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European Union Bill

Volume 728: debated on Wednesday 8 June 2011

Report (1st Day) (Continued)

Amendment 5B not moved.

Clause 3 : Amendment of TFEU under simplified revision procedure

Amendment 6

Moved by

6: Clause 3, page 2, line 32, after second “condition” insert “, the urgency condition”

My Lords, given the debates that we had in Committee and the debate which we had shortly before the dinner break, it is possible to speak to this amendment fairly briefly. Its aim is to take account of circumstances where the Government conclude that it is in the interests of the people of the United Kingdom to act with greater dispatch than would occur if the whole of the processes set out in other parts of this Bill were gone through.

Earlier this afternoon the noble Lord, Lord Howell, asked—I understand the point—“What are the circumstances in which events might take place that are difficult to put into words?”. I shall try to put at least one such circumstance into words, but I recognise immediately that it may be difficult to do so in the context of the judgments that Governments have to make about the interests of the country when events precipitate at a rate which is not anticipated in the normal course of events. However, my ministerial experience, and that of many others in your Lordships’ House, tells us that events happen. I think that I am quoting a former Conservative Prime Minister, and he was entirely right—they do. Events happen and Governments have to respond to them. We will be able to deal with many of them using the sovereign processes of our own political system. Some will occur in a wider context and we will deal with them through international organisations, including the European Union and its existing competences—that is not the subject of this Bill—the United Nations, the World Bank and others. Those are not the issues to which I refer. However, it seems to me at least conceptually possible that some things will happen which require an urgent response and where it will be clear to the Government of the day that they need to act in concert with others in ways which are not covered by current arrangements. Before any noble Lord says that he cannot conceive of such circumstances arising, I assure the House that they will do so. They will arise, for example, around an environmental disaster or a financial disaster. The purpose of this amendment is to make provision for the circumstances in which they will arise.

When we talked about the meltdown of the world banking system, noble Lords rightly pointed out that the emergency arrangements that were made took a considerable time to design and to begin to be put in place. Indeed, they are not in place to this day and we have not reached the end of that process. That is rather regrettable because it seems to me that in international terms we are without a number of the levers which we would probably desire to have, in order to have a real impact on some of those events in concert with others. The G20 made a very good effort at least at one meeting, and arguably at two meetings, to try to work out some sort of architecture to deal with those circumstances. Others may disagree but I believe that if Europe had been able to speak with a more coherent voice in the G20 meetings, it would have been much more likely to have arrived at an authoritative consensus with the United States and with China in particular.

It seems to be within the realms of possibility, and perhaps not so fanciful either, that there could be circumstances—particularly in acute financial crises—where the Government might conclude that emergency conditions applied, they needed to be able to act under those conditions, it was desirable for the interests of the country and the people of the country that they did act under those conditions, and that slight variations in the current arrangements would make that more possible. These are inevitably difficult conditions to envisage largely because every time you try to do so you can usually point to a set of arrangements which have already been designed to take account of them. However, we have surely learnt, certainly since late 2007—we have learnt this rather harsh lesson through 2008 and up to the present—that it is not possible to predict all those circumstances, manage them, say that we have the levers for managing them or say that the other institutions, particularly the G20 in which we put such faith, are capable of doing so, partly because Europe is incapable of acting or speaking in a single and coherent way. I beg to move.

My Lords, I am afraid the noble Lord, Lord Triesman, has not persuaded me of the need to include an urgency condition. It seems to me there is absolutely nothing that prevents the UK from co-ordinating with other EU member states in response to any natural disaster. Furthermore, if the amendment were adopted, the ability of the UK to react speedily might even be circumscribed. The amendment does nothing to improve clarity; rather, it confuses the situation, compromises legal certainty and is very subjective. Amendment 10 states:

“The urgency condition is where an amendment under the simplified revision procedure is considered to be urgent”.

“Considered” by whom and in what forum? It is very unclear. I venture to submit that this amendment does nothing to improve the clarity and certainty of the Bill.

I too oppose the amendment, although I recognise that in tabling it the opposition Benches are very conscious of the leap in the dark that we are making to some extent with this Bill. It is about future eventualities at a time of significant flux in the world, and indeed in the European Union. One would need to be a clairvoyant to imagine what might be coming down the road in terms of emergencies and urgencies that would need rather speedier action than the normal pace of change in the European Union. In fact I think one of the reasons why there is a disconnect between the British electorate and the Union is partly because of the very slow and cumbersome methodology and pace of reacting to events. When there is a deep economic recession or a great financial or banking crisis, people out in the country want their leaders and politicians to act speedily to deal with the issues that led to those events, and perhaps would wish us to move faster than we have been capable of doing in international fora and multilateral institutions.

Despite recognising these things, I nevertheless oppose this amendment because I think what defines urgency is so subjective and so much predicated on what the Government of the day, and the policy-makers on either side of the debate, would imagine to be urgent or not. While I think we all know what is urgent when it hits us in the face, and it is quite right that we should and should then act speedily, enshrining it in law seems to raise a host of problems, not least again with judicial review. It also creates a basis of very subjective analysis as to whether something is urgent or not, and the noble Lord, Lord Triesman, in his very helpful moving of the amendment, accepted that we do take quite a long time—that even the European financial stability mechanism is going to take a leisurely pace. This really goes to the heart of the argument; that it is better for us to look for ways to facilitate speed and urgency when the urgent situation arises, rather than to seek to enshrine it in law at this stage.

My Lords, I have read the amendment, which would restrict the operation of the Bill to matters of urgency. That is what it is about. I thought that the Bill was about major transfers of power, not just little changes to ongoing, day-to-day matters in the EU; it is about major transfers of competence or powers. Whenever you are transferring powers from this country to another institution, it ought not to be done in haste. There should not be urgency about it.

