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Treaty of Lisbon (No. 4)

Volume 471: debated on Wednesday 6 February 2008

(4th Allotted Day)

I inform the House that I have selected the amendment in the name of the right hon. Member for Richmond, Yorks (Mr. Hague).

On a point of order, Mr. Speaker. I have bothered you on a couple of occasions with points of order about instruction, and you have ruled on that. I raised a similar issue yesterday with the Deputy Speaker, who told me that, if I raised a point of order on instruction, which is in motion 41, before Committee, it was too late in the day. I am now trying a little earlier. Can you advise my colleagues and me about what we need to do to make the instruction more selectable, if it has a defect, and whether we can use any other procedure to have it selected?

The motion on instruction has not been selected. The hon. Gentleman has been a Member of Parliament for a considerable time and he knows that my selection—or non-selection—is not for discussion on the Floor of the House. We have a Table Office and some of the best Clerks in the world with regard to parliamentary democracy. I reckon that the hon. Gentleman knows that by now. He would do best to go there for advice. The Speaker has a lot on his plate these days.

The Secretary of State for Business, Enterprise and Regulatory Reform
(Mr. John Hutton)

I beg to move,

That this House approves the Government’s policy towards the Treaty of Lisbon in respect of provisions concerning the single market.

I believe that the founding purpose of the European Union was to try to secure a lasting peace throughout our continent by establishing, first, a common market in the key industrial sectors that could drive economic growth, create jobs and raise living standards, and that could also bring European nations closer together and, in the process, replace decades of strife and war with a new era of prosperity and progress. I am glad to say that that has remained the driving force of the European Union.

The Secretary of State just used the term “common market”, but does he accept that that is not the position today? It was, but it is not now, and those of us who believe in an association of nation states think that that was the most serious mistake made.

If hon. Gentleman will let me make my speech, I shall try to make the point in my own way. I am talking about the historical development of what started as a market and the way in which it has evolved into a wider economic and political relationship that has profoundly benefited the United Kingdom and the continent. I am sure that the hon. Gentleman will make his own contribution later. I do not want to deprive him of the opportunity of doing so, because we are all looking forward to hearing his remarks again—and again and again, probably.

The fundamental purpose that I have set out has remained the European Union’s driving force. Beginning as the European Coal and Steel Community, it has since expanded to take in more goods and more countries, and succeeded in achieving peace and clear economic and social benefits for business, consumers and citizens across Europe. I would hope that hon. Members from all parts of the House celebrate those achievements.

The European Union is now the world’s biggest single market, generating total gross domestic product of more than €12 trillion and comprising almost 500 million people. Since 1992, the single market has created more than 2.75 million extra jobs, led to a more than sixfold rise in foreign direct investment and increased trade by 30 per cent. By 2006, the single market had boosted GDP by an average of £360 for every person in the European Union. Eliminating border bureaucracy, for example, has slashed delivery times, reduced costs and opened hundreds of new export markets to British businesses both large and small.

Nearly 60 per cent. of our total trade in the UK is now with other EU member states and around 3 million British jobs are linked to the export of UK goods and, increasingly, services to the European Union. British citizens—all our constituents—benefit from both a greater choice of higher quality goods and services at lower prices and stronger protections to guarantee their consumer rights throughout the European Union. Every year, EU investment helps to create and protect UK jobs and generates trade. Those who recognise the best interests of the British people have long realised that expanding the single market can be made possible only within a clear legal framework that establishes a new set of rules.

I agree with the Secretary of State about the importance of competition and the market, but why is the treaty a step forward, given that it removes the phrase “free and undistorted competition” from the legal framework, which is what the European Court of Justice will use when making decisions in important cases?

No, there is no weakening of the competitive framework of European Union law at all, and if that is the hon. Gentleman’s point, he needs to go back and do his homework.

We needed rules that would tackle restrictive practices, vested interests and hidden barriers to trade between member states. Qualified majority voting was the essential prerequisite in establishing that new legal framework. Without it, Europe would not have made the same economic progress that it has in the past 20 years.

Does the right hon. Gentleman agree that Baroness Thatcher fought for qualified majority voting precisely because she knew that none of those matters could be carried through unless we all moved together? Is it not also true that qualified majority voting gives greater power to individual nations than the veto, because everyone else knows that they could be steamrollered if they do not join a common enterprise together?

This is a strange debate, but I agree with everything that the right hon. Gentleman has just said. My regret is that his views are not more widely held on the Opposition Benches, because if they were the United Kingdom would have a better prospect of securing more of the deals in the European Union to which he has referred. It is important that we learn the lessons of history. He was involved in a lot of the debates and discussions at that time. I pay tribute to him and to the work that Lady Thatcher did to pave the way towards progress in the European Union.

Since the Single European Act, which introduced qualified majority voting to the single market in 1987 and to which the right hon. Gentleman rightly referred, the Maastricht, Amsterdam and Nice treaties have extended qualified majority voting into new areas, helping, not hindering, the process of economic reform in Europe. Those treaties have all adapted and strengthened both EU institutions and the policies that support enlargement and extend the single market. It is now again clear that we cannot rely on structures designed for the EU 15 to help us fully reap the economic and political benefits that we believe an enlarged Europe of 27 member states offers. That is why we must ratify the Lisbon treaty.

As our competitors continue to invest in their people, ideas and innovation, so should we. As there is still work to be done in opening up European markets to effective competition, we should concentrate on doing just that ourselves. It is for those reasons that I absolutely reject the view of those on the Opposition Front Bench that our response should be another period of introspection and constitutional navel gazing. That is the last thing that we should be doing, but it is exactly what their policy towards the treaty of Lisbon would inevitably involve. That approach would not create jobs, growth or prosperity, just years of fog and an inability to drive Europe forward. There is no benefit there for UK businesses, workers or citizens, just more time and taxpayers’ money spent on debates that are already long past their sell-by date.

Does my right hon. Friend agree that one of the essential components of a strong and effective single market is strong EU institutions that can regulate and monitor it, and that anyone who argues in favour of a single market without strong EU institutions is full of hot air?

I do agree with that. Although this issue is not the direct subject of our debate on the single market, the Lisbon treaty also significantly improves the functioning of the European Union institutions, with a new and stronger role for national Parliaments in particular, which many right hon. and hon. Members from all parts of the House have accepted as important. The Lisbon treaty helps us in all those regards.

In order to set the Secretary of State’s remarks in context, will he give us his estimate of what proportion of UK law now comes from EU institutions?

I am not going to put a figure on that, for obvious reasons. [Hon. Members: “Very obvious reasons.”] Look, either we have a serious debate or we behave like this crowd of people on the Opposition Benches.


We are talking about the single market today, so perhaps I can help the hon. Member for Hertsmere (Mr. Clappison). It is probably true that the majority of the laws established to drive forward the single market have originated from the European Union. The hon. Gentleman was a Minister in the previous Conservative Government; indeed, I believe that he might have had something to do with these issues. Personally, I find the argument that because laws originate from Europe there is something intrinsically wrong with them an astonishing one. Those laws have helped British businesses. The fact that they originated in the European Union is therefore irrelevant.

To take the Secretary of State back to the substance of this debate, which is on the single market, is not the Lisbon agenda an illustration of how Europe has changed? For the first time, we have a set of benchmarks against which the success of individual nations’ economic policies can be properly assessed. That did not happen before Lisbon. Every five years we go back and review those decisions, to ensure that nations are up to speed.

That is a strong and obviously correct point, which is why we particularly welcome the response to the Commission with respect to the single market review. Following what is happening and ensuring that people are delivering what they have said they will deliver is an important part of making progress.

I am not going to give way to the hon. Gentleman now—perhaps I will do so later—because this is a shorter debate and I am anxious to ensure that as many hon. Members contribute as possible.

I think that, in essence, we need to press on with the agenda of economic reform, using the provisions of the treaty, once ratified, so to do, but we cannot do that if our focus is always on reopening debates about the treaty. What possible economic or political interest to our country could be served by a future Government taking the view that the provisions of the treaty did not bind the United Kingdom or that the UK could not sign up to further improvements to the single market in future because the proposals were being taken forward under the provisions of the Lisbon treaty? Such an approach would paralyse any future progress for an indefinite period on future reforms to the single market. It would negate any influence that we might have in the Council and elsewhere. Sadly, it is the policy of the Conservatives, should they ever manage to win an election, to follow precisely such a course of action.

I think that I understand the Secretary of State’s very cogent argument. He says that we want to be more involved in the single market and in Europe, so is it still Government policy that we should join the euro?

We have set out our position on the euro on many occasions, and the position has not changed in relation to the economic tests and a referendum on the European Union. The hon. Gentleman graciously said that I am making a cogent argument, but I do not quite understand the point that he is trying to make.

My right hon. Friend has indeed made a cogent argument on the power of the single market and our progress within it, which I very strongly endorse. Would he add to that the need to redouble our efforts at further reform of agricultural markets—an area where I am afraid that protectionism, quotas and other mechanisms proliferate?

I certainly believe that we need to press ahead with reforms in that area. My right hon. Friends the Prime Minister and the Secretary of State for Environment, Food and Rural Affairs have repeatedly made it clear that we want further progress. I hope that other changes in the Lisbon treaty, particularly around co-decision making for the European Parliament, will act as further stimulus for such reforms. It is incumbent on us all, particularly in the context of the world trade round talks, to try to make further progress.

I believe very strongly that Europe has the ambition, commitment and the talent to succeed in today’s increasingly competitive global economy. It is absolutely time to deliver, and a ratified Lisbon treaty will help make it easier to do so.

My right hon. Friend rightly refers to an increasingly competitive global economy. Will he confirm that article 118, which is on page 87 of the consolidated texts, refers to intellectual property rights, that this country has a fine tradition of design and innovation and that the protection of intellectual property rights both within the European Union and worldwide is particularly important for jobs in this country?

I agree absolutely. The single market has been an evolutionary concept. We have made significant progress, but there are still obstacles in the way of creating a truly single market in many areas, and intellectual property is one of them. I believe that the Lisbon treaty provisions will help take that debate forward. We have important safeguards on language issues—I shall come on to them in a few moments—and requirements for multiple language translations of patents, but there is no doubt that this is one important area where progress needs to be made. We will not make that progress without qualified majority voting. I am afraid that it is as simple as that. Given the range of experienced Ministers on the Opposition Benches, I hope that they would understand that rather fundamental point.

Does the Secretary of State agree with Commissioner Verheugen’s estimate in October 2006 that the cost to business of EU legislation and regulation was £405 billion a year—more than some other estimates of the value of the single market? If he does not agree with the commissioner’s estimate, what is his estimate of the burden to European business of excessive over-regulation, which is used as an excuse for the single market?

I am making a point about the virtue of qualified majority voting, whereas the right hon. Gentleman is talking about the regulatory burden on business—a genuinely important issue. I believe that there are some cases of over-regulation in some sectors in the EU, but the right hon. Gentleman will know that we have been taking the lead in the debate in Europe about a totally different approach towards regulation, which emphasises the costs and the burdens on business in Europe. Impact assessments have now become standard practice in the EU, people have to justify a proposal for regulation and the benefits have to outweigh the costs that inevitably arise once it has been decided to regulate.

