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European Union Bill

Volume 727: debated on Tuesday 26 April 2011

Committee (2nd Day) (Continued)

Clause 4 : Cases where treaty or Article 48(6) decision attracts a referendum

Amendment 20 not moved.

Amendment 20ZA

Moved by

20ZA: Clause 4, page 3, line 26, at end insert “, except where such conferral strengthens the ability of the European Court of Justice to enforce compliance with European Union law”

My Lords, there is a danger in this Committee that we will be accused of mind-boggling pedantry on the clauses of the Bill, and I am very aware of that. However, I think that that is because of the nature of the Bill, which is basically pedantic and full of unnecessary detail. The amendment I am proposing would amend Clause 4(1)(i) to make it clear that there would be no question of a referendum arising,

“except where such conferral strengthens the ability of the European Court of Justice to enforce compliance with European Union law”.

In other words, we are trying to provide that the ability of the European Court of Justice to do its job is a vital national interest of Britain and, if the need arises, we should be able to enhance its powers. Again, this would not be a change of major institutional or constitutional significance, although I suppose it would be anathema to our friends who believe that any acceptance of the European Court of Justice’s role is a denial of British sovereignty. But for those of us who think you have to have a European court in order to make the structure of the European Union work and hold member states to their obligations, it is very important that we are clear that we are prepared, if necessary, to see the powers of the European Court of Justice enhanced.

I raised this as a matter of principle when I tabled the amendment on behalf of the Opposition, but at the weekend I glanced with interest at the recently published report from Sub-Committee E of the European Union Committee. The summary of conclusions is rather stark:

“We predict another crisis of workload soon … We agree … that ‘structural solutions need to be found’”.

Later in the summary of conclusions it states:

“We do not make any suggestion likely to involve Treaty change because in the short term other solutions are available. But the Member States should not be put off from undertaking necessary reform involving Treaty change when the opportunity arises in the longer term”.

The purpose of this amendment is simply to say that we need an effective European Court of Justice and that we should be open to such changes. Frankly, the fact that under the Bill such changes might be subject to a referendum requirement could well mean that a British Government would not agree to changes in the workings of the Court which were actually in the British national interest. That is why I am moving the amendment.

I support the amendment of the noble Lord, Lord Liddle. He is about to move a whole raft of amendments which are designed to do what we were debating before dinner—that is, to introduce a little more flexibility into the application of what the Government call a referendum lock. That could be done either by importing the significance criterion into Clause 2 or in the way that is now being suggested. I should just recall that the British Government of the day, who form one part of the present Government, spent a great deal of time in the 1990s doing precisely what the amendment of the noble Lord, Lord Liddle, would do, which is to strengthen the powers of the European Court of Justice. The noble Lord, Lord Kerr, is no doubt too modest to say so, but he played a major role in securing the provisions which enabled the European Court of Justice to levy fines on member states which were in gross breach of their obligations. That was not easy to do; it was certainly in Britain’s interests that it be done. I would be subject to correction, but I do not believe that any British Government have ever been caught by those provisions, although quite a lot of other people have.

The amendment is very sensible. I make a plea to the Government to think very carefully between now and Report about ways in which they could introduce a bit more flexibility into the Bill. A whole number of different ways are being put forward in different amendments, of which this is just one. By the time we come back on Report, I hope that it will be possible for the Government to show a bit of flexibility on this, so that future British Governments have a certain degree of flexibility, too.

My Lords, I am not quite clear what the amendment is intended to achieve. If it is intended to block any real transfer of power to the European Court of Justice, those of us who believe that it is inappropriate obviously could not support it. However, it seems to me that that is not quite what it is saying; indeed, I am not entirely clear what it is saying. I would therefore be grateful if the noble Lord could in due course be a little more specific about his real objective.

Having heard the explanation of the noble Lord, Lord Liddle, I wonder whether my noble friend might be able to tell us whether the powers required by the ECJ, were any transfer contemplated, would be covered by the significance test. My understanding is that they would be.

My Lords, I welcome a debate in which we are discussing the amendment in front of us rather than having another Second Reading-type debate as I felt at some point this afternoon we were doing. I can see where this amendment and the other probing amendment in the name of the noble Lord, Lord Liddle, are going, but they are based on a fundamental misunderstanding of the purpose of the Bill. The Bill does not intend to tie a British Government hand and foot to prevent them co-operating within the terms of the treaty.

The coalition agreement accepts the Lisbon treaty. That is, after all, a major step forward. The Lisbon treaty includes a substantial extension of competencies. As the noble Lord, Lord Mandelson, said in his very useful speech before dinner, the task that the European Union now needs to pursue is to use effectively the competencies that it has to make good decisions and then to implement worthwhile policy within those existing competencies. I have been struggling, with this and a number of the other probing amendments that the noble Lord has put down, to discover what particular difficulties these will cause for the British Government.

