European Union Bill

Monday 13th June 2011 Lords Chamber

Report (2nd Day)

15:08

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

Amendments 11 to 12A not moved.

Clause 6 : Decisions requiring approval by Act and by referendum

Amendment 13 not moved.

Amendment 14

Moved by

[Lord Hannay of Chiswick]

14: Clause 6, page 4, line 34, leave out from “Parliament” to end of line 35

[Lord Hannay of Chiswick]

My Lords, I will speak to the long list of the amendments in this group. Because some amendments in the group have been changed since they were debated in Committee, I hope that I will be forgiven if I say a little about them. The broad case for this group of amendments remains that which was referred to by many noble Lords at Second Reading and in our debates in Committee: it is the belief that the long list of potential referendums is excessive and disproportionate, that it does real damage to the structure of representative parliamentary democracy and that it needs to be shortened. I do not know how on earth the Government arrived at a list as long as 56. Some earnest people have discovered even more in this legislation. Indeed, why stop one short of where Mr Heinz got to? The amount is quite excessive and would have a disproportionate effect on our constitutional practice. What it amounts to is massively increasing the number of potential referendums in one area of policy while not doing so in any other area of policy. It is completely unbalanced in its approach.

The amendments that I and other noble Lords have tabled today reduce the number of areas that would be subject to a referendum mandatorily if they were pursued separately, one by one. I will come back to the point about what happens if they are pursued collectively later on. In these amendments we have tried to take account of the debate in Committee. The noble Lord, Lord Howell, who was the Minister on that occasion, spoke about the big five and attached a lot of importance to their being the subject of a referendum. I and other noble Lords listened carefully to that speech and have taken considerable account of it in the way in which these amendments are cast. When we discussed it in Committee, we only suggested that there should be an explicit referendum requirement for a decision by Britain to join the euro and that other matters referred to in Clause 6 should not be so treated. However, we listened to what the noble Lord said in the debate, in particular the great importance that he attached both to the question of any move towards military co-operation and to the question of any move on border controls—that is the Schengen treaty, which, of course, does not apply to this country at the moment. Therefore, we have recast these amendments in such a way that, if they were passed, while there would be a considerable reduction in the number of referendums that potentially would need to be held, there would still be a referendum requirement if we were to decide not only to join the euro but to move decisively in the direction of military co-operation. Here the amendment is more precise than the extremely woolly wording of the Government’s own Bill, and makes it clear that what the Government and their supporters were talking about was the circumstances in which defence co-operation moved to an area that involved the setting-up of a European Union force or structure. That is the way in which it is now cast and it suggests that this would definitely require a referendum. The addition of the Schengen provisions requires less explanation; it is fairly straightforward. Britain has had an opt-out since, I believe, the Amsterdam treaty, and it is not suggested that that could be shifted other than after a referendum.

These changes show that those of us seeking to amend the Bill are listening carefully to the debate, in Committee and indeed on Report, and are taking full account of points that have been made from the government Bench on this matter. I hope that on their side they will reciprocate that spirit of compromise.

15:15

It is quite important to emphasise one or two negative points about the amendments: things they do not do. First, the removal of a mandatory referendum requirement for a whole long list of things in Clause 6 but not for the euro, Schengen or military co-operation does not mean that they would not under any circumstance be caught by a referendum requirement. The noble Lords, Lord Howell of Guildford and Lord Wallace of Saltaire, have told us on a number of occasions that, in their view, most of these issues will come up not separately but in a group. As has been the case in the European Union in the past—at the time of the Single European Act, of Maastricht, of Amsterdam, of Nice and of Lisbon—they will come up as a wide range of amendments on different and disparate issues which will be brought together in a single new treaty. By definition, the British Government will be willing to agree to it because, otherwise, none of this would happen at all. If they objected to such a package, there would not be such a package.

In the circumstances where a package was taking shape and being supported in principle by a British Government, and where one or other of these issues which we are suggesting should not be the subject of a separate referendum requirement were part of that package, it would be caught by Clause 2, which we are not suggesting should be changed. If one of these issues, such as the question of the public prosecutor or all the other list of issues which it is suggested should be dropped from being dealt with individually as a referendum, were to become part of a package, that would not then mean that it was exempt from a referendum—quite the contrary. Because it was part of a package being taken forward under the normal treaty revision process, as it is called, it would be caught by Clause 2. The exemption from a referendum is merely if it is dealt with individually.

I do not want to get into a guessing game with noble Lords on the government Bench as to which of the two is more likely. They have said on quite a number of occasions that they believe that the overall-package approach is the more likely if the European Union were to move to change its treaty again, in which case they have nothing to worry about. Nothing will differ from what they wish to see, because, if any of these issues which we are suggesting should not individually be dealt with by a referendum were incorporated in such a package, there would be a referendum and they would be dealt with in it. That is a fairly important negative point to note. The amendments are a great deal less far reaching than noble Lords might think when looking at them on the paper before them.

The second negative point is that those proposing the amendments, as we explained when we discussed them in Committee, are not seeking to move back from the referendum requirement in the Bill to the simple situation that existed on the basis of the legislation which this House and another place adopted at the time of Lisbon; that is, where such changes would require merely a positive resolution in both Houses. We have accepted the Government’s wish to ensure primary legislation—that is, the full works in both Houses—if any of the changes were to be approved by Britain following a decision by the British Government that they were in Britain’s interest in the first place. Again, I emphasise that none of these matters will come before any House unless that condition has been fulfilled. Far from weakening Parliament’s powers, in proposing the amendments we are strengthening them, because Parliament will now have the role of passing primary legislation or rejecting it, depending on which way it goes, and there will not be a return to the Lisbon arrangements.

I think that is pretty important. Those who move these amendments argue that we are strengthening Parliament’s powers over the handling of changes to the treaty, not weakening Parliament’s powers—as the Government would—by giving referendums the possibility of overruling a view reached not only by the British Government but by both Houses of Parliament. Frankly, that is a pretty radical constitutional innovation. The amendments move in the opposite direction, towards a strengthening not a weakening of the powers of both Houses.

The third negative point is that nothing in these amendments cuts across or undermines any commitments by any of the major parties in the last election or those contained in the coalition agreement. None of those texts envisages the “Heinz minus one” number of referendums; they all envisage a broad statement that when the treaty is going to be changed, there will be a referendum. That is preserved by these amendments because if there is the normal treaty reform process, that is what will happen. For all those reasons, we are trying to introduce a bit of the proportionality which noble Lords on various Benches have called for in the last few weeks of debate on the Bill. We have done something to limit the damage to the system of representative parliamentary democracy—which all of us, not only those who tabled these amendments, hold dear—if this Bill passed unamended. I hope that, after debate, the House will support the amendments. I beg to move.

[Baroness Nicholson of Winterbourne]

My Lords, I shall comment briefly on the important set of amendments which the noble Lord, Lord Hannay of Chiswick, has put forward, and focus on two important points. The first concerns Amendment 15, in which the noble Lord, Lord Hannay, recommends that after “defence” we insert the words,

“that permits a single, integrated military force”.

As I understand the amendment, this would trigger a referendum. The second point concerns Amendment 16, in which the noble Lord recommends that decisions on common defence and security policy be referred back for an Act of Parliament.

It is immediately of interest that the supporters of this amendment, led by the noble Lord, Lord Hannay of Chiswick, have, in a sense, given a concession: they have agreed that if Amendment 15 is incorporated, there should be a referendum on a single, integrated military force. However, in their second amendment, Amendment 16, the noble Lord has ceded that although the issue of common defence and security policy is very important, it should be referred back to Parliament, in contrast to the purpose of the Bill, which is to seek the approval of the British people.

I should like to comment first on this welcome opening-up as regards the potential for a referendum on the single, integrated military force. My problem, however, is that I cannot really understand what that phrase means. I do not find “a single, integrated military force” a phrase that is commonly—or ever—used in treaties or Acts of this nature. In fact, I have not been able to recall it at any time during my decade or the decade previously in the other place. I cannot help but wonder precisely what it means. Does it mean, for example, the single, integrated military force that I saw and worked alongside in the south of Iraq in 2003 to 2007, when we had a number of military forces that co-ordinated themselves under UK command? We had the Poles, who were superb; we had the Italians—a little bit more questionably perhaps; we had the Romanians, who were very fierce fighters; the Bulgarians, over whom hung a little bit of a question mark; the Danes, who were superlative; and one or two others. On top of that, of course, we had Australia and the US.

What does a single, integrated military force mean? Does it mean a command under one structure, leader and nation state? Does it mean all 27 member states? Well, I think that that is unlikely. Mercifully, the ones that do not belong to NATO are now very few, but they are very unlikely to offer troops for a single, integrated military command. Does it mean, say, the Franco-British military command, which is getting stronger and whose strength I and others most warmly welcome? I may be correct in saying that at least until recently we had had at least 32 different actions going on with the French on the ground somewhere, some of which were training. We are strengthening that duality in military terms all the time.

Although the referendum proposed here for a single, integrated military force is a welcome admission that a referendum for the British people on common defence and security policy matters, at least in this perspective, is of high value—high enough for the proposers of the amendment to accept that a referendum would be required—none the less, the phraseology is with great respect too loose, too weak, too open and too imprecise to allow this amendment to be adopted.

In Amendment 16, on the other hand, the common defence and security policy is important enough to the proposers of the amendment to bring it back for an Act of Parliament. But how does that differ from now? Parliament has primacy in any event; if we wish to have an Act of Parliament on anything to do with EU legislation or policy, we can do that now. We have the primacy; it has been restated in Clause 18 and it has been there since 1972. The purpose of this Bill, which I support, is to put it to the people, which is why I cannot accept Amendment 16, which brings it solely back to an Act of Parliament. That is no different, in essence, from the situation that we have today.

Another amendment that the proposers have put forward, led by the noble Lord, Lord Hannay, and the last on which I will comment, contains the proposal that we should lose our potential veto for the multiannual budget. Is that truly sensible? I draw noble Lords’ attention to a highly possible situation, whereby in Brussels there could easily be today a time, not far distant, when the discussion on the multiannual budget was about the 40 per cent of the common agricultural policy expenditure. Noble Lords will know how difficult it is to get reform; it is almost possible—it has so far proved impossible to grasp the common agricultural policy by the tail and pull it into the reform network. It is rather like The Hunting of the Snark; it just has not been possible.

It is easy to imagine that reforming the common agricultural policy would be an expensive business. How might that be paid for? Suppose that it would be paid for by the British rebate. It would be very hard indeed to obtain a majority against that for the United Kingdom. We might not be in a minority of one: others who are net contributors and who also wish the reform of the common agricultural policy, such as the Netherlands and Poland, would perhaps be with us; I am not sure. But as sure as eggs is eggs we would lose France. In fact, we would have lost France before the argument began because France—great ally as it is, net contributor as it is—would have been arguing for just that. The loss of the British rebate as a payment for a partial reform of the common agricultural policy would be enormously attractive.

15:30

Of course, as noble Lords know well, particularly those who have served such excellent times in Brussels, the key strength of Brussels—of the system and the mechanisms that have been built up over the decades; the game which everyone now plays all the time, some more successfully than others—is to find ways of isolating those members of the blocking minority. How do you do that? We know how to do that very successfully indeed: by playing the game long, by building up a whole handful of debts and by calling in those debts at the one moment when it matters to your nation or to your grouping. It would not be difficult at all to have used that technique to place Britain in the dunce’s corner in such an argument.

In principle I also believe that a veto is a negative way of behaving. None the less, the European Union is not such a stable body. In fact, with Croatia, the incorporation of Kosovo as a sort of colonial item and other more difficult—by which I mean corrupt—member states coming in, Brussels is not going to be strong, stable and balanced or provide fair treatment for every single member for a very considerable time to come, if ever. I believe that the veto for the multiannual budget is an essential prerequisite, for the sake of the United Kingdom and other member states, and therefore I support the Bill rather than this amendment.

Of course the imperative must be to help Brussels and the EU in general to be clear and transparent and to fight corruption much more effectively. Brussels is not well co-ordinated—none of us would suggest that it is—with other enormously important global players with whom it has to link, such as the World Bank or the United Nations. Through this Bill, we must tackle the waste that Brussels represents in the eyes of the British public and is in fact true in many instances. Our job must be to force Brussels, in a positive way, to tackle its waste management, both financial and administrative. Perhaps the best way of doing that is by transparency. We should ask Brussels to focus on project delivery and proper budget management, through the means of openness, transparency and as full as possible an involvement of the people of the United Kingdom. Our objective must be to reassure the British public that money spent in the European Union goes further and is better spent because of British involvement than would otherwise be the case.

