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Grand Committee

Monday, 3 June 2013.

3.30 pm

Licensing Act 2003 (Descriptions of Entertainment) (Amendment) Order 2013

Licensing Act 2003 (Descriptions of Entertainment) (Amendment) Order 2013

Considered in Grand Committee

Moved by Lord Gardiner of Kimble

That the Grand Committee do report to the House that it has considered the Licensing Act 2003 (Descriptions of Entertainment) (Amendment) Order 2013.

Relevant document: 1st Report from the Joint Committee on Statutory Instruments.

Lord Gardiner of Kimble: My Lords, in 2011 the Government launched a consultation that examined the regulatory regime for entertainment licensing under the Licensing Act 2003. The consultation looked at removing any regulation that unnecessarily restricted creativity, community expression, sporting participation and economic growth. The Government listened carefully to the views received through the consultation and we announced our new policy in the other place on 7 January this year and in this House on 8 January, taking information received through the consultation into careful account.

The order before us today provides the first element of the reform package, which has been widely welcomed by the creative, community and charitable sectors. It addresses reforms to the areas of performance of plays, exhibitions of dance and indoor sport.

In the Government’s response to the consultation, we explained that there was a general consensus that these three areas could be deregulated as there was nothing intrinsic to these activities that required regulation that is not already adequately dealt with through other legislation. The Government listened carefully to the views in the consultation that asked for an end point to performance and that large events were not deregulated. These two key points have been addressed in the new policy and were set out in the Written Statement of 7 and 8 January.

The order before us is therefore relatively straightforward. It removes the need between 8 am and 11 pm for licences for public performances of plays, exhibitions of dance and indoor sport up to a reasonable audience cap of 500 people for plays and dance and 1,000 people for indoor sport. Where any of these activities involve the supply of alcohol, licensing requirements for such sales will continue to apply.

We see no reason why plays, dance and indoor sport, which are so often run by local community groups or charities, should need a licence. The Government have received many representations about harmless public performances that have been needlessly disrupted under the 2003 Act. For instance, Punch and Judy shows have been regarded as a performance of a play and therefore subjected to unnecessary bureaucracy,

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school plays have been cancelled and community dance performances have been hindered. This order will help to bring common sense to the licensing framework for local events and should remove some of the costs and bureaucracy that sap the will of volunteers and soak up often scarce financial resources.

It is interesting that the Voluntary Arts Network said of the proposed measures:

“The … burden of entertainment licensing … has in recent years been a major obstacle to voluntary arts groups putting on small local events and performances. The complexity and cost of regulation intended for much larger-scale events has had a detrimental effect on the tens of thousands of volunteers who give up their own free time for the benefit of their communities”.

Arts Council England said:

“As a result of de-regulation, small companies and artists will be better placed to develop and present their work ... Small venues will also be more disposed to support plays”.

The Government chose the limit of 500 people for plays and dance performances as the existing limit for temporary event notices is 499 under the 2003 Act. This limit has for many years had no mechanism for additional controls on events and, indeed, very few problems have occurred. For indoor sports a higher audience cap of 1,000 people was chosen, as most venues that host public sports activities are held in purpose-built arenas and the events are usually developed in partnership with the local authorities.

Many licensing authorities told us that their only action on indoor sport was to regulate swimming galas held in local council swimming pools, which are already clearly regulated by, and subject to, ongoing risk assessment under health and safety law. This is clearly a case of regulating the same subject twice.

This order also clarifies that where a contest or exhibition combines boxing or wrestling, which will remain licensable, with one or more martial arts to create a combined fighting sport, this activity is licensable as a boxing or wrestling activity. The Government wanted absolute clarity on this point in the context of removing regulation on indoor sporting events. It is right that boxing and wrestling activities should stay regulated, and responses to the Government’s consultation were fully in support of this policy.

This is a sensible deregulation of activities that should not have been caught by the Licensing Act. The Government’s view is that safeguards put in place under alcohol controls, planning law, fire, health and safety and other legislation such as the Theatres Act means that it makes sense to remove these activities from regulation. The removal of this cost and bureaucracy from community life will play a part in helping to sustain cultural and sporting activities in England and Wales.

Lord Clement-Jones: I thank my noble friend the Minister for that introduction to the SI. As he will be aware, I am in general a strong supporter of arts and entertainment deregulation. A little over a year ago we were celebrating the success of a five-year campaign to deregulate the performance of live music in small venues under the Licensing Act, dating back to the recommendations of the Live Music Forum of 2007 with the passing of the Live Music Act. That success

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was a tribute to a great many individuals, and not least to the strong co-operation between the DCMS itself and Ministers and officials.

UK Music, which with help from the Musicians’ Union and others helped to push through the Live Music Act, believes that the new legislation has the potential to create a major economic impact, with thousands of musicians who can add to the £1.5 billion currently earned by the live music sector. I was delighted that the MU published a live music kit when the Act came into force that is a comprehensive guide to hosting and promoting live music.

The key now is to ensure that there is an accurate way to measure the economic and creative impact of the new Act. Research commissioned by UK Music will help to provide some of these answers. The creative and artistic benefits of the new Act will take time to work through the system, but I hope that in a year or so no one who loves music, and live music in particular, will be able to argue that deregulating the performance of live music has been anything but good for the grass-roots scene, and indeed for the community as a whole. I very much hope, therefore, that the same will be true in other areas of deregulation of entertainment.

While the Live Music Bill was going through, as the Minister has explained the Government themselves published their own deregulation proposals in September 2011. The proposal was to deregulate all regulated entertainment of a similar description to live music, recorded music or dance and entertainment before audiences of over 5,000, except boxing, wrestling and adult entertainment. That meant that between 8 am and 11 pm most performances of a play, exhibitions of a film, indoor sporting events and so on would be exempt from Licensing Act regulation. The aim of the proposals, in the words of the consultation, was to,

“improve the quality of life for all through cultural and sporting activities, support the pursuit of excellence, and champion the tourism, creative and leisure industries”.

Those are all extremely important aims.

In seeking to reduce the overall burden of regulation faced by smaller organisations, the Government also wished to encourage the performance of music, dance and sport and to encourage community creativity and expression—all much to be desired. In most cases, as the Minister said today, the consultation rightly asserted that adequate protections against potential problems were already provided by existing legislation, such as the Environmental Protection Act 1990, the Anti-social Behaviour Act 2003 and the Noise Act 1996. As the Minister also stated, licence conditions would still apply and be used for premises licensed to sell alcohol. The threat and use of review powers under the Licensing Act 2003 will provide sufficient protection to communities.

The consultation sought views on the proposed regulation of capacity under 500, but mentioned that the police preferred a 499 limit. We all recognised that these were, to say the least, very radical deregulatory proposals. If implemented they would have had a significant effect and in some cases unintended

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consequences. Although I am in favour generally of deregulation, I am glad to say that rather less radical views prevailed. Following the end of the consultation, as my noble friend said, the Government, in January 2013, published their response and proposals. They proposed deregulating these events between 8 am and 11 pm for those hosted by local authorities and educational establishments, and for others, in the case of an audience of up to 500, except for indoor sporting events, where the audience is limited to 1,000, and films, where partial regulation will continue to ensure age classification.

As the Minister described, I am delighted that we now have before us the draft SI, which implements that proposal, which I wholly support. However, clearly the DCMS is still not a boxing, martial arts or wrestling fan—they remain regulated. Greco-Roman wrestling at first was going to be exempt but now seems caught up in continuing regulation. Is that correct? Can the Minister give the Committee some explanatory background to this distinction?

The consultation response in January also said that the audience limit for exemptions under the Live Music Act will be raised to 500, which was great news. I hope my noble friend can tell us when we can expect that change to be introduced and what mechanism will be used to effect the change in the provisions of the Live Music Act. What other consequential changes arising from the policy announcement in January will need to be made and by what mechanism will they be made? I look forward to the Minister’s reply.

Baroness Jones of Whitchurch: My Lords, I thank the Minister for his very helpful explanation of the background to this order. I also make it clear from the outset that we very much support the intention set out in the order. The local licensing of community arts, sports and music events has been too complicated for far too long. That is why we were also pleased to support the Private Member’s Bill of the noble Lord, Lord Clement-Jones. I am pleased to be able to commend him in person on his move.

There is no doubt at all that the Live Music Act sent a strong message of encouragement to local artists and musicians who were finding it impossible to find a venue to perform in and that it has gone a great way to alleviate that problem. However, that highlights the fact that this order tackles only a small part of a complicated local licensing arrangement that has made life difficult for performers and community organisations alike.

Obviously, by its very nature, secondary legislation tends to be implemented on a rather piecemeal basis, but it would be helpful to know how this fits into the grander plan to update the licensing laws and the rules governing local live performances, building perhaps on the question asked by the noble Lord, Lord Clement-Jones. Can the Minister shed a little more light on the review of film performances, which are not included in this order but which I understand are still under consideration? In other words, can the Minister clarify what further measures will be presented before this House in due course as part of the bigger review of the licensing arrangements and where the details of that can be found?

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3.45 pm

Having said that, within the limits of their scope we believe that the proposals strike the right balance between facilitating more live community arts performance on the one hand and wider public safeguarding and protection on the other. We believe that the timeframe of 8 am to 11 pm is about right, as is the size limit of 500 people. This should more than adequately cover the attendance expectations of most local events, particularly those organised by volunteers, who found the existing licensing rules particularly onerous.

The impact assessment quite rightly identifies the main areas of risk as public safety and noise pollution, and these cannot be ignored. In particular, outside events featuring overamplified live music could become a real noise nuisance to local residents, so local councils and the police will need to be alive to the separate regulations already governing noise complaints. It is not clear from the changes how the police and local councils would receive early warning of a proposed event if the licensing laws are changed in the way that we have been discussing. Without prior knowledge, it is hard to know how they would be aware that an event is taking place so that they could police it rather than waiting for complaints to come in after the event. Perhaps the Minister will shed more light on this.

I accept the premise of the impact assessment that the worst culprits are likely to be events selling alcohol, which remain unaffected by the relaxation of these rules. That is why we welcome the intention to review the implementation of the regulations and pick up any unintended consequences within a sensible timeframe.

The rules regarding community events can be unexpectedly fraught and contentious. I have no doubt that previous Governments thought that they were addressing real local issues when they introduced the licensing Acts in the first place. It is not a perfect science, and we need to keep the arrangements under review, but it is right that we support these changes at this time, and I hope that they will provide new opportunities for local culture to thrive.

Lord Gardiner of Kimble: My Lords, we have had a short but excellent debate on the value of this order and the issues involved. Before I address the points that have been made, I want to place on record the Government’s thanks to all those who responded to the consultation on this issue, which contributed extremely positively to the order we are discussing.

I am most grateful for the support expressed by the noble Baroness, Lady Jones of Whitchurch, and my noble friend Lord Clement-Jones, because common sense has prevailed and we have removed needless bureaucracy. The noble Baroness mentioned a grander plan and a bigger review. This is part of the beginning of a phase. There will be three phases. In January this year, the Government published a full government response to the consultation on regulated entertainment reform. Copies of the document with the full details of the proposed policies can be found on the YouGov website and are available in the Libraries of both Houses.

Today is the first phase. There will be a second phase with a range of exemptions around music and community premises—schools, for instance. In answer

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to the question asked by my noble friend Lord Clement-Jones, we think that the second phase of consideration is the best place to deregulate the low-risk Olympic disciplines of freestyle and Greco-Roman wrestling. The third phase relates to film, and the Government intend to consult on measures to aid film exhibition in community venues in the near future. I am told that I can say that this consultation will be in “coming months”, so I hope we will make good progress on it.

The other point made by the noble Baroness, Lady Jones of Whitchurch, was about receiving an early warning. The key feature of the events proposed for deregulation is that we do not believe that their low risk would cause a problem. We fully expect events organisers to work closely with local authorities and we think that a formal notification process is not proportionate for such events. We will be keeping those matters monitored.

I shall also deal with the points raised by my noble friend Lord Clement-Jones, but before doing so it is appropriate that I again place a tribute on record. My noble friend generously mentioned many others who helped in the successful passage of the Live Music Act, but he has been and continues to be a staunch proponent of the creative industries. He rightly mentioned the deregulation of other areas while at the same time protecting communities. If there are any outstanding points that I have not covered, I will of course write to noble Lords, but in the mean time I commend the Motion.

Motion agreed.

EUC Report: EU External Action Service

Motion to Take Note

3.52 pm

Moved by Lord Teverson

That the Grand Committee takes note of the report of the European Union Committee on the EU’s External Action Service.

Lord Teverson: My Lords, since I have been chair of the External Affairs Committee and its predecessors, we have been concerned that the committee should look at things that are practical and where we can make a difference. I, and I am sure my fellow committee members, like to think that we made a difference in our report on Afghanistan EUPOL and on Somali piracy, and perhaps even in our larger report about relations between the EU and China. We took on as our most recent subject the European External Action Service, which is coming up to its two-year review later this year—I think it is expected to take off in July, the month after next—because we wanted to ensure as a House, as one of the key institutions that looks at European affairs in the United Kingdom, let alone as part of this Parliament, that we could put our opinions into that process. That is why we foreshortened our report and issued it relatively quickly to the Government: so that it could be part of those discussions. Having said that, it is probably one of our more politically charged reports and one in which there was a greater

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diversity of opinion within the sub-committee. That, I am sure—and I welcome it—will come out in the debate this afternoon.

The External Action Service is quite a difficult area for discussion. It is only two years old. Sources vary over the question of when it was started; some say it was December 2010 and others January 2011. In many ways it was invented out of the Kissinger question, “Who do I phone for Europe?”. The whole debate about a unified voice for Europe is one reason why it was in the Lisbon treaty, but by that time it was not the European Foreign Ministry that it was perhaps originally meant to be; rather, it became the high representative and an institution to support her in her work. I will come back to that.

The noble Baroness, Lady Ashton of Upholland, who was appointed to the EAS, is well respected and liked within the House but was hardly known throughout Europe and therefore had a very low-profile start. Being British, or at least being a British commissioner because she has that hat as well, has perhaps made her position even more nuanced and difficult in certain areas. At its start, the EAS was trying to give Europe its true voice all around, in Europe and in the much broader world. Then the eurozone crisis came along and, however good and unified we wanted to make Europe sound, the real noise at the forefront was around Europe’s failures in many ways to make decisions about its own currency and economy. Then there is the vagueness of the task. Nothing in the Lisbon treaty really says what the External Action Service should do except be of assistance to the high representative, and even there the job description is somewhat vague.