There is, however, no way of achieving many of the goals we want—I would hope that we all share them, particularly in respect of the single market—without regulation, necessarily bringing some costs and regulatory burdens for employers. There is no way of pretending otherwise, but the European Union and the Commission have targets to reduce the burden of regulation, which is a welcome first step. I think that significant progress remains to be made, but in a sense the right hon. Gentleman’s argument is not germane to my point about the benefits of qualified majority voting. That is my main argument today, yet the amendment to the motion and the amendments that we will debate later this afternoon would make it harder for us to make progress on single market issues in the EU.

My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) referred to article 118 and provisions on intellectual property rights, but I understand that Conservative Members want to ensure that we cannot proceed along the lines of qualified majority voting in those areas. I suspect that there will be a division of opinion among Conservative Back Benchers on that matter. It is striking to reflect on the extraordinary divergence between the rhetoric we hear in support of the single market and the content of the amendments, which would make it very difficult for us to make the further progress that we need.

Will the Secretary of State confirm that in the European constitutional convention, the UK Government sought an exemption for intellectual property rights?

That is true—[Interruption.] No, it does not lead to a collapse of my argument. The important point about the treaty is that it contains essential protections that will help us to deal with restrictive practices, particularly the insistence on language requirements. The treaty contains important provisions that will advance the arguments that I am making about extending and deepening the single market.

If right hon. and hon. Gentlemen will allow me to make some progress, we can return to this issue later.

We know that back in the days of Maastricht, the Opposition could not unite. The consequences of the Tory policy of fundamental renegotiation of the Lisbon treaty would, I believe, risk our entire membership of the European Union itself. Many Opposition Members in their places today openly advocate British withdrawal from the EU. That would marginalise us during one of the most important periods of reform to the single market.

As I said earlier, the treaty does not make any fundamental changes to the legal basis of the single market, but it introduces a number of technical measures that could benefit UK workers, consumers and businesses even further. It includes a new protocol on competition policy, which I understand is the principal focus of the Opposition amendment to the motion. For reasons that I shall set out in a few moments, I believe that the amendment is wrong about the new treaty and the status of the protocol. It clearly betrays Conservative Front Benchers’ enduring pathological dislike of the European Union and offers further proof, if any were needed, of why they should not be trusted with the responsibility of government.

Order. I must tell the hon. Member for Hertsmere (Mr. Clappison) that it is fairly evident that the Secretary of State is not prepared to give way at the moment, so the hon. Gentleman must not remain on his feet.

I will give way to the hon. Member for Hertsmere in a few moments, but I am anxious to make some progress with my speech.

Articles 85 to 93 of the original treaty of Rome of 1957 stipulated that the Community should monitor and enforce free and fair competition in markets across Europe. With much of the legislation required to establish the single market already in place, the new protocol ensures that proactive competition will remain the major focus and driver of single market policy in the 21st century. The protocol states and confirms, as did the treaty of Rome, that establishing an internal market is a key objective of the European Union and that ensuring free and fair competition across the continent is essential to doing so. The protocol is legally binding and an integral part of the Lisbon treaty. As the treaty itself states:

“The Protocols and Annexes to the Treaties shall form an integral part thereof”.

The wording of the principal treaty articles governing the regulation of competition in the European Union—4, 27, 34, 81 to 89, 96, 98, 105 and 157—are substantially unchanged by the Lisbon treaty, providing an additional layer of protection. Everyone in the House should therefore be clear that removing barriers to competition in the internal market will remain a fundamental part of the EU’s task once the treaty of Lisbon has been ratified.

The Lisbon treaty also expands the Union’s objectives to include references to a

“highly competitive social market economy and free and fair trade.”

Under the terms of the treaty, the Union has a duty to promote those values in every area. The binding protocol on the single market embeds those principles still deeper into the European Union’s agenda. I will now give way to the hon. Member for Hertsmere, for the last time, I hope.

The Secretary of State has been very generous in giving way. While the provision has been placed in a protocol, where it will have such legal force as comes from being in a protocol, free and undistorted competition has been removed from the objectives of the Union and relegated to a protocol. Will he explain why that happened, and how the Government allowed it to happen?

I am sure that the hon. Gentleman has studied carefully the consolidated text of the treaty, and he needs to look at article 51, in which the position is made absolutely clear: the protocol has exactly the same legal effect as any other part of the Lisbon treaty. There is absolutely no basis of fact or law in his assertion that somehow including the provision in a protocol in any way involves a relegation of the issue governed by the protocol. If he has any doubt about that, he should look again at the treaty. He will also probably want to look at the provisions of the Vienna convention, as I have done in preparation for the debate, in relation to how international treaties are to be interpreted. He will find a clear exposition of the international law of treaties and how questions of interpretation in relation to preambles, annexes and protocols are approached. The rebuttal to the Opposition motion can be found in all those sources. The Opposition have misunderstood the legal basis of the protocol. That flushes out one of the most unpleasant aspects of the debate, which is the feverish hatred of all things European that permeates those on the Opposition Benches—and has come principally from those on their Front Bench—with some noble exceptions, although only one of them is on the Opposition Benches today.

The European Commission, strongly supported by the UK Government, is now pushing ahead with implementing the single market review and the Lisbon agenda, both of which are based on the explicit foundation that Europe must continue to tackle anti-competitive practices and barriers to competition. The protocol will help us to achieve our priorities for the single market in the next decade. As Neelie Kroes, the Competition Commissioner, said recently:

“I simply do not agree with the scaremongers who argue that the Protocol is the end of European competition law as we know it. The Protocol maintains in full force the competition rules which have served European citizens so well for fifty years”.

That is also the clear view of both the Law Society—a very respected source of opinion—and the Commission’s own legal service.

I referred to technical changes in the articles dealing with the single market made by the Lisbon treaty. Some of my hon. Friends have also referred to them. They all offer the prospect of further improvements to the single market, and can therefore be seen as having a beneficial, pro-reform, pro-enterprise effect on the single market. Amendments to article 47 introduced qualified majority voting on legislation to remove barriers to self-employed professionals working in other member states of the Union. The free movement of people is one of the four key foundations on which the single market rests. That further advances that fundamental principle, and will be of particular benefit to professionally qualified people.

Preventing countries from competing unfairly by allowing their workers to be exploited is a key element in the free movement of labour. The minimum social provisions are important in that respect. Today, on the 90th anniversary of the introduction of women’s suffrage, does the Secretary of State agree that any step that threatened the treaty and led possibly to opt-outs from the social chapter would be extraordinarily retrograde and would prevent attempts to provide harmony and free competition within the market?

I am grateful to my hon. Friend for making that point. We have stood up consistently, along with others in the House, for a proper balance in the competitiveness agenda. A strong social dimension to Europe now and in the future is important. One of the best things that we did when we came into government was to sign the social chapter, as it demonstrated a clear commitment to developing that part of the European project. I derive a great deal of satisfaction, as I hope she does, from meeting constituents who have benefited from many of those provisions, which include holiday entitlement.

On the social dimension, may I record my disappointment, and that of many of my colleagues, at the way in which the Government blocked a European directive on agency workers before Christmas? Does my right hon. Friend oppose the principle of equal treatment for agency workers, or is it simply a question of negotiating an appropriate qualifying period?

We certainly do not oppose the principle of equal treatment, as we have repeatedly made clear over a long period. The text of the directive was not acceptable to the United Kingdom and other countries in the Council, which is why it was not possible to reach agreement on 5 December. The UK Government remain committed to trying to find an acceptable text on which we can agree, and which addresses our concerns about flexibility, which is crucial for the UK to secure and develop. Our labour markets are widely respected as flexible and for providing proper protection for workers. I do not want to compromise on any of those issues.

With those comments in mind, I cannot see the logic of Opposition amendment No. 145, which not only deprives UK workers of the potential benefits I have just outlined but would take a step backwards. If the Opposition had their way, they would not allow us to use QMV to develop proper protection for self-employed workers in the single market. That is not sensible. We should not take their advice on that or anything else in this debate.

As many will know, the European social fund is investing £3 billion in the UK in 2007-2013 to help the unemployed and disadvantaged improve their job prospects and skills.

The Secretary of State says that he will take no account of any of our proposals. Would it not benefit the House, however, if he were to put before us all the positions taken by the Government on these and other issues in the convention on the constitution—the motions tabled, the positions taken, the letters written—so that we know the Government’s original position? Is not that absolutely essential for informed debate in the House? It is available to some Members, but not to others. As a good House of Commons man, will he not say yes?

I always try hard to say yes to the right hon. Gentleman. His remarks, however, are principally about the old constitutional treaty, which has been abandoned. The process has been abandoned. We are debating the new treaty of Lisbon—the reform treaty. The House has ample opportunity to debate that, and I and all my Cabinet colleagues will debate it with him and others over the next few weeks.

Crucial to the EU’s success as a dynamic knowledge economy is the ability of our people to think, exploit and protect new ideas and innovation. The Community trade mark and design schemes have already proved highly popular with UK businesses, helping them to expand and safeguard their ideas in new EU markets. New article 97a establishes a legal base for the EU to agree measures to create European intellectual property rights and to provide uniform protection of IPR throughout the EU. Qualified majority voting will now apply to all aspects of the creation and administration of European IPRs, except for the issue of language requirements, which will still be decided by unanimity.

Community IPRs can foster further investment in research, design and innovation. Based on precedent and our experience of 20 years in the single market, qualified majority voting is critical. It can help to ensure that existing community IPRs can be updated quickly and flexibly as technology, business and society progress. I hope that it will also help to unblock negotiations—which have been stalled for many years—on the Community patent, and bring member states closer to agreement.

We believe that the retention of unanimity for language issues is crucial to ensure that excessive translation costs are not placed on United Kingdom businesses applying for Community patents. In our view the translation of patents should be limited as far as possible, and unanimity voting will allow us to deflect any proposals that we consider damaging to business in that context.

The introduction of new article 176A provides a specific article enabling discussion and agreement of EU energy measures for the first time. We debated those last week.

The new text on the common commercial policy ensures that the EU can continue to lead in efforts to open markets and reduce trade barriers in the case of rich and poor countries alike. The new text gives more scope for the Community to negotiate and conclude wide-ranging trade and investment agreements of major benefit to member states with third countries. For example, the EU is currently engaged in trade and investment negotiations with countries such as India and Korea. Ambitious investment agreements would increase access to their markets for UK companies, creating new jobs and increasing trade. The text also imposes an obligation on the Commission to update the European Parliament on the progress of its trade negotiations, increasing the transparency of Community-level trade negotiations.

UK business leaders have agreed that the Lisbon treaty will deliver a more effective, robust and efficient European Union to help drive forward measures such as the further liberalisation of the single market that are good for UK companies, workers and consumers. Sir Michael Bishop, chairman of British Midland Airways, said recently:

“The EU needs to be able to take decisions quickly and implement them consistently over the long term. That is why the amending Treaty is important to business and important for Europe's future.”

Bill Thomas, European president of EDS, has said:

“The new amending Treaty will ensure that we have dynamic EU institutions capable of promoting reform and delivering competitiveness and growth across Europe.”

The same point was made by my hon. Friend the Member for Wrexham (Ian Lucas). I prefer those views on the treaty to the views of Opposition Members.