Those sort of matters, those great matters, should be decided only once all the issues concerned have been examined by the Government and by Parliament; and then by referendum. Why do we want an urgency clause? We cannot afford to have an urgency clause when we are transferring powers from our country to another organisation. I cannot support the amendment, although I understand why the noble Lord, Lord Triesman, feels that it would be helpful to the Bill. I do not think that it would be helpful to the Bill, because it would undermine its whole purpose, which is to ensure that when this country transfers major powers elsewhere, there has been proper consideration over a proper period by the proper authorities, including the Government, Parliament and the people.

The noble Lord, Lord Stoddart, will be very upset. I accuse myself of being nerdish, and I hope that the noble Lord will agree that I can be considered in the same class as Mr William Cash.

We are talking about an amendment to Clause 3. Clause 3 is about the accelerated, simplified procedure. I do not know why we have Clause 3 separate from Clause 2, but we do, and we are debating it. The simplified procedure cannot be used for the transfer of competences. That is what the treaty states. Article 48(6) states that the decisions referred to in the second paragraph,

“shall not increase the competences conferred on the Union in the Treaties”.

We are talking about urgency and the use of the competences that the treaties have conferred. We are talking about urgency because that is the nature of the simplified procedure. It was invented to move fast in situations where we might want to. It avoids the convention, it avoids the full paraphernalia after Parliament—you still have to consult Parliament under Article 48(6), but that can be quite quick.

This is a modest amendment, unlike the previous amendment on which we voted, which was bigger. This is a modest amendment because it simply suggests that the urgency condition might be written into Clause 3, on the simplified treaty revision procedure, which is about urgent treaty revision and not about competence. It cannot be used to confer competences on the Union from the member states.

It seems to me appropriate and modest to say that, when we are dealing with treaty revisions or decisions taken under Article 48(6)—which, by definition, will happen only in a hurry—we should be able to have an accelerated procedure here in this country. We might accept that the general view was correct: this was an emergency and we needed to move fast. Of course, if you did not accept that, you would have said “No” in Brussels and the accelerated procedure would have stopped, because it still requires unanimity. By definition, you are in a situation where people have thought, “We haven’t got the time to do the whole shooting match”. This is important. The Government think it is in the UK interest—they voted for it. Who would decide whether the urgency consideration applied? It is a question asked in this debate. The House would decide. Parliament would decide. If this provision was in the Bill, the Government would have to explain whether the urgency procedure, in their view, applied. Parliament would vote on that. This is a parliamentary democracy—that is where the decision should be made.

I do not see anything wrong with this amendment. It seems to me that it is appropriate—particularly appropriate—to this clause. I supported the previous amendment—the bigger amendment—which would have written it also into Clause 2, alongside the significance condition, which sadly is still missing in Clause 2, for reasons that I do not understand. Putting it in Clause 3, which the amendment of the noble Lord, Lord Triesman, proposes, is absolutely appropriate and I support the amendment.

The Minister commented with approval, as would I, on the evidence that Sir John Grant gave to the Commons committee. Sir John Grant made two points that the Minister quoted with approval. I approve of them too—although, as the Minister delicately pointed out, Sir John is a more recent permanent representative in Brussels than me. There may have been a faint connotation in the Minister’s remark that I might be a bit fuddy-duddy or out of date. I accept that; it is perfectly possible, and Sir John Grant is a very brilliant man.

Sir John said that he saw no chance of serious treaty amendment in the next few years. I agree with him for a whole lot of reasons. Nobody in Brussels wants it; the UK Government have said that they are not going to have it; and it is in a coalition agreement. That seems to me to be fairly conclusive, so I think Sir John Grant was on pretty safe ground with that prediction. He also spoke of the unlikelihood—and the Minister quoted him—of the passerelles being used in the near future. I agree. That seems to me to be implausible too.

What the Minister did not mention—I cannot remember whether Sir John Grant did—is the much more likely scenario in which, some time in the next decade, something will cause people to say, “Jeepers, we are going to have to change something. This is clearly a case for the accelerated procedure”. Things do happen in the world, things change, and the chances are—I do not think this is very likely in the near future, though the monetary example is fresh in our minds—that some time in the next decade there will be a need seen by most people, possibly by us as well, for a change, and if it is to be done quickly then the chances are that people will use Article 48(6) procedure.

May I, with apologies, ask a nerdish question of the noble Lord? If I understand Article 48(7) correctly, it suggests that urgency can be carried through at the fastest in six months. Is that correct?

I do not think that is what the treaty says, but yes, it is likely that that is the case. Of course, any treaty amendment requires ratification by whatever the national procedures are. I am talking about an emergency situation in which most people think, “We have to do this pretty fast”.

We could still have our referendum. If the amendment in the name of the noble Lord, Lord Triesman, were accepted, there is nothing to stop the Government of the day saying to Parliament, “Despite all the risks of delay, we actually think this is a sufficiently serious matter to justify having a referendum”. That is entirely open to them, if the amendment of the noble Lord, Lord Triesman, is accepted. However, that amendment would remove the present danger in the text, which is that there would be an absolute requirement to have a referendum because there is no potential let-out for an emergency, even though that is the most plausible scenario for a treaty amendment and everyone, including us, would have agreed that it was an emergency and therefore justified the accelerated procedure. That is why I support the amendment of the noble Lord, Lord Triesman.

The noble Lords opposite will not be surprised to hear that I find it very difficult to accept this amendment. Coming from the Brussels angle, I remind noble Lords that in Brussels the word “urgency” relates to the French word “urgence”, which means of powerful importance. I recall that week after week, month after month in Strasbourg and Brussels, we had urgency debates which took place many days, weeks and sometimes months after the activity in question, such as a revolution somewhere or the Arab spring. It took me a while to realise that the English meaning of the word “urgency” is quick or hurry up whereas in French it means something that counts, something that is valued and something to which we should pay special attention. It is rather like high representative which does not mean high at all, but important.

I suggest that the transfer of sovereignty falls into the French “urgence” category—it is something of powerful importance—but inevitably Brussels life advances at the pace of a snail; it is very slow. Rather like the mills of God, Brussels grinds exceeding small and it takes a very long time. I have never known anything of importance, high-value, “urgence”, to happen at any speed in Brussels. Nor do I think that the transfer of sovereignty, important as it is, should be done in haste. I honestly cannot anticipate Brussels not taking maybe a decade over something of real value, such as the transfer of sovereignty.