I thank the noble Lord, Lord Hannay, immensely for putting forward such interesting amendments. Unfortunately I cannot give him and his fellow supporters my support.

[Lord Rowlands]

My Lords, over the whole of my parliamentary lifetime I have always had a Eurosceptic disposition. Indeed, looking back at or listening to the deliberations in Committee, and now on Report, brings back floods of memories of the debates in 1972 and the various devices that were then thought up to try to make the system more accountable. I recall, for example, an amendment that there should be a general election before we entered the European Union, while there were of course numerous debates on referendums both in 1972 and particularly at Maastricht. I would therefore have had a natural sense of empathy for this Bill.

I have supported referendums and greater accountability on European decision-making right throughout my parliamentary lifetime. Having listened to much of the Committee and read as much as I can of our deliberations, I must say that this is now becoming a hugely overcomplicated process of accountability. Just look at Clause 6(5) and the list of issues that will, through its paragraphs (a) to (k), be subject to a referendum. It is not unreasonable for anyone reading this clause to believe that, as a result, there will be a potential plethora of referendums.

I support the objective, the principle, and the idea behind the Bill, but the Government have overcomplicated the issue. Reflecting on my own experience, I now rather regret that we did not in an earlier time invest greater interest and press the business of ensuring greater parliamentary accountability—a much tougher regime of accountability. That is why I find parts of the Bill, particularly Clause 6, if it were shorn of the referendum provisions as these amendments suggest, very important and attractive.

I was on the Constitution Committee in the previous Parliament when it brought forward an amendment during debate on the Lisbon treaty that all opt-ins should be the subject of particular parliamentary processes, approval and accountability, and the House subsequently devised the procedures to do just that. That is now the best route that we can take to make these European decisions more accountable. Some fundamental issues should be the subject of a referendum, and the three listed in the amendment clearly qualify. Indeed, our own Constitution Committee suggested in its report on referendums that they are best confined to the big, fundamental issues. Those should be subject to a referendum, but not the plethora of some of those listed in Clause 6. Given one’s own experience, and having listened to the debate, I certainly support these amendments, because they would reinforce the role of parliamentary accountability and do not go down the confusing route to the possibility of a plethora of referendums.

[Lord Waddington]

My Lords, the noble Lord, Lord Rowlands, was very eloquent, and I can well understand how he has reached the position that he has. Looking at just one of the amendments that we are considering, I must say that I find the wording of Amendment 15 really rather odd. It seems that, taken at its face value, all sorts of decisions could be made on a common European defence and no referendum would be required unless the intention was to permit a single, integrated military force. We could integrate our Navy with every other country’s navy and still be well short of creating a single, integrated military force, so there would not have to be a referendum. That seems very odd if you are going down the route of having referendums at all.

The noble Lord, Lord Hannay, was again rather beguiling. At one stage he said that he was putting forward these amendments in a spirit of compromise. It might look like an exercise in compromise to some people, but to others it might well look like part of a general strategy to whittle down the protection that the Bill is designed to afford. That is what I find so terribly depressing: that having gone all through Committee, and now on Report, not a word is spoken by the opponents of the Bill to suggest that they have a clue as to how disillusioned people feel and how necessary it is to give them some reassurance, or how necessary it is to show them that their views are not going to continue to be overridden and that we are not going to go on continually conceding powers so that eventually we finish up being no longer a sovereign, independent state. Never a word comes from opponents of the Bill to show that they have any realisation of the difficulties that we face at the present time.

In these debates we are constantly told that the right to a referendum can be safely whittled down here, there and everywhere. We are constantly told that referendums are an affront to parliamentary democracy, but I am bound to say that people are asking me what Parliament has done so far to guarantee our independence and to protect our fundamental freedoms. They point to what happened over the Lisbon and all the rest of it, and, as I say, they are thoroughly disillusioned. I think that they, like me, will not be at all impressed by the suggestion that somehow or other we can meet most of these problems by making sure that Parliament does its work properly.

I remind my noble friends and noble Lords of some of the history. The noble Baroness, Lady Quin, said in a speech the other day that it was made clear in the 1975 referendum that we were joining not just a common market but an EEC. Let us leave aside for a moment the fact that the question on the ballot paper was:

“Do you think the UK should stay in the European Community (Common Market)?”.

Let us leave aside for a moment the fact that there was no mention of the EEC at all. In fact, Harold Wilson, as he then was, made a great speech in which he recommended a yes vote because the threat of monetary union had gone away. I distinctly remember him saying that. That is all part of the dismal history. “Stop worrying, it is not going to happen”. Then it happens. “Well, it is not so important after all and it certainly will not happen again. This is the end of the road”.

I came back from Bermuda in 1997 having looked somewhat askance at some of the developments during the years when I was away. The first thing that happened to me was that I was invited to a rather grand dinner party at which every other guest was a Whitehall mandarin. There were three ambassadors and one or two permanent officials from the Foreign Office, and they said, “Oh, what are you banging on about, David? Stop worrying”. These are the exact words that were used to me that night: “The high-water mark of European integration has been reached”. That is what they told me. Well, the next day the tide continued to come in and it has been coming in ever since.

We are constantly told that it is safe to leave all these matters in the hands of our elected politicians. We might not have much to thank Mr Gordon Brown for, but let us give credit when credit is due; but for Brown, Tony Blair might well have used his vast majority to take us into the euro at the end of the 1990s, and a fine mess we would be in now. Remember, he dreamt up the idea of a referendum only to get him through the 2001 election. There was no question of the need for a referendum on the euro prior to that.

[Lord Liddle]

If I am correct, Mr Blair made his referendum commitment in 1996.

[Lord Waddington]

I am sorry, will you please repeat that?

[Lord Liddle]

Mr Blair made a commitment to have a referendum on the euro well in advance of the 1997 general election, in 1996. Some of us thought that that was a mistake at the time, I hasten to add.

[Lord Waddington]

That had escaped my notice. By the end of the 1990s, he was certainly sending out messages that he thought the time might well be right to think about going into the euro. If Mr Blair were in office now—this would have been relevant on one of the amendments that was not moved—he would no doubt be advocating the need to have elections for a European president, which he would urge upon us as a not very significant matter that would only increase the powers of the people and was a thoroughly good idea, when we all know perfectly well that if a European president were elected that would be a dramatic step towards a United States of Europe. In fact, from the moment of such an election, the international community, whatever the constitutional niceties of the matter, would consider that Britain had turned itself into a United States of Europe.

[Lord Radice]

My noble friend is right. In fact, the Labour Party committed itself in 1994 to a referendum on the euro. That pushed the Conservative Party in that direction as well, and the Liberal Democrats were also in favour. Before the 1997 election, all three main parties were in favour of a referendum on the euro. I do not know where the noble Lord was at the time—was he out of the country? That is what actually happened.

[Lord Waddington]

Perhaps we could have a sweepstake and people could put in their bids; we have had 1996, 1994 and 2001, and we could have a few other dates thrown in. The fact remains that in 2000 and 2001 the papers were full of the possibility of a joint platform to take us into the euro. We were going to have the leader of the Liberal Party, Kenneth Clarke and Blair all on the same platform advocating our entry into the euro, so it is a bit rich to tell us now that there was no danger at that time of our going in. We know perfectly well that there was a very real danger of that, and, as I say, we were rather saved from it by Mr Brown. That at least can be said for him.

No one has answered the other point that I have made—I would have raised this on the third amendment if it had been moved—about the issue that has now arisen: what do we think Mr Blair would have done if he had been in office now and the possibility had been dangled before him of the direct election of the European president? He would have said, “Marvellous idea. It certainly doesn’t affect the rights of the British people. In fact, it extends their rights. It gives them the right to vote for the person they want”, without any regard whatever for the appalling constitutional consequences, which, from his press statements of the past few days, he clearly does not recognise. European matters safe in the hands of Parliament? History shows many things but certainly not that. This is not a very creditable performance.

It is no wonder that present-day people think that it is about time that there was more protection for them so that we can be sure that at some stage, if the European train goes tearing along towards the ultimate destination of a united Europe, we will get off before all British sovereignty is lost and we cease to be an independent nation. I am not attracted at all by this piecemeal approach of, “Don’t worry, this will all be done in a spirit of compromise. We can just take away the right to have a referendum here and another right there; it does not really matter”. That is just like the language that we have had for the past 25 years, and I do not find it attractive.

[Lord Goodhart]

My Lords, my noble friend Lord Waddington said early in his speech that some Members of your Lordships’ House are opponents of this Bill, and no doubt he includes me among the opponents. I am not an opponent of the Bill and nor are others of any significance in the House. What we want to do is make sure that matters which until now have not had to be decided by Parliament will be decided by Act of Parliament, and we are entirely in favour of giving the right to a referendum in matters of importance, which the noble Lord, Lord Hannay, has already described. We are looking for a different Bill, but we have no wish to destroy this one.

Referendums to be voted on by an entire country involve a lot of work on the part of those arranging them and cost a great deal of money. I understand that the referendum voted on a couple of months ago cost something in the order of £120 million. That is why referendums should be used only for matters of real national importance. Another reason, which is perhaps even more important, is that we must recognise that people will vote in a referendum only on issues of real interest to them. So far, the principle of the way referendums should be used has been recognised and observed. Only one referendum, of course, has been voted on across the whole of the United Kingdom; the 1975 referendum on our continued membership of the European Union. Since then, there have been referendums in Scotland, Wales and Northern Ireland on the important subject of devolution.

Those of us who support Amendments 14 to 21 accept that three of those issues, as the noble Lord, Lord Hannay, has said, are now covered by Clause 6. In all probability, they would justify a referendum. They are the creation of a single integrated military force in Amendment 15, making the euro the currency of the United Kingdom in Amendment 18, and bringing the United Kingdom into the Schengen protocol in Amendment 19. But extending referendums to other matters now covered by Clause 6 and its subsidiary, Schedule 1, wastes time and money and is completely unjustified.

In Committee, I spent some time demonstrating this, particularly in relation to matters affecting the legal system. I take, for example, the possibility that the United Kingdom Government might wish to participate in the European public prosecutor’s office. This is an organisation that does not now and may well never exist, and it is perhaps unlikely that the United Kingdom would participate in it if it did, although it is a possibility. But the point about this is that the EPPO, to shorten the name, is far from being a potentially serious change to the United Kingdom legal system. If your Lordships look at the terms of the TEU or the TFEU that deal with this issue, it becomes obvious that the EPPO would apply only to offences against the EU’s financial interests or to serious crime that has a cross-border dimension. Those would represent a tiny proportion of prosecutions in the United Kingdom and would affect hardly any of the ordinary citizens of this country. So if an EPPO is created and the British Government want to join it, what will happen? Most citizens will surely say, “This does not affect me so I am not going to waste my time by going out to vote on it”. Of course, the dinosaurs of UKIP will thunder down to the polling station to cast their votes. No doubt they would win in those circumstances, but that does not represent the real view of the people of this country.

There are also several cases in the Bill where the existing provisions of treaties require unanimity, but there is a possibility that member states might get together in the future to agree to QMV. Since the United Kingdom Parliament would have to give its consent to that change, it is likely that it would occur only if moving to QMV was of benefit to the United Kingdom, which it often is. It is more often than not to our benefit because it avoids the blocking of QMV, and therefore of legislation, by small member states that have a limited interest.

Matters made subject to QMV may be important or relatively trivial. It is totally inappropriate to insist on the referendum when we do not know how important or controversial the issue for that referendum will be. It is unlikely that ordinary citizens would take an interest unless it was clear to them that the referendum was a matter of importance, and one that would affect them personally.

We have never seen anything like this piece of draft legislation before. In cases where legislation has called for a referendum, that referendum comes first. It comes before any talk of an Act of Parliament. If the result is negative, there is no Act of Parliament to give effect to it. What we have here is an Act of Parliament first, followed by a referendum that might overrule it. If Parliament makes a decision, surely that decision should be binding. If Parliament wants to leave it to a referendum, so be it. What we have here is a ridiculous system that is contrary to the constitutional practice of this country.

[Lord Flight]

My Lords, the noble Lords proposing these amendments seem not to understand yet, notwithstanding the amount of time we spent in Committee, the whole point of the Bill. Put very simply, the point is that, whether by intent or by being beguiled, over the past 20 years British Governments have continued to give away sovereignty to the EU, notwithstanding that they have frequently pledged not to do so. Agreeing to the Lisbon treaty, clearly in opposition to the majority view of this country, was a huge example of just that.