I fundamentally believe that, by moving us on from the endless discussions about EU institutional reform that some Members are so keen to continue, the Lisbon treaty can help us to build a Europe ready for the 21st century: a Europe focused on the issues that matter, such as jobs, growth, and open and competitive markets. It should be possible for Members throughout the House to agree on one thing, the absolute priority of strengthening the competitiveness of the European economy. That was made clear in the European Commission’s fundamental review of the single market, published last year. The review reflected many of the policies and reforms for which we have been negotiating, including a new, flexible approach to single market policy to promote competition fully, reduce the burden of regulation, and encourage innovation. It focused on key priorities from which businesses and citizens can benefit together, such as further liberalisation of the energy and telecoms markets, the use of competition policy tools to reduce barriers for businesses, and allowing consumers to benefit from more choice and lower prices.

The Commission has already introduced a system to monitor the market and ensure its competitiveness, enabling the EU to crack down on markets where there are still significant barriers to competition. Full liberalisation of European network industries in particular, such as energy, telecoms, post and transport, could bring an extra £52 billion to £66 billion to the EU economy, create between 140,000 and 360,000 jobs, and reduce prices significantly. Progressive liberalisation in the telecoms sector throughout the 1990s has already led to cheaper prices and more choice for EU consumers. Prices for national and international calls in the EU fell by an average of more than 40 per cent. between 2000 and 2006. I believe that it is time to build on that success, and to deliver even greater price savings and choice to business and consumers.

We are also pushing for full and swift implementation of the services directive across the EU to make the free movement of services a practical reality. Services account for 70 per cent. of EU gross domestic product, but for only 20 per cent. of intra-EU cross-border trade. The agreement of a wide-ranging EU services directive was a major step forward in tackling that covert form of protectionism. Full implementation of the directive will make it easier for service providers to set up and deliver services in other member states, increasing access to new markets and consumer choice. It could be worth between £4 billion and £6 billion per year, and could bring about 80,000 new jobs to the UK economy.

A truly enterprising Europe must slash the bureaucracy that holds opportunity back, and I am glad to say that ensuring better regulation is now a priority in Europe. The EU is working towards achieving its target of a 25 per cent. reduction in administrative costs, which will help to promote fair, open competition, empower consumers and encourage innovation, and which promises an increase of up to £100 billion in EU GDP.

The Secretary of State referred to the services directive, which applies to private sector services. Will he say a little about where public services fit into the internal market? Does he believe that the rules of competition policy and the principle of the internal market should be extended to include them?

Some of the issues have already been addressed in the European Court of Justice in recent litigation. I am thinking particularly of the Watts case, in which I was involved as a junior health Minister. The Lisbon treaty includes provisions relating to services of general economic interest as well, but it is clear that the prime responsibility for the organisation and funding of public services is a matter for member states rather than the European Union.

There are provisions in the treaty that deal with important areas in which greater collaboration and co-operation could bring us advantages in Europe, relating to such matters as early warning of potential contagious public health hazards, about which I think we should be doing more in the European Union. There are border areas where people live very close to each other in parallel health jurisdictions. We should think about what we can do to improve cross-border co-operation in that context. That was the subject of the Watts case, and it is now part of European Union jurisprudence.

The amendments that have been tabled to the Bill would exclude the prospect of any such developments. If we accepted those amendments, with which I know my hon. Friend the Minister for Europe will deal very ably in a few minutes’ time, we would not be able to make progress in those areas. We cannot do so if we do not agree the Lisbon treaty, and accept that in some areas qualified majority voting will work in the interests of the British people. That is the choice that we must face here today. [Interruption.] I hear that lot on the Opposition Benches chuntering at my remarks. I always know when they do not like what I am saying: they start chuntering. I can hear them asking “How will all these developments in the single market be secured?” Those developments will not be secured if we take their advice. As I said at the beginning of my speech, they will not be secured if we go back to Europe and say “We do not accept the treaty of Lisbon. We will not accept any further liberalisation measures if they are based on its provisions.” [Interruption.] That is clearly the position of Opposition Members. They have made it very clear. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) knows this to be true because he follows these debates, unlike some of his right hon. and hon. Friends. He knows that the position of the Opposition is precisely that. Those are the tactics that all these characters want to pursue. All these hon. Gentlemen—

He is another of them. They have all made it clear that they want us to withdraw from the European Union.

The Secretary of State referred to services, and I will come to those in a moment, but the point is this: will these changes actually help our constituents? The treaty extends the single market rules to new areas of financial services, intellectual property rights, foreign direct investment and possibly even sovereign wealth funds. Those would all come under the umbrella of the uniform principles for the first time, and that would damage the City of London, where thousands of my constituents work. Why should they have to put up with it?

Order. May I say gently to the Secretary of State that using such words as “lot”, “characters” and “crowd” departs from the normal nomenclature that we use in this place? It is probably best to keep to the usual.

I accept your admonition, Mr. Deputy Speaker. I was trying to say that they were very interesting characters. I am sorry if that did not entirely come across when I made the remark. Of course I have a great deal of respect for Opposition Members, particularly those who follow these debates closely. Obviously we do not agree on a number of matters, but I respect the way in which they have applied themselves to the issues.

As for the point raised by the hon. Member for Castle Point (Bob Spink)—and I have a great deal of personal respect for him as well—I think it would be sensible for him to make himself clear to the House too. He wants Britain to be out of the European Union, and that is the argument that he should be having with his constituents. This pussyfooting around, if I may put it that way—quibbling about this or that part of the treaty or the text—is all camouflage. We know that from a wider analysis that he and others have made that Britain would be better off outside the European Union. That would be a total disaster for the United Kingdom. That is why we cannot accept his analysis and we certainly do not accept his amendments.

None of the important objectives I have tried to outline would have any prospect of being realised if we took the advice of the Opposition and reopened the debate about the content and structure of the Lisbon treaty. It is clear that the UK’s relationship with the European Union and participation in the single market have worked to our benefit in the past, increasing business, jobs and trade, but we will continue to benefit from these gains only if the UK is actively and fully engaged in the EU, making the case front and centre for changes that will benefit UK citizens and businesses. The choice Opposition Members face is either to do what is in the long-term interests of the British people and economy—actively to engage in Europe to open up new markets and opportunities—or to let their dogmatic dislike of all things European marginalise Britain in Europe, putting at direct risk the benefits of the single market and our economic future.

I believe that the answer is clear. The Lisbon treaty gives an EU of 27 member states a solid foundation from which to move forward and tackle the challenges facing, and reap the opportunities that will be provided by, Europe in the future. On that basis, it must be ratified.

I beg to move, To leave out from “House” to end and to insert instead thereof:

“disapproves of the Government’s policy towards the Treaty of Lisbon in respect of provisions concerning the single market; notes that the Treaty proper now contains no reference to undistorted competition as one of the activities of the European Union, and indeed relegates to a protocol any mention of competition that is not distorted, with significant implications for the interpretation of European Union law; deplores the Government’s failure to block this change during the negotiations; and is concerned that the result could be the revival of protectionism in the European Union wholly contrary to Government policy and damaging to the interest both of the United Kingdom and of the European Union.”.

People are rightly angry about many aspects of the Government’s handling of the treaty of Lisbon: their incompetence in negotiating on Britain’s behalf; the casual way in which Britain’s self-interest has been abandoned by those charged with protecting it; and above all, the breach of trust with the British people in refusing to hold the promised referendum. However, amid the concerns about the impact of the treaty on matters such as foreign and security policy, justice and migration, relatively little attention has been paid to the way in which one of the best and most successful elements of the European structure has been consciously relegated to the sidelines. The purpose of our amendment is to change that.

For 50 years, the creation of what was first called the Common Market, then the single market, and now the internal market, has been at the heart of the European Economic Community and subsequently the European Union. Underlying it was the simple proposition that economic collaboration between the nations of Europe delivers prosperity, and prosperity delivers peace. Now, quite deliberately and with the connivance of the British Government, this treaty downgrades the objective of an open and competitive single market from its place at the heart of the EU’s agenda to an obscure protocol tacked on to the back of the treaty, and it undermines at a stroke one of the undoubted successes of the last 50 years, and just about the only bit of the EU structure that enjoys almost universal support.

Article 3, paragraph 3 of the consolidated treaty states:

“The Union shall establish an internal market.”

It is there in black and white. What is wrong with that?

I did not hear the word “competitive” in what the hon. Gentleman read out. I know he is a lawyer, and if he will just bear with me I shall come on to the detail of the words that have been included and those that have been left out.

I will in a moment, but I want to make a little progress first, to try to avoid the trap that the Secretary of State fell into.

The Opposition seek to strengthen the Union in its pursuit of the single market, not, as the Secretary of State has suggested, to undermine that process. Nothing could be more calculated to damage the EU in the medium and long term, and to undermine the prosperity of the member states as they face the challenges of the 21st century, than the symbolic downgrading of the central place in the EU’s structure of the open competitive single market.

This Government stand accused of a sell-out of truly historic significance. It is a sell-out based not on malevolence, but on sheer incompetence. What we have heard today from the Secretary of State is a breathtaking dose of complacency and wishful thinking.

The hon. Gentleman told my hon. Friend the Member for Wrexham (Ian Lucas) that the treaty referred to an internal market but not a competitive one, as if there were another kind of market. Article 3, paragraph 3 talks about

“a highly competitive social market economy”.

It is a market, and a competitive one. What other kind of market is there?

The treaty as currently drafted refers to a “social market economy”, but reference to undistorted competition has been relegated from the body of the treaty to the protocol. That is important. [Hon. Members: “Good.”] Some Members say “Good”, so there we have it.

If Members will allow me, I shall deal with this specific point in detail shortly.

The constitutional treaty, like the budget and the rebate before it, has involved a process in which the Government have through their own words and deeds showed that they understand full well where the lines needed to be drawn. They recognised precisely where Britain’s vital interest lay. As with the budget negotiation, however, faced with defeat at the negotiating table, instead of digging in and using the veto—which is there precisely to defend our national interest—they rolled over. So now Government policy is to argue that black is white—that the changes they sought to make in the constitutional convention are unnecessary and that the dangers they warned of are non-existent. That is a complete sell-out: it is a capitulation in the area of EU law that is arguably more important to Britain than any other—and in exchange for nothing.

I shall quote President Sarkozy in the course of my remarks—not necessarily with approval, but I will say this at the outset: I fundamentally disagree with the Sarkozy vision of the EU, but I do not doubt for one minute that he has pursued what he genuinely believes to be the best interests of France, and I respect him for that—for defending, however mistakenly, the interests, as he perceives them, of the people he represents. Our Government, by contrast, know that the single market based on free and unfettered competition needs to be at the heart of a prosperous Europe. They set out to achieve that objective; they argued for it and tabled amendments in defence of it, all of which was perfectly honourable. But when the chips were down, they failed comprehensively.

The hon. Gentleman talks about President Sarkozy sticking up for his country. The European structural funds were made available to help not only all countries, but all parts of all countries. In the 1980s and 1990s, previous Conservative Governments failed to draw down on objective 1 funding, especially for Wales when they were decimating the mines and the steelworks, and seaside towns such as Rhyl and Prestatyn in my constituency. They failed to claim that objective 1 funding. It was delivered by a Labour Government in 1998.

The hon. Gentleman wants to fight the battles of 20 years ago, but I think most people want to deal with the future—the future of Europe, and of Britain’s place in the competitive world order.