The European Union, as we all know, has often preferred—or at least those enthusiasts and habitués of Brussels have—to spend time writing new laws and devising new institutions rather than getting on with implementing policies. Part of the hole that we now find ourselves in and the mistrust we have across the European Union is the result of 25 years of treaty amendment, from the Single European Act, through the Maastricht treaty, the Amsterdam treaty, the Nice treaty, the Convention and the Lisbon treaty. They have provided very substantial competencies for the European Union, many of which have not yet been used.

My noble friend Lady Hamwee produced a very interesting paper the other week on the number of powers that the previous Labour Government had acted to put into the law, which have not yet been implemented. There was this great feeling in that Labour Government that when something happened, you passed a new Act or created a new criminal offence. There is now, as a result, a huge list of things on the statute book that have not yet been implemented and which I rather hope that this Government will get around to repealing.

As far as the EU is concerned, there are now substantial competencies. There are a large number of regulations in force, many of which unfortunately have not been fully enforced or implemented. I am puzzled by what it is that one needs to do with the European Court of Justice for which Article 256—which I have read, again—does not provide the powers that we need. The noble Lord, Lord Kerr, has said—on at least one occasion and I think more often—that we will need to change the number of judges in the European Court of Justice, which will require a treaty change and therefore a referendum. My understanding on this—and I may be wrong—is that to change the number of judges on the court, which we all know is overloaded, would require unanimous agreement by Governments of the member states in an intergovernmental conference; but in terms of this Bill, that would not involve a change to the treaty and certainly not the provision of extra powers or competencies. Yet again, I fear we may be dashing off after a hare that is bolting rather faster than we did.

The number of judges in the court is defined in the treaty. So changing the number of judges in the court requires an amendment to the treaty. There is no doubt about that. Whether that would require a referendum—which is the point that the noble Lord, Lord Howell, was debating with me before dinner—is another question. He may well be right: it depends on whether you view an increase in the number of judges as an increase in the power of the court. If you did, then, under this Bill, you would require a referendum; if you did not, then, under this Bill, you would not. However, it is certainly a treaty amendment.

Before the Minister replies, can I ask the noble Lord, Lord Kerr, whether, with his great knowledge of these matters, anything can be done about the quality of these judges? Is it not true that none of them would pass muster as a judge in even the lowest and least distinguished of British courts? Is there anything we can do about that under the treaty? Who decides it?

I think the noble Lord, Lord Kerr, is not going to answer. I had something in my notes about how the European Union attracts pedants and conspiracy theorists, but I thought I would not use that on this occasion. As the noble Lord, Lord Liddle, said, we all know that we are sometimes a little pedantic on this. I am a Eurobore of some considerable standing, having helped to write several textbooks on the subject and struggled each time to remember how the treaty articles have been renumbered and so on. We could go on for a great deal of time.

We have heard one or two conspiracy theories this afternoon and this evening. Noble Lords may be aware that I received an even better conspiracy theory today from Migration Watch suggesting that the increased migration under the previous Labour Government was a deliberate attempt to increase the ethnic vote, which would split down for Labour. That is an even better conspiracy theory than anything that I have ever heard from the noble Lords, Lord Pearson of Rannoch and Lord Stoddart of Swindon. I encourage the members of the Labour Party to have a go at that when they have appreciated it fully.

I do not think that I have ever said that. I have never accused the Labour Party of gerrymandering and bringing millions of people over here to vote for it. The noble Lord might have seen it in a newspaper but I have certainly never used it.

I apologise to the noble Lord, Lord Stoddart. I was in no way suggesting that his imagination had stretched that far. Perhaps I might return to the amendment because I hope that after dinner we are going to keep to each of them. My puzzlement on this one is that I see nothing in the Bill that cramps the powers and competences of the European Court of Justice to enforce compliance with European Union law. Her Majesty’s Government support an effective European Union—as did our predecessors, as the noble Lord, Lord Mandelson, said—and strongly support the better implementation of European Union law. We shall continue to do so.

There is a lot with which I agree in what the noble Lord, Lord Wallace of Saltaire, has said. I agree with the basic analysis: that the question is of how the powers of the Union, as granted by the Lisbon treaty, should be used. What the noble Lord glosses over in his defence, as it were, of the Government is that the Lisbon treaty covers much of the ground that we need to cover but this Bill is designed to cramp the flexibility that it contains. That is the fundamental issue which noble Lords from around the House are trying to address. We are saying: “Look, we're not asking for a mandate for vast new powers for the European Union. That isn't what the argument is about”. We are saying: “The Lisbon treaty? Fine—but there is flexibility within it. Why are the Government ruling out using that flexibility where we, as the United Kingdom, think that it is in our national interest and where the British Government support it?”. Those are the conditions which would have to be met.

