lord Kerr, could be persuaded to withdraw his amendment on an undertaking by the Government that they will give this matter further thought. That would be the right way forward.

Lord Wallace of Saltaire: I am very happy to give an assurance that the Government will look at this further, but we have consulted-we are dealing with legislation, so it is entirely appropriate to consult-lawyers on the implications of that legislation. The process is long by which what necessarily begins with informal exploration becomes formal notification, then, under the terms of Article 140(2), as the noble Lord, Lord Kerr, will know, entails a degree of negotiation on how far the UK meets the convergence criteria and then moves towards the final negotiation in Article 43. What we provide for under the existing arrangement is a degree of flexibility over at what stage in that process the Government put the-



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Lord Hamilton of Epsom: Is not the other side of my noble friend Lord Lawson's argument that if we take the decision in principle, we are put in a much weaker position in all subsequent negotiations because, in practice, the country has already voted in principle to go into the single currency and therefore we have to give way on many of the negotiations that follow?

Lord Wallace of Saltaire: That, of course, is partly why, in all three British applications to join the European Economic Community there were informal conversations before Britain made a formal application-we needed to know what potential terms were available before we formally declared our hand. For the reasons I have outlined, we conclude that Clause 6(5)(c) is not legally deficient and that there is no risk of the Bill requiring more than one referendum on the issue, the second referendum being on the rate at which the UK would join the single currency. I therefore urge the noble Lords to withdraw their amendment.

Lord Kerr of Kinlochard: I always listen very carefully to what my former bosses say and I take very seriously the advice of the noble Lord, Lord Lawson, but I did not hear from the Minister any suggestion of thinking further or looking again. I agree with the noble Lord, Lord Lamont, that there is not a great deal between the Minister and me. My language, which is the language of the existing Act plus the referendum requirement, would permit the Government to do everything that the noble Lord, Lord Wallace, has said they would wish to do. It is perfectly permissive; they could do that because the notification could be done informally and the formalisation of the notification could be saved up till the end. They could do absolutely as the noble Lord, Lord Wallace, says.

Lord Wallace of Saltaire: I was using the language of the consolidated treaty. The noble Lord was using the language of the Maastricht treaty, and I suggest that the current consolidated treaty might provide the more appropriate language.

Lord Kerr of Kinlochard: I was using the language of our Act, the Act in force in this country now. I am talking the 1993 Act language, which is replicated precisely in my amendment. I am very glad to hear the Minister agree that we must avoid a second referendum and that we must avoid the crisis weekend drama, but in a plain reading the Bill says that what should be put to Parliament and the people is the draft of the decision under Article 140(3), which sets out the rate. That is the decision that we are going to take over a weekend, and it is going to be a busy weekend if ECOFIN starts on Friday, Parliament sits on Saturday and the referendum is on Sunday. It is not going to be fun.

I agree that under my language the Government could do exactly as they want. Under their language, I believe that the country would think it very odd if they did not see the draft decision including the rate, because that is what Article 140(3) of the consolidated treaty says. It uses the rate; the rate is there in the treaty. So although I regret that I have taxed your Lordships' patience long enough, I think that I really have to test the views of the House.



13 Jun 2011 : Column 610

7.15 pm

Division on Amendment 22

Contents 187; Not-Contents 188.

Amendment 22 disagreed.


Division No. 2


CONTENTS

Adams of Craigielea, B.
Adebowale, L.
Adonis, L.
Ahmed, L.
Alli, L.
Alton of Liverpool, L.
Anderson of Swansea, L.
Andrews, B.
Armstrong of Hill Top, B.
Bach, L.
Bakewell, B.
Barnett, L.
Bassam of Brighton, L. [Teller]
Beecham, L.
Berkeley, L.
Bilston, L.
Boateng, L.
Bradley, L.
Brennan, L.
Brittan of Spennithorne, L.
Brooke of Alverthorpe, L.
Brookman, L.
Browne of Ladyton, L.
Cameron of Dillington, L.
Campbell-Savours, L.
Carter of Coles, L.
Clancarty, E.
Clark of Windermere, L.
Clinton-Davis, L.
Collins of Highbury, L.
Cotter, L.
Craig of Radley, L.
Craigavon, V.
Crawley, B.
Davies of Coity, L.
Davies of Oldham, L.
Davies of Stamford, L.
Dean of Thornton-le-Fylde, B.
Deben, L.
Donaghy, B.
Donoughue, L.
Drake, B.
Dykes, L.
Elder, L.
Elystan-Morgan, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Fellowes, L.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Garel-Jones, L.
Gibson of Market Rasen, B.
Golding, B.
Goldsmith, L.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Grantchester, L.
Grenfell, L.
Grey-Thompson, B.
Hannay of Chiswick, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hollick, L.
Hollins, B.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howe of Aberavon, L.
Howe of Idlicote, B.
Howells of St Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Stretford, B.
Hughes of Woodside, L.
Irvine of Lairg, L.
Jay of Paddington, B.
Jones, L.
Jones of Whitchurch, B.
Jordan, L.
Kakkar, L.
Kennedy of Southwark, L.
Kennedy of The Shaws, B.
Kerr of Kinlochard, L.
King of West Bromwich, L.
Kingsmill, B.
Kinnock, L.
Kinnock of Holyhead, B.
Kirkhill, L.
Knight of Weymouth, L.
Laird, L.
Laming, L.
Layard, L.
Lea of Crondall, L.
Liddell of Coatdyke, B.
Liddle, L.
Lister of Burtersett, B.
Low of Dalston, L.
McAvoy, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
McFall of Alcluith, L.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Maclennan of Rogart, L.
Mandelson, L.
Masham of Ilton, B.
Massey of Darwen, B.
Maxton, L.
Meacher, B.
Monks, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Yardley, B.
Nye, B.
O'Neill of Clackmannan, L.
Palmer, L.
Pannick, L.
Patel of Bradford, L.
Pendry, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.


13 Jun 2011 : Column 611

Prashar, B.
Prescott, L.
Prosser, B.
Puttnam, L.
Quin, B.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Reid of Cardowan, L.
Rendell of Babergh, B.
Richard, L.
Robertson of Port Ellen, L.
Rodgers of Quarry Bank, L.
Rooker, L.
Rosser, L.
Rowe-Beddoe, L.
Rowlands, L.
Royall of Blaisdon, B.
Sawyer, L.
Scotland of Asthal, B.
Sheldon, L.
Sherlock, B.
Simon, V.
Smith of Basildon, B.
Snape, L.
Stevenson of Balmacara, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taverne, L.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Temple-Morris, L.
Thomas of Swynnerton, L.
Thornton, B.
Tomlinson, L.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turnberg, L.
Turner of Camden, B.
Wall of New Barnet, B.
Walpole, L.
Warner, L.
Warwick of Undercliffe, B.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Williams of Crosby, B.
Williamson of Horton, L.
Wills, L.
Wilson of Tillyorn, L.
Wood of Anfield, L.
Woolmer of Leeds, L.
Young of Norwood Green, L.

NOT CONTENTS

Addington, L.
Alderdice, L.
Allan of Hallam, L.
Anelay of St Johns, B. [Teller]
Ashdown of Norton-sub-Hamdon, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Baker of Dorking, L.
Ballyedmond, L.
Barker, B.
Benjamin, B.
Berridge, B.
Best, L.
Blencathra, L.
Bonham-Carter of Yarnbury, B.
Boswell of Aynho, L.
Bottomley of Nettlestone, B.
Brinton, B.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Browning, B.
Burnett, L.
Buscombe, B.
Byford, B.
Caithness, E.
Cathcart, E.
Chalker of Wallasey, B.
Chidgey, L.
Clement-Jones, L.
Colwyn, L.
Cormack, L.
Cumberlege, B.
De Mauley, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Doocey, B.
D'Souza, B.
Eaton, B.
Eccles, V.
Eden of Winton, L.
Edmiston, L.
Elton, L.
Empey, L.
Falkner of Margravine, B.
Faulks, L.
Fearn, L.
Fellowes of West Stafford, L.
Fink, L.
Flight, L.
Fookes, B.
Fowler, L.
Framlingham, L.
Fraser of Carmyllie, L.
Freud, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
Glasgow, E.
Glendonbrook, L.
Goodlad, L.
Goschen, V.
Greaves, L.
Greenway, L.
Griffiths of Fforestfach, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Harris of Peckham, L.
Harris of Richmond, B.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Home, E.
Howard of Rising, L.
Howe, E.
Howell of Guildford, L.
Hunt of Wirral, L.
Hussain, L.
Hussein-Ece, B.
James of Blackheath, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
Jopling, L.
Kilclooney, L.