How do we describe the External Action Service? It is not an official institution; it is not really a part of the Council, certainly not part of the Commission and absolutely not part of the European Parliament. Then we come to the question of whether Europe really has a foreign policy worth the name. My own view is—and the work that we did on looking at that demonstrates—that it very much does. The European Union makes pronouncements on foreign policy that are often joined by 11 other nation states around Europe that combine with the European member states to make policy decisions. We have to agree, though, that on occasions, and in some of the most important areas such as the Middle East perhaps, Europe does not agree at all.

To all this we have to add a number of other areas. There is the question of large versus small state; not only Germany but France and the United Kingdom stride the globe with our hundreds of years of diplomatic experience, and we are very jealous of that, particularly in France and the UK. Yet we also have small member states that have perhaps only 40 embassies abroad at all, many of those within the European Union. It is questionable whether they even have a foreign policy at all.

To all this we add the fact that the EAS was being set up while it was being run; that there were three cultures among the staff who came from the Commission, from the Council and from national diplomatic corps, which inevitably caused turf wars, let alone culture wars; and that the high representative’s job is often

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seen as being impossible as they wear three hats: the hat of the high representative, the hat of the vice-president of the Commission and the hat of the chair of the Foreign Affairs Council.

We come down to the fundamental question which this report does not really answer. At some point someone might have to make up their mind about this. Is the External Action Service supposed to be a world-class foreign office and diplomatic corps of a supranational quasi-state called Europe, or is it there just to add diplomatic value to the traditional Commission tasks of trade and development? I leave Members to make their own choice, but in the longer term that is what will drive not this review but reviews in the future.

I shall give the Committee one or two facts. The EAS budget is €500 million—nothing to be sniffed at, but that is only 0.4%, or in effect one-third of 1%, of the European Union’s budget. The EAS has 141 delegations abroad; it started with 136 but has combined some and opened others in places such as South Sudan, which I am sure we would agree with in that instance. It has about 3,400 staff altogether.

This organisation is significant and important, but what are the headlines in relation to what should happen in this review? I shall go through them very quickly because other noble Lords will go through them in detail in their speeches. Budget neutrality was supposed to be achieved, and in times of economic difficulty in Europe we believe that that should be maintained. The only way that can be done is by prioritising, but that is very difficult with such a large agenda. It should concern the emerging powers such as China, India and perhaps Brazil, and it should concern our local neighbourhood in the east and the south. A lot of the EAS’s time has been taken up by the Arab spring and neighbourhood questions. It should also perhaps be a priority in crisis management. We have seen examples of that in Somalia, the Horn of Africa and Mali.

The turf war between the Commission’s and the External Action Service’s core staff, the diplomatic staff, must end. We believe that that situation is much better, but it has to improve and be resolved in the near future. We need to think anew. We should not be bound by the geographical locations of existing missions. We have to think about the future rather than the inheritance of the past. We believe that as foreign policy is primarily intergovernmental, the EAS’s annual report should be presented to each of the national parliaments. Clearly, that has to be done in a sensible way so that we can formally respond to the External Action Service’s work each year and feed back into it as an intergovernmental area of EU policy.

Over the next few years, it is fundamental that the EAS concentrates on adding diplomatic value to the strong work undertaken in trade and development. At the end of the day, one of the key issues that we in Britain have to look at is the large versus small state issue. Three ambassadors of smaller member states—Lithuania, Slovenia and Slovakia—were witnesses, and in those states there was a completely different view from perhaps that of French parliamentarians about the role of the EAS. The small member states—this

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was confirmed to me when I was in Estonia last week—see the EAS as part of the European deal, part of their membership, part of what they are, and they expect it to respond to their needs. They do not have the resources for a worldwide presence, and they see the External Action Service as a way of having that. In a Europe where the United Kingdom, and perhaps France these days, has to look for strong allies among all states, I say to our Government that this is one area where they have to take care in their views about the External Action Service in the future. It is easier for us with larger budgets and a larger presence to see the EAS as something that perhaps threatens certain national representation abroad, but to smaller member states it is a way forward and a way to a global and much more visible presence abroad. We need to find a way to drive both of those agendas forward. I beg to move.

4.03 pm

Lord Lamont of Lerwick: My Lords, I thank the noble Lord, Lord Teverson not just for the way in which he chaired our inquiry into the European External Action Service but for all the work that he has done for the committee. He has been a very open-minded but firm chairman, and we had some extremely interesting sessions thanks to his very firm leadership.

I also thank our clerk, Kathryn Colvin, and researchers, Roshani Palamakumbura and Edward Bolton, for all their hard work.

I was a little confused about who would reply for the Government in this debate. I read in the newspaper that my noble friend Lady Warsi had escaped from the entertainment in the Chamber and so I was not surprised to find her name on the list here, but now she seems to have been replaced, not just in the Chamber but in this Room, by the noble Lord, Lord Wallace of Saltaire. If what I read in the newspapers was correct, the noble Lord had some nostalgic recollections over the weekend, as I think he sang at the Queen’s coronation over the road. Anyway, we are delighted that he is answering on behalf of the Government today.

I am not sure that it is appropriate that I should be the first representative of the committee to speak after the chairman. Mind you, not many members of the committee are present at this moment. I was hesitant about being the first because, although I think I was the first person to suggest an inquiry into this subject, I do not think that my views in the committee were representative of the committee as a whole. I was certainly sceptical about the EAS at the beginning of the inquiry, and I have to say that after all the discussions and all the evidence that we had I remain very sceptical about it.

I say that without in any way implying any criticism of the noble Baroness, Lady Ashton, who I think has been in a difficult situation and has done a very good job. Nor do I imply any criticism or make any attempt to diminish the importance of the aid work that goes on through the legations and the embassies. The focus of my scepticism and criticism is much more on the network of offices and embassies throughout the world. It seems to me to be a bureaucracy that has been brought into being before anyone has decided precisely what it is meant to do.

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An awful lot of the evidence that appeared before the committee seemed to be self-justification. I should not speak for other members of the committee, but listening to some of their questions I got the impression that some of them could not work out what the EAS was meant to be doing either. That, I think, is reflected in our conclusion on page 1 of the report, that,

“the EEAS encountered uncertainties about what the Member States wanted it to do”.

On page 2, the report states:

“Member States should clarify what they want the EEAS to do”.

I suggest that it would have been rather better, before we decided to spend around €500 million a year, to have decided what we wanted it to do. As I say, a number of witnesses who appeared before the committee out of choice seemed astonishingly unable to define what the EAS was for or what it was meant to do.

The basic problem, of course, is that there is no single foreign policy of the EU as such. On Iraq, Syria, Libya, Cuba, Kosovo, and trade and energy issues with Russia, despite the achievements of the noble Baroness, Lady Ashton, in recent weeks, there is no agreed line. One or two witnesses attempted to imply that Europe had been a major actor in what had happened in Egypt. Well, it spent a lot of money in Egypt and made a number of representations, but I have met no one from Egypt who believes that the European Union has had a big impact there. I also followed up on claims that were made for the extraordinary influence of the EAS in the Yemen by asking various Yemeni people I met whether they were aware of it. I found little awareness, if any. Where in European foreign policy there is an agreed line, I cannot see why that cannot be communicated diplomatically, if it needs to be, through the embassies of Germany, France, Italy and other countries. I cannot see what the European embassies can do on the ground that cannot be done by the national embassies, certainly of the major countries.

In a previous EU committee session, we had evidence from the prospective EU ambassador to China. I asked him what he thought he could do that could not be done by the German embassy, the French embassy or the Italian embassy. He said, “We, much more than them, are going to major on human rights and place all the emphasis on those rights”. I do not think that will get him a long way in raising the profile of the EU in China.

Under the Lisbon treaty, foreign policy remains largely under the control of member states. Having looked at this, and presumably thought about it, the committee’s recommendation, on page 10, was that it should remain so. Also on page 10, the report states:

“The EEAS should not … seek to project its own foreign policy”.

In that sense, the question “What is the telephone number for Europe?” is not the right one. There are telephone numbers for the different major actors, and it is unreal to think that there should be a single telephone number on all questions for Europe.

On page 31, following the logic that foreign policy is the prerogative of member states, the report states:

“The scrutiny role of the European Parliament should not go beyond its current level”.

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Members of the committee who went on the visit to the European Parliament and heard Elmar Brok speaking on this subject there have no doubt that it is the ambition of Mr Brok and other members of the European Parliament that it should play a major role in directing European foreign policy.

There are 141 delegations around the world. At the time of our report there were 1,922 EAS staff plus 3,514 commission staff, making a total of 5,436 people around the world. There is quite generous staffing in places. There are 44 people in Barbados, 32 in Mozambique and 30 in Uruguay. The EU is represented in 11 Pacific island countries, including the Cook Islands, Micronesia, Fiji, Kiribati, the Marshall Islands and lots of others. A point made very clearly in the report and echoed by the noble Lord, Lord Teverson, in his speech was that the location of offices ought to be determined not by history but by what is in the best interests of the European Union and what is likely to contribute most to the solution of real problems. What the noble Lord and the report say about reviewing the offices and their location makes a lot of sense.

The report was, if anything, rather lenient on the failure of the EAS to achieve budget neutrality. It is not an excuse to say that it is a young organisation. It was set up on the strict condition that there should be budget neutrality—you take money from one pot, and you put it in another—but we have had a litany of all the familiar excuses, which will be familiar to anyone who has ever been in the Treasury, about what had been inherited and the difficulty of the current climate. In the current climate, in which austerity and budget cuts have been in place all over the EU, it is very regrettable that there was a failure to achieve budget neutrality, and I strongly endorse the report’s conclusion that there should be zero real increases in expenditure in future.

It was unfortunate that the report did not go further into salaries. We had a firm statement from Mr Shorter of the office of the Minister for Europe that salaries are very high by national standards. Another witness described them as outrageous profligacy, and another as a ridiculous amount of money. Certainly, they seem to be higher than national salaries. In the report, the argument was made that it is difficult to make precise comparisons, but it would have been better had we looked at this rather earlier in our inquiry and gone somewhat deeper.

Particularly singled out for criticism were the salaries of the 11 special representatives dealing with certain crisis areas and certain geographical areas of crisis. It was said to us that several of those special representatives have salaries higher than that of the Secretary-General of the United Nations. It was argued that high salaries were necessary in order to get figures of genuine international standing, but I think that only three out of the 11 special representatives have actually gone to people who were not former officials. Only three have gone to people who are former Ministers, for example. We have a lot of distinguished people here. Perhaps they could be considered for some of the special representatives in future.

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Again, I emphasise that my criticism is largely directed at the physical network. We heard several witnesses, and one extremely senior one in private, say that the delegations in Brazil and in India, the so-called strategic partners, have had no impact on that relationship or on changing it. The lady witness from the WTO said that the EAS had no noticeable impact on trade negotiations and that the cards and the brass plates on the tables had changed but the method of working and the negotiations methods had not changed at all.

One justification that was put forward for the network of offices was that one needed to see trade in a political context. I remain sceptical about that. Of course one needs to know the political motivation and the local context in which people have a particular view on a particular trade issue. However, that is easily ascertainable through national embassies, or indeed through reading newspapers. One has to distinguish between trade policy and trade promotion. Sometimes in the arguments that were put forward, trade promotion was confused with trade policy. In trade policy, the EU definitely has a valuable role: in trade promotion, I would say hardly at all, although I do not think that that was clear in all the statements that were made before the committee.

The EAS exists, and we have to make the best of it. I agree with the points that the noble Lord, Lord Teverson, made about training and secondment. I have to say that I was somewhat disappointed by the Government’s reply to the report, and I wonder whether it really said what the people in the Foreign Office actually say in their heart of hearts about the EAS. It does not explain away the number of ambassadors—I shall not name them—who, late at night over a glass of whisky, have asked me “What does this thing actually do? What is its purpose? What is it for?”. It seems to me that the logic that we are going with is that we should actually start considering closing down some British embassies just as we start expanding the EAS network, but of course the Foreign Office would never dream of agreeing to that.

4.18 pm

Baroness Coussins: My Lords, I am one of those soon to have the privilege of joining Sub-Committee C, and I read this report with great interest. My observations and comments focus on two of my particular interests: relations between the EU and Latin America, or Europe and Latin America, and languages.

First, it struck me that some of the report’s recommendations are a good fit with the active and strategic approach that Her Majesty’s Government have demonstrated in relation to Latin America. I hope that the Government can be proactive in promoting a similar sense and level of engagement with Latin America through its membership of the EU and through the EAS in particular. The Foreign Secretary himself has said that Latin America is a region,

“which nobody can afford to ignore”,

and that it is,

“playing a central role in tackling pressing international issues from climate change to the economic crisis, and from the Arab Spring to international development”.

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Forging closer links with Latin America is also important for the UK’s own economic growth. I struggled to find any reference to Latin America in the report other than Brazil. I found one fleeting reference to Guatemala but I think that was it. It is important to remember that Latin America is not only Brazil. For example, Peru recorded growth of 6.2% last year and in the last month has become the latest signatory to the EU-Andean free trade agreement, so when the report recommends, and the Government agree in their official response, that the EAS should prioritise relations with emerging powers, I urge all concerned to remember that that term should include Latin America as a whole and should not be focused only on Africa, Asia and the Middle East.

This would not only be in the interests of trade, where, as the report says, the EAS can add value with an overall strategic role to bring a diplomatic perspective, but it is also highly relevant to the recommendation in the report about furthering the EU’s human rights principles. Several Latin American countries—I highlight Colombia—are in post-conflict periods where the leadership of the UK and the EU in promoting human rights’ values in both civilian and corporate life could make a critical difference in areas ranging from the treatment of indigenous communities to the ending of the normalisation of sexual violence against women. Does the Minister agree that the EU needs to be in strategic partnership with more countries in the Latin American region than Brazil alone, and what might the UK Government do to encourage this through the EAS?

As to my second interest, part of the necessary wherewithal to build relationships in Latin America and with most other places on the planet is the linguistic competence to make contacts, build bridges, understand other cultures, participate and earn respect. English, of course, is absolutely vital, and we are very lucky to be native English speakers, but it is not enough in a world where, surprisingly, only 6% of people are native English speakers and 75% of the people on planet Earth speak no English at all.

The report makes the important recommendation that greater attention be given to training for EAS staff, including in languages, and it notes in particular that more Arabic speakers are needed. Professor Whitman of the University of Kent, in his evidence to the committee, put it more strongly still, saying that languages and regional competencies were crucial issues in training. I want to ensure that this recommendation does not get lost or overlooked as a small administrative detail, overshadowed by the bigger picture of emerging powers, security and human rights, because language skills are crucial to securing progress in all these matters.

The report tells us that the EAS says that UK nationals are strongly represented on the EAS staff at all levels. However, on looking at the numbers, I am not sure that that claim is very convincing. The proportion of UK nationals certainly does not reflect the UK population as a proportion of the EU. There may be many reasons for this but one significant contributory factor is the lack of language skills. The Foreign and Commonwealth Office has noted that a shortage of

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British staff in international institutions is detrimental to the national interest and undermines our policy influence.