I am not a great expert on the European Court of Justice, unlike other noble Lords who may be in the Chamber. However, in its analysis of that Court your Lordships’ own committee, under the noble Lord, Lord Bowness, pointed to the possibility of the need for some change in the treaty. We ought to be open to that possibility and to a little bit of give on this kind of thing. If the Bill is to have a less troublesome Report stage than it looks as if it might otherwise have, the Government have to find a way of accommodating the view that we need more flexibility on some of these more detailed provisions.

The noble Lord stated that the Bill seeks to cramp parts of the Lisbon treaty. Does he not agree that if you look at it in a dispassionate way—I know it is very difficult to look at this Bill in a dispassionate way—and use the word “moderate” it might actually be more acceptable. If you felt that this was to moderate rather than to cramp, it is not a physical thing of trying to stop but one of trying to get an acceptable level of agreement throughout. I just wish we could pursue this on that basis.

The noble Baroness has made a helpful point. My fear in all of this is that what we are doing through adopting this very restrictive position is putting British Ministers in a position where they would want to agree things that they regard as being good for Britain and they are going to have to say no because they believe that the referendum lock would apply. That is not very sensible where the issues are not of great concern to the public, where there is not real competence creep and where the benefits of change could be quite considerable.

My Lords, is that not one of the disadvantages of this amendment? It does nothing to prevent competence creep. If the noble Lord does not agree with that, would he care to comment on the remarks made by the noble Lord, Lord Waddington, earlier this evening and indeed by myself about the way the European Court of Justice has permitted and supported the abuse of Article 308 of the treaty of Nice, as it then was, which allowed Brussels to get involved only,

“in the course of the operation of the common market”?

That was the wording in the original treaty, which lasted right through until Lisbon when it was strengthened in the Court’s favour.

The noble Lord, Lord Waddington, mentioned aid to Outer Mongolia as being justified by the Court in this matter. There was urban renewal in Northern Ireland, the co-ordination of our social security systems—quite a big one that—the prevention and aftercare of terrorism, establishing the EU’s agency for fundamental rights and a £235 million “information campaign”, which to those of us who understand these things is of course propaganda.

The European Court has been able to abuse the treaties in these ways and there are many other clauses such as flexibility clauses which the European Union has abused. Indeed, in 1996 when the use of Article 308 was taken to the Luxembourg Court, in its judgment the Court said that the point of this article was to pursue the interests of the Union. In its judgment it did not mention the first words of the clause:

“If in the course of the operation of the common market”.

I really do not see how this amendment is going to do anything to stand up to that sort of behaviour. There is no appeal against the judgments of this so-called Court, the quality of whose judges, I repeat and I am not trying to be amusing, is extremely low and unacceptable. I really do not see why we should have anything in this Bill which enforces the powers of this particular creation. As the noble Lord said when he introduced his remarks, those of us of a Eurosceptic bent would rather they had nothing to do with us or our law at all.

I am sure that the noble Lord knows Justice Scalia of the US Supreme Court well. Justice Scalia has argued on a number of occasions that no American court could ever give credence to international treaty law or to any international court because intrinsically United States law is superior to that of any other state or court—a fundamentally nationalist line that is familiar to us. I am sure that the noble Lord shares it from an English perspective.

I do not wish to pursue that much further. I merely wish to say that my puzzlement on this amendment and on those that follow is that there is considerable flexibility in the treaty that is now before us. It is not the aim of the Bill to tie the British Government or to repatriate powers. We have heard today, even from some of the people behind us on the coalition Benches, that the Bill is inadequate and that what they wanted was repatriation and a reduction of the powers. That is not what we planned. What we are asking for is a pause. Pauses are sometimes used to try to rebuild public confidence in a range of different policy areas and it seems entirely appropriate that, after the considerable extension of competence that the EU has been through over successive treaty changes, there should now be a pause.

We should draw a line under the conspiratorial suspicions and fears—the noble Lord, Lord Liddle, used the word “fears” about his views on what the Bill might have behind it, underneath it or somewhere in a back cupboard—that Brussels is going to slide things past us by saying, “Let’s work within the existing treaties for the foreseeable future and then, when we are absolutely clear that additional powers or competences may be needed, we will return to this process”. However, I hope that all Members of this House will agree that we have spent far too long with Governments and members of the European Commission and Parliament who love discussing institutional change—much more than they wish to discuss real policy outcomes. What we need to do now in the EU is to improve our real policy outcomes using the substantial amount of competences that we now share. I encourage the noble Lord to withdraw his amendment.