13 Jun 2011 : Column 612

King of Bridgwater, L.
Kirkwood of Kirkhope, L.
Kramer, B.
Lamont of Lerwick, L.
Lang of Monkton, L.
Lee of Trafford, L.
Lexden, L.
Lindsay, E.
Lingfield, L.
Liverpool, E.
Loomba, L.
Lucas, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
Macdonald of River Glaven, L.
MacGregor of Pulham Market, L.
McNally, L.
Maddock, B.
Maginnis of Drumglass, L.
Mancroft, L.
Maples, L.
Marks of Henley-on-Thames, L.
Marland, L.
Martin of Springburn, L.
Mawson, L.
Mayhew of Twysden, L.
Moore of Lower Marsh, L.
Morris of Bolton, B.
Moynihan, L.
Naseby, L.
Newby, L.
Newton of Braintree, L.
Nicholson of Winterbourne, B.
Noakes, B.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Oppenheim-Barnes, B.
Palmer of Childs Hill, L.
Palumbo, L.
Parminter, B.
Patten, L.
Randerson, B.
Rawlings, B.
Razzall, L.
Reay, L.
Rennard, L.
Ribeiro, L.
Risby, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Ryder of Wensum, L.
Sassoon, L.
Scott of Needham Market, B.
Seccombe, B.
Selkirk of Douglas, L.
Shackleton of Belgravia, B.
Sharkey, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shipley, L.
Shutt of Greetland, L. [Teller]
Smith of Clifton, L.
Spicer, L.
Steel of Aikwood, L.
Stewartby, L.
Stoddart of Swindon, L.
Stoneham of Droxford, L.
Stowell of Beeston, B.
Strasburger, L.
Strathclyde, L.
Taylor of Holbeach, L.
Thomas of Gresford, L.
Thomas of Walliswood, B.
Thomas of Winchester, B.
Trefgarne, L.
Trenchard, V.
True, L.
Tyler, L.
Tyler of Enfield, B.
Ullswater, V.
Verma, B.
Waddington, L.
Wade of Chorlton, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Warsi, B.
Wasserman, L.
Wei, L.
Wheatcroft, B.
Wilcox, B.
Willis of Knaresborough, L.
Younger of Leckie, V.
7.28 pm

The Deputy Speaker (Baroness Fookes): My Lords, I have to announce a correction in the voting figures in Division No. 1. The correct figures are: Contents, 214, not 213 as announced; Not-Contents 209.

Consideration on Report adjourned until not before 8.30 pm.

Contracting Out (Local Authorities Social Services Functions) (England) Order 2011

Contracting Out (Local Authorities Social Services Functions) (England) Order 2011
22nd Report from the Joint Committee on Statutory Instruments

Motion to Approve

7.29 pm

Moved By Earl Howe



13 Jun 2011 : Column 613

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, the purpose of the order is to allow local authorities taking part in two pilot programmes to contract to outside organisations certain adult social services functions conferred on them by a variety of legal provisions. The pilots are, first, adult social work practices pilots and, secondly, right to control pilots. In short, the SWP pilots will test various models of social worker-led organisations undertaking adult social care functions for which local authorities are currently statutorily responsible. The right to control pilots will test the exercise of disabled people's right to manage the state support they receive to live their daily lives. I will explain each pilot programme in greater detail as I go along.

The Government's vision for adult social care set out a new agenda for adult social care based on a shift of power away from the state to the citizen by putting people, personalised services and outcomes centre stage. We are committed to the devolution of decision-making close to those who are responsible for the service delivered and, wherever possible, into the hands of those who are the service beneficiaries. This is an integral component of our wider personalisation agenda. We also want to ensure that individuals, carers, families and communities work together with local services, balancing family and community action with state support. Again, this is an integral component of our big society vision.

Since 2008, the Department for Education has funded SWP pilots to deliver services for children and young people in care. The pilots have seen the creation of independent, social worker-led organisations, including social workers moving out of public sector employment to form their own employee-owned social enterprises. The pilots also co-ordinate and monitor services provided to the children and young people in the SWP. They are independent of the local authority, but work closely with it and in partnership with other providers. The local authority pays the SWPs for the services provided.

Last November, my right honourable friend the Secretary of State announced that the Government wanted to test this concept in the adult social care sector, with pilots running for two years starting this summer. The emerging evidence from the Department for Education pilots strongly suggests that both clients and staff will benefit from service delivery by SWPs. That is why we are giving local authorities this opportunity to test the potential benefits of the SWP model and adopt a completely innovative approach to delivering services for adults and their carers.

We want not only to improve the experiences and outcomes for people in vulnerable circumstances, but also to empower social workers to do their jobs effectively, and we want to reduce the unnecessary bureaucracy that so often gets in the way. The programme will bring people who need health and care support closer to those who provide the services they need by reducing bureaucracy and encouraging innovation and personalised services. It will also give social workers the freedom to run their own organisations in the way

13 Jun 2011 : Column 614

they want within the constraints of their contract with the local authority. Evidence shows that staff working in employee-owned organisations have greater job satisfaction, leading to lower staff turnover and capacity for greater innovation.

SWPs will discharge the functions of the local authority in providing adult social care services and be responsible for providing the support to people receiving services from the SWP to achieve better experiences and better outcomes. They will also be responsible for undertaking delegated social work functions, managing day-to-day support, co-ordinating and monitoring service provision, and of course this will differ between the pilot sites. The local authority will keep its strategic and corporate responsibilities and will manage the contract and partnership with the SWP. I will speak a little later about concerns that noble Lords may have about possible risks associated with the delegation of these functions.

The SWP pilots will give local authorities a unique opportunity to test the potential benefits of various models and to adopt innovative approaches to delivering services for adults and their carers. The Department of Health is providing funding in the region of £1 million to help the pilots get up and running and to provide initial support. The pilots are an opportunity to test different models to see what works well and what does not, and they will be evaluated fully both during and at the end of the two-year period.

Primary legislation specifically allowed councils taking part in the Department for Education pilot programme to delegate their statutory functions in relation to looked-after children to SWPs. There is no equivalent legislation to allow the delegation of adult social care functions. However, the Deregulation and Contracting Out Act 1994 allows the making of orders allowing such delegation, and that is why we are seeking to introduce the order under discussion today.

The right to control, introduced by the previous Government in the Welfare Reform Act 2009, gives disabled adults greater choice and control over certain state support they receive to go about their daily lives. The right is based on the principle that disabled people are the experts in their own lives and they can decide what support they need and how it should be delivered. It is essentially a variant relating solely to disabled people within the general concept of personalisation.

The right is being tested in eight local authorities in England. These trailblazers, funded by the Office for Disability Issues, will evaluate the best ways to implement the right and will be used to inform decisions about whether and how to roll out the right more widely. Disabled people accessing the right to control will have a right to be told how much money they are eligible to receive for their support. They will be able to choose, in consultation with the public authority delivering the funding stream, how that money is used to meet agreed outcomes. They will be able to choose different degrees of control over their support.

One local authority has asked us whether it could test the delegation of its statutory duty to review social care assessments to third parties such as user-led organisations. As part of their vision for adult social care, the Government have stated their expectation

13 Jun 2011 : Column 615

that by April 2013 councils will provide personal budgets for everyone eligible for ongoing social care, preferably as a direct payment. Evidence shows that people who have their circumstances reviewed by fellow service users under appropriate supervision are far more likely to have their care and support needs met to their satisfaction and to request direct payment of their personal budgets to enable them to make their own support arrangements. We were therefore happy to agree to the request and the order allows delegation of the assessment functions under Section 47 of the NHS and Community Care Act 1990, which is also available to the councils piloting SWPs.