The hon. Gentleman has been talking about the changes—which are cosmetic in my view—in terms of competition in the Lisbon treaty. Will he accept that the protocol on the internal market and competition has identical legal force to the rest of the treaty—that is spelled out in the treaty itself—and says that the internal market

“includes a system ensuring that competition is not distorted”,

which is the precise wording of the treaty of Rome? Will he also accept that the protocol, in what I think is a new provision, refers explicitly to the enhanced powers of European institutions

“under Article 352 of the Treaty on the Functioning of the European Union”

if they are needed to achieve the goal of an undistorted competitive single market? He is simply wrong in the point he makes.

On the contrary, the right hon. Lady is simply wrong. Yes, the protocol has the same legal status as the body of the treaty—I accept that without dispute—but I shall show in a few moments how the European Court of Justice interprets European treaties when it makes decisions, and the trap that we are walking into by relegating this measure from the body of the treaty to the protocol. I shall quote to her what those who have pressed for this change have said. They have not pressed for the removal of these provisions from the body of the treaty to a protocol as a cosmetic change; they have pressed for their removal as a substantive change to the body of European Union law.

To cover their humiliation, the Government embarked on a duplicitous attempt to conceal the scale of the defeat. First, they resolved to deny the referendum that they had promised the British people, because it would have exposed the gap between the rulers and the ruled. They then created a smokescreen of red lines and emergency brakes, which my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) has brilliantly demonstrated is a meaningless charade of flannel and smoke that offers no durable protection. We have heard yet more flannel and smoke from the Secretary of State today. I suppose we should be grateful that he remembered to bring his flannel and smoke with him to the Chamber this week; we should be grateful for something.

Depending on which authority we follow, we know that the treaties are between 90 and 98 per cent. identical to the aborted constitution. It is ironic that one of the few changes made between the draft constitution and these treaties is the relegation of the concept of unfettered competition in the single market from the heart of the structure to the periphery. Instead of making a stand for the principles of economic liberalism, which he repeatedly claims to espouse, the Prime Minister slunk off to Lisbon, almost literally in the dead of night, and looking every inch like a man engaged in a furtive and shameful little mission, to sign the treaty and sell out the interests not only of Britain, but of millions of Europeans whose prosperity will now be put at risk.

Let me explain why people’s prosperity will be put at risk. In 1957 a genuine single European market, on its own, would have ensured Europe’s prosperity—but this is 2008, not 1957. At the beginning of the 21st century the single market, which after 50 years of progress remains far from complete, can only be part of a much larger global picture. We now have to look outwards and further afield. Our need is for a single, open, free, lightly-regulated and competitive market in Europe, not only for its own sake but to act as a base from which European businesses can compete effectively as part of an open world trading system. If we are to prosper, not only in our home market but in the wider world market, the EU single market must be open by virtue of the absence of barriers to competition, not by virtue of a heavy-handed structure of managed and regulated competition. Conservative Members are not prepared to see Britain’s prosperity being dragged down into the quicksand of over-regulation and economic nationalism. Our future lies in engaging with, not resiling from, globalisation.

I agree with a great deal of what my hon. Friend is saying, but may I just qualify one point? Is it not possible that we could use the word “Europe” in the broader sense to achieve the degree of co-operation that we all genuinely want, rather than the legal straitjacket created by the structure to which he referred, the European Union?

I am sure that my hon. Friend will make his case in due course. My purpose is to demonstrate that the Government know very well what is in Britain’s interest, and that although, to their credit, they went out to fight their corner, they did not do so very well, they have comprehensively lost the argument, and Europe, and Britain in particular, face serious consequences.

I shall give way in just a moment. We have heard before, and again today, that none of this matters. The right hon. Member for Leicester, West (Ms Hewitt) referred to the changes as cosmetic, but she is wrong: this does matter. We have heard that whether words are in article 3 of the treaty or in a protocol at the back is irrelevant, but it is not. The change of direction represented by the symbolic relegation of the endorsement of undistorted competition from the opening articles of the treaty to a protocol at the back does matter, and those who fought for it know that. It matters because if Europe is to prosper, much work remains to be done on the completion of a single, open and competitive market; it matters because of the political signal sent and received about the future direction of EU economic policy and its subordination to social policy; and it matters because of the legal significance of the treaties in the EU’s system of jurisprudence and, in turn, the impact on how our own courts interpret the law.

I think I followed the hon. Gentleman’s argument. He says that he wants unfettered free competition—so why does he oppose the treaty provisions that extend qualified majority voting on energy?

We have been around this loop before. We want an open and competitive European market, and a strengthening of the thrust for competition to be the driving force in determining the direction of the single market. I contend that the Lisbon treaty contains a clear political and judicial signal that we are moving in a different direction.

I hope that the hon. Gentleman will just bear with me. I shall deal with three issues, the first of which is the challenge of completing a genuine single market.

In 2000, the Lisbon strategy set out the aim of making the EU

“the most dynamic and competitive knowledge-based economy in the world”

by 2010. Last year, the Secretary of State’s Department conceded that the Lisbon goals remained “a far-off aspiration”. The Lisbon strategy’s own website notes:

“Weak competition in many markets, especially in network services including energy, continues to hold Europe back.”

The Government recognise the need for improved access to capital, lower prices for businesses and consumers, and the liberalisation of the network industries if we are to compete effectively internationally. The Department estimates that liberalisation of the network industries alone could add 1.7 per cent. to Europe’s gross domestic product. We urgently need a more efficient, competitive and integrated market, but the chances of achieving that are receding as this treaty takes form.

I hope that hon. Gentleman will turn his attention to the following point, which I was trying to make in my speech. One of the changes made by the Lisbon treaty is to move the single market provisions into that treaty; future proposals will be made under the provisions that we are debating today. I understand that his party’s position is not to accept the validity of the Lisbon treaty, even if it is ratified by this House. How, then, will he react to future proposals to improve the single market made under the Lisbon treaty? He says that improving that market is his objective, but clearly he will not be in a position to accept any such proposal, will he?

I remind the right hon. Gentleman that his party was committed to demonstrating the legitimacy of the Lisbon treaty—the constitutional treaty—by putting it to a referendum of the British people. He has resiled from that commitment, and I believe that the Government will pay a high price for doing so when the electors eventually get their opportunity to vote.

The fact is that protectionism is alive and well across the EU. Whether we are talking about French yoghurt, Spanish electricity, Austrian steel or Italian banks, EU Governments are doing their utmost to protect their prized domestic industries from the threat of foreign competitors, predators and Anglo-Saxon liberalisers, including the right hon. Gentleman. It was Charlie McCreevy who said what we all know:

“in reality, many countries give lip-service to open and free competition”.

Never has the tension between the need for free and undistorted competition in markets and the EU’s social, cultural and political aspirations been clearer. Never was there a greater need for a clear recognition that without the prosperity that a single, open and competitive market can deliver, the other aspirations will remain just that. Never was the need for the concept of competitive markets to be at the heart of the European Union greater than it is now, when it is being relegated to the margins. What the EU needs right now is a strengthening, not a weakening, of its focus on competition at the heart of everything it does.

I shall give way to the hon. Member for Wolverhampton, South-West (Rob Marris) because of his persistence.

I am grateful for the hon. Gentleman’s usual generosity. I want open competitive markets, but I object to the use of the word “undistorted” because it denotes that a state of perfect competition can be reached: it cannot. He talks about unfettered markets and so on, but I want markets with certain fetters. I want fetters so that we do not send schoolboys up chimneys to clean them and so that we do not have unguarded machinery at work. I want people to have that kind of social protection. I find the concept of undistorted competition ridiculous on the grounds of both economics and social protection. I want open and competitive markets, but “undistorted” is a nonsense word.

The word is “undistorted”, not “unfettered”, and I am coming to the political signals sent out by the treaty on the role of competition in shaping the EU. After 50 years with a clause enshrined at the front of the treaty relating to “undistorted competition”, we still do not have anything like it. What kind of signal is the Secretary of State sending by relegating that provision to a protocol? [Interruption.] Well, the term used is “competition without distortion”.

The signals that are being sent are deliberate and strong, and they strike at the heart of the cause of free and open markets and thus at the interests of the United Kingdom. The high-profile removal of the reference in the draft constitution to

“an internal market in which competition is free and undistorted”

was the first blow. The replacement of the existing treaty wording, setting as an objective for the EU the promotion of

“a high degree of competitiveness”

by the new objective stating that the EU shall work for

“a highly competitive social market economy, aiming at full employment and social progress”,

was a second, representing a significant dilution of the free market agenda. The controversial concept of a “social market economy” makes its way into an EU treaty for the first time. We are seeing the elimination of competition as an end in itself. The relegation of any reference to

“a system ensuring that competition in the internal market is not distorted”,

found in article 3 of the existing treaty, to a protocol is a third blow.

The revised Treaty on the Functioning of the European Union gives exclusive competence to the EU for

“establishing of the competition rules necessary for the functioning of an internal market”.

The EU itself will be left to judge how much competition is necessary to achieve the objective of

“a highly competitive social market economy aiming at full employment and social progress”.

That is a recipe for conflict, fudge and fiddle, if ever there was one. The Government argued vigorously against exclusive competence, but again they were defeated.

By these steps, an unambiguous political signal has been sent: the aim of competition per se is relegated, and competition as an idea is subordinated to other objectives of the Union. That is a clear and humiliating defeat for the Anglo-Saxon liberal approach to the marketplace that Governments of both persuasions in this country have advanced for a political generation.

The hon. Gentleman has made it clear that he is strongly in favour of a high degree of competition. The Secretary of State explained to him that the treaty brings the development of the single market, the furthering of competition and the effective working of the single market into the treaty. The hon. Gentleman remains committed to abrogating that treaty in all circumstances. How does he then propose to develop that market in practice, rather than in purely rhetorical terms?

We have heard from the hon. Gentleman and from the Secretary of State what the Government think. They can argue until they are blue in the face that all of this is of no great significance, but that view is not widely shared, especially by those who have fought long and hard to downgrade the competition provisions. They believe that they have won a great political victory.

For example, President Sarkozy, magnanimous as ever in victory, has said:

“competition is now just a means, not an end in itself. This opens the way to a different jurisprudence, one that favours European champions and brings a true industrial policy”.

In other words, he foresees a market managed by political deals. That is not a model of European collaboration that will bring prosperity to the British people, and ultimately it is will not bring prosperity to the French people, either.

The Commission gains a raft of new powers to act unilaterally—for example, to enact regulations relating to agreements between undertakings, to regulate permitted state aid and to rule on the legality of national restrictions on movements of capital. The internal market becomes a shared competence, which under a new definition means that member states will not be able to legislate at all in a space where the EU has legislated. They will be unable to legislate in a way that conflicts with the EU, and that would include legislation to address matters of temporary national interest, or to supplement EU law. Britain’s veto over regulations on the establishment of self-employed professionals is scrapped. The European Parliament gains vetoes over liberalisation of services and capital movements. International trade becomes an exclusive competence of the EU as far as it is defined by treaty provisions. In all those areas the UK Government fought to hold the line or secure exceptions. In every area they lost the battle, and now they seek to argue that nothing has changed.