I shall of course withdraw the amendment at this stage. What I find puzzling, though, is that when the Minister reads the Bill he sees in it lots of flexibility and possibilities for dealing pragmatically with the challenges that arise but when I and other noble Lords, such as the noble Lord, Lord Kerr of Kinlochard, and the noble Lord, Lord Hannay, read the Bill we see real inflexibility and an attempt to tie a British Government down in a way that is contrary to our national interests. I urge the Minister to have another think about this. Although he is a highly intelligent man who knows a lot about the European Union, his perception of the Bill is not shared by some of the most formidable experts on these issues in the country. I hope very much that the Government will have another look at these matters when we come to Report. I beg leave to withdraw the amendment.

Amendment 20ZA withdrawn.

Amendment 20ZB

Moved by

20ZB: Clause 4, page 3, line 28, at end insert “, except where such conferral strengthens the ability of the European Commission to enforce European Union competition, state aid and single market rules”

This is a similar amendment, which is an attempt to insert in Clause 4(1)(j) an exception of where a conferral of powers would strengthen the ability of the European Commission to enforce European Union competition, state aid and single market rules. Why move this? This is a clear national interest. The Prime Minister has just produced a great glossy booklet about the single market, which he has sent around the chancelleries of Europe to convince his partners that Britain is fully engaged in the European Union. It is a central interest of the United Kingdom. We face a constant complaint that there is, in practice, a lack of a level playing field within the European Union. To enforce the single market, we are largely dependent on the ability and strength of the European Commission in enforcing its rules. I am not saying that immediate changes to those rules are required, but we should have the flexibility, again, to look in a positive light if proposals are made. Again, these are not fundamental issues that involve transfers of powers. These are issues where action could well be in the British national interest, giving us something we want: a deeper, more integrated single market that is good for British business.

We all know that there are areas of the single market where action is much needed. The services directive has been passed; how will it be enforced? The Commission says that it will act. What will be the result when it tries, and what conclusions will be drawn from that? We do not know at this stage. We should be open to seeing what might have to be done to make the services directive effective. Similarly, on the Commission’s competition powers, I should like to see a more proactive European Commission in enforcing competition. However, we do not know whether the existing procedures will prove adequate to the purpose. On state aid, again, there is a very difficult balance to be struck between too much interference in the minutiae of state aid—activities by member states that should not go anywhere near Brussels—and the need to create a level playing field for the future. All I am saying here is that there are issues that might, in future, require us to accept changes. We should be open to that, rather than ruling them out. That is why I beg to move this amendment.

Surely there is a point to be made with regard to this amendment, which could have been made with equal force about the previous amendment. It is not a mere drafting point. You may have a conferral of power that strengthens the ability of the European Commission to enforce European Union competitive state aid and single market rules, but also has other very serious consequences. This is just one of the examples where you have to be very careful to make sure that one power is not used for a different purpose. It is plain—and not just a question of bad draftsmanship—that if you were to do this, you would allow the conferral of a power that did a lot of mischief as well as the things that the noble Lord rightly wants to see done.

My Lords, I support my noble friend’s amendment but let me first deal with the point that the noble Lord, Lord Waddington, has made. It is clear that any powers can be abused, and it is clear that any suggestion that powers should be changed or extended in any way should be the subject of lively debate among member states in the Council of Ministers, as has always been the case. Only when we are satisfied that something is in our national interest should we consent to any proposal from the Commission or anybody else. That is how the European Union has always been conducted and, I trust, always will be conducted. I do not think the fact that a power can always be abused is a reason for not providing for the possibility that we might need to adopt it or to grant it to the European Union.

As my noble friend said in introducing the amendment, the inspiration for this amendment is similar to that which led to the previous one. I rise to speak particularly on this amendment because it deals with the single market. That is an area where I always thought that there existed an all-party consensus—this was true until very recently—that a positive, what you might call forward, policy on the single market was in the interests of this country. Indeed, I remember a time when the Tory party took enormous pride in having created the single market under Lord Cockfield and Jacques Delors who, with the strong support of Margaret Thatcher, brought through those 300 directives and created a single market. When I entered the House of Commons as a Conservative, as the House knows, we all felt—I felt this, as did most of my Conservative colleagues—a great sense of pride that this was a great Conservative achievement. Now we have a situation in which the Tory-dominated coalition Government are trying to bring an end to this forward policy. When I say “forward policy” what I mean is an acceptance in principle that the best way we are likely to be able to achieve our national purposes in the single market area is by according strong regulation-making and enforcement powers to an objective central authority—in this case the European Commission but also the European Court of Justice.

