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European Union (Amendment) Bill

Volume 701: debated on Wednesday 14 May 2008

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES (Lord Brabazon of Tara) in the Chair.]

Clause 2 [Addition to list of treaties]:

70: Clause 2, page 1, line 12, after “excluding” insert—

“(i) Article 2, paragraph 147, inserted Article 176A TEC (TFEU), relating to energy; and(ii) ”

The noble Lord said: This amendment concerns a new article that can be found by a diligent search in the current treaty—difficult though it is to find these headings. I call it new but it is an almost identical copy, with one small addition to what was in the previous draft of the rejected constitutional treaty. Almost all the text of the treaty is embodied in this Bill. In no area is more nonsense talked about the technicalities of an issue than in energy policy. There is a great deal of enthusiasm, lobbying and favourite causes being promoted and rather more smoke—possibly heat—than light, in this area.

Behind the arrival of this new clause in this treaty and in the previous constitutional treaty is the aspiration for what is called a common EU energy policy. The treaty provisions that introduce a new energy competence and allow the introduction of legislation in this area by qualified majority voting refer to all sorts of attractive sounding things, such as solidarity, security of supply, energy efficiency, interconnection of networks—a real benefit—and other admirable objectives, such as reduced carbon emissions. It is a classic example of a clause being paved with good intentions. We know, of course, where they often lead. The interesting thing is that the Government fought very hard to keep energy out of the treaty altogether and to prevent it coming into the convention. The Minister at the time, Mr Hain, said:

“This provision is unnecessary as all aspects of energy policy are effectively covered elsewhere in the Treaty. For example, the single market environment etc”.

He added:

“We have detailed concerns on the text”.

We, too, have detailed concerns and would like them answered. My overall concern is that the rhetoric of this article and the realities of energy security and problems are miles—perhaps I should have said kilometres—apart.

I would not dispute for a moment the fact that some extremely dangerous energy supply and security issues lie just ahead. Some of us would say that they are already here. Crude oil prices are at staggering levels—in real terms, they are above those reached in the early 1980s—and rising to $126 and $130. As we discovered two winters ago, we have unreliable gas supplies but a heavy dependence—about 40 per cent—on gas for our electricity. When I had some responsibility for these things a quarter of a century ago, it was 1 per cent but now 40 per cent of our daily electricity supply is gas-fired. We have concerns about the storage of gas and why we have fewer days for storage than our continental neighbours. We have concerns about the wild oscillation in gas prices. We have endless dithering over the need to resume our nuclear power programme. We still have not made the right decisions, but when we do, it will take us nine or 10 years to get new plants up and running. We have the prospect of power shortages between 2010 and 2016, as an increasing number of experts are pointing out. We have the over-zealotry of some of the perfectly proper enthusiasts for a greener, more sustainable planet, which seems to lead to the excessive piling on of fuel and energy taxes, charges and subsidies, regardless of the fuel poverty that they create. Inevitably, that makes environmental policies unpopular and threatens economic growth.

We also have the biofuels errors, which the government scientist described as insane policies, and the consequent rise in food prices and the starving of the poor which are caused by those energy-related programmes. I cannot understand why some EU leaders or our own Foreign Secretary seem to be in denial about the relationship between the biofuels commitment element in European energy policy and the enormous increase in food prices in the past two or three years, which has led to unrest and riots in 33 countries. The Washington Institute of Food Research, which is very authoritative and respected, calculated that crop switching accounts for between one-quarter and one-third of the food price rise worldwide.

I followed the biofuels point from a distance, but I understood that it was American subsidies for biofuels that were really distorting the market and that the European production had played only an extremely small part in it. Is the noble Lord saying that the distortion of the global food market is Europe’s fault, rather than the immense subsidies which the Americans have had on biofuels?

I am talking about worldwide, so I am talking about the American switch, and certainly the European emphasis on switching to biofuels. It is the EU, America and other places as well. The institute I quoted was looking at the worldwide situation, not America alone.

Is there not an EU requirement that up to 5 per cent of the content of the petrol that people put in their cars has to be generated from biofuels? Is not the European Community therefore adding to the situation?

There is, of course, the renewable fuels obligation, which we ourselves have in place. Beyond that there is a declared objective of 20 per cent renewables in our energy by 2020 in which it is implicit that there has to be a massive switch from mineral oil to plant-based oil. That is why European farmers, as well as American farmers, have been moving towards these oil-based crops. That is happening, and unless the policy is changed it will continue and cause more misery and starvation. That is absolutely so.

I have already mentioned the question of renewables—20 per cent by 2020—and whether they are profitable or being subsidised in the right way. We need to watch those matters very carefully. As we all know, the insatiable demand for oil from China and India is driving up prices. Nationalism all around the world is driving out the international oil companies and asserting a degree of nationalism in access to oil. There is the lack of investment in oil and gas resources; and there are all sorts of scams and oddities around, like the carbon offset rackets and possibly the wrongly phased subsidies to wind farms which newspapers such as the Financial Times have very bravely exposed, although nothing much seems to have been done about them. I am simply saying that there is a whole string of energy problems which we urgently need to face. But how will more EU powers, as in this treaty, really help? Is it that they are concerned about security of supply? Frankly, that is bound to be a matter primarily for national Governments, as every Government in Europe knows perfectly well.

Here on this island we would do much better to rely on our friend Norway, which has plenty of gas and oil for years to come, and on importing liquid natural gas—as we are planning to do to some extent—rather than on the continental grid supplied by Russian gas, which has proved to be quite a tricky system to rely on, particularly in the coldest hours of the coldest days of the coldest years.

We all want to reduce dependence on oil. The United States has probably done better than others in this regard, although Europe has done pretty well also, as has the UK within Europe. But, again, do we need new laws to do that? We all want to get our policy on the support of renewables right and support the ones that are really going to make a contribution, but is the EU guidance towards biofuels, which has helped cause the global food price rise, the right way forward? I am not sure. If we are concerned with carbon reduction, which is related to energy policy, is the European Union Emissions Trading Scheme the right system? Many people say that it has made zero impact in reducing carbon but has plenty of bad side-effects. And so on.

As for sharing stocks, the International Energy Agency, which I chaired many years ago, has a very elaborate scheme for sharing stocks in an emergency. It is quite ready to implement it. That is not always popular, but we have to do it. As for revival of nuclear power, that really is a global issue. It has very little to do with Europe alone. Once we get our programmes going, we will probably rely on French industry, maybe South African expertise and maybe USA expertise. Even the Chinese might help us because we have been so slow in getting back into nuclear power. But, again, what have these things to do with new powers in Europe?

The truth is that EU policies of the kind proposed, namely more centralisation and more involvement, are not only unnecessary but in many instances wrong for our country, leading to bad strategic stances and decisions. The Government were right first time to resist them. They should have resisted them much harder. Mr Hain was right in his initial stance and we should have stuck to common sense rather than to the common energy dreams and dangers. That is why I beg to move this amendment.

I am prompted to intervene by a column I read a while ago in Time magazine by the noble Lord, Lord Lawson. It was entitled “Darkness Looms”. He reminded readers that he had been energy Secretary 25 years before when there was a Department of Energy. I think that the noble Lord who has just spoken from the Front Bench also was an energy Minister in one capacity or another a considerable time ago. It prompted me to remember that I was the shadow spokesman 25 years ago, and a very enjoyable experience it was, too, to mark the noble Lord, Lord Lawson, who was great fun to debate with among other things. The experience prompted him, and it prompts me, to reflect on the changes that have taken place in the last 25 years.

Our energy debates 25 years ago were primarily domestic. They centred around whether we should privatise and how we should allocate the enormous energy resources we had. We had an abundance of coal, we had oil, we had gas and we had nuclear power—a diverse range. In 25 years that scene has been transformed. I recall debating the importance of gas as the “premium fuel” and not burning it in power stations. The speed with which we have depleted our gas reserves has led to a problem of energy security. It is therefore not surprising that energy security has now come to the fore. I am not surprised that for the first time in a European treaty there is an energy chapter, though like the noble Lord I shall have some questions about it. We will also have an Energy Bill in the next week or two. Energy security has come to the centre stage.

I should like to know the answers to the following questions, which in some ways the noble Lord, Lord Howell, also posed. What exactly will this energy chapter do? What is it all about? What is in it that was not in previous treaties or arrangements? For example, does it increase areas of qualified majority voting on energy? It appears that it does, but to what extent?

I turn to what, for me, is the most authoritative assessment that we have—the European Union Select Committee’s report, which I found extremely useful. However, I found the paragraphs relating to energy rather less than full and the committee’s conclusion at paragraph 9.33 rather enigmatic:

“The new provisions in the Lisbon Treaty may raise the profile of the issue of energy but they do not constitute a major innovation. However the extension of QMV may be seen as significant”.

When my noble friend replies to this debate, I hope that he will be able to spell out rather more clearly how far qualified majority voting will be extended in the field of energy. What illustrative examples can he give us to show the impact of this new energy chapter in terms of an extension of QMV? Unfortunately, in this case, and in this case only, the EU Committee did not provide us with that invaluable information.

Secondly, I want to find out what the Commission’s involvement will be in issues of energy security. If one reads the debates in the other place, one can see that there were a lot of hares running with regard to how the Commission would be able to take over our supplies and reallocate them in an emergency or crisis. I should be grateful if my noble friend could clarify whether this chapter in any way adds to or develops the Commission’s or Council’s powers and whether it allows them, through the ordinary procedure, to extend and expand their role in the issue of emergency energy supplies.

I agree with the noble Lord, Lord Howell, that we have a very fine track record of dealing with crises in international energy, and it does not seem to me that there is any need for the Commission or anyone else to cut across the basic and fundamental responsibility and obligation placed on all of us under the terms of the energy agency. Again, I should be grateful if my noble friend could confirm the character and nature of the Commission’s responsibilities, if it has any in this regard, and say whether this treaty is in some cases promoting these areas. There was a debate in the other place about whether the Commission would have the power to propose, under ordinary procedure, a statutory increase in oil reserve stocks. Apparently, that was a hard-won concession. However, my recollection is that qualified majority voting in that area may have been introduced in the treaty of Nice. Again, I should be very grateful if my noble friend could clarify that.

Finally, like the noble Lord, Lord Howell, I should like to know what the new role of the Commission and Council will be, through ordinary procedure, in attaining security of energy supplies. I thought that he was disingenuous in the case that he made—but it is a case that I shall make too. National Governments are ultimately responsible for the security of their energy supplies. However, despite our connections with Norway, if something relating to the security of energy supplies happened in Europe, no one could believe that that would not reverberate throughout our country as well. There is no longer a drawbridge in such issues, and therefore we have a profound interest in revising the complex relationships that exist between European countries and those in the East. After all the unbundling that might occur and all the competition that there might be in the European energy market, there is one inescapable fact—at least in relation to gas, for a very long period Europe will be dependent for its supplies on the East.

I hope that the noble Lord, Lord Howell, occasionally reads Select Committee reports. He chaired the Select Committee on Foreign Affairs with distinction while I also had the privilege of serving on it. It recently produced a report entitled Global Security: Russia which spells out the incredibly complex, difficult and dangerous diplomatic moves that are interlocked with gas pipeline diplomacy. This diplomacy could have a considerable effect on Russian-Turkish and Russian-Turkish-EU relationships, let alone relationships between Russia and its neighbouring states. I therefore also wonder what further role the European Commission will play in this capacity.

We had the G8 meeting in St Petersburg and the establishment of an energy charter treaty. We have a UK-Russian forum. We also have an EU-Russian energy forum. It seems that lots of processes are in place. The problem is not the processes, it is people’s definition of what their national interests are. In the case of the Russians, they apparently do not want to ratify that treaty or agree to a transit protocol of the kind that we and our European partners would like. All of these are profoundly serious matters. I am not sure what additional power and role the Commission will have in energy security, despite its reference in the chapter.

Like the noble Lord, Lord Howell, I will end on this note. I agree that there should be a European dimension to our energy policy—unlike some of the amendments, which would make it impossible to have any kind of a European Union energy policy. Everybody knows, in every nation state, that the citizens of the nation state hold their national Governments responsible for heat and light. I can recall at least two Governments of the past 30 years, in my parliamentary lifetime, where that lesson was learnt. In February 1974, the Government of the day learnt a very painful lesson—that if they could not keep the lights on then there would be considerable political as well as social and economic consequences. Ten years later, in 1984, we found a Government who had learnt that lesson and were prepared to avoid such a situation. In the last resort, however much we should endeavour to develop the desirable idea of a common European energy policy, it will always remain the national Government’s responsibility to ensure that our nation is warm and lit.

I should like to add to the already formidable list of issues raised by my noble friend Lord Howell and the noble Lord, Lord Rowlands. I shall also speak to Amendment No. 119, which is in my name, and which I hope may provide some resolution to these issues.

For the reasons that the noble Lord, Lord Rowlands, has just enunciated, few things are more important to a nation than the security of its energy supply. The problem that many of us have with this treaty is that it is completely unclear about what role exactly the European Union will play—where the limits of its role lie and what role that leaves for the nation state to pursue its obligations on security to its citizens. Article 2C of the Lisbon treaty moves energy into this new category of shared competences, where it is then defined as subject to legislation by qualified majority voting. Article 176A then spells out in detail that the European Union shall establish whatever measures are necessary to do a number of things, including ensuring the functioning of the energy market and ensuring security of energy supply. It goes on to say that,

“Such measures shall not affect a Member State's right to determine the conditions for exploiting its energy resources”.

But what does it mean to say that the European Union shall take whatever measures are necessary to ensure security of energy supply? What role does that give the European Union in taking control of our energy resources? What control does it give the European Union in directing the way in which our energy priorities are set?

This uncertainty is added to by Article 84 in the Lisbon treaty, which says:

“Without prejudice to any other procedures provided for in the Treaties, the Council, on a proposal from the Commission, may decide, in a spirit of solidarity between Member States, upon the measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy”.

I know that much of that statement was in the previous treaty, but energy has notably been added to it. What measures may the Commission and the Council, without prejudice to any other procedures in the treaties, decide to impose in a spirit of solidarity to deal with issues of energy shortage? Exactly what powers are we handing over to the European Union? Will the Commission and Council be able to control our reserves if they so wish? Will they be able to direct the way in which energy resources move within the Community?

These provisions in the treaty are completely unclear. In a measure that is so important, for the reasons that the noble Lord, Lord Rowlands, has spelt out, we need to be very clear about the exact delineation. My amendment is clear. It would not affect the words of the treaty. It would simply add to the Bill the following clarification:

“Nothing in this Act or the Treaty of Lisbon shall be taken as limiting the sole right of the United Kingdom government to take decisions regarding the control and management of the United Kingdom’s energy supply”.

I am sure that the noble Lord has done a lot of research into his amendment, but will he answer one small, factual question? Is his amendment compatible with our obligations under the International Energy Agency, which is of course nothing to do with the European Union? I believe that it is not.

I am talking about what this Bill or the treaty of Lisbon does; I am not talking about other obligations that we may have.

My question is whether the amendment is compatible with our international obligations under the International Energy Agency.

Nothing in my amendment changes any obligations that we may or may not have. It simply refers to changes introduced by the Bill and the treaty of Lisbon. I assume that, if we are already compatible, we will continue to be so. This debate is solely concerned with the treaty of Lisbon.

I hope that the Government can assure us that nothing in the Bill or the treaty of Lisbon will change the right of the United Kingdom to take these decisions. I am sure that they will be happy to allay all the concerns that have been expressed by agreeing to the amendment so that it is included in the Bill. If they cannot agree to it, they are obliged to spell out exactly what in the Bill and the treaty of Lisbon prevents them from giving such an assurance to the Committee and to the British public.

This short debate has illustrated the huge gap between the ideas behind some of the criticisms of the Lisbon treaty and the reality of the rapidly changing world in which we live. The fact that national energy policy is a mirage is illustrated every day in the Financial Times. Is $200 a barrel a figure that we as a country have decided on? Of course not.