I said earlier that I would address concerns that noble Lords might have about the powers provided by the order. I fully understand how the delegation of council functions to outside bodies might raise concerns about potential risks to service users. It is always a balancing act when people are given the freedom to try new ways of doing things with the aim of improving other people's quality of life. On the one hand, might service users be exposed to unnecessary risks, while on the other, might they not benefit from being able to make more decisions for themselves? Functions in social work practices have to be carried out by or under the supervision of a registered social worker or, in the case of right to control, by a person with requisite competencies or qualifications. I should like to assure noble Lords that accountability for the care delivered to vulnerable people will not change. Each local authority will retain overall responsibility for the services delivered by the SWP it contracts to, just as it does in relation to other local services. In this respect, the contract between the local authority and the SWP will be critical. We expect councils to monitor closely the outcomes of the practices, identifying issues early and providing support, while allowing them the scope to innovate and make decisions about the best packages of support and services for their population. Any potential risks will, of course, be reflected in any recommendations coming out of the separate evaluations.

In conclusion, we see this order as an important marker of progress in the developing world of personalisation. On the back of persistent requests from within the sector for greater freedom of choice and control for both staff and service users, this order has the support of councils and their representatives, as well as service users and their carers. It will enable the release of new partnerships and new ways of working to the benefit of individuals and their communities as a whole. I commend the order to the House.

Baroness Thornton: My Lords, I thank the Minister for introducing the order and explaining its purpose so well. It is one of those orders the name of which belies its importance and its comprehensibility. As the Minister explained, the order is similar to one concerning children's services from some years ago. Its purpose is designed to pilot flexibility at local authority level and test innovative approaches to delivering services to adults and their carers. As it is designed to foster new ways of delivering care on the ground with the caring and cared-for-in other words, user-led services-we would all agree that it is a good thing.



13 Jun 2011 : Column 616

The meat of the order is in Article 3(2). Most of my questions centre on the practical details of delivery and how to ensure the safety of the adults concerned. The Minister has addressed some of those already. The noble Earl said that one local authority in the pilot involved the right to control. I wonder which authority that is, which seven authorities have been chosen and how they were chosen.

I am interested in the right to control. I should be grateful if the Minister could explain in more detail what the interface between the trailblazers funded by the ODI is. What benefits could there be to using those powers with the right to control, which is being explained in this order? I am not quite clear on how those would work. How will continued support and resources for co-production with disabled service users-an essential component of successful delivery of right to control-be maintained if there is a marriage between the two regimes?

How will the local authority authorise the third party to undertake social services functions? What criteria will they use, given that no guidance is to be made available with this order? Perhaps the Minister could paint us a picture or give us an example of that.

I should be grateful if the Minister could untangle the approved provider and independent mental capacity advocate by explaining who will be doing what under this proposed regime. Given that social work is regulated, as the Minister explained, can he confirm that that same framework will apply under this order? Can he confirm who-I assume it will be the local authority-will approve the individuals, businesses, charities and social enterprises that participate to ensure that their practice is of the highest standard when they deal with this most vulnerable sector of the community? If things are not working out properly for the person in receipt of care under this order, who would they go to and how would they do that?

Finally, if the person who is undertaking the functions under this order is not a registered social worker, what check will there be on their qualifications to carry out the functions required? I should be grateful if the Minister could explain who is undertaking the monitoring and reporting, and how long it will take. What does the Minister envisage the next steps would then be?

7.45 pm

Lord Beecham: My Lords, in 51 years in active politics, I have never before spoken in support of the SWP. This, however, is a different SWP, and I am happy to support the initiative, which, as the Minister has rightly said, follows an equivalent process in children's services. However, there are one or two questions that I should like to ask.

First, I assume that it will be open to council health and adult services scrutiny committees, if they wish, to look into the operation of the scheme in their individual authorities. That would be a helpful addition to the process. Secondly, it would also be helpful to be assured that the terms and conditions of those to whom this work will be contracted in adult care services will be comparable to those in current adult services departments. One does not want to see-as has sometimes happened, for example, in my own authority-the contracting

13 Jun 2011 : Column 617

out of domiciliary care services even to voluntary sector organisations that pay barely above the minimum wage. That is compared to somewhat above it, although not vastly above it, at the moment.

Thirdly, in respect of the possible formation of new bodies by local authority employees, a matter on which the Minister touched, there might be problems with the European Union procurement and competition laws. We have touched on this from time to time, and will no doubt revert to it in the event that a Bill dealing with the National Health Service comes to this House in due course. I assume that, for the purposes of these experiments, it is perhaps unnecessary to worry too much about that, but is it a factor that might have to be taken into account later?

In relation to the right to control, again, this is a sensible way to proceed. This is a matter not only for the individual and the organisation that helps him but also, I suspect, for the local authority in helping people navigate the various providers and alternative courses of action. For that matter, they must also ensure that sufficient information is available to provide value for money for the applicant. Would it be intended to extend this experiment to provision by the health service for disabled people, either from GP practices or trusts? Presumably at the moment some functions are provided by such statutory organisations as well as by the local authority. If it is not intended to bring that in at this stage, is it something that could be looked at, maybe within the trailblazers working with their local health partners, to see whether this right to control might be extended?

I am reassured to hear that monitoring will take place for individual projects but the document says:

"The Trailblazers ... will evaluate the best ways to implement the Right".

I am not sure whether that means a collective view will be taken by the trailblazers or individual trailblazers will report. In either event, who will decide, and with whom, how matters are taken forward? For example, is it the department's intention to consult patient groups or groups representing the people affected? I assume that that is probably the case but it would be as well to have it spelt out.

Finally, we should bear in mind what currently worries so many people about Southern Cross and reflect on the difficulties that arose as a result of local authorities effectively being driven out of the provision of residential care for the elderly in the 1980s and 1990s when they became heavily dependent on largely private sector providers. I emphasise the need, whatever happens, in a mixed economy of care, which most of us support, for a local authority role to remain in provision. It is worrying that there is now little direct provision of residential care by local authorities. That leaves not just the system but, of more concern, the individuals who are in care and being looked after vulnerable to the pressures of the market. I am sure that the Minister would not wish to see problems of that kind arising so it would be helpful to be given encouragement that local authorities, in conjunction with other providers, will be able to remain on the field, as it were. As I understand it, at the moment it is not possible for people to use direct payments to

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procure services from their local authority. Perhaps that could be looked at in the context of these experiments as matters go forward.

Lord Lee of Trafford: My Lords, these Benches are happy to support this pilot. However, I wish to ask my noble friend one or two questions. First, will the resources currently spent by local authorities in assessing social care needs and arranging care be passed on in their entirety to the organisations to which this duty is being contracted out? If so, for how long will this contractual arrangement last? Who is conducting the independent review of the pilots and will the findings be made available to the House?

Baroness Wall of New Barnet: My Lords, I wish to pursue a matter that has already been discussed and emphasise a couple of concerns that have been raised, which I share. My noble friend referred to the treatment offered by a private consortium being threatened by the financial situation, as has just occurred. If we allow the contracting out to occur-I do not disagree with that-how can we ensure that that does not happen and that the treatment is safeguarded? A couple of noble Lords have asked how the assessment and monitoring will take place. As my noble friend Lord Beecham said, it seems that the trailblazers will also monitor the provision. That might be a bit dubious as their judgment will obviously be biased by their experiences. My noble friend Lady Thornton asked who these trailblazing local authorities are. I should be interested to know that, too.

Earl Howe: My Lords, I am very grateful to noble Lords who have spoken, particularly to the noble Baroness, Lady Thornton, for her broad welcome of the order. A great number of questions have been asked. I shall probably not be able to answer them all but I shall be happy to write to noble Lords with the detailed answers. However, I will attempt to cover as much ground as I can.

The right to control trailblazer that has requested this facility is Essex County Council. The social work practice sites are Birmingham City Council, the London Borough of Lambeth, Stoke-on-Trent City Council, North East Lincolnshire Care Trust, Shropshire County Council, Suffolk County Council and Surrey County Council.