This rather strange Bill and the arrangements for referenda are, I concede, a constitutional novelty. How it will work, assuming it becomes law, we shall have to see. However, it is clear that the referendum locks are there as a deterrent to prevent Governments repeating the behaviour of the past. It is fine to talk about letting the decision be made by Parliament, but we all know perfectly well that if one party has a substantial majority, Parliament is, alas, in practice an elected tyranny. There is absolutely no guarantee that even the wisest heads of this noble House will vote against the Government of the day if that Government have a substantial majority of Members in both Houses.

The issues that these amendments cover are among those that have been red line issues for Governments of both sides for some time. They are not issues that have been plucked out of the air. As was apparent from debates in Committee, there are several other issues that could have been picked up in both Schedule 1 and Clause 6, where there are clearly some aspects of transferring of power but where, for better or worse, the Government have decided not to make them subject to a referendum. It is not a case of issues being protected by the referendum lock—this is not something new that has been pulled out of the air—but about issues which have been seen as important red lines that should not be crossed by, I repeat, Governments of both persuasions.

16:00

The issues covered in these amendments are very straightforward to my mind. The European public prosecutor is a sensitive issue and in Committee we debated precisely why that is so. Looking at the matter from the perspective of not wanting Governments to lead us further down the path of giving away power, I suggest that it warrants a referendum lock. The vetoes are similarly extremely sensitive issues and need to be caught under the passerelle provisions. Otherwise, they could lead to treaty change via the back door.

The common defence is vital to UK interests—the noble Lord, Lord Waddington, made that point extremely clearly. To me, at least, it is absolutely unthinkable that we should move towards an integrated European army by stealth without the confirmed decision of the British people, and wake up one morning to find that although we had been promised that that would not happen, it had happened.

I am afraid that these amendments to me amount to little more than the tactic deployed by certain noble Lords throughout our debates on the Bill; that is, endeavouring in all possible ways to weaken the principle of the Bill, which is to make absolutely sure that even if Governments are unwise enough to propose giving away power, there will be the check of the British people being able to say no. Some say that we cannot be swamped with referenda, but it is clear that they are there as a deterrent. Although the prospect of referenda occurring at all is pretty small, I cannot think of a more effective check. In an age when we are likely to be going into very new territory as the drop-out of the weak financial positions of certain European states is felt, we are likely to enter an era in which it will be only too easy for Governments to be persuaded or dropped into giving away further major powers. The Bill is there to stop that. I can understand why a keen Europhile might not like that very much, but the whole point of the Bill is to protect the British people.

[Lord Davies of Stamford]

My Lords, I rise to do two things. One is to address the contention made by the noble Lord, Lord Waddington, that I have heard before from him and other noble Lords during our debates on the Bill. His contention is wrong—that the British people have been systematically deceived about the nature or purposes of the European Union, or the European Community as it previously was, and that therefore they were unable to take informed decisions at election time or, indeed, at the time of the 1975 referendum.

It was always clear from the beginning that the European Union, or the European Community, was not a dead institution that was fixed once and for all. It was a dynamic institution, even a teleological institution which had a final purpose or end; all that was stated in the preamble of the treaty of Rome. The phrase about the ever closer union of peoples was always there. Right at the beginning, even when Macmillan first suggested that we might join the Common Market, or the European Community, I remember that speeches were made by members of my own party. I was a schoolboy at the time but I was already taking an interest in these matters. I remember Hugh Gaitskell’s famous speech. My noble friend Lord Radice, who has written books on this subject, will correct me if I have the date wrong. I think that it was in 1962 that Hugh Gaitskell made a famous speech saying that the effect of our joining the European Community ,or the Common Market, would be that we would become like Texas in the United States. If I am right and that speech was made in 1962, that means that literally for the past half century this discussion about the constitutional significance, and the significance for national sovereignty, of our being members of this institution have been clearly, expressly, openly, overtly and thoroughly transparently discussed in public.

[Lord Flight]

I thank the noble Lord for giving way. It may be that he was more involved at the time than I was, although we are roughly the same age. However, I remember being organised by the Conservative Party at the time to go out and preach on voting in the referendum for the Common Market—indeed, I voted for it—specifically on the grounds that it would be a good economic prospect for this country. We had lost an empire and we needed to belong to something where we could trade. I was not even aware of the idea that I was trying to market something about political unification—fool though I may have been at the time.

[Lord Lea of Crondall]

I am sorry—I do not know who is speaking and who is intervening here.

[Lord Davies of Stamford]

Perhaps I may resume my remarks and then of course I will give way to my noble friend Lord Lea. Given that the noble Lord, Lord Flight, brings up his personal reminiscences of the 1975 campaign, I can respond only by saying that I did indeed take part in it. I actually became chairman of the City in Europe committee—I had been working in the City only for a year or two at that time—that organised the campaign in the City, and I chaired a meeting attended by 600 or 700 people at which Edward Heath spoke effectively. I remember that very well. I say with great sincerity that then, as now, I was committed to the long-term agenda explicitly set out in the treaty of Rome, which I had taken the trouble to read—even in those days. I believe that I knew what I was doing and that those who campaigned with me knew what we were doing. We made it absolutely clear to the British public what was intended and what we had in mind. I am very proud of that campaign.

Those are my personal reminiscences, and I am delighted that at the time the noble Lord had the right views on the subject. Perhaps he will come around to the right views again one day. Both of us took part in an interesting campaign. I give way to my noble friend Lord Lea.

[Lord Lea of Crondall]

I am most grateful to my noble friend. Perhaps I may give an even more telling example that gives the lie to the other contention. I recommend to the noble Lord, Lord Flight, that he looks at the 1971 White Paper. Mr Heath was Prime Minister, although he was not necessarily the favourite Conservative Prime Minister of the noble Lord. The first page refers to going towards ever-closer union. That is not a phrase that I particularly like, but I invite the noble Lord, Lord Flight, to read that White Paper, which is in the Library, and see whether he wants to keep reiterating this falsehood—I am sorry, I withdraw that—or, rather, this error.

[Lord Davies of Stamford]

My Lords, the second point to which I wanted to draw attention is a theme that has come through in all these debates. All I shall say in a few sentences is to try to make explicit in Hansard what should be implicit for anyone who reads our proceedings with any degree of attention. A clear difference is emerging between those of us who are in favour of the Bill and those of us who are against it as regards the role of Parliament and our view of Parliament’s constitutional importance, functioning, efficacy and efficiency. It is clear that the coalition Government and those who support them in this Bill do not really believe in Parliament in the same way that those of us on the other side of the argument do. That is a sobering thought, because until now, for hundreds of years, there has been no distinction between the parties about Parliament and the fact that it is the best way of taking complex decisions on behalf of the country. That is why most of us came into politics and public life in the first place. It was because we wanted to be part of that process and to influence it in one way or another. All parties in this country and all of us who have stood for public elected office have always believed that Parliament was the best possible mechanism for achieving good governance and for making sure that complex arguments had been viewed from their different perspectives and debated, and that we came to a mature and considered conclusion on difficult issues. I am very proud of being here in the mother of Parliaments.

Now half our Members in this House this afternoon—perhaps more than half; I do not know, but we will see what happens in the vote—are sceptical about Parliament. They pay lip service to it and, no doubt, see some role for it, but they are clearly very sceptical indeed about Parliament. They do not think that Parliament is mature enough or sufficient for the purpose of deciding complex questions in the future. They want to go back to this Napoleonic concept of the plebiscite or referendum as a mechanism that is superior to that of parliamentary government. That is a sobering thought. I will not go further into the constitutional implications or the historical significance of that because it would take me well outside the amendment we are debating. However, it has been a theme which, unambiguously, has emerged from the debates we have been having on this Bill. It is something that we should all reflect on carefully because the long-term consequences of such a split in what has always been a constitutional consensus in this country are to my mind very sobering indeed.

[Lord Kerr of Kinlochard]

I support the final point made the noble Lord, Lord Davies, and the final point made by the noble Lord, Lord Goodhart. My point is a Burke point. I hope that the noble Lord, Lord Waddington, is listening: I am addressing it to the rising hope of the stern, unbending Tories. It seems to me really important that we should try not to undercut Parliament. As the noble Lord, Lord Goodhart, said at Second Reading, as he has said again today, what we are doing with these referenda, the ones talked about in this clause and in this Bill, is asking the simple question: do you wish to overrule Parliament; do you wish to disallow an Act of Parliament? In every case, the Act will be on the statute book and the question for the electorate will be: do you want overrule Parliament? What, I ask the noble Lord, Lord Waddington, would Burke have said?

[Lord Waddington]

As the noble Lord has been kind enough to bring me into this debate, is there not a difference between this situation and the situation which has normally appertained in the past? Is it not right to say that in the eyes of the public people are elected to Parliament to exercise the powers which are going to be bestowed upon them? The difference which has taken place over the past years is that people who have been elected to Parliament to exercise specific powers have thought that they are entitled to give away those powers in perpetuity to others. That is the great change which has come about and must be acknowledged when we are talking about Burke. Burke never envisaged that representatives in Parliament would give away the powers which they have been given—quite the contrary.

[Lord Kerr of Kinlochard]

I could repeat my Burke quotation with which I thought I had skewered the noble Lord, Lord Waddington, in an earlier debate but I will not. It is of the essence of Burke’s theory of parliamentary democracy, in which the Conservative Party used to believe strongly, that the people were consulted about who should sit in Parliament. The decisions of Parliament reflected the judgment of the people whom they had chosen. That seems to me to be quite a good rule and the point made by the noble Lord, Lord Goodhart, is a strong one. I support these amendments with the exception of the wording of the amendment on the euro, on which I have a separate amendment to which we will come later.

[Lord Flight]

I thank the noble Lord for giving way. I spent eight or nine years as a Member of the House of Commons when one particular side had a large majority. I felt that I was simply going through the motions and that there was no prospect of the Opposition members being able to stop that which the Government of the day wished to do. It was an elected tyranny by a large majority.

[Lord Kerr of Kinlochard]

I look forward to hearing the noble Lord express that view in the debate on the reform of the House of Lords.

[Lord Faulks]

My Lords, the amendment seeks to remove the referendum lock from all potential transfers of powers and competences, with the exception of the euro, Schengen and defence, in the sense that it is defined in the proposed amendment. Noble Lords might have thought, after the amendment proposed by the noble Lord, Lord Williamson, and its 40 per cent threshold, that the principle of a referendum lock had received acceptance, albeit without much enthusiasm except for those who are constitutionally opposed to referenda as a whole. This amendment goes much further. It takes outside the lock all potential transfers included in the big five, as they have been identified by my noble friend Lord Howell, with the exceptions that I have already described. I shall mention just one, referred to by my noble friend Lord Goodhart, the European Public Prosecutor's Office.

16:15

[Lord Hannay of Chiswick]

I am most grateful to the noble Lord for giving way, but he has managed in about three sentences to say three incorrect things. He said that in moving the amendment, we paid no attention to what he referred to as the big five. If he had listened to my introductory statement, he would have heard that, exactly to the contrary, we have amended the text that we had on the table in Committee by including Schengen and the international military force. If I may say so, it is clearly not sensible in our debate to pay no attention whatever to the person who introduces the amendment. I covered all that quite thoroughly.

[Lord Faulks]

I am grateful to the noble Lord for his intervention. I listened carefully to what he said and took on board the fact that the suggestion was that some other matters might also be the subject of a referendum if they were joined with those explicitly dealt with by the amendment. I also listened to what he said about the fact that there had been a change since Lisbon because now there was to be parliamentary approval, which was not the case before. I hope that the noble Lord accepts that I had listened to what he said, but, time being as it was, I was trying to truncate my remarks to make them digestible.

I return to the European public prosecutor, which is a matter which I suggest would not be in our national interest for the reasons I gave in Committee. It would involve us adopting the corpus juris, as it has been called; it might well involve us having national prosecutors representing the European public prosecutor; and it might involve an attempt at harmonisation of legal systems, so that we would have to take on board, for example, rules in relation to evidence; hearsay—

[Lord Goodhart]

My noble friend may be right on those particular points, but that would surely be a good reason for Parliament rejecting British participation in the EPPO, not for saying that that is an appropriate matter for members of the public to decide in a referendum.

[Lord Faulks]

I am grateful to the noble Lord and I accept his point. I am not quite sure what is the position of the party opposite in general terms on the European prosecutor. In Committee, the noble Lord, Lord Triesman, said, “Just say no”—as he said in respect of several proposals—from which I understood him to mean that Parliament would not put forward the possibility of a European public prosecutor and that there would therefore be no need for the referendum lock. However, from observations made by the noble Lord, Lord Liddle, I was not at all sure where he stood on the European public prosecutor.