The noble Lord, Lord Kerr, reminded us a few moments ago that in the 1980s among the Conservative achievements in this area was to successfully override the opposition of other member states to, and then to implement, new enforcement powers for the European Court of Justice, including the very memorable historic move forward at that time of introducing the concept of fines on member states. It is extraordinary that in the course of 20 years—this has been part of the agony of my political life—the Conservative Party has done a complete somersault on this.

In referring to the Conservative Party, I can anticipate the remarks that the noble Lord, Lord Wallace, might make when he sums up, following what he said on the previous amendment. I recognise that the Lib Dems are very uncomfortable with this process. As I know him well, I recognise that the noble Lord, Lord Wallace, will have played the most positive part he could in trying to prevent complete extremists and head-bangers setting out the agenda that was to be adopted by the coalition Government. Indeed, the Lib Dems saw off the threat of repatriation of powers, which has been a very strong demand by a great majority in the Conservative Party for far too many years. Of course, that is splendid. I understand what the noble Lord, Lord Wallace, is really saying to us: namely, that they tried their best and could not do any better and therefore they ended up with a compromise, a kind of stalemate, between Conservative Eurosceptic extremism and Lib Dem pragmatism, if you like. That is where we are.

I say to the noble Lord, Lord Wallace, that we all understand the dramas in his party and in the coalition but that is not a good basis for legislation. We should be trying to legislate as far as we possibly can on the basis of a dispassionate analysis of the country’s interests. I do not believe that the country’s interests have changed in the area of the single market at all since the 1980s when, as I say, the Conservative Party took the lead in creating what we now call the single market, and a fine achievement it was. Should we say that we have certain powers which should be used—that is correct and I quite agree with that—and that we should exclude the idea that any new powers may be needed? However, life is not like that. Life always presents you with new challenges, difficulties and unexpected problems that you cannot possibly anticipate.

I am not brilliant enough to anticipate what might happen but of course there could be financial scams and major problems requiring new legislation or regulation. Big threats could arise to competition in some areas which may show up the inadequacy of our present competition powers. Problems could arise in implementing the single market. It may be shown that the one reason why we have so far failed to implement the single market in the energy area is because our powers are inadequate and therefore it might be necessary to take more powers. I am not suggesting that we should take more powers and I am certainly not clever enough to anticipate in what hypothetical circumstances we might need them. I am simply saying that—I think that we are saying this on this side of the House generally—it would be very stupid to exclude ab initio the possibility that we might need to develop the portfolio of powers that we currently have to try to build up and nurture a successful single market and to assume that all the problems that we face exist now and have revealed themselves once and for all and that there will be no surprises in the future. That is not a realistic way of conducting the nation’s business; it is certainly not a way one would ever conduct a private business, of course not. One would know that what was needed, to use my noble friend’s term, was the flexibility to respond to the unexpected. That will never cease; as long as human history continues we shall always need to do that. And here we are depriving ourselves of that flexibility, let there be no doubt about it.

Of course the Eurosceptics on both sides of the Chamber will say that the Government will not have a referendum because it might be lost. Well, a referendum may be lost or gained but it is quite clear to me—I made this argument at Second Reading and I believe it firmly—that in most cases a Minister will be deterred from getting into the position where there might be even some legal doubt about whether an action or decision by him could trigger one. It would be the end of a Minister’s career to come back from Brussels to be told by his legal advisers a few days later that what he had agreed to would require a referendum. The Prime Minister would sack him on the spot. No Prime Minister wants a referendum suddenly landed on him.

Irrespective of what the British nation might feel or whether the great public expect to be asked by us to do all the homework, to read the documents, to come to a substantive decision on technical issues, the very fact that a referendum could be triggered under the regime the Government propose with this Bill will act as a total deterrent and a total freeze on any flexibility at all. So, from having led the way on the single market with an imaginative, forward-looking and enterprising approach, sadly after a generation we are now, substantially under the leadership of the party that more than any other in Europe should be given credit for the single market, producing a situation in which, by definition, we cannot be part of any change however sensible because, irrationally and substantively, a referendum is clearly a political impossibility. It is certainly an impossibility if it is on a technical matter which might be considered to be rather minor by the British electorate. As politicians in this House, we all know that is the truth.

That is what we are letting ourselves into if we pass this Bill, unless we do so with the kind of amendments which my noble friend has introduced to bring a little bit more reality and realism and a sense of the way the world is into its operation. I therefore wholeheartedly support my noble friend. I hope that, if this amendment is not pressed now, we shall get into serious business at Report stage and that we manage to change the Bill into a more sensible direction along the lines he has proposed.