The European Union Committee report on Russia and the European Union—it is an excellent report, if I may so—states that Russia can play the major countries of Europe one off against the other because they have not got their act together on energy policy. Those noble Lords who make these criticisms seem to want it both ways. They do not want Europe to do anything, yet they criticise the weakness of the European Union in enabling Russia, OPEC or anyone else to play countries off against one another.

Take the question of emissions trading. In effect, we are moving inexorably towards a carbon-taxing Europe. I welcome that, but other people want to walk backwards towards Christmas, as far as I can see. They want to deny that it is happening and still keep on walking. They know very well that we are moving towards an agreed $50 or $80 per tonne of carbon dioxide. They know that we will have to have a carbon tax in this country. We know that that carbon tax will have to be the same carbon tax per tonne as in every other European country, otherwise how are we going to avoid the contradictions which other noble Lords have drawn attention to?

If I had to make a criticism of the Lisbon treaty on this question, it is that it does not go far enough. We might all agree that it is not explicit enough, but how can you be explicit about what is going to happen in the accelerating pace of change in the modern world? There has been criticism that the Emissions Trading Scheme and the degree to which we have to fiscalise in this country, or pay out through private enterprise into purchase of units in Africa and elsewhere, is not a matter for the European Union. Yet about a month ago, the European Union announced that it is making provision that by 2020 Europe will be handing over to developing countries €50 billion per year. Of that amount, we would pay €7 billion or €8 billion which we would have to fiscalise within Britain as well as put into our overseas trading account in some way. That will have to be agreed in Europe, if for no reason other than the fact that we have arguments about competitive advantage within Europe unless we do it on a common European basis.

People cannot get up and make speeches saying that Europe is a waste of time in so far as emissions trading is concerned and not draw the conclusion that Europe must get it right rather than that Europe should not do it in the first place.

There is certainly a question of the man and woman in the street in Burton upon Trent paying what they might be encouraged to believe by the Conservative Party are stealth taxes putting up petrol and home oil prices. Choking off demand has to be done somehow. It can be done through either prices or taxation in some other way. Logically, from a fiscal point of view, there is no reason why we cannot have fiscal neutrality as well as a degree of hypothecation, putting up the tax for some people and putting it down for others. But all this will have to be done on a European basis.

One could go on, in terms of the rules about power stations et cetera. But it is absolutely Alice in Wonderland to hear people in this debate saying that the problem with the Lisbon treaty is that it does too much. It does not do enough. That is the question that has to be raised against some of the statements made by noble Lords.

I find it quite extraordinary listening to the noble Lord talk about Alice in Wonderland. The two amendments tabled by my noble friends Lord Howell and Lord Blackwell, which I support, are eminently sensible. They do not preclude co-operation within the European Community on energy matters; they ensure that we are able to determine issues independently where our national interest is at stake.

My noble friend’s Amendment No. 70 simply removes the new energy article which gives the EU more powers, subject to QMV. My noble friend Lord Blackwell’s amendment simply highlights the significance of the move to QMV on aspects of energy policy. I do not, for the life of me, understand why the noble Lord, Lord Lea, should be concerned about that. I much prefer the view put by his noble friend Lord Rowlands, who warned us of the importance of security of supply and of Governments being able to protect their national interest. If energy is unable to be supplied, that has a fundamental and damaging effect on our quality of life and economy. Many wars and conflicts have been fought on those very issues.

If the noble Lord wants to bring Alice in Wonderland into the debate, I give him one example. Not a fortnight ago I asked the noble Lord, Lord Rooker, in Question Time about the effects of the European Community’s requirement to have a proportion of biofuels included in petrol, which has resulted in the increase in the prices of food throughout the world, to which my noble friend referred. It has caused great damage—indeed, it has killed people because of starvation and their inability to afford those food prices. The noble Lord, Lord Rooker, said that the relationship between biofuels and those problems was at yet unproven and that the Government were looking at this matter and had it under review.

I turned on the radio this morning, not a matter of weeks later, to hear the Chancellor telling us that he is this very day going to Brussels to argue that we should be released from the requirement to have a certain percentage of biofuels included in our petrol. The fact is that there is nothing that we can do about it, unless we get agreement—and it is very damaging to the world as a whole. That is one example of a European policy that has proved foolish, although no doubt it was well intentioned; its consequences have been severe, and we have great difficulty in reversing it.

I shall give the noble Lord another example, for which perhaps the Government of whom I was a member bear some responsibility. Those people who are in favour of green taxes should look at what happened to the previous Conservative Government when they introduced VAT on fuel. It was extremely unpopular. If you read the columns of the national press, you can see lots of people pointing out that the heating allowances that they get from the state are less than the VAT that they have to pay on the fuel. A sensible policy might be to consider lifting that, but we do not have freedom to remove VAT once it has been imposed.

The noble Lord is a little cavalier in suggesting that we should risk giving up our ability to determine our policies according to our national interests. He mentioned Russia, which we know is quite capable of using energy as a political tool. We have seen that already. We also know that there is a diversity of interests within the European Community and according to the position of the various member states and their dependence on a particular energy.

I paused before I sat down, because I thought that the noble Lord was getting up. I shall just make one point—but we are all perhaps taking time which other people might think that we should not be taking.

Several speeches have contained remarks that I believe to be totally fallacious, so I want to make one point for the other side. The noble Lord, Lord Forsyth, was a very notable member of the Government who in effect more or less closed down the coal industry. Many of us at that time said that the dash for gas would result in problems of security of supply. Now he says that we are ignoring security of supply. I am sure that my noble friend Lord Rowlands and I are on exactly the same side of that argument.

Finally, on the notion of the noble Lord, Lord Forsyth, being against green taxes, his party is in favour of the targets for a 70 per cent reduction in CO2 by 2050 in the Climate Change Bill. The Conservatives voted for it. How are we going to get to that without choking off some demand in this country? They are being totally dishonest about this. I very rarely make political points—but mark my words that in due course, whether they become the Government or not, they will have to take responsibility for dealing with this green taxation question.

I apologise to the Committee; I thought that the noble Lord had sat down, and I was making my own speech. Because it is a debate, I was following on from his points and I apologise if that caused confusion.

Of course we want to reduce our dependency on fossil fuels; I am happy to come on to that issue. The answer there is to follow the French lead and to embark, as speedily as possible, on building nuclear power stations in this country, while using increasingly available technology to develop electric motor cars and other devices that will enable us to be less dependent on fossil fuels. The noble Lord and I do not differ on the need for co-operation within the European Community; what is of concern is that we should surrender our ability to decide those things for ourselves.

The noble Lord, Lord Lea, made a political point about the closure of the coal-mines. The other day, I was struck by a proposal to reopen the deep mines in Scotland, to which one leading trade union member said, in public, “Why on earth would we want to go back to sending men down to do those dirty, dangerous jobs in the deep coal-mines?”. There is not entire unanimity about the benefits of operating mines that were then inefficient and rather dangerous; the noble Lord might agree about that.

Could the Minister, then, deal specifically with this point? If there is no threat of the kind suggested by my noble friend Lord Blackwell, what is the objection to accepting his amendment?

I recall reading that in 1950, when the first west European institution—the old European Coal and Steel Community—was being negotiated, many in the then Labour Government thought that Britain ought to join it. They recognised that we did not have a purely national energy market, as we imported oil and had been forced to export coal to Germany between 1946 and 1948, and that there were good arguments for co-operation. However, the Foreign Secretary, Ernie Bevin, said, “I don’t care what you think. The Durham miners won’t have it”.

Well, if it was Morrison, never mind; it was the same nationalist argument. When we joined the European Economic Community, we also joined not only the ECSC but EURATOM. We have been in international energy co-operation regionally and, since 1973, globally with the International Energy Agency. We have to be careful that our arguments on this Bill do not extend toward resistance to international regulation as such. Some of the arguments have got close to that.

This is a consolidation amendment, which talks about promoting the interconnection of energy networks. The United Kingdom electricity network has, for many years, been interconnected with that of France; we now need a number of gas connectors across the North Sea to Belgium, the Netherlands and Norway. The clause says it is to promote energy efficiency and savings; although it also comes under that context, it does not refer to the promotion of competition policy and an open market in EU energy. That is strongly in Britain’s interest, because the French and German markets are less open than the British. I think that I get my electricity from a French company; others get theirs, or their gas, from German ones.

This is, then, a consolidation and not a new invasion of British sovereignty. We are in a regional market for electricity and gas. We also operate within a global oil market. It makes sense to co-operate with our European neighbours and the European Union is the useful framework in which to do that.

No one is arguing that we should not co-operate. The point is that in all these agreements we are able to operate as a sovereign state and decide to enter or leave them. The question here is whether we are ceding power and will not be able to act in that way. That is the point and is why, if there is a move that would enable us not to do that, it is undesirable. The noble Lord is setting up an Aunt Sally and knocking it down, but he is not addressing the concerns that have been expressed.

The underlying difference between us is probably how far one starts from a gut mistrust of co-operation under rules. International regulation has to imply very clear rules. The argument about the IEA versus the European Union is also about how far one lets the Americans set the rules or how far one co-operates with others to design the rules within the European market. That is an argument we had in 1973-74, as I am sure the noble Lord will remember, over the setting up of the IEA, and it is an argument that continues. I, like many of us, start from the assumption that it makes sense to co-operate most closely with our neighbours with whom we share a regional energy market. International regulation is, of course, a limitation of absolute national sovereignty. A global world economy is an invasion of national sovereignty. Foreign companies owning British energy suppliers is a limitation of national sovereignty. I recognise that, and we have to manage it.

I, too, some time in the past had something to do with energy policy, and at some moments this afternoon I could have shut my eyes and heard the mellifluous tones of a Secretary of State for Energy who has not yet been quoted, Mr Anthony Wedgwood Benn, because most of the speeches from the Opposition Benches would have found their place in his mouth. He was an ultra-nationalist in energy policy, and he would have subscribed to all those views.

This debate has strayed a longish way from what we are discussing, which is, effectively, making energy policy a part of the treaty in its own right and enabling decisions to be taken by qualified majority. The arguments for that are very similar to the arguments that noble Lords opposite found extremely compelling in the context of the single market and the Single European Act; that is, it was in Britain’s interest to be able to take a number of these decisions, which would make for a more single market in energy, and that having that done by qualified majority would therefore be in this country’s interest. That is a view that I share. To do that is not to surrender national sovereignty.

Interestingly enough, all the things that the European Union does now on energy policy, which have been complained about at some length by noble Lords opposite, have been done under the existing powers. They are nothing to do with the Lisbon treaty. Reversing, let us say, the biofuels commitment would be more difficult if there was not a provision that enabled it to be done by qualified majority and it had to be done by unanimity. I do not particularly want to reverse it anyway immediately because I think the debate has got a little overheated at the moment, as illustrated by claims that virtually single-handedly the European Union has forced up food prices worldwide when in fact the biggest push factor has been the enormous increase in consumption of certain foods by the more prosperous populations of China, India and south-east Asia. But let us leave that on one side.

The question is whether it makes sense to have it in the Lisbon treaty that decisions on energy matters are to be taken by qualified majority. I believe it does. There are plenty of safeguards in the treaty. The question of Britain’s ownership of its resources and right to take decisions over their depletion is carefully excluded from any rights for the European Union. On the International Energy Agency and the sharing of stocks, the reason I asked the noble Lord, Lord Blackwell, the question I did was because he stated categorically in his amendment that we have absolute control over these matters. We do not. We signed a treaty that set up the International Energy Agency and committed us to pooling our resources in certain circumstances, so the amendment is incompatible with our international obligations, not our European ones.

The noble Lord has raised this again. Does he accept that there is a difference between an agreement that we enter into as a sovereign nation, which we can exit at our choice but where the UK Government still controls national interest, and a policy where we may not be able to decide because it is imposed on us by qualified majority voting, which the noble Lord recommends? One may believe that that is a good thing, but it is fundamentally different in kind.

It is not different in kind if we have accepted it as an international obligation. It is different in kind in the period before we accept it. In the period before we accept it as an international obligation, it is up to us. We can veto it, or not join the organisation, as the French did not join the International Energy Agency at the outset, although they have now joined it. We can do that, but once we have joined, and jointly taken a decision to share our oil stocks, I do not notice any difference whatever, except that the method of making decisions about those stocks is different. The obligation is the same. It is a binding international obligation on the British Government.

My Lords, I was not going to intervene but I have to put one brief and simple question to the Minister. It is inspired by the remarks of the noble Lords, Lord Lea and Lord Hannay, with which I fancy the Minister will agree. What makes Her Majesty’s Government confident that the European Union will be any better at running a common energy policy than it is at running our agriculture, fishing, financial services and, indeed, any area where it extends its unwanted tentacles? We may have been foolish virgins with our oil and gas reserves, but I underline the question of my noble friend Lord Forsyth, if he does not mind my describing him so. Why do we not simply establish our national independence by building enough nuclear power stations as soon as possible, and so avoid having to be dependent on energy from Russia and elsewhere, coming to us courtesy of the French, and overseen by, of all things, Brussels? You could not make it up. I look forward to the Minister’s answer.

Amendment No. 70 refers to the provisions in the Lisbon treaty that would create a specific legal base for energy. I am grateful to the noble Lord, Lord Howell, for moving his amendment and pay tribute to his experience and expertise in this particular field, having been a previous Secretary of State.

The appearance of a separate energy article reflects the growing importance of energy as a political and economic issue in the European Union, and the need for more effective action at Union level to achieve our energy and climate security objectives. The Stern report states that 65 per cent of global emissions come from energy. Meanwhile, the world’s demand for energy rises inexorably. The dilemma facing us is how to meet our energy needs and, at the same time, stabilise our climate. This is very much a 21st century security and prosperity challenge.

The new article will help to ensure that policies on energy markets, energy security and energy efficiency are coherent and mutually reinforcing. This is vital if we in the UK are to achieve our own energy and climate change priorities, and to successfully drive the transition to a high-growth, low-carbon economy in Europe. The creation of a separate energy article has the advantage of providing a transparent means of enacting energy policy at the EU level. It is not new EU action on energy, but in the past we had to rely, in particular, on other, more general articles in existing treaties. Examples include Article 175 for the environment or Article 195 for internal market measures. A separate energy article provides better governance and better regulation. It brings clarity to what the EU intends to do and how it will achieve it.

EU action on energy is not a new invention. The Maastricht treaty listed energy as an activity of the Community, although the Community had acted on energy before. As the noble Lord, Lord Wallace, reminded us, European-level action on energy goes back to the inception of the coal and steel community and EURATOM more than 50 years ago.

Today, the EU has already implemented a wide range of measures on energy policy under existing legal bases of the EC treaty. Although the Lisbon treaty provides a dedicated legal base for EU action on specific areas of energy policy for the first time, the Committee should not be under any illusions that the Union has been taking action for some years to open energy markets. We support that liberalising action.

The Lisbon treaty confirms that qualified majority voting will continue to apply to the majority of future decisions made on energy policy at the EU level. My noble friend Lord Rowlands, who I am very glad is taking part in this debate, asked some questions about QMV. I emphasise that, in the past, energy measures were taken under qualified majority voting. As I understand it, there will be nothing specific under QMV that was not there before, but, of course, it was not under the energy legal base. It was under the other provisions that I have tried to describe.

Is my noble friend describing this chapter or article as a purely consolidation measure and not one that will extend QMV to new areas of energy policy?

I am cautious in how I reply, but my understanding is that that is the position. There are no proposals to be taken under the new energy article, but the Lisbon treaty provides what I continue to describe as a legal base for future action on energy security and promoting renewable energy, as well as further action on what the Committee will want to see—energy market liberalisation.

My noble friend asked also about the Commission’s role. The treaty makes it clear that its member states will maintain the right,

“to determine the conditions for exploiting its energy resources”.

I shall come back to that important point, which was raised by the noble Lords, Lord Blackwell and Lord Forsyth. The Commission will be able to propose legislation, as it has in the past. This time it will be under the energy legal basis.