When I joined the other place in 1980, I found myself dealing with a very important piece of legislation on intellectual property. It was data protection and intellectual property in computer software. When I arrived in the House of Lords, a decade later, I found that the Bill had been to Brussels and come back to the Lords and it was still in an active, first-step, consultation process. Two years later, when I arrived in the European Parliament, being lucky enough to be elected there in 1999, I found the Bill was in the European Parliament. It was just about to leave the European Parliament when I left a decade later. Powerfully important things such as that take a considerable length of time. How much longer do we imagine that the transfer of sovereignty would take?

During the past decade, we in the United Kingdom have very actively supported the enlargement of the European Union. It now has 27 states and more are coming in: Croatia tomorrow and the Balkans the day after. As a result, quite properly, the slowness has increased tremendously. It is no longer possible to put things through even at a reasonable speed; now things are slower than slow. That is why I do not see a referendum coming our way even if this Bill goes through in its entirety, which I hope and pray it will, for maybe at least a decade. Brussels is simply not able to think that way. The confusion of the euro, combined with the continuing enlargement, has made the whole system so slow, and I do not think that we will see a referendum in the next 15 years or so. Urgency, in English terminology, is simply not available.

My Lords, if you do not mind me saying very briefly, I find the debate that we have been having since dinner of singular unreality. It reached its apotheosis in the last speech, which told us, “Keep calm dear, nothing is going to happen for 16 years. Everything is going so slowly, as they will be translating urgency from ‘urgence’ and back again and making something of it”. I am sorry, but you have to look back only one year to see a circumstance where there was a major crisis, when the Greek economy was on the point of collapse and the European Union, including Britain, decided that something needed to be done about it because otherwise there was a very real risk for the solidarity of the whole European financial structure. It is no good saying it will not happen. It has happened. Please do not tell me that it could not happen again.

So what happens then if you lock all the doors and throw all the keys out of the window, as the Government are absolutely determined to do? Their supporters have explained with enormous eloquence this evening how jolly happy we will all be when we throw all the keys away and we cannot unlock the door—we cannot do anything in less than two or three years or something like that—and we shall all be happy. What happens? They find some other way of doing it. That is what will happen now. And the British Government will help to find another way too, because it will be in our interests to do so.

This debate is a matter of total unreality. It has no meaning whatsoever. If the Government had a bit of common sense, they would see that the amendment moved by the noble Lord, Lord Triesman, does have quite a lot of sense in it.

My Lords, I suggest that what the noble Lord, Lord Hannay, has just said illustrates the very reason why this amendment is undesirable. It is not in the interests of this country to get sucked into bailing out economies that have gone off the rails as a result of the problems of sharing a currency. Had there been a requirement for a referendum, the Chancellor of the Exchequer of the previous Government would not have been in a position to have committed this country to things to which he should not have committed us.

Charming and likeable though the speech of the noble Lord, Lord Kerr, may have been, this amendment is just another excuse for watering down the basic principle of this Bill. It is of less magnitude than the last amendment. Urgency is a subjective matter—it could arise; it could not arise—but the basic principle of the Bill is that the elite of British Governments will no longer be able to commit this country to loss of sovereignty and other such matters without the consent of the people.

My Lords, we all understand that events happen—although I believe that what Harold Macmillan said was, “Events, dear boy, events.” We also understand that in a crisis Governments get together and take the necessary decisions to deal with that crisis. The noble Lord, Lord Triesman, rightly said that we cannot envisage what sort of crisis we might be facing in five to 10 years’ time or even in two years’ time. The G20 is a very good example of the sort of body which has come to operate relatively effectively, as a form of consultation about a number of global problems. However, the G20 is of an entirely different quality from the European Union. If there were a crisis, the relevant Governments would necessarily get together and have to act, but they would undoubtedly act by consensus. That would be different from agreeing to change the structures and competences of a European Union, which is not simply an international organisation but a structure of law, a semi-confederal institution of which we have become a co-operative member.

Having had some informal conversations across the table with the noble Lord, Lord Kerr, I note that Article 48(6) states—

I thank the Minister for giving way. Is not the argument that he is adducing one that entirely excludes even the theoretical possibility that the European Union might turn out to be the best instrument for addressing the crisis that we are talking about? If the crisis can be dealt with by consensus with other Governments—the G20 or whatever—that is well and good, but what the Government are doing in the Bill is excluding the possibility that the European Union may be the most effective instrument for solving the problem and might need additional powers for that emergency.

My Lords, the Bill in no way excludes the European Union from being the appropriate body to respond. It is entirely appropriate that bodies such as the European Council and the Council of Ministers in its various forms should take decisions. How those decisions are taken, and what their legal implications will be, are matters probably best not dealt with in an emergency. Where there might be a transfer of competences, one should consider it not under emergency conditions but rather more coolly.

I was about to quote Article 48(6), which states that the decision under the simplified procedure,

“shall not enter into force until it is approved by the Member States in accordance with their respective constitutional requirements”.

That is why urgent decisions will take 18 to 24 months to get through the various constitutional requirements, and why the question of what we mean by urgency does not limit the British Government.

It is of course very difficult to foresee what sort of crises we might face, or how and in what framework we and others would respond. The European Union exists as a framework and therefore may very often be used as such, and we and others would work through it. It has plenty of competences and the ability to take decisions by consensus in response to a crisis. However, that does not transfer powers and competences. That is the difference between taking urgent decisions and changing the nature of procedures, structures, powers and competences. With respect, I say that the urgency question is not an important part of the Bill. There would be sufficient time to complete the processes set out by the Bill, by an Act of Parliament and, where required, a referendum of the British people.