UK nationals make up only 5% of the European Civil Service, although we account for more than 12% of the population. In 2011, a mere 2.6% of applicants were from the UK, fewer than any other member state. A key reason for this was that English-speaking applicants must offer either French or German as a second language. I appreciate that the Foreign Office is now trying harder than ever before to turn this around and has already recognised the importance of languages in diplomacy by increasing its budget for language training and the number of posts for which languages are now deemed to be an absolute requirement.

The Government’s response to the committee’s report agrees that EAS staff should be given what they call “hard language training”. I am not sure whether that means difficult training or training in difficult languages, but either way I ask the Minister, in the light of this new commitment to languages, how the Government might directly assist the EAS in achieving its language training needs in ways that could be defined as “in kind support”, rather than further direct budgetary contributions, which both the report and the Government’s response agree must be avoided.

The government response says that they are working to promote the EAS as a career option for talented UK officials. I would like to know how language training plays a part in that effort. In particular, there is no doubt that we need significantly to increase the number of UK nationals who can offer Arabic and Mandarin. The few we have are like gold dust. As I have heard anecdotally from officials at DG Translation in London and Brussels, these few are subject to being ruthlessly poached from agency to agency all the time, which might well add to the turf-war mentality identified in the report, which certainly needs to be overcome if all the relevant agencies are to be able to work and achieve to their full potential.

It can be taken as read from my earlier remarks that the importance of Spanish and Portuguese should also be taken on board by any would-be EAS staff, and indeed any businesses with an export eye on Latin America. Thinking about the supply chain for linguists and practical ways in which the Government could help to implement the recommendations of the committee’s report, will the Minister discuss with ministerial colleagues responsible for higher education in BIS to see what more can be done to halt the decline of applications to university for language degrees, whether in hard or soft languages, and to encourage more of those who graduate as linguists, or as anything else with a language, to consider careers in the EAS and related institutions?

4.26 pm

The Lord Bishop of Derby: My Lords, I add my thanks to the noble Lord, Lord Teverson, and his colleagues for producing this report. One of the subtexts of this is: what is the report about, and what are we trying to achieve?

I am fascinated by language, particularly some of the language developed in this world such as “High Representative”. I know about high priests, but high

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representative is a very interesting concept. Perhaps that is something to be pursued, although I do not want to do that now.

The main language point that I want to pursue now is the word “action” in the title of the External Action Service. The Committee might know that when the UK was thinking about a closer relationship with Europe all those years ago, the matter was discussed in the General Synod of the Church of England. People were in favour of a more formal relationship, but only if it meant that Europe would be outward-looking. Rather than a club just to preserve its own well-being, because of historical links and commitments it would be outward-facing to Latin America and to all kinds of other Commonwealth contacts. That is one of the agenda issues for which presumably the EAS was created: to help Europe to be outward-looking in an effective way.

The question is: is the EAS the right vehicle for that, and how well is it performing? From the report, it is clear that there have been some massive challenges. It talks about China, the Arab spring and Brazil. The report is full of the organisational issues, as the noble Lord, Lord Lamont, has said, and questions about its identity—what it is and how it works—rather than action going outward. Given that this identity crisis and all the debates about budget and salaries coincide with the economic pressures within Europe, I suspect that there is an enormous temptation for this particular animal to become more and more inward-looking and to take action to order and organise itself and get its salaries right, whereas what Europe desperately needs is a proper structure for looking outward. The report raises the question of whether the EAS is the right one.

I want to talk about one area where Europe needs to look outward with real urgency in our present context, and I invite the Committee and the Minister to comment on how best to achieve this and whether the EAS is the right vehicle for this: the area of human rights and religious freedom. The noble Baroness, Lady Ashton, who is the high representative, recognises that human rights should be like a silver thread going through the work of the service. Members probably know from the background papers that 75% of the world’s population now live in countries where the expression of their religious beliefs is subject to abuse, intimidation and sometimes imprisonment. The threat to religious freedom is becoming more and more of a common feature in all kinds of societies.

Europe has something really powerful in its DNA: religious freedom and human rights. Religious belief is a litmus test for how human beings understand identity, aspiration, relationships with others and all the things that form citizens and help citizens to shape their countries, and it helps countries to relate to each other.

There are three things in the DNA of Europe that we need to turn outwards and offer through diplomacy and foreign policy, which other parts of the world still have much to learn from. The first point about our DNA is this amazing commitment to discussion that came from the Greeks and the Romans. European history has been marked by very radical levels of discussion. Sometimes it gets out of hand and people

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fight wars, trying to short-circuit discussion. This very institution is part of a movement, after a war that happened because the discussion got out of hand, whereby we can have a forum to discuss things better and in a more mature way. That is deep in the DNA of Europe and I think it is one of the things that binds us.

From that Greek and Roman Christian heritage, that discussion has allowed us to identify differences and to look at them together. That is how our politics works and how it works in much of Europe. It is a model of which we should be proud and want to turn out and offer to others. The extent to which we fail to do that means that many countries look at models other than western democracy for their hope and their shaping, whether it is Chinese authoritarian capitalism or whatever. It is very important for us to own what is in our DNA and to seek to turn it out and to offer it in our foreign policy, in our diplomacy and in our trade agreements.

Our DNA is about discussion, a discussion that highlights differences. However, the third thing in our DNA is an amazing tradition of trying to develop together, whether it was the alliances among the Greek city states, the amazing Roman empire that held all those different cultures together, or Christendom across the medieval world, with all those different nations and churches trying to develop together, through discussion.

Those things are very precious to the identity of the European peoples; I think they are in our DNA: discussion, owning the difference and development together. Safeguarding religious freedom allows people to continue to work and Europe needs to get its act together to reflect on and to see how best we can make a common witness through those things and to bat for them through diplomacy and foreign policy and through the various influences that we can have across the globe. We might be losing the initiative of standing for the things that people recognise are good and taking up other alternatives, but I think that would be to the detriment of the human race.

I want to make a plea for what Europe has to offer by an outward turn. The question is: is this the right animal to do that? Could it be shaped and revised in order to give it a high priority, as the noble Baroness, Lady Ashton, implies with her commitment to human rights, or do we have to be bold and try to engage and find another way of making that witness?

I remind fellow Peers that we have that heritage and that DNA, so it is key now that we hang on to it and do not lose our nerve. If we lose our nerve, Europe will become more marginalised and what we hold as precious in our political and religious work will become marginalised too.

4.34 pm

Lord Jopling: My Lords, I begin by following my noble friend Lord Lamont in his tribute to the noble Lord, Lord Teverson, and to our staff for this report. It is a good report. I particularity want to thank publicly my noble friend Lord Teverson, who has been a very distinguished chairman of the committee. I particularly applaud his initiative in introducing, at most of our sittings, maybe an hour when people

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come and brief us from the Foreign Office and beyond. It has been a most advantageous innovation and I congratulate him on that.

My noble friend Lord Lamont said that he was the first of the members of Sub-Committee C to speak. I suppose, looking at the list, that I am the last, because after that we come—I hope they will forgive me—to the “heavies”, who will tell us about their previous Brussels experience. Having thanked the noble Lord, Lord Teverson, I think that all of us on the committee are glad to see my noble friend Lord Tugendhat, who has such good experience with Brussels. I suppose he is another of the heavies. He will be a very worthy successor to the noble Lord, Lord Teverson, and we all welcome him on to the committee. I was not aware that the noble Baroness was going to join our committee until she got up. I am sure we will all welcome her in due course, maybe in three days’ time. If she contributes as she has contributed this afternoon, we have good things in store. It was good to have heard what she had to say.

I was particularly glad that the Government—the Foreign Office—gave broad agreement to the report in their response. There are not many things that they demur from, which is a good thing. It is not our job to follow the government line, and I do not think that any of us on the committee want to do that, but it is good to know, after our deliberations, that the Government find themselves in broad agreement with it. This all rather contrasts with the swathing criticism that came upon the head of the EAS from the European Parliament, which was extremely critical of the service. Reading the European Parliament’s report, I just wondered whether it was not too much coloured by a personality conflict with the noble Baroness, Lady Ashton. Some of its criticism was not justified.

We have to realise that the service is only two years old. However, it is urgent that, at this time, it comes in for a degree of reassessment and regrouping. I am sure we shall find that coming from the current review. Indeed, the timing of our report was very much based on producing it in the early or middle stages of the review of the service, so that our views could be taken into account by those who are carrying out the current review. I hope they will ask all the right questions. My noble friend Lord Lamont raised a good many of those questions, as did the chairman.

In this context, I always remember the question that our old friend Lord Peyton used to ask. I think a number of noble Lords here will remember Lord Peyton of Yeovil, who was a somewhat abrasive character. I worked with John Peyton in opposition many, many years ago. He used to go around places and say to people who were doing various jobs, “Tell me, what do you do, and who benefits?”. I hope that the review will ask those sorts of questions and come to the sort of conclusions, which my noble friend Lord Lamont referred to, about what we want the External Action Service to do. I hope that they will take note in the review of what we have had to say.

Clearly, the noble Baroness, Lady Ashton has been hugely overstretched and it is an achievement to have got the EAS up and running within these first two years. However, I wonder whether the architects of the

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service, who put together the Lisbon treaty, realised what a massive task it was and what huge, varied responsibilities were to be put upon its head. Years ago, the noble Lord, Lord Williamson, and I were on this committee when the service was originally mooted. The noble Lord, Lord Maclennan, also had a good deal to do with this many years ago. I remember the noble Lord, Lord Williamson—I hope he will not mind me quoting him—pointing out what a massive and wide responsibility was being proposed. Therefore, it is not surprising that the noble Baroness, Lady Ashton has been massively overfaced with the responsibilities that she has had. The pressure on her must be addressed.

In the United Kingdom we are familiar with the position of junior Ministers operating within departments under the responsibility of their political heads. In 2014, when the new Commission is appointed and the new responsibilities are apportioned, it would be wise at the same time to appoint deputies. These should not be the people who, as the European Parliament has described, sit representing the noble Baroness, Lady Ashton “like lemons”. They need to be there as deputies, with proper powers to represent the high representative and vice-president of the Commission. The more I think about this the more I think it needs a structure that is not dissimilar to the ministerial structure that we enjoy in Whitehall.

As I said, there is much to be done. The salary rates need to be reviewed and made comparable with other diplomats’. I noticed in the European Parliament report—I quote from the Daily Telegraph—that more than 100 European Union diplomats working in the Brussels-based Diplomatic Service earn more than William Hague, the British Foreign Secretary, and at least 50 senior officials pocket higher salaries than David Cameron’s prime ministerial annual salary of £142,500. The rates clearly need to be addressed, and we have put that in our report.

Missions need to be closed where they are not effective or where responsibilities are duplicated. All that should lead, hopefully, to better co-operation with member states’ missions in the countries concerned. There are too many of the alleged “turf wars” going on, a point to which the noble Baroness, Lady Coussins, referred. We must try to get a better understanding so that these turf wars do not exist.

There is one point in the report on which I have had second thoughts. Of course I recognise that the EEAS can provide representation in some countries where smaller European states have no presence. This especially concerns consulate services. We say in our report that if the EEAS were to provide consular services for some smaller states, those small states should be asked to pay for them. On reflection, though, that was a dangerous thing to open the door to. The service, as we say in our report, has no consular expertise at all, and to start trying to provide it could easily lead to tears. In all states around the world where there is an EEAS presence, there are other embassies that provide consular services, and it would be far better if those smaller countries that seek a consular presence in those countries sought to provide it through the consular services of existing embassies and high commissions rather than trying to start from scratch within the EEAS.

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In conclusion, I am bound to say that it is almost as difficult to say EEAS as it is to talk about the atomic energy authority in Vienna, whose name I cannot remember.

4.46 pm

Lord Hannay of Chiswick: My Lords, trying to judge the performance of the European External Action Service less than three years after it was first set up, a period during which a massive amount of time and effort necessarily went into the administrative complexities of that teething process, given the impossibility of doing more in advance planning while the Lisbon treaty was going through its rather agonising ratification process, is not an exact science, nor can it lead to any very definitive conclusions. Nevertheless, we owe a debt of gratitude to the noble Lord, Lord Teverson, and his colleagues for this last in a number of really excellent reports that the committee has brought forward in the years that he has chaired it. It is a genuinely valuable account of a work still very much in progress.

The report is timely, as the noble Lord recalled, as a first review of the EEAS is now under way in Brussels and because—this is a point made by the noble Lord, Lord Jopling—in 2014 the process of appointing a new Commission, including a new president, a new high representative for common foreign and security policy and a new president of the European Council, creates an opportunity, if it is taken, to address some of the problems that have arisen in the early years of the EAS’s existence.

If I may be tempted by the noble Lord, Lord Jopling, to a bit of anecdotage, I reminisce, and I find it astonishing, how that wizard of modern diplomacy, Henry Kissinger, managed to fix the whole debate, practically for ever it sometimes seems to me, with his remark about which telephone number he had to ring. That was an extraordinary piece of chutzpah, if that is an adequate word for it, since, even when Henry Kissinger himself managed for the only time in American history—and it will probably remain the only time—to combine the offices of Secretary of State and National Security Adviser, you still needed more than one telephone number to find out what American foreign policy was: probably more than 20 or 30. It is a pity that he somehow fixed the debate, and we should not allow ourselves to be mesmerised by that objective of producing someone at the end of a single telephone number. I doubt whether it is achievable, and it certainly will not be achieved in the short term.

To add to the Kissinger stories, I add his unhappy initiative that he called the “Year of Europe”, which caused a good deal of fracas in Brussels at the time when he launched it. When he asked the man who I worked for at the time, Christopher Soames, former Leader of this House, why everyone was so upset, Christopher said to him: “Well Henry, how would you have liked it if I had made a speech saying that next year is the year of the United States?”. That brought the conversation to a short and rapid conclusion, and the year of Europe came to a conclusion rather soon after that.

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I will address three main issues. First, there is the question which the noble Lord, Lord Jopling, with whom I agreed 100% on this, spoke about: the overload on the person holding the job of vice-president and high representative. This really cannot be in doubt and it is likely to get worse as the EAS and common foreign and security policy become more a part of the international scene. It is not only that the high representative cannot be in two places at once, particularly when those places are often separated by thousands of miles, but that the number and complexity of the policy issues needing to be handled exceed the capacity of one person to do so. Because the crucial work of co-ordination in Brussels at a political level cannot be effectively achieved by someone who is often absent from that city, the present situation is absurd. Even Foreign Ministers of small member states often have political deputies to share the load. However, the Commission, where there are now 28 commissioners from 1 July onwards, which far exceeds the number of meaningful separate tasks to be performed, cannot seem to contemplate a system of a deputy or deputies for its vice-president.

