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Lords Chamber

Volume 548: debated on Tuesday 20 July 1993

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House Of Lords

Tuesday, 20th July 1993.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by
the Lord Bishop of Lichfield.

Lord Menuhin

Sir Yehudi Menuhin, OM, KBE, having been created Baron Menuhin, of Stoke d'Abernon in the County of Surrey, for life—Was, in his robes, introduced between the Lord Jakobovits and the Lord Armstrong of Ilminster.

Hong Kong: Local Enlisted Personnel

What special steps they propose in order to retain the services of naval and military locally employed personnel in Hong Kong until 1997.

The Parliamentary Under-Secretary of State, Ministry of Defence
(Viscount Cranborne)

My Lords, the locally enlisted military personnel serving with the Army and the Royal Navy in Hong Kong are a key element of the British garrison, as indeed are the locally employed civilian staff. Recruitment and retention are satisfactory and at present we have no plans to take any additional steps to retain their services between now and 1997.

My Lords, as the noble Viscount visualises the locally employed personnel taking on some of the duties of the garrison, is he confident, although he has made no reference to it, that he will be able to retain these key locally employed personnel?

My Lords, if the present rates of retention deteriorate, there is flexibility available to the Governor to advise the Ministry of Defence to take alternative steps. At the moment this is not considered necessary.

My Lords, is my noble friend aware that the LEP outflow more than doubled in 1992 relative to 1991 from 5 per cent. to 10 per cent. for the Army and 7 per cent. to 14 per cent. for the Navy? Will my noble friend speak again to his colleague in the Home Office to obtain a significant increase in the LEP passport quota second tranche, which is understood to be a derisory 44 in total for the Army and 10 for the Navy, being just 4 per cent. and 3 per cent. respectively of their strengths as at 1st April?

My Lords, I can confirm the figures that my noble friend mentioned. He may feel that as a percentage of the total LEP numbers it is a derisory figure, but I would suggest to my noble friend that as a percentage of the original quota it is a substantial percentage.

My Lords, will the Minister tell the House what the alternative steps are that he mentioned? Is he aware that as 1997 draws towards us many of these people will be wondering about their future, and if their future is not guaranteed in some way or other by Her Majesty's Government they will feel badly let down?

My Lords, I would say to the noble Lord, Lord Williams, that this overall matter was roundly aired, if I may put it that way, last week in your Lordships' House. I regret to say that your Lordships expressed an opinion which was generally contrary to the position taken by Her Majesty's Government. I have already told the noble Lord, Lord Shackleton, that if the situation should change there is flexibility available to the Governor. Indeed, locally employed personnel are considered crucial to the future stability of the garrison in the run-up to the Chinese takeover in 1997.

My Lords, the Minister mentioned alternative steps. What are those alternative steps?

My Lords, flexibility implies considerable latitude. We will cross that bridge when we come to it.

My Lords, the noble Viscount's conviction that a phrase such as the one he has just used will satisfy your Lordships is not correct. Will he now give an indication that in certain circumstances, if the prospects are bad, he will ask his colleague in the Home Office to increase the total number of people who may be granted passports?

My Lords, my noble friend—whom I am glad to see sitting on the Government Front Bench—answered questions of that very nature at some length last week. The noble Lord will be aware that if the overall quota of 50,000 is to be increased primary legislation will be required. I am sorry that my answers dissatisfied both the noble Lord and the noble Lord, Lord Williams. However, I can tell the noble Lords that flexibility is available to the Governor. We are well aware of the need to run down the garrison in an orderly manner and in such a way as to ensure that our obligations in Hong Kong are discharged. Indeed, your Lordships will be aware that a Question was answered in written form yesterday which addressed this very point.

My Lords, with respect to my noble friend's answer to my supplementary question, is he aware that in the passport quota first tranche the number of applications relative to the quota was 4:1 for the Army, 3:1 for the Navy, but 1:1 for the police and 0.6:1 for what are described as sensitive services? Does that not indicate unfair weighting against locally employed personnel in the military?

My Lords, in the first tranche the first of the four divisions of applicants under the quota was on the whole underweight. Therefore, greater weight could be placed in the other three categories, including the 7,000 in the category of the disciplined services. That accounts for the increased number available to LEPs.

My Lords, will the Minister acknowledge that the vote which took place last Thursday, which he so deplores, was formally about non-Chinese ethnic minorities but expressed the dissatisfaction in all quarters of the House at the rigidity of the Government's position on Hong Kong citizenship? Will he not indicate some further recognition of the need for that flexibility, if necessary within the 50,000 limit at this stage, for locally employed personnel and for the disciplined services as a whole?

My Lords, I was fortunate enough to be able to listen to the debate to which the noble Lord, Lord McIntosh, referred from beginning to end. I noted that the Division which took place concerned the ethnic minorities. I was also aware as a result of listening to the debate, as the noble Lord will know, that other elements of dissatisfaction with the present arrangements were expressed by noble Lords in all parts of the House. All I would say to the noble Lord is that the opinions expressed here will, of course, be taken into account by Her Majesty's Government. On the other hand, I cannot give the noble Lord much hope since, as I understand it, the orders take effect. No vote was taken on the orders themselves, merely on the Motion in the name of the noble Lord, Lord Bonham-Carter.

My Lords, is the noble Viscount saying merely that it appears that the Government can get away without any further consideration of the matter or concessions to these people who are employed locally?

No, my Lords. I hope that that is the reverse of what is the case. I have already expressed, I hope very clearly, the importance with which we regard the further employment of LEPs. They are essential. We shall certainly look at the position if the rate of resignation from the locally employed services increases to such an extent as to give us concern.

My Lords, does the noble Viscount recall the meeting which a number of us had with him on this issue on our return from Hong Kong? Does he recall that many senior officers in the British garrison expressed deep dissatisfaction about the way in which members of the British Armed Forces are being treated in terms of the allocation of passports?

My Lords, the details of that meeting are engraved deeply on my memory. The noble Lord's eloquence is equally engraved. I must say to the noble Lord that the judgment that we make must be entirely dependent on the arrangements and the algebraic formula so eloquently expressed and explained to your Lordships by my noble friend last week. The caveat which I would enter is the one that I have entered several times already in these exchanges; namely, that if we feel that alternative arrangements need to be made within the quota we will address ourselves to them.

My Lords, is my noble friend aware that in view of the sensitivity of this particular problem most reasonable people will think it very wise of the Government to keep all of their options open and not to be manoeuvred into anticipating a situation which may never arise?

My Lords, as so often, I am grateful to my noble friend. I hope that your Lordships will not feel that I have been manoeuvred in any way during the course of this afternoon.

My Lords, does the Minister agree that the fact that there was not a vote on this subject suggests that the Government are rather obsessed with the subject of voting? In the interests of the House my noble friend decided not to prolong the debate because the views expressed by noble Lords were so definite. I hope that the Minister will not use that as a serious argument.

My Lords, far be it for me to be obsessed with voting. I often feel during the course of July that your Lordships are perhaps more obsessed with voting than I am. In fact, I would greatly welcome it if Members of the Opposition Benches voted rather less than they have done in the past few months and concentrated more on the expression of their opinion. However, perhaps I may say to the noble Lord, Lord Shackleton, that I am sure the strong views expressed by your Lordships have been heard and taken into account by my noble friend.

My Lords, does the Minister say that he regrets the fact that the Opposition Benches went into the Government Lobby on the referendum vote?

My Lords, the noble Lord always tempts with his questions. If I may say so, he would be craving the indulgence of the House a little far if we started to argue once again about referenda instead of Hong Kong.

Aung San Suu Kyi: House Arrest

3 p.m.

What steps they are taking to persuade the military regime in Burma to release the democratically elected leader of the National League for Democracy, Aung San Suu Kyi, from house arrest.

The Minister of State, Foreign and Commonwealth Office
(Baroness Chalker of Wallasey)

My Lords, with our European Community partners we have repeatedly urged the Burmese authorities, both bilaterally and in the relevant international bodies, to release Aung San Suu Kyi immediately and unconditionally from detention on this, the fourth anniversary of her house arrest. She should be allowed to play her part in Burma's political future.

My Lords, I thank the Minister for that reply and the Government for the efforts that they have made, both directly and with partners in the European Community. At the forthcoming Commonwealth summit will the Government seek to obtain the agreement of Commonwealth governments in following the course set by the European Community and bringing the maximum pressure to bear on the military regime in Burma to release this distinguished lady, to end violations of human rights, and to restore parliamentary democracy in Burma?

My Lords, although Burma is no member of the Commonwealth, I am certain that noble Lords will appreciate that we have taken up every opportunity, including the further tough resolution passed by the United Nations Commission on Human Rights this year, criticising the continuing serious abuses of human rights in Burma and calling for the release of all political prisoners including Aung San Suu Kyi. I hope that we shall see some response from the Burmese. We have to keep on pressing. With the few political prisoners who have been released and the visits which Michael Aris is now allowed to make to his wife, perhaps there is a little more hope. However, she needs to be released, as do the political prisoners. That is the only action that will answer the free world's call.

Is my noble friend aware that the continued ill-treatment of this very courageous lady is an affront to the entire civilised world? Will she give the House an assurance that fresh efforts will be made to mobilise world opinion in order to achieve results?

My Lords, is there not a very strong case for taking more positive action through the Security Council against this cruel and wicked government in Burma? Will Her Majesty's Government propose to the Security Council that sanctions should be operated against them?

My Lords, it is difficult to know what to do with a country that has been totally deaf to the many and repeated calls from all international bodies. However, having renewed by our resolution in the United Nations this year the special rapporteurs' mandate to continue the public scrutiny of human rights in Burma, I am quite sure that there will be further occasions not only for discussion but also for action. I shall see whether the noble Lord's ideas can be put into action.

My Lords, is the Minister aware of, and did she support, the initiative taken by other Nobel Peace Prize winners, led by the Dalai Lama, a while ago in seeking to go to Burma to plead on behalf of Aung San Suu Kyi? Their request was, of course, refused. Is the Minister satisfied that nothing more can be done? Will she give support to the proposal made by my noble friend Lord Cledwyn?

My Lords, perhaps I may welcome the noble Lord safely back to our House, having read my newspapers in the past 24 hours. Although the noble Lord, Lord Cledwyn, is, I know, very keen that we should look at wider trade sanctions, I fear that they are unlikely to be effective without widespread international support which, sadly, is not forthcoming, in particular from some of the ASEAN countries. However, I sympathise very much that further action must be taken to help to free this very brave lady and indeed to get democracy alive again in Burma.

My Lords, if the unfortunate lady is still under restraint at the time, will the Government use the next Commonwealth heads of government meeting as a good forum in which to focus pressure on Burma?

My Lords, as I say, I am not sure that it is specifically a matter for the Commonwealth; it goes far wider. That is why, in answer to my noble friend. Lord Braine, I spoke about the United Nations. However, we shall do whatever we can to help this brave lady gain her freedom and to secure the freedom of others who are in prison on political grounds.

My Lords, the Minister referred to the ASEAN countries. Will she tell the House whether the Government have made any representations either alone or with our EC partners to those countries to try to put pressure on the Burmese Government to restore democracy and to observe decent human rights?

My Lords, the issue has been discussed in a number of different fora. We have been to the fore in those discussions with others. One has to understand that many of the countries which could be most influential are among the ASEAN group. That is why we have put pressure on them. However, they have not used their influence on the Burmese SLORC government—the military government—as we would like them to do. It is a time for more representation, not less.

My Lords, the noble Baroness puts her finger on the point. I refer to the support which the regime unfortunately receives from some of the countries geographically closest to it. Is it possible to bring collective pressure to bear on some of those countries to withdraw that support? I understand that one or two are beginning to waver. If that support was withdrawn, the world community could be satisfied and this disastrous situation brought to an end.

Life Imprisonment: Tariff Disclosure

3.7 p.m.

Whether, in the light of the judgment of the House on 24th June in the case of Regina v. Secretary of State for the Home Department ex parte Doody, they will disclose the tariff of all prisoners sentenced to life imprisonment.

My Lords, my right honourable friend will be consulting the Lord Chief Justice on how to give effect to those parts of the judgment which are binding on my right honourable friend. He will make an announcement in due course.

My Lords, I express a very limited measure of satisfaction at that somewhat evasive answer. Perhaps I may point out—

My Lords, the court's judgment has committed the Government to disclosing the tariff to all life prisoners. Is the noble Earl aware of that fact, or is it one of those questions which somehow has got lost in the wash?

My Lords, I would have been enormously unprepared for the Question had I not been aware of that fact. The noble Earl stated that he found my answer of limited satisfaction and evasive. It was not supposed to be evasive. Of course my right honourable friend is aware of what the courts have said. But how to put that into practice needs consultation with the Lord Chief Justice, because it is necessary to get right the system by which one puts into effect the bindings of the court.

My Lords, no one denies the necessity for the Home Secretary to consult with the Lord Chief Justice. However, does the Minister not agree that the administrative procedures for disclosing tariffs to those under sentence of life imprisonment could be set into effect straight away? Does he also agree that implementation of a decision following consultation could take place more quickly if those factors were put in place at once?

My Lords, before my right honourable friend makes those alterations, it is quite appropriate for him to consult the Lord Chief Justice, whose responsibility it is to administer the courts. My right honourable friend has every intention of carrying out the obligations put upon him, but it is right that he should do so in a way which is acceptable to the courts.

My Lords, will the Minister confirm that disclosure of the tariff is one of the recommendations of your Lordships' Select Committee on Murder and Life Imprisonment and that the progress which my noble friend has now suggested is to take place on consultation with the Lord Chief Justice is indeed welcome?

My Lords, I am grateful to my noble friend for giving at least one bit of support to the Government. We are doing what we are supposed to do, and I am glad that it has the approval of my noble friend.

My Lords, being mildly surprised at the uncharacteristically sharp words which the noble Earl has just directed at his noble friend, perhaps I may ask him on the general issue which is raised in the Question whether he will tell us what "in due course" may mean. Is there to be a statement before the end of the present parliamentary Session or is there not? Is he aware—I am sure that he is—that the Home Secretary lost this case before your Lordships' Appeal Committee and obviously a number of people are anxious to find out the timescale envisaged by the Home Secretary?

My Lords, your Lordships frequently ask for an explanation of the words "in due course". I am unable to give a precise explanation which will satisfy the noble Lord, Lord Harris of Greenwich. He will realise that when people are consulted it is necessary to go through the proper motions before being in a position to make a statement. If it happens that a statement can be made before the Recess, I am sure that it will be. If it cannot, it will be made later.

My Lords, is the noble Earl aware that this matter could be disposed of in five minutes? Is he further aware that those whose tariffs are 20 years or less are already being told their tariffs, but that there are about 120 whose tariffs are more than 20 years who for some reason unknown have not so far been given their tariffs? Does the noble Earl agree that they should be given them immediately? Because the tariffs are known, it would not take more than five minutes to tell them what they are.

My Lords, the noble Earl must have greater experience of the methods of the courts than I have if he thinks that anything which the courts do can be done within five minutes.

My Lords, I assure the noble Earl that it is our intention to resolve this problem. I can reassure him that we intend to do that in consultation with the Lord Chief Justice in order to make certain that the mechanism works correctly. There is nothing untoward about that.

Vat On Fuel

3.13 p.m.

Whether the undertaking by the then Chancellor of the Exchequer on 1st April 1993, that "it is not our intention that poorer people should suffer" by the imposition of VAT on fuel still represents their policy, and whether they accept the finding of the Social Security Advisory Committee that the cost of that undertaking would be approximately £720 million per annum, or £400 million per annum more than the cost of uprating benefits in line with the Rossi index.

The Parliamentary Under-Secretary of State, Department of Social Security
(Lord Henley)

My Lords, our policy remains that extra help will be given to poorer pensioners and others on low incomes before VAT on fuel and power is reflected in bills. The form this help will take will be announced in the autumn, along with its cost.

My Lords, I thank my noble kinsman for that reply, but is he aware that it is not very informative? Does he accept that the words of the former Chancellor of the Exchequer constitute an undertaking? Does he accept the findings of the Social Security Advisory Committee that that undertaking will cost far more than a mere uprating according to the Rossi index? Is he aware that if he does not compensate to the extent recommended by the committee, the Government may be widely accused of a breach of faith?

My Lords, as I made clear, I do not believe that I can comment on the Social Security Advisory Committee's figures at this moment and I have no intention of doing so. As has been made perfectly clear on many occasions by my right honourable friend the Secretary of State for Social Security, by my right honourable friend the former Chancellor of the Exchequer and by my right honourable friend the Prime Minister, my right honourable friend the Secretary of State for Social Security will wish to consider all current information before taking the final decision. Therefore, he will make his judgment on costs in the autumn.

My Lords, although I generally agree with the noble Lord that it will be necessary eventually to target help on the poorest, will he not accept that the real problem will be where to draw the line? In this instance, where would he intend to draw the line?

My Lords, I am sorry, I missed one word of the noble Lord's question. He said that the real problem will be …?

My Lords, I said that I agree broadly with the Minister on the question of the need to target help on the poorest but in this instance, as in others, the question will be where to draw the line and how to define "the poorest". Where do the Government draw the line in that regard?

My Lords, that is always the problem. It is generally a problem with income related benefits as a whole. We have said that we shall target extra help on our poorer people and poorer pensioners. That implies that we shall have to look at the income related benefit schemes. Therefore, that implies that there will be some people just above the income related benefit ceiling who will not be included, but by increasing income related benefits some of those people will be included. Obviously a new line is then drawn at which other people are excluded. That is either the virtue or the vice of income related benefits, but I am afraid that there is no answer to that, as the SSAC saw.

My Lords, on the general issue, is it not grossly unfair that it should he the poor people who are targeted to pay for the Government's failures and inadequacies rather than those who have made great profits during the period when this Government have been in power?

My Lords, I reject completely what the noble Lord says. If he had taken the trouble to listen to the various answers that I have given and had seen the answers given in another place, he would know that we have said that we shall target help on poorer people to help them meet their bills and we shall announce that help well before the first bill ever hits their doorstep.

My Lords, is the Minister aware that 7 million families—the old, the disabled and the unemployed with young children—who most need warm homes cannot now afford to keep their homes warm? If benefits are not uprated to cover all the costs of full VAT, which will cost about £2 per week, where will such families find the money? Does the Minister suggest that they should cut back further on heat, go into debt or simply eat less?

My Lords, as always, the noble Baroness has asked more than two questions and I shall answer only her first two questions. I do not accept the first point which the noble Baroness made. As regards the second point, as I have made quite clear to her and to all other noble Lords, she will have to wait until the autumn when we shall announce our plans.

My Lords, before those on the Benches opposite disappear in a welter of self-righteousness, will my noble friend confirm that when the Liberal Democrats were in what I suspect will be called their "green mode" they produced a document called Costing the Earth which advocated a tax on energy? As far as I understand it, there were not too many qualifications about that advocacy.

My Lords, I can assist my noble friend. That document went on to say:

"We would … press forward … by ending the anomalous zero rate of VAT on fuel".

My Lords, does the noble Lord agree with one view expressed in the report referred to by my noble friend that one of the reasons for the excessively high expenditure on energy by people on low incomes is the poor state of insulation in the homes in which they live? Neighbourhood Energy Action has done a great deal to put that right, but will the Government consider giving it adequate resources to cope with that very serious problem?

My Lords, that is a matter which my right honourable friend will consider. He has made it clear in the past that he will consider that.

My Lords, will the department be prepared to consider the cases of those old age pensioners who suffer from industrial diseases; for example, miners who suffer from what is called "the dust"? It can be extremely expensive for them merely to ease their pain, let alone find a cure. Will such matters be taken into consideration?

My Lords, we shall consider all matters, but the commitment that we have given is to poorer people and poorer pensioners. I am here to repeat that commitment and to repeat the commitment made by my right honourable friend.

My Lords, did I hear the noble Lord correctly when he referred to his former right honourable friend the Chancellor of the Exchequer? I believe that he meant his right honourable friend the former Chancellor of the Exchequer. I may be wrong. Is there any significance in the fact that the statement was made by the former Chancellor of the Exchequer on 1st April?

My Lords, the noble Lord is wrong. If he checks in Hansard he will find that I referred to him as my right honourable friend the former Chancellor of the Exchequer. There is no significance in the date of that statement.