Perhaps I am confused and muddled; the noble Lord is, as always, making a very reasonable case for the treaty’s provisions on energy. But if they are so reasonable, why did the Government work so hard to prevent them being included? Was it not one of their objectives not to have these provisions in the treaty? He makes it sound terribly unthreatening. What were the Government worried about when they were fighting so hard, or am I missing something here?

The noble Lord misses very little. The noble Lord, Lord Howell, could not resist raising that point in moving the amendment, for which I do not blame him. Perhaps I may come to that point later. I hope that I have explained the point raised by my noble friend Lord Rowlands on QMV and the significance of having a separate energy article. To repeat myself, it reflects the growing importance of energy as a major issue in the EU and the connected policy areas of climate change.

As I say, the treaty confirms that QMV will continue to apply to the majority of future decisions—not fiscal decisions; I make that clear—made on energy policy. This is in our interests as a country. We are leading the push for greater liberalisation of the gas and electricity markets across the continent which, if implemented fully, could save EU consumers tens of billions of euros a year. Frankly, without QMV we would have made very little progress in liberalising energy markets and we would not have any chance of securing the package of further liberalisation currently being negotiated. Indeed, without qualified majority voting, it is arguable that the Commission would not have proposed the measures in the first place. But, I repeat, the treaty retains unanimity for fiscal measures, as argued for by us.

Amendment No. 119 in the name of the noble Lord, Lord Blackwell, and the linked Amendment No. 120 relate to the control of our energy supplies. The Lisbon treaty does not allow the EU to take control of our oil stocks or reserves. It clearly states:

“Such measures shall not affect a Member State’s right to determine the condition for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply”.

Declaration 35 to the Lisbon treaty goes on to say that,

“Article 176A does not affect the right of the Member States to take the necessary measures to ensure their energy supply”.

So, in answer to noble Lords who posed this crucial question, we are not passing over the power to protect the security of our energy supply—no nation would.

Paragraph 9.34 of the EU Select Committee report states:

“The insertion of Article 194(2) is important as it helps to define the boundaries between EU and Member States’ competence by making clear that Member States retain sovereignty over national energy resources and have the right to determine their energy mix and the structure of their energy supply”.

I was asked why we had initially opposed putting an energy article into the treaty. We could not accept in the draft treaty in the convention of 2003—which prepared the now-defunct constitutional treaty—an energy article which we did not think at the time was in our interests. We were concerned that a new article should not restrict what was already possible using other articles—which, as I say, is the way we have done it in the past—but we also wanted to protect our rights over natural oil and gas reserves and make sure that we could act to ensure security of supply in emergencies. We believe that we have secured this in the final text and I have quoted from that part of the treaty. In particular treaty language, it makes it clear that, first, member states determine their own energy mix; secondly, that member states retain control over their own energy resources; and thirdly—and very significantly—all tax issues are decided by unanimity. These safeguards did not exist in the draft treaty that was part of the 2003 convention. That is why we could not accept it.

I thank the Minister for his helpful reassurances but can he explain exactly the language in Article 87 of the Lisbon treaty which states that in areas of supply difficulty the commission may take whatever measures are necessary without prejudice to other procedures provided for in the treaties? Does that not provide an ability for the European Union to override all those reassurances if it determines that there is a situation of supply difficulties?

We do not think that it does. I called it Article 100; I think that we are talking about the same animal—numbers are difficult in this, as the noble Lord agrees. This article inserts a reference to “a spirit of solidarity”. A similar reference is included in the new energy article. Noble Lords should not be too concerned about that. It is unlikely to result in significant change, given that Article 2 of the treaty establishing the European Community already includes the task of promoting solidarity between member states. It is certainly a form of words and it may be more than that, but it should not be of great concern.

Because the phrase “a spirit of solidarity” is a repetition of a phrase that appears in Article 2 of the treaty and does not overcome the article and the declaration that I have already quoted. That is certainly the Government’s view.

Would the Minister be amused to hear that he reminds me of the noble and learned Lord, Lord Mackay of Clashfern, who, standing where the Minister is standing at the Dispatch Box during our debates on Maastricht, said exactly the same about doubts that we raised on the future of justice and home affairs? If any noble Lord has not yet read the speeches of my noble friends Lord Kingsland and Lord Blackwell in our previous day in Committee, on exactly where we have got in spite of all that meaningless language in Maastricht, I suggest that they do so.

The noble Lord has paid me—I do not know whether he meant to—one of the greatest compliments that I have ever been paid, which is to be compared with the noble and learned Lord, Lord Mackay of Clashfern. I think that I shall leave my answer at that and sit down before the noble Lord changes his mind. I have attempted to answer what noble Lords have argued in their amendments, which I hope noble Lords will not seek to press.

I am grateful to the Minister for the good-natured and thorough way in which he sought to answer some of the worries raised in this debate. I am not in the least bit reassured. When we debate energy in this Chamber, we do it rather well. A great reservoir of expertise is here and a good deal of apprehension about what is coming on the energy policy front, because it is clear that many difficulties are looming to which we have perhaps not given enough attention, so keen have we been to fix our eyes on the longer horizons of saving the planet and so on. There will not be any planet to save if we get all our energy problems wrong.

Throughout this debate there has flowed a quality of—what can I call it?—mandarinesque naivety about what is really happening in energy policy throughout the whole of the European membership. We are playing games. We talk about liberalising—and of course that is right. We dream about a better European energy market. We are, as is often said, playing cricket while others are pushing their own national monopolies, securing their own energy supplies and getting on with the job of looking after the number one requirement of a national Government, which is to ensure that energy flows continue.

I heard the noble Lords, Lord Wallace and Lord Hannay, assert the virtues of the regional energy market. There is no regional energy market. It is pure imagination to assume that our neighbours, whatever they may say in their rhetoric, are pursuing the free energy market policies required to create such an entity. We know the realities. While the continental champions E.ON, EDF, Iberdola and others are supplying us and taking over our concerns, nobody asks how many French consumers or German consumers are being supplied by British concerns. The answer is none at all. The whole thing is lopsided. Our neighbours in Europe, while talking about common energy policies and drafting them to put into this treaty, are getting on with their own energy policies in quite different ways and doing separate deals with the Russians, as in the case of the Germans, and so on. That is the reality.

If I have followed the logic of the noble Lord’s argument, he is saying that we should return to a protected national energy market.

No, the logic is the exact opposite. We should be realists. We should see that if we want to develop an effective energy scene for ourselves, we should do so on a global basis and look after our interests. If we talk about energy markets while others pursue completely different targets in completely different directions, we will find—as we found with the gas market—that it is impossible to be the liberal island in a larger area that is not liberal and which is governed by completely different principles. That is what I am saying.

I was going on to say how much I enjoyed the speech of the noble Lord, Lord Rowlands. He and I served together and had many adventures in the international scene in the distant past. The question that he pressed was, “What do these provisions do?”. That is a true and accurate question indeed. As my noble friend Lord Blackwell said, the treaty provisions—quite aside from whether they do anything; we are still not clear what they do—are extremely vague.

As for the International Energy Agency, we signed up to it and gave certain undertakings. I suppose that we could have walked out on it at any time. I have a personal experience to share with your Lordships. In 1979 I went to Paris and chaired a meeting at which I signed up to various production, output and stock-sharing agreements with our neighbours in Europe in a spirit of solidarity. When I got back to London the then Prime Minister, my noble friend Lady Thatcher, was not at all pleased. In fact she glared at me and said, “David, you are giving away our oil”. These are arrangements that we could have rescinded at any time, but the question in the future is whether our freedom to share our oil resources is in any way further restricted than it is already. Frankly, the IEA is not troubled at all by anything that my noble friend Lord Blackwell is saying. In fact, it provides perfectly adequately for good stock sharing. I do not understand why we need these extra provisions.

The noble Lord, Lord Lea, talked about the mirage of energy policy. The real mirage is the EU energy policy because it is not there. If we believe that it is and others carry on because it is not, we will greatly damage the interests of our nation and our people very directly indeed. We want co-operation in Europe. As the noble Lord, Lord Bach, rightly said, there is plenty, but we do not need the further transfers of power set out in the treaty. We just do not need them.

As for biofuels, the European energy advisory agency—a senior body and part of the Brussels Commission structure as I understand it—looked at this matter the other day, and it urged abandonment of the Commission’s biofuels targets. It said that they caused environmental damage and that they were having an effect on world food prices. That now appears to be the policy of the British Government as well.

The noble Lord has mentioned biofuels on a number of occasions. Would he at least welcome the latest Commission communication with the aim of moving towards a lower carbon economy? It talks clearly about setting environmental criteria for biofuels and ensuring that the environmental disadvantages of biofuels use do not outweigh the advantages.

I welcome all movements on this front. In fact, the curious situation is that the British Government, through the mouths of the Prime Minister and the Chancellor of the Exchequer, are urging that the European Union should look at its biofuels policy again. The noble Baroness indicates that some second thoughts might be starting to develop, but the EU Commissioner concerned has said very bluntly that he does not see any connection at all between biofuels policy and rising prices. A number of other quite blunt assertions have been made that if this policy changes at all, it will not be by much.

It is therefore not wise for the Government of this country or the government of Europe to commit to an elaborate new legal base to confer further restraints or further centralisation on these vastly complex areas. We need the co-operation of our neighbours through the interconnector, and the enlargement of the French electrical interconnector was one of the things that I authorised in the early 1980s. However, we do not need a lot of further rules and regulations of the kind proposed in the Bill.

The Opposition should be strong to anything that will damage the flexibility and existing co-operative arrangements which have worked reasonably well but are about to be tested most vigorously by the coming energy crisis. On the biofuels issue, even the noble Lord, Lord Stern—now a Member of this House, and the apostle of climate change and the need for renewables and so on—warned that Europe was on the wrong track. If we do not have the strength and the freedom to see that others are on the wrong track and to develop our own pattern and perhaps encourage others to develop theirs, if we bind ourselves by these new regulations and provisions, we are making a grave mistake for the future. We will look back in your Lordships’ House and see that that is what we have done.

In the mean time, because the Minister has given certain assurances on the QMV side—and I would like to examine those more carefully—I am prepared to think about this again and perhaps return to it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 71 and 72 not moved.]

[Amendments Nos. 73 to 78 had been withdrawn from the Marshalled List.]

79: Clause 2, page 1, line 12, after “excluding” insert—

“(i) Article 2, paragraph 230, amending Article 246 TEC (TFEU), relating to the Court of Auditors, and(ii) ”

The noble Lord said: This group of amendments is probing in nature. It tries to tease out the Government’s attitude to the unfortunate situation with the accounts of the European Union and what they think of the role and composition of the Court of Auditors.

In November last year, the EU audit committee refused to sign off the EU accounts for the 13th year in succession. Its 2006 report issued a qualified opinion on EU expenditure, saying that,

“errors of legality and regularity still persist in the majority of EU expenditure due to weaknesses in internal control systems both at the Commission and in Member States”.

Please note the words,

“the majority of EU expenditure”.

The areas of expenditure on which the court has given an adverse opinion account for something like 57 per cent of the EU budget—nearly €50 billion. As I think we are still the second biggest contributor to the EU budget, that means that something like €5 billion or €6 billion of the British taxpayer’s contribution is open to fraud.

Just to put a little flesh on that, I should say that agriculture is one of the areas most prone to this abuse. The EU spent €50 billion funding agriculture in 2006 but, according to the Court of Auditors, €15 billion was not subject to proper checks. The court found that one-quarter of the payments tested at final beneficiary level revealed overpayments. Nearly a quarter of olive growers in Italy, Spain and Greece have declared at least 5 per cent more olive trees than they owned, in some cases netting significant EU funds. Greece, in particular, came in for severe criticism. Again according to Court of Auditors, something like €850 million was paid to Greek farmers under what it called “unsatisfactory control conditions”. It also found that 50 per cent of Greek sultana producers should not have qualified for the payments that they received at all. There were high levels of error in the rural development budgets which are supposed to deal with environmental matters. They were aimed mostly at developments for farmers. In seven of the eight cases that the European Court of Auditors investigated, the farmers had not met the necessary commitments to qualify for these grants.

The court also criticised the Commission's oversight of national agencies, such as the Rural Payments Agency, that make the payments to farmers. The noble Lord, Lord Bach, who is not in his place at the moment, will recall that example rather painfully. It further found that 1998, 10 years ago, was the last time the Commission updated its records on how much money member states owed the EU budget. The report stated:

“These involve significant sums of money being repaid to the Community budget … It should be emphasised that these recoveries to the Community budget are funded by national taxpayers, rather than the beneficiaries who have received Community funds irregularly”.

Structural funding was another example. The court noticed little improvement in the €32 billion budget and said that the situation remained similar to previous years—that is, entirely unsatisfactory. Of the projects that the court audited, only 31 per cent were found free from error. It warned that there was a high risk that the project costs were overstated and that there were large numbers of claims for ineligible expenditure. The report states that there is generally a lack of evidence to support the calculation of overheads or the staff costs involved. As well as criticising the member states on the control of these funds, the court also criticised the Commission’s supervision of how the funding was spent. It said that,

“the Court again found a material level of error in the legality and regularity of the underlying transactions, mainly due to reimbursements to beneficiaries who had overstated the costs for projects”.

There are a number of really worrying developments there. It is not as if it was just one or two years; this is the 13th year in which the accounts have failed to be passed. The Commission has always tried to say that it is not its problem but is due to the member states not being able to control the budgets or the money that it gives them. It has always said that the responsibility for the fraud is at national level and not with itself. The Court of Auditors comes down quite severely on the Commission on this point. It criticises the Commission for attempting to spin its findings and blame member states.

Article 274 of the Maastricht treaty reminds us of the situation. It is the Commission's direct responsibility to uphold a “sound financial management”. The European Court repeats that by saying:

“Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Communities (Article 274 of the Treaty)”.

The Commission tried to put a positive spin on the report by saying that,

“in significant parts of the EU budget, the Directors-General give a more positive account of the legality and regularity of EU spending than is consistent with the Court’s audit”.

Coming from one of the European Union’s own bodies, that is quite a damning verdict. I believe that Europe's taxpayers deserve better.

I now turn to the useful report of the European Union Select Committee of 2006. I am very pleased to see the noble Lords, Lord Grenfell and Lord Radice, in the Committee. Of the two reports, I refer to the second one—the committee’s response to the government response to its recommendations; that is, the Government and other bodies mentioned. I want to see whether there is any improvement following the suggestions and recommendations made in this useful report. It made some good recommendations, as did the noble Lord, Lord Tomlinson, who sadly is not in his usual place this afternoon. He is a swivel-eyed Europhile, keeping an eye on swivel-eyed Europhobes. He is normally only too pleased to do that. For example—this issue is covered in one of the amendments I am speaking to—he suggested:

=“We must look once again at the structure of the Court of Auditors itself. With a Court of Auditors for six member states, having one from each member state was okay. It still worked when it was nine, and 10, 12 and 15; but to have a member of the Court of Auditors from each member state in a court of 25, and then 27, each with their own cabinet, creates a top-heavy structure. I hope that Sub-Committee A can at some time return to its excellent work in looking at the Court of Auditors and come up with new ideas on the structure for the audit court itself.” [Official Report, 5/3/07; col. 93]

I note that in the treaty there is still a provision for one member of the Court of Auditors from every member state. I do not know whether there is any further thought on that or whether that is slightly arcane and rather like moving the deck chairs around on the “Titanic”—however many members the Court of Auditors has does not seem to make much difference to the EU accounts.

I want to raise three more points with the Minister, although I do not expect her to answer them this afternoon. She has an enormous brief which she carries out—if I may say so without sounding too smarmy—with great charm and patience. I raise my first point by noting that the committee said:

“We support calls for the European Court of Auditors to produce a list of those Member States demonstrating poor management of European funds”.

The Government replied to that by saying:

“The Government would welcome this recommendation”.

Has this happened? Is there a list of member states demonstrating poor management of European funds? If there is such a list, is the United Kingdom on it?

The second recommendation in this report is:

“We are strongly in favour of a national Statement of Assurance on the monies disbursed in each Member State.”