I was asked how the SWP pilots would be put in place. The local authority will support the set-up of the SWP and the transition of people to the SWP. Once in place, the SWP will use its income under the contract with the local authority to provide services and improve the experience and outcomes of people in the SWP. As I said, the local authority will then manage the contract, monitor performance and manage the relationship as a whole. The local authority will review the contract with the SWP periodically to set new outcome targets and adjust payments. The Department of Health would expect these reviews to occur annually. In answer to my noble friend Lord Lee as to who will conduct the eventual evaluation, the workforce unit at King's College, London, will do that. The final report will be an independent evaluation and will be published after the two-year period.



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Although the local authority will remain liable for the performance of functions undertaken by the SWP, the authority will be able to sue for any breach of contract. It will work closely with the local authority and each local authority should decide what decisions it wishes the SWP to refer to it for agreement, so everything hinges on the contract. How will the outcomes of the SWP be managed? The local authority needs to maintain a close relationship with the SWP, as I have said, but it also needs to allow the SWP scope to innovate and make decisions about the best packages of support and services for the people involved-the service users-and how to provide these, so there is a delicate balance to be struck here. The department would expect the local authority to monitor outcomes, identify issues early and provide support, while allowing the SWP sufficient autonomy to decide how best to meet the needs of the people with whom it works.

The transfer process will be managed between each local authority and SWP. Where transfers take place, it is for the local authority and SWP to agree as part of their contract clear and transparent criteria for deciding who should transfer. It would be for local authorities to decide where social workers could be most effectively deployed. Ideally, SWPs will provide out-of-hours support directly to ensure continuity of services, but if the SWP is small, and particularly while it is getting started, it could choose to purchase out-of-hours support from the local authority.

The noble Baroness, Lady Thornton, asked how these contracts will operate if there is no guidance. I hope that what I have already said about the importance of the contract has answered that. The contract that each local authority has with an SWP will specify the scope and feasibility of operation of each SWP.

My noble friend Lord Lee asked whether the terms and conditions being contracted out are comparable to current conditions. That would depend on the individual SWP and the individual local authority. There will be flexibility here. We are encouraging diversity so that we can find out from different models what works best.

The noble Baroness, Lady Thornton, asked how the SWP would link with the approved provider for independent mental capacity advocates. The SWP would have access to whatever independent mental capacity advocate services exist locally. I think that there will be no bar to that. She also referred to the very important issue of safeguarding and how that would be ensured. Any body that is carrying out regulated activities in adult social care must be registered with the CQC. We are working with the seven councils to establish which sites are carrying out regulated activities. It is likely that most will need to be registered with the CQC, but the pilots vary greatly. They may therefore be subject to different registration requirements. Ultimately, it is the responsibility of councils to ensure that SWPs, if applicable, are registered individually with the CQC. Organisations registered with the CQC are required by regulations to carry out CRB checks on staff who have contact with patients or service users. Keeping patients and service users safe involves

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providing training, regular supervision and development and feedback from patients, service users and relatives. It will be for the councils and the SWPs to ensure that CRB checks are carried out as appropriate. The noble Lord, Lord Beecham, asked whether the overview and scrutiny committees would have a role here. I see every reason why they should take an interest in what is happening. No doubt the message will go out that they should be encouraged to pay particular attention to these pilots.

The noble Baroness, Lady Wall, asked how we can ensure that SWPs do not go down the same path as providers such as Southern Cross. We do not, of course, yet know the final models of the SWP pilots and whether there is likely to be much, if any, private sector involvement. Local authorities can decide what they put in their contracts with the SWP pilots to ensure that those risks are mitigated.

Disabled people taking part in the right to control trailblazers will have a legal right to be told how much support they are eligible to receive, and to decide and agree with the public body the outcomes they want to achieve, based on the objectives of the funding streams they access. They will have a right to choice and control over the support they receive, and be able to choose how they receive the support.

Some aspects of the right to control process, such as the extent to which administrative processes are aligned, will be subject to some flexibility and may be different in each trailblazer. However, the broad framework of how the right to control will be tested is already agreed. Disabled people accessing the right to control will be told how much money they are eligible to receive for their support. They will be able to choose, in consultation with the public authority delivering the funding stream, how that money is used to meet agreed outcomes. I should say for the information of noble Lords that the seven trailblazing local authorities are Barnsley Metropolitan Borough Council, Sheffield City Council, Essex County Council, Greater Manchester, Leicester City Council, the London Borough of Barnet, the London Borough of Newham and Surrey County Council.

I was asked whether the trailblazers will be consulting with service users. The answer is yes-the evaluation will include consultation with service users.

A number of other issues were raised in the debate and I shall cover just one before I conclude. The noble Lord, Lord Beecham, asked whether direct payments were prohibited from buying council services in this context. There are no plans to change current arrangements and, indeed, the Law Commission, in its recent report on social care, did not recommend a change in this respect.

Once again, I am grateful to noble Lords for their pertinent questions and comments. As I mentioned at the beginning, I shall endeavour to respond to those questions that I have not covered in my reply.

Motion agreed.

8.03 pm

Sitting suspended.



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European Union Bill

Main Bill Page
European Union Bill
Amendments

Report (2nd day) (Continued)

8.30 pm

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

Amendment 22A

Moved by Lord Davies of Stamford

22A: Schedule 1, page 14, leave out lines 32 and 33

Lord Davies of Stamford: My Lords, it would be possible to make a well founded and persuasive argument to get rid of all the provisions of Schedule 1. At this point, however, I will focus on one provision where there is an absolutely demonstrable, concrete, national, economic and industrial issue at stake. I hope I shall persuade the House, and indeed the Government, that there is more than good reason to think again about this element of Schedule 1. The House will be well aware that military equipment is one of the rare exceptions and exemptions from the single market. That is achieved by Article 346(1)(b) of the treaty, which states:

That is an explicitly protectionist measure that allows individual member states to protect their own markets, as in generations gone by before the single market, or Common Market, were ever conceived of. It is an anomaly in what is otherwise a free market, and it is very difficult for some member states to give this up because they are protecting industries with considerable lobbying potential in their own countries.

I have no financial interest to declare in the British defence industry. When I became Defence Procurement Minister, I made sure that I had no shares in defence industries and that has remained the case. I have not developed any relationships with the defence industry since I left government. Indeed, it would have been impossible under the rules for me to have done so in the last year. I acknowledge an admiration for the British defence industry, which I was able in the course of my job to get to know extremely well. The technologies that it has developed over the years, many of which you cannot even talk about the existence of let alone describe the nature of, are extraordinary. We really are at the front line in this area of technology. It is not surprising, and a demonstrable fact, that the British defence industry is by far and away the largest in turnover in the European Union. In other words, we are the losers through this protectionism.

The EU market for defence procurement is roughly €70 billion, say £55 billion, or something of that order. Our own element in that is about £15 billion-say €18 billion-so we are talking about a potential market of some €50 billion to €55 billion. The French, who

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are very protectionist and make considerable use of Article 346, have about the same spend. The Germans and the Italians have rather less and are also very protectionist. Everyone else in the EU adds up to that sum. There is at stake a market for something like €55 billion, or £45 billion to £50 billion. Of its own nature and operating against the largest most productive sector in the EU, this protectionism deprives us of the opportunities for sales and therefore for employment and for investment, not least for sharing the considerable overheads of R&D with the Ministry of Defence, which is very much in the interests of this country-the interests of defence, the taxpayer and industry.

It might be thought-indeed, I hope it would be-that any rational Government, and I am sure that the coalition Government are in no sense irrational, would want to seize any opportunity that could be identified to deal with that anomaly in the single market. We have been pioneers in, first, opening the single market initiative under Margaret Thatcher and Lord Cockfield and, subsequently, in pushing through the opening of financial services, intellectual property and many other areas in which there was hesitation on the part of our partners in moving forward to implement the principles of the single market.

One would assume that it would be common ground between all the major political parties, in addressing the electorate in our own ways and in addressing the economic interests of the nation, to want to get rid of the protectionist barriers that face that particularly important industry. I think it would also be common ground to agree that the defence industry, perhaps after pharmaceuticals and biochemistry, is the area of manufacturing in which we have the greatest competitive technological advantages in the world market. It is very important, and we ought to be able to come, more or less, to a consensus on what should be done about it.