The second part of the condition is that the treaty change should be in the national interest. My noble friend Lord Howell said, when debating a previous amendment, that the national interest is not an entirely objective concept. I am sure that the noble Lord, Lord Triesman, agrees that the coalition has come together in the national interest and is acting in what we think is the national interest—although he may have a different view of the national interest from members of the coalition. Politics revolves around our contesting views of Britain's best national interests. Therefore, the concept is not an entirely objective one that we can usefully write into the Bill. No Government would agree to any treaty change at EU level if they were not of the firm belief that such a move was consistent with the national interest. No Administration would ever agree to a treaty change if they considered that it would be against the interests of the United Kingdom. Therefore, I assure noble Lords that the national interest, as we see it, is at the heart of every major decision that this Government take on EU matters—as I assume was the case with the previous Government and will be for any subsequent Government.

Having answered those questions, I urge noble Lords to withdraw the amendment. We have had a useful but general debate about what might happen in a hypothetical crisis that none of us can yet quite envisage, let alone consider what immediate changes in powers or competences it would require.

My Lords, just to take any possible lingering tension out of the highly charged environment of this Chamber—I would hate to wind up everybody inappropriately—I will tell you now that, in a few minutes, I will withdraw the amendment. Before I do so, I have to say that, from an intellectual point of view, these have been some of the more depressing arguments that I have heard. I do not mean to say that in order to be rude. I just think that we must allow ourselves the courtesy of being a great deal more rigorous.

As the noble Lord, Lord Kerr, pointed out, it is plainly the intention of the amendment to provide a means whereby, in circumstances which are very pressing and where we need potentially to adjust our capacity to act—this is about our capacity to act and the mechanisms that we can use to act—we do not deny ourselves the opportunity to do something if it is in the national interest.

I cannot imagine that it really needed any presentation to us, but I readily accept that what constitutes the national interest will not be determined by some objective basis, as would a demonstration of Boyle’s law of gaseous volumes. This is not a point that I have ever attempted to make. The national interest will be defined by the Government of the day, whether a single party or a coalition. We may or may not all agree with one another, but it is in the nature of our parliamentary democracy that the power to arrive at a conclusion about what the national interest is is vested in a Government that enjoy the confidence of the House of Commons and can proceed on that basis. In that sense, from a political point of view, it is a completely objective test. I know whether the Government of the day enjoy the confidence of the House of Commons precisely because I know what would happen if they did not. It is a very simple matter.

Let us not deal with this kind of discussion as though it were incumbent upon us to do something like Boyle did, in showing the way in which the volumes of gases under pressure react to it, which can then be set out in a textbook to be tested to kingdom come in any laboratory in the land. Let us deal with it as political people—I was going to say, if the noble Lord, Lord Pearson, was in his place, as humble members of the political class. Let us deal with it as political people—with a small p—who understand perfectly well the convention which decides what the national interest is at any time. I am sorry, but I cannot buy that kind of argument. I do not think it treats us credibly.

I say to the noble Lord, Lord Flight, that it was never my intention in moving this amendment that the Bill should be watered down. I do not like that interpretation being ascribed to what I have said. I have always tried in the House, whether on the government Benches or on these Benches, to be very candid and very frank—it does not always win you friends—about what I am doing and why I am doing it, because it seems to me that life is a lot easier if you try to do it that way. The reason is not to water it down but to make certain that Ministers in any Government have the kind of authority and ability to act in circumstances which come along that we cannot predict.

I am not omniscient, and I cannot say any more than anybody else in the House what I know will happen or what kinds of competence we may require at a particular time to deal with those issues. I will be candid with the House: I did not expect the collapse of Lehman Brothers; I was astonished to know that we were within two hours of the Royal Bank of Scotland collapsing; and I notice that sovereign debt crises are occurring more rapidly and are likely to occur more rapidly. I just say to the House no more than that it is extremely likely that we will face more such circumstances. I do not want to feel that we do not have all the levers at our disposal in order to deal with them.

The decision would plainly be taken by the Government putting a proposition to Parliament about what is urgent in those circumstances, and Parliament would decide it. That was the question that the noble Viscount, Lord Trenchard, was asking. It will unquestionably be what the Government of the day judge to be urgent. I am perfectly confident, knowing our incapacity in the United Kingdom to speak other people’s languages generally, that we will mean urgency to mean urgency—ce n’est pas le même mot que l’urgence en français. We will know exactly what we are saying and why we are saying it, and we will not need to borrow anybody else’s dictionary in order to translate it. In lots of legislation, we leave ourselves with emergency powers for circumstances we cannot predict in relation to national security and a wide range of other matters. We do that because we are sensible, and we take the precaution of allowing ourselves the room to be able to act.

I come to the conclusion that I put to the House, but it relates to a point made by the noble Lord, Lord Stoddart, which, again, I understand. Of course, it would be great in all circumstances if we had sufficient notice of anything that happened to be able to go through every single process and feel that we had interrogated it to the nth degree. Of course that would be desirable. I understand that, but we do not live in a world which affords us that luxury on every occasion.

What I was talking about was the transfer of great powers, which would be permanent; what the noble Lord has been discussing is matters of emergency. Those are quite different because, for example, on the financial crisis that has blown up in the European Union, it is perfectly possible for the Government—indeed, the Government alone, backed later by Parliament—to make decisions that might last for five years, but would nevertheless not be permanent transfers of power. That was what I was trying to get at.

My Lords, if I misunderstood the point, I of course apologise.

I conclude my remarks by saying that this does not involve the same sort of transfer of powers as under Article 48(6). It is not intended to do so. We have all acknowledged that it has a different standing.

My key point is this, and I address it to the government Front Bench to think about—even though they obviously cannot respond to it this evening in this particular debate. The G20 was as good an attempt as anybody could make in the circumstances to try to find some way of codifying the responses to the financial crisis across the world. Thinking of it professionally almost—as an economist—I think that it was a pretty poor outcome and the G20 did not do what it was supposed to do. The key players did not play the roles. It may be that a number of people, including eminent politicians from this country, talked up what the G20 was capable of doing and what its successes might be, but when we look at it in the cold light of day, we do not have in the international financial system the protections that some pretended there would be as a consequence of that meeting. There is no doubt in my mind that one of the reasons for that is that a number of coherent economies in Europe that were used to mature financial operation found themselves without the tools to respond together, and that had a profound effect. I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendment 7

Moved by

7: Clause 3, page 2, line 38, after “decision” insert “also”

Amendment 7 agreed.