Alternative ways of addressing the overload problem, such as turning back to the rotating presidency to plug a gap, would seem to me a cure that is worse than the disease, risking recreating the confusion and dispersal of effort that the high representative was established to remedy. It should surely be a high priority for the 2014 process of EU appointments and the allocation of responsibilities to address this problem.

Secondly, there is the problem of policy coherence. The European Union of 2013 has a wide range of policies and policy instruments that impact on the world outside its borders, such as enlargement, neighbourhood policy, development aid, trade, environment, transport and immigration, to name only the most obvious ones. However, is it achieving the sort of coherence in the operation of those policies that will maximise their impact and maximise, too, the European Union’s influence in an increasingly interdependent and multipolar world? The honest answer is that it is not. One need look no further than the way in which both Russia and China are able to divide and rule among the member states when there is no meaningful overall policy approach towards those two countries, or at the contradictions between the Union’s agricultural policy and its development policy, or those built into the handling of Turkey’s and Macedonia’s applications for membership. The best diplomatic service in the world cannot itself compensate for, or gloss over, such a lack of policy coherence. If the EAS is to be more effective, that lacuna in policy coherence needs to be filled.

Thirdly, there is the issue of turf fighting, both within and between the various institutions in Brussels, between the Commission, the EAS, the Council, the Parliament, and the member states. If there was a gold medal for turf fighting, Europe would surely have won it quite a lot of times. One of the principle objectives with the establishment of the EAS was to reduce that turf fighting. Has it succeeded in doing so? I rather doubt it. Those who work within the Brussels machinery tell me that while there have been some improvements in the operations, such as the operation of the Political

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and Security Committee and the Situation Centre, there are plenty of other examples of time and resource-wasting infighting. There are some member states—the UK, I fear, prominent among them—whose lip service of support for the EAS is in sharp contrast to the resources they devote to the task of policing the lonely frontiers of competence creep, biting the ankles of the EAS whenever any transgression, however minor, is perceived.

There are plenty of other areas that need to be addressed before the EEAS can confidently demonstrate a degree of professional excellence equal to that of the best among its member states, which have, after all, been in the business for an awful lot longer. Better language skills, as my noble friend Lady Coussins said, greater effectiveness at public diplomacy, the avoidance of cronyism in the making of senior appointments and better co-ordination between the work of special representatives and the EEAS heads of mission on the spot all need to be addressed in the period ahead. Above all, the EU and the EEAS need to spend more time and effort influencing the policymaking of the rest of the world and less time arguing among themselves about the precise formulation of EU positions, whose shelf life is inevitably limited. This is work not just for three years but for as many decades. Meanwhile, I would be grateful if the Minister replying to this debate could give the Government’s views on the three priority issues I have identified—deputisation, policy coherence and turf fighting—and say what steps the Government intend to take to make the most of the opportunities of 2013 and 2014 and the general post appointments next year to address those problems.

4.56 pm

Lord Maclennan of Rogart: My Lords, from my external position, I would like to say how very much I appreciated the work of the committee and the Chairman in producing this thought-provoking report. It is extremely timely, and bringing it forward in time to feed into the review being undertaken by the vice-president and high representative is a very skilful move. I cannot believe that there will be another contribution from a national parliament that will have more thought-provoking recommendations with the possibility of enabling the new group of European leaders who will emerge in 2014 to get to grips with this.

It is a very short time since the External Action Service was set up. It is consequently right to be cautious about it and to learn from the experience of the past two-plus years. The noble Baroness, Lady Ashton, deserves very high commendation for the work that she has done, not only in shaping the structure of the institution, which is not an institution but an agency, but in her response to crises that were not predictable when the agency came into being. In particular, I wish to record our admiration for the work that has been done between Kosovo and Serbia. The European Union Select Committee heard from Serbian parliamentarians not very long ago, who made it plain that they were going to find it exceedingly difficult to come to any agreement with Kosovo other than through the agency of the European Union.

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I take the view that there is some urgency in continuing this work. It is quite clear that the global powers, the BRICs, will develop very rapidly over the next decade, and if the European Union is to exercise its influence, and even to protect itself, it must speak with a single voice on many of the issues that confront us. During these early years of a common foreign and security policy, it is evident that that has not always been so. Our relationships with Russia have been notably very different, Germany has spoken for itself very often in these matters, and the Libyan intervention was not supported by Germany. We need to treat these issues with greater coherence than has to date been achieved.

We can be very effective, I do not doubt, if we bring our foreign stances together. We must not seek to do this only in areas of self-centred need. We must recognise that it is a continent of 500 million people with a huge underlying economy. We are in a position to assist other less developed countries that have, as the right reverend Prelate said, less adherence and commitment to western European balance, democracy and human rights. We have to recognise that these matters can be effectively addressed if we come together with a common voice. We have used sanctions as a pressure in this period and they have been effective—indeed, the committee recognised that—but persuasion is also important.

Despite the fact that France and the United Kingdom have a long history of extensive global participation, we ought to recognise that that is going to diminish and that there is no way in which we can continue to be or should wish to be an imperial power. This brings me to an issue that was clearly discussed in the drawing together of this valuable report: the extent to which we in the United Kingdom should hold our own role, not only in terms of our own interest but in terms of our Diplomatic Service. There are places in which it is quite clear that the United Kingdom is less influential than it was. In some countries in west Africa, for example, we do not have the kind of representation that would carry weight. That is partly a function of prioritisation, which of course was a theme of this report. However, as these developments occur, the continent of Europe, with its 500 million people, should be able to have a view about global issues right across the world and we should not back out and deal only with matters of crisis.

The transference of power to the European Union, of course, cannot be accomplished without a greater democratisation of the institutions. It cannot be achieved overnight. That is a subject for further reflection, but that we should have the ambition to do this seems to me to be beyond dispute.

I noted with interest the committee’s comments on development, trade and climate change. Those issues are all important. It is right that at the beginning of this process of developing a foreign service—for that in effect is what it is—we should not expect too much to be taken off. However, these matters are interlinked, and I think the noble Baroness, Lady Ashton, was explicit in and has been successful in indicating how important political understanding is when we are making contributions to trade issues. Here I somewhat disagree

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with the noble Lord, Lord Lamont, and his remarks about China. We have to recognise—I have to declare an interest in regard to China—that we cannot turn a blind eye to matters such as the denial of human rights, even if we are seeking to extend our intimacy in the area of trade.

This report ought to be considered very carefully by the Council in formulating its new views, by the Commission in recognising what a valuable role there is for this service, and by the European Parliament. The criticisms made by some of those European parliamentarians about the lack of political will were justified, but what a splendid beginning has been made in these two and a half years.

5.08 pm

Lord Williamson of Horton: My Lords, I declare an interest in that I spent a good part of my career on European affairs in the United Kingdom Civil Service and in the European Commission. I join others in thanking the European Union Committee for this valuable report on the European Union’s External Action Service which I hope I shall continue to call the EEAS for the rest of this speech, unless I get confused with the initials. This is just the sort of report that we need to keep us informed about what is happening within the European Union following the Lisbon treaty. The analysis of evidence and the 49 conclusions and recommendations are very full indeed, although some of that is necessarily provisional and speculative because the EEAS, in its present form, is a new creation, having been formally launched in January 2011, and being due for review in mid-2013, which is critical timing.

I am a notoriously quick reader and often complete a book in an evening. However, this report took a little longer to digest and I therefore decided to select only a few points for comment. First, we need always to keep in mind that the EEAS is a genuinely new and significant initiative. It is quite different from the extensive network of external delegations—of which I had some experience—which, before the Lisbon treaty, were under the direct control of the Commission. The EEAS, on the contrary, is an information resource on external affairs for the member states and, of course, for the EU as a whole. The common foreign and security policy is now a core part of the work of the European Union, but its control and management is quite different from most aspects of the EU’s work, because the Commission does not have the sole right of initiative. Policy decisions are reached by consensus in the Council. They do not require the consent of the European Parliament, although it may try to achieve some influence on them, and are not, for the most part, within the jurisdiction of the European Court of Justice. Some very important consequences stem from this, most notably that the key basis for action is the capacity of the member states in the Council to reach agreement and, if there is no agreement, the diplomatic handling of the situation. We have seen this markedly recently in a number of crises, for example in Libya and Syria, to which we have already heard references.

There are some important areas for which the European Commission continues to have the major responsibility, notably international trade and the EU’s humanitarian

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assistance. Under the common foreign and security policy, the member states rule. It follows from that that I strongly endorse some conclusions in the report. First, there is conclusion 167:

“The EEAS should not … seek to project its own foreign policy. The Common and Foreign Security Policy should remain under the control of the Member States”.

In the same line of argument, I endorse conclusion 189, as referred to by another noble Lord, which says that the,

“annual report to the European Parliament on … staffing and budget”

for the high representative and vice-president should also be submitted “to national parliaments”, because of,

“the intergovernmental nature of the CFSP”.

I come now to the key element of our report, namely the judgment of the performance and value of the EEAS in the first two years. The committee’s view, although subject to conditions, is favourable. Conclusion 215 states that,

“we believe that the EEAS has made a good start in its first two years”.

In conclusion 193, the committee cites example areas such as,

“the relations between Serbia and Kosovo”,

where, in the committee’s opinion, there has been a “noticeable impact” and an enhancement of the European Union’s ability to speak with one voice.

We have set ourselves on this course for the EEAS and we need to maximise the value of this substantial resource. For me, that is the underlying point that we have to build on in the coming period. There are 3,400 staff, to which we have also committed national diplomats—I recall that national diplomats represent 40% of the delegations—with a view to providing extra advantages for the diplomacy and influence of the United Kingdom, the other member states and the EU. However, I might be a little more cautious than the committee in trying to draw conclusions before the review. I have some sympathy with the comment of Mr Mats Persson from Open Europe, summarised at paragraph 104 as saying that,

“he believed that the jury was out on the value which the EEAS added”.

I think we need to be a bit careful about that, but I believe that the potential of the EEAS is great. We need to be careful where we stand now.

The European Union Committee has also examined in detail a number of practical and administrative arrangements that may affect the operation of the EEAS. It is not surprising that there is still work to be done in bringing together the three staff components from the Council secretariat, the Commission and the member states’ diplomatic services, and the relationship between the EU special representatives and the heads of delegations should be clarified. The comments of the EU Select Committee on the organisation and co-ordination within the EEAS should be taken into account—they are useful for that—by the Council, the Commission and the noble Baroness, Lady Ashton, in the imminent review.

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In the Moses Room, far from the EEAS working environment, it is not too easy to take a definitive view on some of these recommendations. For example, in principle, I am in favour of a single set of budgets and accounts for delegations, as recommended in the report, but we need to be careful that there are no unintended consequences, which sometimes happen, that could affect the Commission’s excellent record on administrative expenditure, which has received a favourable opinion from the Court of Auditors year after year, most recently a few months ago when the court stated that revenue and payments were free from material error and that the examined supervisory and control systems were effective.

Finally, where the European Commission has prime responsibility for the European Union’s humanitarian aid and international trade, the EEAS may sometimes be able to bring a new perspective but in no way can it substitute for the Commission. In international trade, the Commission has made an outstanding contribution to the EU’s status as one of the largest consumer markets in the world and also one of the most open, including such initiatives as duty-and-quota-free access for all exports other than arms from least-developed countries, the almost complete reversal of the original common agricultural policy and the almost complete removal of EU export subsidies. This report will certainly contribute very useful material for the review. It is well timed and should be taken into account seriously in the review. I hope that it will be seriously studied and that a little later in the history of the EEAS we can claim that we have influenced the way in which it is going to develop.

5.18 pm

Lord Kerr of Kinlochard: My Lords, speaking as a non-member of the committee that produced this report, I join those who have paid tribute to its chairman, the noble Lord, Lord Teverson. He has been famous for some time for his skill in chairmanship. I had not quite grasped how skilful he is until I heard the terms in which the noble Lord, Lord Lamont of Lerwick, supported his report. I detected a slight element of dissent here and there, yet, looking at the report, I discover it is unanimous. I congratulate the chairman on his skill.

I also congratulate him on and join with him in what he said about the noble Baroness, Lady Ashton of Upholland. That tribute is very well deserved. What she has done on reconciliation between Kosovo and Serbia is quite remarkable and puts her up in the pantheon of those Members of this House who have made a real contribution to reconciliation and peacemaking in the Balkans. One could mention the noble Lords, Lord Carrington, Lord Owen and, particularly, perhaps, Lord Ashdown. We should note that what looked like a hospital pass has resulted in scoring a rather brilliant try. The game is not over, it is not even half-time, but she is doing extremely well.

So one has to ask oneself: is the European Parliament correct in its criticism? Are those who carp about the External Action Service and about the noble Baroness, Lady Ashton, right? I think that they need to ask themselves: in what situations is the Union prepared

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to allow the high representative to take the lead? First, there has to be a degree of common policy among the member states. For example, in Libya or Mali, she could not take the lead. The Germans even abstained in the General Assembly on the resolution. The Union was not united. The same, I fear, applies now in Syria.

The report is slightly Panglossian when it suggests that the External Action Service should focus particularly on the places that are of most importance to us in economic and security terms. Suppose that the noble Baroness tried to take the lead on China. The noble Lord, Lord Lamont, is right that the member states would not be prepared to allow her to do so. On the other hand, I think that the noble Lord is wrong when he says that there is no role for EU diplomacy, as distinct from member state diplomacy, on human rights. Sometimes, people find that there is safety in numbers. When one is dealing with, say, China or Russia, as we see, receiving the Dalai Lama can have consequences and criticising the murder of Litvinenko in London can have consequences. Sometimes, member states feel braver about speaking up for human rights if they are speaking up collectively. There may well be a role for the noble Baroness, Lady Ashton, there. Basically, the tasks that the Council tends to entrust to her are the ones that it thinks are too difficult. It is no accident that she plays a leading and very successful role on the P3+3 process with Iran. That was seen to be too difficult for any one of us to tackle on our own. We were very happy to put her in charge, and we were not all rushing forward saying, “We will handle Serbia and Kosovo”. When one accuses the service and its head of not yet having done a great deal, one should remember the constraints that we impose and the subjects that we pick for her.

I agree with a lot of things in this report. Unfortunately, on a couple of things with which I wish to disagree, my fox has just been shot by the noble Lord, Lord Jopling. He is entirely correct about consular work.

Lord Jopling: I hope that the noble Lord understands that I would never dream of shooting a fox.

Lord Kerr of Kinlochard: A dull, grey metaphorical fox, not a beautiful red one.