How the Commission and the Parliament will use their new powers is an open question. It is possibly the understatement of the decade to say that it is by no means obvious that they will use them to promote free competition. I, for one, suspect that President Sarkozy’s vision of an industrial policy of “picking champions” will have an irresistible appeal in Brussels.

What is clear is that at the end of the process a strong political signal has been delivered and the EU’s approach to the development of the single market will change. It will be more interventionist, less focused on free and open competition and more focused on picking winners, imposing strategies and enforcing other EU social objectives through the regulation and manipulation of the marketplace. Only a rejection of this treaty by the British people in a referendum can now reverse that momentum.

Finally, I turn to the legal implications of the changes to the treaty and the impact that they will have on EU jurisprudence. The Secretary of State said that there were none, and that nothing would change. But there are serious concerns that the changes to the treaty will undermine the political and constitutional support for anti-trust action by the EU and will inevitably have an impact on the ECJ’s interpretation of EU law. It is true that the protocol has the same legal force as the treaty itself, but the Vienna Convention on the Law of Treaties emphasises the importance of objective and purpose as a guide to the interpretation of treaties.

The ECJ has developed a “purposive interpretation” tradition to deal with conflicts. In other words, it considers the objectives and purposes of the Union in deciding which of the conflicting arguments should be given greater weight. In relation to how the Court conducts itself, it is a simple matter of fact that no mere protocol can achieve the same interpretative status as an article of principle or an objective in the treaty itself.

The hon. Gentleman asserts that as a fact. Can he point me to a decision of the European Court that confirms that?

I had not intended to cite specific decisions, but it appears that I will have to. A 1999 decision in the Albany International case shows how fatal the relegation of this issue to the protocol will be—[Interruption.] Of course that decision was not about a protocol, because the provision was not in a protocol then. In that judgment, the ECJ noted that article 3 of the EU treaty required both

“a system ensuring that competition in the internal market is not distorted”


“a policy in the social sphere”.

It set to work to resolve the conflict on the explicit basis that both were objectives of the Union as set out in the article 3 of the treaty. Now one of those objectives will be removed from the opening articles of the treaty and put in a protocol on page 199. The Secretary of State wants us to believe that the ECJ will give the same weight to the statement in a protocol to the treaty as it gave to it when set out in leading articles of the treaty.

Only 10 minutes ago, the hon. Gentleman accepted that the protocol had exactly the same effect as any provision of the treaty.

A protocol does have the same legal status as the rest of the treaty. My point is that in pursuing the purposive interpretation tradition, the ECJ will look at the purposes and objectives of the Union, as set out in the preamble and the leading clauses of the treaty. I do not believe that the Secretary of State, who I believe is a lawyer by training, finds that concept as difficult as he is making out. Time will tell. We will see how the ECJ interprets decisions in the future in the light of the changes in the treaty. I hope that the Secretary of State will have the good grace, in due course, to come back to the House and accept that there was rather more to the changes in the treaty than the cosmetic effects that he has sought to set out today.

The Commission has based its attack on illegal state aid on article 3, paragraph 1(g), read in conjunction with article 10 of the EU treaty. The Court has held that provision elsewhere in the treaty must be interpreted by reference to the purposes expressed in article 3, concluding that public subsidies, whether or not they are apparently sanctioned elsewhere, are illegal if they distort competition, because that is the objective set out in article 3. There is a concern that the ECJ may find it difficult even to maintain the current position on state aid set out in existing case law, because it is all built on article 3, paragraph 1(g), of the treaty as it stands.

That was clearly in Sarkozy’s mind when he said that the final form of the treaty

“may also give a different legal direction to the Commission. That of a competition that is there to support the emergence of European champions, to carry out a true industrial policy”.

Some member states—no names, no pack drill—that fought for these changes have made no secret of the fact that they will seek to use them to expand the scope for legal state aid on social and social market grounds, to permit mergers on industrial policy grounds and to resist pressures for market liberalisation, particularly in energy and network services. I bet that there are people on the Government Benches who would welcome all those things.

It remains to be seen how precisely the changes to the treaty in the area of competition policy will be interpreted and used in practice by the Court, the Commission, the European Parliament and the member states. However, I can say this with some degree of certainty: the Government’s suggestion that nothing has changed is dangerously complacent and out of line with expert opinion and with the views of most of our European partners.

Let me quote Sarkozy again:

“We have obtained a major reorientation of the objectives of the Union. Competition is no longer an objective of the Union or an end in itself…The word protection is no longer taboo.”

The Government have allowed themselves to be outmanoeuvred, outwitted and out-negotiated. After 50 years, the pursuit of a single, open competitive market has been relegated to the back burner and subordinated to the other objectives of the Union. The one undisputed success of the EU is now at risk, and with it the Union’s already dubious place in the sentiments of the British people. At a time when Europe needs to become more competitive, more liberalised and more open to the world, it is set to become less competitive, more inward-looking and more protectionist. To their enduring shame, the Government have acquiesced in that process, knowing that it was wrong and that it was neither in Britain’s interest nor in Europe’s interest.

The Government’s policy in respect of the treaty and its impact on the single market is not merely incompetent and complacent, it is contemptible and duplicitous. I urge my hon. Friends to support the amendment.

Order. I remind the House that Mr. Speaker has placed an eight-minute limit on Back-Bench speeches, which applies from now.

I confess that I approach this matter from the opposite end of the spectrum to the hon. Member for Runnymede and Weybridge (Mr. Hammond). A major part of my job as an MP is to try to promote prosperity and fairness in our society and, as a Labour MP, to protect and enhance the interests of the worst-off people in my constituency and in the country as a whole. In that respect, I welcome our Labour Government’s acceptance of the social chapter.

I am extremely concerned about recent developments in the EU, and in particular about the application of fair and open competition in the internal market to health care. The EU treaty as it stands states that on health:

“Community action…shall complement national policies”.

It goes on:

“Community action in the field of public health shall fully respect the responsibilities of the Member States for the organisation and delivery of health services and medical care.”

The Lisbon treaty updates that, I suppose, and states:

“Union action shall respect the responsibilities of the Member States for the definition of their health policy and for the organisation and delivery of health services and medical care. The responsibilities of the Member States shall include the management of health services and medical care and the allocation of the resources assigned to them.”

Appearances would suggest that our national health service is and will remain the exclusive responsibility of the UK Government, but it is not and, under the Lisbon treaty, it will not. All the apparent protection for our sovereignty that was provided in the old and new treaties does not exist. It turns out that some parts of the treaties are more equal than others.

In a recent ECJ decision, now followed up by the European Commission, the neo-liberals who hold powerful positions on the Court and the Commission decided to open everything to do with health care up to internal market forces. My right hon. Friend the Secretary of State referred to the Watts case in 2006, which the British Government lost in the ECJ. The Court found that a patient from this country was entitled to be treated in another European country and that the NHS was obliged to pay the Bill. The patient was not in despair after a protracted wait for treatment in the UK. The patient’s daughter was pushing the primary care trust to provide the European care before the GP had even referred the patient to a consultant. The Court’s decision was therefore made in worship of the internal market, in blatant contradiction of the treaty protections that I have read out.

Worse was to come. In December last year, the European Commission produced a draft directive in which it asserted that competition would drive down costs in health care. We should ask whether that works in the US. That directive, as drafted—before it was withdrawn—would have meant that the British Government would have no say whatever in setting any limits on the provision. People would be entitled to get treatment in Europe. They would be given a voucher or, after they were treated, what they spent could be repaid. They would also be able to top up any costs with their own money. I cannot see why the Tories did not welcome that, because it is exactly like the patient passport proposition that they put to the country at the last general election, which was so roundly rejected and, we are told, has been abandoned as a policy.

When the ECJ decision was made and when the European Commission produced its latest document, Tories from this country in the European Parliament said that it was absolutely right. I was rather shocked to discover that the Liberal Democrats welcomed it, describing it as health tourism. I want to try to look after the least well off and the least well informed, but the decision of the Court and the proposal from the Commission will clearly give a leg-up to the well off and the well informed, disadvantaging everyone else. The well off will be able to afford to pay in advance and wait to be reimbursed. They will be able to afford to make a top-up payment if they need to, and to meet the cost of travel. Badly off people will not be able to do any of those things. The well off are also likely to be well informed and to know how to work the system.

I cannot possibly support the proposal before us today, and I am very dubious about supporting a treaty that has not done something to set aside the Watts decision. I should warn the House that I think that there are very powerful forces at work behind the proposition, and they are in this country now. Those forces are the US health corporations that are having such a bad time in their own country. They have made such a gratuitous mess of the health care system there that even the most right-wing Republican presidential candidates are calling for wholesale, root-and-branch changes. They want to ensure that every American is covered and to prevent costs from escalating even above the present level which, roughly speaking, is twice as much per head of population as anywhere else in the developed world.

However, the mess in the US is so great that the companies to which I have referred are roaming around Europe and Britain looking for markets. They are promoting the concept of competition in health provision which, if it is applied in the way set out in the European directive, is likely to be greatly to the disadvantage of the worst off and least informed people in this country—exactly the people to whose interests all Labour MPs should give a high priority. I shall therefore find it very difficult to vote for the treaty’s ratification unless the Government make some concession to that effect.

I had assumed that there would be quite a high degree of consensus on this part of the treaty debate. After all, as the Conservative spokesman conceded in his peroration, we are talking about the single area that almost everyone accepts represents an achievement on the part of the EU. Equally, the six provisions in the treaty relating specifically to economic matters are not especially controversial. They do not apply to the euro and, weak though they are, they are broadly helpful to the UK where they apply to intellectual property rights and self-employment. The other major provision relates to social security and is governed by veto, so the economic clauses do not contain an enormous amount to get worked up about.

The Sarkozy change is one issue of controversy, and the hon. Member for Runnymede and Weybridge (Mr. Hammond) managed to make a half-hour speech out of it. He massively overstated his point, but I happen to agree that it is unhelpful in the extreme that economic nationalisation should have emerged, in France and elsewhere. In addition, the concession made by the British Government may be symbolic but it is rather damaging.

The right hon. Member for Leicester, West (Ms Hewitt), the former Secretary of State for Trade and Industry, made it clear that absolutely nothing has changed legally, and that was helpful. Even so, the concession represents a step backwards in political terms, and that is why we have tabled some amendments to ensure that that aspect of the treaty is monitored as it proceeds.

The hon. Member for Runnymede and Weybridge (Mr. Hammond) decried President Sarkozy for saying that competition should be a means and not an end. I do not agree with President Sarkozy about many things, but in this case I do. However, the Tories seem to see competition as an end in itself, thus making a fetish of what is a means to greater prosperity. Does the hon. Gentleman agree that to make competition an end in itself is economic reductionism of the worst order?

Of course competition is a means rather than an end, but the French President is seeking ends that are based in economic nationalism. Most of us feel that that is extremely unhelpful in the context of the economic union.

The Secretary of State spoke about the fundamentals of the single market, and he was right to begin by emphasising that the single market is the bedrock on which the EU is built. It is the EU’s greatest success, and it underpins the rise in living standards that we all enjoy. The common market, followed by the single market, has attracted and sustained the membership of countries from southern and eastern Europe, permanently liberating the first group from fascism and the second from communism.