My Lords, is the Minister aware that the document Costing the Earth to which he referred was a Green Paper and is not party policy? Is he further aware that it committed us even then to full compensation of those on social security benefit? Why will he not join us?

My Lords, I am sure that the noble Earl will be all too happy to deny that that was a document that the Liberal Party was committed to, particularly when there is a by-election on.


3.20 p.m.

My Lords, it may be for the convenience of the House if I were again briefly to remind your Lordships of the procedure on Third Reading.

Your Lordships will have seen that a number of amendments have been tabled for Third Reading. In discussing these amendments, the same procedure should be followed as on Report. That is that no noble Lord should speak twice, except the mover of the amendment in reply, or, with the leave of the House, the Minister or a noble Lord seeking to explain a part of his speech. Save for brief questions to the Minister, no noble Lord except the mover of the amendment should speak after the Minister has sat down.

Debate is also possible on the Motion that the Bill do now pass, but such debate should be relevant to the Bill in the form in which it has emerged.

Pension Schemes Bill Hl

Report received.

Pension Schemes (Northern Ireland) Bill Hl

Report received.

Health Service Commissioners Bill Hl

Read a third time, and passed, and sent to the Commons.

Probation Service Bill Hl

Read a third time, and passed, and sent to the Commons.

European Communities (Amendment) Bill

3.22 p.m.

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the European Communities (Amendment) Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read a third time.— (Baroness Chalker of Wallasey.)

My Lords, my noble friends on the Front Bench will be extraordinarily surprised to hear that I am attempting to make a helpful suggestion. If the action of the noble Lord, Lord Rees-Mogg, succeeds in the courts and the courts then show where this Bill is defective, the Government, I suspect, have one of two options. They can either leave over the Third Reading of this Bill for a little time and amend it to make sure that the objections of the court, should they so arise, are taken care of; or, alternatively, they can pass this Bill. The Bill can then be shown to be defective; and then they will have (heigh-ho) another year of passing another European Communities Bill through both this House and another place. All I ask my noble friends on the Front Bench, in a spirit of kindliness, of co-operation and of helping them forward with their policies—

—is: would it not be better to leave the Third Reading stage open, so that in the—it may be likely or unlikely—event that the courts find in favour of the noble Lord, Lord Rees-Mogg, and not in favour of the Government, they have a chance of rectifying the situation rather than going through a whole new Session of the next Parliament with a new Bill?

My Lords, I am sure that my noble friend wishes to be helpful to the House, and I am grateful to him for that. But I also wish to be helpful to the House: my advice to the House is to proceed with the Bill on the Order Paper. I take comfort from the fact that these matters have arisen on previous occasions. Page 52 of the Companion to the Standing Orders is quite clear on this matter: any question of sub judice does not apply to legislation.

On Question, Motion agreed to.

Bill read a third time.

Clause 1 [Treaty on European Union]:

moved Amendment No. 1:

Page 1, line 11, after ("Titles") insert ("(which other provisions shall not include the following words in paragraph 2 of Article N of Title VII "in accordance with the objectives set out in Articles A and B.")").

The noble Lord said: My Lords, as noble Lords will see, this is a very simple and straightforward amendment, although it requires some reference to the treaty to follow its effect. The amendment would in effect take out the words which are set out on the Order Paper; that is to say,

"in accordance with the objectives set out in Articles A and B"

This relates to the section (if I may help noble Lords) in Title VII of the treaty, on page 87, at Article N.2. There noble Lords will see the authority, in essence, for the calling of the 1996 intergovernmental conference for the further revision of the Treaty of Rome.

It is clear that from time to time (indeed, on many occasions) this House and the country at large have been told that it would be best that, instead of further delaying the progress of this treaty through Parliament and instead of further examination, Parliament accepted the treaty; that it should be ratified; and then at a later stage Her Majesty's Government would sort it all out within Europe. We would be then at the top table. I have to tell noble Lords that there is only one table and all 12 members of the Community are seated at it. But that is presumably the table to which my noble friends refer.

The grand theme behind all that is that opinion in Europe is moving in our direction; that the federalists have been defeated; that the centralisers have all gone; that the Treaty of Maastricht marks the high water point of the federalist advance; and that we have won all the arguments. The Prime Minister has observed that he is the greatest Euro-sceptic of them all. Presumably, therefore, it is to the arguments of the Euro-sceptics that he refers when he says that he has won the arguments. Indeed, in the interview which the Prime Minister gave on Sunday with Mr. Jonathan Dimbleby on BBC television that was a constant theme of his remarks concerning the Maastricht Treaty.

Even the Daily Telegraph has caught the habit of sloppy thinking. Today's leader is an example of extremely sloppy thinking. It refers to the fact, as it alleges in its words, that:

"it is plain that a large majority of the House of Commons favours the treaty".

In the next paragraph it says:

"It is regarded by many, if not most, MPs as a wretched piece of Euro-business which Europe would be better without".

How those two statements go together in successive paragraphs I do not know. But the leader argues further in that paragraph that,

"the national interest is best served by arguing for the future of Europe after signing the treaty, not after rejecting it"

In Article N.2 in Title VII, which is the subject of the amendment, noble Lords will see that it is written there that the intergovernmental conference will,

"examine those provisions of this Treaty for which revision is provided, in accordance with the objectives set out in Articles A and B".

What are those objectives? One has to turn to page 7 of the treaty and the common provisions. First, there is the establishment of the Union. It:

"marks a new stage in the process of creating an ever closer union".

Article B goes on to refer to the ambition of the Union,

"to assert its identity on the international scene, in particular through the implementation of a common foreign and security policy including the eventual framing of a common defence policy, which might in time lead to a common defence".

The article refers also to,

"the strengthening of economic and social cohesion … through the establishment of economic and monetary union, ultimately including a single currency in accordance with the provisions of this Treaty".

That is the agenda which is now set in the treaty for the 1996 conference - the conference at which the federalists, the centralisers, will be put to flight. But it will not be with this agenda, because with this agenda by that provision Her Majesty's Government are committed to taking forward these objectives in 1996 and not pulling back from them.

The provision also makes a little more clear why my noble friend Lord Caithness found such difficulty in telling us whether or not the Government believe that a single currency would be in the interests of the other 11 member states. The other day we were told that it was a matter on which Her Majesty's Government have no opinion. That seems strange when we realise that Her Majesty's Government have signed up to Articles A and B of the treaty. It becomes even stranger when we see that they are committed at the 1996 conference further to advance the cause of economic and monetary union. I hope that there is some explanation of that which I have missed.

I hope that it will be explained to us very clearly that the 1996 conference will not have its agenda set by those words and that we should ignore them. I hope that it will be explained that Her Majesty's Government can ignore them and that it will be open to the Government at the 1996 conference to seek to reverse the direction taken by this treaty, to move away from economic and monetary union and to move away also from the proposal eventually to reach a common defence policy.

It would be much easier for the Government if they were to accept this amendment and were not to find their hands bound by the provisions of Title VII. I beg to move.

3.30 p.m.

My Lords, we have previously discussed this matter and I am not at all sure that the noble Baroness gave satisfactory answers to the questions that we raised. We want to ensure that the view on the Continent does not prevail. The noble Baroness and indeed the Government, as the noble Lord, Lord Tebbit, has outlined, believe that their view of future developments within the Community will prevail. I am sure that they know that there are others equally determined that it shall be their own view of the Community that prevails.

No doubt the noble Baroness has seen the report by Boris Johnson, EC correspondent in Strasbourg of the Daily Telegraph, on the views of Mr. Willy Claes, the Belgian Foreign Minister. Perhaps I may quote just one or two sentences. The report says:
"Taking British and German ratification of Maastricht for granted, M. Willy Claes, Foreign Minister, said that the treaty was 'not an end point, but a point of departure'".
Another part of the report, which appeared on 15th July, states:
"Britain would not long escape the Brussels programme for a border-free EC".
I did not believe that that was the Government's policy, particularly in relation to immigration and customs. The article goes on:
"M. Claes called for even tighter Brussels laws. There should be 'an increasingly central role for environmental directives; a gradual strengthening of environmental standards' he said".
Finally, the article states:
"M. Claes stressed Belgium's view of the EC as an essentially centralised, Brussels-based structure. 'The commission is and remains the driving force of European construction', he added".
That is an entirely different view from the one expressed by Her Majesty's Government. I believe Her Majesty's Government when they say that that is not their view of the Community of the future and that their view is against a federal structure. I should want to be sure that Her Majesty's Government were being assisted by Parliament, as I feel sure that they wish to be assisted by Parliament, in resisting the views put forward by Mr. Claes and others in the European Community. That is why this amendment has been moved. That is why it is an extremely helpful amendment, which I hope the Government can accept.

My Lords, it seems to me odd that the Government are so divorced from the feelings of ordinary people in this country. I know that a slightly old fashioned thing called an Earl talking about ordinary people may sound anachronistic. But numbers of people have approached or written to me since the vote last Wednesday saying how they felt they were being deprived of their say. They did not want further political or monetary union; they valued their country; they valued their independence. If my noble friends on the Front Bench go on like this, the Government will eventually lose office. There is going to be an uprising—not an armed uprising, but people will say, "Up with this we will not put. We have been let down by the governing class on both Front Benches." Unless an amendment such as the one proposed by my noble friend Lord Tebbit is accepted, that is what is going to happen.

I say that only because since last Wednesday not one single person has said to me, "You are a wally for voting for a referendum." They said that the House of Lords was a wally for rejecting it.

My Lords, the noble Lord, Lord Tebbit, in moving this amendment and to demonstrate the centralising nature of the treaty, quoted from Article A. Among other things, he read out the words of the second sentence of Article A:

"This Treaty marks a new stage in the process of creating an ever closer union among the peoples of Europe".
He needed to complete that sentence. The rest of it reads:
"in which decisions are taken as closely as possible to the citizen".
It seems to me that far from suggesting something of a centralising nature, the whole purport of the article is to suggest something totally decentralised; namely, that decisions should be taken as near as possible to the citizen. That happens to be a sentiment with which we on these Benches wholeheartedly agree. We can think of no reason why we should recommend to the Government that the article should be omitted.

My Lords, the right honourable gentleman the Home Secretary is reported in the press today as having said during the campaign in the Christchurch by-election that the Liberal Democrats are best described as the "boot-lickers of Brussels". That is strong language. I wonder sometimes whether the right honourable gentleman has similar thoughts about some of his colleagues in the Cabinet, who continually assure us, in speeches of the kind quoted by the noble Lord, Lord Stoddart, and against all the evidence in the treaty, that it is the firm intention of our so-called partners on the Continent to proceed willy-nilly with a further intensification of integration.

Amendment No. 17, which is grouped with Amendment No. 1, again suggests parliamentary procedures by which the Government could, if they chose, be fortified by the opinions of this Parliament into resisting that process. Therefore, if they are genuine in their belief—if the Prime Minister is genuine in his belief—that what can be done is to stop the process of integration at this point, then they should be happy to accept both amendments.

3.45 p.m.

My Lords, I shall not detain the House for long. There is a certain weariness about some of these debates and also a good deal of repetition. It is not for me to deal with the motivations of the Government or the inadequacies of consideration of certain of the provisions. Suffice it to say that we believe that the 1996 revision conference should take place along the lines set out in the treaty.

With regard to Amendment No. 17, to which little reference was made, there seems to be some inconsistency of approach on the part of those who tabled it. They speak in paragraph (2) of Her Majesty's Government making,
"such submissions to the Council as either House of Parliament may by Resolution direct".
Yet in earlier amendments they talk of "each House of Parliament" and "both Houses of Parliament" and then go back in other amendments to "either House of Parliament". There seems to be a good deal of confusion of thought on the part of those who tabled the amendments. I suggest that they clarify the position with the least possible delay.

In response to the noble Earl, Lord Onslow, I do not mind how the Government lose office—the sooner the better as far as I am concerned. But I am not sure that they will be assisted too much by the noble Earl. I agree also with what was said by the noble Lord, Lord Ezra. When noble Lords quote provisions in the treaty it is as well that they go on to quote the entirety.

The second paragraph in Article A invokes with great deliberation the concept of subsidiarity. It is a concept in respect of which I and my noble friends take a different view from the Government. We believe that it should be applied in this country as well. The fact is that it is specifically stated that decisions are to be taken,
"as closely as possible to the citizen".
That is a substantial improvement on anything that has taken place in the past. We advise the rejection of the amendment.

My Lords, I am grateful to my noble friend Lord Tebbit for moving Amendment No. 1 fairly speedily. But let me take a little time to make absolutely clear what the amendment would do and why I advise the House to resist it.

My noble friend quoted from parts of Articles A and B. As the noble Lord, Lord Ezra, said, he did not quote completely. After his quotation of Articles A and B he said that that would be the agenda for 1996. I want to make something quite clear. The treaty specifically mentions those areas which will be reviewed—policies and forms of co-operation in the treaty; Article 3(1) on the possible treaty chapters on energy, civil protection and tourism; Article 189b on the legislative powers of the European Parliament; Article J.4(6) on defence; Article J.10 on the common foreign and security policy; and the hierarchy of Community points.

That is the agenda which my right honourable friend the Prime Minister brought back following the discussions of heads of government at Maastricht. It is what we agreed should be incorporated in the Maastricht Treaty. Obviously member states will be able to consider other issues if the Maastricht Treaty, by the enactment of the Bill, is agreed. It is also clear that if things have moved on, member states may decide not to follow up a specific review of the items mentioned or they may decide that there are items which are important enough to be reviewed by 1996 and which your Lordships and another place may not have discussed during our many hours of debate.

Article N, to which my noble friend is so attached, and the references to Articles A and B in it, in no way prejudice the outcome of future discussions. There could not be a prejudice of future discussions because it will be the heads of government who decide what comes on to the agenda for any future inter-governmental conference. But it seemed sensible at the time of Maastricht, and that was what we were told on the Prime Minister's return, that those items should be reviewed when it comes to a further IGC.

My noble friend Lord Tebbit referred also to the objective of EMU in Article B. But that objective does no more than match the EMU provisions of the treaty itself, which includes the United Kingdom's right to decide whether and when to move to stage 3 of EMU. The point is that the common provisions, of which Articles A and B in Title I are part, set in their context the operational provisions which follow la ter in the treaty, as with the objective of EMU.

My noble friend failed not only to quote the whole of the sentence from Article A but also that part of Article B which notes that the objectives of the Union shall be achieved as provided in this treaty. That, of course, includes the United Kingdom's opt-out. The provisions of the treaty are not federalist. Were they federalist I would not be standing here answering my noble friend in the way that I have just done.

Article N, which refers to both the Community treaties and the inter-governmental pillars, we have discussed a number of times before. It reproduces Article 236 of the Treaty of Rome, which outlines procedures for treaty amendment. That is why I find it difficult to understand the objection to Article N. We know that any amendments to the treaty arising from any IGC must be ratified by all member states in accordance with the respective constitutional requirements. In the United Kingdom that would certainly mean an Act of Parliament.

I do not believe that there is any more to be said in relation to Amendment No. 1. The noble Lord, Lord Clinton-Davis, said almost all that could be said, although I disagree with him on one or two points. I can assure my noble friend and the noble Lord, Lord Beloff, who spoke to Amendment No. 17, that Parliament's right to scrutinise and influence legislation, and indeed our future dealings in the Community, are not in doubt. The length of time which your Lordships and those in another place have spent on the passage of the European Communities (Amendment) Bill is a good illustration of that—more than 300 hours debating every aspect of the Bill. And as the noble Lord, Lord Richard, pointed out in an earlier debate, another place decided to alter the Bill. However, it seems to me wholly right and sensible that when we have a review clause such as Article N, which is purely neutral and which in no way prejudges the outcome, we should accept it. That is what your Lordships have agreed at previous stages.

It is certainly right that we review the treaty and how it is working in practice, just as we review our domestic law from time to time and make alterations in it. First of all, one has to see how the treaty is working in practice. By 1996 we should have some idea not only of how it is working in practice but what, as we hope will be the case by then, the joining of the EFTA countries in the Community will indicate we should do to make the Community work all the better in the interests of Europe's citizens and British citizens. I sincerely hope that my noble friends will not press their amendments.

My Lords, before the noble Baroness sits down, will she answer this question? She says that it is reasonable and sensible to make provision for revisions of the treaty. There are certain parts of the treaty which are declared to be irrevocable or irreversible. Shall we have the power to review what is irreversible and irrevocable?

My Lords, if any part of any treaty is found not to be working then those who have combined together to make that treaty can equally combine together to make other judgments and other decisions. That is not to say that it will be easy to decide on what then follows. But if something is plainly not working I do not think that even a Belgian Minister, such as the Minister quoted by the noble Lord, Lord Stoddart of Swindon—a Belgian Minister with whom I do not agree in what he said—would be able to say that it was sensible to leave it as it was. That is the point of review.

My Lords, we have never before signed a treaty which declared that parts of it were irrevocable or irreversible. Is that really consistent with saying that those specific parts of the treaty can then be revised or reviewed?

My Lords, I shall try again to explain to the noble Lord, Lord Jay. It is my experience of working in various Councils of Ministers and my experience of working with others within the European Community from other member governments that if something is plainly not working it is both sensible and right to change it. If that means that one has to reform part of a treaty by a subsequent treaty—after all, we have indeed changed the Treaty of Rome by subsequent treaties—we will go ahead and do it. But I do not believe that this question of setting a treaty as a tablet of stone for ever and a day is something that either I would go along with or indeed is ultimately necessary.

My Lords, before the noble Baroness sits down, can she confirm that the degree of flexibility to which she referred means that the fifth indent to Article B need not necessarily apply? She will recall that under the fifth indent we undertake to maintain the full acquis communautaire. Are we to understand from what she said that there is a right to disturb what has happened in the past? Is she aware that so far it has been said by Ministers of the Crown that the only way in which past decisions and past regulations can be changed—and there are thousands of them—is on a proposal from the Commission? Is she further aware that her right honourable friend Mr. Peter Lilley himself, in giving evidence to the Select Committee on European Affairs, indicated that there were occasions when the Council of Ministers wanted to change something unanimously and the Commission declined to do so? Are we to understand that that veto has been abandoned now and that the Council can change what has happened in the past?

My Lords, we have discussed the whole question of the acquis communautaire on past occasions and I do not intend to go all the way through it unless many of your Lordships so demand. The short, clear and unequivocal answer to the noble Lords, Lord Bruce of Donington and Lord Jay, is that if all 12 agree that the acquis can be amended, then it will be amended. And that is that.

My Lords, I thank my noble friend for her reply, which I found most interesting. In the interests of brevity I shall refrain from reading the whole of Articles A and B. I find it a little annoying to be chastised for not reading the whole of the articles in making the point when I directed your Lordships' attention to the articles. I was puzzled by some of what the noble Lord, Lord Ezra, said. I do not see that it will bring government closer to the citizens of Europe to establish a single central bank. Would the new central bank be closer to the citizens of Germany than the Bundesbank is today? I doubt it. Would a single foreign policy be closer to the citizens of Greece than one which is fashioned in Athens, or closer to the citizens of this kingdom than one that is fashioned here in this Parliament? I doubt it.

I took some comfort from what my noble friend said in her reply. I noticed that she hoped that the arrival of the EFTA countries will result in substantial change of view within the Community. I think that she may have neglected the fact that each of them will sign up to the Treaty of Rome, as amended by the Single European Act and by this Treaty on European Union. It would seem strange indeed if no sooner than they had arrived, having signed up to the treaty, they were to join Her Majesty's Government in trying to reverse the progress which they had accepted in their signature to the treaty.

I did not ask any questions about the United Kingdom's opt-out provision or the protocol concerning the single currency. I find so frequently that the questions I do not ask are answered and in the process the ones which I do ask are left hanging in the air. I suggested once again that this was an opportunity for a Minister to say whether indeed it was the Government's policy that there should be economic and monetary union. I asked whether it was Her Majesty's Government's policy that they were in favour of monetary union between the other 11 . Again that question was left unanswered. I have been told that Her Majesty's Government have no opinion on this matter and yet it seems to me that they are taking up a position not merely through the signature on this treaty, not merely through its proposed ratification, but in going along with Article N.2 of Title VII.