Amendment 8

Moved by

8: Clause 3, page 2, line 42, at end insert “, and

(d) the Electoral Commission have issued a certificate stating whether or not it appears to them that more than 40 per cent of the persons entitled to vote in the referendum have voted in it. ( ) If the certificate issued under subsection (2)(d) states that more than 40 per cent of the persons entitled to vote in the referendum have voted in it, the decision may be approved.

( ) If the certificate issued under subsection (2)(d) states that fewer than 40 per cent of the persons entitled to vote in the referendum have voted in it, the decision may not be approved unless—

(a) in each House of Parliament a Minister of the Crown has moved a motion that the House approves Her Majesty’s Government’s intention to approve the decision, and(b) each House has agreed to the motion without amendment.”

Amendment 8 agreed.

Amendment 9

Moved by

9: Clause 3, page 3, line 4, leave out “(1)(i) or (j)” and insert “(1)”

My Lords, I hope not to detain the House long on this. In a sense, with this amendment we are trying to skin the same cat in a different way. It is designed to extend the scope of the significance clause in order precisely to give our Government, because we want to support them and make them effective in the European Union, the flexibility to cope with the unforeseen. We have made this point many times in these debates. Basically, the Government point-blank refuse to accept its validity. They argue, first, that all the red lines and every issue in the Bill is of constitutional significance, including the full list of issues in Schedule 1, and that therefore any move on these issues should require a referendum. That is the Government’s position on my first point.

Secondly, they would argue that the EU has plenty of competences to act already in most situations, which is true, but that does not cover any potential new situations which we cannot foresee, to which my noble friend Lord Triesman referred. Thirdly, they argue that when we talk about circumstances that might occur which would require action, we cannot name any of these circumstances and that it is all hypothetical and nonsensical.

This amendment is on the assumption that it is not hypothetical and nonsensical. We can already see brewing in the European Union the makings of another big step forward towards fiscal federalism being considered at a senior level within the Union. One just has to read the—in many ways wonderful—parting speech made by Jean-Claude Trichet last week when he received the Karlspreis in Aachen. It was about the achievements of the European Union and all Members of the House should read it. He said that as a result of the present crisis, not today but the day after tomorrow, there would be a need for the creation of a European finance ministry and for member states to concede sovereignty over economic questions, particularly when they were in difficulties and failing to conform to European rules. I can understand his frustration in dealing with the situations in Greece, Portugal and Ireland.

If I was still an adviser in No. 10 Downing Street, my reaction would be to say, “Gosh, there’s something potentially quite big here coming down the track. We may well have changes of Government in France and Germany in the next couple of years. We have got to do some hard thinking ourselves about how we anticipate the situation”. I would say to the British Prime Minister that if he wants to avoid another big treaty, he has to think about how, on all the relevant issues—economic governance, supervision of the banks, the structural reforms necessary to make the European economy competitive and the advance of the single market—we can make Europe more effective. If necessary we have to be prepared to look at small changes in the treaties which we could make under the simplified revision procedure that would convince our partners that serious action could be taken that would not require another big leap forward. Therefore, that is what I would be doing.

These issues are likely to be right at the top of the agenda in the next two or three years. On page 14 of this wretched Bill, in Schedule 1, we see how it would inhibit any British Government from considering even the slightest change in decision-making processes in these crucial areas. In Schedule 1(2) we see that referenda would be required on any changes in the approximation of national laws affecting the internal market, any changes in the broad guidelines of economic policies, any changes in the adoption of provisions replacing the protocol on the excessive deficit procedure and any changes in the role of the European Central Bank on prudential supervision. These are precisely the issues that are going to be at the top of the agenda in European Union policy-making in the next few years, yet we are putting a ball and chain around the feet of our Ministers, because we know that Ministers are not going to put forward anything that would require a referendum, and we are preventing Britain from playing the role it should be playing in the next few years on these issues.

Some noble Lords may argue that these issues are nothing to do with Britain because we are not in the euro. I think that that is completely wrong. Although we are not in the euro, the success of the Government’s economic and political strategy very largely depends on the success of the euro area to which a huge proportion of our exports goes. If we are going to get a rebalancing of the British economy into exports and investment, we have to put forward policies for the success of the euro area, because we will not succeed in those ambitions unless we engage constructively in that debate. Yet we are hampered completely from engaging constructively in it because of the conditions of this Bill. So let us be pragmatic. Let us give ourselves the ability to act in our national interests.

I am most grateful to the noble Lord for giving way. Is not that point even more relevant when one thinks of the very helpful and positive Answer of the noble Lord, Lord Sassoon, answering Questions on Monday, when he said how important it was to maintain the solidarity of the UK with the eurozone through all the common work that we are doing together? Is that not even more important now that we are going to have the pan-European financial supervisory agency based in London? What if a crisis emerges that needs to be dealt with precipitately by all national Governments together?

The noble Lord, Lord Dykes, is so right. I actually congratulate the Government in many respects on their attitude. The Chancellor of the Exchequer made a speech in Paris earlier this year in which he said, “We are not in the euro but by gosh we want the euro to succeed. It is absolutely essential to our interests”. This was what Mr Osborne said. Some Members on the Conservative Benches may not recognise that point but that is where Britain’s national interests lie and we have to have the flexibility to deal with these situations. I do not know what precise flexibilities would be required but we have to have that.

In terms of historical parallels, I am reminded of Harold Macmillan’s wonderful quote, “Events, dear boy, events”. Of course it was Harold Macmillan as Chancellor of the Exchequer who had failed to realise the significance of what was happening at Messina and then woke up later to the reality of the treaty of Rome and the threat that this presented to Britain’s position in the European Union.