It goes on to say that the Dutch do this and that we should follow that. The government reply to that recommendation was:

“The Government agrees and announced on 20 November its intention to provide an annual consolidated statement of the UK’s use of EU funds, which would then be audited to international standards by the National Audit Office. Both the consolidated statement and audit opinion would be presented to Parliament and made available to the European Court of Auditors and European Commission”.

Again, has this happened? I have not seen such a report presented to Parliament but I stand corrected if it has.

Finally, the committee recommended very sensibly that,

“we consider that there is a clear role for national parliaments: not least because in the UK, for example, there is considerable misunderstanding of the real position”.

It goes on to say that there is misreporting in the newspapers about the whole thing and that the problem is not really with the accounts but with the way it is reported in the Murdoch-ite press so beloved by the Liberal Democrats. The committee said:

“The Government welcomes this recommendation. It is important to discuss these issues in Parliament”.

Again, has this happened or is it going to happen? I repeat that I do not expect the Minister to reply in detail to these questions this afternoon but perhaps if she cannot do that she could write to me and put a copy of that letter in the House.

Is this not still a rather unsatisfactory position? We have had 13 years of qualified accounts and there does not seem to be any real progress on this. We are told it does not really matter, that it is just a formality and that the EU accounts are absolutely satisfactory but that is not the case. It is a huge amount of money and it is not satisfactorily accounted for by the EU’s own Court of Auditors. I wonder whether the Government have any ideas on how to improve this situation. Perhaps an international firm of accountants could be asked to run an eye over the EU accounts to see what the problem is or perhaps methodological means should be used. Perhaps, in the future, Europe Day could be not 9 May but the day when the European Union accounts are finally approved by the Court of Auditors. I beg to move.

The noble Lord has tempted me to reply, as he mentioned the Select Committee report. However, perhaps I may first ask him a question. I noticed that he did not say what the purpose of his amendment was—that is, apart from the fact that it gives him the opportunity to speak. I certainly do not understand the amendment. Is he proposing to remove the Court of Auditors or is he proposing ways of improving the Court of Auditors? Perhaps he could answer that before I continue.

I agree that this was not mentioned in the report but the noble Lord’s noble friend Lord Tomlinson suggested that the Court of Auditors could be improved by not having a member from each of the 27 member states. That may be an improvement, but I also have a question for the Government. Might there be a better way than using the Court of Auditors? At the moment, European accounts are a very grey area, notwithstanding all the reports that we have had and the questions that have been raised over the years. I repeat: these accounts have failed to be passed for 13 years in succession. There must be a better way of doing things.

I was asking the noble Lord to explain his amendment, not what the noble Lord, Lord Tomlinson, said. I do not understand the purpose of the amendment, apart from, as I said, giving him an opportunity to speak.

It provides an opportunity to probe what we are going to do about the continual misapplication of funds in the European Union. Surely that is worth debating in this Chamber, particularly when the Court of Auditors is mentioned in some detail in the Lisbon treaty.

I agree that it is useful to discuss that, but should we do so on the basis of an amendment which would weaken the Court of Auditors? I am not certain and that is why I asked the noble Lord to explain the purpose of his amendment. He is right to say that it is a matter of regret that the European Court of Auditors has not been able to give a positive statement of assurance, although he might have mentioned that that does not necessarily indicate that high levels of fraudulent or corrupt transactions have taken place. In addition, Sir John Bourn, who was the head of our National Audit Office, told us that, were he required to do so, he would be unable to give a positive statement of assurance for the UK accounts similar to one that would be issued by the European Court of Auditors. I am not suggesting that this is not a matter of concern but I am suggesting that it should be put in context.

The noble Lord is also right to say that we were strongly in favour of the introduction of national statements of assurance signed by a Minister and senior civil servants, and, like him, I should like to know what is happening on that front and what the Government are doing about it. Of course, as more than 80 per cent of European funds are dispersed within member states, the Commission alone cannot be held responsible for the irregularity of these transactions. The national Governments have to take responsibility as well.

Under the treaties, the chief financial officer of the Commission is responsible. Surely the Commission could say to countries with which they were not satisfied, “You’re not getting any more money until you satisfy us that it is not disappearing in fraud and other irregularities”.

I see that I have three noble friends who want to get involved in this debate. It is true that the Commission has a role in this under the treaty. My point is that it cannot be held solely responsible; national Governments have a responsibility as well. I hope that our Government, who have agreed with that point, are going to take this matter very seriously and produce a statement of assurance.

I am not affected by whether my erstwhile noble friend moved his amendment for particular reasons; he has provided an opportunity for others to ask questions. I am going to ask one which, frankly, somewhat embarrasses me, but has been prompted by listening to the debate today.

Twenty years ago, I was on the Budget Council and the Minister responsible for just about everything in the Treasury that came in the housekeeping category—I was the only one of the eight Ministers who served in the Treasury, during my time, who had never worked in the City. Whether it was thought that I understood the outside world I do not know; it was certainly thought that I might be usefully employed on matters which were not related to the City. The then Treasury, under my now noble friend Lord Lawson, introduced a special unit to assist the rest of government with issues of purchasing and procurement. I can recall driving to see the Court of Auditors, after a Budget Council meeting, through a profound fog—climatically apposite to the subject we were looking at. I recall being told on that occasion that I was the first president of the Budget Council who had ever visited the Court of Auditors; that is a little alarming since 1986 was some 29 years after the foundation of the Community.

The question I want to ask relates to the second unit, for which I was responsible, in relation to procurement and purchasing. As we set that up, we recruited able people from the private sector to come and look at how government entities were handling the ordinary efficiencies of their job. One young man had taken an interest in the costs that were being incurred by the storage of commodities under the CAP and related matters. He realised that the storage was being charged and costed at a rate which was rising in line with the retail price index. He took the trouble to go down and visit the various storage contractors around the country and was very struck by the ubiquity of BMWs in their car parks. As a consequence, he made further inquiries into what the ordinary movement of costs in the storage industry were and discovered that we were going through a happy technological period where the costs were going vertically downward. I am not going to go any further into that issue. I have made the important points about it. What interests me—it embarrasses me that I did not ask the question at the time— is how far there is a system for communication and collation within the Union, either at the level of the Commission, or at the level of the Court of Auditors under which good practice in individual countries is reported on and thereby reflected in other countries within the Union.

The noble Lord, Lord Radice, asked what the purpose of this amendment was. It is to probe the arrangements that the EU has to control fraud within its finances. It is very relevant for that matter to be discussed in this Parliament because we contribute about £12 billion a year towards the finances of the European Union. That is taxpayers’ money which should be taken proper care of and should not be converted to fraudulent use. So this is an excellent opportunity to discuss this matter, although not at great length.

I remember—as most of us in this Chamber will—the late Lord Bruce of Donington, who spent half his life in investigating the fraud in the EU and the role of the Court of Auditors and how we could improve matters so that fraud did not exist or was at least reduced. Prime Ministers have got involved in this because they are so concerned about it. Margaret Thatcher, when she was Prime Minister, was very concerned; I think she actually mentioned a figure of £6 billion which was converted fraudulently. Various other people, including the Government, are concerned about it. The Chancellor of the Exchequer sees that a lot of the fraud is caused through the CAP, which is one of the reasons he wants to get rid of it.

I hope that the noble Lord will forgive me for introducing an extraneous comparison. He mentioned a figure of £6 billion; was it not interesting to reminisce about the exact same figure, which was the cost of the repair job done by the then Conservative Government after the collapse of the poll tax?

The noble Lord is usually spot-on with his interventions, but I think he is a little out of line with this one. I do not believe that fraud was involved in the introduction of the poll tax, so I do not see its relevance to our present debate. In any event, that was nothing to do with the EU—it was everything to do with a mistake by a Tory Government, which we all resent, and which the Tory party has always regretted. That is a diversion from this debate, which is important. A very good Prime Minister who was with it, who understood finance and was very well qualified was concerned about this £6 billion-worth of fraud, so we ought to be concerned about it too.

The objective of the amendment is to get the Government involved in finding a different and better means of controlling fraud within the European Union. Our own Public Accounts Committee does quite a good job, but that is not relevant to the EU.

I was rather surprised at what the noble Lord has just said. I agree that member states should be more involved in countering fraud, but the other amendment, which is part of this group, seeks to remove the obligations on the EU institutions in member states to counter fraud. The noble Lord, Lord Radice, asked the noble Lord, Lord Willoughby de Broke, the reason for the amendment, which appears to seek to abolish the Court of Auditors, and was told that it was just a probing amendment so that we could discuss the matter. Surely that does not justify the other amendment, which wants to take out the obligations on the EU institutions of the member states to counter fraud. The new Article 325 in the treaty says that the Union and the member states shall counter fraud and any other illegal activities affecting the Union’s financial interests and that member states shall take the same measures to counter fraud affecting the Union’s financial interests as they take to counter fraud affecting their own financial interests. This is a very important part of the treaty. The noble Lord said that we want member states to get more involved in countering fraud, yet the amendment wants to take out the fraud-busting provisions in the treaty, so I am quite puzzled.

Some of us do not have confidence in the existing arrangements and we are not sure that the proposed arrangements will be any better. They will certainly not be any better unless the Government can tell us exactly how they would proceed under them. What ideas do they have to improve them? I hope that the Leader of the House will be able to tell us exactly what the Government’s view is. We can then perhaps be satisfied and the noble Lord, Lord Willoughby de Broke, may well want to withdraw his amendment, although that is a matter for him.

I am grateful to the noble Lord, Lord Radice, for asking such a pertinent question of the noble Lord, Lord Willoughby de Broke, although he did not receive an answer. To be fair to the noble Lord, Lord Willoughby de Broke, I recognise that he said that this is a probing amendment, tabled to reiterate some of the discussions that have been held before. However, he rather repeated all the points. A feature of the UKIP contributions is the constant, inexorable and relentless repetition of points, even when they are not necessarily accurate. I accept that there is a serious problem with fraud in the EU member states, which has to be tackled.

I am going to rest on the suggestion of the noble Lord, Lord Tomlinson, although he is no longer in his place. He said that, in order for us to make more progress, he would not necessarily give way. I am invoking my right not to give way. I would love to give way, but the debate goes on too long.

The noble Lord, Lord Willoughby de Broke, will of course have a right of reply at the end of the debate, so perhaps he can deal with the matter then.

I am grateful to the Lord President for that. As the noble Lord, Lord Tomlinson, said, if we give way all the time—much as I would love to for the purposes of the debate and the exchanges—we just get, at excessive length, the propaganda from UKIP, of which there are two Members, with the independent Labour Member sometimes supporting them. Other colleagues genuinely wish to make progress with the Bill. I feel that a majority of Members—without our being oppressive of the minority views—is in favour of beginning to accelerate the progress of the Committee, albeit in a way that is not undemocratic and does not deprive people of the opportunity of saying a few words. The realistic appraisal is that there is a strong majority in your Lordships’ House for the treaty and therefore for passing this Bill. A lot of patience has been shown to the UKIP Members, which I feel they should acknowledge by making shorter speeches. Indeed, I am sorry for the length of my remarks in dealing with that matter.

If the noble Lord, Lord Willoughby de Broke, had correctly answered the question that he was asked, he would have said, “I’ll withdraw the amendment and will support the provision in the treaty”. I believe that everyone agrees that the Court of Auditors needs substantially to increase resources. It is now dealing with 27 member states and needs, without going too far overboard and being too expensive, to be a much more powerful body in terms of personnel. The problem of having one person from each member state also needs to be solved, although the main problem relates to the detailed administration travelling down through the member states to the ground.

I think that the noble Lord, Lord Brooke, was referring to examples in the United Kingdom when he mentioned the young man, which gives me the opportunity to remind colleagues that there have been cases of fraud in the UK, too, although I mean no disgrace to redound on any British Government. Indeed, the UK has often been quite high on the Court of Auditors’ list in its measurement of fraud. That is partly because of the sad reality that there were certain dodgy people in the City a few years ago who were very good at devising equally dodgy agricultural investment schemes. The combination of our strength in agricultural management as an industry—unlike in Germany, where industry is strong but agriculture has always been weak and fragmented—and the City spivs to whom I referred, although obviously without mentioning any names, was powerful and explosive in creating some interesting and ingenious schemes some 10 to 12 years ago. The reality must be that we should support the Court of Auditors in its work.

Because of time, I will not refer to Amendments Nos. 80A and 85, except to say that they are part of the same picture. The European Court of Auditors has done a good job and the sovereign member states have their own responsibility to respond to the central responsibility of the Commission and the Court of Auditors to ensure that money is managed properly. Putting 27 national public finance and financial management cultures together in the increasingly enlarged European Union is a difficult task for both the Commission and the Court of Auditors. In many ways, they have done a marvellous job. As a Member of the other place, I made various visits to the Court of Auditors; one could only be struck by its efficiency and expertise in dealing with these matters.

I was not going to intervene, but the remarks made by the noble Lord, Lord Dykes, are too tempting. I remind him that the propaganda budget—the information budget, as I think it is called—of the European Union is somewhat larger than that of the UK Independence Party.

Now that I am on my feet, perhaps I may put an idea to the Government. I have put it to them before in these proceedings, but I did not get an answer. My idea is based on our agreement that the Court of Auditors is the least malign of the institutions of the European Union. None the less, it is still part of the EU; it is the EU’s internal auditor. There is no external auditor as anyone understands that expression for these vast amounts of money that we pour down the throat of this octopus in Brussels. As the noble Lord, Lord Stoddart, said, there is no equivalent even of our Public Accounts Committee.

My idea is that, as a major contributor to this budget, we should simply withhold our contributions until Brussels appoints a major firm of international auditors, chosen by the donor nations, to oversee the accounts of the European Union. If that means standing down the Court of Auditors, so what? As noble Lords will know, we in the UK Independence Party do not mind if the whole thing collapses. However, surely a firm of international auditors appointed to work either alongside the Court of Auditors or in the nation states might take us some way forward. I fear that nothing else will, despite the blandishments of the noble Lord, Lord Dykes, and his Europhile friends.

I thought that the speech of the noble Lord, Lord Willoughby de Broke, was very sensible, so I am slightly mystified by some of the reactions to it. If anything, I thought that he erred on the side of euphemism. He referred to a number of “worrying developments” and said that he found the situation “rather unsatisfactory”. I believe that the situation that we have been discussing is unacceptable and must be resolved as quickly as possible. As he reminded us, the Court of Auditors has not been able to sign off the EU’s accounts for 13 years. One would have thought that, by now, we would have sorted it out.

The noble Lord, Lord Radice, intervened to question exactly what the amendments would do and the noble Baroness, Lady Ludford, and the noble Lord, Lord Dykes, interrupted the noble Lord, Lord Stoddart, as he was trying to stress the importance of some of the substantial figures involved. It is quite clear to me that Amendment No. 79 gives us the opportunity to examine the membership of the Court of Auditors. Should it consist of one national of each member state? Should there be independent members? Is this the right provision? Amendment No. 80A, which we are taking in this group, enables us to examine whether the right words are used. Should they refer only to examining,

“fraud and other illegal activities affecting the financial interests of the Union”,

or should other areas be included in the terms of reference? Finally, Amendment No. 85 gives us the opportunity to examine the reports of the Court of Auditors. I thought that all the diversion, which took about 10 to 15 minutes, was a little irrelevant. I hope that the noble Lord, Lord Radice, does not mind my saying this, as I believe that the committee of which he is a member has done a good job in raising a number of key questions, to which we still await answers.

The European Commission tends to blame national Governments for why the accounts are not signed off. But the Court of Auditors says it is the Commission, so we really have to examine who is right.

In the preliminary draft Budget debate, Mr Ed Balls said:

“The Commission has given an assurance in its action plan that its intention is to get a budget fully signed off by the European Court of Auditors, with a statement of assurance, by 2009”.

That is next year. He continued:

“In the ECOFIN conclusions that were agreed in November, a series of steps was set out in the action plan, in relation to improving payment systems and control systems, simplifying regulations, and putting in place proper integrated internal frameworks, to ensure that we can get a grip on the errors and irregularities that … have plagued the European budget for more than a decade … We need to make progress and I have made that clear”.—[Official Report, Commons European Standing Committee, 11/7/06; col. 11.]