The treaty is quite clear. Any citizen of the Union may seek consular assistance from the embassy of any Union member state. Of course, a financial transaction will properly follow. Suppose that an independent Scotland required consular services provided from the Foreign Office in its posts abroad, the bill might be quite substantial. The noble Lord, Lord Jopling, is right, and I think that the report is wrong. The Government agree with the noble Lord, Lord Jopling; perhaps they always do, perhaps it is the noble Lord who moves the Government on these matters.

On the central problem of overload addressed in the report, I think that the committee got it completely right. It is not the case that there was no thinking about how it would work. There was a lot of thinking and worry in the original Convention in which the noble Lord, Lord Maclennan of Rogart, served with such distinction. There was a text on the External Action Service produced by the Convention which

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was deliberately not put into the treaty so that it would not be subjected to the delays of ratification but people could start planning and building the External Action Service so that it was ready to go on day one. Unfortunately, they did not. However, that text did some of the thinking about what the External Action Service should do and what it is for.

As for the job of high representative, all of us in the Convention assumed that there would be two political deputies. The noble Lord, Lord Jopling, is right that they are needed. We assumed that there would be a political deputy whose job would be to chair the Council when the high representative was on a mission, to undertake some missions for the high representative and, particularly, to maintain contact with national Parliaments. The report is slightly pusillanimous on the relationship with national Parliaments. At paragraph 85 we are told that:

“The scrutiny role of the European Parliament should not go beyond its current level, as foreign policy is primarily inter-governmental and scrutiny should therefore be performed at the national parliamentary level”.

Yes, by national Parliaments. Physician, heal thyself. We need to devise a way of doing it. There also has to be a docking point. There has to be someone at the other end who is ready to talk to us. That is the political deputy high representative.

The problem is even greater inside the Commission. We all assumed that there would be another commissioner who would co-ordinate external relations dossiers, working to the vice-president external relations, which is the other title of the noble Baroness, Lady Ashton. That has not happened. We could not put it into the treaty because the definition as well as the allocation of commissioner portfolios is the prerogative of the incoming President of the Commission. However, we all assumed that it would happen, and I am very puzzled that it has not. I hope that in the next Commission it will happen. If people remember that the high representative is also the vice-president of the Commission, and if she is helped to do what used to be done by the Relex group of external relations commissioners—this is where the overload has shown most—the situation will improve considerably. I hope that will happen.

I should like to pick up on the question asked by the noble Lord, Lord Lamont, about the purpose of the External Action Service. I was a convert to it before I worked for the Convention. When the noble Lord, Lord Patten of Barnes, was commissioner in charge of external relations, he made a good appointment to head the Commission’s office in Washington. He appointed an Irish ex-Prime Minister, John Bruton, and John handled the job in a way that no one had done previously. It had been seen as a great job for a trade policy expert, trade policy being seen as an Eleusinian mystery, with high priests working with incense in darkened rooms.

Trade policy is hugely political. The point about trade policy, particularly in a place such as Washington, is to be known on the Hill and to be up there all the time, to be good on television and to be on television often, all the things that John Bruton was extremely good at. I am very sorry that his successor was not another political appointee. However, the External

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Action Service is supposed to be about producing secondees or breeding its own talent, people who do not only know about the subject but have the communication, diplomatic and lobbying skills which made Bruton so successful.

When Javier Solana, a distinguished Foreign Minister and Secretary-General of NATO, moved from NATO to do the job of high representative, he told me that he discovered that he was entitled when abroad to the assistance of a small council office in New York, a council office in Geneva and nothing more. The Commission sent out an instruction to all its delegations around the world that no assistance was to be provided to the high representative as he worked for the member states and was nothing to do with it. When he went to Washington, Javier Solana would go to call on member states’ ambassadors, but he had to book his own hotel. That is why dual-hatting—and it may seem eccentric—makes sense. Bringing together the two jobs of the high representative and the vice president in charge of the external dossiers of the Commission is, in principle, a good idea if it is put into practice. All these budgetary problems disappear. The noble Lord, Lord Williamson of Horton, is right, and I agree with him. There is no need to have this nonsense because the person responsible for these posts abroad is a vice president in the Commission as well as being a high representative.

I do not think there is such a thing as a purely technical mission. I think this report flirts with error when it suggests that the EAS should have no role in purely technical missions and should back off from where they are all trade, aid or humanitarian aid. I do not think so at all. What matters for effective trade or development policy is adequate access to heads of state and Governments and the ability to project what we are trying to do in the country in ways that are understandable—languages matter very much, as the noble Baroness said—and acceptable to the country. We need a more professional External Action Service, but we should not regard any of the jobs of any of the delegations around the world as unsuitable to be done by, or at least to be done under the guidance of, that service.

It is a pity that our Government still take such a defensive approach to the build up of this service. I hope that that will improve. I share the doubts of the noble Lord, Lord Hannay of Chiswick, about whether it is always wise to be so ferocious, usually on our own, while 26 others take a different view, on every last detail on the frontiers of competence.

I hope that the dual-hatted job will be built up still more and the External Action Service will bed down. The record so far, though patchy, is one on which the noble Baroness, Lady Ashton, deserves all our congratulations.

5.32 pm

Lord Liddle: My Lords, I must apologise to the Grand Committee because, for unavoidable personal reasons, I probably have to commit the unpardonable sin of leaving the Committee before the Minister has concluded. I am very sorry about that, but I cannot avoid it. I will be very brief. First, I thank the noble Lord, Lord Teverson, for the work that he has done

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and for the many reports that this Committee has produced. This again shows the value of the work that our Select Committee does.

Secondly, I join the tributes to the noble Baroness, Lady Ashton, for the role that she has played in helping partly to settle the Serbia-Kosovo dispute. I would like to make clear, on behalf of the Labour Party, that we support the External Action Service and that we want to see its role developed, obviously as a supplement to British foreign policy and to magnify that policy’s impact.

The fact is, as the noble Lord, Lord Kerr, has explained, that what went before was dysfunctional, and the EAS is a great improvement. There is one point that I would like to ask the Minister about, and that is the role of Britain in this service. I agree with the comments of the noble Lords, Lord Hannay and Lord Kerr, about the hope that the Government would not be so reserved in their approach. One of the real worries that I have is about the proportion of British officials working in the EAS. The noble Baroness, Lady Coussins, raised this point. The service gave me figures showing that only 7.6% of the people working in the service are British, as opposed to our 12.5% share of the population. This is particularly true of member state diplomats: British diplomats make up only 2.3% of the numbers in the service as opposed to 4% for France. As a lot of the national diplomats occupy senior positions in policymaking in the service in Brussels, this is a demonstration of a lack of adequate British influence that I would like the Minister to address in his reply.

5.35 pm

Lord Wallace of Saltaire: My Lords, I should explain that it was a simple mistake that my noble friend Lady Warsi was put down on today’s list of speakers instead of me. I volunteered some weeks ago to take this debate because I had just made a speech at a conference for the Foreign Office on the development of the External Action Service, had done a considerable amount of work, had had briefings from officials and had talked to people in Brussels. It seemed rather idiotic that, my having put in that effort, she should then have to do the same and duplicate that work. This happens to be one of the few subjects on which I am mildly well informed, and I find this much more comfortable than answering questions on South Sudan, North Korea or other things that one occasionally has to do. I also thank the noble Lord, Lord Lamont, for his reference to the Coronation. I was indeed rehearsing in the Abbey this morning for the very small role that I will be playing in tomorrow’s service, but I shall be singing rather more deeply than I did some 60 years ago.

The Government are extremely grateful to the committee for this report, particularly for the speed at which it was completed so that it could feed in to the discussion at the informal Foreign Affairs Council in March. That helps very much to ensure that informed British views carry. We all know, and I have certainly experienced this many times in Brussels and Strasbourg, that reports from this committee are widely read and respected.

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The Foreign Secretary has set out the Government’s position on the review in a recent letter to the noble Baroness, Lady Ashton, which has been shared with Parliament. In it, he welcomed the fact that the noble Baroness has set up from scratch a service that has now moved beyond the initial institutional issues to focus on a number of key foreign policy priorities. Like many of those who have spoken in this debate, the Government look forward to the EEAS continuing to focus on those areas where it can really add value by complementing and supplementing the work of member states’ diplomatic services.

Mention has been made of the valuable work on Iran. I add to what has been said in this debate that the value of the EU is sometimes that it appears to be slightly more neutral than individual states. In those parts of the world, particularly the Middle East, where there is sensitivity about the imperial past, and where echoes of the imperial past carry against Britain, France and sometimes others, the collective weight of the EU can therefore sometimes be more helpful. That is also true, to some extent, of the western Balkans.

I also noted the point made in the report about the collective weight of the European Union’s multilateral institutions. There are now some 28 states working together, with Croatia joining, plus a number of others often voting with them, which amplifies the weight of states like the UK when we all agree. The work of the E3+3, in which the noble Baroness, Lady Ashton, has been playing a collective role for the smaller states, has been very valuable in a number of ways. I note the subtle distinction between what I read in the American press about the P5+1 and in the British press about the E3+3. I am sure that the Committee understands the subtle distinctions in those descriptions of the same process.

I was quite surprised not to hear Members picking up the issue of the comprehensive approach. The issue of trying to build a much more comprehensive approach using the different levers of EU policy is part of what this has all been about. We note that the Americans, in some ways, envied the European Union in its ability to bring together aid, humanitarian intervention and a number of military instruments in the way that NATO cannot. Trying to bring together the EU-wide levers of influence, aid instruments, trade access and sanctions is very much part of what we are all attempting to do.

The noble Lord, Lord Hannay, asked me how this would help to promote policy coherence, to which one has to say that there are a number of aspects to this. The rivalry between different directorates-general in the Commission and between different Commissioners is a problem, but the extent to which domestic lobbies in different countries and their collective representatives in Brussels do their utmost to resist the policy coherence that he and I would love to have—for example, in trade policy toward north Africa and west Africa—so that trade policy does not cut across what we are trying to do in terms of development policy is something that we are stuck with as a problem of our domestic politics.

A number of noble Lords also spoke about the budgets. We have worked very hard to promote budget neutrality. We note the issue of high salaries. From

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anecdotal conversations that I have had, particularly with a number of people in the newer member states, I am conscious that if you come from a poorer state which is a net beneficiary of the EU budget, these issues may seem rather less important than they do to the net contributors. For those who have struggled away in national politics for some time, the thought of being appointed to an international post that will pay them far more than they are paid in their national Government has a real appeal. However, Her Majesty’s Government will continue to battle away on this front.

A number of people have also spoken about British representation in the institutions. We are very concerned to promote a high level of British representation in this new institution from the Commission, from direct recruitment and from secondees. Of course, there are problems with languages. The last time I was in Brussels I was talking with a senior official in UKREP about how we could encourage more British applicants to go through the concours to join the Commission and to gain the language skills needed. He said that by far the best way was to get them to marry someone from another country so that they will then acquire the language and, furthermore, they will agree that it is easier to live in Brussels than either of their home countries. Perhaps that is the gospel of despair. I say to the noble Baroness, Lady Coussins, that we all recognise that have a great deal to do in this country on languages. The international languages, such as French, particularly for Africa, Spanish, particularly for Latin America, Arabic and Mandarin are extremely important and that requires a concentrated effort in schools as well as in universities. The noble Baroness knows as well as I do that applications to study languages at universities have been going down in recent years and that is one of the reasons why language departments in universities have been shrinking. That is all part of what we need to reverse.

A number of noble Lords also spoke about turf wars. The other day I heard from someone about the current tour of the head of the World Bank and the United Nations Secretary General to Congo. The remark by this international civil servant was that this was the first time they had managed to do something on such a good note between these traditionally deeply suspicious and uncooperative institutions. Rivalry among institutions, sadly, is a mark of international bodies. It helps that the new American head of the World Bank speaks Korean as his own language and the current Secretary General of the UN is a Korean. We have to work to reduce these turf wars.

That takes me into the question of deputies and competencies because, as the noble Lord, Lord Kerr, mentioned, the idea was that we would have clusters of commissioners and that the Relex group of commissioners would meet regularly. I regret, and the British Government regret, that the Relex group of commissioners has not met as regularly in the current Commission as it did in the previous Commission. Now that there are 28 commissioners, Her Majesty’s Government would very much like to move in the next Commission to a much greater dependence on clusters of commissioners, with vice-presidents, in effect, as their chair, and it seems to us entirely appropriate as part of that that one of the

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clusters should be an active group of external commissioners working more closely together. That would also help to reduce the element of turf wars with different commissioners and their different directorates-general promoting nuances of difference against each other. It would certainly reduce some of the weight which overloads the current high representative.

The noble Lord, Lord Teverson, spoke about the importance of understanding the difference between large state interests and small state interests, which is fundamental to all this. It is quite clear that for small states the EEAS is a tremendous boon. It gives them knowledge and representation in states which they had not covered before. For large states, that is less essential, although, as the squeeze on our budgets persists and as the number of member states in the UN expands beyond 190, it is not possible for all of us to be represented in all those places. Indeed, there are a number of places where the EEAS is represented where the UK is not.

Pooling and sharing is part of what we are moving towards in this area as in the common security and defence policy. We are now co-located with the Germans in Antananarivo in Madagascar as part of moving the British back into resident representation there, and also in Quito, Pyongyang and Reykjavik. I have visited the building the British and Germans have in Reykjavik on several occasions over the past 10 years. We are co-located with the French in Chisinau and Valetta, with the Dutch and the Danes in Baghdad and Beirut, with the European Union, the Germans and the Dutch for some years now in Dar-es-Salaam and with the EU, the French and the Germans in Bishkek and in Astana, a new national capital, jointly with the EU, the French, the Germans, the Italians, the Dutch and the Austrians. We are working together practically where we can and it provides greater coherence. As I have travelled around, I have experienced generally extremely favourable comments from British ambassadors about the utility of EU delegations on the spot, particularly in countries some distance from the EU, and the way in which EU embassies—often only a few EU embassies—and the resident EU delegation have learnt to work together. There is common political reporting—of course, you cannot say everything because, in a group of 28 member states, not everyone has the same attitude to confidentiality and so sometimes you cannot put everything into a joint telegram that will be circulated around all 28 members—common intelligence and common representation to the host Government.

We have some problems with the way the EEAS was set up. As the noble Lord, Lord Lamont, said, and I had some sympathy with his speech, it was brought into being before its purposes had been entirely agreed. It is not the first time that has happened with an international organisation or a European institution. I am not at all sure people knew what the International Labour Organisation was going to do when it was created after the First World War. That is one of the reasons why we have some of these problems with the institutions. However, now that the EEAS is there, we have to make the best of it, and we certainly need to have as coherent a policy as we can in all of those areas where member states can agree a common policy.