Harold Macmillan wrote in his diary—using the language of a man who had fought in the First World War and lived through those experiences in a different age from that in which, thankfully, we are living in—that, “If we were to allow the French and the Germans together to create a united Europe with Britain not being a part of it, we would be sacrificing everything that our men had fought for in two world wars”. That was his view in the 1950s. Our view today should be decided on the basis of a proper calculation of our national interest. We need to be fully engaged in all the questions affecting the European Union. We ought not to have this ball and chain, and we should have some flexibility. That is why I urge the Government, even at this late stage in the consideration of the Bill, to think about how it could be amended to give Ministers the pragmatic flexibility they need in order to represent our national interests effectively in Brussels and in order that Britain can live up to its role as one of the leading partners in the European Union. I beg to move.

My Lords, I think that this is what might be called the Rumsfeld amendment, because it has been moved to deal with the unknown unknowns. That is what it is all about. I had not remotely intended to speak in this debate, but the noble Lord’s enthusiasm is so infectious. He looks at the European Union and sees that nothing has ever gone wrong with it. We ought always to be in there and engaging with it. We must be careful not to miss the train. We must always be positive regardless of what is happening. He tells us about the wonderful speech that Monsieur Trichet has made, saying that we ought to have fiscal union in order to save the euro. No mention is made that that comes out of the ashes of the disastrous ruin of monetary union.

I think it was the noble Lord who used the same arguments to try to persuade us to join the euro. He said that we are losing influence. Even though the euro has now itself faced enormous problems and even though some of my noble friends on the Back Benches have said that we shall never be able to have a single currency area without a fiscal union, we are told, “That is ridiculous. Now fiscal union is just another great step forward. We have got to be positive about it”.

The noble Lord also says that the European stability mechanism is another thing that we are missing out on, and that we ought to be involved in it. Of course, the ESM is in complete contradiction to the whole basis on which the euro was set up. It is not because it was an unexpected disaster—it was a predicted disaster. The reason the ESM had to be created was because the treaties totally forbade it. Yes, we do face some unknown unknowns.

I apologise to the House because we should not all give our own views on Europe, but I was completely provoked by the noble Lord, who seems to be like Alice through the looking-glass: every disaster is seen as a step forward. We just ought to take a step back, hold our breath, and think about it a little.

My Lords, I am going to resist the great temptation to respond to the noble Lord, Lord Lamont. I do so not because I do not think that he is completely wrong, which I think he is. He is quite wrong to write off the euro in this way, and he is wrong to suppose that we would not have had to face a systemic crisis caused by fiscal collapse in Ireland, Portugal and Greece. Whether or not the euro had ever existed, we would have needed to take intelligent and concerted action. The noble Lord, with whom I have debated these matters with great pleasure on many occasions over the years, is as wrong as he has always been. I am happy to give him good money in a private conversation afterwards that the euro is far from being in a state of crisis and that it will survive.

I hope noble Lords understand the very important distinction between a fiscal crisis, which has hit a number of countries that are members of the eurozone and have the euro currency, and a crisis for the euro itself. You can have a fiscal crisis caused by Governments overborrowing irrespective of the currency in which they are borrowing. Even if those countries had been members of the dollar area and had borrowed so much that the financial markets were in danger of ceasing to refinance them, there would have been a crisis affecting them; and because of the number of assets that we inevitably hold in those countries, which are major trading partners of ours here, we could not have been immune to a fiscal crisis irrespective of the currencies involved.

I accept nothing of the kind—the ECB has a triple-A credit rating, as I am sure the noble Lord knows.

Would the noble Lord give even just a little bit of credibility to the argument that the problem of different economies sharing the same currency is that the costs of some in the southern part of Europe have gone up 35 per cent while Germany’s costs have only gone up 10 per cent, so they have a big competitiveness problem, which is part of their fiscal problem? In the case of Spain and Ireland, the problem is that they have had a low rate of interest that is unsuitable for their own domestic rate of inflation, causing real interest rates to be negative. That caused everyone to borrow too much and the banks to lend too much, so they have had an overlending problem, in part caused by the fact that they are sharing an inappropriate currency. If they had their own currency, they could devalue when they had such a crisis.

I am getting signals, quite rightly so, from my Front Bench so I really must not respond to the substance of that because I shall be turning this into a debate—which we ought to have in this House on these important matters—on fiscal and monetary issues in the European Union at present. I hope that the Government take note of the obvious interest on their own Benches in having the opportunity to discuss this matter and exchange our various perspectives on it. I wanted to intervene really just to support my noble friend’s excellent amendment. If it is accepted by the House, it will get rid of a large amount—80 or possibly 90 per cent of the damage—that could be done by this Bill. If this amendment goes through, Clause 3(4) would then read:

“The significance condition is that the Act providing for the approval of the decision states that … the decision falls within section 4 only because of provision of the kind mentioned in subsection (1) of that section, and … the effect of that provision in relation to the United Kingdom is not significant”.

In other words, the only exemption from the need to have a referendum would be in relation to matters that were not significant for the United Kingdom. Surely, to accept this particular amendment is a cost-free concession on the part of the Government. I cannot believe that the Government actually want to provide for having a referendum on something that is not significant for the United Kingdom. Am I perhaps wrong about this?

We need to probe the Government’s logic a little here, because what an extraordinary thing it would be if the Government want to take through Parliament a Bill providing for the possibility of having referenda on issues that are not significant for the United Kingdom. The Government cannot turn around and use the argument that what is significant or not might be a subjective and difficult matter to determine at any one point, because they have already accepted in this Bill, as it stands, the need to make a distinction between significant and non-significant. That argument cannot be made. The only argument that can be made is that we need to provide for having referenda on something that is not significant, which does not make the slightest sense. I ask noble Lords to envisage a scenario in which we have a referendum in this country on something that everybody accepts is not significant for the United Kingdom. We ask the electorate to focus their mind on a difficult, technical and perhaps rather abstruse matter—maybe a whole package of such matters, which is what the Government have been suggesting recently; to take the time to master the relevant briefs or at least make up their minds on this matter; and to take time off from their work or from their leisure activities and go to the polls on something that they are told in advance is not significant for the United Kingdom.

