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EU: Reform

Volume 750: debated on Thursday 9 January 2014

Question for Short Debate

Asked by

To ask Her Majesty’s Government what priority areas of United Kingdom reform ideas they will discuss with European Union partner countries.

My Lords, I welcome this opportunity to speak in the last debate of this afternoon. I express gratitude first to my noble friend Lady Warsi, the Minister in charge, for coming today. I am sorry that she has to be the last speaker and I hope it will not take too long for that to occur. My colleague and good noble friend Lord Teverson was originally going to speak, too, but had to withdraw his name for a noble reason. He is attending in Paris the awarding of the CBE to a distinguished French senator, Josselin De Rohan, who is retiring soon and whom I also know, so informally my noble friend is also representing me at this occasion. It is a very good Anglo-French occasion anyway and Josselin De Rohan, like most members of the Gaullist or UMP party in Paris, is an enthusiastic European as well as a patriotic Frenchman. The two go side by side in France with most people. I do not know why some people in this country seem to have difficulty with that.

I also thank very much the excellent Lords Library team for its helpful briefing pack, which I hope has been of help to other colleagues in this debate.

In a way, this debate is an unusual way of linking psychologically to tomorrow’s complexities on the EU referendum Bill’s Second Reading. We have a huge list of, I think, 77 worthy speakers and there is a complicated situation about what may happen after the next general election. Once again, we see some politicians in the UK—some, I emphasise—contorting, wheeling, skirting and scheming to overanalyse our long-standing membership of the EU. It is not all of them but enough to get the attention of those who are, interestingly enough, the non-UK personal taxpaying owners who dominate some of the more unsavoury right-wing papers in the UK, which all pronounce in an anti-European mode. No other member state, least of all those who joined when we did or shortly afterwards, such as Greece, Spain and Portugal, has expended so many hours wringing their hands with extraordinary quasi-geopolitical despair about whether it was a mistake to join in the first place.

In that context, I was also rather glad that my noble friend Lady Warsi, in replying to today’s third Question, tabled by our good friend and colleague the noble Lord, Lord Spicer, avoided any response directly to the acquis communautaire suggestion, which could be described as hair raising, to say the least.

We do not do this kind of thing over membership of the IMF, the World Bank, the UN, the WTO or NATO, all of which impose serious and onerous treaty obligations, so why do we do it over Europe? Why is working closely and inextricably with foreigners in Europe so dangerous and why are some of us so insecure and, indeed, immature about this subject? It is a mystery to me so I hope today that my noble friend the Minister will afford us some cheering and cheerful answers to these obfuscating mysteries and leave us in a good mood when we depart.

However, I was glad when the Prime Minister, in his Bloomberg speech almost a year ago, sounded unusually positive on Europe. He quoted Churchill after the war, referring quite rightly to the new economic challenges that faced the oldest continent and saying that we, too, are a continental power. He stressed that he was no isolationist, which he showed in his actions after that. Everyone involved in running both the national Governments and the European Union institutions to strengthen the EU’s long-term cohesion accepts that continuous modernisation and reform is a vital ingredient. This is not rocket science so why does one small part of the bigger of the two governing parties in Britain get so apoplectic about items that are mere tangible common sense?

At the same time, we have to ask ourselves honestly why the UK and many politicians remain so scared of the euro, a strong international currency. Is it a currency with too many duties for us to perform to manage to be a member? Latvia has just joined with great courage. Why do we seem to favour the easy option of regular devaluations? These are serious questions about reform and modernisation. Has not the foolishness of repeat devaluations got us into a terrible position, many years since that first started in 1947? Do we in this country really want to force the other member states to invoke the Lisbon treaty machinery permitting countries to leave, since in many of their eyes—sadly, I have to say this—we are now the bad and unreliable member of the club?

I am grateful to my distinguished colleague Charles Kennedy MP, who I am delighted to remind the House is both rector of the University of Glasgow and president of the European Movement in the UK, for his arresting new year blog a few days ago. He complained that no one in HMG explains what they mean by reform and said that free movement of labour, goods and capital—labour is particularly in the news nowadays—is both a sacred treaty principle and a legal requirement. That is a reality to which the British diaspora—the by now at least 2.5 million British people whom we informally estimate are residing in the other EU countries—would also attest.

The editorial on 4 January in the Figaro newspaper said quite rightly that surely what we all need is a strong EU-wide strict frontier entry policy, agreed rationally between all the member states, rather than piecemeal individual exceptions because senior politicians in certain countries do not have the nerve to stand up to atavistic, xenophobic motives based on false hearsay and rumours. Indeed, the recent remarks about Romanian and Bulgarian potential immigrants to this country have been deeply disturbing to many people.

All the while during this 2013 period, our German embassy friends have rightly agreed with British official suggestions to widen and deepen the single market—there is strong agreement between us and Germany on that—but they warn against threatening to leave the club rather than simply ensuring that the rules are modernised and that continued integration takes place. Indeed, the new FRG grand coalition in Berlin shares these British ideas precisely because Germany itself has harmonious relations between companies and trade unions rather than the atmosphere of mutual distrust between the two bodies that still haunts us in Britain. Once again, that means more integration, not less, a subject about which we appear to remain very confused.