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Perhaps the committee will now move on to look at the question of whether we can agree a revision of the European security strategy for next December’s meeting of the European Council, which will focus on the common security and defence policy. It may be impossible to agree on a common EU security strategy again because we have not yet reached a sufficiently shared approach. That is why national Parliaments and committees meeting together for a more coherent dialogue on foreign policy and defence, and a common approach between national Parliaments, is what we need to encourage. I am glad to hear that that is developing more effectively through COSAC and other areas.

The noble Baroness, Lady Coussins, asked about more engagement with Latin America. I am glad to be able to tell her that the new head of the European delegation in Bolivia will be a British national—who, I assume, must have absolutely fluent Spanish—on secondment to EEAS. There is a clear recognition that the EU has to be in partnership with many other South American states apart from Brazil.

I have discussed the question of language. I hope that I have answered the questions of the right reverend Prelate the Bishop of Derby about structure. We need not only the right structures but a more coherent approach. That requires active dialogue among political elites and others in various countries to agree a common approach, which is often lacking. Those in the south look naturally to north Africa, those in the east look naturally to their eastern neighbourhood, and we have different sets of priorities and assumptions.

The right reverend Prelate talked about commitment to human rights and a values-based approach to foreign policy. Her Majesty’s Government were being criticised in Brussels the other week for having what others regard as a rather transactional approach to the European Union. I look forward to hearing the Church of England collectively demanding that we have a much more positive approach to European Union co-operation because we share values with our neighbours across the continent, something that the Daily Mail is not always willing to accept. I have also answered the question on the clusters of commissioners and touched on the question of the role of national Parliaments in promoting dialogue.

I think that that enables me to say that I have answered the three points raised by the noble Lord, Lord Hannay, on deputisation, turf-fighting and policy coherence. Let me therefore end by saying that the Government believe that the European External Action Service should focus on priorities agreed by member states in the Council. It should complement the member states’ diplomatic services, not replace them. Where there is no agreement among member states, we cannot expect the EEAS to bring coherence that reflects the nature of EU common foreign and security policy, but I hope that your Lordships agree that our current Foreign Secretary has been extremely active in working, above all, with our French and German partners and the other large, active diplomatic states to promote common positions where possible and, as far as we can, to carry the other, smaller member states with us in common policies toward our eastern neighbourhood, the deeply disturbed Middle East and the many weak states of Africa in which we have been active.

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We look forward to the noble Baroness, Lady Ashton, issuing her review of the EEAS in the summer. We very much welcome this constructive input into the debate. Her Majesty’s Government will respond to the review of the noble Baroness, Lady Ashton, when it is completed. I thank all those who have contributed to this debate. The committee is extremely valuable and I look forward to the many future reports it will produce under its new chairman, who was once my boss and with whom I once wrote a short book on the future of British foreign policy in the 1990s.

5.54 pm

Lord Teverson: My Lords, I am not sure that that declaration of interest should not have been made at the beginning of the speech, rather than at the end. I thank all noble Lords for their contributions. I thank my noble friend Lord Wallace for stepping in. Goodness knows what would happen if the Government always put forward the person who knew about the subject rather than the one they would put in otherwise. That might really do something to change the way we work.

I am going to comment on only one statement, which was made by my noble friend Lord Lamont, whose contribution to this report was truly excellent. He mentioned that he had spoken to our ambassadors about the EAS and that they had been somewhat disparaging about it. Funnily enough, I do the same and get exactly the opposite reaction, which shows how good our diplomats are at giving us the message that they know we want to receive. The EAS should perhaps learn from that example.

I am not going to say anything more about the report. It has all been said. However, I do want to say to members of the committee who are here, and past members, that I found it a great honour and privilege to be chair of the committee over four Sessions. Thanks to everybody’s contribution, it has been the best job you could ever have in this House, with no disrespect to anybody else or any other office. I particularly want to thank the clerk of the committee who served the whole of that time, Kathryn Colvin, who was excellent in the innovations in her report writing and in the way she supported the committee. I also want to thank Roshani Palamakumbura; her predecessor, Oliver Fox; Ed Bolton of the secretariat; and his predecessor, Bina Sudra. My noble friend Lord Tugendhat, who I am delighted has now taken over the chairmanship of the sub-committee, has great topics to look forward to and a great committee to lead and chair. It has been a great privilege for me.

Motion agreed.

EUC Report: EU Sugar Regime

Motion to Take Note

5.59 pm

Moved by Lord Carter of Coles

That the Grand Committee takes note of the report of the European Union Committee, Leaving a Bitter Taste?: The EU Sugar Regime.

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Lord Carter of Coles: My Lords, I chaired Sub-Committee D—the sub-committee on agriculture, fisheries, environment and energy—when this report was produced last year. Sadly I have now stepped down from that position, but happily I have passed the baton to the very able hands of the noble Baroness, Lady Scott of Needham Market.

Before moving on to the detail of our report, I want to deal with a procedural matter. We published our report in September last year. A response was received quite promptly from the European Commission in March. Despite repeated prompting, though, we received a response from the Government only last Wednesday, almost seven months late, and I suspect it may only have been the pressure of today’s debate that produced it at all. Members will know that receipt of a government response three working days before a debate, and during recess, does not provide ample time for preparation for a parliamentary debate.

We recognise the challenges of the last few months, which have seen the parameters of this debate shifting on a regular basis as the common agricultural policy negotiations have progressed, but the lack of communication from the Government during that process has been lamentable. We trust that there will be no repeat of this disregard of Parliament in future.

I turn to the substance of today’s debate. The EU sugar regime might sound like a very niche, distinct and rather arcane area. However, it has widespread implications. The first is that sugar remains one of the most protected sectors under a CAP that in other respects has slowly made progress towards a more liberal regime. Secondly, like it or not, we all consume sugar and it is our contention that we, as consumers, pay more than we should as a direct result of EU policy. Thirdly, the regime also has significant implications for developing countries, and I shall come back to that point.

At the time of most of the reform of the sugar regime in 2005, we undertook an inquiry and welcomed that reform as a necessary step, although even then we regretted that more extensive proposals had not been pursued. Since then there have been critical reviews of the regime, not least by the EU’s Court of Auditors. Indeed, in 2011 the European Commission tried to identify some of these shortcomings in its proposals to reform the common agricultural policy. For that reason, we decided to undertake a short inquiry into this subject last spring as part of our contribution to the debate on the reform of the CAP, knowing that the future of the EU’s sugar regime would be a closely fought tussle in those negotiations. We were also keen to ensure continuity and follow up on our earlier report.

I turn first to quotas. The EU’s sugar policy is not something of which we can be proud—in fact, it is not sweet, it is rather bitter. It is still a policy that restricts both the production of beet sugar in the EU and the import of cane sugar from third countries into the EU. Changes made in 2006 have ensured that the EU’s minimum price is there, yet we do not have a guaranteed minimum price. That is a rather contradictory position.

There was a clear division of opinion among our witnesses as to when, and even if, production quotas should be abolished. Some argued for an extension of

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the system until 2020 in order to allow the sugar beet industry to restructure further and prepare itself for the onset of the world market. Others—quite logically, those on the receiving end of an uncompetitive market—argued for the immediate end to quotas. This included the industrial users of sugar, such as manufacturers and producers of confectionery products and the like.

However, that final grouping also included the importers of raw cane into the EU for refining, specifically Tate & Lyle. Their position was that either they should be protected against the market or both the beet and cane sectors should be liberalised—a logical position. We took the view that neither the cane nor the beet sectors should continue to be protected and that this would involve both the abolition of production quotas and the easing of import tariffs on raw cane sugar. We acknowledged the difficulties of negotiating this, but suggested that in the event that production quotas could not be phased out by 2020, they should certainly end at some point between 2015 and 2020.

It is pleasing to note in the Minister’s response that the Council’s negotiating mandate extends quotas only until 2017, although that has to be negotiated finally with the European Parliament, which itself favours 2020. I would very much appreciate it if the Minister could share any further intelligence with us, including how the Government are working to ensure a positive outcome in this respect.

We also recommended that, as part of a package to assist with the negotiation over the ending of quotas, support should be available to remove inefficient production. Interestingly, the Government disagree, noting that there is no justification for the spending of such money. Let me be clear: we supported the use of such funding only as part of a compromise package. It is unclear to me, frankly, how the Minister expects to be able to negotiate the 2017 date without some form of financial compensation. I would welcome clarity on that subject.

I turn to the issue of price and competition. One consequence of the protected sugar industry is that costs to the consumer are higher than they should be. We were struck by the findings of the EU’s own auditors, the European Court of Auditors, which concluded in 2010 that changes in the EU market price for sugar were not passed on to the consumer. Between 2006 and 2012, the average price of a kilo of granulated sugar in the UK rose by one-third, while the market price increased by only 16%. Clearly there is a widening of margins somewhere.

We concluded that the consumer is the missing stakeholder from the debate on EU sugar policy. The Commission refuted that argument in its response to us, noting that:

“Consumers are consulted in the framework of the High Level Forum for a Better Functioning Food Supply Chain”.

That seems hardly a very consumer-focused body to us, so it is no surprise that we remain unconvinced about this.

The Government say that they have used every opportunity to raise awareness of the impact of this policy on consumers. I should be grateful if the Minister could tell us whether the Government’s work has

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influenced the course of negotiations on sugar, and indeed generally on the future of the common agricultural policy in any way.

We noted that this is a highly concentrated industry; as we heard, only six companies account for almost 80% of sugar production quotas. The European Competition Network, a network of national competition authorities and the European Commission, has been very critical of the concentrated nature of the industry. The Government confirm that the sector is in the spotlight and that the European Commission undertook an unannounced inspection on 23 April at the premises of companies active in the sugar industry in several member states.

The Commission noted in its response to us that it is conducting its own study into price transmission in the sugar sector, which I understand should be available imminently, and we are keen to see what it says. We are pleased to note that the UK’s Office of Fair Trading is assisting the Commission in its work. I urge the OFT and the Government to be very vigilant in this area.

Another issue that we are keen to see explored is risk management. We observed that most sugar producers are a risk-averse group, which is why they have a strong preference for continuing the protection available under the current regime. The reformed CAP contains some support for risk management, including support to help farms and groups of farms manage their own risk, making use of private sector insurance mechanisms. This is important; it is trying to make industries use the private sector instead of always relying on the state to somehow mutualise the risks that they face. This is a theme that we have referred to many times in our reports.

The Government are imprecise in their response about their preferences regarding risk management. I would welcome an update from the Minister on the state of play of risk management in the CAP negotiations and what the UK’s current priorities are for that aspect of the negotiation.

I want to focus on the importance to beet growers, in terms of managing their risk and in the light of the concentrated nature of the industry, of clarifying the relationship between beet producers—that is, the farmers—and processors such as British Sugar, Nordzucker, Suedzucker and all those big organisations. The proposals to reform the CAP insist that this relationship be covered by a written agreement but do not set out what should be included, which is in fact a step back from the status quo. The Commission insisted in its response that such detail can be set out later in secondary legislation. I would welcome an update from the Minister on where that debate has reached.

One of the recurring themes on our committee has been that of research. We emphasised in this case the importance of basic and applied research in sugar, supported by adequate knowledge transfer: that is, getting the research from the lab into the hands of farmers. We recommended that the Government assess whether research efforts in this industry are in line with the needs of consumers. The Government appear content that all necessary basic and applied research is being undertaken and is sufficiently funded. Sadly, we

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do not share the Government’s confidence on that matter. While we agree that the industry is particularly well placed to identify its needs, at least in terms of applied research, it is important that science is able to feed in basic research and to be financially supported in its efforts. It is only through this sort of research that we will maintain in Europe the lead in technology that we need to maintain our position in the world and in trade. There will inevitably be a tendency by industry to focus on low-hanging fruit, but I urge the Government to take a greater interest in this important part of the chain.

The African, Caribbean and Pacific bloc and the so-called least developed countries, the LDCs, have had preferential access to the EU’s sugar market and were therefore negatively affected by the reduction in the EU’s sugar price after the 2006 reform. A helpful package of transitional measures was put together, known by the lengthy name of Accompanying Measures for Sugar Protocol countries funding. We heard that almost €1.2 billion had been allocated to this, yet much of it had not reached the intended beneficiaries. This was due in part to insufficient resourcing in the Commission’s offices in those countries. It is very sad that the money was available but we could not find a way to spend it. That is clearly an issue for the Commission to address. I am glad that the Government similarly recognise the problem and that they will seek assurances from the Commission that local offices will be sufficiently resourced.

In evidence to us, we were favourably struck by the Minister’s condemnation of the plan for further reform, which in his view almost entirely ignored the needs of developing countries. He emphasised that the Government have an obligation to find ways to support them, and we support that.

It was surprising to note from the Government’s response that some progress had been made in negotiations on the European Development Fund. The response indicates that funding available to many of the sugar-producing developing countries will support interventions that have the most impact on the critical areas of poverty reduction, job creation and economic growth.

These developments are helpful and important, but I would caution against any complacency. We have had seven years of little action on this, and I urge the Government to ensure that they are assiduous in their work with the Commission on monitoring the effect of the new reform and ensuring that the money that has been allocated gets spent.

I have spoken today on behalf of the committee and I pay tribute to its members, whose engagement with this subject gave our inquiry both energy and effect. I also pay tribute to our clerk of the committee, Kate Meanwell, and to Alistair Dillon, our researcher, both of whose endeavours on our behalf made us better informed and better able to produce this report.

The common agricultural policy continues to be reformed, albeit slowly. It is extremely disappointing that there are sectors within it, such as sugar, that proceed at such a glacial pace along that path. Certain industrial concerns dominate while the interests of consumers and developing countries are virtually ignored. This is not a situation that we should tolerate,

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and I look forward to hearing from the Minister how the Government’s attempts to promote reform are bearing fruit in Brussels. I beg to move.

6.15 pm

Baroness Byford: My Lords, I thank the noble Lord, Lord Carter of Coles, for introducing the debate. I thank him for having chaired our committee for several Sessions. As he said, he is now handing over to the noble Baroness, Lady Scott of Needham Market, and we welcome her. The noble Lord has done a wonderful job for us on several reports.

My family’s farming interests meant that I had to withdraw from—or, I would rather say, did not take part in—this report. On our farm in Suffolk we grow about 100 acres of sugar beet. I therefore felt that it was not correct to take part in the report. I have not had the advantage of listening to the evidence given, so I am looking at this from a slightly different point of view. However, I was shadow Minister at the time when we debated the earlier reports, and I re-emphasise the frustration that the noble Lord, Lord Carter, has described that things move very slowly with regard to sugar reform. It reminded me of the occasions when we had reports from EU Sub-Committee D on fisheries. We were talking constantly about discards but for month after month and year after year nothing seemed to be done. However, to encourage us, at least that has now made a start and I hope that today’s debate will move things forward. To some extent, I have read the report from an outsider’s point of view, but before I go further I apologise to Members of the Committee if my words take them over a trail they have already travelled.