My noble friend suggested that I was objecting to the whole of Article N of Title VII. That is not so. The amendment is directed to half a sentence of one sub-paragraph. That was the point which I was putting. Nonetheless, I am grateful to hear from my noble friend that in the world of diplomacy and the ratification of treaties the word "irrevocable" means "for the time being we shall go along with it". That is a new definition of "irrevocable" in my understanding of it, but I am grateful to my noble friend.

Finally, having heard her reply, as always I am immensely comforted. I am immensely comforted in the way that a child is comforted when his or her governess says, "Never mind, dear, there is nothing to worry about. Just take this little tablet and drink up your Horlicks. Pull the blankets over your head and all will be well". That is the message which we have received as regards every amendment which has been moved in all the debates that we have had. The message has been "Do not be afraid, children, because nothing is going to happen to you. Nothing is prejudiced for the future. 'Irrevocable' does not mean 'irrevocable'; 'citizenship' does not mean 'citizenship'; 'monetary union' does not mean 'monetary union'. The article here which commits the agenda of the 1996 conference does not commit the agenda of the 1996 conference". I am enormously comforted, but I have a feeling that that sense of warmth and comfort may wear off before very long.

My Lords, is my noble friend going to withdraw the amendment or not?

My Lords, with the leave of the House, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4 p.m.

moved Amendment No. 2:

Page 1, line 11, after ("Titles") insert ("(which other provisions shall not include Titles V or VI of the said Treaty)").

The noble Lord said: My Lords, this amendment would improve the drafting of Clause 1 of the Bill by putting on the face of it the fact that Titles V and VI are totally excluded from the Bill. Its purpose is simply to get complete clarification from the Government about the meaning of the words in Clause 1 of the Bill.

On 12th July, in answer to a question from me, my noble friend sought to explain the meaning of Clause 1 of the Bill and a particular phrase therein which reads:

"together with the other provisions of the Treaty so far as they relate to those titles".

My noble friend said:

"The 'other provisions' to which the Bill refers in this context are the preamble, the common provisions (Title I) and the final provisions (Title VII)".—[Official Report, 12/7/93; cols. 43–45.]

The trouble is that her statement did not go all the way. She said what is in the phrase, but she did not confirm what is not in it. I agree that my noble friend did imply that the other provisions do not include Titles V and VI, but she did not actually use words which said so expressly. I hope that it will not be difficult for her to pronounce words which will make the point clear.

Her implication that Titles V and VI are not in the meaning of the phrase in Clause 1 was pretty strong. She implied that including them would run counter to the whole thrust of the Government's thinking about the structure of the treaty and counter to the structure

of the Bill. Indeed, Ministers in another place seem to have gone some way to make it clear that the inclusion of Titles V and VI would be contrary to Government thinking. Noble Lords may refer, for example, to what my right honourable friend Mr. Kenneth Clarke said on 27th January ( Official Report, Commons, cols. 1108 and 1112) and also what my right honourable friend Mr. Douglas Hurd said on 30th March (cols. 172 and 173).

Implication is not the same as an express statement; neither is it the same as clarity in the Bill. Therefore, I ask my noble friend whether she can accept this amendment for the sake of clarifying the Bill. However, I suspect that she wishes to refuse it. In those circumstances, I ask her now to make a clear statement saying that the other provisions in Clause 1 of the Bill do not include Titles V or VI of the treaty. I beg to move.

My Lords, I am a little mystified that my noble friend Lord Pearson of Rannoch should have tabled Amendment No. 2 because it would not add further meaning to the Bill were your Lordships to accept it. I ask my noble friend to read the whole of col. 44 and the first half of col. 45 of the Official Report for 12th July. There he will see very similar words to those which I am about to use in order to try to clarify for the second time the points that he has raised.

None of the provisions of Titles V or VI—the inter-governmental pillars covering the common foreign and security policy and justice and home affairs matters—relate to the Community pillars. The effect of the existing text is exactly that; so specifying that the other provisions do not include Titles V and VI is unnecessary. It is purely a matter of legislative drafting. I do not find that the Bill would be improved by this amendment. I hope that my noble friend might look again at what I said in the rest cif the paragraph from which he began to quote in col. 44 as regards the other provisions. After I had declared what the other provisions were—that is, the preamble, the common provisions and the final provisions—I went on to explain why those provisions were not being incorporated into UK law lock, stock and barrel.

I went on to explain the difference between the Community treaties covered by Titles II, III and IV and the two inter-governmental pillars covered by Titles V and VI. In col. 45 he will see that I referred to a similar technique used successfully in the European Communities (Amendment) Act 1986 which gave effect to the Single European Act. It contained not just EC matters but the inter-governmental provisions. We hoped to keep this matter as simple as possible and to follow the same pattern of the division between the Community treaties and the inter-;governmental pillars. That is exactly what the existing text of the Bill does. That is why I urge your Lordships to resist Amendment No. 2.

My Lords, I am most grateful to my noble friend. I apologise to your Lordships' House if I have been obtuse about her earlier explanation. I believe that she has made the matter as clear as she is going to on this occasion. Therefore, I have pleasure in withdrawing the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 3

Page 1, line 24, after ("unless") insert ("the principle that the United Kingdom move to the third stage has first been approved in a consultative referendum and unless").

The noble Lord said: My Lords, in essence this amendment refers to the occasion when Her Majesty's Government have to decide whether or not to opt out from the full economic and monetary union provisions of the treaty. Quite clearly, the fact that there is an opt-out at all means that the Government are in some doubt as to the principle which is involved despite the fact that they subscribed to Article B of the treaty where the objective of EMU is set out.

Fortunately, my own party is in no doubt whatsoever and has placed itself firmly at the head of the movement towards economic and monetary union. Perhaps your Lordships will bear with me for a moment while I find a quotation from Committee stage which deserves to be emphasised. Speaking on behalf of the Labour Party, my noble friend Lord Eatwell said:

"I suggest that monetary union would create a framework in which real convergence was easier to attain and, indeed, the absence of it would make real convergence and sustained growth in Europe extremely difficult to attain …
The second advantage of a monetary union is that monetary policy would be determined on a European basis, not simply in the interests of one particular region of Europe…
The third advantage of a monetary union is that a co-ordinated fiscal policy in Europe, a co-ordinated strategy which has been called for at the Copenhagen Summit, would be possible, and is only possible, effectively within a monetary union".—[Official Report, 23/6/93; cols. 363–4.]

That is emphatic enough. There is not a scintilla of doubt about where Her Majesty's Opposition stand on the matter. There are not even any particular reservations about the concomitants to the establishment of this desirable state of affairs—that is to say, the establishment of an independent central bank responsible to nobody at all for the determination of key items of policy and, of course, the overall position whereby the Brussels bureaucracy itself has additional powers which it will exercise irrespective of what the member states may think about it. So the Opposition's position on this matter is settled.

I appeal to the Government, who are the other junior partners in this. Are they going to join the Opposition's drive to a federal Europe, to the establishment of a unitary state, which the establishment of economic and monetary union and a single currency automatically brings, or are they going to be left on the slow-speed train following Her Majesty's Opposition in this matter? It is extremely important that we should be told.

As the noble Lord, Lord Tebbit, has said, that question was addressed to the noble Earl, Lord Caithness, in the course of our previous proceedings, but he declined to commit the Government on the questions of principle as to whether they really believed in economic and monetary union and whether it was a good thing. The noble Earl referred continuously to the Government's opt-out and was not prepared to commit himself further. He would not address himself to the merits of the judgment on the principle of whether this country ought to enter economic and monetary union and ought to have a single currency. He would rather leave it to the opt-out stage to see whether at the particular stage envisaged it would be satisfactory for the United Kingdom to do so.

We have already had discussions in your Lordships' House concerning a referendum on the Bill as a whole. That question was decisively decided by a vote of very unusual proportions in which, if I may say so, hundreds of my colleagues previously unknown to me and never sighted by me in this place suddenly became attracted to our proceedings and were so absorbed by the quality of government oratory that they decided to descend on this place, to listen to the arguments and then to vote. They are not here today and they may not appear for another five years or so, although as long as they have the Writ of Summons they will naturally be extremely well received here and will, I have no doubt, receive an enthusiastic welcome by the Refreshment Department when they next decide to arrive.

In the meantime, surely this is a case on which the general populace can help the Government to make up their minds. My party is not involved in this. It has already made up its mind and is firmly set on the train to a federal Europe, with one or two marginal considerations which it does not consider to be of any great importance. It is Her Majesty's Government with whom I am principally concerned today. I feel that they ought to take advantage of the opportunity of a referendum on a very limited scale purely to help them to make up their minds as to whether they should opt-out. It should not be difficult to frame the question for a referendum in this case and it would help to lift the Government out of their paralysing indecision on the question of whether EMU is a good thing. I hope that, in the interests of their own peace of mind as well as that of their followers, the Government will accept the amendment. I cannot, of course, envisage for one moment my own party having anything to do with it. It is already dead certain.

My Lords, before the noble Lord sits down, would he agree that a substantial number of the Members of your Lordships' House who voted on that question and whom he had never seen before voted on his side?

My Lords, yes, I cannot possibly dissent. A very large number of them might, in fact, have attended the debate.

4.15 p.m.

My Lords, in supporting the noble Lord, Lord Bruce of Donington, I am brought to mind of the very distinguished speech of my noble friend Lord Lawson of Blaby during the referendum debate in which, from his great position of authority, he stated that the moment when we join a single currency is the moment when we finally lose control over our own financial affairs. Therefore, I would certainly support him in his view that that is the moment when we should have a referendum and I feel that it would well behove the Government to insert such a provision in the Bill now.

I should like to speak also to Amendment No. 6 which seeks to insert a new clause in the Bill that reinforces the Government's position which, as I understand it, is that they consider themselves to be under no obligation to rejoin the ERM—

My Lords, I am grateful to my noble friend for giving way. As I understand it, Amendment No. 6 is not grouped with Amendment No. 3. It will be taken separately in a few minutes' time.

My Lords, I apologise to your Lordships. I shall speak to Amendment No. 6 later.

My Lords, I rise to speak briefly. I sincerely hope that the Government will support the amendment, which seems to me to be very helpful. It gets the Government off the hook. It puts them back on the side of the people because, as the noble Earl well knows, it has been shown in public opinion poll after public opinion poll that people want a referendum on who is to govern this country. If the Government were to give the assurance at this stage that there would be a referendum before we went into a single currency (and with it a political union), the people of this country would be given the opportunity to have their say and a lot of people who are very dissatisfied at present might feel a little better about it. Those who sincerely believe that we are on our way to a Federal European union may very well be reassured if the Government were at this stage to write into the Bill a provision for a referendum before we entered a single currency.

I should like to follow the noble Lord, Lord Hamilton, in praising once again the noble Lord, Lord Lawson, whom I followed on 14th July, on his maiden speech. His words are worth quoting so that they are rewritten into the record. He said:
"However, should there come a time when this or any future British Government are so unwise as to conclude that this country should participate in a European monetary union, with all its political consequences, that would be a decision of such momentous constitutional significance as to warrant not merely the separate approval of Parliament at a time as provided for in the treaty before us, but also a prior referendum of the British people".—[Official Report, 14/7/93; col. 257.]
Those are powerful words from a senior politician which should be heeded by Her Majesty's Government. As I say, if those words were written into the Bill it would give a great deal of reassurance to those people who are genuinely worried about this country's future as a fully independent, self-governing state. I hope that the noble Earl will at least be able to accept this amendment, although the Government have so far refused rigidly to accept any reasonable amendment, even a technical amendment.

My Lords, I thank my noble friend Lord Bruce for introducing this matter and in particular for stating so clearly the policy of the party of which he is a member, which I thought my noble friend Lord Eatwell put rather better than I could have done. It is the Labour Party view, and it makes the overwhelming case for economic and monetary union. I also thank my noble friend. Lord Bruce for making the point that I had made: that some of us, mainly on our side, know where we stand; some on the other side know where they stand; but those who still provide us with a problem are the Government, who do not seem to have the faintest idea where they stand. Although I have no hope that the noble Earl will be able to tell us where the Government stand on this matter, this at least gives him one more opportunity to do so.

The amendment is about a referendum. It is not about EMU. I assume that it is within the courtesies of the House that I can now speak about the maiden speech of the noble Lord, Lord Lawson, although it is not customary to attack a maiden speaker at the time that he speaks. My noble friends supported it. I found his maiden speech, although terribly interesting, completely bewildering on this matter. If he felt so strongly about EMU, the time to vote for a referendum was last week. If I may use a vulgar expression, it is a cop out to say that he might vote for a referendum if EMU became a reality but was not willing to vote for one last week. I see nothing in the Bill which says that the time to come will be later rather than sooner.

I very much regard EMU as a matter for government and Parliament to decide. That is my judgment and that of my party. When the time comes for EMU—if the Government make up their mind—the correct thing is not a referendum, which would be absurd on such a matter, but for the Government to come to Parliament to say that they have now decided that they wish to proceed with EMU and to look for support within the two Houses. That is the correct way to proceed on such a matter. I believe—I cannot anticipate; I am merely theorising—that were it to happen, as it may well do—sooner rather than later—that the party of which I am a member brought EMU before Parliament, I am sure that we would bring it in a straightforward way and say that that is what we believe in, and, "Vote for us or not".

My Lords, I listened with care to what the noble Lord, Lord Bruce of Donington, said when he moved the amendment. I visualised him in his first-class carriage on the Labour Party's train on a speedy downward descent into federalism. I hope that the noble Lord will find time to get off the train, stand on the station and wait for a more sensible train in which he would be more comfortable and happier.

I understand the noble Lord's desire to ensure adequate public debate before the United Kingdom makes any commitment to participate in a single currency. It is an objective that the Government share. Our debates on the EMU provisions of the treaty have underlined the importance of those issues. As I have explained before, the Government's approach is based upon three fundamental principles: first, we do not believe that the present Community is ready for a single monetary policy and currency; secondly, we do not believe that we should consider establishing a single monetary policy before a sufficient degree of economic convergence has been achieved; and, thirdly, equally, we do not want to make a decision now which would, once and for all, cut us off from developments with major implications for this country's economic and financial interests. That is why we have been involved fully in the negotiations which led to the Maastricht Treaty; that is why we shall continue to play a full part in Stage 2; that is why we negotiated the UK protocol (our opt-out clause); and that is why my right honourable friend the Prime Minister secured at Maastricht the right of Parliament to decide whether and when we should seek to join a single currency. That was an important negotiating success, as was recognised by this House soon afterward.

I should like to remind the House that the treaty does not specify how Parliament is to be involved in decisions on the move to Stage 3; nor would it be appropriate for me to do so. It was the Government who decided to put into Clause 2 the requirement for a full Act of Parliament before any move to Stage 3. That Act will provide ample opportunity for the Government and Parliament to add further conditions, such as a referendum, to any move to a single currency. It would cut across the basic principle of maximising the freedoms for future governments and Parliaments, which has been the cornerstone of the Government's approach to EMU, if we were to impose unnecessary conditions now.

I listened with care to the noble Lord, Lord Stoddart of Swindon, when he quoted from the speech of my noble friend Lord Lawson of Blaby. I wish that the noble Lord had not stopped quoting when he did. So let me carry on where he stopped. He stopped at the words "the British people". My noble friend Lord Lawson went on to say:
"Unless and until that time arrives—and for a number of reasons I rather doubt that it ever will—I do not believe that the case for a referendum is made and I shall vote tonight accordingly".—[Official Report, 14/7/93; co1.257.]
That coincides with the Government's position. That is the success of the opt-out clause. That is also the success of Clause 2 which allows for a full Act of Parliament in respect of which your Lordships can debate this measure again.

Your Lordships will recall the full debate on referenda that we had last week. We debated a referendum in relation to the Maastricht Treaty. The Government made clear their position on calls for a referendum. In our system of parliamentary democracy, Parliament is elected to represent the people and to take decisions on their behalf. That is how the Maastricht Bill is being considered. Your Lordships' House supported that approach overwhelmingly.

Of course, ratifying the treaty does not oblige the United Kingdom to accept a single currency—a point that I have stressed consistently. I accept that the amendment raises somewhat different issues, but the arguments of principle are similar. There are arguments that I am sure your Lordships would want to consider fully if a Bill were presented by a government proposing a move to Stage 3, but until then I hope that noble Lords will accept the Bill as it stands.

4.30 p.m.

My Lords, I am grateful to the Minister for his reply. I am sorry that he has not seen fit to accept the amendment which, as my noble friend Lord Stoddart said, would in certain eventualities have got the Government off the hook. Be that as it may, the noble Earl has at least confessed that the Government are still tormented by doubt. To be tormented by doubt is often the beginning of wisdom. The Minister and the Government are showing promising signs, and I sincerely hope that they keep that up. In the meantime, I am glad that my noble friend Lord Peston, who is an economist, has seen fit to give his full confirmation to my party's drive towards a federal Europe—

My Lords, my noble friend will be able to read Hansard tomorrow. Indeed, during the past three or four years my party has not been without the economic advice which considerably enhanced the change of view that took place during that time, including that towards the ERM. Perhaps I may explain my attitude towards the whole issue by reminding the House of the words of another famous economist from Cambridge, Mrs. Joan Robinson. She said:

"The purpose of studying economics is not to acquire a set of ready-made answers to economic questions but to learn how to avoid being deceived by economists".
I have heeded those words, and I hope that in due course my colleagues will see fit to do the same. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 4:

After Clause 1, insert the following new clause:

Common Agricultural Policy: reform

(".—(1) Before 30th June 1995 Her Majesty's Government shall lay before both Houses of Parliament a Command Paper considering the extent to which reform of the Common Agricultural Policy requires amendment of the Treaties under the provisions of Article N of the Treaty on European Union.
(2) Her Majesty's Government shall thereafter make such submissions to the Council as either House of Parliament may by Resolution direct.").

The noble Lord said: My Lords, I am pleased to move this amendment today. It was my intention to do so on Report but I was informed that the wording was out of order. I am therefore forced to table an amendment in terms which some noble Lords believe are not applicable to the Bill before the House.

It transpires that I was in order in putting forward the amendment at an earlier stage because my noble friend Lady Chalker has since confirmed that Title VII, to which this amendment refers, is included in the Bill under those two little words, "other provisions". Therefore, we are no longer talking about having to remove Article 3(e). The amendment before the House deals with the powers of treaty revision in 1996 under Title VII, Article N(2). Treaty revision is of central relevance. The amendment will enable Parliament to give a direction to Her Majesty's Government about that revision in connection with the common agricultural policy.

I shall not rehash the old arguments about the CAP. There has been broad agreement in the House on the need for reform of that policy. However, I part company with the Government on the likely effectiveness of the reforms already in place. By happy chance a House of Commons paper was published on 13th July entitled CAP One Year After Reform. It makes somewhat disappointing reading for those who believe that the new reformed CAP is a real advance on the old unreformed model. It is in the nature of an end-of-term report and the conclusion is that the pupil shows little promise and must work harder to achieve the desired result.

I do not propose to go into detail; I wish simply to summarise the reasons for that rather dampening conclusion. First, set-aside payments have been substantially increased as Danegeld to the French. Secondly, milk quotas have been increased as Danegeld to the Mediterranean countries of Italy, Spain and Portugal with the consequence that milk surpluses must be paid for at a much higher cost of disposal. Thirdly, annual sheep premiums are payable for larger flocks of sheep than was originally envisaged. Fourthly, and perhaps most crucially, there is no provision for limiting the period during which compensation may be paid to farmers.

It is clear that the benefits of the MacSharry reforms are being whittled away by those concessions. I wish to draw your Lordships' attention to the conclusions of that part of the report. It states:

"All the signs are that when it comes to the point the Council of Ministers continues to modify previous agreements in a way that protects potential losers—always at the cost of higher overall expenditure. Until there is a change in this behaviour, it is difficult to be too confident that spending will he kept under control".

That conclusion is borne out by another recently published independent bulletin, produced jointly by the NFU and the TSB. It concentrates more on the looming budgetary crisis in the CAP caused by the weakening of the reform process, about which I have spoken, and the monetary factors—the turbulence, to put it politely, in the ERM during the past nine months and negative economic growth in Europe. The report points out that all those factors will lead almost inevitably to the CAP budget exceeding its guideline. As the Commission cannot legally set a budget which exceeds the guideline, I wish to know what measures it is likely to propose to bring the budget within set limits.