My Lords, it seems perhaps surprising but state aid is yet another area where powers granted to the EU have exceeded themselves. Noble Lords will have been aware that, in the recent Budget, the Government quite rightly wished to provide additional support for small companies and to widen the EIS to do that because the equity funding gap is up to £10 million. This has been limited because the state aid rules, which were rightly intended to stop unfair massive state subsidy of uncompetitive industries, have been used to decree that you fall foul if there are any sort of tax incentives to companies with more than 50 employees or those raising more than £2 million per annum. This ridiculous intrusion into the economic life of this country has been put in under the guise of state aid, so the Government have rightly said “We are going to go back and renegotiate this”. However, instead of being able to put in the financial support when it is needed—when the economy is on its back as a result of the last Government’s failures—we have to wait another year to try to negotiate to widen these issues.

I have some sympathy with what the noble Lord has said in principle but, when it comes to experience, the last thing I want to see is any more state aid powers.

I had thought to myself, “Dear oh dear”; when the noble Lord and I were colleagues in the Conservative Party a generation ago, we would have both been arguing against state aids on the basis that they were always distortionary, and the European Union was a wonderful way of getting away from the completely self-destructive bidding war that all nations are inclined to get into, in terms of providing some sort of subsidy or other for their industries on whatever political or other grounds or the fashionable economic doctrines that might be in vogue at the time.

However, I repeat my main point that we do not need to get into a discussion on the theory of state aids or their substantive costs or risks, because the assumption has always been—and the way that the issue has always worked has been—that European Union member states have held robust discussions between them on these matters. We have never signed up to anything that we did not agree to. All that I and Members on this side of the House want to achieve is for us to continue to be able, when we think that it is in the national interest, to go along with some agreement for new, extended or slightly modified powers. That is all. There is no suggestion that in advance we would necessarily agree to anything of that kind—that would be utterly unrealistic—but we need to maintain flexibility. The noble Lord is a very considerable and successful businessman, and in the conduct of his own business he would not adopt the policy he is now suggesting for the nation. You must never exclude the need to be able to respond to new problems as they arise. That is all we are asking for.

I am sure that all noble Lords would agree with the basic reason for opposing state aid, as the noble Lord and I did some time ago. My point is simply that the state aid rules have already ended up being interpreted in a fashion that is manifestly not economically sensible. They are damaging the economic interests of this country and, not surprisingly, I would very much like there to be a check on the ability of state aid rules to be yet further misapplied.

My Lords, perhaps I may stick to the substance of the amendment. As I have not been privy to the debates in the usual channels, I ask why amendments that are similar in terms of the arguments employed have been de-grouped for sequential consideration. It has resulted in the debate being all over the place and we are spending far longer on it than might have been the case. I know that the Minister will not deal with that issue, but I hope that the usual channels will go away, contemplate whether we can make slightly speedier progress on these matters and perhaps have a debate that is more valuable to the rest of us who sit here and listen attentively.

I should say to the opposition Front Bench that I have considerable sympathy with the noble Lord, Lord Liddle, on these amendments; and I say to the noble Lord, Lord Davies, that he is right that a consensus has prevailed in this country over the single market, competition policy, and so on. I pay tribute to the Conservative Party for having taken us there, but today no party here can say that it is a champion of that consensus to a greater degree than any other party. These are valuable probing amendments.

At this late hour, in order not to detain the House longer, I want the Minister to answer the question that he did not answer on the previous amendment. I believe that any treaty changes made to enhance the ability of the Commission, the European Court of Justice and other bodies to enforce EU rules would fall under the significance condition. My understanding is that where a treaty change merely confers additional powers on an EU body or institution to impose new requirements, obligations or sanctions on member states, and when this change is deemed not be significant for the UK, a referendum would not be required. In which case, do we really need to have the amendment? If the Minister gave us an answer as to where the significance test would apply—we debated that at length several hours ago—we would know which side of this amendment to be on. It would be most helpful if we could get some clarification on that.

The point of these amendments is the reverse of the significance test. We are saying that securing change in these areas—very important changes on the single market or the effectiveness of the European Court of Justice or whatever—could be highly significant, not insignificant, for the UK. However, we would not want to stop British Ministers agreeing to them on the basis that they would fall foul of the referendum test. That is the point.

Perhaps I may ask for the patience of the Committee for a moment so that I may respond on that very valuable clarification. If it were in the UK’s national interest to pursue the options of the changes proposed, would we not, in the event that there had to be a referendum, expect the British Government to fully support the referendum?

Surely we are entitled to ask the noble Lord for an explanation as to why the Opposition sought an arrangement whereby the last two amendments were debated separately. The noble Lord has used exactly the same arguments for both amendments and therefore he has wasted a great deal of time. I think that there should be some explanation as to why, when the original grouping put together Amendments 20ZA and 20ZB, we have ended up debating them separately and precisely the same arguments have been advanced by the noble Lord on both amendments.