How do you generate an opportunity to get rid of a form of protectionism when certain member states find themselves subject to considerable pressures and lobbies and find it difficult to move? It is difficult for some of them to vote openly, clearly and decisively for the abolition of Article 346. As I said in Committee, and as all of us with experience of negotiations in any context will know, often the best way to solve a substantive problem or make progress on a substantive issue, especially in a complex negotiation where people have strong and differing interests at the outset, is by a procedural route. I gave the example of setting up a committee to solve the problem rather than taking a decision around the board table, the Council of Ministers, or whatever. The qualified majority voting system is undoubtedly a very useful weapon that has proved its worth over the past generation in achieving substantive progress through procedural routes.

I can see one or two noble Lords looking for the text of the provision in Schedule 1, so let me say that it is on page 14, the penultimate element in Schedule 1, and states:

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

The provision does exactly the opposite of what I suggest is the obvious thing to be done in the national interest. It makes it impossible for us to agree to, let

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alone to propose, QMV to decide the future of that derogation from the single market without a referendum. We are putting a ball around our own necks, we are shooting ourselves in the foot, with that provision. It makes no sense at all. Where we have an interest in liberalising trade-I think I would carry a number of people on the opposite side with me in saying that we surely do-and where that means might be the only way to make progress in the area, as has proved to be the case in other similarly difficult areas in the past, we are preventing ourselves from doing so.

We all know that if a British Minister is not allowed to agree and says, "Well, we've got to have a referendum beforehand", that in effect denies us the chance to seize the opportunity rapidly. It might need to be seized there and then, because if it is not you have lost it. You have your interlocutors in a favourable frame of mind in a particular situation when they agree to resolve the question through QMV. That element in Schedule 1 is entirely perverse. It goes in exactly the opposite direction from that in which any responsible Government would want to go. It is contrary to rationality and good sense; it is directly contrary to the national interest.

The Government have been very statesmanlike in saying in the course of our debates that they will listen to new arguments, that their minds are not closed. Both noble Lords, Lord Wallace and Lord Howell, have said that in answer to me and to other noble Lords. I am sure that that is true, because they are both sophisticated men of the world who know that one always needs to look carefully at these things. When you have a schedule of 56 items, it is almost certain that something somewhere will have crept through when it should not really be there, and it needs to be looked at again.

I claim no monopoly of wisdom in this matter, but I raise it because, as I said, I have a background in this subject and I was struck very forcibly on reading the text of the Bill. I hope that on the basis of the considerations that I have just set out there will be scope to reconsider this important matter. It is important for a major British industry which I think we all wish to support in every way we can. I beg to move.

Baroness Nicholson of Winterbourne: In moving his amendment, the noble Lord has not explained to my satisfaction, or perhaps to the satisfaction of others, why the removal of these two lines from the text of the Bill, which would result in QMV rather than a veto on the protectionism of military products, would assist the development of the free market, as he and I wish to see. From my experience in Brussels, sometimes sitting in the chair on common security and defence policy debates, it was very clear that some member states-particularly some of the smaller and newer ones-wished to pursue protectionism to an extent that would have been extraordinarily unhelpful both to the defence of the European Union and to the wider defence policies of countries such as the United Kingdom. In other words, we need the veto and I cannot understand why the noble Lord wishes to remove it.



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Lord Davies of Stamford: Perhaps I may try to help the noble Baroness. Of course I did not suggest that adopting QMV in this case would guarantee that we would solve the problem. I said that the problem had not been solved until now but an opportunity might arise to solve it via QMV. Many problems that were solved by QMV did not prove to be solvable when each individual member state was put on the spot with a requirement that it make an explicit and public declaration and hold a public vote in favour of a change, particularly when the change was to remove protectionist support for a domestic industry. I am saying simply that it would be quite perverse to deny ourselves the opportunity of using QMV as an instrument. Of course, there is no guarantee that it would work, but that is no reason for not trying it or keeping it open as an instrument that we might need.

Baroness Nicholson of Winterbourne: My point was purely that from my experience and that of others in Brussels, a number of member states wish to keep protectionism. As the noble Lord has already clearly indicated, it is in Britain's interests to have an open system, and in the case of the defence of the European Union and beyond it is in all our interests to have an open system. I cannot see how QMV will assist an open system when Britain may need a veto.

Since the noble Lord was involved in the defence industry at an earlier stage in his political career, the European Union has widened immensely. Some of the newest member states have had a significant interest in keeping protectionism moving in the defence industry, with some of them having very large interests in it. The contracts are massive; the potential for dealings that are less than transparent is huge, as some of the biggest contracts on the globe are before individual member states; and one of the great strengths of the potential of the EU common security and defence policy is an open system of military equipment, which would stop the protectionism to which the noble Lord rightly refers. I have failed to be convinced so far by what the noble Lord has said about the loss of the veto and the introduction of QMV.

Lord Hannay of Chiswick: I think that the noble Baroness has the wrong end of the stick. I do not see how on earth Britain keeping a veto on a matter where there is no liberalisation will help us to achieve liberalisation. What are we going to veto-protectionist moves by other member states? This is absurd; it is another world. To do what the noble Lord, Lord Davies, suggests does not involve a decision to move to QMV. The noble Baroness implies that if we took the two lines out of the Bill, we would automatically and at that moment accept QMV. We are not doing that; we are simply making it possible, at a putative future moment and if we felt that it was to our advantage, to do so by means of simple legislation in Parliament without a referendum.

8.45 pm

Baroness Nicholson of Winterbourne: I accept that the noble Lord, Lord Hannay, wishes to exemplify the argument that the noble Lord, Lord Davies of Stamford,

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has already put forward-in which case it must be rather weak. I cannot see why bringing in QMV is a better option than the veto, which I prefer. I cannot see how the proposal will strengthen the hand of the United Kingdom. Although I have a long and personal friendship-and indeed a good neighbourliness-with the noble Lord, Lord Davies of Stamford, and a high regard for his massive intellect and his knowledge of the defence industry, none the less he has failed to convince me.

Lord Hamilton of Epsom: Does my noble friend not feel that if the argument of the noble Lord, Lord Davies of Stamford, is so compelling, he would probably win it in a referendum?

Baroness Nicholson of Winterbourne: I must admit that this is a very compelling argument from this side of the House. I am sure that the noble Lords, Lord Davies and Lord Hannay, will attempt to knock it down, but I suspect that they will not succeed.

Lord Triesman: My Lords, it may dismay the House, but I will pick up from the point where this argument has arrived. Like the noble Lord, Lord Hannay, when I looked at the proposal put forward by my noble friend Lord Davies of Stamford, it did not seem to me that the consequence of it was that there would be an immediate move without any further ado to qualified majority voting. Instead, there would be a very substantial process before anybody got there, even if they had the desire to get there. It seemed that whatever difficulties and barriers were raised by those who thought it best to have a closed-market system rather than an open-market system in the defence industry, it would be harder in the middle and long term for them to sustain the restriction on free markets were they to be deprived of the veto as the automatic response. In short, over a period of time-I am sure that it would be over a period of time if it happened at all-it might be possible through a different mechanism to change from this restriction to a free-market solution.

It may be thought curious that from this opposition Bench I argue trenchantly for free markets in Europe. However, it does not seem odd to me; I have held this view consistently for a very long time. Like my noble friend Lord Davies, it appears to me that when we take a serious and hard view of the areas in our manufacturing industry where we might be very successful, among them are the products of our defence industries. They are very fine industries; they are hallmarked by exceptional research and development; they are among the industries that co-operate most successfully and most frequently with the best of our university departments that are working in the same areas of research and development; they manage to do it on a large scale; and they manage to create extremely valuable intellectual properties of a kind that we cannot always achieve in many other parts of our manufacturing life.

As a former Minister responsible for intellectual property, I frequently came at this from a different ministerial portfolio from that of my noble friend Lord Davies, but none the less I was frequently full of admiration for the high quality of patents that were created in that industry and very well aware of the

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value that they could inject into free-market circumstances. It is very easy to see why, even when there is a concrete commercial rationale for this country, there will be others who will seek protectionism because they are fearful that their industries cannot compete in industries of this kind, particularly where those industries are so driven by outstanding research and development and by their links with the university research world. It is a tough environment to compete in-that is for sure-but that does not seem to me to be a reason to protect those kinds of industries in other countries any more than somebody could argue that we should simply protect them in our country from any difficult winds and buffeting of international competition in a fully commercial sense.