On Report I asked the Government how the United Kingdom, only one of 12 voices, will be able to influence decisions taken on agriculture in the Council of Minsters, especially when a large majority of the other 11 are not only major beneficiaries of the CAP but do not contribute to the EC budget at all. Presumably they will be quite happy to continue to lead a champagne life on beer money. Perhaps my noble friend will agree that the provisions of Article N offer an ideal opportunity for the Government to use their influence as one of the three paymasters to the EC coffers in order to secure some real reform of the CAP in the likely event that such reform will be of interest to them and to the country as a whole.

I do not expect my noble friend to accept the amendment but I hope she will recognise that it is tabled in an attempt to strengthen the Government's hand in future negotiations. I beg to move.

My Lords, it is a pleasure to return to the CAP because there is so much agreement. We know that the Government come to this House and to the other place and affirm their complete commitment to radical reform. We hear from the noble Lord, Lord Willoughby de Broke, that the reform as it unfolds is disappointing.

In order to get away from the sad events of Maastricht I was during the weekend tempted to read through the diaries of Alan Clark. It was a great mistake because I came to the report of a meeting that he had in Luxembourg with some European commissioners. At that time he was at the Department of Trade and Industry. He explained that he had a prepared speech which represented his view of government policy on the matter in hand. Five minutes before he was about to deliver that speech it was snatched from his hands by a powerful lady. He was not as complimentary about her as he sometimes is about ladies whom he meets during his work. He was given a handful of notes and was told that that was the latest line. When he demurred he was told that there had been a telegram or a telephone call from the Foreign Office.

That passage brought me back to this great contention. In our discussions on Report on 12th July, at col. 21 of the Official Report, the noble Baroness, Lady Chalker, recalled as a mitigating factor for the CAP that it was helpful in ensuring sufficient food to feed Europe. As I understand it, she was saying that that was one of its original justifications. Of course, it has been overtaken wholly by events since then, because it is piling up enormous surpluses which we can scarcely afford to maintain; which we have to give away; and which undermine world markets.

My worry is that at the back of the minds of those in the Foreign Office is the notion that there was some justification for it. I have the suspicion that they will go soft on the CAP. They are on our side now, but the question is: will they stay bought? I wanted to make a small contribution to the thinking of the noble Baroness. If my new-found friends on the Labour Benches will kindly avert their ears for a moment, I should like to tell the noble Baroness that the common agricultural policy is typical of many of the socialist policies that we have criticised over the years. They had some justification way back—that is, 40 years ago—but they have been perpetuated long past their time.

A private company plans ahead for five, 10 or 20 years. However, it is very quick to change when circumstances have been totally transformed. Government is very slow to change. It is a piece of socialism which has been overtaken by events. Here we are, passing a great law which will indicate approval for the whole of the business that is going on in Europe. All we are asking is that the Government should display their share of commitment on the common agricultural policy by inserting into the Bill the well-chosen words in the amendment; namely, that by June 1995 they will,
"lay before both Houses of Parliament a Command Paper [showing] the extent to which reform of the Common Agricultural Policy requires amendment of the Treaties".
That seems to me to be something which, in their own hearts, they would wish to do. We would like to invite them to have a nice day and to allow us to insert the above wording.

My Lords, it seems impossible to over-estimate the importance of reform of the CAP. It is equally impossible to over-estimate the importance that the CAP has on distorting not only European agricultural trade but also the agricultural trade in the rest of the world. As your Lordships know, I am a farmer and I am also a beneficiary of set-aside. We must—and I emphasise the word "must"—do something about it and get it into the heads of our colleagues on the Continent that it is vitally important to do so.

At the same time, we must be equally sensitive to the problems of depopulation as regards French rural villages and poverty in Sicily. We must try to separate the social and environmental problems of the countryside—which, for want of a better word, I shall call "the gardening and gamekeeping problems"—which are of general interest and which should be subsidised by general taxation in some form or another, either Community based or individual country-based, but preferably by a combination of both.

We must remove food production from the position of being subsidised. Funnily enough, there are no villains in the story. We remember Boyd Orr, and we remember U-boats in the Channel. Boyd Orr is long since dead and the U-boats surrendered on 8th May 1945. However, there was fear of food to Western Europe being cut off. That has been solved by generous incentive payments to producers and the agro-chemical and plant revolutions, all of which have done nothing but great good to the world.

We must try to address the problems as they are now rather than what we thought they were 40 years ago. Above all, we must do so before the great grain-growing lands of Galicia and the Ukraine come back into production with the standards that they had before the 1914 war. Noble Lords have heard me banging on about Odessa before: I shall bang on about it, probably, until I die. To me, it is one of the most vivid images of the problems which will face world trade and world agriculture unless we address them now rather than let them tumble down upon our heads.

4.45 p.m.

My Lords, the grouped list of amendments with its statement of the subjects of debate has a somewhat familiar appearance. I trust that it will not seem ungrateful as regards debating of a very high order if I say that the proponents of the amendments give something of the appearance of a stage army. Today's debate is the third that we have had on the common agricultural policy. The CAP cannot conceivably be within the scope of the Bill which, as the Long Title says, is to make changes "consequential on … Maastricht". But the common agricultural policy was the creature of the Treaty of Rome, decades before Maastricht. We adhered to it almost 20 years before Maastricht.

We have had very interesting teachers. I do not complain about that at all; indeed, we have learnt much. However, the Procedure Committee is being asked to consider what has happened on the Bill lest it might be a precedent. It might particularly consider the three debates on the common agricultural policy.

My Lords, I should like to support the noble and learned Lord, Lord Simon of Glaisdale. All elements concerning the reform of the common agricultural policy are precisely contained in the Maastricht Treaty. If the treaty is kept as it is, there is every possibility and every opportunity for our Government to play a leading role in the reform of the CAP as is required.

We have only to look back over recent years to see that one of the major efforts has been to reduce surpluses. That has been most successful. However, we now read in a report on the state of the world that there will be a massive shortage of food because of an increase in population. That is just one example of why one cannot resolve the problem of the CAP one year and think that it has been resolved forever; it is a changing circumstance. I believe that the Maastricht Treaty covers all the possibilities and that it will allow our Government to play a leading role in the reform. Therefore, I totally reject the amendment.

My Lords, if the importance that has been attached to the matter by my noble friends needs any reinforcement, it can be found in a report which I read only a few days ago concerning the latest CAP folly. Apparently, the 15 per cent. set-aside for which we pay will increase costs, not save on them, because the increased production which we subsidise has, in effect, only achieved 1 per cent. of the proposed figure of 15 per cent.

My Lords, I feel that I really must respond to the remarks made by the noble and learned Lord, Lord Simon of Glaisdale. He accuses those who have been opposing the Bill of being part of a stage army. Well, if that is the case, all I can say is, "Thank God for stage armies." If the situation had been different, the matter would have gone through on the nod. That is something which I and my colleagues are not prepared to allow.

We have before us an important Bill about a very important treaty. The fact that we have had to use our ingenuity to enable us to discuss the matters within the treaty is, perhaps, unfortunate. Nevertheless, it had to be done to ensure that the treaty was given a fair and proper hearing by this House and to enable noble Lords to have the opportunity to do their duty; namely, to scrutinise and, if necessary, to revise legislation.

It is most unfortunate that those of us who have tried to do our duty should have been incessantly criticised for the way that we have had to do so because of the rules of order and because of the way in which the Government have, perhaps, found it necessary to introduce the Bill and have the treaty discussed. I hope we shall hear no more about breaking the conventions of this House. I have seen amendments put down in Committee, at Report stage and at Third Reading and the same arguments were used on each of those three occasions. Why it should be different in the case of this Bill I simply do not know. As far as I am concerned, the people on both sides of the argument who have had the decency, courtesy and indeed courage to take part in this Bill deserve praise rather than the reverse.

My Lords, this amendment deals with the amendment to the treaty which will be required to reform the common agricultural policy, which I believe concerns Articles 38 to 47. I must congratulate the drafters of the amendment on the ingenious route they have found to get into this debate. For a long time I have been struck by the similarities between the objectives clauses of two different Acts. The first Act is the 1947 Agriculture Act. I paraphrase Section 1 of that Act. The Act had the purpose of promoting and maintaining a stable and efficient agricultural industry capable of producing agricultural produce at minimum prices consistent with proper remuneration and living conditions for farmers and workers in agriculture and an adequate return on capital invested in the industry.

The other objectives clause is Article 39 of the Treaty of Rome which states:
"The objectives of the common agricultural policy shall be: to increase agricultural productivity … to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture; to stabilize markets; to assure the availability of supplies; and to ensure that supplies reach consumers at reasonable prices".
I have always been struck by the fact that those two objectives clauses are extremely similar. However, Section 1 of the 1947 Agriculture Act is repealed by the Agriculture Bill which is now going through the House.

The articles in the Rome Treaty which set out the objectives of a common policy for agriculture—not the common agricultural policy—are acceptable. The problems with the CAP have arisen due to its bureaucratic complexities, the plethora of regulations and directives and the wheeling and dealing in the Council of Ministers. At least this amendment tabled at Third Reading disposes of the debate we had to have at Report on the distinction between a common policy for agriculture and the common agricultural policy as we presently have it. That is not a connoisseur's distinction; it is central to the argument.

As I said on Report, I believe that a great trading bloc with its responsibilities to GATT and operating a single market must have a common policy for agriculture. But my objection to the amendment is that I am not sure at all that amendment of Articles 38 to 47 of the treaty is required to bring about the fundamental reform of the CAP that we all want to see. That point was picked up by the noble Baroness, Lady Elles. After all, at a recent meeting of the GATT the European Community agreed to limit cereal production, limit cereal exports, limit oilseed production and reduce export subsidies. That was all achieved without the need to amend the treaty. At the other extreme, as we all know, we now have a set-aside policy designed to remove production from millions of hectares of European farmland. That again has been agreed without amending the Treaty on European Union.

The MacSharry reforms introduced what are in effect deficiency payments, although we were told for years that this was not possible under the Treaty of Rome. Again a fundamental change of policy moving from income support to farmers through price support, to income support through direct aid payments has been achieved without amending the articles in the Treaty of Rome. We can go right back to the founding of the Community in the 1950s and the agreement between France and Germany that was referred to by the noble Lord, Lord Tebbit., as a conspiracy between them, in which the Germans accepted the high price of grain to suit the French farmer to enable the Germans to have a market for their industrial exports. In passing, I should say that the biggest mistake in the whole history of the CAP was to set the price of corn too high because the price of corn is central to agriculture policy. If the price of corn is too high, we know the political effect of the price of bread but it also affects the price of animal feedstuffs. But that fundamental agreement on the high price of grain was achieved within the articles of the treaty.

I could give further examples of changes to the CAP. The Mansholt Plan is another example of a fundamental change. The Mansholt agreement. the Franco-German agreement, the MacSharry reforms, the GATT agreement and the set-aside policy are all examples of matters that have been agreed without any changes to the treaty. They all represent fundamental attempts to reform the CAP. For this reason I think it would be possible to produce a much better common policy for agriculture than the present CAP without the need for amending the treaty as this amendment envisages.

Before I sit down I wish to repeat the question I put to the Minister on Report to which she could not reply at that stage. Why in the negotiations at Maastricht, with the opt-out from the social chapter and the opt-out from EMU, did the Government not then attempt in their bargaining to insist on reform of the CAP as a part of their negotiating package? I and a number of other speakers asked that question on Report but the Minister did not reply then. I hope she will do so now.

For all the reasons I have mentioned. I feel that this amendment is unnecessary, although I concede to nobody the wish to reform the CAP root and branch. If this amendment were to be pressed, I would regretfully have to advise my noble friends to vote against it.

My Lords, I feel, rather like the noble Lord, Lord Carter, and certainly the noble and learned Lord, Lord Simon of Glaisdale, that we have been over rather a lot of this ground before. I shall try not to delay your Lordships too long but to seek to answer one or two of the points that have been made about this amendment and in the many speeches which have gone far wide of the amendment.

The details of the common agricultural policy and the efforts to reform it are not part of the EC treaty and can be changed without treaty amendment, as the noble Lord, Lord Carter, has just said. It is the detailed provisions of the common agricultural policy, not the existence of a common policy itself, which have created the problems in Community agriculture. In a few moments I shall say a word or two about CAP reform.

It is indeed, as the noble Lord intimated just now, Article 38 of the Treaty of Rome which states that the common market shall extend to agriculture and agricultural products and that a common agricultural policy is necessary to have fair and free trade in agricultural produce. But we have made progress on CAP reform. The House should be in no doubt that this Government intend to pursue it further with vigour. We intend to build on the reforms which have already been achieved and we can do that without treaty amendment. In any case I hardly think that now is the time to be considering yet more treaty negotiations, were that immediately necessary. Fortunately for us that is not necessary. I believe this is a time when we should seek stability and consolidation as well as reform in the CAP.

To negotiate CAP reform as part of future treaty negotiations I believe would be misconceived and likely to be counterproductive. I would say to the noble Lord, Lord Carter, that we discussed treaty change at Maastricht, but knowing that the CAP did not require treaty change but rather policy change, we did not go further down that agenda. Although I may not have answered his question at Report stage quite so explicitly as that, I hope the noble Lord will now be satisfied with that reply. His nods encourage me to think that I might just have scored at least one small mark with him.

My noble friend Lord Willoughby de Broke in moving this amendment talked about the real problems of agriculture. Let me for a moment talk about some of those real problems. However, I do not wish to detain the House for long. In doing so perhaps I may say to the noble Lord, Lord Harris of High Cross, who has obviously had a thoroughly enjoyable weekend reading Alan Clark's apocryphal stories, that Her Majesty's Government will not go soft on CAP reform. I shall be talking to the Minister of Agriculture about this tomorrow, having been enthused by the noble Lord, Lord Bruce of Donington, to get to grips with some of the detail which hitherto I had not found time to do. I am quite certain that we shall see sound reforms from my right honourable friend Mrs. Shephard. She is a very sound lady.

My noble friend Lord Onslow spoke of the CAP as a distorting factor. The only way to stop the CAP being a distorting factor is to get on with this reform. I want to look forward—as I believe the noble Lord, Lord Carter, does, although he quoted the 1947 Act —and talk for a moment about our further objectives for reform of the CAP.

I have already referred, at Report stage, to the commodities that are not covered by the 1992 agreement. We want farmers to have a reasonable return from the investment of their labour and other resources. We recognise the need for consumers to secure supplies at fair prices. We need to ensure compatibility with the liberalisation of world trade. We need to take account of market and budgetary realities. We need to assist the Community's relationship with its trading partners and with developing countries. We need to keep artificial constraints and distortions to a minimum. We also need in the Community to recognise agriculture's role in protecting and enhancing the environment, because it can so do if it is given the chance.

When my noble friend Lord Willoughby de Broke moved the amendment, and when my noble friend Lord Gray spoke of the cost of set-aside, I felt it incumbent upon me to say to your Lordships that I accept that one consequence of CAP reform will be an increase in the budgetary cost of the CAP, but that will be more than offset by the reduced burden on consumers. Overall, the cost of the CAP to consumers and taxpayers will be lower, and at the time of the reform it was estimated that after the full implementation of the package the savings to EC consumers could be of the order of some £8 billion.

There is a great deal to be done in this field. It is a field which we should perhaps debate on another occasion rather than tonight. I now have many interesting pages on the intricacies of farming, which I am studying with great pleasure. On another occasion perhaps I shall have an opportunity to regale your Lordships with some of the facts.

The noble and learned Lord, Lord Simon of Glaisdale, was right, but I shall not enter into that debate. However, I defend his right to say what he said, as many others might have wished to do.

Of course, as Government we always have the opportunity to seek a mandate from Parliament on a wide range of issues. That is without contention. However, it is frankly not practicable for the government of the day to seek a mandate on any and every thing. The government of the day are there to govern and take decisions in the light of circumstances and to convey the detail of those decisions to Parliament. I simply do not believe that we should enshrine in legislation the sort of measure proposed by my noble friend Lord Willoughby de Broke in Amendment No. 4. We shall keep Parliament well informed, in the normal manner, of our efforts to further CAP reform and of the detail thereof. I am quite certain that in the measures which my right honourable friend the Minister of Agriculture wishes to take even my noble friend Lord Willoughby de Broke will find some comfort in the years ahead. The amendment is not one which would assist us in our work. It would simply take up time. That is why I have spent a little time trying to reply to the points which have been raised.

One of the points raised by my noble friend requires an immediate and detailed answer. He mentioned additional milk quotas. The additional quota for Italy, Spain and Greece has been granted on a provisional basis for this year only. I can inform him that the Council has not committed itself to continuing an additional quota next year. It could do so only if the Commission confirmed that the countries in question were meeting their obligations to implement the quota system properly and cut milk production. What has been agreed is likely to result in a 14 per cent. reduction in the Italian production. Therefore, that move will help reduce the over-production in the EC. That is why the measure has been carried through.

I have considered various other aspects of the points raised by my noble friend, but they should be considered in a proper agricultural debate, particularly as they are not part of the Maastricht Treaty. They do not form part of our Bill. The amendment, although very interesting (and it caused me to do some interesting reading) is not one which, in our deliberations on the Maastricht Bill, Parliament should accept. Should my noble friend press the amendment I hope that your Lordships will resist it.

5 p.m.

My Lords, I thank my noble friend for her very full reply. I apologise for making her answer two agricultural debates within the space of one week when she has not had practice in doing so. I was not aware that my amendments had been forwarded for comment to the Procedure Committee. I look forward to its response. Of course, the whole Bill has been put to the High Court—which might be regarded as a committee of procedure—and I await its verdict with great interest.

I am mildly encouraged by the words of my noble friend concerning her determination that the Government will not go soft on the CAP. I am also encouraged by her detailed reply concerning the milk quota. I remain to be convinced whether that will achieve its objective. The outcome of many CAP reforms is often very wide of the objective which is sought.

I remain encouraged by my noble friend's determination not to go soft on the CAP. Accordingly, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 5 not moved.]

moved Amendment No. 6:

After Clause 1, insert the following new clause:

Exchange Rate Mechanism

(".Nothing in this Act shall have the effect of imposing any obligation on Her Majesty's Government to place the currency of the United Kingdom within the Exchange Rate Mechanism or any comparable mechanism for fixing exchange rates.")

The noble Lord said: My Lords, I hasten to assure the Government that this amendment is designed not to hinder but to be of assistance to them.

Those of your Lordships who do not suffer from political amnesia—which I expect includes all noble Lords present—will remember 16th September of last year when we left the exchange rate mechanism. They will recall that the then Chancellor—and it is surprising how Chancellors come and go—confided to us all that he was now singing in his bath as a result of the new liberty which had been given to the Government to free the exchange rate from the shackles of the exchange rate mechanism.

Those of us who remember that will have observed with interest the report in The Times yesterday, which was published after the Committee and Report stages of the Bill. It may therefore be of some interest to your Lordships. Under the byline of Mr. Torn Walker in Brussels, the report reads:

"The European Commission will on Thursday"—

that is this coming Thursday—

"unveil radical blueprints for the second phase of monetary union in Europe, scheduled to begin next year, despite the fragile state of the existing European exchange-rate mechanism, which is expected to come under further stress this week with attacks on the Danish krone and the franc.
The release of commission documents, outlining how a fledgling European central bank could punish EC states that failed to control spending, will coincide with the vital Commons vote on the Maastricht Treaty".

The article continues:

"On Thursday, Jacques Delors, commission president, will discuss with colleagues four texts, detailing precise rules on Articles 104A and 109E of the Maastricht treaty, which aim to ensure that member states stick to their 'convergence' plans for a single currency by 1997".

We stated to both the Government and Her Majesty's Opposition in the course cif debates that presently the Commission would unleash its energies in producing further rules and amplifications of Articles 104 and 109a of the Maastricht Treaty. I shall not say that we were exactly sniffed at, but there was a degree of mirth in some quarters that we should have hinted that such measures were already on the stocks. However, if the correspondent of The Times is as well informed as he usually is, it is quite clear that that is so.