Those are major achievements, and we should underline the major contribution that the single European market makes to the UK economy. We often take it for granted, but roughly 63 or 65 per cent. of British visible exports now go to the EU, compared with 43 or 45 per cent. in the mid-1970s. The EU market represents some 40 per cent. of total world trade, so it is an enormous entity into which we are fully integrated. Britain has benefited disproportionately from the very large amount of inward investment in the single market that has taken advantage of its unified characteristics.

Those are major benefits, but I often meet people who would be described as Eurosceptics—I am talking about people old enough to have been able to make their choice in a referendum—and they say, “We voted to join the common market, not for silly political things like square tomatoes, straight bananas and abolishing double-decker buses.” From the outset, we must acknowledge that the establishment of the common market and the single market had very far-reaching implications for how we do things. They include many of the things that people often do not like but which are the flip-side of the benefits.

Let us remind ourselves of how the EU is structured. The simplest base is the free-trade area. Superimposed on that is a customs union, and on that a common market that involves freedom of movement of people and capital. That freedom of movement explains why so many foreigners have come here—more than 600,000 from eastern Europe alone. However, we should also recall that 750,000 Brits have gone to the south of Spain and 300,000 to France. No doubt they are regarded in much the same way as we regard the eastern Europeans—

The right hon. Gentleman is right. The Brits are good at buying houses, but not at plumbing.

On top of all that, there is the competition policy that is essential for cross-border mergers and monopoly relationships. We need to have a discipline governing state aid, and finally there is the single market. The right hon. Member for Suffolk, Coastal (Mr. Gummer) helpfully reminded us of the major contribution made by Lady Thatcher—Mrs. Thatcher as she then was—in introducing the single market. She was acting on the advice and encouragement of Lord Cockfield, who was the real inspiration behind the move.

It is worth recalling what the then Prime Minister said, as in no sense was she naive about the implications of the single market. In her diary, she wrote:

“British business would be amongst the most likely to benefit from an opening up of other countries’ markets…The price which we would have to pay to achieve a Single Market with all its economic benefits…was more majority voting in the Community.”

She therefore understood very clearly the price that had to be paid if the objective of a single market was to be achieved.

Similarly, it is inherent in the creation of a single market that there is more harmonisation. That can often be very irritating and produce slightly absurd consequences, but it has to happen. Anyone who has been involved in the standardisation process more generally, such as through the International Organisation for Standardisation in Maastricht, will know that there has to be a degree of harmonisation if meaningful markets are to be achieved.

The classic case is the square pin plug that does not fit in round sockets. At some point, people have to agree that there has to be interoperability and that means that there has to be harmonisation. However, harmonisation can be frustrating, and it imposes some of the regulatory costs about which the right hon. Member for Wells (Mr. Heathcoat-Amory) was complaining.

The hon. Gentleman is making an interesting and fair analysis, but he has not yet mentioned one of the crucial problems. I voted for the Bill that created the single market when it had its Second Reading in this House, but I said:

“The European Court of Justice will be involved…Who will control it all?”—[Official Report, 23 April 1986; Vol. 96, c. 379.]

The same question arises in connection with the matter that we are discussing today, and for the same reasons. However, the accumulated functions and the acquis communautaire have made the cost of over-regulation intolerable, and my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) was right to say that the European Commissioner had put that cost at £450 billion a year.

I will come on to the cost of regulation later. Of course there has to be an arbiter, because there will obviously be disputes. That applies to all international organisations. I am sure that the hon. Gentleman, who is a global liberal in an economic sense, will accept that the World Trade Organisation has to liberalise trade. It has dispute panels, and bodies comparable to the European Court of Justice that make rulings in much the same way as the ECJ does. That is the only way in which trade can proceed.

On bringing in common standards, does the hon. Gentleman agree that harmonisation has meant that lots of different standards in different countries have been torn up, particularly in many western, developed EU countries? National regulation has been removed and European regulation has been introduced. In eastern European countries, where there was no regulation, standards have been raised as a result. Some standards have been lost as harmonisation has taken place, but some standards have been raised.

Order. May I make a plea for short interventions? There is precious little time left, and a number of hon. Members are seeking to speak.

Does the hon. Gentleman accept that common markets that did not set up a firm institutional base with a court have been almost stillborn? Common markets need such a base if they are to work.

The right hon. Gentleman is correct. In my earlier professional career, I tried to help establish common markets in Latin America and Africa. All of them failed because they lacked strong institutional underpinning. The European Union is the one that has succeeded. Of course, that underpinning does not have to be rigid; one of the major innovations that is not referred to in the treaty, but which has become part of Commission practice, is what is called mutual recognition—recognition that we are gradually deepening the single market through mutual acceptance of other countries’ rules. That is why there is now mutual recognition of professional qualifications, for example. That does not have to take the form of blanket harmonisation. Those moves are progress.

I shall cite a few topical recent examples of Commission and Court rulings that have taken forward competition policy and the single market in a common-sense, practical way to the benefit of consumers. First, the European institutions stood up to the credit card companies on the charges that they imposed on shops for clocking up credit card transactions. The Office of Fair Trading had a go at the companies, but it was the European Union that really made the big difference to consumers.

The European institutions tackled the monopoly that British Airways and Virgin had on transatlantic flights—an issue that no British Government had been willing to deal with—and opened up the low-cost airline business. We may have doubts about that business for environmental reasons, but from a consumer point of view it was a major advance. [Interruption.] As the hon. Member for Wolverhampton, South-West (Rob Marris) is trying to prompt me to say, there have been considerable advantages on telephony, as a result of roaming charges, and before that, there were many significant advances on telephone costs. Those are all achievements of the single market concept.

The European institutions also stop Governments doing foolish things. I am tempted to mention Northern Rock. Of course we can all criticise what the Government are doing, and the press will do so, but the one institutional constraint on the Government’s aid to the bank is the European Union. That is what is binding the Chancellor of the Exchequer; he is totally constrained by the EU. Those are some of the many practical ways in which the single market benefits us.

I accept what the hon. Gentleman just said, but does he accept that if we signed up to a single monetary policy, there would be greater restraint on future Governments, whether Labour or Conservative?

Or Liberal Democrat, for that matter. Yes, there almost certainly would be greater restraint, but I think that we all accept that that is not the debate that we are having now. I think that all parties are committed to having a referendum on that possibility, if it arises in future, as it may well do.

Of course there are concerns about the single market. First, many UK businesses worry that their liberalisation is not reciprocated. A few days ago I was at Royal Mail’s south-west London sorting office—a very efficient installation. When I looked out of the window, I saw the headquarters of TNT, a Dutch competitor. The general manager said, “I’m all for liberalising the Royal Mail market, but why can’t the Germans, the Dutch and the French do the same?” and he is quite right. The logic is that prising open the other European markets will require stronger, not weaker, intervention by the Commission and the European Court of Justice.

Precisely the same point can be made about areas in which there is frustration about the slowness of the single market’s progress—a point to which the Conservative spokesman referred. The obvious example is services. It has taken years to get any kind of agreement on services in Europe. The agreement that we reached in 2006 is fairly weak; it does not respect the underlying principle of the origin of the country concerned, which is what would really open up a services market, which does exist. Clearly, for services liberalisation to progress faster, there would have to be more qualified majority voting and more European Union decision making on the matter.

Finally on the single market, the right hon. Member for Wells said that all progress has come at a price—at the cost of regulation in Europe. He is right up to a point. There is a lot of unnecessary bureaucracy associated with European regulations and directives. Of course, we have often compounded it by gold-plating them here. The Secretary of State was right to point out that there is now a process—the Lamfalussy process—for making the system much more efficient. The question that I would pose to the right hon. Member for Wells if he was still in the Chamber is this: what is the counter-factual case? What is the alternative to having a bureaucratic regulation? It is probably having 27 bureaucratic regulations across Europe, which would compound the cost many times over.

Let me briefly cover the items allocated for today’s debate, and the treaty powers relating to economic matters. The euro procedures clearly do not apply; I answered an intervention on that point. Other issues include the definition of the framework for commercial policy, which I do not think is controversial, and the co-ordinated approach to self-employment. I would have thought that such an approach was sensible. We have rules governing freedom of capital and professionals, but not self-employment, as would be logical.

The issues to do with intellectual property rights are trickier. As I understand it, the measures will make it easier to have common European Union rules on copyright, trademarks and patents, which will make it easier to do business that involves them, and that will be good for British intellectual property right holders. However, as the Secretary of State conceded, when it comes to patents, the tricky issue of language has not been resolved. We will still not have unanimity, and that is a source of frustration. As the author of the Cable Bill—that famous copyright protection legislation—I look forward to seeing copyright protected across the whole of Europe, in a way that accords with the sanctions that I introduced in the House. Those are not issues on which there is a great deal of controversy.

On the important contribution made by the right hon. Member for Holborn and St. Pancras (Frank Dobson), one of the less discussed issues is that of what are called general services, of which the NHS is an obvious example. My understanding of the protocol governing the treaty is that it does not take us very far towards a common approach to NHS entitlements. In fact, article 2 of the protocol says:

“The provisions of the Treaties do not affect in any way the competence of Member States to provide, commission and organise non-economic services of general interest “

The basic principles of the NHS would therefore remain pretty much intact, as I understand it.

However, I disagree with the right hon. Gentleman to some degree. He was right to say that the Liberal Democrats were sympathetic to the Watts ruling. The question that we would ask is this: if it is right for people to buy a house, travel or exchange goods in Europe, what is wrong with their trying to pursue a higher life expectancy in countries that have better cancer treatment? Surely common sense would say that that is a reasonable expectation in an integrated market. People will do that, and as long as the basic frameworks of the NHS remain intact, I do not see anything fundamentally wrong with enlarging the concept of a single market to include health.

If someone buys a house in Europe, they are spending their own money. If someone gets NHS treatment in Europe, they are spending somebody else’s money that might have been spent in the national health service.

That is absolutely true, but the right hon. Gentleman was also questioning people’s ability to spend their own money, was he not, through co-financing? That is a much bigger debate, and I understand the sensitivities around it. We share a commitment to the British national health service, but we also want choice to be extended.

Finally, I shall deal with the issue on which the Conservative spokesman spent so much time: the threat to the competitive market within Europe presented by the Sarkozy approach to national champions. The hon. Member for Runnymede and Weybridge is right to stress the current spasm of economic nationalist thinking about energy companies and so on, not just in France but in Spain and Italy and sometimes in Germany and elsewhere.

We should not be totally self-righteous about this. We have had and continue to have national champions of our own, but they take a different form. The debates that I have tried to provoke in the House on BAE Systems relate to a British national champion where politics and commerce have become rather dangerously intertwined. We should not be too pious on the matter, but the hon. Gentleman is right that there was a retreat from a commitment in the treaty to an undistorted internal market.

The objective legal position remains very much as the right hon. Member for Leicester, West said: we have exactly the set of rules governing the single market and competition policy that prevailed before. Neelie Kroes, the Dutch Liberal who presides over competition policy, has spelled out clearly where we currently stand. The protocol on the internal market and competition which was agreed at the European Council clearly repeats that competition policy is fundamental to the internal market. It retains the competition rules that have served us for 50 years, and reaffirms the European Commission’s duties as the independent Commission enforcement authority for Europe. Nothing formally has changed, although the hon. Member for Runnymede and Weybridge is right that there is a change of mood that is potentially worrying and it is right to signal our concerns about that.