I can also understand the argument that some of those countries will be looking at industries-as we have in defence in the past-as being of considerable strategic importance and we have been cautious about whether that strategic importance should be so lightly set aside. Westland helicopters and so on have been examples of it. However, broadly speaking, we have been at our best as a country when we have been prepared in free markets to compete where we can and to achieve results on the basis of the excellence of what some of our manufacturing industries can do with freedom to operate properly in markets.

In summary, I return to the point that the noble Lord, Lord Davies, has made, that the noble Lord, Lord Hannay, was making and that I made at the beginning of my remarks. Nothing in this proposal moves us with any suddenness onto a different trajectory. I am loath to believe that the House and the general sentiment in this House would be against the possibility of the full operation of free markets and the benefit to United Kingdom industry of competition in a free market, especially where we believe that we can succeed way beyond many of our competitors in that market. It is a very strong argument and I hope that it will appeal to any free marketer looking at the benefits of the European Union in free market terms, which, many noble Lords have urged, were among the founding reasons that they could see for the rationale of the EU in the first place. I support this amendment and I believe that, on free market arguments alone, it should succeed.

Lord Howell of Guildford: My Lords, this amendment seeks to remove Article 346(2) of the Treaty on the Functioning of the European Union from Schedule 1 to the Bill. The article has appeared verbatim in every European treaty since 1957, so it is not new on the scene. At present, unanimity is required for changes made to the list of military products for which single market provisions do not apply. Under the Bill, a proposal to move to QMV would require approval by Act and by referendum. The noble Lord, Lord Hannay, and others are correct that it does not immediately mean that the veto is removed. It merely means that the move would require approval by Act and by referendum. The amendment of the noble Lord, Lord Davies, would remove that requirement.

The noble Lord, Lord Davies, spoke at length on this issue during day six in Committee, and he has spoken again now. Of course, he has considerable

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experience as Minister for Defence Equipment and Support, and in my view he has made the case extremely well that there could be some benefits to the UK from a move to QMV in this area. Having conceded that point, I hope that he and other noble Lords will excuse me if I now at least set out the other side of the argument, particularly as the noble Lord, Lord Davies, has just said that there is no guarantee that his proposal would work. Why is that so? It is because a move to QMV would also come at considerable cost to the UK, which a responsible Government have to consider. We must remember that this article is sensitive, as it applies to national security and defence. It is one of the wires that feeds directly into the red lines that all parties in the United Kingdom and other member states have always maintained during treaty change negotiations. Obviously that applies to previous Governments as well as this one.

The noble Lord, Lord Davies, said with some passion that Article 346 of the TFEU is a protectionist measure and he portrayed the Government as,

The noble Lord, Lord Triesman, has spoken in the same vein just now. I have to point out that the UK's veto could be used also to block any proposals to extend the protectionist measures with which the noble Lord understandably takes issue. A qualified majority could push through decisions which would favour greater national discretion and protection. The list, which has been unchanged-

Lord Kerr of Kinlochard: I thank the Minister for letting me intervene. The point that he is making is absolutely right-it could work either way-but the trouble is that the list is very long now. The UK interest is to have the list reduced. The list is very long because particular countries have particular little defence industries which they are keen to protect. The chances of it being possible to reduce the list are therefore low but would be enhanced if there were qualified majority voting on the composition of the list. We are starting from a bad place. It is unlikely to get worse; it is difficult to get it better; but you cannot get it better without qualified majority voting.

Lord Howell of Guildford: It is unlikely to be shortened, but I do not think that any of us can be sure. Protectionist pressures operate all the time, particularly in the defence industries. as the noble Lord, Lord Davies, knows better than all of us, and will continue to do so. The noble Lord said that the position is unlikely to get worse, but I think that we have to guard against that. A qualified majority could push through decisions which favoured greater national discretion and those pressures exist. The list has been unchanged since 1958 and can be expanded as well as contracted. I have before me the list as it is at present; it is a long list. It could certainly be expanded, so keeping the veto is as much, if not more than, a guard against protectionism as a barrier to liberalism, much as one believes, as I believe very strongly, in liberal free markets. The noble Lord's zest for liberalism, which is certainly equalled by mine, could end up the opposite way round.



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Lord Kerr of Kinlochard: The Minister is now making a general argument against the Single European Act and against having qualified majority voting on any area of the single market because it might go the wrong way and in a protectionist direction. All history suggests that the Single European Act was a good bargain. On the whole, it got us a more open market. It was a good, Conservative, market-driven measure which worked pretty well. The exception of defence goods is there because it was there before we joined the European Union. We have to my knowledge always argued against applying single market disciplines, which we believe in, to all sectors of the economy. That is the argument for the amendment.

Lord Howell of Guildford: I am not a Latin scholar, but I have a feeling that there is a Latin phrase to describe what the noble Lord is doing, which is projecting from a particular area which has its particular features and qualities, with which we are all quite familiar, on to the general case for free markets and expansion of trade, which we all seek, as we have done throughout the history of our membership of the European Union and will continue to do. I suppose that the noble Lord's proposition is that the interweaving of political pressures and the defence and security industries operates just the same as everything else. I do not believe that it does; I just have to disagree with him. In this case, we are dealing with different pressures which are evident to those who examine these patterns. There are dangers as well as gains.

Retaining unanimity does not prevent product list changes, but it ensures that we can oppose any decisions that seek to install greater, inappropriate levels of protectionism for products-weapons, equipment, trucks, APVs and all the rest-that we feel should not be exempt from single market provisions. This allows us to take decisions on the basis of what would be best for the effectiveness of the single market and our own defence industry. Unanimity enables us to oppose removal of any products in the list where that would have unwelcome consequences for the UK and might prevent us from acting quickly to secure the right equipment for our troops in times of urgent need. I reassure noble Lords that, despite the doubts that have been expressed, the Government fully support the goal of better value for money through collective arrangements for identifying gaps and procuring equipment, pooling our multinational capabilities and forces wherever we can.

9 pm

However, in the support of our Armed Forces and their capabilities, any initiative that had the potential to reduce our ability to protect our operational advantages and freedom of action in protecting the essential interests of security will be a matter for serious concern. We must ensure we can sustain our defence industrial capacity in sectors deemed essential to our national security interests, such as military equipment for counterterrorism or cryptographic equipment. Retention of the veto provides this safeguard.

I am not arguing that the noble Lord, Lord Davies of Stamford, who speaks with passion on these matters, is wrong in the general point he has made so eloquently.

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I am saying that there are arguments on both sides and that the potential consequences could have a serious impact. Given the national security implications, it is right that any move to qualified majority voting be subjected to the highest level of scrutiny. That is not to say that it will not be achieved in part but it must be subjected to the highest level of scrutiny. If there were ever a proposal to remove a veto in this area and if a future Government felt inclined to agree, it should have the support of Parliament and the people before being allowed to proceed.

The chance of a future Government agreeing to give up this veto in practice is vanishingly small. The chances of this being proposed as a separate one-off move are zero. A remote possibility is that it could be put forward as part of a package of transfers of competence and powers to the EU, however undesirable it seems to us at present that it should be so. That would be the sort of event where people rightly want and expect their say. If denied their say people would feel that, once again, powers were being transferred without adequate public accountability. For those reasons, although I salute the feeling and validity of half of the noble Lord's argument, I hope that he respects my half of the argument and I ask him to consider what he has said and withdraw his amendment.