I am, however, in no doubt about the view of the noble Lord, Lord Davies of Stamford, because he described the matter as being, to use his words, a no-brainer. Were somebody with his views to be the Minister for Europe in some Government to come, it would no doubt be said that the establishment of a European public prosecutor was generally to be the policy of the Government. The matter would then go through Parliament without the British people having been consulted and we would then have a European public prosecutor, with all the disadvantages which I have attempted to identify.

I am not in any way lacking in enthusiasm for the European project but, as a lawyer, I am aware that whereas sometimes I would like to conclude a negotiation without consulting my client—often I think I do much better without consulting my client—it is sometimes necessary to do so and to seek their instructions. It seems to be accepted on all sides of the House that enthusiasm for the European Union is, sadly, not as great as it might be. It is therefore, I suggest, incumbent on us as parliamentarians to consult and inform the people by means of a referendum, so that we can reconnect with those who are the source of our power.

Although I accept the qualifications made by the noble Lord, Lord Hannay, the amendment would take away that reassurance which has been identified by the coalition Government. I suggest that they have identified the zeitgeist. The Bill reflects what the country would like. To remove the referendum lock in the way proposed by the amendment would undermine that.

[Lord Risby]

My Lords, perhaps we could return to the Laeken declaration, which signified a very important moment in the history of the European Union. We all recognise the problem of disconnect. The Laeken declaration was intended to inform the individuals who were considering the whole future of the European Union what should be done about that problem. It is a fair summary to say that out of the Laeken declaration we saw the emergence of the constitutional treaty, which became the Lisbon treaty. Anyone, by any objective standards, would have to conclude that the spirit of Laeken, which was meant to inform the constitutional treaty, and later the Lisbon treaty, was not successful. Right across Europe we have seen an increase in Euroscepticism and in the disconnect between the peoples of Europe and the institutions of the European Union. The treaty, which was meant substantively to deal with that problem, has failed, not only in this country but right across the European Union. I suppose that one of the definingly difficult moments in the history of our relationship with the European Union was when Tony Blair substantially gave up the rebate in return for some structural reforms particularly linked to the common agricultural policy.

At the heart of this Bill must be the veto for the very firm purpose of restoring a sense of ownership of the processes of the European Union and our relationship with them. I think we all agree that the rebate is a most sensitive issue. Therefore, I just pose this question: would we wish to delete the requirement for a referendum if a future Government agreed to remove unanimity from the EU multiannual budget? This is a very contentious issue—it covers the whole envelope of European Union spending. The annual budget veto has already gone, and I suggest that nothing, particularly at a time of austerity, would be more damaging. It is precisely the threat of that happening that the Bill attempts to deal with.

I come back to the point that right across the European Union we have failed dismally to give people a sense of ownership or to secure the feeling that they have some sort of control. Therefore, comprehensive but clear processes, with a significant range of vetoes, are crucial in this country if we are to restore a sense of confidence and connection between the people and the European Union.

[Lord Stoddart of Swindon]

My Lords, I think that I have taken part in virtually all our Committee days. We are beginning to get to the end of our labours, although there are still a few amendments to go. This is a very important amendment and it has been discussed at great length. However, I want to get back to the reason why we have the Bill at all. It is because the people of this country have felt let down by the Government, and indeed by Parliament, for not involving them in very important decisions which affect their lives and the future of our country. I think that the Lisbon treaty brought that to a head and persuaded the Conservative Party that it had to do something about it. Together with its Liberal Democrat colleagues, it has now brought forward a Bill which, frankly, I believe has to stand virtually as it is or not at all. For that reason alone, if there is a vote, I shall vote against the amendment.

During our debates, we have heard a lot about parliamentary democracy, and so we should. Of course everyone agrees with real parliamentary democracy, if that is what we are talking about, but are we really talking about proper parliamentary democracy or do we have a “whipocracy”, in which great issues are not decided following proper debate in Parliament and relatively free votes on important constitutional matters but are voted on at the behest of government with strong whipping? Under those circumstances we cannot say that Parliament alone should be responsible for the great issues of who governs Britain—which is what it is all about.

[Lord Richard]

I have listened to the noble Lord for 20 years. He has been a passionate supporter of parliamentary democracy and British sovereignty, and has passionately opposed any kind of Eurofication or steps towards greater union with the countries of Europe. How on earth does he square the position that he has held for donkey’s years that Parliament is sovereign, and that it is what Parliament does that matters, with the idea that now Parliament has been doing things that he does not like it can no longer be trusted—even though Governments with majorities have been elected in general elections—so we have to move to a different form of public consultation? It is inconsistent with everything that he has said for 20 years.

[Lord Stoddart of Swindon]

Of course, I have listened to the noble Lord, Lord Richard, for longer than 20 years, and I know that he is an absolutely committed Europhile. He is right to say that I am very much in favour of parliamentary democracy, but I am trying to explain that in relation to the European Union we do not have a proper parliamentary democracy. All the amendments made to the European Communities Act 1972 were made by treaty. Under those circumstances, the Government agree to the treaty and sign it. One former Secretary of State for Foreign and Commonwealth Affairs said, “Now that I've signed the treaty, perhaps I'd better read it”. Therefore, we cannot be sure that even those who sign the treaties know what they are about. Nevertheless, the treaty then comes before Parliament and Ministers come to the Dispatch Box and say, “You must pass this treaty because we have agreed to it. If you do not, the country's standing in the world will be damaged and we will never be trusted again”. Governments put Parliament in an almost impossible position. If Parliament rejects the treaty out of hand, the Government will say, “My God, we have no further influence in the world because Parliament has declared that it does not agree with the treaty”.

[Baroness Symons of Vernham Dean]

I was the lead Minister on the Amsterdam and Nice treaties. I stood at the Dispatch Box and argued for them. I do not recall ever saying to the noble Lord, Lord Stoddart of Swindon, that we would not be trusted again. We argued on the merits of the treaty. It is important that we stick to the merits of the treaty in this argument today. I would not like the noble Lord's arguments about what was said from the Dispatch Box to stand on the record without being challenged by the person who stood at the Dispatch Box.

16:30

[Lord Stoddart of Swindon]

Of course the noble Baroness is entitled to challenge what I have said. I accept that she did not say that from the Dispatch Box, but various Prime Ministers did so. I am sorry if I offended her, but I did not accuse her of any such thing. However, we do have this problem; and there is a further problem that treaties cannot be amended. Parliament, which is here to scrutinise and amend, is told that it is not allowed to amend a treaty. Treaty amendments are simply not allowed, so Parliament has to accept everything in the treaty or nothing. That is Parliament’s situation in relation to the European Union. It is not democratic and it is not demonstrative of parliamentary democracy; when we talk about parliamentary democracy, let us realise that in respect of EU treaties. It has been the case with every single treaty that I have taken part in—and that is all of them. As the noble Lord, Lord Richard, pointed out, I was never in favour of joining the Common Market in the first place, and I believe that it would be in the best interests of this country to leave it at present. That is my view on this Bill. It is the best that we are going to get, quite frankly, at this stage.

Out in the country there is disquiet about our membership of the European Union—where it was, where it is now and where it is going in the future. My view, which I expressed in Committee, is that there should be a referendum as to whether we remain in the European Union or come out. I know that is difficult, but some way, some time, that is going to have to happen. I do not think the people of this country will be satisfied until it happens. I am sorry that I cannot support the amendments before us. As I have said, I think this Bill is about the best that we are going to get.

[Lord Dobbs]

My Lords, the noble Lord, Lord Davies, has tested our memories, and I ask noble Lords to test theirs. I did not intervene in Committee because to do so might have delayed the Whitsun Recess. Never have I received such a warm reception for a speech that I did not make.

I have been reluctant to intervene on this Bill because it has so much detail. I have been prompted to change my mind by two things. First of all, sitting here last week listening to proceedings for many hours, I heard language that I did not think did the argument justice. I heard Members of another place called “rather nerdy people” simply for being persistent and consistent. I do not know whether it is my job as one of the newest Members here to say that that sort of language in a debate helps neither the debate nor the reputation of this House.

I also thought that I should not intervene because, frankly, there are so many big beasts of the European jungle here—some very big beasts. Looking around this Chamber I can see that many of them are waiting to pounce, although where they were last week when the noble Lord, Lord Faulks, and I defended the honour of this place in the Commons versus Lords tug of war, I do not know. I wish they had been there. For those who do not know, we came a very close second.

Listening to this debate, I often feel as though I have dropped into the scene of that wonderful film, “Casablanca”, right at the very end when the wicked deed has been done, the fog is swirling, the body is lying on the ground and the police captain instructs his men:

“Round up the usual suspects”.

Having sat through this Bill for so many hours, I am beginning to recognise some of those usual suspects. If they will forgive me, I think it is not I who have missed the point but they. We have heard the blandishments of compromise that the noble Lord, Lord Hannay, has put forward so eloquently today, and we have heard the noble Lord, Lord Goodhart. Apparently we cannot afford a referendum on these issues. We have just had a referendum on AV, which no one seemed to want, so why can we not afford referendums on matters that people so clearly want?

This debate has tried to bury the point in details rather than address the fundamental purpose. This amendment, like so many of the others that we shall deal with today, is yet another excellent example of that. The details are of course important, but the fundamental purpose of making the EU responsive to the people is far more so.

Europe is unpopular and is growing ever more so. No institution that claims to be democratic can sustain itself in the face of continued popular hostility. That is the huge challenge that this Bill aims to meet. We have heard it called a process of reconnection, but that language is insufficient. This Bill is much more than that; it is an attempt to save the European Union from itself.

It is my firm proposition, and, I believe, that of the Bill, that the people know best. To suggest, as so many of the amendments do, that there is nothing wrong with an institution that asks to be taken on trust yet embraces accounting practices that would have any company director thrown in jail is hopeless. Some might even argue that it is pretty shameful. Ministers have been accused constantly of not listening. Well, your Lordships will forgive me if I say that it is the usual suspects who have not been listening; they seem even afraid to listen. If they had listened more, perhaps we would not need this Bill. The Bill is a mark of their failure, a failure to recognise the need for change.

There is nothing inherently wrong or evil in the European dream. What so many ordinary men and women object to is the way in which that dream has been put into practice, imposed from the top down rather than built from the bottom up, so that it has now become so top-heavy it is in danger of toppling.

The face of Europe has changed over these past 40 years, whether the people accepted it or not. Often, little has changed perhaps from day to day; just a small change here, a little adjustment, a nip or a tuck there—a bit of bureaucratic Botox for which the EU is so well known. However, as with any ageing process, the face has ultimately changed beyond all recognition. It needs rejuvenation, and the only way to do that is by re-establishing the pre-eminence of the people in its deliberations. That will not harm the European dream; it will save it. The great irony of this amendment and all the amendments that we will discuss today is that, if they are pushed to a vote by their proposers, it is a vote that they will deny the people whom we were sent here to serve.

[Lord Empey]

My Lords, the noble Lord, Lord Davies of Stamford, referred to the argument about Parliament and said that the party positions had changed. However, I said at the beginning of my remarks on the Bill last week that we are nothing if not consistent in our consistencies. This House voted so that people such as me in Northern Ireland would have a referendum on our constitutional future and that we would decide. As recently as on a visit to Northern Ireland last week, the Prime Minister said that the decision about its future lay with the people there; he did not say that it lay with Parliament. If we want to take the argument to its logical conclusion, that Parliament decides everything, why did Parliament provide for referenda in the first place? If you are going to be consistent in saying that such matters are a decision for Parliament, you do not have referenda. However, we do have referenda. We had one in 1975, and we have had a number since. Therefore, the argument that Parliament always takes the decisions is simply not true.

Edmund Burke was quoted again. He is very popular in this debate, but we are talking about the 18th century and things have moved on. Life has changed. We have a totally different world in which people are, thank God, educated and able to participate in a meaningful way and no longer require people who can read and write to interpret things for them. As a new Member, it has struck me from the very beginning of our debates on the Bill that it is hard to construct an argument that we support the Bill in broad terms, inelegant though it might be, without automatically being deemed to be someone who does not want to have anything to do with Europe. I refute that. There are positive things about Europe, but, as the noble Lord, Lord Dobbs, said, in the view of the British people Europe has been systematically salami-sliced.