One of our principal anxieties was, and still remains, that, despite the liberating effect of this country being forced to abandon the ERM, which has already been instrumental in easing forward a centimetre or so the green shoots of recovery that have been on offer for the past two or three years, there might be some endeavour by the Government to get back into the ERM. There are certain advantages. The political interests of the Government—I shall not mention those of Her Majesty's Opposition for the moment—quite clearly lie in using deflationary policies, in particular those associated with the maintenance of a high exchange rate, such as high interest rates, in the interests of those in receipt of fixed investment income. They form a quite considerable and significant part of government support. Therefore, there is always a slight bias—I put it no higher than that—towards the Governrnent getting back into the ERM again. Indeed, one has the feeling that there is a certain restlessness to get back to the old days of a rather higher exchange rate in which, as used to be said, the pound could look the dollar in the face. It did so several times, and occasionally looked downwards as well.

We wish to make quite sure that, if there is a move towards entering the ERM, there is nothing in the treaty requiring that. We made diligent inquiries to see whether any inference could be taken from the treaty to require Her Majesty's Government to re-enter the ERM at some stage in Stage 2 prior to their being required to exercise their option as to whether they should enter full monetary union. We had a certain amount of reassurance on that. To be fair to the Government, it appears to support their contention. In paragraph 36, the First Report of the Treasury and Civil Service Committee of Session 1992–93, published on 16th December 1992, states:

"In evidence to this Committee on 12 October 1992 the Chancellor again spelt out the conditions for re-entry to the ERM, emphasising: 'It is not a question of what one person might want, or what another person might want, it is a question of what is practical. It is not practical to return to the ERM until there is a greater symmetry between the policy in this country and Germany"'.

A little later in the same paragraph the then Chancellor stated:

"We cannot consider rejoining the ERM, in my opinion, until two things have happened: firstly we are firmly out of recession and, secondly, there is a greater convergence between monetary policy in Germany and in this country".

There have been assertions to that effect. In giving evidence to the committee on 16th November 1992 Mr. Lamont stated:

"We do not believe that Maastricht requires any country to be a member of the ERM and, indeed, Greece has all but ratified the Treaty already and is not a member of the ERM. It is our view on the details of the Treaty that it does not require membership of the ERM. When you refer to Stage 2 you will recall that in Stage 2—and this was one of the main objectives that I had and I am the person who negotiated the monetary part of the Maastricht Treaty—that monetary policy remains entirely in national hands in Stage 2. That was my objective in the negotiations and I would never have negotiated that treaty and allowed the Government to sign it if I felt that Stage 2 in any way compromised the Government's ability to pursue its own monetary policy as it saw fit and I believe that that has been achieved in the Treaty. That is the legal advice that I have had and have always had".

On the face of it that seems to be quite conclusive. I am troubled by only one factor: the question of legal advice. I well recall in another place when the social chapter to the treaty was being discussed that the Government were advised by their then legal advisers in the Foreign Office that the social chapter formed an integral part of the treaty. If the social chapter were tampered with and taken out, the treaty would fall.

Legal advice does not come cheaply. I am quite sure that the Foreign Office legal adviser is a lawyer of the utmost repute; otherwise he would not be in that august position. Yet we have the peculiar position that, although that part of the treaty would come before, and has repeatedly been before, the appropriate Cabinet sub-committee—I believe that it is the ODSE, on which the Attorney-General is a permanent member—despite the legal advice having been given by the Foreign Office lawyer (and undoubtedly he is a distinguished gentleman), a few weeks later we find the Attorney-General advising that exactly the contrary is the case and in fact the social chapter could be detached from the remainder of the treaty without in any way injuring it. It is the reference by the Chancellor to legal advice that he has had which worries me.

As your Lordships will observe, the amendment inserts the following new clause:

"Nothing in this Act shall have the effect of imposing any obligation on Her Majesty's Government to place the currency of the United Kingdom within the Exchange Rate Mechanism or any comparable mechanism for fixing exchange rates".

It does not seek to prohibit the Government in any way.

People who know me might suspect that I wish to place some limitation on the Government in that regard, but not a bit of it. In view of the ambiguities which can sometimes occur and the differences between conflicting legal advice, I merely seek a confirmation to be placed on the face of the Bill that the treaty contains no obligation on the Government to re-enter the exchange rate mechanism. I should have thought that that was quite harmless in the sense that it only underwrites precisely what has been said already. I hope sincerely that the Government will avail themselves of the opportunity and protection which I am anxious to offer them in this instance.

As regards my own party—and I must refer to the other side of the coalition on the Bill—I understand that it is the personal opinion of my noble friend Lord Peston that we should re-enter the ERM as quickly as possible regardless, whatever rate is available. He believes that it is necessary for us to do so. I am not sure whether there has been any official confirmation from on high that my noble friend's personal view is now official Opposition party policy. I should be glad to know whether it is. One likes to keep up with party policy even though it tends to be enunciated sometimes on the hoof. Perhaps my noble friend will tell me whether that is his personal position or whether, since his observations, it has now become party policy.

I am bound to say that my view that it is party policy, even though it has not been enunciated as such, is fortified by the fact that three days before we entered the ERM, three days before the Tory Party Conference of 1990 at which our entry into the ERM was announced at a figure of 2.95 deutschmarks, my party had advocated precisely that. Therefore, I presume, although I do not wish to presume too much, that it is now official party policy that we should re-enter the ERM at the earliest opportunity.

On the other hand, I should be equally obliged to know that it is not party policy because it would remove one area of conflict between myself and my Front Bench. I am most anxious to minimise that conflict because I find our existing differences most disagreeable. Therefore, I should be obliged to know whether the view of my noble friend Lord Peston is his personal view or official party policy.

I must warn my noble friend that he may be in the position of being two speed on the matter and being half on and half off the train initiated by the Government in that regard—a complete reversal of the position with regard to EMU. Perhaps my noble friend will reply to that. I beg to move.

My Lords, I moved a similar amendment on Report and I hope that my noble friend on the Front Bench will forgive me if I return to some of the points that I raised then.

Most of us on this side of the House would agree that our joining of the ERM was a mistake because it is a fair weather policy. It will be bearable only when exchange rates are static because the markets are static. As matters stand, when that occurs we can rejoin if we so desire, and there are those who would wish us to do so, particularly on the other side of the House.

On Report I asked whether we would be forced to join. In his reply to the debate on Report my noble friend Lord Caithness relied on the EMI statute, Article 3.1, which he says clearly states that monetary policy remains in the hands of national authorities during Stage 2 of EMU. I agree that that is what it says, but unfortunately it is patently misleading. It is an economic non sequitur, a nonsense, because it is impossible to use monetary policy to keep the exchange rate static while using it at the same time to control the growth of the domestic economy. All those countries which are still in the ERM have their interest rates tied to those required by the domestic problems of the German economy rather than to their own requirements. After all, that was the fundamental reason why we were forced to leave it. Monetary policy is not in the hands of those nations and cannot be while they are still in the ERM.

My noble friend relied also on the specific exemptions accorded to Britain in the United Kingdom protocol which states that if we notify the Council that we do not intend to move to Stage 3, the United Kingdom shall retain its powers in the field of monetary policy according to national law. The question arises whether that assurance might not also suffer from the same fallacy as is apparent in the EMI Article 3.1 and stem from the same misunderstanding of the economic facts of life in claiming that monetary control can still remain in national hands in a fixed exchange rate regime. The purpose of the amendment is to put the matter beyond doubt by underwriting what appears to be the Government's policy in that regard.

In our previous debate I quoted the words of the noble and learned Lord, Lord Wilberforce, and my noble and learned friend the Lord Chancellor in describing the processes of the European Court of Justice, the Supreme Court, as being "producive"; that is, it interprets the law according to its intentions rather than according to, as has hitherto been the practice of the British courts, what is written in the statute. There can be little doubt as to what is the intention behind the Treaty of Union.

I fear that without the amendment there may be differences as regards the interpretation of Article 109e(2) of the treaty which requires that each Member State shall adopt before the start of Stage 2:
"multiannual programmes … of convergence necessary for the achievement of economy and monetary union";
Article 109j(1) which states that:
"The Commission and the EMI shall report to the Council on the progress made in fulfilment by the Member States of their obligations regarding the achievement of economic and monetary union";
and Article 109m which states that:
"Until the beginning of the third stage, each Member State shall treat its exchange rate policy as a matter of common interest".
In that I am supported by other legal opinions and that of Charles Goodhart. Is that another matter which will be settled in the courts, or will the Government accept this amendment?

My Lords, I rise to support the amendment. The noble Earl, Lord Caithness, has assured me on at least two occasions that nothing in this Bill will have the effect of imposing any obligation on Her Majesty's Government to re-enter the ERM. The purpose of the amendment is to enshrine that very firm and definite assurance in law, just in case the noble Earl should move onto higher pastures and his successor may turn out to be rather less firm and resolute in that regard. What could be more reasonable and welcome than that?

5.30 p.m.

My Lords, I believe that we have here a slight difficulty which I can explain. It seems to me that there are a number of people of not inconsiderable ability or intellect who find that the provisions of the treaty in that regard, as well as in many others, are somewhat unclear and that there can be argument between men of goodwill and considerable experience one way or the other.

My noble friends on the Front Bench say, "No, no, it is not unclear at all. It is very clear". They therefore resist what would otherwise seem to be perfectly sensible amendments to ensure clarity. One reason that they resist those amendments is that they would resist any amendment to this Bill. That is part of the way in which this legislation is carried through. It is legislation which, in effect, must not be amended. At the very least, it would require sending it back and forth to the other place, thereby delaying not only the ambitions of the Government to ratify the treaty—which seem to have been a little postponed by the activities of the noble Lord, Lord Rees-Mogg—but also the departure of this House to more seasonal attractions as we approach, for example, 12th August. But there may be another reason, and I should like to explore it for a moment with my noble friends.

What I may delicately refer to as "my Brussels correspondents" tell me that at the ECOFIN meeting last week the Chancellor of the Exchequer made it very plain to his colleagues in the closed session meetings that he was firmly in favour of Britain resuming its place in the exchange rate mechanism. That was not to be now because at the moment conditions are not appropriate to do so. But I understand that he was very clear that it was his intention that we should resume our place in the mechanism. If that is so, it provides a perfectly reasonable case for the Minister to resist all the amendments which come forward. He will say: "What is the fuss about? We are not going to be forced into it; we are going to jump willingly into it, as we willingly jumped into it a little while ago".

If that is indeed the case, I can understand the logic of my noble friend saying that we do not need this amendment; that it is only an embarrassment and an encumbrance. But I should like my noble friend, when he replies, to assure me very clearly and firmly that the Chancellor has not been saying any such thing in the ECOFIN meetings; that he has been saying very firmly that the Government at the moment have no policy towards whether or not Britain should re-enter the exchange rate mechanism; that these are extremely difficult issues; that our experience has been very unfortunate with membership; and that our experience since we left the exchange rate mechanism has been very favourable.

Indeed, I understand that the Prime Minister says to many people in many different places that few people would have believed 12 months ago that we could make the enormous progress that has been made in our economy. We are now competitive with our friends on the Continent; in Germany, for example. Our costs relative to theirs have fallen sharply. Our interest rates are down sharply as against theirs. All these things have been achieved outside the exchange rate mechanism and could not have been achieved while we were inside it. So I would be very uneasy were there to be a proposal to re-enter.

I am sorry that the noble Lord, Lord Callaghan, is not in his place. I intend to refer to him and I have not had time to let him know. But what I say will not be in any way derogatory. I believe that, as history is written, it will be very much kinder about the noble Lord than perhaps contemporary history has been, or indeed his contemporary opponents such as myself. I have formed the impression that the noble Lord was seldom wrong in his first judgment and response. Sadly, the longer he considered things, very often the more wrong he was. I see a nod from the Labour Benches opposite, from my old sparring partner the former general secretary of the TUC. I shall not explore that matter further.

Yesterday I was given a copy of a document entitled James Callaghan on the Common Market. It is priced at only 10p—surprisingly good value—and is published by the Labour Committee for Safeguards on the Common Market. It is a copy of a speech which the noble Lord made on 25th May 1971 at Bitterne Park School, Southampton. Let me find the most relevant part, because I do not want to read too much. The noble Lord says on page 2 of the pamphlet:
"A rigid relationship with the E.E.C. countries' exchange rates could have a serious impact upon employment in this country. What would Mr. Heath do when that situation arises? He will be faced with the difficult alternative of either staying with the Common Market policy and putting our own people second, or of breaking faith with the Common Market and inviting their odium in order to protect the British people. My own view is that in the event of such a clash arising, British Ministers—even Tory Ministers—would eventually act in what they thought were Britain's best interests, even if that meant flying in the face of Common Market philosophy and agreements. That is what the German Government has just done over its own currency. But do we wish to start on such a course without a clear understanding with the French and others that this is what we should do?".
That is a classic description of what happened last year. I do not think that any of us would want to go through that experience again.

I think it would be appropriate if my noble friend would tell us whether or not the Chancellor has been giving any understandings to our friends in the Community that we intend to re-enter the exchange rate mechanism. By the way, I did not ask for an assurance that we would not enter in this Parliament. No, no, no. What I want is an assurance that there is no intention for the foreseeable future of re-entering. We in this country have learnt our lesson and do not believe that fixed exchange rate mechanisms benefit our people.

The other day the Belgian transport minister was reported as complaining bitterly that it was unfair that British Airways pays many of its staff less than the wages which are paid by Sabena. He claimed that if only its wage rates were the same as those of British Airways, it would be put into profit rather than loss. He was asking that under those provisions of the treaty (indeed the Single European Act) concerning the level playing field of competition, something should be done about this. The easiest, and simple, way to do something about it would be to raise the parity of our currency against the others in such a way as to raise the wages of British Airways' staff relative to those of Sabena; to render British Airways as uncompetitive in the world as Sabena is. I say again: the noble Lord, Lord Callaghan, was almost certainly right in his initial reaction to the concept of the exchange rate mechanism.

My Lords, if the noble Baroness would accept this amendment, or treat it in a favourable light, she would very much reassure a large number of people. After all, in the past three years we have had practical experience both of joining and of leaving the exchange rate mechanism. Two years of experience is worth a great deal of theory and argument.

When we joined the ERM, in two years we had an extreme deflationary policy imposed on us, with high interest rates and an overvalued exchange rate. The upshot was that unemployment rose by nearly 1·5 million in those two years. Since we left the exchange rate mechanism 10 months ago, in September, interest rates have fallen and the exchange rate has dropped to a competitive level. That was largely responsible for the beginnings of some kind of recovery at the present time. The Government claim it as some mysterious virtue of their own but the dates prove beyond any serious shadow of doubt that the main reason was our escape from the exchange rate mechanism. Some people think that nobody in his right mind after that experience would want to go back.

My second and more modest reason for asking the noble Baroness to look favourably on the amendment is that I see no reason why she should not accept it. It does not prevent the Government from rejoining the ERM if ever they are so foolish as to want to do so. It merely refrains from placing on them an obligation to do so. It leaves the Government perfectly free either to join or not join as they wish. Therefore I cannot see that any harm will be done by accepting the amendment. Quite certainly it would reassure a great number of people about the immediate prospects.

My Lords, I share the view of my predecessor as Financial Secretary to the Treasury, the noble Lord, Lord Jay, on the merits of the ERM. It was a disastrous decision when we joined it and a very sensible one when we left it. I should certainly oppose any move to go back into it.

What troubles me a little about the amendment is that it appears to be hitting at nothing. I can see nothing in the Bill that would involve any commitment whatever for us to return to the ERM. Nor in listening to this debate and the very able speeches in support of the amendment have I heard any quotation whatever indicating that there is anything in the Bill which would impose on us an obligation to go back into the ERM.

Therefore, although the sentiment, which I fully share, that we should not go back into the ERM is thoroughly sound, I cannot see any practical reason why it is necessary to put into the Bill a denial that there is anything in it of that sort. I have not seen, and nor has any noble Lord who has spoken seen, any indication in the Bill that it would impose an obligation on us. If that is right and there is no obligation, it seems to me that it is bad draftsmanship solemnly to impose a prohibition of this sort.

My Lords, perhaps I could help my noble friend Lord Boyd-Carpenter. At the previous stage of the Bill I quoted in some detail the opinion of Professor Charles Goodhart, who is the Professor of Banking and Finance at the London School of Economics and who was the Chief Economic Adviser to the Bank of England from 1980 to 1985. My noble friend on the Front Bench at the time did not fully reply to the quotation which I gave then. I believe that in some way he felt that Professor Goodhart was muddled up with an opinion given by Mr. Martin Howe in a paper called Monetary Policy after Maastricht, which my noble friend indicated had been comprehensively dismissed by the Treasury.

In those circumstances I wonder whether I could put back on the record the opinion of Professor Goodhart, which was referred to by my noble friend Lord Hamilton of Dalzell in his opening remarks. Perhaps I could ask my noble friend on this occasion not to inform us that the Treasury has dismissed Mr. Martin Howe's opinion but how the Government dismiss Professor Charles Goodhart's opinion, which reads as follows,
"Article 109e(2) of the Maastricht Treaty requires each member state to adopt, before the start of Stage 2 of monetary union on 1st January 1994, a 'multiannual programme' of convergence for achieving economic and monetary union. [I] consider"—
that is, Professor Goodhart considers—
"that this article, read in conjunction with Article 109j(1), which sets out the 'convergence criteria' for entry to the third stage, will oblige the UK either to give a date in its multiannual programme for intended return to the Exchange Rate Mechanism, or at least to set out clear criteria for such a return, and"—
this may be the point that my noble friend Lord Boyd-Carpenter was looking for—
"to express a statement of intent to work towards that".
That is the opinion of a gentleman who is very well qualified. I should be grateful if my noble friend could knock him off his perch rather than relying on the Treasury knocking Mr. Martin Howe off his perch.

My Lords, before my noble friend sits down, would he indicate where in the Bill there is any proposal whatever to compel us, if we do not wish it, to rejoin the ERM? The passage that he quoted gives some amiable intentions. As I understood it, it imposes no obligation whatsoever.

My Lords, with the leave of the House, the opinion says that we have to express a statement of intent to work towards setting out clear criteria for such a return. If that statement of intent is given in good faith and means anything, I think it comes near enough to what my noble friend Lord Boyd-Carpenter is asking me to ask my noble friend to reply to.

5.45 p.m.

My Lords, we have covered a range of topics. At risk of boring your Lordships, perhaps I may deal with just one or two matters raised by my noble friends. I should like to start with my noble friend Lord Bruce of Donington and explain to him the simple logic. The Labour Party is committed to joining EMU—full stop. That is sentence number one. A precondition of joining; EMU is to have been in the exchange rate mechanism for two years within the narrow bands. That is the second sentence. Since we are committed to the first, we are committed to the second. That is in party policy. But even if it were not written out, it is a simple matter of logic. I said to him "in my judgment" because I rather hoped that he would respect my judgment more than my simply telling him that it was written down in party policy. But if he wants to have it the other way round, either way that is it—full stop; end of argument there.

My noble friend Lord Jay, the noble Lord, Lord Boyd-Carpenter, and others seem to have become great advocates of floating exchange rate policies. Indeed, last week my noble friend Lord Stoddart said that fixed exchange rate systems were always bad and were to be avoided. Because of the conventions of the House I was not able at that time to argue with him. If he will forgive me, I shall say a few words on that matter now. In terms of basic economics it is quite serious.

First, in my judgment—I speak as a professional economist—during the period of the most famous of all fixed exchange rate systems—namely, the gold standard—on the whole the world prospered. By that I mean the Victorian age and all of that time. The famous case (the Keynes case) against the gold standard was when Winston Churchill returned to the gold standard. That was the famous crucifixion on the cross of gold, which had to do with going in at the wrong rate. At no stage, I remind my noble friend Lord Jay, did Maynard Keynes as a result of that favour floating exchange rate policies. At no stage did he do that. He was the architect of the great post-war recovery, from which the western world gained enormously—namely, the Bretton Woods system. The essence of the Bretton Woods system is that it is a fixed, though adjustable, exchange rate system. It is precisely an ERM system. Therefore the argument that somehow the world has benefited from floating exchange rates seems to me not to stand up for one moment.

I believe that the noble Lord wishes to interrupt me.

My Lords, the noble Lord will detect two crucial differences between the gold standard and a fixed exchange rate à la ERM or any other European system. The European systems are fixed essentially against another currency in the exchange rate mechanism. That is one point. The second point is that in the gold standard people were free to devalue; they did not enter into a treaty commitment not to do so.