Alarming questions remain as a result of Mr Cameron’s recent rather clumsy démarches on the EU scene. Is the Tory referendum planned for 2017 just PR rubbish or a serious attempt to give the long-suffering public a real say, as they had in 1975—yet again for narrow internal party reasons—under a different party? Why does the infamous EU Act of 2011, which a number of us oppose strongly, specifically exclude enlargement treaties from the referendum lock? If Turkey were to join the EU, why would that not be an enormous new delimitation of the out-of-date and quaint definition of “true national sovereignty”, whatever that means in the modern world? Can the Government accept that most reforms in the Union are part of a continuous legislative and procedural evolution as well as being comprehensively covered in the extensive Lisbon treaty provisions, which consolidated all the accumulated treaties since Messina and Rome and include more of a role for national parliaments?

Sharing sovereignty is not losing it; it is a net gain. Each country becomes even more influential and strong precisely because it is part of the larger modern comity of the whole Union. Before anyone complains too loudly about a so-called lack of democracy—the democratic deficit—with the unfairly criticised European Parliament, we are reminded in history how long it took the USA after its revolution, albeit that it was gradually developing into being a single country, to get the electorate voting in more than mere handfuls of percentages, with a restricted property qualification to boot for many decades, evolving gradually from individual states to a single polity.

The background to this sad subject has been anything but cheering and uplifting, and austerity and slowdown in the member states’ economies have been an inevitable concomitant. The signs are now, gradually and painfully, getting better in many parts, including in Britain. However, an ominous aspect remains. At a time when virtually all sane and sensible representatives of our UK business and corporate community are so pro-European—the CBI is a good example of that, bearing in mind its views a few years ago—politicians’ recklessness has left us now teetering on the brink of resolving our incoherent European policy stances, at best as a semi-detached and irrelevant member country or possibly even with complete separation. Are we not therefore paying a very heavy price for years of insouciance by the pro-European politicians in this country who have always been ready to postpone indefinitely a strong and necessary defence of a full role for the UK, instead of always pretending to be half-committed? The moment of truth is coming, and I am sure that the Minister will help us today.

My Lords, I thank my noble friend Lord Dykes for initiating this debate on European priorities. The right place to start is indeed from the famous Bloomberg speech by my right honourable friend the Prime Minister on 23 January 2013, which I strongly believe set the right agenda and pointed in the right direction. However, follow-up is now needed. The reform agenda will not solve itself; it must be vigorously pursued. Indeed, as the excellent pro-European organisation Open Europe puts it:

“Sweeping European reform is fully possible but … Downing Street must seriously raise its game”.

Of course, it is not only Downing Street. This should be above parties if that is possible, but certainly it should mobilise the best brains in this country.

Two essential strategic requirements follow from the agenda-setting of the famous 23 January speech. The first is obvious. It is that allies must be secured if there is to be European reform. It must be European reform, not just reform of the narrow issue of Britain’s relations with the rest of the European Union. There is definite progress on this. Mr Cameron, the Prime Minister, is gathering support for European reform on a scale frankly not dreamed of and, no doubt, longed for by previous Prime Ministers from both major political parties. Support for reform is coming quite strongly from the Netherlands, Sweden, the Czech Republic, Slovakia, Hungary, the Baltic states and, of course the Club Med countries. Although they are arguing for reform for very different reasons, as we know, related to the difficulties of the eurozone, they are also looking for a reformed system. We should also have Poland with us as a friend and in the reform programme—for the different kind of EU for the 21st century—but, frankly, present differences are not exactly helping that. However, I believe that the underlying interests are the same and point in the same direction.

In my view, there is no question of the UK being somehow marginalised or isolated, as some of the gurus and commentariat keep insisting. Even if we were alone in this EU reform programme, and we are not, in our modern networked world interdependence is guaranteed to every responsible nation. We are linked to all our neighbours in Europe and, indeed, with the wider world and the developing world far more closely today than ever before. We are caught up in an international system of connectivity and joint responsibility as never before in the history of the world. The intensity of communication is instant and deep, and that completely changes the interface between all nations.

It is not just a question of Governments in Europe supporting or being in favour of different aspects of European reform. There are also powerful interests that support them and which are shifting very visibly and very clearly. There is growing scepticism among German business leaders, who say that the doctrine of ever closer union has failed; that is frequently reported in the Frankfurter Allgemeine Zeitung and other bodies. We have the CSU in Munich calling very loudly for more localism and less centralism and regulation. We have the German association of family businesses, which are really the beating heart of the German economy, demanding that the treaties be “fundamentally recalibrated”. Frankly, the call is coming from countless quarters all over the European Union for the political class to rethink its hard-line 20th century dogmatic position, whether in France, Spain, Germany or any of the countries I have mentioned. That is the first requirement that flows from the 23 January agenda and the need to mobilise political support behind it.

The second essential element is the development of a really profound intellectual case against the outdated 20th century doctrine of integration and against what many countries regard as—as quoted in this morning’s papers—“federalist hyperbole”. The centralist model is simply no longer relevant in an age when all the disciplines, from scientists and engineers to physicists, are telling us about self-assembly, flexibility and building from the bottom up. This demands a different relationship internationally, and you can see it developing, perhaps away from the media somewhat, at every level in our different societies.

As many have pointed out—many people of strongly pro-European inclination—Europe today is not working. Unemployment is miserably high at 12%. Youth unemployment is frankly appalling; the figures are unbelievable. The euro problem is not solved. It has gone underground for the time being, but those who think it is solved are living in cloud-cuckoo-land.