I think I understand why that is. There is a small group of people at the heart of Europe who, for perfectly legitimate reasons, believe ultimately in a large superstate to rival the United States. We saw an example of that last week when one former Prime Minister said that we now need a leader. I am not speculating on who he thought that person might be, but the implication is that the nation state is not held by some people to be the fundamental building block of the European Union. Indeed, the nation state is merely in transition towards something else.

[Baroness Nicholson of Winterbourne]

I apologise for interrupting the noble Lord, Lord Empey, but the facts are very firmly against him. I ask him to accept that the very architecture of the European Union is one of the most decentralised architectures of a large bloc of countries coming together that the world has witnessed in modern times. It is a highly decentralised, very diffuse organisational structure, and I beg him to recognise that point despite his excellent oratory.

[Lord Empey]

I thank the noble Baroness for her comments. I understand the argument for subsidiarity. I was part of a European institution that practised it in the days of bringing decisions ostensibly down to the lowest level at which they can be taken. However, the practice is somewhat different. It is all very well to push things down, but setting the envelope within which those bodies can take decisions and determining the size and shape of that envelope centrally, which is what happens, goes against the argument.

The point I am trying to develop is that I believe in the nation state and in nation states coming together in common cause where that is in their national interests. However, I do not believe in a push by some people to transform those nation states into a collective within a larger body that in effect has all the characteristics of a state: its own President, its own Foreign Secretary, its own system of justice, possibly even its own army. The people of this country are not ready for that argument. Those who for economic, political or security reasons push that argument are pushing against the tide and undermining the people of this country’s view of Europe. They are therefore undermining their own argument.

I hope as we go forward with this that we will recognise that confidence in the principle of a European Union in this country will be re-established only if people feel that they are in charge. Indeed, its standing, with pages filled with people claiming for Kit Kats and all sorts of things, has been undermined and has suffered colossal damage. It may take a generation to repair it, but in the mean time this Bill, with all its downsides, can at least begin the process of saying to people, “You are now in charge”. Yes, Ministers and Members of Parliament will play their role, but in a modern democracy with modern communications and an educated electorate, who says that it is incompatible to have parliamentary democracy on the one hand and on the other hand, for certain defined purposes, a referendum in which the people can be specific? When they vote for a Member of Parliament, they vote for myriad policies covering everything from defence to social services—the whole gamut of government. Constitutional matters are much more precise, and, with an educated electorate, why should the people on occasions not be able to tick the box that they feel is appropriate?

16:45

[Lord Richard]

My Lords, to follow the argument advanced by the noble Lord, Lord Empey, on referenda, the last few sentences of his speech seemed to indicate more than anything else a decision or a desire to support the amendment tabled by the noble Lord, Lord Hannay, and not to vote against it. Referenda are scattered throughout the clauses in the Bill on almost any given issue on which it is quite absurd that there should have to be a referendum.

Will the noble Lord consider again the provisions of Schedule 1 and apply them to Northern Ireland? Is he seriously suggesting that in Northern Ireland there should be a referendum on,

“provisions concerning passports, identity cards, residence permits … minimum rules on criminal procedure”,

or a

“decision identifying other areas of crime”,

or on the, “European Public Prosecutor’s Office”? Is he suggesting that there should be one on,

“police co-operation … cross-border operation by competent authorities … harmonisation of indirect taxes”,

in Northern Ireland, or on the,

“approximation of national laws affecting internal market”?

I could go on and on about this.

The point about the Bill is that if it was enacted you would have to have referenda on those issues. The noble Lord is saying that once we have crossed the bridge and accepted referenda in Northern Ireland, Scotland and Wales, why do we not accept them in this Bill? One does not accept them in this Bill because these are not proper and fit matters to be put to a referendum. They are matters for a Government to decide.

I cannot believe that the noble Lord would advocate having referenda on the issues set out on Schedule 1 if they were to apply only to Northern Ireland. It is absurd; it could not be done. It is exactly what Parliament is there to do. You do not to consult people on issues of that sort; you govern. The amendment in the name of the noble Lord, Lord Hannay, specifically confined the issue of referenda, which he accepts—and we accept—to certain major constitutional issues. I totally accept that. If the Bill confined it to those issues, no doubt there would be much less difficulty in getting it through. When it is as absurdly worrying as it is here, it does not make a great deal of sense.

[Lord Empey]

The noble Lord, Lord Richard, caught me as I was sitting down. I think he has misunderstood the point that I made at the beginning of my remarks about what the noble Lord, Lord Davies of Stamford, said—that the argument was that Parliament should effectively decide. I made the point to him that we had been required to have a referendum whereby the people in that referendum were taking a decision outwith Parliament. I was not suggesting for one moment that referenda would be held in Northern Ireland alone—in fact, the issues that the noble Lord, Lord Richard, listed are United Kingdom-wide. Tax harmonisation and the rest are very important matters but they are United Kingdom-wide not Northern Ireland-specific.

[Lord Hamilton of Epsom]

My Lords, I have been on a steepish learning curve for the duration of this Bill and one of the more amazing things I have learned this evening is that my noble friend Lord Goodhart is actually a supporter of the Bill. For some reason I got the impression that he did not really like this Bill at all. I am very encouraged to hear that he supports it, but I find it rather extraordinary that someone who is trying to support the Bill puts their name to an amendment which will mean that a whole lot of things that were going to be subjected to referenda will not be subjected to referenda any more.

As we know, the way in which the EU has operated for a very long time is that it never does anything in a great big bang: it is always “grandmother’s footsteps”, it is always one bit after another. It is very unlikely that at any stage the EU would introduce something saying that there should be a single, integrated military force. That would be much too large and dramatic a step. They would do it incrementally, bit by bit, until we ended up with a single, integrated military force.

[Lord Radice]

Is the noble Lord, Lord Hamilton, actually arguing that it is not legitimate to amend this Bill? He is coming very close to that. This amendment is trying to accept the principle of referendum but confine it to the major issues, as our own Constitution Committee suggested was the best way forward. It is trying to escape from the fact that this Bill has referenda for 56 separate issues, which brings the whole idea of referendum into disrepute.

[Lord Hamilton of Epsom]

I am very glad that the noble Lord, Lord Radice, has mentioned that point. This Bill covers a large number of issues concerning where there should be referenda. Of course, they are all wired back into the red lines laid down by a Labour Government. This is why they are in the Bill: they are not just dreamt up at random, they are related back to the red lines laid out by a Labour Government, and those are the issues that will now be subject to referenda.

The noble Lord’s accusation that I say people should not have the ability to amend this Bill is absurd—that is what we are here for—but some amendments have a much more wrecking impact on a Bill than others, and I would suggest that these amendments go a long way to removing most of the point of this Bill altogether. That is why I will not be supporting this amendment, but it will be up to the House to decide whether this amendment should go through.

My noble friend Lord Goodhart said that when these referenda come to be debated in the country the dinosaurs of UKIP will be the ones out there campaigning and winning the argument. I would suggest to him that if there is any rationale for UKIP, its primary purpose seems to be to have a referendum to decide whether we should stay in the EU. However, another reason people join UKIP is the feeling that not only are we in the EU but we are getting sucked further in. That is one reason there has been this pretty modest growth in the membership of UKIP, the feeling that not only are we in the EU but we are getting dragged further into a federal Europe, which people do not want to be part of. I think that UKIP is going to be very seriously damaged when this Bill becomes an Act of Parliament because it will be reassuring to people to know that we are not going to be taken any further into the EU and end up in a federal Europe for which nobody voted.

[Lord Grenfell]

Before the noble Lord sits down, he appeared to suggest that there were a large number of red lines which the Labour Government had introduced and that these were now under threat. The fact is that there were, I think, six red lines in the Lisbon treaty. Every one of them is now enshrined in the two treaties as amended by the Lisbon treaty, so one should not cry wolf where that is not appropriate.

[Lord Hamilton of Epsom]

I think that the noble Lord would accept that, enshrined or otherwise, the red lines have until now never been subjected to a referendum. If this Bill goes through, there will have to be referenda on all the red lines originally laid down by the Labour Government. That seems eminently sensible, so I will not be supporting these amendments.

[Lord Lamont of Lerwick]

My Lords, the noble Lord, Lord Dobbs, said in a very amusing and eloquent speech that the face of the European Union has changed out of all recognition. He added that all faces change unrecognisably as they get older, but he did not add “except to those who are behind the face”. Some of the enthusiasts for European integration should look in the mirror when they say that the European Union has not changed at all.

Earlier, we had an argument, which bordered on being disagreeable or a little ill tempered, about whether misleading things had been said about the future development of the European Union. I have to confess— I do not intend to pursue this point very long—that I am rather on the side of those who think that there was some misleading about its future development. I seem to remember that, in 1975, Harold Wilson told us that there was no question whatever of monetary union ever arising in the future. As for the phrase “ever closer union”, of course there will be ever closer co-operation in coming together, travelling and meeting across European boundaries—that is the nature of the modern world and of commerce and travel in Europe today. However, I never interpreted the phrase “ever closer union of the European peoples” as meaning the involvement of a supranational authority to such an extent, but perhaps I was wrong in my assumptions and failed to understand.

I remember standing in Trafalgar Square and sharing a platform with my noble friend Lord Deben. He and I have entirely different views on the European Union as it has evolved, but at that time we stood on the same platform advocating membership of the Common Market, as it was then. However, because, in a sense, the point is not of such great importance, I am quite prepared to concede that perhaps I failed to understand. Yet if I failed to understand, so did millions of other people in this country. Regardless of whether they should be criticised or told that they are fools for not understanding, the fact is that there is considerable disillusionment with the European Union, not just in this country but throughout Europe. I acknowledge that the noble Lords, Lord Hannay and Lord Kerr, have both admitted that extremely important fact during these debates.

As I have said before, it is not because of the Daily Express that the True Finns party has suddenly burst upon our consciousness. There are other reasons for it. First, there is a real problem with governance and democracy within the European Union which relates to the type of indirect democracy that we really operate. Deals are done between Governments; Ministers come back to the House of Commons and announce decisions; decisions can then hardly be modified because they are dependent on other decisions and concessions that have been made and on the horse-trading that has taken place. Secondly, as came out in the exchange with the noble Lord, Lord Stoddart, treaties cannot be amended. Treaties are treaties. So the role of Parliament and the great discussion which we have had about Burkean democracy is a bit irrelevant when you have the results of horse-trading in that indirect democracy and when you have the presentation of treaties. Those are two reasons why there is a real problem of governance in the EU. I am pleased to see the noble Lord, Lord Kerr, returning to his seat at this point.

The third and most important point is the irreversible nature of the decisions that are made in the EU—not just decisions about competence, but so many decisions about policy as well. They are very difficult to reverse simply because they are arrived at by a process of compromise, a process of agglomerating, of aggregating the decisions and interests of different countries together. If three, four or five years later one country has now got a different view of that issue, it is extremely difficult for the Parliament to reverse that decision because, unless public opinion has changed throughout the European Union, one Parliament alone cannot then change the decision that has been made, because one Government will require either a qualified majority or unanimity in order to reverse the decision.

17:00

That means that democracy in the European Union—legislation—is often a one-way street. It is very difficult to reverse things. That is the problem with arguments that it might be in our interest to give that qualified majority. It may be in our interest at one time to have qualified majority voting on one issue, but it does not follow that it will be in our interest for all time. That is why the Bill is long overdue. I regard it as almost a constitutional Bill, giving us part of a written constitution. It is actually saying, “Here are certain areas and we are not going to let them go to Europe. Some of them are more important than others, but they are all important up to a point and we are not going to go beyond these red lines. A future Parliament can change these decisions if it wants to do so, but we are not going to move beyond those red lines at this moment”.

The difficulty in reversing European legislation and in making it more flexible needs to be addressed. We are going to have an argument about a sunset clause later, but when did we ever have a sunset clause in any European Union legislation? It is so difficult to bring the rights of the House of Commons to bear on European Union legislation that we have to be very careful about all these areas where power can move away from our country. Once it is gone, it is gone beyond recall.

[Baroness Symons of Vernham Dean]

My Lords, the noble Lord, Lord Lamont, has gone to the heart of the issue in many ways and I applaud him for what he has said. I do not agree with a lot of what he said, but at least he was dealing with the issues and not with the bland assertion that has come from some on the Benches opposite that this side, or those who are putting forward this amendment, the noble Lord, Lord Hannay, and his supporters, have somehow not got the point of the Bill, either out of deliberate perversity or just plain ignorance. The fact is that we simply disagree. We have to argue through that disagreement and Parliament is the right place to have the argument. In so far as that was the point that the noble Lord, Lord Lamont, was making, I agree with him wholeheartedly.