The report, Leaving a bitter taste?, was published in response to the many questions raised by the 2006 report. If it had been a direct response to the plight of the least developed countries to which the noble Lord has spoken, particularly those in the Caribbean, I would have applauded it even more than I am able to applaud it today. I share the frustration. For many years we have looked at what we could do to help our colleagues in those countries but, as we have heard, not much progress has been made.

The figures from the FOA quoted two weeks ago in the “Food Programme” on the radio showed that white sugar consumption per head per annum averages 12 kilograms in China, 27 kilograms in the UK, 33 kilograms across Europe and 25 kilograms globally. Assuming that we are moving towards a world population of 7 billion, that means that a world white sugar market of 175 million tonnes is likely in the future. Clearly we want to free up this market so that it can fulfil its role.

I am a little disappointed that we still have problems some seven years after the 2006 changes. These were highlighted in paragraph 12 of the report and were driven by the WTO ruling that the EU was subsidising its sugar exports by guaranteeing producers prices above world levels. As the noble Lord, Lord Carter, said, it is the most protective regime in existence.

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Paragraph 13 summarises the effects that the regime change has across Europe. Here in the UK, prices for sugar beet fell, production was reduced and a number of processing factories have closed. The anticipated rise in raw sugar imports for refining did not happen. The beet processors built refining capacity, and I understand that Mauritius has started a refining industry. The outcome is a UK refining industry reportedly running at 60% capacity. The EU reference price has been brought down but the current market price for white sugar is some 16% higher than it was in July 2006. As a consumer, my observation of local shops is that the price is a further 13% or so above the market price in those days.

Surely the combination of sugar beet production quotas and the tariffs charged on raw cane and refined sugar can only be acting to keep the consumer price up, which I am sure we do not want to see. If you take another view, that might not be a bad thing in the light of the research findings on the damage done to our health by sugar consumption. I wish, however, that the arguments for the retention of tariffs and quotas were not put in a way that makes me think of the protection of EU income coming from the former and the benefits to France and Germany from the latter.

Having said that, however, I remember that Janet Young on many occasions introduced dinner debates in the House on the way in which we could help the ACP and less developed countries. She continually drew our attention to those former Commonwealth countries whose livelihoods depend almost entirely on raw cane, coconut and bananas. Following on from the questions of the noble Lord, Lord Carter, in that context, I would like to ask the Minister which countries have received transitional assistance, whether it has all been dispersed, and whether he is able to tell us how it has been spent. The noble Lord mentioned that there were not enough personnel to make this happen, but I wonder whether there is a broader picture to follow here.

In the event that further assistance is required, I am convinced that, whatever happens in the future, there must be a time limit on sugar quotas and a date set now to help prevent the manipulation of the market in future.

Surely China’s per-head consumption will continue to rise over the next decade, and the question has to be how the ACP countries and the less developed country producers could be helped to take advantage of the situation while making clear that this will be a short-term help and that they will have to stand on their own in future years. I am not quite clear from the report, not having heard the evidence, what it really is that is stopping the ACP countries from being able to process and develop, or whether they are continuing just to export their raw materials. If that is so, what steps could be put in place to help them to add value to their initial crop?

Here in the UK, farmers have grown beet for many years, with 50% of the sugar that we use coming from sugar beet that we have produced. With the CAP negotiations well under way, I would like to add to what the noble Lord, Lord Carter, has mentioned, that the CAP is looking at ways in which farmers will be encouraged to spread their crop production—in

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other words, not just wheat, rape and barley. In fact, for many farmers sugar beet is a good crop break because it puts goodness back into the ground, so from a cereal farmer’s point of view it is an important break. At the end of the day, however, it will be important that whoever produces the sugar, whether beet or cane, can make sufficient money out of it or they will not continue to grow it. In this country and in Europe, they will grow something else. Again, though, that is not a possibility for the ACP countries.

I understand that the market price for white sugar is something like €710, which is roughly £600 per tonne or 60p per kilo. Prices paid to farmers vary, but somewhere between £28 or £30 per tonne should be possible to obtain. That is 3p per kilo, and my observed off-the-shelf price to the consumer is about 79p per kilo. Does this perhaps ring a similarity with what happens with our dairy farmers across Europe? The question has to be: what is the reason for the price rising so much for the consumer while the actual producers of the cane and sugar beet have not grown? Changes to bagging and distribution and to the retail technology should surely have managed to counterbalance some of the rises that will have occurred, especially perhaps within fuel. Maybe the Minister can throw some light on the situation.

Both the report and the Government’s response make reference to inefficient production. That makes my mind wonder what is inefficient. Is it the growers, the producers or the people at the other end? Perhaps the Minister can tell us a little more about that—whether it is on the growing, the refining or the processing side, and which countries it occurs in the most, because we are looking across the whole of Europe.

I endorse the committee’s recommendation as laid out in paragraph 33, although I do not put out too much hope for an agreement in recognising the changes that were made before 2006 being taken forward.

The report is very worthy and goes into quite a bit of detail. However, to me, there are three real issues: first, the whole question of quotas and import restrictions; secondly, the ACP countries; and, thirdly, the CAP and where we are going in future years. I have had briefings, as perhaps have other noble Lords, from the UK Industrial Sugar Users Group, which has highlighted the need for wide-ranging reform of the EU sugar regime without delay. It goes on to suggest in that briefing:

“The competitiveness of manufacturers of products containing sugar is severely impacted by existing EU sugar policy”.

We should bear in mind that this is a huge sector that employs about 70,000 people, with a turnover of more than £12.3 billion, accounting for about 70% of the sugar usage in the UK. A little further on, it says:

“The mistake is graver because the maintenance of sugar quotas will not benefit European farmers and the EU sugar sector overall either: shortage of domestic supply, growing global demand and rising world prices are opportunities that European farmers and sugar processors can exploit if the production and export restrictions that the quota system imposes are removed”.

I have tried not to view it from a producer’s point of view but there are clearly things that the report identified very specifically, which I would like to highlight and reflect in this short contribution. I thank the noble Lord, Lord Carter, again for initiating the debate.

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6.26 pm

The Earl of Caithness: My Lords, I, too, thank the noble Lord, Lord Carter, for introducing this debate, which is very timely considering the negotiations that are going on with the reform of the common agricultural policy in Brussels and elsewhere. I have found it a huge privilege to serve on the committee for a number of years. My time is up and I have now moved on, but it has been a great pleasure working under the noble Lord’s chairmanship. His fairness both to us as members of the committee and to those whom we interviewed became one of his hallmarks.

One of the other hallmarks of his chairmanship was the noticeable improvement in Defra’s communication with the committee, which has now come to a grinding halt with this report. It is extraordinary that I received notification that the government reply had finally been received, after numerous requests from our clerk and endless telephone conversations, when I was in Romania last week. It is a wonderful place. It used to be a communist country and grows its own sugar. I managed to ask some of the farmers there what they considered would be an appropriate response, and I can tell my noble friend Lord De Mauley that his officials would all get promoted under the communist regime. The farmers felt that the bureaucratic system that they endured was nothing compared to what we are enduring in this country at the moment.

I really hope that my noble friend will get a grip on his officials. It is treating Parliament and the committee with contempt that we did not get a reply for nine months. Even the European Commission got its reply in during March. Perhaps my noble friend will take the message back to his department and ask his Secretary of State to write to the Leader of the House and apologise for what has happened.

Much that I wanted to say has already been said, which is a great relief and one of the advantages of talking in the House of Lords. I will concentrate on two points. One is paragraph 31 in our report, where we rowed behind the UK Government’s position that quotas must be abolished in 2015 and import tariffs on raw cane sugar eased. However, the game has changed. The Government have already agreed, as I understand it, to support the Commission in relaxing the date for the abolition of quotas from 2015 to 2017. Why did the Government do that? Why did my noble friend’s department move the goalposts in the middle of the CAP negotiations? What did we get for it? There has been a huge protectionist influence on the sugar regime, as was pointed out by the noble Lord, Lord Carter, and my noble friend Lady Byford, and yet we have already given way on this. It seems ludicrous to me; if there is a good explanation perhaps my noble friend could tell us.

On the points raised by the noble Lord, Lord Carter, on consumers, I thought that the Commission’s reply from Vice-President Šefcovic was perhaps a little arrogant, complacent and offhand towards the work of the committee. He was very dismissive of some of the suggestions that we put forward for the Commission. The noble Lord quite rightly highlighted the fact that precious little had been done on working with consumers, who, at the end of the day, are the ones who pay the

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bills. Have the results that were expected in February 2013 on the EEC study come in yet, and what are they?

In his letter, the vice-president states that the EU will undertake that in future, when the regime continues, the EU sugar growers and the EU sugar undertakings should have mandatory written contracts. I would be grateful if my noble friend could comment on that, on whether the Government find that acceptable and in what form those contracts will be.

The presence of my noble friend Lady Byford was hugely missed on the committee. It is one of the sadnesses of the ways in which some of our rules are interpreted that she could not take part. Her knowledge as a farmer and beet grower would have been immensely useful. She highlighted the briefing that we have received from the UK Industrial Sugar Users Group. I found that particularly interesting because it updates the graph in our report at figure 1 on page 11. It highlights how, since 2006, the EU sugar regime has failed. In July 2006, the EU average price for white sugar was 75% above the world market price in London and for a brief period in 2010 and 2011 they were about level. Then there was a coming and a going, but the work that had been undertaken and the falls that occurred started to work.

Since then, things have gone seriously wrong and the gap between the world sugar price and the EU reference price has increased from 75% to about 90%. That surely underlines the need for comprehensive reform of the sugar market. Unfortunately, it is already clear that that will not happen. The protectionist elements in Europe—other member states—are winning the battle. Employment opportunities in this country that are currently available will be in jeopardy unless significant reforms are undertaken. The industrial sugar market accounts for 70,000 people, with a turnover of about £12.3 billion, and that accounts for 70% of the sugar usage in the UK. It must be to our farmers’ advantage, to our employment advantage and more particularly to the consumer’s advantage that sugar is moved forward. Instead of it being a bitter pill, it should become a sweet pill.

6.34 pm

Baroness Parminter: My Lords, I am another member of the sub-committee which co-authored the report, and I, too, thank the noble Lord, Lord Carter of Coles, for introducing this debate and for being such an excellent chairman. When I came into the House, less than three years ago, I was pretty much a new girl in the committee. The noble Lord was nothing other than welcoming to me and ensured that all of us had our voices heard—those of us who are producers and those of us who are concerned about consumers and animal welfare. He has had a fantastic manner throughout, which has been to the benefit of the committee and its work. I am grateful to have the opportunity to put my thanks for that in Hansard. We welcome Ros but I am very grateful to Patrick.

A key outcome of any sugar reform should be to ensure that consumers pay a fair price. That is, fair in there being good reason to justify any product support—in

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this case, by the CAP—that they pay through their taxes; fair in terms of the price at the till; and fair in pricing and the externalities of the product, which in sugar’s case is its impact on human health.

I commend our chairman for the timely production of the report, if not the Government for their less than timely response. The report contributes to the debate on the reform of the common agricultural policy and, in so doing, addresses the first two of those issues about fairness of price. It supports, as do the Government, a vision of a more market-oriented agriculture where taxpayers’ money, distributed through the CAP, is used for rural development and environmental outcomes which help to build resilience to the impact of climate change and halt biodiversity loss.

It concludes that past reforms failed to bring the price down for the consumer at the supermarket and that there are insufficient good reasons to continue sugar production support. Following past reforms, as fellow committee members have highlighted, the EU price of sugar fell, but savings did not get into consumers’ pockets. That is unacceptable, but nothing in the current reform process looks as though that is set to change.

Like the noble Lord, Lord Carter of Coles, I would like to hear the Minister’s current assessment of the likelihood of the sugar quota slithering on, as the Secretary of State so eloquently put it when he addressed our committee on 15 May. What are the chances of a reasonable timeframe in which to abolish it being adopted, or will it be dragged, aided by the European Parliament, into the next round of CAP reform?

That failure to deliver lower costs for consumers in a market with few significant operators needs a spotlight shone on it. I therefore endorse the report’s call for an investigation by the Office of Fair Trading, in collaboration with competition regulators in other EU member states, to assess the extent to which sugar consumers are getting a fair deal. In the Government’s reply to the report, they highlight what the EU competition authorities and the OFT have been doing about suspected anti-competitive practices. I look forward to hearing from my noble friend whether he thinks that what they are doing is enough or whether he supports the report’s call for a full investigation of the sector.

The report reflects the strong views from the health sector that sugar is a health hazard for consumers, particularly for children, but it concludes—rightly, I think—that the control of sugar consumption on health grounds should be achieved by member state taxation and regulation policies rather than justifying EU-level continuation of market distortion.

In the face of the growing obesity challenge that this country faces, “nudging” consumers to adopt healthier lifestyles cannot deliver the pace of change required. The idea of the Government intervening to change people’s behaviour will often be controversial, but it should not be discounted when failure to do so is having adverse societal and environmental impacts and when there is clear evidence to show that such measures could work. The House of Lords Science and Technology Committee report on behavioural change in 2011 made that case very strongly.

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Taxing foodstuffs such as sugar, which can cause health problems by contributing to our rising obesity epidemic—which is particularly alarming among young people—should now be actively looked at as a means to help consumers to make more positive food and drink choices. Taxing foodstuffs has become more prevalent in fellow European states over recent years. France, for example, has introduced a tax on sugary drinks.

Current CAP reform discussions show that the Government may not be able to secure support for the recommendations of the report, but it is within their power to launch a consultation on fiscal incentives and their potential to promote healthier lifestyles. Do the Government intend to do so and to ensure that consumers pay a truly fair price for sugar?

6.39 pm

Lord Palmer: My Lords, I rise to speak very briefly in the gap. Having served in several Sessions on Sub-Committee D, I re-emphasise the point made by the noble Lord, Lord Carter: it really is a scandal that this report has taken so long to be debated. I feel very strongly that it is an insult to the members of the committee, knowing how much they have to work, read papers and so on. There was one such occasion when I was on the sub-committee when it was more than a year after our report was published that it was finally debated. I want to put this on the record. I think it is a scandal.

6.40 pm

Lord Knight of Weymouth: My Lords, I, too, congratulate my noble friend Lord Carter on introducing this debate. I think that I am the first to speak in this debate who is not a member of the committee, so I congratulate the committee as a whole on an excellent and concise report, which has been mirrored by this debate. I, too, aspire to be both excellent and concise in making my comments now, though I feel somewhat more confident in one than the other. I will leave it up to the Committee to judge which.