We all await the words of the noble Baroness with great interest.

I would like to add to the questions that have, quite rightly, been raised in the debate by the noble Lord, Lord Willoughby de Broke, by my noble friend Lord Brooke of Sutton Mandeville—who, having visited the Court of Auditors, probably knows more about this than anyone else—and other noble Lords. What progress has there been on implementing the action plan? How close do the Government feel that the Commission is to meeting its target of getting the Court of Auditors to sign off a budget by next year?

I support the noble Lord, Lord Willoughby de Broke, on what further consideration the Government have given to the recommendation of, among others, the noble Lords, Lord Grenfell and Lord Radice, that there should be annual debates on audit and financial matters: In the report, it was discovered that Spain and the UK account for more than half of the quantifiable errors in structural policies in the 2006 annual report. What have we done to improve that?

These are really important issues because this is one of the areas where, outside this House, our vision of Europe is always attacked—particularly by some of the press—for what has happened. I hope that we are all resolved that we must get this put right. What are the Government going to do?

I am extremely grateful to all who have spoken. I am aware that we had quite a lengthy debate earlier in Committee and I will therefore not repeat all the things that I said before. I will take those as read for the purpose of this debate, but will try to deal with the questions that have been raised. I love the idea that I might be able to satisfy the noble Lord, Lord Stoddart, on an issue to do with Europe. I fear that that will never ever happen—if it does, the drinks are on me.

As the noble Lord, Lord Hunt of Wirral, very eloquently said in his support of the noble Lord, Lord Willoughby de Broke, and his amendment, this is an important issue and one that concerns the UK Government. I know that noble Lords will also not mind if I make clear that we have to make a very important distinction between fraudulent activity and activity of errors. In his references to the UK and Spain, the noble Lord, Lord Hunt of Wirral, described errors. That does not mean that errors should not be put right, but I would not want noble Lords to think that the position held by the European Union in the main is to do with fraud. That is not to diminish the issue of fraud in people’s minds, but to be absolutely clear.

It is clear that most of the irregularities and errors are resolved after the reports come out. In other words, these issues are not about finances going astray but are rather issues of not complying strictly with the rules and regulations that apply, and therefore are dealt with. None the less, I do not think the figure is 31 per cent as the noble Lord, Lord Willoughby de Broke, said—only 40 per cent is able to be signed off at present. I am not trying to suggest that these are not important issues, but a lot of the ways in which they can be dealt with are by making sure that member states and the Commission take responsibility for ensuring that they fulfil their obligations properly, rather than making assumptions about fraud, although that plays its part.

I will not go through all the different concerns that we addressed before but will rather focus on what noble Lords want to hear in answer to their questions. The noble Lord, Lord Willoughby de Broke, asked about the production of a list. He asked me three questions and I will try to answer him as fully as possible. First, there is not yet a list, as such. I will let him know if I can find out any more information about whether there are any plans for such a list. I will copy that letter to any of your Lordships who participated in the debate and to the Library as well, but as far as I am concerned there is not a list.

We want to make sure that we continue to press for these issues to be dealt with properly and appropriately. The UK has played an important role—for example, in setting up the EU anti-fraud office, OLAF. It is a very active anti-fraud office and has had successes. It has looked at complaints where, for example, more than €20 million has been wrongly claimed and has been able to reclaim that money, at flax producers in 2001 where there had been a false declaration that straw was unsuitable for processing, and at all aspects of fisheries and so on. It has been able to deal with examples of fraud very effectively. We were instrumental in making sure that we had an EU anti-fraud office.

I have already said that we are concerned to make sure that we play our part. We will be publishing a consolidated statement on the use of EU funds in the UK. That will be audited by the National Audit Office and will give Parliament a greater role in scrutinising it. The noble Lord, Lord Willoughby de Broke, asked whether that had yet been published. It will be published soon, but we are waiting for the National Audit Office to finalise its work; once that is ready the statement will be published—but it rests with the NAO, not the Government at present.

The noble Lord, Lord Hunt, asked what had happened to the Commission’s action plan—the report that it produced on progress. A progress report has been produced and most of its points have now been dealt with. The Commission was going to produce a further report on the implementation later this year. As the noble Lord indicated, Mr Balls said in another place that it is the Commission’s objective to try to strive for a positive statement of assurance by 2009 as well. There is clearly an impetus.

In our negotiations on the reform treaty and the constitution which preceded them, the UK has been keen to make as much progress as possible and we have put forward positive suggestions. I do not accept the proposal made by the noble Lord, Lord Pearson of Rannoch, that we should simply withhold the money. That is not the right approach. I can understand why he would feel that even the most dire consequences of so doing would not matter, but that is not the way that we should try to ensure that we get a better outcome and more satisfactory progress.

The noble Lord, Lord Brooke of Sutton Mandeville, who is probably the most experienced person here as he has visited the European Court of Auditors, asked about good practice. It is a very important question and I mouthed as much to him, because if we can get more progress in spreading good practice that would be a better proposition. The UK, the Netherlands and Denmark have already published, or will publish, their own initiatives on the use of EU funds. Sweden has also announced that it too will be doing so, or something similar in any event. We hope that other areas will follow suit and that being able to see what is being done across member states will be a good way of demonstrating good practice.

We also have various working groups. There is a working group on Article 280 which is trying to look at co-operation and the prevention of fraud where good practice and best practice across member states plays its part. Good practice is beginning to be seen as a way of combating at least the irregularities of the issues before the European Court of Auditors and the European Union.

The scrutiny committees of both Houses have commented on the report of the Court of Auditors. The Commission recently issued a report of member states’ responses made to it in the 2006 ECA report, which was considered in the House of Commons European Scrutiny Committee in March 2008. The committee recommended a general debate. I agree with noble Lords that it is very important to make sure that Parliament is able to debate, not just through this treaty but in more general terms, what is happening on these important issues. I hope that the work of the National Audit Office, when we get it, will provide another opportunity for the committees to consider the matter and perhaps recommend to the House through the usual channels whether we need to debate those matters further.

The UK has been very keen to push forward proposals and think about how we might reform the European Court of Auditors. Perhaps, as noble Lords have said, a committee that was set up originally for nine member states now doing the same thing for 27 has a large task. Perhaps there is a better way in which to do that, with an executive board of auditors-general and a more strategic approach. We will continue to press on that. It is clear from the discussions that I have had and from looking through the detail, not least in response to thinking about these amendments, that a lot of work is under way. While it is difficult to see how we can get 100 per cent certainty from the European Court of Auditors, with 27 member states and a Commission—not because of fraud but because of irregularities—the more that we can spread good practice, the more we can push to ensure that the auditing position is the best that it can be. The more that member states and the Commission take responsibility for ensuring the best possible practice and the best way in which to root out any fraudulent activity, then so much the better.

I am grateful to the noble Lord for tabling these probing amendments in what I think has been a useful debate.

I am grateful to almost everyone who took part in this short debate, particularly to the Minister for a very full reply. I hope that the noble Lord, Lord Radice, did not think that I was criticising his report—far from it. I used his second report to make a number of points and ask questions that I think are relevant. I am grateful to the noble Lord, Lord Hunt of Wirral, for enlarging on my points and introducing his own questions. I am grateful, too, to the noble Lord, Lord Brooke, who is the only one of us who has been at the European audit coal face.

I said “almost all”. I was not particularly pleased with the useless intervention of the noble Lord, Lord Dykes. He did not contribute anything to the debate. He said that he wanted to get on with the debate and then spoke for longer than I took on my introductory remarks. I cannot think that that added to the debate at all. Why I wanted to intervene was because he accused me of saying things that were not accurate; I believe that that was his gist. I refute that utterly. Everything that I said came either from the report from the European sub-committee of this House, or from the report of the European Court of Auditors, so what I said was entirely factual and absolutely nothing to do with any propaganda, as he may have feared. I fear that it is the true state of European Union finances at the moment, and nothing fanciful.

I am most grateful to the Minister for having answered our questions so clearly and I am satisfied with the answer to those questions. Accordingly, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 80 and 80A not moved.]

[Amendments Nos. 81 to 83 had been withdrawn from the Marshalled List.]

[Amendment No. 83A not moved.]

84: Clause 2, page 1, line 12, after “excluding” insert—

“(i) Annexed Protocol on the role of National Parliaments in the European Union; and(ii) ”

The noble Lord said: I do not propose to move this amendment but I want to make it clear that I shall talk to the issues arising from it under a later amendment in my name.

[Amendment No. 84 not moved.]

[Amendments Nos. 85 to 89 not moved.]

[Amendment No. 90 had been withdrawn from the Marshalled List.]

[Amendment No. 91 not moved.]

[Amendments Nos. 92 and 93 had been withdrawn from the Marshalled List.]

94: Clause 2, page 1, line 12, after “excluding” insert—

“(i) any provision that gives Her Majesty’s Government authority to agree to pay, or to pay, any financial penalty imposed as a result of a decision by Her Majesty’s Government not to opt in, or to opt out of, any provision; and(ii) ”

The noble Lord said: We move on now to deal with something that my noble friend Lord Kingsland raised briefly late on Monday in the discussion on the provisions relating to justice and home affairs co-operation. I should like to deal with the matter in more depth.

Our concerns with the possibility of financial penalties being imposed on the UK are, of course, inextricably linked with our concerns over just how feasible it will be to exercise our right not to opt-in. The amendment would give us the opportunity to examine the financial penalties consequent on the UK opting in or out of any of the Lisbon treaty provisions. These concerns are entirely shared by the European Scrutiny Committee, which has of course on several occasions reported on the uncertain consequences of exercising this right, and on our ability to safeguard the interests of the UK.

These financial penalties will be levied on the UK if our refusal to opt into an amended measure makes the existing measure inoperable, so the whole package has to be disregarded. The Government will no doubt respond that the provisions allow for only “necessary and unavoidable” financial consequences to be charged to the UK, in what I know they regard as the highly unlikely event of the provisions being implemented. But how can the Minister and her colleagues know this? There is no consensus on what future provisions for integration in this area may look like, so how can we predict whether we will wish to opt in or not? To add to this, the decisions on the inoperability of an existing measure, and on what the “necessary and unavoidable” financial consequences are, are both to be made by QMV—so again, we have no control over exactly what our European neighbours might choose to make us do.

The chairman of the European Scrutiny Committee, Michael Connarty, was utterly clear in his opinion of these provisions when questioning the Foreign Secretary on the matter. He said,

“do not pretend that this is not a bullying tactic by whoever proposed it to pressurise the UK … These are bullying clauses and I am shocked that you try to defend them”.

I await the Minister’s comments.

It is unlikely that the Government will be persuaded by me when they were not necessarily persuaded by one of their own colleagues, but I would like to hear them at least attempt to explain why these provisions were allowed to remain in. I beg to move.

I am grateful for the opportunity. The noble Lord is normally very persuasive.

We have been very successful in securing the opt-ins, which we will no doubt debate at greater length, so I shall not dwell on the principles behind them. Noble Lords will know that we already have the capacity in some areas to exercise the opt-in and that I exercised or declined to exercise the opt-in when I was a Minister in what is now the Ministry of Justice. I am, then, quite familiar with the process involved here. I am also well aware that, in securing this big and important change, the UK Government expanded our ability to opt into the entire justice and home affairs arena. I believe that is important for the UK, for all the reasons that your Lordships have raised and will be raising about ensuring that we are clear about our co-operation and collaboration within the European Union—not least, for example, that our desire to retain control of our own borders in matters regarding them would not lead us to an opt-in.

Having got that security, it is important to recognise that there are implications for the European Union’s entire operation. Personally, I think it quite reasonable that the implications of getting such security are considered by the whole Union. In so doing, it is reasonable to say that if a member state is actively engaged in a European Union operation and decides that, as a consequence of changes having been made in the collapse of the Third Pillar and the move to the First, it no longer wishes to participate, should that operation become inoperable then there will be consequences facing the other 26 member states if a process—an IT system, perhaps—no longer functions at all.

Those consequences would, clearly, result from the UK’s decision. The noble Lord, Lord Hunt, might well agree that it is difficult to think of real examples of that. I cannot think of any where that would currently be the case, yet just as one is always trying to think strategically about the consequence of the UK’s involvement, so it is quite reasonable to think strategically about the UK taking a decision not to participate in something.

These are measured proposals within the treaty. To be clear, as the noble Lord, Lord Hunt of Wirral, elegantly laid out, where the test is “inoperable”, could that be defended in court and could we argue against it? Yes, it could be defended but the decision would have to be that it was inoperable. It would then be decided by qualified majority voting whether, as the noble Lord says, we needed to bear the financial costs in consequence. Before the European Union could demand anything of the UK, there are those very high tests, so I disagree with my honourable friend Mr Connarty, as I am sure that my right honourable friend the Foreign Secretary did in responding to him. I cannot remember his exact response, but I am sure he did that.

I am clear that this is about not bullying but ensuring that, if we and the European Union were in that position, we are all clear that there are consequences for us all. I have no difficulty with what is proposed, and I hope that the noble Lord will be satisfied with that response and feel able to withdraw his amendment.

We are in the realms of the unpredictable, and it is difficult to contemplate the circumstances in which all this would operate. However, when the Government were preparing to decide whether to agree to these provisions I know that there would have been a detailed brief presented to Ministers on what consequences there could be. The Minister says that it is difficult to work out the situations that might occur, but I am sure that a particular Minister, before agreeing to these provisions, would have received a brief that contained all sorts of possibilities. I wonder whether I might appeal again to the Minister, who said a little earlier that she often finds me persuasive, to return to her colleagues and officials and see whether they might be prepared to release all or part of that brief to me, so that I can start to contemplate what is—and I share this with her—difficult to visualise at the moment. She nods; I am delighted, and thank her very much.

I have two examples. I used the one about IT software; the other was that if we were to withdraw from our involvement in an agency there would be consequential costs in bringing our staff home. As the noble Lord would expect, I had asked, “Can we think of examples?”, and I have been given those two, which, although highly unlikely, were the two most obvious where our withdrawal might have consequential costs. It would be quite reasonable, then, to argue that the UK should cover the costs of taking its own staff away or of settling their contracts, which would disappear, et cetera. I do not believe that there are any more, but if I find any then I will certainly send them to the noble Lord. He would expect me to say that, and I would do so.

That is all I needed to hear and, on that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 95 to 99 had been withdrawn from the Marshalled List.]

[Amendments Nos. 100 and 101 not moved.]

[Amendments Nos. 102 to 104 had been withdrawn from the Marshalled List.]

[Amendments Nos. 105 and 106 not moved.]

[Amendments Nos. 107 and 108 had been withdrawn from the Marshalled List.]

[Amendment No. 109 not moved.]

[Amendment No. 110 had been withdrawn from the Marshalled List.]

Clause 2 agreed to.

[Amendments Nos. 111 to 114 not moved.]

115: After Clause 2, insert the following new Clause—

“United Kingdom courts: independence

Nothing in this Act or the Treaty of Lisbon shall be taken as requiring United Kingdom courts to enforce judgements of the European Court of Justice relating to civil or criminal law or police and judicial processes that run counter to laws passed by the United Kingdom Parliament.”

The noble Lord said: This straightforward amendment seeks to establish that nothing in this Bill or the treaty of Lisbon changes the position requiring the UK courts to enforce judgments of the European Court of Justice in the specific areas of civil or criminal law, or police and judicial processes, that run counter to laws passed by the United Kingdom Parliament.

In our debate earlier this week on the provisions in the area of freedom, security and justice, I made the point that justice and policing is an area that belongs within a nation state. The electorate of a nation expect to be able to elect a Parliament and Government that have ultimate control over their criminal law and judicial processes. I fully accept—although I may not like it—that, where the UK agrees to opt in to a measure on freedom, security and justice and then passes a law to apply that measure here, we will be signing up to the jurisdiction of the European Court on any measure in that area.

Indeed, as we noted during the week, the European Court can take the UK Government to task if it believes that they have not implemented a measure effectively in the UK. The question that follows is: if there is a dispute, who decides which law applies in the UK? Can someone apply to the UK courts for a court interpretation of the will of the UK Parliament, or is the UK court system trumped by the European Court of Justice, which has a superior position in interpreting that will?