I say to the noble Lord, Lord Flight, that putting forward amendments in this way is not a tactic. It is part of a reasoned argument. Much of it has come not from the political side of these Benches, but from noble Lords on the Cross Benches, who have put forward well-reasoned amendments, although, of course, he may disagree with them. The noble Lord, Lord Flight, says that he sat through what he called “an elected tyranny” in the other House. Well, that “tyranny” was elected in 1997 and the British people, in whom he places so much faith over referendums, re-elected that “tyranny” in 2001 and again in 2005, so perhaps not so jolly tyrannical after all.

[Lord Flight]

Does the noble Baroness agree that there is a difference between how people vote at elections and what happens in the House of Commons? I was simply making the point that when any party has a large majority in the House of Commons, under the British system since it was changed by Walpole from the originally intended system in the Act of Rights, I am afraid that when there is a large majority it does function as an elected tyranny on either side.

[Baroness Symons of Vernham Dean]

The fact that there is a difference in Parliament from what happens at elections is precisely what we are discussing. The fact is that after the passing of the Amsterdam treaty the British people re-elected a Labour Government and after the passing of the Nice treaty the British people re-elected a Labour Government. They had the opportunity to get rid of the Government on those occasions and they chose not to do so.

The noble Lord, Lord Dobbs, made a very interesting argument. He said, with passionate conviction, that the British people know best. Do we therefore extend that argument to a referendum on the current health proposals that are dominating our headlines and are probably far closer to the hearts of the British people than a lot of what we are discussing here? Did it occur to the Benches opposite to have a referendum on the increases in university fees?

[Lord Dobbs]

Does the noble Baroness accept that I was trying to make the point that there should be moderation and a sense of balance in all this? That is what so many parts of this argument lack. It is not a matter to be taken to extremes; it is a matter of balance and common sense. Had we pursued that with the British people, they would be far more onside than they are.

[Baroness Symons of Vernham Dean]

My Lords, of course it is a question of balance and common sense. Where do we find arguments about balance and common sense but in another place and, especially, here? It is here where we have those arguments and can argue out what is in a Bill.

The noble Lord said that the British people know best—he did not qualify the sentence that he uttered—in making his argument about how important referendums could be. I merely suggest to him that the British people would perhaps have liked to have had a referendum on the increases in university fees.

[Lord Stoddart of Swindon]

Will the noble Baroness give way?

[Baroness Symons of Vernham Dean]

I will give way in a moment. Perhaps it would be pertinent to suggest that there should be a referendum on the future of the nuclear deterrent.

[Lord Stoddart of Swindon]

I am most obliged to the noble Baroness for giving way. Would it not have been more pertinent if the Labour Government who introduced university tuition fees had had a referendum? That would have saved them from betraying everything that the Labour Party ever stood for.

[Baroness Symons of Vernham Dean]

No, my Lords, of course that is not the case. The point about what has happened in the very recent past is that not only did one of the parties in the referendum say in its manifesto that it would not raise fees but its members signed individual pledges to their electorates to say that they would not increase them, let alone put them up by three times. I do not take the noble Lord’s point on that; it was rather a weak one.

I return to the noble Lord, Lord Waddington. We understand that he has very robust views, as do many of his noble colleagues, but I hope that the Conservative Benches have listened to what I thought was the generous support from the noble Lord, Lord Goodhart. There can be no doubt where he stands on the European Union and yet he and the noble Lord, Lord Hannay, are willing to compromise on this issue. They are willing to acknowledge some of the points that have been raised on the Conservative Benches—and I make the point that it is very much the Conservative Benches, with one or two exceptions on the Liberal Democrat Benches. The noble Lords, Lord Goodhart and Lord Hannay, and others are willing to support referendums on the really important issues. That is the point. We are not saying no; we are saying, “Let’s listen to what our own Constitution Committee, with its representatives from the Conservative Benches, has said unanimously on this issue”, and it has said that referendums must be kept for the really important constitutional issues. If we do not concentrate on what is important, where we should be concentrating the British public’s attention, then indeed we do have a big argument about the role of Parliament and we do start to get into the fundamental constitutional issue of what Parliament is here to do.

It has been said that people will really want to have these referendums. I put it to your Lordships that we all know that is not true; of course they will not want them. They would want them on the euro; if we decided that we were going to leave the European Union; on Schengen issues, because immigration is such a major issue; and on whether or not there should be a European army. Those are the fundamental issues that have been at the centre of most of the arguments in this House in the whole time that I have been here, listening as we went through them over and over again. I suggest to your Lordships that going through the long list in front of us will do nothing to make the British public more confident in what we are doing here. Frankly, it will make them think that we have been dealing with trivia instead of with the important issues that face us.

[Lord Maclennan of Rogart]

My Lords, perhaps I may intervene briefly at the end of a fascinating debate. Those who are opposed to Amendment 14, which I strongly support, and the other amendments in the group have been at pains to suggest that what the British people really want is to stop the European Union taking decisions. My noble friend Lord Lamont made the point forcefully that one of the reasons for the unhappiness about the European Union is that it makes decisions in a cumbersome and not very transparent way. It does not actually always intervene to deal with the problems that occupy the British public most closely. It seems that the matters on which the Bill suggests that there should be referenda before decisions are finally taken would in fact make that doubt about the effectiveness of the European Union much stronger. It would make it more difficult for the Union to be able to answer the problems of banking, which are uppermost in many people’s minds at this time. It would make it more difficult for the Union to deal with problems of cross-border immigration and it would make it more difficult for the Union to take action on the environment, which many regard as the top priority today.

The noble Lord, Lord Lamont, talked about the indirect democracy of the European Union. Yes, I agree with him that that is a suitable characterisation. Of course all democracy is indirect in a sense, and the kind of cutting of agreements between interest groups within a Cabinet is comparable with what he described when decisions are taken at the European level. However, it is not altogether true that treaties are unamendable. We have had many treaties since we entered the Common Market which have endeavoured to make the decision- making process more democratic, open and expeditious, and I think that most of those treaties have gone through without any hostile reaction from the public. This Bill seems to have been designed to put a drag anchor on the process of improving decision making within the European Union. I do not accept the view expressed by the noble Lord, Lord Lamont, that decisions taken in the Union are irreversible. Even among those who are full members of Schengen, discussions are going on about the need to look at immigration in the light of the probable influx from Arabian countries. It is not impossible that steps will be taken to respond to that.

If we want the European Union to be more appreciated for what it does, we should not be putting rocks in the road that make it more difficult for its institutions, including the European Parliament, the Council and the Commission, to come up with legislative proposals to tackle the perceived difficulties that we all share within Europe. Most of our interests are common interests in the areas for which the European Union has responsibility. Certainly, ideologies will divide people in all countries, but because of the fact that so many of our interests are common, we do want to improve the democratic processes. Requiring referenda to be held on some of these matters by one out of 27 or 28 countries would be seen as a block on progress, democratisation and modernisation not only by other countries, but also by many people in this country who are conscious of the value of the work that the European Union has done over the 60 years of its existence.

17:15

[Lord Liddle]

My Lords, we have had a long debate on this set of amendments. We on the opposition Front Bench strongly support this group of amendments, spoken to by the noble Lord, Lord Hannay. I shall focus our debate on Report on the essence of these amendments, which is to reduce the 56 varieties of referendum lock that the Bill contains to referenda on new treaties and three major issues: joining the euro, joining Schengen and the setting up of a single European army or force, as my noble friend Lady Symons mentioned.

What people who accuse us of proposing a set of wrecking amendments have to take into account is that the Bill as amended would be a substantial step forward in public accountability as far as the European Union is concerned. There could be no major new treaties containing the kind of proposal that former Prime Minister Tony Blair floated last week—for an elected president of the European Union—without a referendum. We could not join the euro, which clearly might now mean significant steps towards a fiscal union, under the amendments in this group. We could not join Schengen, which would certainly mean abolishing our own border controls and replacing them with border controls at the EU frontier, a common set of asylum rules, burden sharing and so on. Under the amendments that we are proposing, that would be subject to a referendum, as would a major step towards common defence.

Therefore, these amendments do not wreck this Bill; they just make it more sensible and get rid of the huge number of referenda in it. That is wholly in line with the spirit of your Lordships’ Constitution Committee’s recommendation that referenda should be confined to matters of major constitutional significance. One of the curiosities of the many days of debate that we have had is that we have never heard why the Government think they can set aside in this way the recommendations of your Lordships’ committee on these specific matters when it comes to the European Union. On all these other matters—on which, if this amendment were passed, there would be no need for a referendum—there would still be a need for an Act of Parliament. That is an enormous change from the position that we are in now. We are not wrecking this Bill; we are trying to improve it. I hope that on that basis the Government might be prepared to show a flexibility that they have so far lacked in these debates.

One of the very wise contributions to this discussion was made by my noble friend Lord Rowlands. In a distinguished career in another place, he was a sceptic in the proper sense of the word and had to be convinced about the case for Britain’s membership of the European Union and the pooling of sovereignty that it involved. However, as he said, we are setting up a far too overcomplicated process of accountability with the plethora of referendums proposed. What I find difficult about this is why the presumed lack of legitimacy of the European Union is seen as being so peculiar and special compared with the huge problems that our democracy as a whole faces in today’s world.

I looked at the Eurobarometer opinion poll for October 2010—that poll asks people questions about trust on a regular basis—and found that a very depressing 64 per cent of the British people do not trust the European Union. That is why we accept that there is a legitimacy problem. However, it seems that 66 per cent do not trust the British Parliament, 67 per cent do not trust the UK Government and 82 per cent do not trust political parties in Britain, so what is so peculiar about the lack of legitimacy of the European Union compared with the rest of our democracy?

It is argued either that confidence in Europe has been destroyed by so-called competence creep or that we face lots of threats to our sovereignty in future. As my noble friend Lord Triesman has said many times, if you are in government and do not want to do something, you just say no. The noble Lord, Lord Lamont, made a very interesting speech in which he pointed out that there is a very distinctive issue about the irreversible nature of the surrenders of sovereignty that take place in the European Union and the problems of a Union that moves by a process of intergovernmental compromise. Many of us who are pro-Europeans have been worried about this issue for many years and have wanted to think of ways of closing that democratic deficit. Certainly, we should have a debate about the role of the European Parliament, which plays a much bigger role now than it did 15 years ago, largely because of the treaties that the noble Baroness, Lady Symons, when she was leading for the Government, put through this House. However, I presume that the noble Lord, Lord Lamont, would not regard those treaties or the strengthening of the European Parliament as being good things. I agree with him that we have to think of ways of addressing that democratic deficit, but I suspect that he is not prepared to accept these kinds of remedies.

There is a problem of legitimacy vis-à-vis Europe that is particular to Britain, because over decades we have failed to establish a cross-party consensus about our membership of the European Union and failed to argue the case for British membership with a united voice. Amendment 31—which we shall discuss later; the noble Lord, Lord Radice, moved it in Committee—will try to address that problem in part. However, there is another explanation of why the EU has run into problems. The explanation is, as I said at Second Reading, that there are two ways of looking at legitimacy. One is to think about it in terms of how decisions are approved, but the other is to think about whether the institution is effective at doing the job that it is supposed to do. One of the problems with Europe is that it is not as effective as it could be, and this causes public disillusion.

I looked at a poll carried out last November about attitudes to the European Union. If you ask a general question—do people think that we should co-operate more or do they want us to loosen the links with the European Union?—only 21 per cent want us to co-operate more, but 49 per cent would have us loosen the links. However, when you ask people questions about specific areas such as climate change, attacking terrorism and crime, regulating banks, minimum rights for workers, or minimum levels of tax on business, a strong majority in Britain want the European Union to do more. I therefore argue that it is not a question just of how decisions are taken, but of how we make Europe effective. That is what we ought to focus on in our debate.

Finally, in support of the amendment, perhaps I may say that we have had a good and long debate, but one of the depressing things about it is a tendency to be historical, to look back to the past, to take trips down memory lane, and to look at the debates in the 1950s, 1960s and 1970s. I am very prone to that tendency, and this is therefore a self-criticism. When we think about Europe, we really should remember that the world of which the European Union is part is transforming itself at enormous speed. Since the Maastricht treaty, communism has fallen and that aspect of the world has changed enormously, the Arab world is in revolution, China has risen enormously as a power, and the weight of the European Union in the world is decreasing at a rapid rate. Our weight in the world as the United Kingdom is decreasing at an even more rapid rate.