Lord Davies of Stamford: My Lords, I am deeply grateful for the consideration which the House has given to my amendment and for the warm and supportive words of the noble Lords, Lord Hannay and Lord Triesman, and the noble Lord, Lord Kerr, who seized on an argument that I was about to deploy myself in response to the noble Lord, Lord Howell. I will address the points of the noble Lord, Lord Howell, in a moment and bring my remarks to a conclusion by addressing the Government's response. I am grateful too for the contribution of the noble Baroness, Lady Nicholson. Frankly, I did not understand her argument that somehow possession of veto was going to help us in any circumstance in advancing the cause of reform of Article 346. I shall correct her on a practical point: she says that since I was involved with defence there have been a lot of changes in the world, including the end of the Cold War. I think she is going back to the time when I was a defence spokesman in the Conservative Party. My experience of defence in government ended 13 months ago, in May last year.

I always enjoy the contribution of the noble Lord, Lord Hamilton, to these debates. He deployed an argument today which I have heard him deploy in other contexts. It is, "If it is such a good idea, why not have a referendum and you will win it? The public will support you". I am not sitting close enough to see whether he has a twinkle in his eye when he says it but I think he has. He knows as well as I do that there is no prospect of having a referendum on a subject as esoteric as Article 346. If we have a serious opportunity to change it, it is no use saying to our partners, "For once we have got the chemistry right-there is an opportunity to go for QMV on this, and then maybe there will be a consensus and we'll get some reform. But sorry, chaps, you've got to wait for two, three, four, five or six years, when it is particularly convenient for us to have a referendum with a whole package of

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measures". Even then, as I have said before in these debates, it would be quite unsatisfactory for the British electorate to do their homework on a whole series of rather technical matters. It is just not practical politics. The noble Lord, Lord Hamilton, knows more about politics than I do; he has been involved in politics longer than I have, and I am quite certain that he had his tongue in his cheek when he said those things.

I move to the points made by the noble Lord, Lord Howell, on behalf of the Government. He started off by saying that Article 346 had been in the treaties in one form or another-of course, it had different numbers-since 1957. What is new is the idea of having a referendum on a change. That is brand new. It has not come in yet-it is in the Bill before us. That is what I want to change. It is not an argument against changing this new measure that the instrument that we might want to use to reform Article 346 is now under threat from a new provision in this Bill, so it would be sensible for us to remove that threat. I do not think that there is a logical argument there against my proposal.

Like the noble Lord, Lord Kerr, I really wondered how serious the noble Lord, Lord Howell, was when he said that it may be in our interests to prevent protectionism to have a veto, because then we could stop our partners from being even worse protectionists than they were before. As the noble Lord, Lord Kerr, pointed out, in that case the noble Lord, Lord Howell, would have logically opposed the whole single market programme. It would not have made any sense at all. So the noble Baroness, Lady Thatcher, and Lord Cockfield were actually doing something very dangerous in threatening greater protectionism by agreeing to have qualified majority voting in the Single European Act.

The noble Lord, Lord Howell, tried to justify that approach with the distinctly implausible suggestion that different rules applied to defence. I do not think that different rules applied to defence; I think that the argument is rather different from that. That is why, for two reasons, I think there might be an opportunity to achieve QMV, if only the British Government have not deprived us of that opportunity in advance, ab initio. First, there is a positive incentive on Governments to reduce the costs of their defence procurement-and protectionism, as we know, is extremely expensive. If they opened their markets they would be able to purchase more cheaply, given a measure of defence capability. When I was the Defence Procurement Minister-and I was very proud of this, because I did it for the first time-I introduced a unilateral open market in the EU. I said, "Sorry, we're going to buy the cheapest and the best, wherever it is. We're not going to be protectionist". It is only when there is inequality of quality and price between the British supplier and non-British supplier that I will favour the British supplier. I made that absolutely public, and it was what I operated on. For example, I bought the 42-millimetre cannon for the Scout vehicle and potentially for the Warrior upgrade from France. Why? Because it was the best. The French were obviously delighted. There was no quid pro quo. I said to my French colleague, Laurent Collet-Billon, "You know, you and I must do something". He said, "Of course, mon cher

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collègue, we will see what we can do". But of course nothing has come through. Unless we do something about this protectionism, it will probably not.

Lord Hamilton of Epsom: As the noble Lord was responsible for the posting of the aircraft carrier orders, why were they not submitted to bids from all round Europe? Why were the bids all placed with British shipyards in this country?

Lord Davies of Stamford: As a matter of fact, I would be very proud to take credit for those particular contracts, but that contract was let before I came into my job in the MoD. However, I did manage to save that project when it was under very severe threat, in similar circumstances as last year. But unfortunately the new Government decided to throw in the project and deny us carrier strike capabilities for at least the next 10 years-disastrously so. Let me answer the question hypothetically, therefore, and say what I would have done had I been there at the time. Undoubtedly, I would have been delighted to have had those carriers procured on the best bid from within the European Union basis, as long as it was reciprocal and we had some chance of getting an order for a French frigate from a British shipyard. It has to be reciprocal. That was a particularly big order, and the protectionism the French afford to their shipyard, the Chantiers de l'Atlantique, is particularly great, so there would have been a situation in which competition would have been completely false.

I would have been delighted to have had the opportunity to procure on a common EU basis because that would have enabled us to bring the costs down further and it would have meant that our yards, over time, would have done very well. If you just look at two-the Type 45 destroyer and our submarine-building capability in Barrow-I am convinced that they are the best in the world, including the United States, when it comes to building very sophisticated warships. We would have done very well with that solution.

As I said, there are two reasons why there is a chance of Article 346 being reformed. It is particularly unfortunate, therefore, that we should be about to make it much more difficult for that to be achieved through QMV, if that seems the most likely way forward, which I think it is. The second argument is that, unlike us, our continental partners always have a sense of guilt in acting in a non-communautaire fashion. They are signed up to the principle of the single market. They find it very difficult and embarrassing to argue for derogations, though of course they do so when they are under great political pressure. Therefore, it is the sort of situation when agreeing to the intermediate stage of going to a QMV decision-making process has some hope-I do not put it more strongly than that-of achieving the substantive change that we all want.

I put to the Government, in my last comment on the subject, that when you have some realistic hope of something-it does not matter whether it is 20 per cent or 50 per cent or 70 per cent or even 10 per cent-but there is no downside, logically you do it. In this case there is a real hope of moving forward. There

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is no possibility whatsoever of extending the list under Article 346. The list is already far too great, as somebody has already said in the debate. Nothing that could conceivably be argued to be military materiel is not currently included, and this clause has been used to cover things like trucks, notably in the case of the Italians-I do not mind embarrassing them by mentioning this now-who claimed that because they were military trucks they were military materiel. There is no chance; I am quite convinced that the European Court of Justice would rule out any further use of Article 346 because such a use would no longer be consistent with the description in the article itself.

There is no downside. I ask the Government to look at that point again. There is a potential upside through using QMV, and the stake is important. This is a major national industrial interest for one of the major British industries in which we have a worldwide capability. There is a direct benefit to us-the taxpayer-as well, because if we can expand the sales which carry the overheads, including R&D, of the British defence industry, it will mean that we can achieve given levels of military capability from that industry when we procure from them at lower cost. It will be a win-win situation if we can break through here and we would be very foolish to deny ourselves any opportunity or instrument which made it even slightly more likely that we would achieve that.

On the basis of that, you would expect me to put my amendment to a vote. However, I am conscious that we are after dinner and that the Whip has been withdrawn, so there may be an uncharacteristic result from any particular vote, and I am also anxious not to take up too much time. We have already had a very good debate. I think I have said enough and colleagues have said enough. I trust to persuade the Government to look at this again. The noble Lord, Lord Howell-I am very grateful for this-was kind in his remarks about my intervention and he said that there were strong arguments on my side, though he said there were strong arguments on the other side as well. I understand that. That indicates to me that despite what is in the Bill the Government are a little bit more open-minded, perhaps, than one might have thought at the beginning of this debate. On that basis, I beg leave to withdraw my amendment.

Amendment 22A withdrawn.

Clause 7 : Decisions requiring approval by Act

Amendment 23 not moved.

Clause 8 : Decisions under Article 352 of TFEU

Amendments 24 and 25 not moved.

Clause 9 : Approval required in connection with Title V of Part 3 of TFEU

Amendment 26 not moved.



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Clause 10 : Parliamentary control of certain decisions not requiring approval by Act

Amendments 27 to 29 not moved.