Moreover, if the UK Parliament responded to an ECJ judgment by passing a new law that made explicit what the provisions of that law were meant to be in the United Kingdom, would the UK court system uphold the will of this Parliament, or would it regard itself as having to uphold decisions by the European Court of Justice? It is important that we are clear on these issues at this point.

In the area of freedom, security and justice, where we may not have opted in, judgments will be made and precedents developed within the rest of the European Community and it is quite possible, following precedent, that those judgments may be taken as setting precedents. Then we have the situation that, even in an area where we have not opted in, our legal system may start to define UK law based on judgments elsewhere in the European community. Much of that is normal process, but if our UK courts are asked to interpret a law according to a law passed by the UK Parliament, can we be clear that the UK Parliament’s law will take precedence over the importation of precedents from the European legal system? Will judgments in the area of security, freedom and justice—where we have opted in—to do with cross-border disputes, as all measures under that area are supposed to be, nevertheless become precedents that become a determining factor in the UK legal system?

Then we come on to the European Charter of Fundamental Rights which, as we know, has the same effect in the UK as elsewhere, despite our protocol, and is binding in its consequences. The question arises of whether it can be used as an appeal mechanism to appeal against UK laws on the basis that a UK law passed by the UK Parliament offends, in the eyes of the European Court of Justice at least, against some of the measures in it. If so, will the European Court of Justice have the final say on the matter or will it be the UK courts?

I am not a lawyer, and I confess that many of these issues puzzle me. I have listened to many lawyers arguing them without coming to a clear resolution. My amendment attempts to put this matter beyond doubt by stating:

“Nothing in this Act or the Treaty of Lisbon shall be taken as requiring United Kingdom courts to enforce judgements of the European Court of Justice”,

in this area,

“that run counter to laws passed by the United Kingdom Parliament”.

I live in hope that the noble Baroness the Leader of the House will respond to this by saying, “Yes, of course that’s true and therefore I am quite happy to accept this amendment and add it to the face of the Bill”. If she cannot accept it, it is incumbent on her and the Government to spell out that under this Act and treaty they are asking us to accept that the ECJ should have the power to override laws passed by the United Kingdom Parliament because, if she does not accept this amendment, that is what she is telling us. I beg to move.

[Amendment No. 116, as an amendment to Amendment No. 115, not moved.]

I congratulate the noble Lord on making the issue that he raises as clear as it could possibly be. This amendment is as direct, clear and, I respectfully suggest, potentially destructive as any of the other amendments before your Lordships today. There is no way that a regional system of justice can avoid accepting the principle of uniformity. It is essential in the European Union that there should be a court that will give a final interpretation and a final determination on questions of European law. Those decisions must be applicable in every member state of the European Union. That principle of law has been applied for 50 years. It is a principle that, until this amendment, I had not heard challenged with quite such directness. The noble Lord is, of course, perfectly entitled to do so, and I respect his view, but it would mean that in future—leaving aside the areas that he says he would accept as being within the remit of the European court—there can be no area in which any decision of the European court can lay down a principle that must be followed by the national courts. If the principle in this amendment is to apply in the United Kingdom, it should also apply in the member states, and we should now have not six, not 15, not even 25, but 27 and perhaps more judgments and definitions given by the courts of all the countries. The chaos would be absolute. I respectfully submit that this amendment is not one that the Committee should contemplate for a moment accepting or giving effect to.

It would be presumptuous of me to speak at any length after the noble and learned Lord, Lord Slynn of Hadley, has spoken. I remember with great affection that it is half a century since, sitting on the bed of Queen Victoria at Trinity College, Cambridge, he attempted to teach me the history of the law of assumpsit. For the past 50 years, ever since being his pupil, I have sat at his feet. There is no greater living authority than the noble and learned Lord, Lord Slynn, when it comes to the relationship between European Union law and this country’s domestic law. I shall therefore be extremely brief and shall not repeat anything he said.

Ever since 1972, when we joined the Common Market, it has been quite clear in the European Communities Act, which was crafted principally by the noble and learned Lord, Lord Howe of Aberavon, that Section 2 requires all three branches of government in this country, where European law reigns supreme, to give full effect to that law whether passing laws, interpreting laws or giving effect to those laws. It was clear at the time, it was made clear in a case I once argued before Lord Denning called McCarthy’s v Smith, it was later made absolutely clear in the Factortame case by the Law Lords and made clearer yet again in the case involving the Equal Opportunities Commission and the Secretary of State for Employment. In all those cases, a provision in an Act of Parliament was in conflict with the paramount law of the European Community. For example, in the Factortame case, as everyone knows, a provision in the Merchant Shipping Act discriminated on grounds of nationality in the area of fisheries. That case went to Luxembourg and came back again—it went several times—but it was made quite clear by Lord Bridge that the Merchant Shipping Act’s discriminatory provisions had to be displaced in favour of the binding European rule of equal treatment without nationality discrimination. To take quickly another example, in the EOC case, the Employment Protection (Consolidation) Act 1978 stated that people had to work so many hours a week in order to get employment benefits. That was in conflict with the European equality directive, which requires equality for women without discrimination, as it hit disproportionately at women who could not work full time, and the Law Lords again decided that the domestic provision had to be read and given effect so as to remove the sex discrimination against women. There is no doubt whatever about the relationship. The sovereign Parliament could decide to repeal the 1972 Act, but could do so only if we were to leave the European Union. Unless it did so, the position is as the noble and learned Lord, Lord Slynn, has stated, far more eloquently than I can. That is the first main point: parliamentary supremacy gives way, because we exercised parliamentary sovereignty in 1972, to the paramount law of the European Union, only where that paramount law reigns.

As far as the Charter of Fundamental Rights is concerned, the report of the Select Committee of this House, to which I was privileged to contribute, made it clear beyond argument, article by article, that the charter posed no threat whatever to our internal legal system. No one has pointed to any provision where that could arise. It does not give rise to a problem.

Finally, I will speak briefly to Amendment No. 127 in the name of the noble Lord, Lord Owen. That will save my doing so again later. I will explain briefly why—with great respect—it is, for similar reasons, misconceived. Amendment No. 127 seeks to allow anyone living in the United Kingdom to apply to the High Court for a declaration on any question of interpretation of the Lisbon treaty, even though there is no need to determine the rights or liabilities of the applicant. On that first point, that is entirely a matter for our own courts at present. I have no doubt that, in a proper case, they would think it right to grant a declaration on matters of interpretation.

The second point is that a Minister or others can apply. That is otiose—unnecessary—because they could already do so under our well known principles of administrative law. The third point, which is the nub of the amendment, is the suggestion that an interpretation of the treaty, made on an application brought under this section, must be consistent with the interpretation given to the treaty by the UK Parliament at the time the Act was passed. That is unlawful under the law of the European Union because it would seek to make this Parliament master of the interpretation to be given of the treaty, rather than the European Court of Justice, which is the final court on questions of that kind. In other words, it would be another way of seeking to invoke parliamentary sovereignty in a way that was unlawful under European law.

Sub-sections (4), (5) and (6), which I will not bore the Chamber by reading, are all well-recognised in existing administrative law and procedure, and would be unnecessary. The vice of Amendment No. 127, like that of the amendment we are now concentrating on, is that it seeks to elevate Parliament into a position contrary to the European Communities Act 1972, and contrary to the supreme law of the European Union.

I hesitate to intervene, particularly after two speeches by a noble Lord and a noble and learned Lord whose views I respect and who, I am fully aware, know a great deal more about this subject than I do. I have been studying this legislation for a long time, every bit as long as the noble Lord and the noble and learned Lord. At one time I had the resources of a major department of state behind me. I must say that I do not think the noble Lord and the noble and learned Lord are correct. I do not disagree with the law of this land and their interpretation of the 1972 Act, but the law of the land in other EU member states is different. There is nothing that can be said to be against the treaty of Rome, or any subsequent amendments, that can prevent this country harmonising its laws with those of other countries.

I refer specifically to the Federal Constitutional Court in Germany. It is true that that court preceded the Federal Republic of Germany’s accession to the treaty of Rome. That is a fact. Nevertheless, it was open to the German Parliaments at the time of accession to the treaty of Rome to rule that there was an inherent conflict between the continuation of the Federal Constitutional Court, the principles of the treaty of Rome and the creation of the International Court of Justice. They did not do so. I could cite other member states which have constitutional courts. By far the pre-eminent, and the one that is most respected in the European Union, is the Federal Constitutional Court of Germany, so I will confine my arguments entirely to that existing court.

I ask the Minister to confirm that there is already a case before the German Constitutional Court relating to the treaty of Lisbon. A Member of Parliament, Peter Gauweiler of the Christian Social Union, part of the governing coalition, moved that the treaty of Lisbon weakened democracy in European politics, especially national parliaments’ right to a say, and brought a case before the Constitutional Court. As I understand it, although I am not sure because I found it difficult to trace, the case is still before that Constitutional Court. Technically speaking, it may delay German ratification of the treaty of Lisbon. It is open to the Federal German President, Horst Kohler, to sign off the treaty if it is ratified by the German Parliament, despite not yet having had a judgment from the Constitutional Court, but it would be unusual to do so.

A similar case was made before the German Constitutional Court at the time of the ratification of the European Union constitution. It was widely felt that it would not be wise, or necessarily accepted by the then German President, for the German Parliament to ratify while that case lay before the Constitutional Court. In the event, because of the French and Dutch votes on the referendum, it was put to one side and no final decision was taken. I also understand that the president of the German Constitutional Court, Hans-Jürgen Papier, has called the provisions in the Lisbon treaty intended to strengthen the role of national Parliaments “ineffective” and “impractical”. He has therefore given, I presume, an indication that there is at least a case to be considered before the German Constitutional Court.

The absolute nature of the way the noble Lord presented his case, in terms of the European Union as a whole, is not correct. I accept that the way the British Parliament considered the 1972 treaty excludes it. Therefore, it can be changed only by an Act of Parliament.

Is the noble Lord aware that he is describing litigation under the German written constitution, which challenges aspects of the treaty of Lisbon? As he rightly says, it is not the first time that challenges of that kind have arisen in the German constitutional court. The same applies, for example, in the Irish Supreme Court where there have been similar challenges. In this country, there have been attempts also in litigation before our courts to challenge, for example, the treaty of Maastricht, the treaty of Nice and others. Is the noble Lord aware that all those attempts, which in the main have been unsuccessful, have been subject to the paramount law of the European Union, as interpreted and applied by the supreme constitutional court of the European Union—the Luxembourg court? It is beside the point whether there is satellite litigation attempting in Germany or Ireland or here or anywhere else to make challenges. The main point is that the only court that can interpret and apply the supreme law of the European Union is the Court of Justice.

I do not accept that judgment and I do not believe it is accepted in Germany either. I think that the noble Lord has allowed his personal views to sway him on the actual interpretation of the German constitutional court. As German people understand it, that court can strike out any aspect of any treaty entered into by their Government if it goes against the German constitution. It is put there to uphold the German constitution at all stages. If they interpret it as being against the German constitution, automatically it follows that there is legislation and there would have to be superseding legislation by the Federal Parliament.

There is a long history of legal issues on this, on which normally I would expect the noble Lord to be well versed—certainly better so than myself. Having talked to many German parliamentarians over quite a long period, I know that they have always viewed this as a potential clash with the European Court of Justice. He is right that so far there has been no clash.

I should like to pursue my amendment.

Does the noble Lord accept that, although under German law this was all done, as he says, in a lawful way, it was quite plainly contrary to the law of the European Union and is widely, if not universally, accepted to be in breach of Community law? What happened in Germany, not under the Lisbon treaty, but on a previous occasion, finally led to a settlement of the problem and agreement on how to handle it. German, French and Italian attempts to say that they could do what they like under their own system were recognised generally—I would say universally—as being contrary to European Union law, whatever their position was under domestic law.

They cannot change European law, but they can challenge the interpretation of European law within the context of the Federal Republic of Germany.

The noble and learned Lord may be correct that it is a violation, but there is a conflict here. If it was so much of an overt conflict, it would have been much wiser for the Federal Parliament, when it came to accept the treaty of Rome, to have tidied this up and to have made it clear that the German constitutional court was a secondary body. It did not do so and it has inherently a conflict. I should like to move on.

As I understand it, the argument put forward by the noble Lord is that the domestic court can override the European court. That is not possible.

I know that it is very difficult for noble Lords who have spent quite a lot of their time in the Commission, but I can only assure them that there is a conflict here, which is inherent in the whole of the European Union. There is a juxtaposition of European law and national law. There is a juxtaposition of supranationalism and national government. Some of these have never been cleared up—sometimes quite deliberately. On constitutional issues, in my judgment, the German decision to run the two in parallel was quite deliberate.

Does the noble Lord accept that there is only a potential conflict? Can he give examples, as the noble Lord, Lord Lester, gave in respect of the England and Wales law, of where the German constitutional court, the Bundesverfassunggericht, has overridden Community law? As I understand them, the examples he has given are of a case which is now before the German Federal Court and a case which was before the German Federal Court on an earlier treaty, but which was never decided. Can he give any precedence where the Germans have given primacy to their own law, which has not been in violation of Community law?

I do not claim there to be a precedent. I claim the fact that this potential conflict exists. It is no use the noble Lord shaking his hands. This conflict exists. It is discussed in German politics and it is a factor behind the political decisions taken by federal chancellors over a period of years when faced by amendments of the Rome treaty. They take it into account and they are particularly careful about it. Indeed, it has been made clear. The Federal Chancellor, Angela Merkel, has said that in some circumstances she is contemplating making a specific amendment to federal law to take account of this case. I do not want to go on too much on this. I have conceded to any noble Lord the basic fundamentals that our 1972 Act gave complete supremacy to European law.

I am just saying that there are other member states that have left this issue open, because they know that the nature of the European Union is a continuous negotiation. There are very few absolutes. It is a fact of life, although many people do not like to accept it, that the Luxembourg compromise is still accepted by many member states as existing. There are other purists who argue that the Luxembourg compromise has no legal standing and does not exist. As recently as the treaty of Maastricht, it was necessary for the French Prime Minister to assure the French Assembly that the Luxembourg compromise still existed in terms of the French Government. There are number of other inconsistencies like this. It is not quite as clear cut as the lawyers in this Committee seem to wish to think.

I should like to draw attention to the basis of Amendment No. 127 and to deal with a small number of points. I agree that subsection (2) of the amendment is otiose.

I think that the noble Lord’s interpretation of the nature of the Luxembourg compromise is not relevant to what we are talking about. No one in any member state that I know of or any British Government have ever said that the Luxembourg compromise was part of European Union law. They said that it was part of European Union practice and part of the policy of the Governments who supported it. In any case, the Luxembourg compromise is not a compromise. It is an agreement to disagree between those member states who take one view and those who take another. It really is not relevant to the discussion on this group of amendments, which is about the application of European Union law.

If the noble Lord would look at the debate in the French Assembly, he will know that it was said that this was no longer possible, because there have been changes in the treaty of Maastricht which meant that it was no longer possible to invoke the Luxembourg compromise. The French Prime Minister came down to the Assembly and gave a very clear, legal interpretation that it had not been changed by the Maastricht treaty and that it was still perfectly legal for the French Government to invoke the Luxembourg compromise. If the noble Lord reads the debate, he may like to come back on the issue. Perhaps, because of my views on these issues, I may have studied it more than he has in this instance.

Everyone likes to try to believe that the European Union is a tightly constructed and perfectly legal system. It is not. It is, above all, a negotiation between member states, which is why I would urge the Committee to have a look at the new clause. I know that I cannot possibly push this through with the resources that I have available. All I can ask is for the major parties to have a look at it.