In conclusion, it has always been understood that we on the Liberal Democrat Benches are strong supporters of the European project. We are not uncritical. There are areas where we have fundamental disagreements. We have been critical of agricultural policy, particularly its protectionist features. We have been critical of the European budget and voted against it a few weeks ago. We believe that there should be more subsidiarity, including in areas of social policy, which should not be prescriptively applied at a European level. None the less, the fundamentals of the European project are sound, they are reflected in the treaty, and that is why we support it.

The single market is central to the European Union. We know that in the 1950s the forerunner of the European Union grew out of the agreements between France and Germany for the benefit of their coal and steel industries. Fast-forwarding to the early 1990s, we eagerly anticipated the advent of the single market, with its principles of the free movement of people, goods, capital and services. Inevitably, that cannot be achieved Harry Potter-style by the wave of a magic wand on a single date. It is a process of slow evolution, and the treaty that we are debating today is one further step in that process of evolution.

I remind the House how much we depend on the single market—3.2 million UK jobs are dependent on exports to the rest of the EU, and some £550 million-worth of goods and services are exported every day to other EU countries. Some 63 per cent. of our exported goods go to other EU countries. Without the customs union that the EU single market provides, those markets would be much more difficult to access.

The creation of the single market has cut companies’ overheads and much of the red tape, especially if one compares the difficulties of exporting to non-EU markets. It also ensures that EU countries recognise one another’s product standards. That means that UK manufacturers can save on the considerable costs involved in retesting and modifying products to meet specific standards required in non-EU countries.

One would expect more services to be marketed to people in their home countries; nevertheless, some 40 per cent of services exported by the UK go to the rest of the EU. A large amount of foreign investment from other EU countries also comes into the UK. The EU provides a better deal for consumers—we have lower prices and less red tape, we have full consumer rights when we go shopping in another EU country, and we have fairer competition.

Of course things are not always right, and there will always be details that we want to work on further. For example, we know that work is being done on roaming charges for mobile phones. We know, too, about the energy market in which there has been some liberalisation but where some aspects are still not right. One domestic problem that we have is the tremendous disparity between what a poorer household pays for electricity and what a richer household pays, based on the difference between payment for electricity on a meter and payment by direct debit. There will always be problems that we need to put right, but the structures are in place to allow a pan-European approach to resolving them.

We hear a good deal about migration. We hear about the thousands of EU migrant workers who have come to the UK and who make a valuable contribution to our economy, but we often forget about the 1.6 million Britons who are living in other parts of the EU. They go there for various reasons—for work opportunities, to travel and broaden the mind, because of family ties, or simply because they enjoy the climate. The main countries that they like to go to are France and Spain.

We may have an image of such people being rather privileged—possibly top company executives—but travelling back by boat from northern Spain on a stormy Christmas eve one year, I met numerous people who were working in Spain and coming home for Christmas. What were they doing out there? They were plumbers, painters, builders and all manner of small business people who were making a good living in another EU country. They were immensely helped by the single market in so many aspects of their working lives. Even though they encountered Spanish bureaucracy, which is a law unto itself, they were grateful for the many issues that they were able to sort out much more easily because of the single market. All together, we make 51 million journeys to other EU countries, and 21 million visitors come to the UK. Tourism is an immense source of income for us.

People criticise EU legislation but we have benefited from it. Without legislation from Brussels, we would have to legislate about the same issues in this place, so it is a help to us and it can even out the differences and the competitive disadvantages between EU countries. We have the right to 20 days’ annual leave. Our pensioners can claim their pensions in mainland Europe. We have minimum standards of paternity and maternity leave, and equal pay and protection against discrimination in the workplace. All those important advances have been brought to us through the single market and EU structures.

Objective 1 status has been a tremendous help to us in Wales. It represents the principle of resourcing less advantaged areas that are often disadvantaged precisely because of their geographical location on the periphery of the EU, as opposed to the motor regions of France, Germany, northern Spain, northern Italy and the southern part of the UK, which are nearer the centre. Objective 1 money has provided immense benefits to Wales. For example, more than £3.2 billion of investment has been made in west Wales and the valleys in all sorts of projects, such as the techniums, which attract and nurture small businesses and provide opportunities for local people to develop their own businesses or attract investment from outside. In Llanelli the extraordinary task of clearing away a huge coastal area of derelict industrial ground, cleaning and restoring it and preparing it for new state-of-the-art factories has been possible with the use of EU funds.

I conclude with a few words from Giscard d’Estaing, who has not yet been quoted in today’s debate.

Indeed. The hon. Member for Rayleigh (Mr. Francois) did not let me intervene on him in the previous debate during which that individual was mentioned. Apart from speaking about the constitution and the treaty, Giscard d’Estaing also stated clearly that

“Britain has also been allowed to be the odd one out whenever it feels like it.”

That is an important feature of the treaty: we can have our cake and eat it. We have got what we want from the negotiations. That is why I commend the treaty to the House and I will not vote for the amendment.

We have to be very careful about being curmudgeonly about the European Union. The truth is that we are all immensely better off because we are a member of it, and the single market is the key part of that. No single market works unless justiciable responsibility is accepted; there has to be a court that makes decisions. Sometimes we do not like its decisions and sometimes we do, but the court is part of what is necessary if the thing is to work.

We have to recognise that the European Union has changed other countries significantly more than it has Britain. We always talk as if Britain has had to change. I declare an interest: I have done business in France for 40 years. That means that I know about the enormous changes that have taken place in France because of its membership of the European Union and because of the single market.

We have the curious view that somehow or other we are a sort of victim in this. One of the reasons for that is, as my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) has said, that Governments of both parties have talked about “going to Europe”—as if it is somewhere else and we are not in it—and discuss it as if they always had to go there for a battle. The truth is that we go there to sit round a table and make decisions together. Historically, we could either not make such decisions or had to fight to make them.

We should be much more willing to be enthusiastic about the successes of the European Union so that we can improve it. I say to my hon. Friends on the Front Bench that they would be more credible if they showed enthusiasm for the good things and then went on to say that they would like to improve the European Union. I would like to improve it a good deal. I have to say to the right hon. Member for Holborn and St. Pancras (Frank Dobson) that I do not understand his argument at all. If we exclude people from making choices in the European Union about the bits of his choosing, we will only open the gates to the protectionism of, say, the French—and exclude other things. The deal is for all of us, and all of us have to accept it.

The existing treaty and new treaty provide that there should not be a European Court of Justice intervention to overrule the protection for health care systems in respect of considerations of the internal market. My objection is that if that is in the treaty, the court should be bound by the treaty.

I have always believed that courts have to make decisions on the facts put before them; the bits that we get are often very partial. I prefer my constituents to have more opportunities rather than fewer. For many years, I have been seeking in the House to extend them.

I think I should go on. I say to my hon. Friends in particular that their arguments sometimes compare the European Union with perfection, as if there were a perfect alternative. I merely suggest that although the European Union is not perfect, the alternative is very much worse. A comment was made about having 27 different sets of regulations rather than one, and that was perfectly reasonable, particularly as we are largely at fault because we have gold-plated almost every EU regulation. The recent arguments about what might have happened with Northern Rock show that the very issues raised were issues gold-plated by this Government, not by the EU itself.

My experience of environmental issues suggests that the single market has benefited us considerably and that many of our most important decisions would not have been made without the pressures of the EU. If anyone really thinks that we would have had a proper water system in this country if we had not signed up to the water directive, they do not know the history. People can certainly not argue that we could have a clean air or clean water policy, within which the single market has to operate, if there were no EU.

We have to be a bit serious about the effect of the changes. I agree with the hon. Member for Twickenham (Dr. Cable), who referred to the symbolic concession made by the British Government. However, my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) explained what he said experts thought of the matter, but his quotation was not from experts, but from Mr. Sarkozy. That is like explaining the Iraq war by quoting Mr. Blair—we are not talking about an expert, but about someone who is parti pris. I want to look at independent sources. Mr. Sarkozy was putting forward his case, as politicians do. I would much prefer to listen to the Law Society, which clearly tells me that the change does not water anything down. It is symbolic; I think it a pity that it was made and that the Government did not argue well enough, but the fact is that fundamentally there is no change and nobody should be worried about the treaty as far as a single market is concerned.

We should recognise that if we want to change and improve the single market, that will mean Britain agreeing to do things together with others so that together we can create a more effective market. Instead of complaining about that, we ought to be out there explaining why it is worth while. It is better for my constituents that they can travel and know that there are the same standards of health and hygiene throughout the European Union. It is better for business men in my constituency to know that they can trade in the EU and that the standards are the same. Above all, it is because the EU is the world’s largest single market that it can get the terms of trade that we need in the world, and that is so important to us.

Having been president of the Agricultural Council, I have negotiated on the international trade in agricultural products. I can tell the House that the agreements were made between Europe and the United States. The other countries made speeches, but the decisions were made between the world’s two biggest trading units. Anybody who undermines Britain’s membership of the EU undermines our ability to play a proper part in the international trading arrangements on which we, of all nations in the world, depend most.

Some of my hon. Friends ask, “There’s a bigger world out there—why do we concentrate so much on Europe?” I say to them simply this: in the European Union we have a voice in the formulation of trading policies that enables us to create the conditions in which world trade is carried out.

My right hon. Friend is making a cogent case for his point of view, with which I do not agree. Given what he has said and all the advantages that he claims for this great European Union, why is the gross domestic product of European nations, in aggregate, plummeting?

The one advantage that I have over my hon. Friend is that I am in business, have been in business and continue to be in business. He says that the GDPs of member states are plummeting; I say to him that outside the EU they would reduce significantly more. Any business man will tell him that. My hon. Friend’s theory would destroy Britain’s ability to trade within our largest trading unit and, more importantly, its ability to arrange the terms of trade in a way that was beneficial not only to the whole of Europe, but to Britain in particular.

I would simply say to my hon. Friend that, if he wants to relegate us to the edge of the world trading system—where we would constantly have to place our future in the hands of other people and play no part in deciding how our future was regulated—then let us do what he wants. Let us make a so-called free arrangement, with none of the systems that enable us to make such decisions. I direct him to The Wall Street Journal, a newspaper that I read every morning. It said recently that it was the European Union that was laying down the terms under which trade took place, and making the decisions on the environment that were laying down the environmental terms under which people were increasingly manufacturing.

I say to my hon. Friends that we can interpret the term “social market” in two different ways. I hope that they do not really believe that competition is the only issue. No one could be a stronger supporter of competition than I, but I do not want competition that means that the Bangladeshis do not get proper payment for their work. I do not want unsafe factories to undermine British businesses. Competition must exist within a sensibly regulated market. That is what we have always believed. That is what “one nation” means. It means that we believe that competition drives the market—

The one nation that I was referring to, as my hon. Friend knows, was that of Disraeli, who was not talking about Europe. I am not keen on my hon. Friend trying to put into my mouth words that he knows perfectly well I have never said. I would just remind him that the one nation principle—the principle that we are together trying to raise the standards of all of us—applies more widely in the European Union, because we want standards to rise there, too.

The Lisbon treaty does not change the original single market very much. There are some technical points, to which my right hon. Friend the Member for Leicester, West (Ms Hewitt) drew our attention, about definitions in the main treaty and in the protocol, but the single market itself is not changed dramatically by anything in the treaty.