In looking at decentralisation and the balance of competences, as our Foreign and Commonwealth Office is now doing, we should be especially wary of overambitious European energy policy, which is currently a catastrophe and of which the outcome is, horrifically, much more coal burning. Europe is burning more coal than ever. Germany is building 10 new coal-fired stations. There are sky-high energy prices in Europe, which are damaging our industry and competition, losing jobs and creating more fuel poverty. Oddly enough, this is an area in which, in some senses, you need more Europe. We need more physical connections of gas and electricity interconnectors to make our market work, but we also need much less administrative interference from Brussels in our national energy policies. More Europe and less Europe go together there.

Generally, we should not only assess but unpick and reallocate some of the competences that are now no longer valid and were conceived in a different, pre-internet, age. Equally important is that there is no real single market in services. There, too, we need fundamental change. I am not against a detailed shopping list of things that it would be nice for the different countries of Europe to have, including this country; that is perfectly reasonable. Of course, the whole subsidiarity principle needs to be boosted. National parliaments should be given a red-card role. Then there is the working time directive, tighter budgets and the common fishery policies—we have been over these things a thousand times. As long as these aims are widely supported, and are not just British special pleading, I am all for putting maximum force behind them. However, that is frankly not enough.

The fundamental case for change to bring the European Union into the 21st century, which people really want, needs advancing. I agree with Mrs Merkel—incidentally, I am sure that we all wish her well in her recovery from her recent skiing accident—that Europe is no longer the right model. An utterly transformed world has now emerged. New patterns of modernisation are now unfolding in Africa and Asia, which are not the same as the European modernisation experience at all. The growth markets we must penetrate are outside Europe and the West. Power has not just shifted east and south but has fragmented into a thousand pressures, sources, cells and groups in the global digital network, with both good and, frankly, very bad outcomes, as the Arab so-called spring—and now autumn and winter—reminds us.

Our priority is not so much to lead because, in the networked world, leadership is an out of date concept. It is working with, rather than leading, other partners in honest and realistic EU reform in the face of these totally new conditions. We need to turn the European Union into a positive force to meet this new world. We are ideally placed to do that, so let us get on with it.

My Lords, I thank the noble Lord, Lord Dykes, and I am sure that the whole House is grateful to him for giving us the opportunity this afternoon to debate this important matter.

There has been a striking change, at least in the tactics and rhetoric of the Government on this issue over the past year or so; that is of course very welcome. I am sure that noble friends of mine will accuse me of being very naive if I place too much reliance on this, but I speak this afternoon on the basis that that change is genuine, that the Government are acting in good faith and to encourage them along that path. It is not impossible that there is a large element of genuineness about the government rethink. A year or two ago, the Government were adopting an extremely confrontational stance towards our partners in the European Union, vociferously demanding all sorts of concessions, exemptions, derogations and repatriations, and occasionally laying on some histrionics, such as walk-outs and so forth, in order to appease pressure from the Cashites in the Tory party and UKIP. It was a deplorable spectacle.

I have heard the noble Baroness, Lady Warsi, say on several occasions that the Government now take the line that they are committed to our membership of the European Union and simply want to be a member of a reformed European Union in the future. Of course, I welcome that very significant change. The change may be a genuine one for two very good reasons. One is that the Government—and the world—have clearly seen that the tactics they were adopting previously were pretty counterproductive and unintelligent, and they have drawn the sensible conclusion from that. The second thing is that they were forced to look into the abyss: into what would actually happen if we left the European Union. I know that they have had some very frank advice on that—franker in private than in public, of course—from bodies such as the CBI, the Corporation of the City of London, the Engineering Employers Federation, and from a number of Japanese and American multinationals and others as well. Therefore they have had to confront the alternative, which has been a salutary process.

In that spirit, therefore, I will not attack the Government this afternoon but will try to be helpful and suggest ways in which we can make a success of those discussions. We on this side of the House, and I think the whole country, want to see reform in a positive sense. Any human institution can always be improved and reformed, and the more important that institution, the more important it is that it is improved and reformed by each generation. Therefore we should be committed to that process in principle. I will suggest one or two bases on which the Government might decide what are the sensible initiatives to take and what the less productive course to take might be in the months and years ahead, as discussions continue with our partners.

The first thing I urge on the Government is always to focus on the substance, not on the symbolism. Always go for the content, not the colour of the wrapping on the package. We should have absolutely no more farces such as those we had with the Justice and Home Affairs opt-out, where the Government opted out of a whole series of measures and then wanted to opt right back into them, because on the substance they were very necessary and in the national interest. That was a deplorable and ludicrous exercise, and it was quite obvious that the Government were pirouetting around in order to appease their own extremists and to head off pressure from UKIP. That was not a very edifying episode at all. I hope that the Government will learn the right lessons from that in future and that they will always focus on the reality and the substance, and be pragmatic.

Being pragmatic, my second point is that it would be sensible to take up issues where we have a particular credibility and, obviously, where our national interest is directly engaged. The obvious selection is the single market. We have a natural credibility on the single market as after all, we took the decisive initiatives to push it through in the 1992 programme and so forth, which we should not allow our partners to forget. We have not completed the single market—there is some important work to be done. I hope that as a result of this discussion on the reform of the EU we will be able to make some concrete progress there.