My Lords, that is to do with EMU. My noble friend was talking of fixed exchange rate systems as opposed to EMU per se. I suppose I am simply wearing my academic hat. I felt it right to set those arguments out.

Let me make one final point to my noble friends who have decided that they favour floating exchange rate systems. The architect of floating exchange rate systems is the most extreme right wing and pro-free market and anti-interventionist economist in the world. Milton Friedman happens to be a brilliant economist, but the notion that my friends are espousing the views that he is putting forward is surprising.

Professor Friedman does not put forward those views along the same lines as my noble friends; that is to say, that we can now engage in active economic policy. He was the greatest architect of saying that there must be no government intervention in macro-economic policy at all. Again, I am sorry to be criticising my friends because everybody knows how emollient I am at all times. The idea that they favour a floating exchange rate system in order to follow the doctrines of Professor Friedman, which are totally non-interventionist in that they say that fiscal and monetary policies are neither desirable nor will they work, is strange coming from my noble friends with whose views on active policy I am familiar.

I make the same comment to the noble Lord, Lord Hamilton of Dalzell. He too seemed to favour floating exchange rate systems but equally felt that he could see a case for active monetary policy. I am afraid that he cannot. Let me ask him also, because that is what interests me, whether or not he reflected on why, with the needs of the British economy requiring some expansion measures at this time, his right honourable friend the Chancellor of the Exchequer is fearful of cutting interest rates, given that monetary policy remains entirely in national hands. If monetary policy remotely remained entirely in national hands I am certain that his right honourable friend the Chancellor of the Exchequer would certainly lower interest rates. But he knows what would happen if he even suggested lowering interest rates.

That has taken us some way from the amendments. I felt that it was my only opportunity to talk on economics, which at least interests me. What I want to say on the amendment perhaps revolves around the semantics of the word "obligation". I am delighted that the noble Lord, Lord Pearson of Rannoch, quoted the view of my old friend Charles Goodhart, because I entirely agree with him. Unless we regard the Government as dishonest, which I have been at pains over some weeks to say that I do not, the presumption of the Maastricht Treaty is for EMU and therefore for ERM. If that were not the case the Government would announce that they were exercising the opt-out, which we all know they are not going to do.

Charles Goodhart points out that the Government are "obliged" to take seriously the possibility of going into EMU. They are also therefore obliged to take seriously the possibility of following the ERM. For the Government to say that they have no obligation on the matter is plainly wrong. The noble Earl said it, and I have to tell him that he is wrong. To say that is essentially to say that all we are going to do for the next couple of years in terms of the British economy will have nothing whatever to do with meeting Maastricht and EMU.

I shall not delay the House for long. I have a great many other notes on the subject but I shall not prolong the matter. I wish the amendment to be rejected not because it is not necessary, but because it is unacceptable. If that is the Government's view, then I do not know why we signed the treaty in the first place. I do not see how we proceed if we announce in terms that we have no obligation. My judgment is that Charles Goodhart is right, and is right to be right. I support Maastricht; I support EMU and I support our rejoining the ERM.

My noble friend Lord Bruce referred to the coalition. The problem is that there is no coalition. There is us. The others are just floating around not knowing what to do and having no view on what is the central economic issue of our day. I hope therefore that the amendment is rejected. I shall vote against it, not because it is not needed, but because it is mistaken.

My Lords, my noble friend referred to me and I therefore feel obliged to say a few words in my defence. He mentioned my remarks in regard to fixed exchange rates. I remind him that with one or two other noble friends such as my noble friends Lord Bruce and Lord Jay, I was one of the few who opposed consistently our entry into the exchange rate mechanism. Once we were in it we had some disagreement as to whether or not I should continue to call for a devaluation.

Having a floating exchange rate does not preclude fiscal and monetary measures in support of the system. My problem with fixed exchange rates is not only the rate at which one enters, but how one keeps that rate. How do we fix and keep the rate fixed at that level? I fear that what happened is that we have not been able to keep the rate fixed within the ERM without increasing interest rates inordinately, causing businesses to collapse and unemployment to rise. That is my problem with fixed exchange rates. First, how do we fix the correct rate at which to go in? Then, in the light of changing economic circumstances, how do we maintain that fixed rate? I hope that helps my noble friend.

My Lords, I know that the whole House is feeling increasing concern for the noble Lords, Lord Bruce of Donington and Lord Stoddart of Swindon. It must be an uncomfortable position to be in. Every time the noble Lord, Lord Bruce of Donington, rises and hopes that Labour Party policy is not quite what he thought it was, he is smartly smacked down into his box by the noble Lord, Lord Peston, who says that of course it is Labour Party policy. I am sorry for the noble Lord, Lord Bruce of Donington. He is a man of great principle. He may feel that other parts of the House are more comfortable places from which he can continue to entertain your Lordships, because we all listen to him with great interest.

I listened to him with great interest today. He started by saying that he felt sure that none of your Lordships is suffering from amnesia. I expected him to refer to another issue. He referred to September last year. I will bring your Lordships closer up to date. I refer your Lordships to a week ago, 13th July, where an amendment was discussed word-for-word for over an hour, even though the noble Lord, Lord Bruce, did not take part. It is for that reason, not discourtesy to your Lordships, that my response will be particularly brief today.

I listened with care to what the noble Lords, Lord Jay, Lord Stoddart of Swindon, and other noble Lords, said. It was interesting though nothing to do with the amendment. It was all to do with the merits of the ERM.

I apologise for stopping my noble friend Lord Hamilton of Dalzell when he was speaking on Amendment No. 3 and went on to the amendment we are now discussing. It was worth waiting to hear what he had to say. He said what I intended to say. He quoted virtually what I said at Report stage. I do not wish to bore your Lordships again. I simply refer to the EMI statute Article 3(1), the commitments that we have made and the position in the UK protocol which is well known to your Lordships. In response to my noble friend Lord Tebbit I say that I set out clearly the Government's position with regard to the ERM at col. 182 a week ago. Needless to say, the situation has not changed.

The noble Lord, Lord Bruce of Donington, produced a somewhat lurid article from a certain newspaper that he has the habit of reading from time to time. I know that the noble Lord read the treaty extremely carefully and I admit that he probably knows it better than me. However, if he looks at Articles 104A(2), 104B(2) and 104E(14) he will see clearly that further secondary legislation is to emanate from the Commission. That will be dealt with in the usual way. It will go to ECOFIN. It will be available for discussion through your Lordships. There is nothing to worry about. It is all there in the treaty, and at no stage have we sought to deny it.

The crux of the matter comes to what my noble friend Lord Boyd-Carpenter said. He dislikes the ERM. But this is not a debate on the ERM. There is nothing in the treaty that commits the United Kingdom. He answered effectively the point raised by my noble friend Lord Pearson of Rannoch. I have looked again since we discussed the matter a week ago and I can find no requirement in Article 109e(2) or Article 109j(1) or elsewhere for a member state to join or rejoin the ERM or indicate a date when it will join or rejoin.

6 p.m.

My Lords, before my noble friend sits down, perhaps I may make this point. He dismissed my argument. I was trying to make out that the EMI statute—Article 3(l)—gave no defence against our being forced into the ERM on the ground of it appearing to maintain that while being in the ERM one still has complete control over one's own monetary policy. Therefore, it would be perfectly possible to comply with the article and still be in the ERM.

My Lords, I listened with care to my noble friend's argument. Certainly, I did not dismiss it lightly. It would be quite wrong to do so. He is right to say that Article 3(1) clearly states that monetary policy remains in the hands of national authorities during stage 2 of EMU. That, combined with the UK protocol, clearly confirms that the Government's interpretation of the treaty is an accurate one; and what I have said before on many occasions remains the case.

My Lords, I am most grateful to both noble Lords for the response they have given to my arguments in favour of the amendment. My noble friend Lord Peston must not try to impute to me or indeed to my colleagues any continuity with the policies of Milton Friedman. Milton Friedman is a strict non-interventionist whereas I, as is well known, belong to the Heseltine school of intervening in the economy, if necessary three times a day before meals, in order to establish the rate of exchange at a level which is roughly around purchasing power parity. I trust that my noble friend will not try that one again, because I am not that naive.

I am most grateful to the noble Earl, Lord Caithness, for being so solicitous on behalf of my political health. I note his welcome to move around the House to a position which possibly he might find more agreeable. I have to say that I have been in politics and in the Labour Party since 1935, which is a long time. Most of the Front Bench here were in knickerbockers; perhaps they were not even yet born. I have observed the various vicissitudes through which my party has passed. I can assure the House that the events of today bear some astonishing resemblances to events of 40 or 50 years ago which I managed to survive with an undying loyalty towards the party of which I am very proud to be a member. I regret, as some of my colleagues do, the disappearance from the Labour Party's manifesto of the word "socialism" to which I am still committed. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

("Cohesion funds: review
.—If at any time—
  • (a) it appears to Her Majesty's Government that the date for the entry of the Community into the third stage of Economic and Monetary Union is, or is likely to be, delayed beyond 1st January 1999; or
  • (b) the United Kingdom notifies the Council that it does not intend to move to the third stage;
  • then Her Majesty's Government shall lay before Parliament a report which shall—
  • (a) review the contributions made by the United Kingdom to the cohesion funds of the Community;
  • (b) examine the question of whether it would be appropriate to renegotiate the future contributions of the United Kingdom thereto; and
  • (c) set out the policy of Her Majesty's Government in respect thereof.")
  • The noble Lord said: My Lords, Amendment No. 7 is perfectly clear and self-explanatory and therefore I shall not weary your Lordships by going through it line by line. We are constantly being told by enthusiasts for the Maastricht Treaty that the European Economic Community is a club, that we must abide by club rules and that it is positively unseemly and bad form to question or complain about those rules. But what a very curious club it is where 17 per cent. of the members pay a truly enormous subscription, which they can ill afford; 50 per cent. of the members pay virtually no subscription at all; and the remaining 33 per cent. not only pay no subscription but are handsomely paid for graciously deigning to remain members of the club.

    As I have pointed out on two or three occasions, none of the so-called poor members of the Community—neither Spain nor Portugal, nor Greece, nor the Republic of Ireland—is poor in any objective sense. They are all numbered among the world's better-off countries. When this country has to live with a deficit of between £50 billion and £55 billion, a deficit which is expected to persist for many years to come, we must be extremely careful with the money that we really do not have, especially when we consider that fraud and waste are involved in so many intra-Community transfers.

    I am sure that all noble Lords would agree—not least noble Lords on the Labour and Liberal Democrat Benches—that if we have any money to give away to other countries it would be better directed to genuinely poor countries, whether they be in Eastern Europe, in Asia, in Latin-America, in Africa or the Caribbean, rather than to countries that are not genuinely poor but merely relatively poor in relation to, say., Switzerland, Sweden or Germany. Of course, most people who have actually studied the matter are well aware that the real purpose of cohesion funds has nothing to do with the relief of genuine poverty. It has to do with artificially boosting the economies of the so-called poor countries to prepare them for stage 3 of EMU which takes place, theoretically at any rate, in less than five-and-a-half years' time.

    Free trade and the removal of barriers in consequence of the single market will in any case ensure that the economies of the currently slightly less well-off countries will grow and converge with those of the currently better-off countries in perhaps 15 to 20 years' time without the need for any cohesion money to speak of, provided that they do not artificially burden themselves with high labour costs—at least not before their productivity has improved to the level pertaining in the currently better-off countries. Therefore, if stage 3 does not come about, or if it is delayed beyond the target date, most of these cohesion transfers will be unnecessary.

    One of the great achievements of what we call the Thatcher years is that people at long last have come to realise that there is no such thing as government money; it is all taxpayers' money. I am not so sure that people have yet come to realise that there is no such thing as European Economic Community money. That, too, is taxpayers' money, mainly that of the taxpayers of Britain and Germany. With higher taxes and/or large cuts in public spending in the pipeline it will not be long before people here come to realise that. I beg to move.

    My Lords, I listened with care to what the noble Lord, Lord Monson, said in moving this amendment. It seems to me that he is in a sense confusing the ideas of convergence and cohesion. The difference is an important one and, therefore, perhaps it will be for the convenience of your Lordships' House that I explain it.

    As the noble Lord correctly said, strengthening cohesion means reducing economic disparities between the regions of the Community. As he knows, that objective first appeared in the treaty in the Single European Act 1986. We have reaffirmed that in the Maastricht Treaty under Article 130a. But I must say to the noble Lord that it is a question of levelling up, and not levelling down, those countries which already have done better in economic terms.

    Promoting convergence means ensuring that the different European Community economies could move to, and operate within, a single currency without substantial disruption as set out in Article 109j of the Maastricht Treaty and the protocol on convergence. Many may argue that that will never happen, but it actually means that in any case.

    Strengthening cohesion and promoting convergence are linked in so far as both depend on the 12 member states pursuing responsible economic policies and sound public finance which ensures low inflation and structural reform to bring about flexible economies.

    I now come to the difference between convergence and cohesion. The difference is that convergence is required for a single currency while cohesion is not. Convergence in particular of interest rates, public deficits, inflation and the structure of economies would be necessary for the effective operation of a single currency. Cohesion—which is reduced disparities in living standards—although an important objective, is not a necessary condition for the operation of a single currency.

    The amendment of the noble Lord, Lord Monson, appears to be based on the premise that the operation of a single currency will require large transfers of funds between rich and poor member states and that if we are not participating in a single currency we should consider whether it would be right that we should contribute to such transfers. As I have explained, such cohesion spending would not be required to bring about the necessary convergence for a single currency. That requires governments to follow sensible economic policies. So cohesion and convergence are different concepts and that is my reason for urging the noble Lord, Lord Monson, to withdraw his amendment.

    My Lords, I am grateful to the noble Baroness, Lady Chalker, for her very full reply. I appreciate that there is a dividing line between convergence and cohesion. The trouble is that I am not sure that the countries on the receiving end of these transfers make that distinction themselves. In speaking to Amendment No. 4 the noble Lord, Lord Willoughby De Broke, rightly drew our attention to the Danegeld, as he put it, which had to be paid to a number of our EC partners to get them to agree to even the smallest reform of CAP.

    From the other side of the House the noble Lord, Lord Fitt, reminded us on 9th July, in a debate on Northern Ireland, of the astronomical billions of pounds of cohesion money that was being paid to the Republic of Ireland as a quid pro quo for their agreeing to the Maastricht Treaty. Once again, that is an example of Danegeld. I believe that the amendment is a reasonable one, but time is getting on. Therefore, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    6.15 p.m.

    moved Amendment No. 8:

    After Clause 1, insert the following new clause:

    Justice and Home Affairs: voting by unanimity

    (" . Without the prior approval of Parliament, Her Majesty's Ciovernrnent shall not give its consent to any voting under Article K.3 of Title VI of the Treaty on European Union (Justice and Home Affairs) which is not on the basis of unanimity.").

    The noble Lord said: My Lords, as I am sure most of your Lordships will be aware, Title VI (or Article K) of the union treaty covers proposed Community co-operation in the fields of justice and home affairs. It is to be binding in international law and covers such important matters as asylum policy, immigration, terrorism, and drug running.

    The Government's line on Title VI is that under it our sovereignty is safeguarded because it can only be operated by unanimity—that is to say, with our consent. The amendment would confirm that position. But the wording of Article K does not appear to be so clear cut. So I thought that it might be helpful for my noble friend the Minister to put on record how the Government interpret the clause and how they intend to operate it. For instance, Article K.4(3) says:

    "The Council shall act unanimously, except on matters of procedure and in cases where Article K.3 expressly provides for other voting rules".

    So we come to Article K.3, the subject of this amendment, which seems to wander about a bit. For instance, it envisages drawing up conventions which the council may recommend to member states for adoption. It appears that measures implementing those conventions could be adopted by a two-thirds

    majority of the high contracting parties which is the somewhat hubristic terminology used in the treaty to describe its signatories. In other words, it can be agreed by a two-thirds majority of the member states.

    Article K.4(3) also envisages the use of qualified majority voting in unspecified areas which is presumably not the same procedure as a simple two-thirds majority of the member states. On my reading of Article K.3 it would appear that we could be committed to things called "joint positions" by majority voting of one kind or another. Can my noble friend describe what a "joint position" is going to be?

    I ask that because when we had a similar debate on Title V (or Article J) of the treaty, my noble friend was good enough to explain what "joint actions" were to be under those clauses. It would he very helpful to have a similar description of "joint positions" in Title VI. Since I have a feeling that my noble friend is going to say that the amendment is unnecessary, can she explain exactly how our sovereignty is to be safeguarded under this clause, because unanimity does in fact prevail? I beg to move.

    My Lords., if my noble friend is right in saying what he believes the noble Baroness is going to say—that is, that the amendment. is not necessary—I hope that she will keep in mind that the spirit behind the amendment is very necessary indeed because one thing that has disillusioned a great many people is the easy way that, under the Treaty of Rome, we have been allowed to slide away from the unanimity protection to a situation where now it is sufficient to have a majority. Things have happened which we were led to believe would not happen because we would use the power of the veto.

    The point I am making is that although my noble friend the Minister may use as an argument that the insertion of these actual words in the Bill is unnecessary, the spirit behind them is very necessary. I would like to have my noble friend's reaction as to exactly how she feels about the matter.

    My Lords, this amendment is a very pale shadow of the amendments, tabled at earlier stages on the subjects of justice and home affairs. At previous stages it was suggested that those two matters were wrongly included in the treaty and that we should not be co-operating with other member states on them within the context of the treaty. All that opposition appears to have faded away, or it is not being reflected in amendments.

    My Lords, I am sorry to say to my noble friend that there is no opportunity for further amendments to the Bill to be tabled in this House. We now have what appears to be an extremely minor concern about Article K.3. In introducing this amendment, the noble Lord, Lord Pearson, did not read out what that article says. That article is concerned with,

    "collaboration between the relevant departments of their administrations"
    of member states and member states informing and consulting each other within the council. It is concerned in particular with co-operation, contributing to the pursuit of the objectives and with conventions recommended to member states for adoption. They are not imposed on member states but recommended for adoption in accordance with their respective constitutional requirements.

    The article then goes on—and only then—to say that unless otherwise provided by such conventions, measures implementing them shall be adopted by the Council by a majority of two-thirds of the high contracting parties who, by the way, are the heads of state. The signatories to the treaties are not the high contracting parties. There is no hubris in saying that the Foreign Secretaries and Prime Ministers shall sign on behalf of the high contracting parties, who are the Queen of the United Kingdom of Great Britain and Northern Ireland, the Grand Duke of Luxembourg, and so on.

    Bearing in mind what seems to be relatively widespread agreement that issues such as asylum policy, external borders, immigration policy and the combating of drug addiction are proper matters for the European Community and a European Union, I find it difficult to see why noble Lords should persist in seeking that co-operation of this kind, which is not binding on member states, should not be adopted by a two-thirds majority.

    My Lords, perhaps I may first put my noble friend Lord Harmar-Nicholls right on one matter. He predicted that my noble friend Lady Chalker would say that the amendment is not necessary. My noble friend Lord Harmar-Nicholls is wrong. My noble friend Lady Chalker is not making such a statement; I am.

    My noble friends Lord Harmar-Nicholls and Lord Pearson of Rannoch both argue that the wording of the amendment may not be important but that its spirit is. They are, of course, right. I hope that I shall be able to show them that the amendment is not necessary because the spirit of it is already in the Bill.

    My noble friend Lord Pearson was concerned about joint positions. Perhaps I may advise him that a joint position would relate to a common approach that the member states might wish to adopt with respect to a problem which has been dealt with in, for example, an international organisation.

    The wording of Article K.3(2) (b) is a little complicated and I quite understand that my noble friends may find it difficult to absorb exactly what it means. I shall try to explain it as carefully as I can. Article K.3(2) (b) says that the Council may,
    "decide that measures implementing joint action are to be adopted by a qualified majority".
    If this were considered to be the appropriate way of proceeding, the decision of the Council to adopt qualified majority voting will actually have had to be one of unanimity. In other words, the United Kingdom has the right and the ability to veto any moves to qualified majority voting on implementing measures if we do not approve of the proposals.

    Article K.3(2) (c) states that the Council may,
    "draw up conventions which it shall recommend to the Member States for adoption"
    and that,
    "Unless otherwise provided by such conventions, measures implementing them shall he adopted within the Council by a majority of two-thirds"
    of the member states.