My Lords, essentially the amendments deal with the removal of a referendum provision in three areas which are in our vital national interest—something on which we all agree—namely, the single market, EU competition and state aid. Of course, these are areas where the EU should concentrate, particularly the single market, which is indeed in our national interest. However, this is all possible under the existing treaties and, if sensible actions are taken under the existing treaties, there can be no possible objection to this, and the Bill does not prevent this happening. That is the essential difference and I think that there is some misunderstanding. The Bill does not prevent EU action where the treaties allow it. It is only in areas where a judgment would impact on us seriously that a treaty change might be required, and in those circumstances we would come back to the issue of whether or not to have a referendum. In this House we all agree about the importance of the single market. If, for example, there was a proposal concerning the labour market that could have an impact on this country by undoing much of the trade union and employment law reform, that would have an enormous impact not only on this country but on the entire European Union. In those circumstances, it would be absolutely legitimate to consider the possibility of a referendum.

Finally, in a very interesting speech, the noble Lord, Lord Mandelson—and I am sorry that he is not here—made the point that so far as he could make out the coalition Government were being entirely pragmatic. All the discussions that I have had with others have indicated that our member state friends—officials and politicians—would agree with that. Quite frankly, it is in the context of trying to defuse the difficulty in this country towards the European Union that this proposal is made. In that context, it is important in very specific circumstances affecting our national interest, including the single market, that an option is available for a referendum, although it does not necessarily have to be used because it is covered under the existing treaties.

My Lords, I fear that we have been following a number of hypothetical will o’ the wisps around here. We have heard, “It’s possible, it might be the case, we can’t think of an example but at some point perhaps the powers might prove not to be adequate. We haven’t used many of the powers and competences yet; nevertheless we might not have enough”. I remind the noble Lord, Lord Liddle—perhaps he even wrote it—of an article in the Telegraph in which David Miliband, our previous Foreign Secretary, said:

“One of the greatest blessings of the Lisbon Treaty is that it brings to an end institutional navel gazing ... the EU [will have] 10 years to prove itself”,

without further treaty change. That is where we are now. The noble Lord is insisting on standing improperly. Although I did not wish to give way, I shall give way to him once.

My Lords, I could speak to this amendment before the noble Lord sits down, but if he is going to reply to the debate, it might be convenient if he hears what I have to say on this amendment. I think that that is in order.

I oppose this amendment, and I am afraid that I have to go further and say that I am not among those who think that the single market has been an undiluted success for this country. I shall be speaking in much greater detail to that fact under Amendment 41, so I will not detain your Lordships long this evening.

I am also aware that there are dying embers in the Conservative Party—shared by the noble Lord, Lord Davies, no doubt from his time on those Benches—which hold that the single market is one of the Conservative Party’s greatest achievements. I can deal with a few facts briefly to show that the single market has been a disaster for this country. You only have to take the report of the Treasury, Global Europe: full employment Europe, signed by Mr Gordon Brown himself, which estimated that EU overregulation, which comes to us entirely thanks to the single market, costs us some 6 per cent of GDP per annum, or £84 billion a year. It handicaps our exporters, and what we are about to see hitting the City of London from the new supervision bodies coming from Brussels under the single market will clearly be disastrous.

Then there is the very simple point that only 9 per cent of our GDP goes in trade with clients in the European Union; 11 per cent goes to the rest of the world and 80 per cent stays here in the domestic economy. Yet, 91 per cent—everything in the domestic economy that is exported overseas—is controlled by the single market.

My Lords, I gave way to what I understood was an intervention from the noble Lord. He previously gave no indication that he wished to speak to this amendment. I had certainly not seen him and I was looking directly at him. I think that he is being discourteous.

I did not stand up because I was waiting for my turn. I moved to speak on several occasions. Obviously I am in the hands of your Lordships, but I understand that we are entitled to speak to these amendments in their order on the Marshalled List, and I have rather different points from those of the noble Lord, Lord Waddington, as I regard the single market’s disadvantages as rather different.

My Lords, I wonder whether the noble Lord will take his seat. We are not on a deadline tonight but are seeking to carry out the proper debating role of this House. As the noble Lord will know more than most, in Committee he may speak after the Minister, unlike on Report. Therefore, it might be courteous, since the Minister had started to speak, to allow him to continue to give his response. Of course, the noble Lord, Lord Pearson, may speak after that. My noble friend indicated that he did look around. Indeed, I was at the door of the Chamber at that point, so he was not intending any discourtesy. Perhaps the noble Lord might allow the Minister to complete his speech, because he gave way only on the basis that it was an intervention, and he had not finished speaking himself. Perhaps that is the way to proceed. The noble Lord, Lord Pearson, will have a full opportunity to speak, as he has on other occasions.