The EU sugar regime is impossible to defend, and I am pleased that no one has sought to do so today. Coming to this fresh, it is difficult for me to think of a worse example of the problems of the common agricultural policy and the need rapidly to reform away from the legacy policy enshrined in this regime.

In trying to understand EU matters, it is always easy to get bogged down in jargon. When I read the response from the vice-president to the committee, I was reminded of some of those problems. The noble Baroness, Lady Byford, read out a particularly interesting section on how consumers might be able to engage with the High Level Forum for a Better Functioning Food Supply Chain. It goes on,

“In this context, consumer organisations have supported the work done under the B2B platform of the High Level Forum”—

blah blah; it is a lot of euro-babble. I would therefore like to think how I would explain it to a lay person. What would I say? This is an attempt, based on my efforts to understand the regime.

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It was established 45 years ago as a Common Market organisation to protect producers of sugar. It does so, as I understand it, by using taxpayers’ money to pay a direct subsidy to producers and by setting a minimum price paid to producers by sugar factories. At the same time, we are also subsidising some of these farmers through rural development grants—and this is to produce a product that we know is unhealthy, leading to obesity and with some links to cancer.

Having then interfered with the market once, we are then locked into a spiral of constant, costly market interference. To prevent overproduction in response to the generous price, and to in some way control the cost, there are then quotas to set a limit on production. Production in excess of the quota is known as out-of-quota sugar and strict rules then govern its use. It can be exported up to another limit, sold for biofuel or other industrial non-food uses, or be counted against the following year’s quota of sugar. The quotas can be varied to try to keep up with changes in the amount of sugar that people want to buy.

So far so good, in terms of the story, but of course it does not end there, because some of the poorest countries in the world grow sugar cane. Although we know that those countries would be better off if they refined it themselves, we like to import it and refine it here. Indeed, when our beet production was limited, some of our refiners adapted to refine cane sugar themselves as well. So, we give free access to preferred poorer countries to fill the gap between what we allow ourselves to produce and what we need. Fair enough— as the noble Baroness, Lady Byford, reminds us, these countries need the help—but they get it on our terms.

However, it seems that the Commission is very bad at giving extra money to help those countries produce the cane sugar we need, so we have to make up the shortfall, which we do by importing from other countries, rather than, say, allowing ourselves to produce some more. We sometimes pay our beet producers to store some sugar so we can release it on to the market to make up for shortfall, but we are normally too slow to do this because the Commission is not proving that good at responding quickly.

I may have misunderstood some of the detail but that appears to be the story from my reading today. It is a story that could have been written by the most swivel-eyed of Eurosceptics. It is madness and needs to change. At no point are consumers accounted for and, despite all this public money, consumers are paying a lot more for sugar, as the noble Baroness, Lady Byford, set out so well.

Of course, it is easier to say what is wrong with the system than how we get from where we are now to a market-based system. I welcome the committee’s report, which is sensible and discusses the risks for ACP and LDC countries as well as others in the industry of changing too fast. I also welcome the Government’s response, although I note the comments of my noble friend Lord Carter and others who have spoken on the unacceptable lateness of that response. I also agree that the response on research appears a little complacent. However, we are all broadly in agreement.

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My position on the main specific issues is that quotas are outdated measures that create artificial shortages on the EU market, do not deliver supply to meet demand, drive prices up, affect consumers heavily, limit the functioning of the market and hinder farmers from adapting to market signals. They also hamper efficient producers and stop new entrants from joining the industry and helping to develop it. Therefore, as we have heard from the noble Earl, Lord Caithness, they should be abolished as soon as possible. I hope that the Government will find some friends on the Council and reject the Parliament’s proposal to delay from 2017 to 2020. I suspect that they will end up compromising on 2018. If so, I guess that I can live with that, provided that it is adhered to with no concessions to being subject to progress and such like, as argued by some MEPs.

On cane refiners, regardless of whether the quotas stay or are abolished, beet growers and cane refiners must be treated fairly. A mechanism could be introduced so that when it is clear that a refiner’s raw material needs cannot be supplied from the preferential countries or topped up from beet production, raw cane sugar from other sources would be made available at low or no import duty.

On developing countries, through the European Parliamentary Labour Party we are pushing the Commission to ensure measures to help mitigate the effects of abolition of the quotas, such as increasing competitiveness and diversifying production. We must move away from a costly system that fails to stabilise the market, is doing little to serve producers and is certainly not serving consumers.

We would do well to recycle some of the savings from abolition into education about the health effects of consuming too much sugar. However, I agree with the committee that health is no reason to continue with the barmy EU sugar regime. I am, incidentally, unpersuaded as yet by the argument for using tax in this area, as the noble Baroness, Lady Parminter, argued, given the comments that we have already made about consumer pricing.

We would do well to ensure that assistance to preferred suppliers works and assist others to follow the Mauritius example and those supported by the Fair Trade Foundation to process more sugar domestically.

Most of all, we must get on with regime change. My one question to the Minister—I promised him only one question—is to ask how likely it is that we will get agreement, as planned, by the end of this month, and whether the Government will stick to their determination to phase out quotas before 2020.

6.48 pm

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley): My Lords, I am grateful to the noble Lord, Lord Carter, for instigating the debate, to all noble Lords who have spoken today and to the entire committee for its work on this report.

In responding to the noble Lord, Lord Carter, and others, perhaps I may begin with an abject apology for the delay in sending the Government’s response to the

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committee. My honourable friend David Heath has written to the noble Lord, Lord Carter, and to my noble friend Lord Boswell. However, I would like to make clear that the delay was unsatisfactory and that we need to do better in future. I should also emphasise that this episode in no way reflects on the Government’s appreciation of the committee’s work or of the report. Indeed, I find myself in the happy position of being able to say that the Government agree with the vast majority of the report’s recommendations.

It has, of course, been, as noble Lords have said, some time since the report was published. In the mean time, the common agricultural policy reform negotiations have continued, albeit slowly, and it may help if I recap the main developments.

The Commission’s proposal in October 2011 included very little on sugar. This reflected the intention not to re-enact quotas when they expire under current legislation in 2015. In fact, there was very little discussion on sugar for the first year of the negotiations. When the EU Council of Agriculture Ministers and the European Parliament concluded their separate discussions on the issue in March this year, the focus was very much on the future of beet quotas, and two different visions of the future emerged. As the noble Lord, Lord Carter, said, the Council took the view that quotas should be extended to 2017 but no further. This reflected a compromise between two broad groups. In the main, those member states that currently have a beet quota wanted to retain it, while those without a quota supported the early abolition of quotas. The European Parliament, too, had internal divisions, but eventually concluded that beet quotas should be extended until 2020.

The noble Lord, Lord Carter, and my noble friends Lady Parminter and Lady Byford asked about our view on the timing of the end of quotas, as did the noble Lord, Lord Knight, in his final question. The Council mandate is for quotas to end in 2017, and the European Parliament has voted to keep quotas to 2020. Those two dates represent the starting point for the negotiations, and we remain optimistic about which end of the range we will end up at.

The noble Lord, Lord Carter, asked how influential we have been in the negotiations on the CAP. Our support was key in ensuring that the Council reached agreement on a 2017 end date. More widely, we have seen successes in stopping excessive coupled payments and in allowing the four parts of the United Kingdom to make their own decisions on implementing the agreement.

The next step in the process is the so-called trilogue negotiations between the Irish presidency, on behalf of the Council, the European Parliament and the Commission. Those negotiations are ongoing and any agreement between the parties on sugar is now likely to occur in the context of an overall agreement on CAP reform. As the committee heard when the Secretary of State appeared before it on 15 May, much remains to be done to secure that agreement. However, we are still optimistic that, under the able chairmanship of the Irish Agriculture Minister, Simon Coveney, a deal will be struck by the end of June.

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For our part, the UK Government have done, and will continue to do, all that we can to promote the liberalisation of the EU sugar regime in respect of both beet and cane, and I thank the committee again for its report as adding weight with the Commission to that argument. We do so for good reason. EU market prices have consistently been at least 50% above world market prices for the past few years, a level of distortion not seen in any other CAP regime. That distortion arises from both production quotas for EU beet and very high tariffs on imports of cane. As a result, wholesale sugar prices for EU food and drink manufacturers have been inflated by around 35%, while EU consumers have suffered a 1% increase in the overall cost of the average food basket. At the same time, producers in many poorer countries find it difficult to market their sugar in Europe, as the noble Lord, Lord Knight, mentioned. That hinders their economic development, and undermines to some extent the EU’s own aid programmes to these countries.

Abolishing beet quotas would be an important step towards removing current market distortions. It is disappointing, therefore, that the Council could not agree with the Commission’s proposal in this respect. We do not wish to see any further delay beyond 2017. However, even more disappointing is that neither the Council nor the European Parliament has addressed the need for additional measures on cane imports. The very high tariffs that apply have an even greater distorting effect on the market than beet quotas. The exemptions from those tariffs for African, Caribbean and Pacific states and less developed countries are valuable, but the supply from those sources is less than was anticipated at the time of the last reform. That has left the market with a shortage of sugar and idle capacity in EU refineries, which is putting their future viability under threat.

The abolition of beet quotas would ease the supply shortage, but would also increase the risks to the viability of the refining sector, as market prices are expected to drop while the cost of their raw material remains high. Losing the refining industry would reduce competition and introduce food security risks to the EU market. It would also lead to job losses, including at the Tate & Lyle factory in London, and threaten the livelihood of growers of cane in developing countries that currently supply EU refineries.

The Government will therefore continue to seek fair treatment for cane refineries as the CAP reform negotiations progress. The focus in the negotiations on beet quotas has also meant that there has been relatively little discussion on inter-professional agreements, or IPAs. As touched on during the debate, IPAs govern the contractual relationship between beet processors and growers and have traditionally been valued by both parties.

The Commission’s proposals contain different wording to that in current legislation and, as indicated in the debate today, this has caused some concern whether the intention is to change the ground rules. We hope that the Commission’s own response to the committee’s report will provide some reassurance that there is no agenda to weaken the negotiating position of growers. However, this is something that we will pay close attention to as detailed rules are drawn up.

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I will now answer noble Lords’ questions to the best of my ability. To start with, in response to the noble Lord, Lord Carter, as the Secretary of State explained when he appeared before the committee, a great deal of effort has been put into developing relationships and building alliances. Noble Lords would not expect me to go into detail about our negotiating tactics, but every opportunity is being used to build on that groundwork so as to make the case for further liberalisation while accommodating other views where possible. That approach bore fruit in securing the agreement to a 2017 end date for quotas as part of the council mandate, and we should be defending that agreement very strongly for the remainder of the negotiations.

The noble Lord, Lord Carter, asked how we could achieve 2017 without financial compensation. We have strong support from some in the Council for the end of quotas. We are optimistic that the agreement will stick. We have not seen requests for compensation from other member states, and do not see a case for that. Compensation for less developed countries is another matter, and measures can be considered within the context of the European Development Fund.

The noble Lord, Lord Carter, and my noble friend Lady Parminter asked about work by the competition authorities. As indicated in the Government’s response, the EU competition authorities, supported by the OFT, are undertaking an investigation and we would prefer to see that completed before considering further reviews.

My noble friend Lord Caithness suggested that we have relaxed our demand for an end date for quotas to 2017. We argued strongly for 2015 but there was very little support in Council. In a negotiation with 26 other member states some compromise has to be made and, with Germany, France and others pushing for 2020, an end date of 2017 was a relative negotiation success.

The noble Lord, Lord Carter, asked for an update on the state of play on risk management discussions in the CAP negotiations. The past 18 months have been very challenging for farmers, with some difficult weather conditions such as late snow, even as recently as Easter, as noble Lords will know. The Government are therefore considering how best to support farmers to manage risks. The rural development regulation offers opportunities for supporting risk management. For instance, the proposed risk management toolkit, if used, could provide subsidies for agri-insurance and mutual funds. However, consideration should be given as to whether subsidies in this area are permanent or temporary and to what degree these sorts of products are needed by farmers in the United Kingdom. As the toolkit is in Pillar 2, using it would mean there would be less money available of course for other Pillar 2 activities and priorities.

The UK is opposed to the income stabilisation tool proposed by the Commission. We are concerned that it is unstable and unpredictable. In any case, the countries that use such tools, such as Canada, have them instead of direct payments, not in addition. We should not focus solely on the risk management tools set out in the Commission’s proposals that directly address risk management in the rural development regulation. There

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are other activities enabled by the rural development regulation that can be used to support farmers to manage their risks, for example by enabling them to make investments in physical assets which help to mitigate some of the risks that they may face. The development of the next English rural development programme is under way and Defra is building an evidence base. We will be considering the objectives and priorities for funding through the next programme based on that evidence and the objectives for rural development set out in the draft EU rural development regulation.

The use of tools available under the rural development regulation is only one of several options. We are working with industry, the financial sector and charities to consider what might be done. We will meet again with their representatives in July to look at the impact of recent bad weather on farming cash flows. There is a frost insurance scheme and a private sector scheme for sugar beet. There is a market for such schemes without public money.

My noble friend Lady Byford asked how the ACP and less developed countries could be helped to stand on their own two feet. There are a number of factors holding less developed countries back, including economies of scale, infrastructure and skills at both farm and processing level. Solutions need to be tailored to the specific national problems, which is being done under the accompanying measures for the last reform, albeit too slowly. My noble friend asked which countries have received assistance and how it is being disbursed. I think the noble Lord, Lord Carter, asked about that too. The main beneficiaries have been Kenya, Mozambique, Ivory Coast, Swaziland and Tanzania. My understanding is that of the £1.2 billion intended for accompanying measures, some £0.95 billion has been awarded, of which £0.5 billion has actually been paid. My colleagues in the Department for International Development are pressing the Commission on that slow disbursement.

My noble friend Lady Byford and the noble Lord, Lord Carter, also asked why, if sugar prices have declined for the producer, consumers are paying more in real terms. Available data suggest that retail prices did not fall in line with the cut in EU prices following the last reform. Sugar users contend that this is attributable to generally rising costs within the supply chain, for example, energy and labour. However, others have questioned the extent to which sugar users have been able to capture the price cuts and not pass them on to consumers. As indicated in the government response, the European Commission authorities are making inquiries into alleged anti-competitive practices, which may throw some light on this area.

My noble friend also asked whether the use of the term “inefficient” to describe the production systems in some countries is a reference from a grower’s or a refiner’s viewpoint. It is generally meant to refer to those countries or regions whose growers have the lowest yields.

My noble friend Lord Caithness asked whether the EU study results expected in February have come in yet and what they are. I am afraid that the results of

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this study have not yet been published. We are as keen as your Lordships to read it and engage with the Commission on how any conclusions can be taken forward. We will ensure that the committee is made aware of the study’s results when they are published.