One thing that cries out to be resolved is the services issue—we must have a proper services directive. Of course, we have a services directive, but we all know that that is inadequate. It was much better than what we had before and was a considerable achievement in itself, and we all know that you can only move human institutions along at a certain pace. However, now is the time to try to achieve a real services directive so that we have a single market in services that is comparable to the one that we have had successfully for a long time in goods.

Last time round we found that the French and the Germans were the greatest obstacle to that, but it is possible that the Germans will now be less opposed. That is partially because their economy is doing so well and unemployment is falling in Germany, so they are less frightened perhaps by the prospect of Polish plumbers coming across the frontier to work in Berlin—that was one of the many issues that arose last time—and also because the Germans have got into the habit of lecturing everybody else about deregulation, so they may be more open to deregulatory arguments themselves. Therefore I put it to the Government that a good proposal would be to invest a certain amount of capital in services and to develop, I hope, a certain amount of momentum for that.

Secondly, on energy, I am never quite sure whether I agree with the noble Lord, Lord Howell, or not, because he says one thing at one moment, and something that sounds slightly contradictory in the next sentence. However I agree with some of what he said about energy policy. Energy policy is an area where we need to complete the single market—there is no question about that at all. We do not have a single market in the retail sector in energy, and that, after 20 years of the single market, is quite disgraceful. We should do something about that. We have had partially state-owned monopolies in France—they are not entirely nationalised, of course—and “monopolies” is the word. In the terms of the domestic market, they are holding up progress on this, very much to the detriment of the interests of French consumers, as much as anyone else. We should deal with that, and now is the time to do it. I think that we would have a lot of support in taking up that issue.

My third piece of advice to the Government is the kind of advice that I would give to anyone who felt that they wanted to slightly change their image in a particular context—that is, to surprise people positively, and come up with something that results in the continentals saying, “Good Lord, the British really have changed”, which would establish a certain credibility for what we say about being pragmatic. If we are genuinely pragmatic and open-minded and believe in European reform, clearly there will be cases when the competences of the Union should be extended to resolve a particular problem, because that is the right way in which to do it. There may be other cases, of course, which I would recognise, whereby under the subsidiarity rule it would make pragmatic sense to repatriate certain functions.

I have yet to be convinced, to be honest, that any powers need to be repatriated—and I have looked at the suggestions that have been made on fish and overseas aid, and so forth. It has always seemed to me that there was a very good argument for not repatriating; in fact, in many cases, we might want to go further into integration. But we can have that discussion another time. I am certainly open-minded and could be persuaded that there are situations in which we should repatriate powers, and I hope that the Government and the noble Lord are open-minded and could be persuaded that there are cases when, in fact, the European Union is in the best position in the interests of all its members to have the necessary jurisdiction to resolve the problem.

One area where that is certainly true is with banking union. I have heard no good reason at all why we should not be members of the banking union, and it is extremely dangerous that we are not. We think that we are being very clever in negotiating the double lock, but that works only if there are four member states remaining outside the banking union. If you look at the matter purely objectively, you can see that there is every interest in our being a part of it, and it is extremely dangerous to fragment a supervisory regime or bank resolution regime. It is not something that can possibly be in the country’s interest.

Since time is short, I shall make a final suggestion, which is one that I made before to the noble Lord, Lord Newby. The Government—and I congratulate them on this—have come round to the arguments of many of us over quite a long time that we need to do something about the scandal of payday loans and loan sharks. I see that the Minister is nodding to me, and I understand that the Government have instructed the FCA to come up with an interest rate or cost limit on those payday loans. I congratulate them on doing that. When that has been done in the United States and individual states of the Union—and the Minister will be familiar with this argument, because those opposed to it have always come up with it—it has always been ineffective, because lenders have come in from other states. This is an obvious area in which, if we are to have effective regulation, we need to have it on an EU-wide basis. I put it to the Minister a few weeks ago that it would be worth taking the matter up with Brussels to see if the Commission might be minded to produce a regulation or directive, and whether our partners would agree that this would be a sensible move to take. Now that I have put the issue in public to both the Treasury and the Foreign Office, I would be grateful to the Minister when she responds to this debate, or subsequently in writing, leaving a copy in the Library of the House, if she would let me know whether my arguments have been considered and what the Government’s conclusions are.

My Lords, I join in thanking the noble Lord, Lord Dykes, for having secured this important debate, and, in so doing, declare my own interests as professor of surgery at University College London and a member of the General Medical Council.

The area of health and delivery of healthcare was not an area originally anticipated as having any competence at European Union level, specifically in the treaties. The delivery of healthcare and the allocation of healthcare resources along with the development of health policy were described as an area in which member states and national governments maintained absolute competence. The Department of Health balance of competence review, necessitated by the fact that, inadvertently, much European legislation and many directives have impacted on the delivery of healthcare, determined broadly that, in those areas where European regulation and directives have impacted on the delivery, it was positive. However, it identified a number of important areas where there were unintended detrimental consequences resulting from European regulation.

I shall concentrate on two areas that were highlighted in that competence review and in the third report of Session 2013-14 of the Science and Technology Committee of the other place. The first is the question of the European working time directive, which has been debated extensively in your Lordships’ House. I return to that because the directive continues to have a very important impact on the way that we are able to organise and deliver healthcare in our country and because the unintended consequences of its impact have been substantial.