    Again, member states would have to agree the text of any such conventions. That agreement would have to be a unanimous decision. When the details of the conventions, which have been the subject of a unanimous vote, come to be put into operation, that implementation of the convention will be done by a two-thirds majority—but only if the United Kingdom has approved the convention on that basis.

    In fact, we do not anticipate circumstances where we would agree to the implementation of any convention on the basis of a two-thirds majority. The United Kingdom will therefore see that there is a clause inserted into each convention, which will stipulate that the implementation of the convention will only come about after a unanimous vote.

    My noble friend makes an interjection in which I thought I heard him say that that was what he called "the spirit". He is, for once, correct.

    If our European colleagues were not to agree to the inclusion of such a clause of unanimity in a convention, then there would be no convention, as the convention itself would require unanimous approval and we would not be prepared to give our approval to a convention which did not allow for unanimous approval.

    The article is complicated. Had my noble friend Lord Harmar-Nicholls not interrupted and destroyed the flow of thought, perhaps your Lordships would have understood it even better. I hope that your Lordships will realise that the amendment is not necessary because, in the words of my noble friend Lord Harmar-Nicholls, "the spirit" is there.

    My Lords, I am most grateful to my noble friend, particularly for admitting that the wording is complicated. I dare say that a number of your Lordships agree that the word "complicated" is a somewhat polite way of putting it. I also notice that the declaration on voting in the field of a common foreign and security policy, which forces or pushes us towards a unanimous vote when a qualified majority vote exists for Article J or Title V of the treaty, does not apply in this case to Article K. Therefore, I am grateful to my noble friend for what he has said. I very much hope—indeed, I assume—that it will stand the test of time. I am therefore happy to beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 3 [Annual report by Bank of England]:

    moved Amendment No. 9:

    Page 2, line 3, after ("order") insert ("made by statutory instrument").

    The noble Lord said: My Lords, I and others argued in Committee and on Report that the drafting of Clauses 3 and 5 of the Bill is ambiguous, inadequate in terms of whatever the purpose may be, and therefore defective. The amendments to which I now speak, which are Amendments Nos. 9, 11, 12 and 13, attempt to improve the drafting of Clause 3. Indeed, if accepted, they would do so. We shall come to Clause 5 later.

    At Report stage I incurred the irritation of some of your Lordships by refusing to name the legal draftsman who had been advising me. In order to get around that problem, I have since taken an official private legal opinion, which confirms the opinion that I had been given unofficially before our last proceedings. I feel that this opinion carries such weight that I should put it on record in your Lordships' House, and, indeed, I am at liberty to do so. It comes from Mr. Joe Durkin, who is the senior partner of the well known parliamentary agents, Rees & Freres. His letter to me, dated yesterday, reads as follows:

    "Dear Lord Pearson, I refer to our discussions concerning the Bill. I can confirm that I and my partners, Peter Lane and Monica Peto, were previously members of the Office of the Parliamentary Counsel and we have considered the Bill and clauses 3 and 5 in particular and the relevant articles of the Treaty. We have also read the reports of the debates on the amendments moved by you at the Committee stage on 30 June 1993 (Hansard, cols. 842 to 847) and at the Report stage on 13 July 1993 (Hansard, cols. 130 to 136 and 144 to 150).
    In our view clause 3 is ambiguous in that it is uncertain whether the Order or the Annual Report is to be approved by a resolution of each House of Parliament. Furthermore, if it is the Report which is to be approved, the clause fails to say what should happen if either House refuses to approve it. The amendment (number 23) proposed by you at the Report stage would have cured both those defects. Your amendment number 20 would have further improved the clause by ensuring that the Order should be a statutory instrument which would need to be published and made publicly available in accordance with the Statutory Instruments Act 1946.
    Clause 5 of the Bill is also unsatisfactory in that it fails to require the government to obtain parliamentary approval to the government report before making any submission to the Council and to the Commission. Your amendments numbers 26 and 28 would bring clarity to the clause.
    Finally, I would advise that your amendments to clauses 3 and 5 are not only desirable but also necessary. It seems surprising, therefore, that the government intends that the Bill should proceed to Royal Assent without agreeing that those amendments be made. The only conclusion to be reached is that the government wishes to avoid Commons' Consideration of Lords' amendments even at the price of having a defective Act of Parliament.
    Yours sincerely,
    Joe Durkin".

    That is the end of the letter, but I hope that it is not the end of the matter.

    The amendment would ensure that the order envisaged in Clause 3 is a statutory instrument; that it, and not the governor's annual report, would be subject to an affirmative resolution; and that the statutory instrument should of course contain matters which ought to be covered by the report. All reputable legal advice seems to accept that that should be the meaning of Clause 3. Can my noble friend on the Front Bench agree?

    6.30 p.m.

    My Lords, I spoke to this amendment when the noble Lord, Lord Pearson, raised it the last time. I said robustly, and I repeat, that the amendment is clear. I assume that the Government will bring to both Houses of Parliament an annual repot from the Governor of the Bank of England with wording such as, "That this House do take note", and so forth. There seems to be no difficulty over that. I said that on the previous occasion.

    I am advised also that the amendment was looked at by government draftsmen. It is not just a matter of saying that it is amateur opposition drafting. Perhaps the Minister will say a word about that. My difficulty—this is why I am indebted to the noble Lord, Lord Pearson of Rannoch—is that the three people to whom he referred are known to me, as is their firm. Peter Lane is an old friend. He is a distinguished draftsman, as are Monica Peto and Joe Durkin. The noble Lord is right to draw your Lordships' attention to their judgment. I am in difficulties because it seems to me that the Bill is clear, but as a person who lives in a professional world I am always worried when a professional tells me that it is not.

    Having said that, I stick to my view that the clause is clear and is not a problem. I suppose that I can also then hide my head under the pillow and say that it is up to the Minister to argue on those grounds, as he is the one who is responsible for the Bill. I shall do that. I shall rush off to my pillow and put my head under it.

    My Lords, I interpret the noble Lord as saying that the amendment is right, and that there are good reasons to, justify it. He gave priority to the authority quoted by my noble friend and put it ahead of his own. That is humble and good of him. When he reads his speech tomorrow, he will see that he was saying in effect that it would be a good idea if the amendment were accepted.

    My Lords, I am not sure whether I am breaking the rules of the House, but before the noble Lord sits down, I was not trying to say that. I was trying to say that the noble Lord, Lord Pearson, introduced his amendments because he felt that the Bill was ambiguous. I said that I do not find the Bill ambiguous but that I am worried when someone quotes a professional opinion that says that it is. That is my position. I am not saying that the noble Lord is right. I am merely saying that I am always worried when a professional opinion is quoted against me.

    My Lords, the noble Lord, Lord Peston, is one of our leading economists. He has earned a great reputation. We respect him greatly. When economists have a division of opinion on a matter like this, they are usually dogmatic. The absence of dogmatism in what the noble Lord said gives me a clear message that he cannot find a great deal wrong with the amendment. Nor can I.

    I am rather surprised that my noble friends did not accept the amendment when we dealt with it in Committee. That would have been the time to do so. We know why they did not. I hope that it will be a warning to future governments never to make a decision that they do not want any amendment to go back to the Commons from the Lords. It is clear that the instructions given by the other place, and from the top of the Government, I suppose, were that they wanted no amendment to come back from the Lords. They wanted a clear Bill. They wanted it sent back as it was. That is commendable. It is obtaining something that one wants in an easy way. The noble Lord confirmed that in the interests of proper parliamentary procedure it would have been a good thing had the amendment been accepted earlier.

    I hope that the amendment will not be pushed to the vote now and take up any more time. I hope that the message will be taken back. The Government should never decide that they want no amendments from this House because it is part of our duty to send back amendments when an incomplete Bill is sent to us.

    My Lords, as my noble friend Lord Harmar-Nicholls has taken the opportunity to interpret freely the speech of the noble Lord, Lord Peston, I think that I should apply the same process to him and say that he will realise that the essence of the noble Lord's message was that on no account should the amendment be pressed or carried because it would be a disaster if it were.

    My Lords, my noble friend Lord Peston seems to have a touching faith in parliamentary draftsmen. Perhaps I may remind him of the Financial Services Bill where hundreds and hundreds of amendments were made in this House. Our noble friend had to instruct the Government and the draftsmen how the Bill should be drafted. Coming more up to date, does my noble friend recall that the Government tabled hundreds of amendments to the Education Bill, which initially was so badly drafted that the government draftsmen had to burn the midnight oil and propose hundreds of amendments because they were wrong in the first place? Do not the Government think that on this occasion their parliamentary draftsmen are wrong and that my noble friend Lord Pearson and his advisers are right?

    My Lords, we are a revising Chamber, as we constantly remind ourselves. We fail in our duty, therefore, if, on noticing or having drawn to our attention that a Bill is grammatically defective, ambiguous, or both, we do not insist on rectifying it so that it means what the Government have always intended it to mean. I support the amendment.

    My Lords, this is the third time we have considered this matter. I fear that I have to repeat some of the things I said on the two previous occasions. I apologise to your Lordships for that. Nonetheless, it is necessary. I start with a simple proposition: one has, first, to decide what effect one thinks that the draftsman of this clause intended to produce.

    My noble friend Lord Pearson of Rannoch seems to think that what was desired was that a clause should be produced which should stipulate that an order should be drawn up making provision for the Governor of the Bank of England to make an annual report to Parliament, and that that order should not be made unless it is approved by a resolution of each House of Parliament, but after that order has been made there is no question of any approval of the annual report of the Governor of the Bank of England being given.

    If one starts from that position, I can see that one would decide that the wording of Clause 3, as it stands, does not lead one to that conclusion. If, however, that was not the intention of the draftsman of the clause, then of course the position is different. As I said previously, it is plain that the purpose of those who introduced the clause in another place was to ensure that the report of the Governor of the Bank of England should be subject to approval by a resolution of both Houses of Parliament.

    If that is the intention it follows as night follows day that the proposed amendments are entirely unacceptable. They are not mere drafting amendments; they are designed completely to change the meaning, the purpose and the effect of the clause. They would do so in a way which I find to be extraordinary, coming from my noble friend who I understand is, in broad terms, opposed to the treaty and complains that the actions of the Community are not subject to sufficient control by Parliament.

    If the amendments were carried the result would be not to increase the opportunity for Parliament to look at the work of the Governor of the Bank of England but, on the contrary, would reduce it. There would be no question of approval being required of the annual report of the Governor of the Bank of England. From the point of view of my noble friend's policy objectives I find that approach absolutely extraordinary and I cannot understand it.

    One must look at the letter from Mr. Durkin in that light. I do not know exactly what was said to Mr. Durkin, but if he were being asked whether Clause 3 seemed not to give effect to the kind of policy which my noble friend wished he would plainly have come to the view that it was ambiguous at the very least. But if, on the other hand, one believes that the policy is that which I have outlined, one does not need to be a lawyer or anything other than a person capable of reading the English language in a normal way to be able to conclude that the effect of the words in the clause is to enshrine the policy which I have outlined. Clause 3 states:
    "Her Majesty's Government shall, by order, make provision for the Governor of the Bank of England to make an annual report to Parliament".
    There is then the qualifying clause:
    "which shall be subject to approval by a Resolution of each House of Parliament".
    If during my school days someone had asked me which noun was qualified by the adjectival clause,
    "which shall be subject to approval by a Resolution of each House of Parlaiment",
    I should have had little difficulty in concluding, according to the ordinary usage of the English language, that "which" referred to the nearest relevant noun; that would have been the annual report. One reads that according to the ordinary rules of English usage—

    My Lords, perhaps I may interrupt the noble and learned Lord before he sits down. That is exactly my interpretation as a layman. However, is the noble and learned Lord the Lord Advocate saying that that is his interpretation, first, as a layman and, secondly, as a distinguished lawyer? It is the latter question which has been troubling me because I have had no difficulty in reading the English language.

    My Lords, lawyers have no language to work with apart from the English language. If it is plain what the English language says of course that is the interpretation which the courts would be expected to follow. If I have to put on my lawyer's hat, I say that where the policy intention is plain and easily derived from the wording of the clause, if interpreted according to the ordinary cannons of English, that is the way in which I should expect a court to interpret it.

    Even supposing that I were wrong in the simple approach that I have advocated towards the interpretation of the clause or that somehow a judge took the perverse view that the word "which" could suddenly leap two lines up the page and attach itself to the word "order"—supposing that he were tempted to such an extraordinary construction of the English language—at that stage he might declare an ambiguity. As I have said on repeated occasions, if that situation arose the judge, under the rule recently established by your Lordships' House in its Judicial Committee in the case of Pepper v. Hart, would have regard to what was said in this House and in the other place as to the intention behind the clause and would interpret the wording of the clause in that spirit.

    I have no experience in drafting legislation but I have considerable experience in interpreting legislation. I am aware that parliamentary draftsmen do not always get things absolutely correct. But I am satisfied that, in looking at the clause as I have put it to your Lordships, it embodies to a sufficient and satisfactory degree the policy which I understand to lie behind it. In that situation it would he interpreted in the spirit and with the result that I have mentioned.

    I do not take up time with the point mentioned in the letter—that is, the fact that the clause does not state what would happen if there were no approval of the governor's report—for the simple reason that on two previous occasions the Governor of the Bank, at this stage ex hypothesi being an independent governor of an independent bank, would determine what to do. It would not be in accordance with the treaty for Parliament to seek to dictate to him what to do. For that reason the clause does not contain any such provision and it would be a matter for the governor to consider what to do in those circumstances.

    For those reasons, which are not mere matters of drafting because they amount to an assault upon the policy behind the clause, I find the amendments completely unacceptable and I ask my noble friend not to press them.

    My Lords, before my noble and learned friend sits down perhaps I may ask him about his interpretation, in the light of his comments, which seems to me to be entirely in accordance with the wording of the clause as one would normally read it. Does it mean that the annual report to Parliament could be subject only to a Motion for approval and not to a Motion to take note, even if that seemed to be more appropriate at the time?

    My Lords, the terms in accordance with the clause are that it should be subject to approval. That is the way in which, at the end of the day, it would have to be framed.

    My Lords, even if everything that the noble and learned Lord said is true, would not all doubt be removed if the word "report" were to be inserted after the word "which"? That would put the matter beyond doubt. That there is doubt has been proved by the fact that we have had two debates on the issue. Why not make the matter clear beyond any question?

    My Lords, with the leave of the House, that point is raised in amendments with which we have yet to deal and I may address it in that context.

    My Lords, I am grateful to my noble friend. I wish to remove any suggestion that he may have advanced that Mr. Durkin and the firm of Rees & Freres were in any way led to the conclusion that they reached. I have quoted their letter in full. Any noble Lord who cares to read it in Hansard will see that they have made it clear that their opinion is entirely objective, based simply on the meaning of the Bill, the treaty and the amendments.

    I have to tell my noble and learned friend that he still has not really convinced me that his interpretation of the clause is correct. I say that because we are still left with the words "subject" and "report". In other words, the statutory instrument as we maintain it ought to be is still,
    "subject to approval by a Resolution of each House of Parliament".
    Why would it be subject to that approval unless something was going to happen either way if that approval was not given? That phrase leads me and my legal advisers towards the interpretation that we have taken. However, I am clear that my noble and learned friend does not want to give any more on the subject at present. Therefore, for the moment, I am prepared to withdraw Amendment No. 9.

    Amendment, by leave, withdrawn.

    The noble Lord said, My Lords, I have tabled the amendment in an attempt, yet again, to be helpful to my noble and learned friend Lord Rodger of Earlsferry. As we heard during the debate on the previous amendment, he decided that the amendments tabled in the name of my noble friend Lord Pearson of Rannoch were totally unnecessary. My noble and learned friend came to precisely the same conclusion in regard to the present amendment at previous stages of the Bill. The reason why he deemed it totally unnecessary was that the wording in the Bill is quite clear. In other words, on the grounds of clarity, the amendment was unnecessary.

    That is rather odd. I say that because my noble and learned friend took about 400 words to explain the clarity of the Bill's wording. He also suggested that the clause might even come to court. He said that in such a situation one would have to have regard to the rule of construction in Pepper v. Hart. Indeed, my noble friend Lady Carnegy of Lour, who, as the House knows, is no slouch in the interpretation of statutes, was absolutely convinced that Clause 3 meant that it was the order that should be subject to approval and not the report.

    I have re-tabled the amendment and included the word "report" so as to make the matter clear beyond peradventure and to test the opinion of the House. I have not done so because I want the Government to be defeated; indeed, I really want them to win. I have done so to make absolutely sure that they demonstrate that they really feel that the inclusion of the word "report" is unnecessary. I beg to move.

    My Lords, I hope that the Government will accept the amendment. It was not only my noble friend Lady Carnegy of Lour but also a very distinguished Member of the Opposition Front Bench—namely, the noble Lord, Lord McIntosh of Haringey—who came to precisely the opposite conclusion as to the meaning of the clause to that given later by my noble and learned friend the Lord Advocate.

    I could quite understand until yesterday why the Government were so keen that there should be no amendments, even of a drafting kind. It was because they were anxious to save the time of the other place by not requiring it to consider any amendments from this House. But surely that argument has now disappeared, thanks to the dissent as a sort of deus ex machina of the noble Lord, Lord Rees-Mogg, who has saved the Government from such embarrassment by giving them, probably, several weeks or, possibly, several months during which time any amendments can conveniently be discussed by the other place without the necessity of calling those concerned back from their well-earned holidays.

    I believe that at this point it would be only reasonable for my noble and learned friend the Lord Advocate to admit that distinguished Members of this House have come to an entirely different interpretation to the one upon which, rightly or wrongly, he insists. He should therefore accept the amendment which will put his interpretation on the face of the Bill.

    My Lords, I am pretty certain that my noble and learned friend on the Front Bench will not accept the amendment. He will not accept it for the very clear reason that the Government have made up their minds that, so long as they have a whipped vote, they do not want any amendment which will entail the Bill returning to another place. However, so that we can be really grown up about it, perhaps my noble and learned friend will think back to the speech he made only a few moments ago where, in order to justify his resistance to the previous amendment, he said that anyone reading English can see that "subject to approval" must refer to the order, mention of which is made two sentences previously.

    The present amendment would put the matter beyond any doubt by the insertion of the word "report". Therefore, in order to justify his own defence as regards the last amendment, it would be more forceful if my noble and learned friend said that, although he can find it in his heart to say that he sees the sense of this particular amendment, he cannot accept it for bigger reasons.

    My Lords, I have already explained my interpretation of the clause. However, in view of the remarks just made by my noble friend Lord Harmar-Nicholls, I should stress that certainly my understanding of what I said—and, indeed, what I hoped I had said—was that the words,

    "which shall be subject to approval",
    according to all the most ordinary rules of construction of the English language, refer back to the immediately preceding relevant words "annual report". I was simply saying that if, contrary to that—which I perceive to be the most obvious interpretation—a judge somehow or other could be persuaded that it might be possible to go back to the words "by order" and to attach them to the relative clause which will be "subject" and so on to the word "order", then what has been said in this House and in another place would make the correct interpretation of the clause clear. In other words, what was intended by Parliament would be clear.

    I referred to the courts. I have done so only because it seems to me that that is the ultimate test which must be applied. I have indicated what the Government understand to be the intention behind the clause. Accordingly, it would be the way in which the Government would operate the clause. However, if another government chose to try to resist such an interpretation of the clause, I suppose that, at that stage, someone might choose to take the matter to court in order to make the Government submit the report for approval by Parliament. I do not know. But, if they did so, all I am saying is that, when the matter came to be tested in a contest of litigation, I am satisfied that the interpretation that I have put forward would be the one, for the reasons that I have given, which would be adopted by the court.

    For that reason, I say that the amendment is unnecessary. It is because it is unnecessary that I say to noble Lords that such a change does not need to be made and, indeed, should not be made at this stage of the Bill's proceedings.

    My Lords, my noble and learned friend has said that by the time the clause comes into force the Governor of the Bank of England will be independent and will be able to do what he likes with any report. Therefore, why should it be subject to the approval of Parliament, or otherwise?