I merely wish to say that I wanted to speak to this amendment from the start. It is not my fault if the noble Lord, Lord Wallace, did not catch my eye before he stood up. I am always a very well behaved boy in your Lordships’ House, and with the extreme charm with which the Chief Whip has put her request, I shall not continue with my remarks now. But they are important because they prove that the single market has been a disaster for this country. I shall come back to that under Amendment 41, if I may. In the mean time, the Minister can feel free to carry on. I did not realise that we were on a close deadline.

We are not necessarily on a very tight deadline, but it is customary to move towards a close. However, I was speaking. I thought that the noble Lord was trying to intervene and gave way to him as an intervention. We clearly misunderstood where we were.

I was saying that, speaking in another place, David Miliband also said in November 2009:

“The Lisbon Treaty provides the Union with a stable and lasting institutional framework. We expect no change in the foreseeable future, so that the Union will be able to fully concentrate on addressing the concrete challenges ahead”.—[Official Report, Commons, 23/11/09; col. 273.]

I agree with those pragmatic, practical sentences. We all recognise that there are differences of view within all parties about European matters. The noble Lord, Lord Davies of Stamford, has moved from one party with a very wide range of views on European integration to another, as he well knows. I shall not respond further to his slightly hobnail-booted references to relations within the current coalition.

The great joy for me is that, for the first time in many, many years, I find myself in agreement with those on my Front Bench. I assure noble Lords that that makes a great deal of difference.

I return to where we were on the amendment, as on some of the others that follow. Here we have a Government who are playing a positive and practical part within the EU within its existing, but considerably expanded, competences. I have looked at Articles 102 to 106 and Articles 114 and 116. I totally failed to find the relevance of Article 308, which, in my copy of the treaty, is about the European Investment Bank, but perhaps when we get to debate on Article 41, the noble Lord, Lord Pearson of Rannoch, will tell us what that is all about.

I was referring to Article 308 as it was under the Nice treaty. Before that it was Article 257 in the original treaty of Rome.

I will not pursue that further.

The question is: does the Bill tie the hands of the British Government against British national interests? That is the fear which the noble Lord appears to have; I have to say that it is an irrational fear. There is a great deal that the British Government can do to pursue our national interests within the European Union within its present competences, and we are doing so.

The noble Baroness, Lady Symons, gave us an early version of her speech on the question of enhanced co-operation before dinner. As it happens, the United Kingdom Government are leading in early enhanced co-operation. The Franco-British treaty puts us very much in the lead on European defence co-operation. It is not what some other members of the European Union would have liked to put in the treaty, which was a commitment to have a European army, but of course they did not know what they meant by having a European army: it is much more practical co-operation on military affairs. That is the way forward, it seems to us.

On the following amendments from the noble Lord, I see nothing in the Bill which cramps the British Government in pursuing practical and effective British interests within the European Union in strengthening the single market. We now know that the single market has not been fully implemented. Some of what was happening in Greece was appalling; I have just been to southern Italy and it was quite easy to see parts of the single market which are not enforced there, but the powers are there. The single market needs to be more effectively enforced. There are clauses in the Lisbon treaty which talk about expanding the single market into services. There are some very tough clauses on state aids and competition law. We have those powers, and we do not need to spend more time chasing constitutional change before we begin effectively to make the European Union work better.

My Lords, the noble Lord, Lord Wallace, has tried to make a very powerful case for the Government, but actually he is unwittingly misleading the House when he quotes David Miliband as saying that there is no need for any further institutional navel-gazing on the basis of the Lisbon treaty. I would agree with that, although obviously the euro crisis has created a new situation in economic affairs. Broadly speaking, given where he stood in 2009, that is absolutely right, but David Miliband was talking about the Lisbon treaty that contained the simplified revision procedure under Article 48(6) and the passerelles under Article 48(7). He was talking about the package that gave the Union powers but also contained limited flexibility to change those powers in the light of circumstances precisely in order to obviate the need for further major treaty change for a long period ahead.

What this Government are now doing and what this coalition has agreed to do is basically to hamstring the flexibility that the Lisbon treaty contains. That is why the Opposition are urging the Government to think again, because this is where all the requirements for 56 referenda come from. If only you would look at the issue of how to allow more flexibility within the Lisbon treaty, many of us on this side of the House would be satisfied. I shall withdraw the amendment for the moment in the hope that the Government will consider these issues further.

Amendment 20ZB withdrawn.

House resumed.

House adjourned at 10.08 pm.