The working time regulations have affected the quality of care. Although initially it was anticipated that restricting working time to 48 hours per week for trainees would promote patient safety and improve quality, regrettably that has not been the case in this country. Indeed, where the question of the duration of working hours for junior doctors has been studied carefully, particularly in the United States, it is clear from prospective evaluations that have been undertaken over a period of time that such a restricted period of working each week has a detrimental impact on patient safety.

There has clearly also been a detrimental impact on our ability to train junior doctors.

I am most grateful to the noble Lord for giving way. I greatly recognise and admire his expertise and experience in this area, but can he perhaps tell the House why our continental partners, in France and Germany and so on, do not seem to have had the same problem with the delivery of healthcare that he suggests we have had as a result of the directive?

I thank the noble Lord for his intervention. That is because the application of the working time directive in those countries has been different from our rather fastidious application of the directive here in the United Kingdom. It is also due to the fact that the organisational structure for the delivery of healthcare is very different in France and Germany from the way that we deliver healthcare in our country.

Particularly in the craft specialties, such as my own specialty of surgery, trainees have found it increasingly difficult, within the restriction of 48 hours and the restricted period of time now available for specialist training, to develop the skills necessary to deliver independent consulting practice, which is very much a feature of the delivery of healthcare in our NHS but is rather different from countries such as France and Germany, where they tend to have larger departments with a much more hierarchical structure.

There has also been a substantial cost impact from the adoption of the working time regulations. In the first full year after their application across the National Health Service, an extra £200 million was spent on the provision of locums to fill rotas necessary to cover the provision of out-of-hours care within the NHS. Indeed, just for surgical specialties, the Royal College of Surgeons has assessed that an additional £60 million was spent to provide locums to cover surgical rotas. The Royal College of Surgeons estimates that, because of the application of the working time regulations, some 40,000 surgical hours are lost per month. Again, that has had a detrimental impact on ensuring that access to services can be adequately delivered to meet workload demands. Most worrying is the fact that, on a number of occasions, coroners have included in their narrative verdicts reference to the working time regulations as having had a detrimental impact on the care of individual patients.

Her Majesty’s Government recognise that this is an important challenge. Indeed, in 2010, the then Health Secretary and the Business Secretary announced that they were to initiate negotiations with our European partners not on withdrawing from the working time directive as it applies to healthcare but on ensuring greater flexibility, which would allow us to develop training schemes to meet the specific needs of the NHS in England in the training of our trainees. That resulted in the process being pursued through the mechanism of the social partners, but regrettably that negotiation has failed and the question has now been returned to the European Commission.

Clearly, this is an important area where action is required. As I have said, we need not to withdraw from the working time directive but to allow the necessary flexibility to allow working hours to increase from the current level of 48 hours to 56 or 65 hours, depending on what point trainees are at in their training and on what specialty or discipline they are training in. Can the Minister confirm that this might be a priority area in any further negotiations with our European partners?

The second area is the question of clinical research. Our country has a very distinguished heritage in terms of its contribution to biomedical research globally. The citations for research undertaken in our country are substantial. Some 12% of global citations for biomedical research are derived from research conducted in our country, a substantially greater proportion than in any other country in the world. Much of this is based on our distinguished history in delivering important clinical research. In 2001 6% of all patients entering clinical trials in the world came from the United Kingdom. By 2006, after application of the clinical trials directive, that had fallen to 1.4% and in the period 2007-11 there was a further 22% decline in the number of patients entered into clinical trials from our country.

The clinical trials directive has not only impacted on clinical research in our own country, it has affected all other European member states in terms of their competitiveness globally to deliver clinical research. The Medicines and Healthcare Products Regulatory Agency, which registers new clinical trials, identified in 2007 some 1,207 new trials registered. By 2011 it was down to 943. Clearly, the clinical trials directive is having a detrimental impact. It has, indeed, been renegotiated and a clinical trials regulation was agreed in 2012 by the European Parliament, due for application in 2016. The third report of the Science and Technology Committee of the other place identified ongoing concerns even about the newly drafted clinical trials regulation, concerns that were raised in evidence the committee received from the Academy of Medical Sciences and from the Wellcome Trust, a major funder of clinical research in our country.

In the area of clinical research, I suggest not that we withdraw from the clinical trials directive or the future clinical trials regulation, because there are important benefits to having a certain standard across the European Union, but that we should be able to ensure that flexibility provides for the specific environment in which we undertake and deliver clinical research in our country, with the strong national clinical governance mechanisms that we have in place, rather than find that the directive and the future regulation have had a detrimental impact on our ability to remain competitive in the life sciences area. The life sciences are an important feature of national activity, both in terms of ensuring excellence in our health service and in terms of the economic impact that life science industries have for our country.

My Lords, I, too, congratulate the noble Lord, Lord Dykes, on having initiated this debate. As he said, it is a useful preface to the mega-exercise of tomorrow. I wish the noble Baroness—genuinely—good luck in keeping awake during the 750,000 speeches, or 75 speeches, that will be given tomorrow. Perhaps I should not say this, but I have just written a book on the future of Europe and I have had the occasion to travel quite widely debating it, during which travels I have met a range of European political leaders past and present. I always greatly respect the speeches of the noble Lord, Lord Howell, and quite often agree with him. In this case I have to say that I disagree with quite a chunk of what he had to say in assessing European political opinion about the current position of Britain.