    My Lords, as I said on the previous occasion, it is clearly a matter where Parliament—that is, if the clause is eventually passed into an Act—has decided that one way of dealing with the situation of an independent governor is to have an annual report which shall be subject to approval. In that way, Parliament will be able to express its will on the governor's report, whether or not it approves it. As I said, it will thereby be indicating its view of the governor's report. That is something which, obviously, the governor would be expected to take into account, although to what extent and in what way he would do so I cannot say or predict. But, in the ordinary common sense of the thing, one would imagine that the Governor of the Bank of England would, indeed, take note of whether or not Parliament had approved of the report.

    In that way Parliament would be expressing a view. I think that is the intention behind this clause. It is clearly an understandable intention, and I see that as being perfectly understandable and not pointing, as my noble friend suggests, somehow or other to a construction of the words which would, in my submission, be quite contrary to all the ordinary rules of English usage and grammar.

    My Lords, I listened with very great care to my noble and learned friend. He suggested in his answer that this is not the right stage to move an amendment of this kind. I am certain my noble and learned friend knows as well as I do that the Companion to the Standing Orders makes it quite clear that these are precisely the type of amendments at Third Reading—mainly drafting amendments—that cart and indeed should be moved if a Bill is imperfect. What I find sad and worrying is that if this Government are so careless about what might be regarded as small matters, how careful are they about the issues which really matter? That is what worries me. I believe we should test the will of the House on this amendment.

    7.1 p.m.

    On Question, Whether the said amendment (No. 10) shall be agreed to?

    Their Lordships divided: Contents, 33; Not-Contents, 164.

    Division No. 1

    Belhaven and Stenton, L.Listowel, E.
    Beloff, L.Masham of Ilton, B.
    Blease, L.Monson, L.
    Bruce of Donington, L.Moran, L.
    Cross, V.Morris, L. [Teller.]
    Dacre of Glanton, L.Onslow, E.
    Dormand of Easington, L.Pitt of Hampstead, L.
    Erroll, E.Rankeillour, L.
    Glenamara, L.Rees-Mogg, L.
    Gray, L.Stoddart of Swindon, L.
    Greenway, L.Sudeley, L.
    Hamilton of Dalzell, L.Swinfen, L.
    Harris of High Cross, L.Tebbit, L.
    Jay, L.Tonypandy, V.
    Jeger, B.Wedgwood, L.
    Jenkins of Putney, L.Willoughby de Broke, L. [Teller.]
    Kilbracken, L.


    Airedale, L.Beaumont of Whitley, L
    Aldington, L.Belstead, L.
    Allenby of Megiddo, V.Birdwood, L.
    Arran, E.Blatch, B.
    Astor, V.Blyth, L.
    Astor of Hever, L.Bolton, L.
    Auckland, L.Bonham-Carter, L.
    Borthwick, L.Lockwood, B.
    Boyd-Carpenter, L.Long, V.
    Brabazon of Tara, L.Lyell, L.
    Brougham and Vaux, L.McAlpine of West Green, L.
    Butterfield, L.Mclntosh of Haringey, L.
    Cadman, L.Mackay of Ardbrecknish, L.
    Caithness, E.Mackay of Clashfern, L. [Lord Chancellor.]
    Caldecote, V.
    Carlisle of Bucklow, L.Mackie of Benshie, L.
    Carmichael of Kelvingrove, L.Macleod of Borve, B.
    Carnegy of Lour, B.Mancroft, L.
    Carnock, L.Marlesford, L.
    Carter, L.Mayhew, L.
    Chalker of Wallasey, B.Mersey, V.
    Clinton-Davis, L.Meston, L.
    Colnbrook, L.Milverton, L
    Colwyn, L.Monk Bretton, L.
    Craigavon, V.Morris of Castle Morris, L.
    Cranborne, V.Mottistone, L.
    Cranbrook, E.Mountevans, L.
    Crawshaw, L.Mowbray and Stourton, L.
    Crickhowell, L.Moyne, L.
    Cumberlege, B.Mulley, L.
    Darcy (de Knayth), B.Murton of Lindisfarne, L.
    De L'Isle, V.Nelson, E.
    Dean of Beswick, L.Nicol, B.
    Denham, L.Orkney, E.
    Denton of Wakefield, B.Orr-Ewing, L
    Dilhorne, V.Oxfuird, V.
    Elibank, L.Park of Monmouth, B.
    Elles, B.Pender, L.
    Elliot of Harwood, B.Perry of Walton, L.
    Elphinstone, L.Peston, L.
    Elton, L.Peyton of Yeovil, L.
    Ezra, L.Prentice, L.
    Fairfax of Cameron, L.Reay, L.
    Ferrers, E.Redesdale, L.
    Fraser of Carmyllie, L.Renfrew of Kaimsthorn. L.
    Fraser of Kilmorack, L.Renwick, L.
    Gilmour of Craigmillar, L.Rippon of Hexham, L.
    Glenarthur, L.Rodger of Earlsferry, L.
    Goschen, V.Rodgers of Quarry Bank, L
    Graham of Edmonton, L.Rodney, L.
    Gregson, L.Russell, E.
    Grey, E.St. Davids, V.
    Gridley, L.Saltoun of Abernethy, Ly.
    Hacking, L.Sanderson of Bowden, L.
    Hailsham of Saint Marylebone, L.Seccombe, B.
    Seear, B.
    Harmsworth, L.Sharples, B.
    Harris of Greenwich, L.Sherfield, L.
    Hayhoe, L.Shuttleworth, L.
    Hayter, L.Simon of Glaisdale, L.
    Henley, L.Skidelsky, L.
    Hesketh, L. [Teller.]Stodart of Leaston, L.
    Hilton of Eggardon, B.Strathclyde, L.
    Hives, L.Strathcona and Mount Royal, L.
    Holderness, L.
    Hood, V.Strathmore and Kinghorne, E. [Teller.]
    Hooper, B.
    Hooson, L.Taylor of Blackburn, L.
    Houghton of Sowerby, L.Taylor of Gryfe, L.
    Howe, E.Thomas of Gwydir, L.
    Hylton-Foster, B.Thomas of Swynnerton, L.
    Inchyra, L.Thomson of Monifieth, L.
    Inglewood, L.Thurlow, L.
    Jeffreys, L.Tordoff, L.
    Jenkins of Hillhead, L.Trumpington, B.
    Judd, L.Ullswater, V.
    Kilmarnock, L.Vivian, L.
    Kimball, L.Wakeham, L. [Lord Privy Seal.]
    Kinloss, Ly.
    Kinnoull, E.Warnock, B.
    Knutsford, V.Waverley, V.
    Lauderdale, E.Wharton, B.
    Leigh, L.White, B.
    Lindsay, E.Wynford, L.
    Lindsey and Abingdon, E.

    Resolved in the negative, and amendment disagreed to accordongly.

    7.10 p.m.

    [ Amendments Nos. 11 and 12 not moved.]

    moved Amendment No. 13:

    Page 2, line 5, leave out from ("Parliament") to end of line 6 and insert:
    ("(2) No such order shall be made unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.").

    The noble Lord said: My Lords, I am afraid that this is an amendment—

    My Lords, I withdrew Amendment No. 9. I spoke to Amendments Nos. 11, 12 and 13 and I indicated that I would be coming back to Amendments Nos. 11 and 12, and this is now Amendment No. 13. I believe that this is an amendment which goes in the opposite direction to what my noble and learned friend has said. I should like to test the opinion of the House on Amendment No. 13. I beg to move.

    My Lords, I am not clear what the noble Lord said that he had said because I did not hear him say what he said that he said.

    My Lords, when I was speaking to Amendment No. 9 I made it clear that I was also speaking to Amendments Nos. 11, 12 and 13. After that debate I withdrew Amendment No. 9. I believe that I am now therefore in order to move Amendment No. 13, which I wish to do. I wish to test the opinion of the House on Amendment No. 13.

    7.12 p m.

    On Question, Whether the said amendment (No. 13) shall be agreed to?

    Their Lordships divided: Contents, 31; Not-Contents, 138.

    Division No. 2


    Belhaven and Stenton, L.Onslow, E.
    Beloff, L.Orr-Ewing, L.
    Blease, L.Pearson of Rannoch, L. [Teller.]
    Bruce of Donington, L.
    Cross, V.Perry of Walton, L.
    Dacre of Glanton, L.Pitt of Hampstead, L.
    Dormand of Easington, L.Rankeillour, L.
    Galpern, L.Rees-Mogg, L.
    Gray, L.Stoddart of Swindon, L. [Teller.]
    Hamilton of Dalzell, L.
    Harris of High Cross, L.Sudeley, L.
    Jay, L.Swinfen, L.
    Jenkins of Putney, L.Tebbit, L.
    Kilbracken, L.Tonypandy, V.
    Monson, L.Wedgwood, L.
    Moran, L.Willoughby de Broke, L.
    Morris, L.


    Airedale, L.Blatch, B.
    Aldington, L.Blyth, L.
    Allenby of Megiddo, V.Boyd-Carpenter, L.
    Arran, E.Brabazon of Tara, L.
    Astor, V.Braine of Wheatley, L.
    Astor of Hever, L.Brougham and Vaux, L.
    Auckland, L.Cadman, L.
    Belstead, L.Caithness, E.
    Caldecote, V.Mackay of Ardbrecknish, L.
    Carlisle of Bucklow, L.Mackay of Clashfern, L. [Lord Chancellor.]
    Carnegy of Lour, B.
    Carnock, L.Macleod of Borve, B.
    Carter, L.McNair, L.
    Chalker of Wallasey, B.Mancroft, L.
    Clinton-Davis, L.Marlesford, L.
    Colnbrook, L.Mersey, V.
    Colwyn, L.Milverton, L.
    Craigavon, V.Monk Bretton, L.
    Cranbrook, E.Morris of Castle Morris, L.
    Cumberlege, B.Mottistone, L.
    De L'Isle, V.Mountevans, L.
    Dean of Beswick, L.Mowbray and Stourton, L.
    Denham, L.Moyne, L.
    Denton of Wakefield, B.Mulley, L.
    Dilhorne, V.Murton of Lindisfarne, L.
    Elibank, L.Nelson, E.
    Elles, B.Nicol, B.
    Elliot of Harwood, B.Orkney, E.
    Elphinstone, L.Oxfuird, V.
    Elton, L.Park of Monmouth, B.
    Fairfax of Cameron, L.Pender, L.
    Faithfull, B.Peston, L.
    Ferrers, E.Peyton of Yeovil, L.
    Fraser of Carmyllie, L.Prentice, L.
    Fraser of Kilmorack, L.Reay, L.
    Gilmour of Craigmillar, L.Redesdale, L.
    Goschen, V.Renfrew of Kaimsthorn, L.
    Graham of Edmonton, L.Renwick, L.
    Grey, E.Richard, L.
    Gridley, L.Rippon of Hexham, L.
    Hacking, L.Rodger of Earlsferry, L.
    Hailsham of Saint Marylebone, L.Rodney, L
    St. Davids, V.
    Harmsworth, L.Saltoun of Abernethy, Ly.
    Hayhoe, L.Sanderson of Bowden, L.
    Hayter, L.Seccombe, B.
    Henley, L.Sharples, B.
    Hesketh, L. [Teller.]Sherfield, L.
    Hilton of Eggardon, B.Shuttleworth, L.
    Hives, L.Simon of Glaisdale, L.
    Holderness, L.Slynn of Hadley, L.
    Hood, V.Stodart of Leaston, L.
    Hooper, B.Strathclyde, L.
    Houghton of Sowerby, L.Strathcona and Mount Royal, L.
    Howe, E.
    Hylton-Foster, B.Strathmore and Kinghorne, E [Teller.]
    Inchyra, L.
    Inglewood, L.Taylor of Blackburn, L.
    Jeffreys, L.Taylor of Gryfe, L.
    Jenkin of Roding, L.Thomas of Gwydir, L.
    Kilmarnock, L.Thomas of Swynnerton, L.
    Kimball, L.Thurlow, L.
    Knutsford, V.Trumpington, B.
    Lauderdale, E.Ullswater, V.
    Leigh, L.Vivian, L.
    Lindsay, E.Wakeham, L. [Lord Privy Seal.]
    Lindsey and Abingdon, E.
    Listowel, E.Warnock, B.
    Lockwood, B.Waverley, V.
    Long, V.White, B.
    Lyell, L.Wynford, L.
    McIntosh of Haringey, L.

    Resolved in the negative, and amendment disagreed to accordingly.

    7.20 p.m.

    Clause 5 [ Convergence criteria: assessment of deficits]:

    [ Amendment No. 14 not moved.]

    The noble Lord said: My Lords, your Lordships will recall that in moving Amendment No. 10 we were assured by my noble and learned friend the Lord Advocate that the word "report" in Clause 3 was totally unnecessary because the meaning was absolutely clear. Clause 3 called for two things: first, that Her Majesty's Government should make an order; and, secondly, that they should make an annual report. It was for that reason that I believe the inclusion of the word "report" after "which" helps to clear up a quite obvious ambiguity.

    If it was unnecessary in Clause 3, I should have thought that the inclusion of the word "report" in Clause 5 was even more unnecessary. Her Majesty's Government are keen on clarity and precision in drafting. It is for that reason that I move the amendment. Bearing in mind what my noble and learned friend said in defending the drafting of Clause 3, 1 am sure that he will happily welcome the amendment. I beg to move.

    My Lords, I fear that I may disappoint my noble friend by not agreeing to his amendment. I do not accept any implied suggestion that the word "report" is somehow redundant in Clause 5 if I state that it is unnecessary in Clause 3. I have explained to your Lordships how I believe that one would naturally interpret Clause 3 according to the ordinary rules of English. However, if one considers Clause 5, it is a very different clause in this sense. It states that,

    "Her Majesty's Government shall report to Parliament for its approval an assessment of"—
    the clause sets out various items, and continues—
    "which report shall form the basis of any submission to the Council and Commission".
    If one were to follow the spirit of the amendment and withdraw the word "report", it would not make the clause clearer. It would have the effect of making it less clear. I understand that to be precisely the reverse of what my noble friend intends.

    The word "report" added after "which" is one way of making clear to what the word "which" refers. That might be doubtful in Clause 5 in which there is a great string of nouns just before the word "which". It might therefore be somewhat doubtful to which word "which" refers. To make sense, if the word "report" was not in, Clause 5 "which" would have to refer back to the word "assessment" at the beginning of line 16. According to the ordinary rules of English usage, I believe that the use of the word "which" to refer back to two lines above would be unnatural. I therefore do not find it surprising that the draftsman of Clause 5 has inserted the word "report" to make it clear that it is the assessment which is reported which is to form the basis of the submission to the Council and the Commission.

    Contrary to what is implied by my noble friend's amendment, omitting the word "report" makes the clause less clear rather than clearer. In that situation the amendment would make the Bill worse, even in drafting terms. For that reason, I ask my noble friend to withdraw the amendment.

    My Lords, I thank my noble and learned friend for his response to the amendment. I wish that I had had those words to use when I moved Amendment No. 10. I believe that they are a perfect justification for including the word "report" in Clause 3. It is precisely for that reason that I believe it would be an improvement to Clause 3.

    However, as in all innocence we take even the most unworldly and unpromising assurances with equanimity, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    moved Amendment No. 16:

    Page 2, line 20, at end insert:
    ("(2) No such submission shall be made unless the report referred to in subsection (1) above has been laid before and approved by both Houses of Parliament.").

    The noble Lord said: My Lords, I appreciate that Amendment No. 16 is grouped with Amendment No. 14, but with the leave of your Lordships' House I should like to speak to it briefly. Some of your Lordships may have noticed that I was caught on the wrong side of the Chamber after the last vote. If I had not been, I would not have done the discourtesy of passing between the Lord Chancellor and the Table, and I would also have moved Amendment No. 14, which I appreciate is now behind us.

    If it is in order, I shall speak briefly to Amendment No. 16 which would improve the drafting of Clause 5 of the Bill. I shall not repeat everything that I have just said about the poor drafting of Clause 3. Suffice it to say that Clause 5 of the Bill as we have considered it on Report and in Committee is also unsatisfactory because it fails to require the Government to obtain parliamentary approval of their report before making any submission to the Council and to the Commission. I believe that the amendment tabled, Amendment No. 16, is adequate to make good that omission. I beg to move.

    My Lords, I hope that I can be as brief as my noble friend. As I explained previously, the position is that I am satisfied, and I have sought to persuade your Lordships that they should be satisfied, that the wording of the clause makes clear that what is intended is that the information should be submitted only if the report has been submitted and approved by both Houses of Parliament.

    If my noble friend had moved Amendment No. 14, he would have sought to delete from the clause the words "for its approval". Those words are absolutely crucial to the argument. The clause states:
    "Before submitting the information … Her Majesty's Government shall report to Parliament … an assessment of the medium term economic and budgetary position".
    If the clause simply stated that, "Her Majesty's Government shall report to Parliament an assessment", and so on, I understand that there would be some doubt about the matter. But the words of the clause do not stop there. The words "for its approval" are inserted into the clause. If my noble friend was right, and the matter did not have to be approved before it was submitted, what would be the purpose of adding the words "for its approval"? They would be entirely redundant and superfluous. There would be no point in having those words in the clause.

    My noble friend's construction of the clause does not take account of the words "for its approval". It is an elementary principle of statutory construction known to all lawyers that one must have regard to all the words which are there and give them value. The point is that because Parliament will say, if this clause becomes a section of the Act, it is to be reported to Parliament for its approval, the implication must necessarily be that it is only to be submitted if that approval has been maintained.

    Again, at pains of labouring the same point, even if I am wrong on that matter and the matter remained dubious, doubtful or ambiguous, the court would have regard to what has been said repeatedly about the matter both in another place and in your Lordships' House as to the interpretation which is to be put on those words. Account will be taken of that, and I am satisfied that the construction which I have advanced and which I understand is accepted as being the desired construction by my noble friend Lord Pearson will indeed be the construction that is put upon the clause. Therefore, I ask my noble friend to withdraw the amendment.

    7.30 p.m.

    My Lords, I am most grateful to my noble and learned friend. I have to say that the fact that he comes to rely on Pepper v. Hart on this clause as well as on Clause 3 leads me to the conclusion that the clauses are badly drafted. However, I see no point in pursuing the matter further at the moment. It is clear that the Government are content to see a Bill receive Royal Assent even if it is defective. In those circumstances, I feel that I have no alternative but to withdraw the amendment.

    Amendment, by leave, withdrawn.

    [Amendment No. 17 not moved.]

    Frontier protection

    (". Nothing in this Act shall have the effect of requiring the abandonment or restriction of any measures in force at the periphery of the territory of the United Kingdom for—
  • (a) the purpose of control of drug traffic, terrorism and other criminal activity, and
  • (b) the passage to and from the United Kingdom of persons who are not citizens of the Union.").
  • The noble Lord said: This amendment was discussed at the previous stage of the Bill. I sought reassurance from my noble friend Lord Ferrers because, although I was greatly reassured by him, which is why I withdrew the amendment—and I listened with great care to what he said—I read a report that a Signor Raniero Vanni d'Archirafi, who, I assume, is an Italian commissioner for the internal market, gave warning that Britain would not long escape Brussels programme for a border-free European Community.

    In fairness, the report goes on to state that British officials reported that they had "objections of substance" to removing border checks against drug smugglers, terrorists and illegal immigrants. That is precisely my understanding as to what is the position of Her Majesty's Government. I should very much like to know from my noble friend whether Her Majesty's Government have made any démarches, or whatever

    the term may be, to the Commission to object to a commissioner making such a statement which basically ignores the much publicised position of Her Majesty's Government. I beg to move.

    My Lords, I rise with some disappointment. As my noble friend indicated, on Report he moved an amendment in identical terms. I thought that I had provided comfort to my noble friend on Report because I told him that adequate provision for the matters about which he is anxious is contained in the Treaty of Rome.

    Perhaps I may deal with the matter with a little more precision. If my noble friend looks at Article 36, which concerns the free movement of goods, and Article 48, which concerns the free movement of persons, he will find that member states are able to set up border controls to deal with matters of public policy or public security. If my noble friend needs further comfort—I am happy to provide it—your Lordships have considered this matter in considerable detail in a European Communities Select Committee report; namely, the 1992 Border Control of People report. Your Lordships concluded in that report that the Single European Act does not impose a legal obligation to abolish national border controls and that member states are required to co-operate with regard to immigration from outside the Community and in combating crime.

    At a later stage of the report we considered specifically frontier checks for illegal weapons, checks for illegal drugs, systematic passport control, checks for prevention of