Amendment 30

Moved by Lord Willoughby de Broke

30: After Clause 12, insert the following new Clause-

"Repeat referendums

Where a referendum has been held in pursuance of any of section 2, 3 or 6, a further referendum on the same treaty or decision, or treaties or decisions, cannot be held until a period of three years has expired."

9.15 pm

Lord Willoughby de Broke: My Lords, I brought a similar amendment to this in Committee which did not find favour with the Government. That was in the name of the noble Lord, Lord Stoddart of Swindon, and my noble friend Lord Pearson of Rannoch. I listened to the arguments then that the five-year gap that we proposed was perhaps too long, so this amendment proposes simply a mandatory three-year gap between referendums. When he replied to that similar amendment on 23 May, the noble Lord, Lord Wallace, went off on a rather bizarre tangent about the European Gendarmerie Force, which I had not even mentioned in my speech. I do not know quite what that was all about. However, in reply to my amendment he went on to say:

"If the Government were defeated in a referendum, it would be tantamount to a defeat of the Government",

and they would have to reconsider the matter. He went on to say:

"It would be unusual for the Government then to consider asking the public the same question in short order, having failed to convince them"-[Official Report, 23/5/11; col. 1623-24-]

at the time to change their minds the second time around.

The point of my amendment is that this is what has happened in the EU in the past. It is exactly what happened on the Maastricht treaty and in Ireland with the Nice treaty. It happened on the constitutional treaty. When the French and the Dutch voted that down, it was brought back under the cloak of the Lisbon treaty with a rather unsavoury démarche which allowed the then Government to pretend that it was not the same thing at all as the constitutional treaty. Yet a stinkweed by any other name still smells as foul. This constant backsliding, weaving, dodging and bobbing and ducking are what have given the European Union a bad name. Several speakers made the same point on the amendments that we discussed this afternoon: that there is a very prevalent distrust of the EU in this country, and not only in this country but throughout the European Union now.

In many of his remarks during both Committee and Report, the noble Lord, Lord Howell, has repeatedly underlined that the purpose of this Bill is to reduce the distrust of the British people in the institutions of the EU and in the way that the Government deal with EU matters and directives which have, so far, gone through without any influence by the people of this country. The amendment really should be there to reassure those people that if they vote in a referendum under

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this Bill, it will not be interfered with again by a Government, who may be more manipulative than this one, for at least three years. That is helpful to the Government and I hope that they will take it in that spirit. I beg to move.

Lord Deben: My Lords, I find this a fascinating amendment because those of us who are opposed to referenda in any case are now presented with somebody who is in favour of a referendum but does not want to have it when it is inconvenient. This is a most peculiar amendment. I think that referenda are always wrong in a parliamentary democracy and I have always stood by that. I have never changed my view from that and I am not changing it now, but if we are to have a referendum, the concept that we must not have one except in three years' time, irrespective of what the public think, seems a most peculiar argument. To complain about the fact that in a second referendum people made a different choice seems an odd thing. After all, that was the choice the people made. I think that this is proof of why referenda are not an acceptable way forward, because the truth is that a referendum analyses what people think at a particular moment.

I became opposed to referenda at my father's knee. I remember just after the war he was explaining to his infant son about politics. He said that he remembered the peace pledge. Eleven million people signed the peace pledge and two years later one could not find any of them. Once we got near to the war, they all disappeared. That is the problem with a referendum, because it is an irresponsible act-one is not responsible for the vote that one makes because it is secret and private. Surprisingly enough, I found a number of my constituents who voted one way in the referendum we had about remaining in the European Union and who within two or three years decided they had really voted the other way. I gave them the benefit of the doubt and felt that they had mistaken themselves, but if one is going to have a referendum, one has to have it without strings.

The noble Lord is presenting something that gives the lie to the whole referendum argument. People who want referenda want referenda because they want a particular response. That is why they want them. They want it because they think it will produce a particular answer of which they approve. When they find that there is a possibility that it might not produce that, they want rules to make sure that the public cannot have another go. I beg your Lordships' House to accept that if we are going to have referenda, we had better have them on a fair deal and not on the basis that we restrict them in case the public possibly take a different view the second time.

Baroness Brinton: My Lords, I cannot really follow the points of the noble Lord, Lord Deben, on referenda. I disagree with his initial argument, but I support the principle about the people having their say, whether one agrees with it or not. I find it understandable that the noble Lord, Lord Willoughby de Broke, proposed the amendment, given the frustrations that he and his colleagues clearly feel about both the Irish and Danish referendums on treaties in the past, but it seems to me that there are two reasons to oppose the amendment.



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In Committee, the Minister made the valid point that it would be very unlikely that two successive referendums would be called, not least for the important political reason that it would be likely to cost the Government of the day dear-assuming that it were the same Government-with a cynical public punishing them for so doing. Secondly, the Bill is not a crystal ball attempting to predict the future, no matter how much the noble Lord would wish it so. The Bill must allow for flexibility for a future Government and this amendment would tie their hands.

There are checks and balances within the Bill: a second referendum would require a second Act of Parliament with the detailed and appropriate scrutiny that comes with that-and that is before the Government of the day would have to start convincing the public of the need for that second referendum. There might be rare circumstances in which a second referendum were relevant-the checks and balances that I have outlined will force politicians and the public to think carefully about returning down the road of another referendum. To ban it completely for three years, or even five, as we looked at in Committee, removes that option for those circumstances which, though rare, are not impossible. There might be changes to the treaty that significantly benefited our country and other member states, which it might therefore be appropriate to consider. Or there might be a financial crisis in the eurozone-as there has been recently-in which the circumstances have so substantially changed that it might be appropriate to go back for a second referendum.

To conclude, the amendment seeks to remove the flexibility and the voice of Parliament and the people should there be a rare but necessary need to consider a second referendum.

Lord Hamilton of Epsom: My Lords, I very much sympathise with my noble friend Lady Brinton because it is unlikely that any Government would be brave enough to hold another referendum on the same subject when the country had made it quite clear that it did not want the measure put forward originally. However, to turn to the distaste of referenda generally expressed by my noble friend Lord Deben, presumably that distaste is slightly tempered by the referendum confirming our membership of the European Union. Let us face it, this referendum was put forward by Harold Wilson to solve a problem that he had within his own Labour party and settle the issue for good. Many people-I am one of them-voted in favour of our remaining in the European Union and it seemed to settle the issue for some time after that.

Lord Deben: I was opposed to that referendum, as I have always been opposed to referenda. I am absolutely consistent on that matter, whether they were favourable or unfavourable.

Lord Hamilton of Epsom: My noble friend prides himself on his consistency, but that decision put the issue to bed at the time. That would seem to have certain advantages that he does not acknowledge in any way.



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Lord Stoddart of Swindon: My Lords, I supported this amendment in Committee and we had quite a good debate about it. I am not going to repeat everything that I said at that stage but I want to say a couple of things. First, I regret that the noble Lord, Lord Willoughby de Broke, has reduced the amount of time from five years to three.

Secondly, second referendums have been quite common in Europe. When Governments do not like an outcome, they are quite prepared to hold a second referendum in order to get it changed. Second referendums per se are perfectly logical and legitimate in the European Union. Surely we should not arrive at the decision that once a referendum has been held on anything there should be no second referendum. That would be quite absurd. It would bring Governments in particular into disrepute, because it is usually they who call for second referendums, if they said to the electorate, "You have voted but I'm afraid we don't like what you have told us. We must therefore ask you to vote again, and indeed again, until you provide the right answer for the Government".

Lord Liddle: My Lords, the Opposition cannot support the amendment. The reasons why many have spoken against it are very true. I agree with what the noble Baroness, Lady Brinton, had to say. I agree with the noble Lord, Lord Hamilton, that in our political culture a precise repeat referendum would be extremely unlikely. However, we should not tie our hands. As the noble Lord, Lord Deben, said, you vote under a particular set of circumstances but circumstances can change at remarkable speed. We do not need these kinds of constraints on our politics.

Lord Wallace of Saltaire: My Lords, this is the second time that we have examined an amendment of this nature. It did not find much sympathy around the Chamber in Committee and it has not found much more now. The amendment stipulates a lesser period of three years rather than the original five but the principle remains the same.


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