I think that the UK still stands at fundamental risk of being isolated and finding itself in a marginal position in Europe, and it is in the process of alienating some of its best allies in eastern Europe because of the current debate about migration. One only has to look at Viviane Reding’s comments yesterday, reported today in the Times, to see the current of opinion in Europe about some of these policies.

When the Prime Minister gave his Bloomberg speech, European leaders were at one in saying that Europe à la carte is not an option. Having talked to quite a few of them I know that that view is strongly held today. The Prime Minister wants an open and flexible Europe. Everyone wants a more open and flexible Europe, and many reforms are being pushed through to try to achieve this. However, it is absurd to identify flexibility with cherry picking. Flexibility often means, for example, enhanced leadership. In the case of the eurozone, for example, as the noble Lord, Lord Dykes, mentioned, we need more leadership and more capability to respond quickly. That is not achieved by a version of fragmentation.

It is easy to see what would happen if the government approach was generalised and every country wanted the benefits of being in the EU without the commitments. The whole enterprise would become unworkable. It is for that reason that when I travelled around I found a response to the UK’s position that sees it as a mixture of special pleading and blackmail. I fully agree with my noble friend that the Government must surely seek to cut through this and break away from it.

Although it has not been mentioned, this discussion is about the British review of competences. One should begin by saying that there are substantial differences between our review and that being carried out in the Netherlands, which is often thought of as being a similar exercise. The Dutch approach is not based on the idea of securing treaty change—as our approach seems to be—rejects an approach based on opt-outs, and is concerned with subsidiarity as such. I have read the literature on our review of competences and a lot of interesting ideas are developed in it, but I feel strongly that we should make a contribution to the Commission’s attempts in the REFIT programme to produce a more flexible and proactive Europe. That programme is for doing precisely that. It has already reached a sophisticated level.

The idea that the UK has a special view on the need for flexibility and clear leadership in Europe is totally false. All European leaders are conscious of this. One of the things on which I agreed with the noble Lord, Lord Howell, is that we have lived in a world of fantastic transformation, dominated by technology, throughout most of our lives. All states, not just the European Union as a collection of states, are stumbling in their attempts to deal with this new world. It is completely false to suppose that the major European leaders are not conscious of the need to do so and do not have in play programmes striving to do just that.

I should like to have a go at asking the noble Baroness four questions about this matter. When I tried to do so in previous debates, she did not always seem inclined to answer those questions. I suppose that I will be sympathetic, given her situation of being squeezed between the two debates, if she does not answer them today. However, they are questions that the Government should address.

Point 1 is that I read the first batch of reviews of competences, which seemed to contain a lot of interesting discussion. However, in those that have been published—those that I know of, anyway—I do not see any basis for renegotiation at all. If the Government do see one, I should like to hear it. A group of authors produced a detailed study of the first publication of the review of competences, which concluded that the,

“first set of … reviews reveals no grounds in the assessments of British stakeholders for any large repatriation of competences, nor for further opt-outs”.

The study was based on consulting major stakeholders in the relevant areas. I would like the noble Baroness to comment on this if she has enough stamina to do so, but she may be saving it all up for tomorrow—which would perhaps be a wise strategy.

Secondly, are the Government really serious about getting EU-wide agreement for proposals to place significant restrictions on immigrants from new entrant countries to the EU in the future? I have seen that mooted in the press but I do not see it as a feasible or desirable strategy. We clearly need treaty change. Is there not a contradiction between, on the one hand, the Government’s endorsement of the single market—which is, after all, the centre point of the whole Bloomberg speech—and, on the other, the apparent desire to block free mobility of labour? We cannot have a well functioning single market without free mobility of labour. It is arguable that we actually need more mobility of labour than we have at the moment for economic efficiency in Europe. In the United States, for example, mobility of labour is at something like twice the level that it is in Europe, and this is generally seen by all economists as contributing to the efficiency of the American economy.

As usual, the noble Lord is making a fascinating speech, but is there not a difference between mobility of labour for work, bringing the single market further success and action, and mobility of people and migrants for benefit purposes?

Of course there is a difference but there is now a lot of evidence which indicates that no more than a tiny sliver of migrants in the EU have come benefit-seeking over the past few years. There is no evidence for what the noble Lord suggests. The European Commission has carried out a systematic study of this, and personally I do not think that that point holds.

My third question to the noble Baroness is as follows. Everyone agrees that one of the UK’s major contributions to Europe in the past has been to support enlargement, it being the driving force behind part of the European Union’s success. We had a war in Europe in which 100,000 died. In my view, it will be crucial that the Balkan countries—Serbia, Kosovo and Albania—are incorporated into the European Union. Are the Government seriously threatening to block accession, as reported in the press, as part of a sort of blackmail tactic? Is there any truth in that assertion? Surely that would be wrong. We need those countries in the European Union. There is still the possibility of conflict in that area, and the UK has always supported such a process in the past. Is it now going to try to throw up a roadblock? I certainly hope not, and I hope that the noble Baroness will agree with that.

Fourthly and finally, it is pretty clear that the most that Britain is likely to get from the other 27 partners in this enterprise is a kind of patched-up, face-saving deal, because to a substantial degree it is based on special pleading. I have asked the noble Baroness this question twice before but I would still like to see whether she is willing to venture an answer. Following the Prime Minister’s Bloomberg speech, if the Government are still in power and if sufficient forms of response from Europe are not achieved, is there a situation in which the PM would actively campaign for the UK’s exit from the European Union?