Turning to points of detail, this new clause is drafted to make it clear. It is an educative exercise and subsections (2), (4), (5) and (6) of the new clause proposed in Amendment No. 127 may not be necessary. The noble Lord is right to say that the essence lies in subsection (3). But behind it lies a very important question. Experience since 1972 has made many of us realise that while we may pass a treaty amendment in the British Parliament, and genuinely believe at the time that we do so that it means one thing, we have seen cases—the classic example is the health and safety directive—where the interpretation of the words of the treaty as understood by both Houses of the UK Parliament were later changed by the European Court of Justice in defiance of what almost everyone believed was the correct interpretation. It is because of that that many of us worry about having no way of challenging the interpretation of the European Court of Justice.

Whether we like it or not, our law is founded on the basis that the clarification of law by the courts, which goes on in many different ways, relates back to what is said in this House about the law of the land. It may not be perfect but it means that we have some control over the lawyers.

The noble Lord seems to be under a misapprehension. When judges in this country have to decide what is the intention of legislation, they do not do so on the basis of what is said in this House or the other House—that is neither here nor there. They do it on the basis of interpreting and applying the objects and purpose of the legislation and the language of the legislation read by them as independent courts. It is a mistake to think that anything that is said by Ministers or anyone else about what they think the law is becomes what the law means. Separation of powers means that it is up to the judges to decide that and not up to us as lawmakers. We make the law but the judges interpret and apply it. There is a fundamental difference between the two.

If the noble Lord is saying that when the justices make the case they do not bear in mind the argumentation that goes on about what is said in both Houses of Parliament, I am surprised. I do not deny that it is their judgment that makes the law of the land; the words and the interpretation of those words lies in the courts of law of this country. But in regard to the framing of those words and the way that they are put—as the noble Lord knows perfectly well because he has been on the other side in government—parliamentary draftsmen take Ministers through with extreme care what the words are meant to mean. The interpretation and explanation of the words by Ministers is taken very seriously because it is thought to have implications for how a future judge and court will interpret those words. But if what the noble Lord is saying is right, then we might as well give up having debates, go home and let the judges and the lawyers decide everything.

Fortunately, we have a system in this country where there is an input from the normal, average person about what words mean. This is one reason why I have always thought that you could go to a court and argue that the words mean a certain thing. But, of course, the judges will decide. They will not be bound by Parliament—nor should they be—but, equally, I do not think that they ignore Parliament. This is obviously touching some sensitive nerves but I still come back to the fact that legislation has been passed as treaty amendments and interpreted by the European Court of Justice in a way that we did not consider the words meant at the time.

I considered whether or not to try to create a constitutional court and I came out against it. We now have the Supreme Court—in name but with hardly any considerable change in judgment—and, having taken on this well-respected name with all the authority it incurs, it would not be unreasonable for the British Parliament to consider, in the light of experience since 1972, whether we need some further safeguarding of the terms of the wording of treaty amendments. If the Supreme Court made a judgment that the interpretation of the European Court of Justice did not correspond with the intention of and the explanation to the British Parliament, there would be a clash. Such a situation would be extremely helpful.

I return to the question of the double heading of the President of the Commission and the President of the European Council, an issue that I have raised before in this House and which I still see as a potentially great danger. I wrote to the noble Baroness explaining why the Dutch Government, in March 2004, took the view on the European constitution—this is my own translation—that:

“The Government also shares the opinion [of parliamentary factions] that the possibility should be kept that in future the President of the Commission can also be the President of the European Council”.

They went on to say:

“The texts before us leave this possibility open”.

In addition, the Dutch Government’s internal legal advice was that Article 21(3) of the then European constitution stipulated that,

“The President of the European Council may not hold a national mandate”,

and should be read explicitly as only excluding national mandates and not other—read European—mandates. Since then there have been further wording changes introduced, predominantly by the British Government with, I think, the understanding of the Dutch Government. I asked the noble Baroness to see whether she could, through bilateral talks with the Dutch Government, reach some understanding and a common interpretation of this. We have good and friendly relations with the Dutch Government. They are now much more attuned to our view about the nature of the European Union—they are not the federalists they once were—and it is not unreasonable that we should get some explanation from the British Government of the Dutch Government’s view. In international law the Dutch Government is extremely well respected, and I would find it much easier to live with the present treaty if I thought that the Dutch Government shared the British Government’s interpretation of double heading.

But double heading is another example of where, despite constant promises by the noble Baroness—I know she has gone into this very carefully—and genuine assurances by the British Government that it is impossible, there are still at this moment campaigners in Brussels who are arguing that this is the next step, and they believe that it is possible to do it within the treaty. That is a fact. You can go on to the blogs of the people who believe it and read the speeches made about it by serious European politicians. Every statement that the noble Baroness makes is helpful to this House, but it is not sufficient. We could still have an interpretation put on the wording in the treaty which is diametrically opposed to the assurances that we have received from the present Government. It may not come in 10 years’ time or in 20 years’ time, but this challenge will come. For that reason and for many others, one of the ways to deal with it would be through the amendment that I have tabled.

I should tell the Committee about a case I was involved in as lately as last Friday in the Court of Appeal. It concerned the prosecution rights of appeal, a matter that we discussed at length in Committee, on Report and at Third Reading in the Criminal Justice Bill 2003. My opponent for the prosecution had raised the issue that the clear words of the statute did not represent the intention of Parliament and I quoted to the judge the words of the Attorney-General, the noble and learned Lord, Lord Goldsmith, which made absolutely clear what the Government had in mind in passing that legislation. The Lord Justice presiding said to me that that was very interesting, but that there was no obvious difficulty in interpreting the clear words of the statute, that various things had been said in Parliament on all sides and that if the courts started to take notice of what was said in Parliament in that sense, they would be completely confused. I was surprised, because I thought that, on the Pepper v Hart principle, the words of the Attorney-General would be accepted as definitive. But there was no difficulty in interpreting the statute, notwithstanding the arguments of my opponent, who sought to put a gloss on it that the Court of Appeal did not accept.

My noble friend who explained this was absolutely right that it is with the words of the statute that we are concerned. As early as 1964, long before we entered the European Union, the European Court ruled in the case of Costa that,

“in contrast with ordinary international treaties, the EEC Treaty has created its own legal system which, on the entry into force of the Treaty, became an integral part of the legal system of the member States and which their courts are bound to apply”.

That applies to Germany as to any other country. The court continued:

“The transfer by the States from their domestic legal systems to the Community legal systems of the rights and obligations arising under the Treaty carries with it a permanent limitation of their sovereign rights, against which a subsequent unilateral act incompatible with the concept of the Community cannot prevail”.

They were clear statements. With those in mind, we entered into the 1972 agreement and passed the European Communities Act 1972, which contained precisely that principle. Shortly afterwards, in 1974, Lord Denning, in the case of Bulmer v Bollinger, said about it:

“When we come to matters with a European element, the Treaty is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back. Parliament has decreed that the Treaty is henceforward to be part of our law ... The governing provision is section 2(1) of the European Communities Act 1972 ... The statute is expressed in forthright terms which are absolute and all embracing”.

That was a statement of principle two years after the European Communities Act. The rationale for giving primacy to European law, as decided by the European Court of Justice, was expressed by the noble and learned Lord, Lord Bingham, in his High Court judge days in 1983, in the case of Commissioners of Customs and Excise v Samex. He said that,

“the Court has a panoramic view of the Community and its institutions, a detailed knowledge of the treaties and of much subordinate legislation made under them, and an intimate familiarity with the functioning of the Community market which no national judge denied the collective experience of the [European] Court of Justice could hope to achieve ... The interpretation of Community instruments involves very often not the process familiar to common lawyers of laboriously extracting the meaning from words used, but the more creative process of supplying flesh to a spare and loosely constructed skeleton. The choice between alternative submissions may turn not on purely legal considerations, but on a broader view of what the orderly development of the Community requires. These are matters which the [European] Court of Justice is very much better placed to assess and determine than a national court”.

Those are the views of Lord Denning and the noble and learned Lord, Lord Bingham. They are clear; the legislation is clear. There is no doubt about what it said in 1972, and it incorporated principles that had been expressed by the European Court years earlier in 1964. I am amazed that in 2008 we are still questioning the primacy of the European Court of Justice.

The noble Lord has done the Committee a service by citing those important judgments, which all lead in the same direction. I was fascinated particularly by his citing of Lord Denning, because, on any version, he was not the most ardent of Europeans—I think of his “nooks and crannies” speech. He was absolutely clear about the position: that European law is one which member states are bound to accept. The noble Lord, Lord Owen, spoke about the German federal court, but that court made no specific declaration in respect of the primacy of European law, because it is wholly fundamental—there was no need for the German federal court to accept it. The hole in the noble Lord’s argument was that, try as he might, he could not cite a single case—he noble Lord, Lord Lester, cited an array of cases—where the German federal court has overridden the European Court; all he could do, at the high watermark of his submission, was say that there is currently a case before the German federal court—I am surprised that that has not been struck down in limine, as it probably would have been in our own jurisdiction. There was a potential case, too, in respect of Maastricht. But the truth is that the Community law is paramount; indeed, our own courts would make references to the European Court of Justice for preliminary rulings in respect of that interpretation.

The noble Lord, Lord Blackwell, said with due humility that he was not a lawyer; the noble Lord, Lord Owen, followed in that same vein. If the ordinary man were asked to perform a judgment as to whether the views of the noble Lords, Lord Blackwell and Lord Owen, should be given greater weight than those of the noble and learned Lord, Lord Slynn, whose background in the European Court we all know and respect, or of the noble Lord, Lord Lester, one wonders where the weight would fall.

I shall not detain the Committee. These amendments seek to drive a coach and horses through the fundamental principle of European law. Our own jurisdiction and all others have decided on the primacy of European law. To do otherwise and have individual courts in the 27 member states deciding what that law is would be destructive and run wholly counter to the obligations to which we have subjected ourselves.

I, too, am not a lawyer, but I nevertheless support the amendment of my noble friend Lord Blackwell. I was interested by the intervention of the noble Lord, Lord Anderson, who correctly pointed out that if the ordinary man—I think he meant the man on the Clapham omnibus—were asked whether my noble friend Lord Blackwell or the noble Lord, Lord Owen, were likely to be more correct in interpretations of law than the noble and learned Lords who have spoken, he would surely disagree. Nevertheless, the man on the Clapham omnibus would surely think that things ought not to be so, because he would prefer that this Parliament, to which he elected his representative Members, were more important in determining matters of law and criminal justice than a place across the sea in Brussels—where I worked for the whole of 2006.

One reason why the United Kingdom has been so successful in attracting investment from companies around the world is that its legal and justice system is held in such high regard. It is thought to provide stability, clarity and a good place in which international companies can establish headquarters in this time zone and run their businesses in this region. Therefore, anything that further weakens that clarity, such as the introduction of qualified majority voting— notwithstanding opt-ins and opt-outs—into the area of criminal justice, which further weakens the authority of the United Kingdom Parliament to make our own laws, will reduce rather than enhance confidence in our legal system. I worry that that would reduce the attractiveness of the United Kingdom as a destination for investment from around the world. Both amendments enhance the attractiveness of the UK rather than the reverse, and I support them.

We have had an extremely interesting contribution from the noble Lord, Lord Owen. It produced strong reactions from the lawyers present, all of whom talked with great precision, authority and emphasis. None the less, I doubt whether the argument will end with this particular debate. The noble Lord, Lord Owen, has opened something of a Pandora's box. I hope that what is said in this debate will be reported and heard in the Federal Republic of Germany and that people there will hear what the Minister says about this issue and about the position of the Federal Constitutional Court of Germany vis-à-vis European union law. The noble Lord, Lord Owen, made an extremely worthwhile contribution.

In the light of that and of the categorical statement of the noble and learned Lord, Lord Slynn, that EU law must be applicable in every state, I return to one of our earlier debates about the protocol and the Charter of Fundamental Rights. Bearing in mind what the noble and learned Lord said about EU law being applicable everywhere and there being no question of tiers of law, I have a question for the Minister. I know that she will say that we debated this before but will she again explain the effectiveness of the protocol in the light of the noble and learned Lord’s statement and the particular point raised by my noble friend Lord Kingsland? What happens when a judgment is made in a country outside the UK—another country where the Charter of Fundamental Rights has a different effect? How can we avoid law made in other countries having to be applied in that sense and in the light of a judgment made in this country? What the noble and learned Lord has said might be interpreted as strongly supportive of the point made earlier by my noble friend Lord Kingsland about the Charter of Fundamental Rights.

I do not want to speak for long, but I welcome this debate and thank the noble Lord, Lord Blackwell, for moving his amendment because we have had clarification from such expert noble Lords that they need congratulation. If the amendment moved by the noble Lord, Lord Blackwell, were put to the vote and carried, and the House of Commons agreed to it, we would have to leave the European Union, which from my point of view would be desirable. But I do not believe that people understand how far we have become subject to European law. The noble Lord, Lord Lester, made it clear that matters European are becoming greater and greater. With every treaty that we pass, their powers become greater. European law becomes greater. Therefore, the position of our courts and of this Parliament is consequently weakened.

The noble and learned Lord, Lord Slynn, who helped us earlier on in our debate has confirmed that the European institutions and courts are superior, not only to our own courts, but to our own Parliament. This Parliament dare not pass legislation that is against European law. Otherwise, it will have to be struck down. This debate has served to emphasise that point. It will be interesting to hear what the noble Baroness the Leader of the House will say. I do not believe that she can say anything different from what has already been said by the noble and learned Lord, Lord Slynn, and the noble Lords, Lord Thomas of Gresford and Lord Lester. She will have to confirm exactly how far the independence and sovereignty of this country have been reduced by various treaties since the 1972 Act.

The noble Lord, Lord Thomas of Gresford, quoted Lord Denning. I have quoted him previously on this, but I will do it again because it is so good. He made it clear in this House on 31 July 1986, saying:

“Acts of Parliament and decisions of our courts have been set aside and rendered invalid by decisions of the European Court, which is superior in all matters of EEC law not only to British Courts, including the House of Lords, but also to Parliament where their Acts past, present or future have been, can be and will be declared illegal by an overweening court sitting in a foreign capital”.—[Official Report, 31/7/86; cols.1055-1060.]

Nothing can be clearer than that.

I rise to support a point made by the noble Lord, Lord Owen, which nobody else has picked up, but which is central to the debate. He said that we agree not only to laws passed by Parliament; we also agree to treaty law in Parliament. That is why we are discussing the Lisbon treaty. It goes through the Commons, comes to this House, we debate it and eventually agree the various provisions. It is agreed by the Government and that is that. That is the position as the Government understand it. However, the noble Lord was right to say that that is no longer the case. When we agree these laws, they are then liable to be changed by the European Court of Justice without recourse to the agreement of Parliament.

I have a quick example from when Mr Major was Prime Minister. He was shocked. He went to Maastricht and returned, notoriously saying, “game, set and match”. He then found that things were changed not by Parliament, the Commission or the European Parliament, but by the European Court of Justice. He wrote to Mr Santer, the then President of the Commission saying:

“Dear Jacques,

My intention in agreeing to the Protocol on Social Policy at Maastricht was to ensure that social legislation which placed unnecessary burdens on businesses and damaged competitiveness could not be imposed on the United Kingdom”.

The next paragraph is important:

“The other Heads of State and Government also agreed that arrangement, without which there would have been no agreement at all at Maastricht”.

The letter continues:

“However, in its judgement today, the European Court of Justice has ruled that the scope of Article 118a is much broader than the United Kingdom envisaged when the article was originally agreed, as part of the Single European Act. This appears to mean that legislation that the United Kingdom had expected would be dealt with under the Protocol can in fact be adopted under Article 118a.

This is contrary to the clear and express wish of the United Kingdom Government, and goes directly counter to the spirit of what we agreed at Maastricht”.

The noble Lord, Lord Owen, was quite right to highlight this. Regardless of what Parliament agrees, what the electors elected Parliament for and what the European legislature or the Commission say, the European Court of Justice can, unilaterally, change agreed European arrangements. That is very important. I would be interested to hear what the noble Lord has to say about that in his response, and, indeed, what the Minister will say now.