Since the noble Lord has such confidence in the judgment of Ministers that he wishes to recentralise the possible decision-making that would come through referenda, why does he not have confidence that the judgment of Ministers would be that something inessential would not come to Parliament in the first place? There is an illogicality in his circular argument.

There is no illogicality at all. There is no need to provide for a referendum on something which is not significant for the United Kingdom unless the Government believe that they might, at some point, wish to have such a referendum, which I regard as an utter absurdity. It would be an insult to the electorate; it would be treating the whole electoral system of this country in a thoroughly frivolous way. I have to ask the Government: what is the purpose—what is the logic, because it is not clear to me at all—in providing for the possibility of referenda on non-significant subjects? It would be an utter contradiction in terms.

I have to mention to the House a matter which I must not go into in any detail for fear of breaking the relevance rule. I shall not do that, but I need to refer to the fact that a week or two ago the Government published a Bill on reform of the House of Lords which provides for fundamental changes to this House, and therefore to the legislature of this country, without providing for a referendum at all. So we have a situation in which the same Government are saying, on one hand, “We have to change the House of Lords in a fundamental way and we cannot have a referendum on it”, and at the same time saying, “We have to have referenda on changing the rules on qualified majority voting on taking decisions about the future of the public prosecutor’s office in the European Union”—something idiotic like that. Now they come forward and say, “No, actually we need to provide for referenda on explicitly non-significant matters”. What an extraordinary contradiction.

I see that, for once, I have the agreement of the noble Lords, Lord Flight and Lord Hamilton, as well as other distinguished Members opposite. Maybe the Government, in responding, should not just turn to me; they should turn to their supporters on their own Back Benches. They certainly need to turn to the country to explain the logic of the Bill, because, whatever it is, it does not appear to be coherent or something that has been properly thought through. I am sure that it is not deliberate hypocrisy—I would not dream of accusing noble Lords of that. Maybe it is some kind of confusion, but we need to know what it is, because what they are bringing forward seems to have no sense at all either from the rational or the pragmatic point of view, or to be credible in any way.

My Lords, perhaps it is for me to try to put this amendment back in its box, from which it seems to be rapidly escaping into fascinating issues such as reform of the House of Lords. I am not sure whether that is immediately germane to this amendment, which does not involve any transfer of powers or competencies to the European Union as far as I can see from the debate. I shall, if I may, abandon that and return to the amendment which the noble Lord, Lord Liddle, moved with fiery eloquence. He was frank enough to admit that the purpose of the amendment was an attempt to say, I think his phrase was, the same thing in a different way. I shall try to avoid giving the same answer in a different way, but I am afraid that the answer I am going to give will not please him very much. Anyway, I will do my best.

The amendment seeks to extend the scope of the significance condition beyond the two types of transfer of power identified by Clause 4(1)(i) and Clause 4(1)(j). We had a similar amendment, did we not, in Committee? I explained at that stage that the significance condition as drafted applies only where there may be a proposal for treaty change under the simplified revision procedure which would result in a transfer of power—I shall come to the competence issue in a moment—from the UK to the EU, as defined by the criteria in Clause 4(1)(i) and Clause 4(1)(j), namely treaty changes which seek to impose or extend a requirement obligation or sanction on the UK. It is only then that an assessment by the Minister is required as to its significance. As I said at the time, the significance condition is applied deliberately to such a limited range of proposals in order to establish a transparent and un-fuzzy, un-grey, unequivocal set of criteria, for Parliament as well as for the people, for which a referendum will be required under the Bill.

We agree that a minor proposal concerning administrative procedure need not constitute a transfer of power or competence. Therefore, it would be disproportionate to have a referendum before the UK could agree. The whole tableau of suggestions that referenda would be applied to these minor matters that I have described simply does not arise. We also want to ensure that the amount of latitude for Ministers is limited to maintain consistency. That is a deliberate purpose of the Bill. However, the amendment would go the other way. It would involve the extension of the significance condition, which is of concern to the Government and is not in line with our purposes.

I should make it absolutely clear that there would be no value in extending the significance condition to the criteria that are in Clause 4(1)(a) to (h). Those are the paragraphs that come before the two to which it does apply. Each of these criteria relates to a transfer of competence. At the beginning of the Committee stage, the noble Lord, Lord Kerr, pointed out accurately that measures under the simplified revision procedure cannot be used to extend the EU’s competence; Article 48(6) of the Treaty on European Union specifically stipulates that. Therefore, to extend the significance condition, as suggested by these amendments would create a sort of loophole through which you could drive a coach and horses.

Transfers of competence and questions of whether to give up UK vetos or emergency brakes in such very sensitive areas as tax, social policy, justice and home affairs—not at all trivial areas—will be left once again to the discretion of Ministers. They will determine whether the British people should be consulted. Therein lies the problem that we are all trying to address, and which has led to so much distrust and the feeling that Ministers will not necessarily be able to say no, which noble Lords on the Benches opposite urged as being the simple answer. Why do the Government not just say no? There is not sufficient confidence that that will happen because it has not happened in the past. Any move now to extend the significance clauses in the way suggested would leave the British people with very little confidence that the Bill will prevent a repetition of the past, when powers and competences were transferred to the European Union without people being given the say that they were promised.

The noble Lord, Lord Empey, said in Committee:

“Disillusionment has crept in because over a prolonged period of years Governments of different persuasions have made promises on these matters which they simply have not kept”.—[Official Report, 26/4/11; col. 72.]

That is where the difficulty has arisen. That is the problem that we are addressing with the aim of strengthening public support for the Union, which is not strong, particularly at a time when the Union faces difficulties. I hope no one is suggesting that there are no such difficulties; they are being faced. The system, our commitment to it and our membership need public support. We must overcome that disillusionment.