I know that, in a debate that is structured like this, Oppositions have to try to table an amendment that relates to the issue, and I know that the Opposition have tried very hard in this regard. However, they have not been very successful, except at incriminating themselves, because the only term that catches my eye in their amendment is “undistorted competition”. We have already heard exchanges on that subject between the right hon. and learned Member for Rushcliffe (Mr. Clarke) and my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) and me. What we have learned from this debate—and we might learn more—is that we are beginning to understand more about the Conservatives, the single market and the European Union itself.

The main thing that we are beginning to learn is that the Conservative party today does not understand what is on offer. I exempt from that observation the right hon. Member for Suffolk, Coastal (Mr. Gummer), who made his position very clear. I agreed with almost everything that he said about a modern Britain in a modern European context. The rest of the Conservatives who have tried to take part in the debate have, however, failed to be precise about what they actually stand for.

The right hon. Member for Wells (Mr. Heathcoat-Amory) seemed to want no regulation at all in the European Union, and to send the kids back up the chimneys. He seemed to want a kind of pre-mercantile anarchic capitalism, if there is such a thing. I know that some members of the Conservative party want a customs union, and some of them might want a common market. I have to say to them, however, that none of those things is on offer. When the Conservatives talk to British business and British work people about what is on offer, there is no point in talking about pre-mercantilism, anarchic capitalism or customs unions, because they do not apply.

What is on offer is a single market and a social market. We cannot have just a single market. I think that most Members on both sides of the House want a single market, but, if that is what we want, we also have to agree that there is a social market. The Conservative party—although not all Conservative party members—are now pretty much isolated in the whole of Europe. Apparently, it has only one ally, which is some right-wing fringe party in the Czech Republic. That is the only party with which the Conservative party is prepared to sit down and talk about common positions before entering into negotiations in the European Union.

Some Conservative Members have been here before. I see the right hon. Member for Skipton and Ripon (Mr. Curry), who has been in the European Union and knows how negotiations take place. One cannot build alliances only with fringe parties in the Czech Republic if one is going to represent British business—

The party to which the hon. Gentleman is referring is the ODS, which is the party of Government in the Czech Republic. Is he saying that the Czech Government are a fringe party?

If the hon. Gentleman is accurate, it is one of the coalition parties in the Government, and it is considered to be a relatively fringe party. That is the view that I have picked up, and I am sure that it would be confirmed by anyone else in the European Union. It is not akin to a main conservative party in Germany, France or suchlike.

I support what my hon. Friend is saying. The ODS is a fairly new, right-wing party. Does not that show the degree to which the Conservative party is going off the rails? The main conservative parties across Europe—the Christian Democratic family—accept the economic dimension of the single market, the social dimension that the European Union now has, and the political dimension that has come with the development of the European institutions.

Before the hon. Gentleman responds to that intervention, may I say that although we have a time limit of eight minutes on Back-Bench speeches, an awful lot of Members are still trying to catch my eye and it would be helpful if any hon. Members feel that they can take less than their allotted time.

I am grateful to you, Mr. Deputy Speaker. This hon. Member will feel able to take less than his allotted time.

I agree with my hon. Friend the Member for Preston (Mr. Hendrick). The tragedy for the Conservative party’s relationship with British business is that British business knows that the party is off the rails but does not know where or how it is off the rails. The Conservative party cannot face up to the realities of modern-day participation in Europe, as British business has to. British business and the people who work for it have to face up to the realities. Would Nissan in Sunderland, or Sanofi Aventis or Nestlé in my constituency in Newcastle, have any trust in a Conservative Government with such an unclear and, where it is clear, negative policy towards Europe? When there are issues that matter to them—in Nestlé’s case, the sugar agreement negotiated by the European Union—they want to know that the British Government can sit down cogently with other Governments and other parties throughout Europe to find a negotiated solution that is sensible for Europe and sensible for British interests? If companies such as those were considering investing in Britain, before doing so they would think about it very seriously were there a Conservative Government with a policy as unclear and as negative as that of the current Conservative Opposition.

All those things are very damaging, not only for the Conservative party but for British industry. One thinks back to the days of Macmillan and Heath. In Heath’s time, I used to attack the Conservative party for being too close to British business. It is miles away from British business now, with no comprehension of what is entailed in trying to build a product, trade within Europe and seek investment from Europe.

I am not taking any more interventions, as I promised Mr. Deputy Speaker that I shall not take my full time.

In the short term, it is crazy to believe in a competitive economy and not to accept the fairly modest changes in the Lisbon treaty to extend liberalisation through qualified majority voting in the energy markets—that is vital for the companies that I mentioned but also for everyone else—in telecommunications, where Britain has a fairly strong role and it would definitely be in our interests, and in financial markets and services. In the long term, were I speaking on behalf of British business generally—I am speaking only on behalf of businesses in my constituency—I would worry that a major political party in Britain has such a low commitment to the European Union that it puts at risk all the benefits that were mentioned by the right hon. Member for Suffolk, Coastal and which are available from the single market.

All those companies and all the people who trade in Europe recognise that by any sort of definition of a civilised industrial scene, it is not possible to have a single market without a social market. Both are taken together, and then we look for reform. It is important to reform them both so that they both work effectively.

It is a pleasure to follow the hon. Member for Newcastle upon Tyne, North (Mr. Henderson). I do not agree with everything he said, but he is extremely well informed about this subject. It is also a pleasure to follow my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), with whom I am in complete agreement on these matters. It has been a strange debate because, as the hon. Member for Newcastle upon Tyne, North illustrated and implied, we have had a general debate about the single market and its history, rather than line-by-line consideration of the changes that the Bill makes, which is what we were promised.

There is another reason why this debate has been strange. Perhaps we should rename it the Lady Thatcher debate, because her achievements in introducing the Single European Act and the single market have been lauded throughout the House. There is now a consensus. Thinking back, I cannot remember Lady Thatcher being decked with garlands of praise by the then Opposition. Labour and Liberal Democrat Members might be provocative in the debate, but I have quotes of what they said at the time. I will not use them because I do not want to disturb—[Hon. Members: “Go on!”] A good précis would be that she got it all wrong and that Britain was isolated in Europe. Suffice it to say that I would rather have Mrs. Thatcher negotiating for me on the rebate when she is isolated, than certain other leaders with plenty of allies.

The hon. Member for Twickenham (Dr. Cable) is right when he says that the single market has been at the heart of public perception of the European Union in the UK. As he rightly reminded us, that goes back to the referendum of 1975, when being part of the trade bloc was the first of the three main reasons that the Government of the day gave for saying yes. The other two reasons were a guarantee of secure supplies of food and getting more European Community money spent in Britain. In view of the subsequent history of the common agricultural policy—about the only European matter with which the Liberal Democrats would now disagree—and the tangled history of the UK contribution to the budget, perhaps it is best to draw a veil over both those issues.

To the credit of the Government of 1975—a Government who had some impressive and significant figures, and some very good parliamentarians—they were clearly worried about the impact of the European Union on this House. A large section of the explanatory document that they issued was entitled, “Will Parliament lose its power?” The electorate of the day were told:

“It is the Council of Ministers and not the Market’s officials who take the important decisions. These decisions can be taken only if all the members of the Council agree.”

That solemn safeguard has long since fallen by the wayside.

The hon. Gentleman mentioned the Single European Act and the Maastricht treaty in glowing terms, but did not those treaties bring about the two greatest—by a massive margin—extensions of qualified majority voting?

It would have been better if the hon. Gentleman had waited until the end of my speech. I shall give way to him once he has heard my whole argument.

We now see a consensus on the Single European Act. That Act did indeed establish qualified majority voting to complete the market, but the problem is—and it is also a problem for the hon. Gentleman—that it did not stop there, as far as the European Union was concerned. We now see, particularly in this treaty, an extension of qualified majority voting into fields far beyond the single market. I asked the Secretary of State what proportion of our law came from the EU, and he did not know. I am not sure that he would know how much of our law is determined by qualified majority voting either. The ink was barely dry on the Single European Act when the process began that led to the treaty of Maastricht, to which the hon. Gentleman also alluded, and the Conservative Government of the day, very much to their credit, negotiated to put in place the safeguard of a pillar structure. The ink was barely dry on the treaty when the European institutions moved to new ground and set about collapsing the pillars.

We moved on—this is the real answer to the hon. Member for Birmingham, Erdington (Mr. Simon)—to the European area of justice, freedom and security, more developments in the common European foreign and security policy, and developments that we were told might lead to common European defence. We then came to the long list of policy areas that the treaty contains. The right hon. Member for Holborn and St. Pancras (Frank Dobson) gave a good example. He complained that the health service would not be the sole responsibility of the House and was worried about the influence of US health corporations.

Whatever our view of the Single European Act, we must ask whether it was the genuine aim of the European Union or simply a tool to accomplish other, different objectives. That is a live debate in Europe—perhaps it should be heard more in this country.

The outcome of the negotiations on the treaty provided one answer to that debate. After the French no, the Government experienced the humiliation of “competition… free and undistorted” being removed from the list of the objectives at the beginning and put into the protocol at the back.

The Government are trying to get round that political humiliation with an argument based on legal technicalities about the effect of law in the protocols and law in the body of treaty. The objective was moved expressly and deliberately through the intervention of the French Government. It was at the beginning of the treaty and would have determined the shape of the EU and the shape of things to come. Our Government’s negotiations on that failed and we suffered the humiliation, which has been trumpeted in France and many other parts of the EU, that free and undistorted competition is not the EU’s objective. Whatever the legal force of the Government’s achievement, it is not the same as having competition as an objective.

Time and again, the Government return to the House from negotiations and try to put a brave face on their defeats. They have had to accept provisions that they opposed and subsequently performed contortions, with Ministers describing them in the House as a great step forward and good for the country while simultaneously introducing proposals to ensure that they would not apply here.

Historians will have an interesting time investigating the background of and motivation for the UK negotiating position last June and earlier, when the rebate was lost. My hon. Friends talk of incompetence and it may be part of the historians’ remit to investigate that. However, such failure is partly inherent in the UK’s relationship with the supranational authority of the EU.

It is a shame that Ministers cannot admit the truth to the House: sometimes, because of the nature of the institution, they cannot get their way in negotiations and they have not been able to secure what they and this country’s electorate would have preferred. We must therefore be careful and jealous of the power of the House. We must be careful about the matters for which we permit the EU to exercise power over our electorate.

Power is either exercised here, where we are accountable to our constituents and Governments are accountable to the people, or it is not. In the latter case, it is exercised elsewhere and the relevant authority is not so accountable. We sometimes pretend that, in the history of our relationship with the EU, there is some huge, underground storage facility beneath the House, containing unexercised and undistributed power.

I reiterate that power is exercised either here or in Europe, by a supranational authority, over which we have limited ability to shape what takes place. Of course, we go to the limit of that ability, but it is not the same as national parliamentary accountability. That is the shame of our current proceedings, which are a travesty. We have been denied line-by-line consideration of the treaty. There could be no more compelling evidence of the way in which power has passed from the House and the House has been degraded. That is to the House’s discredit.


I now have to announce the result of the Division deferred from the previous day.

On the draft Wiltshire (Structural Change) Order 2008, the Ayes were 269, the Noes were 158, so the motion was agreed to.

[The Division Lists are published at the end of today’s debates.]