Yet, in response to these extraordinary developments of the past 20 years, this Government have come forward with a policy on Europe that is essentially, “Thus far and no further”. In other words, “We have no imagination about how the European Union might develop. We are saying there should be no change without a referendum”. This is a depressing attitude that destroys the flexibility that a British Government should have to respond to an unpredictable and unknowable future. I urge the House to support these amendments because they confine referendums to the really big issues on which the people ought to decide.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, we have had a rather amazing debate in which I found all kinds of echoes of agreement that did not seem to be there in the darker days of May when your Lordships first went into Committee to examine the details of the Bill. We have come a long way since then and there seems to be a greater appreciation—not necessarily combined with agreement—about some of the issues that the Bill seeks to address.

We have of course been down memory lane with the various comments by noble Lords who have been extremely experienced in European affairs over almost half a century. Edmund Burke featured again, although I must say that the more I think about that great man, the more I hear in my mind his remark, “Show me the man; show me the things”. In other words, he was interested in the situation as it actually was, rather than in the high theory of how it ought to be. I did not agree with the final remarks of the noble Lord, Lord Liddle. He should not be depressed because the possibilities for our leading in European reform are much greater than he accepts, although he is an expert in these matters. He is entirely right to say that the landscape has changed and that we are dealing with an entirely new situation.

17:33

I agree with the noble Lord, Lord Rowlands, who put his finger on the matter when he said that this is all incredibly complex. It is complex. I was venturing the view only this morning that having taken through the other place and this House somewhere in the region of 35 Bills, I have to say that this is one of the most complex measures I have had the privilege of laying before a House of Parliament. The complexity is there because the EU legislative landscape is complex. Some of its 1,001 aspects are understood and some are not. Many, because of their unintelligibility and obscurity, create the atmosphere of mistrust and reinforce the devastating figures, just given to us by the noble Lord, Lord Liddle, about the decline of trust in the political process generally and the administration of power in places where power is held, including the European Commission and European institutions.

As we tried to wade through the complexities, we had a splendid reminder from my noble friend Lord Dobbs of the overarching purpose of this Bill and of how some of us are trying to persuade your Lordships of the validity of what is proposed in detail in the Bill, which is, in a sense, to rescue the European Union from a trend of declining confidence and a growing dismay that the European Union is about to lose its way and to underline the important part the European Union is playing and can play, contrary to the views of some noble Lords, in repositioning this nation in the totally new international situation that is emerging very fast.

Finally, on the general points, my noble friend Lord Risby reminded us very importantly of the spirit of Laaken, which was, if I may put it in the vernacular, “For heaven’s sake, let us bring the workings of the Union closer to the people”—a task that was totally failed by the consequent European constitution, which we debated for long hours in this House, and to some extent the Lisbon treaty, which I am afraid also failed to meet that particular objective.

I will address, with your Lordships, the precise issues that came up in the amendments, not necessarily in the order in which they were put forward. I would like to deal with my noble friend Lord Goodhart’s profound and learned comments on the European public prosecutor and associated issues. I would certainly like to address the comments of the noble Lord, Lord Hannay. I would also like to deal with the common defence aspects.

The noble Lord, Lord Hannay, led the first amendment in a very persuasive and even seductive way. I welcome his concession that there should be a referendum before the UK gives up its border controls and for certain aspects of common defence. I also welcome the acknowledgment that some other matters in Clause 6 might merit a referendum in certain circumstances. This is what I mean by us all travelling up the learning curve.

I hope now to persuade and explain to your Lordships why all the elements of Clause 6—which, contrary to this constant reference to trivia, are directly wired into and relate back to the major red-line issues that concern the public and the nation—should be under the referendum lock, so that there is no inconsistency and no uncertainty.

Let me first make some general comments on the whole group of amendments. The Bill and Clause 6 —and Schedule 1, which the clause activates—set out to give the British people their say on future transfers of further competence of power from the UK to the European Union. With great respect to the noble Baroness, Lady Symons, who gave a splendidly eloquent speech, this has absolutely nothing—thank goodness—to do with university fees or reform of the National Health Service. Those are very important issues that we will debate with great intensity. What we are debating here is the transfer of competences and powers away from this Parliament and this nation to the European Union, and not the internal domestic reforms that we all argue about and which are controversial, I realise, and a matter of heated debate. To exempt specific areas of competence or power in the way these amendments propose would in my view, and in that of many who want to see our role in Europe repositioned as a leading and positive one, a thoroughly retrograde step. It would serve to undermine the direct, frank and honest commitment that we wish to make to the British people.

It has been implied that the Government might on occasion be better placed than the people to assess the national interest—this is the thought underlying many of the contributions that have been made—and that the representatives of the people in Parliament should be left to decide. I can only reiterate, to add to the figures given by the noble Lord, Lord Liddle, that in the 2009 European Parliament survey over 80 per cent of those polled agreed that all treaty changes should be determined by referendum. I really would suggest that the public can be trusted to determine what is in their own interest on issues on which they wish to express their view. They are not trivial issues at all. It should be for Government and Parliament to commend with confidence a further transfer of competence or power to the electorate and make the case on its merits. I do not see why there is such fear about that. Listening to the debate in the other place, I am not sure that there was all that much fear. Even the Front Bench of Her Majesty’s Opposition in the other place seemed to be fairly aware of that. The more I listen to the Front Bench in this House, the more it seems that it is getting a little out of step with its party’s views and with the general, overwhelming public view that this legislation must be devoted to achieving some reconnection between people, Parliament and the European Union.

I would mention, in brackets really, the constant reiteration that this is weakening Parliament. Parliament is involved at every stage. Parliament has to legislate as to whether there should be a referendum. Our Parliament remains at the centre of this entire process. It spreads the validity of the authorisation to the electorate in a way that is thoroughly consistent with modern trends. This may sound a little avant garde to those who are thinking about the European Union of 20, 30, 40 years ago and a different kind of politics that existed then, but the world has changed. That has to be accepted, and I am not sure that it has been by everyone in the general debate about this Bill.

I turn to the specific amendments in the order in which I said I would and, first, to the European public prosecutor. Clause 6 reflects issues of great sensitivity for successive UK Governments, as well as those of many of our European partners. The debate is too often conducted as though we were striking out alone on these issues, with our concern for reconnection. Not so; it is the same in very many other European Union countries. I repeat that these are not trivial issues, as some noble Lords insist. The evidence from the European convention, which was gathered together, as noble Lords will remember, to devise the constitution, shows us how divisive the creation of the office of European public prosecutor proved to be with a number of member states, which registered,

“strong objections on both practical and accountability grounds”.

The treaties provide for the possibility of a European public prosecutor, but there is no consensus whatever among member states that it should be set up because of the sensitivity of the proposal. It cannot be pushed aside that that sensitivity is very great.

It is only right that if we agree to participate in such a measure, which would result in the possibility of British citizens being prosecuted in British courts by prosecutors working for the European public prosecutor and not our legal authorities—that would be quite revolutionary—we should first seek the consent of the British people. That remains our view. That is why I have to say to my noble friend that I fear that I cannot accept his amendment.

[Lord Goodhart]

I accept that other countries in the European Union have been very reluctant, as have our Government, to join up to the EPPO and I think it is unlikely that there will ever be an EPPO, but that is mostly because of the inadequacies of the legal system in a number of those countries. For this country, under Article 86 of TFEU:

“The European Public Prosecutor's Office shall be responsible for investigating, prosecuting and bringing to judgment … the perpetrators of, and accomplices in, offences against the Union's financial interests, as determined by … regulation”.

That makes it perfectly clear that those who would suffer would not be ordinary citizens in this country. If the EPPO was brought into this country, those who would be subject to it would be international criminals and some major commercial companies. It would not affect the ordinary people in this country in the slightest.

[Lord Howell of Guildford]

I respect what my noble friend is saying, but one has only to pause for a moment and think about the phrase, the European Union's financial interests. Who will interpret that? How widely or narrowly will that be interpreted? Will offences be generated by the misuse of structural funds or other arrangements to do with the EU's finances? We do not know. We do not know who will define these things, but we can see clearly that they may well lead to a prosecution authority outside the UK, when we have our own prosecution authorities which are perfectly adequate in most—indeed, in all—cases to deal with those matters. We will have a prosecution authority from outside the United Kingdom for the first time charging and prosecuting British citizens. That is one reason why a huge uncertainty hangs over that.

Furthermore, once set up, although it is confined to EU financial interests now, the range can spread. Who is to say that it may not? We do not know. All those matters are reasons why many European countries—possibly the majority—are reluctant to see a development of that kind and why, if a Government in this country decided to change their mind, flatly against what the previous Labour Government wanted and flatly against what the present Government want, that should certainly be one item that should be put to a referendum.

I turn now to some of the comments made by the noble Lord, Lord Hannay, which were very reasonably put. I know that he felt that he was in a consensual and concessionary mood and looked for some reciprocity from the Government. In that, I fear that he will be disappointed. The passerelles allowing for a move to QMV, which are listed in Clause 6(5), have been included simply because they are covered by Schedule 1. That is obvious to most of your Lordships. It would be wildly illogical to provide for a referendum on an amending treaty which abolished those vetoes without also providing for a referendum on any decision to use the passerelles attached to the specific articles listed in Clause 6(5), which would achieve exactly the same result. That would be tantamount to locking the front and back doors of the house—not closing them, locking them; and not throwing away the key either, but giving the key to the British people—but leaving the kitchen window open.

17:45

I have made clear before our firm belief that the Bill will not lead to the litany of referendums that some noble Lords keep suggesting—although I think there has been a learning curve on that. History tells us that individual vetoes do not get abolished on an individual, ad hoc basis, just as treaty changes tend not to be piecemeal and ad hoc without good reason: namely, that they are important and urgent. I take the example of the Czech and Irish protocols agreed during the ratification of the Lisbon treaty. They are a very good example. They have been held back until the next accession treaty. Why? Because of the arduousness and length of going through a round of treaty change just to agree to append those protocols.

Just because Schedule 1 and Clause 6 are detailed does not mean that there will have at some point to be a separate referendum on each of the provisions listed. Although that point is to me self-evident, I am not sure that it is accepted or understood by all noble Lords who have spoken. All the items in Schedule 1 are wired into the major issues, the six red lines to which the noble Lord, Lord Grenfell, rightly referred. I have in front of me and could share it with the House, although that would be very tiring and boring, the way in which every one of the articles in Schedule 1 relates to one of the six red lines which successive Governments have stood by and which are of great interest to ordinary citizens. One is left asking: what are the extra powers or extra veto surrenders which the Opposition and others of your Lordships seem to want and are too nervous to put to the people? We have given up past vetoes on the annual budget, with disastrous results. We gave up a veto on Article 122, which made us liable for the European financial stability mechanism, with disastrous results. What are these new vetoes that are required to be given up to make the European Union work? We have never had a clear answer to that question.

[Lord Hannay of Chiswick]

On one small point of fact, the noble Lord, Lord Howell, said that we have just given up the veto on the annual budget. The annual budget has been adopted by a majority vote by a provision of the Treaty of Rome which was negotiated before we joined, which we have applied. Therefore, it has been taken by a majority vote throughout the period of our membership. It really is not wise to adduce changes which have not taken place during the period of our membership.

[Lord Howell of Guildford]

I totally disagree; I think that it is pertinent and a healthy reminder of what happens. We can contribute all we wish to in all these vital areas. The surrender of the veto can lead to consequences which can be extremely dangerous.

Finally, I should like to say a word on common defence, because that has come up and it is important. Amendments 15 and 16 suggest that the only controversial element of a decision to move to common defence would be a decision to develop a single integrated military force—in other words, that it is only that particular interpretation of common defence which is of real concern.

Successive Governments and successive Ministers, including noble Lords sitting here now in the Chamber, have rightly said that we do not support the introduction of a common defence. A Minister said:

“We oppose the introduction of common defence either at 25”—

there were 25 members when this was said—

“or through enhanced co-operation. We think it is divisive and a duplication of NATO”.

We do not support,

“anything such as the creation of standing inner groups or an inner core on ESDP,

which,

“would undermine the inclusive, flexible model of ESDP that the EU and NATO”—[Official Report, 11/5/04; col. 242]—

have agreed. That comes from a Minister in a previous Government. It is extremely telling and sums up the case very well. However, there would be confusion about any decision that resulted in the establishment of a single integrated military force. For example, would the establishment of an integrated command structure or integrated units or the achievement of integrated budgets count? It is just that lack of clarity that allows for the sort of competence-creep which caused so much distrust and which we are trying to overcome in the Bill.