Without the parliamentary and referendum locks—both of which are in the Bill, as we know—that we seek to include, we could condone so-called competence creep. It is possible; we have at least to ask whether it could be condoned through the simplified provision procedure, even though, technically, the TEU rules that out. I certainly do not suggest that the EU has tried or will try to smuggle transfers of competence past member states. However, while the Union is grounded in law and must operate within the express limitations of the treaties, we must remain vigilant to any proposal under Article 48(6) that might be aimed at doing just that. That is why we have arranged and crafted the Bill to ensure that Parliament will have a full and effective role in overseeing and interrogating the judgment of Ministers, and in assessing whether a transfer of competence may be taking place under a particular proposal. That is a clear message sent by the Bill—that the people and Parliament will have their say on specific treaty changes and measures—and it is a more effective route to a more open and accountable relationship between the UK, its peoples and the European Union.

In Committee, the Government were accused of cynicism by some noble Lords for including the areas that we have in the automatic referendum lock. I suggest that the referendum lock that is easy for Ministers to pick and dismantle would itself lead to an increase in public scepticism that decisions taken in their name at the EU level are made without their consultation or consent. The amendment would deliver exactly this state of affairs. It would replace the clarity and certainty of the Bill with obfuscation and opacity. The Government intend to bring the UK’s relations with the EU into the light. We can only do that if we are prepared to move away from these grey areas that are constantly being sought by these various amendments and defend our actions clearly to this House and to the people.

The noble Lord, Lord Liddle, had some further remarks on a theme that has run through many of these discussions; namely that somehow the Bill would weaken our hand in the European Union, marginalise us and prevent Ministers from dealing with certain situations that lay ahead. The Bill will have no impact on the UK’s ability to play an active leading role in negotiating and shaping the legislation agreed in the European Union out of the provisions of the existing treaties. The day-to-day business of the EU is not within the scope of the Bill. The effect on our negotiating hand for changes is not in question. We can, and will, still continue to participate and negotiate in any treaty change or use of the passerelle without hindrance. Any proposition to the contrary is not founded on the facts or practice.

I return to the remarks that I quoted and which the noble Lord, Lord Kerr, elaborated on. The European Scrutiny Committee asked our very distinguished permanent rep in 2003-07, Sir John Grant, how he might have operated had the Bill been in place. He replied that,

“since by definition the Council’s working groups and the Council of Ministers worked within the competence of the EU and as there could be no negotiations on legislation where there was no competence, the Bill, which concerns itself with competence or changes in voting procedure, would have made no difference”.

Here we have the voice of reality, of the practitioner, speaking against the theories, extravaganzas and possibilities that remain ill defined and do not coincide with the way that the European Union works. The whole proposition that there must be add-ons of power, additional treaties, an abandonment of vetoes and transfers of power to the European Union is a vague future pattern that simply does not fit with the reality of how the European Union is developing and is tackling all sorts of issues.

No doubt there will be crises ahead. Of course there are crises. However, there are competences to deal with the crises. There are all sorts of operations and patterns that can be developed to meet these things. The noble Lord talked about Jean-Claude Trichet talking about the day after tomorrow and the possibility of a finance minister emerging—a sort of grand treasurer of the European Union. The idea that such things are possible, that propositions on such major and central issues of our sovereign control of our finances could be brought forward without the consultation of the British people, is absolutely incredible.

I hope that these matters do not come forward. However, if they did, they would raise very important issues that would excite considerable public comment and attention and deal most intimately with out national interests and plans. We would have to start thinking about that which the noble Lord, Lord Liddle, talks about. This thinking ought to lead rapidly to ways in which we could deal with these issues in a co-operative and practical way. However, if it came about that there was an overwhelming demand and conviction that there should be a new treaty throughout the whole European Union, it would certainly have to be put to the people. The idea that it would not be put to the people is absolutely incredible.

I am most grateful to the noble Lord for giving way. With the greatest respect, this amendment is about having a referendum, or not having a referendum, on matters the effect of which—to quote the Bill—

“in relation to the United Kingdom is not significant”.

Nobody in the world would argue that setting up a finance ministry for the European Union was not significant for the United Kingdom; the question is why we should have referenda on matters which are not significant. The noble Lord has cited a lot of possible scenarios, all of which involve dramatically significant events which would obviously be significant events for us, but the big issue concerns why we should have a referendum on matters which are known not to be significant for the United Kingdom.

I think that we are arguing in a circle because the Bill provides the significance test and matters in paragraphs (i) and (j) of Clause 4(1), which I have described, might well be ruled by Ministers not to be significant, and therefore there would be no referendum. Furthermore, in Clause 4(1) there is a whole string of exempt conditions where no referendum will occur. Therefore, I do not see what the noble Lord is worried about. As regards issues that are deemed to be insignificant, or issues that are deemed to fall under Clause 4(4)—sorry, I said Clause 4(1), whereas I meant Clause 4(4)—Clause 4(4) states that:

“A treaty or Article 48(6) decision does not fall within this section merely because it involves one or more of the following”.

There is your list. There are the things that are not significant which will not attract a referendum. The noble Lord was speaking with great feeling and fervour but I cannot see that his worry is well founded. I am clear that this amendment would not assist the purposes of the Bill and would undermine certain values and aims of the coalition’s European policy. On that basis, I strongly urge the noble Lord to withdraw it.

My Lords, I will withdraw the amendment, but the Government are making a major mistake in not listening to the points made not just from the opposition Benches but from the Cross Benches as well about the necessity to keep open some flexibility to deal with the unforeseen. If the United Kingdom wants to resist major treaty change, we will almost certainly have to propose minor changes which would demonstrate a willingness to deal with the practical realities of the situation that the EU would be facing. It is the Government who are not living in the real world and not facing up to what it is necessary to do if we are to be an effective member of the European Union in the years ahead. I regret very much having to say that, but with that I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Amendment 10 not moved.

Consideration on Report adjourned.

House adjourned at 10.13 pm.