I know that we are in a hurry for the dinner hour, but I would like to congratulate the noble Lord, Lord Owen, on his courage in moving this amendment. If a former Foreign Secretary does not today understand the extent of the trap that we are in with our European Union membership, then how can ordinary members of the public? I will spare your Lordships the quote from Section 3 of our European Communities Act 1972 because I have already put it on the record in these proceedings. I have to say to the noble Lord, Lord Owen, that I support his amendment. I fear that the lawyers in this House are absolutely right. I put it to the noble Lord that the only way out is the door.

I shall speak to Amendment No. 159, which is in this group. This has been a fascinating debate. I thank my noble friend Lord Blackwell and the noble Lord, Lord Owen, for having stimulated a most useful occasion, highlighting some of the constitutional aspects of the issue that we face.

My noble friend Lord Lamont went straight to the point. As a result of what has been said in this debate, the Minister needs to tell us exactly what the protocol’s effect is. The noble and learned Lord, Lord Slynn of Hadley, stated very clearly that it is essential to have a court to give final interpretation on European law. The noble Lord, Lord Lester of Herne Hill, highlighted that the paramount law of the European Union must prevail where it reigns. Where it does, Luxembourg is supreme. My noble friend Lord Blackwell has done us all a great service by highlighting the issue. We profoundly object to the extended jurisdiction that will be given to the European Court of Justice in relation to the police, judicial co-operation and criminal law. I will just say to him that we would like to give further consideration as to whether his amendment is the best way forward in providing a safeguard for our criminal justice system in this area.

The speech of the noble Lord, Lord Owen, was hugely helpful in reflecting on a sort of paramount, panoramic picture of European law; it also particularly came across from the noble Lord, Lord Thomas of Gresford. The noble Lord, Lord Owen, gave us all a fascinating insight into the internal workings of not only the German federal constitutional court, but proceedings in France.

Is the noble Lord aware that one of the great pluses of the treaty of Lisbon protocols is that, when we believe that a proposed European measure violates the principle of subsidiarity, our national Parliament will for the first time be able to have access, in ways to be agreed in due course, to the Court of Justice? Therefore, under this treaty and arrangements for it here—the amendment against it has been withdrawn so we cannot debate it—the democratically elected Chamber and this House will together, with the Government, for the first time, be able to challenge a measure for overreach.

Yes, the European Court has the final word—I am not quite sure what point the noble Lord was trying to make. However, I know that we want to move on, so let me just say that the implications of the amendment tabled by the noble Lord, Lord Owen, are sufficiently far-reaching to require additional examination before we can consider such a potentially profound overhaul of our legal arrangements.

I have to say to my noble friend Lord Lamont that I am a lawyer—a real one, as many colleagues in the solicitor’s profession would say—one of the few practising solicitors in this House. Of course, we always have to consider the arguments put forward from barristers on one side and the other—not, I hasten to add, in a judicial way but in a reflective way—when we are seeking to explain the legal position to our clients. Therefore, as a lawyer, I found that the noble Lord, Lord Owen, made a positive contribution on which we would like to reflect.

However, my Amendment No. 159 calls for an annual report to be laid before Parliament on the impact of any preceding rulings of the European Court of Justice on the United Kingdom. This report was called for by our Constitution Committee. I hope that the Government will give that recommendation the respect that it deserves. In giving evidence to the Constitution Committee, the Government laid out all the ways in which the European Court of Justice’s jurisdiction will be expanded by this treaty. The list relates closely to debates we have had in this House on various parts of this treaty. For instance, the charter, the impact of the common foreign and security policy and the increased co-operation on home and judicial affairs are all areas that we have mentioned several times. No doubt we will return to those issues in the future.

It has been made perfectly clear in the contributions that we have been listening to that much of the opposition to these provisions is driven by uncertainty about the impacts of future ECJ judgments. We simply cannot tell whether their powers will be used to drive the European Union towards eventual federation—is that fear unfounded?—or instead whether the European Union will develop with complete agreement between all the participants about their role within it.

The Government, in promoting this Bill, have sought to downplay their inability to predict the future. They confidently proclaim that only positive results will come from the increased remit of the European Court of Justice. However, their optimism has failed to convince many.

This report in Amendment No. 159 will allow the Government to proclaim in future just how wrong we all were in getting so concerned, but it will give Parliament a chance to identify and protect against the undue interference and perceived loss of national independence that may follow. I sense that the general public are very confused about the situation. They are hungry for knowledge about what the EU does and would enjoy the opportunity coming from a debate on that report to learn about the treaty’s effects.

Finally, in this place we have frequently opposed the gold-plating of EU directives—a practice that allows the Government to push unpopular Labour policies through Parliament while refusing responsibility for their impact. As a result, the European Union always bears the blame, in many cases unfairly, for what were Labour additions to a relatively harmless directive. Resentment also builds up because of the perception that it is only the United Kingdom that obeys and pays the full cost. That is a well known myth, but to some extent a very damaging one for those who believe so passionately in Europe.

The Government have frequently claimed that our concerns and those of the public are unfounded because we do not understand the real situation, but they bear a great deal of the blame for any misunderstanding we might have. They have consistently rejected any of the various reporting or clarifying measures that we have proposed. I can only hope that the arguments of the Constitution Committee will be more successful and that Amendment No. 159 will at least meet with a positive response.

This has been a long and very interesting debate. I thank all Members of the Committee who have participated, not least those who have tabled amendments in this group. I am conscious that I am all that stands between noble Lords and dinner so I shall try to deal with matters expeditiously, although I intend to cover as much as I can in the full and certain knowledge that this is an issue to which we shall return and continue to debate. Although there have been many contributions, for many noble Lords there has been much food for thought as well, which I sense they will go away and deliberate on. I shall set out as clearly as I can the current position.

I go back to the beginning and to something that I said at Second Reading. Noble Lords need to have this clearly in their minds when considering the European Court of Justice, a much maligned organisation in many of the contributions. Whether noble Lords like it or not, the European Union is an organisation which needs rules; if you have rules you have to be able to enforce them. The European Court of Justice is the mechanism, put crudely, which enforces the rules. Making it effective as a court is in our interests. It ensures that member states respect the European Union rules—that there is a level playing field, particularly for our businesses in the single market, and protection for our citizens in the rights that they have as members of the European Union. I think it helps to destroy, as the noble Lord, Lord Hunt of Wirral, said, the myth that somehow we implement and other nation states do not—that we do it properly and other member states do not.

When member states interpret and apply European treaties, the court’s role is to ensure that European law is observed. The member states make the law. The European Court of Justice does not make the law; that is not its job. Its job is to interpret the law. We will have fully participated in any law that is made in Europe. The European Union in its competences is able to make laws on subjects only with the approval of the member states. We are not absent players; we are part and parcel of the system. That is really important because it is suggested that somehow the European Court of Justice operates on its own, outside the law and outside the European Council of Ministers, as though it were a body that made law. As the noble and learned Lord, Lord Slynn, said, on a previous day in Committee, although the court has spoken and interpreted the law, that law is binding. The Council can change the law and practice. It may not do so very often but it can do so; that is not beyond it.

Does the Minister agree that in the debate to which she referred, she had to confess that the Council of Ministers had never repealed a law and that, for it to do that, unanimity in it would be required? It is unrealistic; it has never happened and it will not happen.

When I said it might not do it very often, I was referring to the future. It might not do it; it might not do it very often; and it has not done it; but that does not mean that it cannot do it. We just have to be clear what we are describing, but it has the power and the capacity to do that. Unanimity is argued for by most noble Lords opposite as being of great import, so I do not see that as a problem; I see that as a positive, if what the noble Lord, Lord Pearson of Rannoch, usually says about unanimity is right. The European Court of Justice interprets the law. If the Council, in its wisdom, decided that it did not like that interpretation, it has the power and the capacity to change it. That principle is important. It is the same with this Parliament and national courts.

When we joined the European Union, the principle of primacy was already there. It is not new; it has not been invented by this treaty or by Maastricht. It is a fundamental part of having a European Union, where you are trying to apply rules that you have made across the Union. That is very important. If you make rules, you need a mechanism to enforce them, but it is not open to a member state to decide that it does not fancy a certain rule one day and, therefore, will ignore it and change it. There is no point in being part of a Union on that basis.

The Lords Constitution Committee report is often quoted and I shall quote the implications that it has described on this. It states:

“We conclude that the Lisbon Treaty would make no alteration to the current relationship between the principles of primacy of European Union law and parliamentary sovereignty. The introduction of a provision explicitly confirming Member States’ right to withdraw from the European Union underlines the point that the United Kingdom only remains bound by European Union law as long as Parliament chooses to remain in the Union”.

So the ultimate ability to leave the European Union is there. On a previous day in Committee we debated the withdrawal article in the treaty. If noble Lords do not wish to be bound by European law, that is the way to address the matter. As I have said, it is in our interests and it has been a fundamental principle. In 1972, the then Solicitor–General, now the noble and learned Lord, Lord Howe—I hope he will not mind me repeating his words—said:

“It would make a nonsense of the necessity for Community law to have the same effect in every member State if the United Kingdom, any more than any other member State, could choose by national law to override what it did not like. The principle of Community law having precedence throughout the Community is one that operates for the mutual benefit of all member States”.—[Official Report, Commons, 13/6/72; col. 1317.]

That is the principle. The doctrine of parliamentary sovereignty remains a cornerstone of our constitutional arrangements and is unaffected by ratification of the Lisbon treaty. That, in a nutshell, sets out in our involvement in the European Union.

Let me try to deal with some of the issues that have been raised by noble Lords. In moving the amendment, the noble Lord, Lord Blackwell, raised two examples. The first was whether, if we did not opt in, the UK courts could be influenced by EU law. If we do not opt into a measure in the area of justice and home affairs, it will not form part of our law and, therefore, our courts would not apply it. It is as simple as that. Noble Lords also asked about the European Court of Justice and the charter. The noble Lord, Lord Lamont, referred to what the noble Lord, Lord Kingsland, had said and much has been made of what the noble and learned Lord, Lord Slynn, and the noble Lord, Lord Hunt of Wirral, raised. I shall try to be as clear and succinct as I can on that.

The charter sets out existing rights. In our previous discussions, we described the backdrop to the charter. The different articles in the charter come from different places: the European Court of Human Rights, EU law or principles in the operation of EU law, and so forth. I shall not go back through all that. The European Court of Justice can apply the charter only to the same extent that it applies the existing rights. That is a critical point. As the UK protocol makes clear, no court—European Court of Justice or other—can use the charter to extend its jurisdiction to attack UK law. I think that is clear and I hope that noble Lords will reflect on that.

The noble Lord, Lord Owen, made a very interesting contribution. I am glad to hear he has regained his voice. In speaking to Amendment No. 127, he spoke much about other jurisdictions and particularly about the German constitutional court. I hope the noble Lord will not be surprised that I, too, looked at the German constitutional court and at the French courts—the Cour de Cassation and the Conseil d’État, which are the two courts that have had an interest in EU legislation as well.

Let me back up a lot of what has been said. I will not enter the lawyers’ debate that surrounded that, for obvious reasons—I am not a lawyer and I would not pretend to intervene in that way. I recognise that the German Constitutional Court plays a very particular role. What it does is test legislation and government action against the national written constitution. It therefore has a specific focus. That focus is on the national constitution. This is an important backdrop to understanding what the court does. The Court considers that in principle it can decide on the compatibility of Community law with the German constitution but it has never challenged European Community law.

Let me give two examples quoted by noble Lords. The court questioned the compatibility of EC law with human rights. The European Court of Justice confirmed that it applied human rights as part of EC law. The German court accepted that, as long as EC law was compatible with its own constitutional safeguards, it would respect the primacy of EC law. That case—the Solange case—was a case that was referred to by a noble Lord on the Liberal Democrat Benches.

The other example was the question that the noble Lord, Lord Owen, referred to—the Brunner case. The court made clear it could review the compatibility of EU treaties with the German constitution but found no incompatibility. There is a case before the German Constitutional Court at present. There is nothing new in that. These cases have never resulted in a member state being prevented from ratifying a treaty but I am not going to comment on it because it is before the court and I am advised that I should therefore not make any further comment on that.

Tomorrow I will be going to Peru with Chancellor Merkel. While I am there I will approach her officials to see if I can get any more information about the German Constitutional Court and the current activities. If I do, I will either write to noble Lords or make sure that we have an opportunity to come back to this.

The noble Lord, Lord Owen, talked about the Luxembourg compromise. As far as I am concerned, that is well outside the treaty. It is a political determination. It involves, as I understand it—I am sure that noble Lords will leap up to correct me if I am wrong—the situation where a member state feels that there is something so fundamental going on that they ask for a pause or stay in the discussions in order to examine that properly. It is a political commitment—it has no legal status, as I understand it. As far as we are concerned, it still exists. It has not been used, as far as I know, for a while—certainly not by us—but it exists because it is about the politics of nation states working together.

The noble Lord, Lord Owen, asked about the Dutch position. He is much exercised that I had not yet made contact with the Dutch in order to discuss the double-hatting of the High Representative or the Commission President. I have not done that—like the noble Lord I have huge respect for the Dutch courts and for courts across the European Union—because it is the responsibility of the UK Government, working with its own legal advice, to look at the treaty and to interpret what we believe to be the correct position. When I was in Brussels recently, I discussed this position with officials in order to make sure that the interpretation was right. Actually it is spelled out in the treaty. Noble Lords can go to Article 17 of the European Union Treaty and find references to Article 245 on the functioning of the European Union. To put it in a nutshell, if you are President of the Commission or if you are the High Representative and therefore a Vice-President of the Commission, you are part of the Commission. Article 245 states:

“The members of the Commission may not, during their term of office, engage in any other occupation, whether gainful or not.”

If that were amended, the treaty would need to be amended so it is impossible for the President of the Commission and the High Representative, who is Vice-President of the Commission, and the Council President to double-hat because the two people in the Commission are not allowed to hold any other role. In order to double-hat you need two out of three to be involved but two out of the three cannot do it. I have not used government resources and therefore taxpayers’ money to talk to the Dutch about this because in my view the position is crystal clear.

As I said, we are clear about the primacy of European Union law and we are very clear on the role of Parliament. We believe that this position is exactly the same as it has been before the treaty. It is an important position. If this Parliament decides it does not wish to be part of the European Union that is within its gift. While it is part of the European Union, however, laws that we have participated in making fall to the European Court of Justice to interpret.

The noble Lord, Lord Hunt, talked about Amendment No. 159. It was interesting that the noble Lord made it clear that he is unhappy about pillar collapse. The preamble to this was his worry about what is now part of the JHA opt-in; essentially, that involves pillar collapse from pillar 3 to pillar 1. I would be very interested to know what the noble Lord would wish to do on behalf of his party about trying to change that if this treaty were not to be ratified. Would he want to keep the Third Pillar as it currently is? I will wait for another occasion to discuss this.

The noble Lord is quite right to say that this is a conclusion in relation to the report of the Constitution Committee. We are very interested in this. All I can say at present—and I hope the noble Lord will take heart with this—is that consultations with government departments are nearing their conclusion. I hope to be able to respond positively in due course but I am not able to do so today, as I had hoped. On that basis, I hope that the noble Lord will withdraw the amendment.

I thank the noble Baroness for her response to the debate, the noble and learned Lord, Lord Slynn, and the noble Lords, Lord Lester and Lord Thomas. We all learnt a great deal from their interpretation of EU law. It has been a very interesting and revealing debate. As I said earlier, I understand the supremacy of EU law in general, although the way it was described was very helpful.

My amendment deals in particular with the changes introduced by this treaty—bringing freedom, security and justice for the first time under the jurisdiction of the court and introducing the Charter of Fundamental Rights. I sought to draw attention in particular to whether those innovations in this treaty brought the supremacy of European law to cover justice and criminal law and policing in the UK. I think the answer was a resounding “Yes, it does”. That is a very interesting answer which will bear much thought. As my noble friend Lord Hunt suggested, I and others will want to take this away and consider the best way of proceeding with this argument. Given the lateness of the hour for dinner, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 116 to 119 not moved.]

I beg to move that the House do now resume. In moving that Motion, I suggest that the Committee stage begin again not before 9.18 pm.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.