My Lords, this has been an excellent short debate and I thank the noble Lord, Lord Dykes, for raising this topic. To be honest, the quality of the contributions is likely to be considerably in advance of what we hear tomorrow, and I think that this is a much more relevant topic for debate on the future of Britain’s relations with Europe. As I listened to the excellent speeches from all noble Lords who have spoken, it struck me that we should be using our wonderful Lords Select Committee to try to put together some kind of consensus about what a reform agenda for the EU would be. That would be a very valuable exercise.

There will probably always be some differences on areas such as social Europe but I think that there is a possibility of achieving a large measure of agreement on what such a reform agenda should be. However, the key point, which I put to the Minister during Questions this morning, is that an agenda for reform has to be a multilateral agenda for Europe and not a set of British demands for the repatriation of this power and opt-outs from this or that directive. I was glad to hear the noble Lord, Lord Howell, endorse that approach.

I do not agree with the Prime Minister’s speech about a referendum—we can debate that tomorrow—but it was extremely well crafted. There is a lot of common ground on about 80% of what it had to say about the future of the European Union.

However, the Government’s reform agenda has certain flaws. The questions asked by the noble Lord, Lord Giddens, were extremely relevant. I had intended to ask them myself. I will not repeat them but I will add to them. First, the assumption that there will be a major treaty change in the next Parliament is debatable at best. Some of the countries which most favour reform—the Netherlands, for example—are among the partners who are most opposed to a comprehensive treaty change. So we do not necessarily win allies on reform by demanding treaty change.

Secondly, as the noble Lord, Lord Giddens, said, our approach to future enlargement and the linking of that to the question of migration and limitations on migration, threatens to put against us in Europe most of the new member states that, when I worked for Tony Blair, we fought hardest to get onside. There are obviously many issues that need to be considered on the question of migration—social security benefits and so on—but if it is thought that we are playing a populist game on these issues, we will simply alienate a large section of the European Union.

The third error the Government are making is the assumption that the eurozone will become a much more integrated area and that we will have to accept a kind of permanent outer-tier status in the European Union. That is not realistic. I am sure that we can negotiate non-discrimination clauses and commitments that would reassure people who worry that a eurozone bloc might discriminate against us. I am sure that that could be done and the integrity of the single market preserved.

There is wide range of issues within the EU in which Britain should seek to play a leading role, such as energy and climate change; defence and security, where our bilateral co-operation with France is presently very strong; foreign policy; free trade agreements; and the deepening of the single market. We should not automatically assume that we will be outer-tier players. That is not a viable vision for Britain’s future in the European Union. I do not see a country such as Great Britain putting up for decades with the idea that it is only on the outer fringe.

The Government may have some of the right ideas about reform but they are not, in our view on this side of the House, going about it in the right way. There is a big opportunity for change coming up with the appointment of a new European Commission. Who will be the President? Are we pressing for reforms to how the Commission works? One of the key things in trying to ensure that Europe focuses on a limited number of key priorities rather than trying to legislate over a wide area is to think about how you streamline the European Commission so that it has a limited number of priorities, and making an agreement with the European Council about what those priorities would be.

I do not think that the agenda for the future should be one of repatriation of powers. However, it should certainly be one of understanding between the Council and the Commission about how competences that the treaties give to the European Union should be exercised. We must have another go at the question of more sharply defining the principles of proportionality and subsidiarity. For the moment, that is enough. The Government have a lot of major questions to answer.

My Lords, I thank and congratulate my noble friend Lord Dykes on securing this debate on an issue of such significance to the United Kingdom. It has been a great starter for the main meal of a debate which I sincerely look forward to tomorrow. I am sure that many of the issues that have been raised today will be raised again tomorrow.

This Government are clear that membership of the EU is in the UK’s interest. We are also clear that the EU urgently needs to reform. As the Prime Minister and Deputy Prime Minister set out in speeches last year, the EU needs to become more competitive, more flexible and more democratically accountable, with powers flowing both ways and fairness between eurozone and non-eurozone members. I am delighted to hear the noble Lord, Lord Liddle, say that he agrees with almost 80% of the Prime Minister’s speech from last January. He also agrees with the need for reform, and it would be interesting to hear specifically the areas that he does not agree with. I certainly look forward to hearing from the Benches opposite in relation to how they feel the British people could also have their say in relation to these matters.

It is the Government’s priority to engage with all member states and the European Union institutions to make these reforms, which we feel are essential, a reality. Some have suggested that the UK is seeking special treatment in Europe. I want to be very clear on this. The reforms that we seek are for the benefit of all member states, and we are working with them to achieve this. My noble friend Lord Howell of Guildford said exactly that.

It is not as the noble Lord, Lord Giddens, described. I am pleased to say that we are already making significant progress, and I do not accept what my noble friend Lord Dykes said in his analysis. Let me give him a few examples of what I think our approach is already doing in terms of making a difference. We worked closely with countries such as Sweden to achieve a double majority voting rule, which provides a safeguard for non-eurozone members in banking union decisions and makes sure that our voice is heard.

We worked with other member states, including Denmark, Germany, Sweden and the Netherlands, to abolish the policy of—

Will the noble Baroness tell the House the reasons which make it not in the national interest to be part of the banking union?

To be part of the banking union we would have to be part of the euro, and I am certainly not going to spend this debate debating the benefits of membership of the euro.

The noble Baroness is, with respect, wrong about that. A number of countries are joining the banking union who are not members of the euro, though they may join the euro of course. The banking union involves a common supervisory, common bank resolution and a common retail deposit insurance system which can be applied to countries which are not currently in the euro.

I will look into this matter again. My understanding was that the banking union flows from the single currency and not from the single market, and therefore I will look at this question again and write to the noble Lord once I have considered it.

I was talking about work that we had done with the Danes, the Germans, the Swedes and the Dutch to abolish the policy of “discarding” caught fish as part of a wholesale reform of the common fisheries policy. We have secured the first ever exemption of micro-businesses from new EU proposals from 1 January of last year. We have worked with a coalition of countries to secure the first ever cut to the EU’s budget. We could have done none of this alone. Our engagement with other member states has been, and will continue to be, key. We will continue to work closely with our partners to further the good work on international trade agreements and cutting red tape to make Europe more competitive. We will work with others to ensure that the rights of eurozone-“outs” are protected as the eurozone puts in place the necessary governance arrangements to secure its long-term stability and safeguard the position of the single market.

We will continue to seek greater democratic accountability within the EU, particularly through strengthening the role of national Parliaments, and ensuring that the principles of subsidiarity and proportionality are respected. We will continue to position ourselves at the heart of the debate on the interests that matter most to the United Kingdom.

I think that the reading of the Government’s position on the part of the noble Lord, Lord Davies of Stamford, is simply wrong. We have been clear that membership of the EU is in the UK’s interest. On many occasions, the noble Lord has heard me detail at this Dispatch Box what I feel those interests are.

My noble friend Lord Howell also spoke about the respect for more subsidiarity and national Parliaments needing a red card. I fully agree with that. The Foreign Secretary has, indeed, called for a red card for national Parliaments, and others, such as the Dutch Foreign Minister, have made it clear that they, too, agree. We support the principle set out by the Dutch—namely:

“Europe where necessary, national where possible”.

My noble friend Lord Howell is absolutely right to say that follow-up is now needed. The noble Lord, Lord Davies, also said that we should focus on substance, not rhetoric. I wholeheartedly agree with that. Progress is being made. For example, the Prime Minister worked with Germany, the Netherlands, Sweden and Denmark to secure the cut in the EU budget. The PM and Commission President Barroso co-chaired the meeting of leaders from Germany, Italy, the Netherlands and others in the Business Taskforce, which presented a report on cutting red tape. These are but a few examples.

The noble Lord, Lord Kakkar, has raised the working time directive before. This Government are committed to limit the application of the working time directive in the United Kingdom. The noble Lord made some incredibly important points in relation to specific professions where this has had a disproportionate impact. The evidence suggests that a one-size-fits-all approach in the working time directive limits the time available for training and reduces operational flexibility in relation to particular professions and, of course, in relation to medicine and surgery. The Government will continue to prioritise this important issue which came up in the first set of balance of competences review reports. I do not have details of the clinical trials directive in my brief but I will certainly write to the noble Lord.

My noble friend Lord Dykes asked why the European Union Act 2011 excludes enlargement treaties from the referendum lock. The referendum condition is focused on treaties that expand EU competences or change the voting rules. Extending the geographical scope of the EU does not currently fall within the relevant section because it does not curtail the competence of existing member states such as the United Kingdom.

The noble Lord, Lord Giddens, asked me four questions. I will try to answer some of them. He spoke about the first set of reports from the balance of competences review. I dealt with some of this in an Oral Question earlier today. Although the first set of those reports mainly concern non-contentious areas, even where they lay out the benefits of EU membership they go on to say that further improvements could be made. Therefore, there is a real need for reform outlined in those reports. The noble Lord asked about the restrictions on EU migrants. I do not think I could put it better than my noble friend Lord Howell who commented on that point. I wholeheartedly endorse his comments. The noble Lord has asked me before about the PM campaigning for an exit. I can tell him that my right honourable friend the Prime Minister is campaigning for a referendum. We need to get back behind the idea of giving people the right to decide. We can then campaign in whatever camp we want to as to what we feel the outcome of that referendum should be, but we should at least give people the choice.

The noble Lord, Lord Liddle, suggested that treaty change would not happen or that there would not be the possibility of treaty change. A number of ideas have been considered in European capitals and in Brussels that we feel would require treaty change. Europe is changing because of the eurozone crisis, among other reasons, and we expect that process to include treaty change.

I conclude by thanking the noble Lord, Lord Dykes, again for giving us the opportunity to examine this interesting issue. We have covered some ground and I am sure we will cover more ground tomorrow. The noble Lord, Lord Dykes, in setting out the debate, asked specifically about the vision for reform. I will simply repeat what I said at the beginning about a Europe that is more competitive, more flexible and takes account of the diversity of its different EU member states and the differences between those which belong to the single currency and those which do not; a Europe that is more democratically accountable, so that the connection between citizens and the EU can be strengthened; a Europe where powers flow both ways; and a Europe that ensures fairness between those that are in the eurozone and those that are not.

Many European leaders welcomed the Prime Minister’s January speech and the debate that it has provoked. Many voices across Europe—in the Netherlands, Germany, Sweden, Italy, Austria, the Czech Republic and elsewhere—have spoken out in support of European reform. The Government will continue to prioritise this issue, working closely with our partners across Europe to deliver a Europe that works for all its member states and that works better.