In addition, we have concerns about a move to a common defence that goes beyond the establishment of a common force. A decision to move to a common defence could lead to the loss by the British Parliament of final decisions over whether to send our troops into harm’s way. Like the previous Government, we think it is vital that the UK is able to maintain an independent defence policy. Indeed, it was one of the red lines during negotiation of the Lisbon treaty, and I cannot understand the Labour Opposition wanting to move away from that today. I accept that a common defence is ill defined but that problem would not be solved with this amendment, which could apply only to the UK. Instead, our promise is that any decision to move to a common defence should be subject to the full scrutiny of the British public.

I have gone on for a long time but this has been a huge debate. There are many vital issues to address and it would be wrong to ignore them. I am pleased that noble Lords recognise the utility of the referendum lock in its application to any proposal to abolish our border controls or adopt the euro. However, I ask your Lordships also to consider the sheer inconsistency of seeking to remove from Clause 6 other measures that would transfer further competence and power from the UK to the EU. They are directly related to the crucial six issues on which successive Governments have insisted they want to protect Britain while being forward and active in encouraging the European Union within their full competences. This is a good European policy and the Bill reinforces it. It should be supported and the amendment should be withdrawn.

[Lord Hannay of Chiswick]

My Lords, I am most grateful to all noble Lords who have contributed to this lengthy and interesting debate. I hope that I may be forgiven for saying that there were moments during the afternoon when I thought we were moving back to the future—namely, heading rapidly towards a Second Reading debate. A fair number of contributions bore little relation to the amendments on the Marshalled List but a great deal to the discussions that we had during Second Reading. However, I shall not follow that road now, when we need to focus on the amendments in a much more controlled way.

I thank the noble Lord, Lord Howell of Guildford, for his very thoughtful response and for being so frank about the fact that, although those in whose names the amendments stand were introducing an element of compromise, he did not intend to do so. That was made extremely clear and I hope that all those who listened to the debate will draw the appropriate conclusions from the lack of flexibility on the part of the Government.

There are not many detailed points that need to be referred to. A certain amount of a meal was made by those who spoke against the wording of the amendment relating to an integrated military force. What we are talking about is fairly obvious. We are talking about our old friend—much beloved of the Daily Mail—the European army. We are talking about, for example, our treaty commitment in NATO under which we are part of an integrated military force. I only say to the noble Lord, Lord Waddington, that he will know very well that the NATO obligations apply in exactly the same way to the Navy and the Air Force as they do to the Army. The use of the word “military” is not exclusive to the Army. Therefore, it is obvious what the amendment tries to do: it tries to ensure that, if we were ever to have a British Government who wanted to move in that direction, they would have to submit the matter to a referendum. That is a recognition by those in whose names the amendments stand that the Government are right to have identified that issue as one of fundamental constitutional significance. However, I am afraid that issues such as whom we fought alongside in Iraq are totally irrelevant. We did not fight in Iraq on the basis of any treaty whatever; we fought on the basis of a coalition of the willing without a legal base. Therefore, we should not get muddled up with that issue. There seems to be less trouble about the euro and Schengen. Then, ultimately we come back to the question of whether we should be trying to reduce the number of potential individual referendums. The arguments for that are very strong.

I have been a little saddened by the way in which so many of the protagonists of the Bill and the opponents of the amendments have denigrated the parliamentary process. They have, in fact, thrown up their hands and said that it is completely useless. They seem to have discovered the whipping system, which I think has been in effect since the 18th century or perhaps even earlier, as being at the root of all this evil. That is pretty sad. There are quite a lot of former Whips sitting here and I do not see them covering their heads in sackcloth and ashes and saying that they made terrible mistakes by doing so. It has been part of our constitutional practice for a very long time and we have managed to achieve greater constitutional stability than a lot of countries that do not have it. It is a bit sad that we should be heading off in the direction of plebiscitary democracy-a-go-go instead of thinking about how to make our parliamentary institutions work more effectively. That is why one of the most important points made by the proponents of the amendments is the fact that you need primary legislation for every single change in the Bill. That is really important. It is the way to make parliamentary scrutiny more effective and that is what is needed—not a dash towards plebiscites, which is a very revolutionary approach. I have to say that it comes from a rather unlikely band of revolutionaries from a party whose name suggests that they are counter-revolutionaries. Nevertheless, I think that it is a move in the wrong direction and I should therefore like to test the opinion of the House.

17:56

Division 1

Ayes: 213

---

Labour: 163
Crossbench: 32
Liberal Democrat: 6
Conservative: 3
Independent: 2
Bishops: 1

Noes: 209

---

Conservative: 125
Liberal Democrat: 58
Crossbench: 19
Ulster Unionist Party: 2
Independent: 1

18:10

[The Deputy Speaker (Lord Geddes)]

Amendments 15 to 21 moved formally en bloc, Lord Hannay?

[Baroness Anelay of St Johns]

My Lords, it is my understanding that these amendments are not consequential on Amendment 14, on which the Government have just suffered a defeat. I understand that the Public Bill Office did not notify these amendments as being consequential. They were not put forward as being consequential by the noble Lord, Lord Hannay, in opening, and they were certainly not accepted by the Minister in winding as being consequential. I can understand that the noble Lord, Lord Hannay, might consider it desirable to insert Amendments 15 and 16 as a policy objective, but they are not consequential on the amendment that has just been decided.

[Lord Hannay of Chiswick]

My Lords, if I may, I will respond to some extremely mysterious words from the Government Chief Whip that I am afraid I do not altogether understand. I was perfectly clear when I introduced this set of amendments—which were grouped together by the Government Whips in a way with which I had no trouble at all—that I was introducing the whole body of the amendments, and nobody gainsaid that at all.

[Baroness Anelay of St Johns]

My Lords, the procedure when seeking any agreement on consequential amendments is, first of all, that they should be clearly consequential; these are not.

Secondly, grouping of course is for the convenience of the House. It does not indicate that all the amendments in a group are consequential. Indeed, if that were the case, there could be an invidious position whereby a noble Lord might have an amendment in a group led by a government amendment, and they would not be able to vote on later amendments in that group. Grouping is not of itself an indication of consequentiality. I remind the noble Lord, Lord Hannay, that the Minister did not accept the other amendments as being consequential. I am advised that the Public Bill Office did not give prior indication that these amendments were to be considered consequential.

Indeed, there are matters that are consequential in later groups. It is for the Government to consider whether they wish to bring different policy objectives to bear in another place as a result of Amendment 14. Amendments 15 and 16 may indeed be seen by the noble Lord, Lord Hannay, as desirable in policy terms, but those two amendments are not consequential on the Government’s defeat regarding Amendment 14. The noble Lord may wish to consider whether to take the matter further. There will, of course, be the opportunity to deal with the matter in another place and it may return here on another occasion.

[Lord Triesman]

My Lords, in almost all other circumstances I would not have dreamt of getting to my feet to argue this point, but I genuinely do not believe that a single Member of your Lordships’ House did not think that that was a debate on one set of matters that were plainly related. The speeches all dealt with issue after issue and the total consequence of them. The noble Lord, Lord Hannay, introduced the group by saying that attention had been given to questions described by the noble Lord, Lord Howell, as the big issues—I am not trying to argue that he said that what some of us described as smaller issues are not important. I cannot believe, in all conscience, that anybody in this House was under any misapprehension about the character of the last debate. It would be tragic if we got into a position where game-playing took over from the decencies of proper politics.

[Baroness Anelay of St Johns]

My Lords, in 13 years of opposition, we never thought to press an amendment that was not consequential when it had not formally been agreed to as being consequential by the Bill team and by the Minister, who always checked in advance. The noble Lord, Lord Triesman, talks about matters being related. Of course matters are related in debates on groups of amendments. That is why amendments are grouped. It is part of the constructive way in which this House works.

The Government cannot accept that Amendments 15 and 16 are consequential simply because they are not. They may be the policy objective that the noble Lord, Lord Hannay, feels is sensible and advisable, but it may not be what the Government accept as sensible and advisable. The Government may wish to take a different view. It is not a matter of the Government being recalcitrant. If something is not consequential and has not been accepted by the Government as being consequential, it is not. It is procedural, and it is something to be considered in the future if the Opposition wish to have amendments accepted as consequential when they are not. It is a matter of negotiation beforehand; not for announcement on the Floor of the House.

18:15

[Baroness Williams of Crosby]

My Lords, from these Benches I support the view that most of us believed that these amendments were taken together for the convenience of the House. We had a very long debate, which ranged over the whole group of amendments. I have to say to the Chief Whip, for whom I have great admiration—she is a person of great ability—that most of us took that vote to be about the whole group of amendments taken together. I find it difficult to see how we can explain to the world outside that this group of amendments has now somehow got lost when it seemed clear that, admittedly by a relatively small majority, the House chose to support these amendments.

[Lord Elton]

My Lords—

[Lord Hannay of Chiswick]

My Lords, I wish to protest, frankly, at what I can only describe as an extremely underhand manoeuvre. I cannot believe that, if it were the intention of the Government to argue as they are now doing, it was not the right, proper and fair thing to do to warn the House before this debate started, on the basis of a grouping of amendments that the Government had made themselves and that were agreed to, that whatever we decided on Amendment 14 would not apply to the rest. We would then have had a completely different sort of debate. No warning was given of that sort at the time. No indication was given. If the noble Lord, Lord Howell of Guildford, seriously intended to do that, he could have said that, but he did not. He did not say one word of that. He in fact addressed all the amendments in this grouping in the debate, and when I asked to test the opinion of the House, there was no indication by any Member of the House that we were not testing the opinion on the whole group. I hope that, on calm reflection, the Government Chief Whip will consider that this is an unwise course to go down and one that is likely to lead to bad blood and accusations of something less than fair play. I will sit down now. We can have one more round at this, and afterwards I will speak.

[Baroness Anelay of St Johns]

My Lords, it may be helpful if I just point out at this stage that it is for each individual Peer to make their own view about how they present amendments. When a debate is held, it is not for the Government to warn the House as to whether any amendments may be consequential if the Government lose a Division. That is not how this House has been run. It has been a matter for those in charge of an amendment to be able to determine its fate and then to give advice to the House as to whether it considers other matters consequential. I have made it clear that the Government do not consider Amendments 15 and 16 to be consequential on Amendment 14. That is exactly the procedure that the noble Lord, Lord Bassam, would have carried out when he was the Government Chief Whip, because it is the way that this House works. It is not for the Government at the beginning of each debate to say that a number of amendments are grouped together and, if the House decides on the first of the amendments, we will not consider the rest consequential. It is for the person bringing the debate to make that statement.

However, I can feel the strength of feeling on some Benches that noble Lords wish, in a sense, to change the way in which this House works on the hoof, which is what the request is today. I am going to listen to that. The House has heard the argument. It is a matter that will need to be considered by the usual channels and perhaps the Procedure Committee. If the House is to change the way that it groups amendments and then deals with consequential amendments, it should be done after calm consideration; it cannot be done here and now.

The Government will not object to the noble Lord, Lord Hannay, moving his next two amendments, although I state again that I do not accept the policy that he proposes within them. That should not be taken as proof that the Government consider them consequential or in any way acceptable. On that basis, the House can proceed knowing the Government’s view that the remainder of the amendments in this group are not acceptable. We will not resist them, because the House has already been tested in its patience almost beyond endurance by the length of this debate on Report.

[Lord Bassam of Brighton]

My Lords, I have great respect for the noble Baroness, Lady Anelay, in these matters. While it is clear that she disagrees with the views being expressed around the House, she has acknowledged that, on this occasion, it would perhaps be wise to draw a line under where we are so that we can move on. It would also be wise for this matter to be one of those issues to which both the usual channels and the Procedure Committee should give further consideration. I can see that there is cause for question and dispute, although I take the view which has been expressed on this side of the House. However, I thank the Minister for clarifying issues for the House in the way in which she latterly has.

[Lord Hannay of Chiswick]

My Lords, I thank the Chief Whip for having come to a very statesmanlike conclusion on this matter. I shall certainly not say anything to exacerbate matters—quite the contrary. I have always found the Chief Whip to be a very good person who has helped the House in its deliberations. In this last decision that she has taken, she has once again done that. Since we are talking about the European Union, perhaps it might be the moment to bring out that most time-honoured of phrases used in all European Union agreements: this agreement creates no precedent.

Amendments 15 to 21

Moved by

[Lord Hannay of Chiswick]

15: Clause 6, page 4, line 38, after “defence” insert “that permits a single, integrated military force”

16: Clause 6, page 4, line 41, at end insert—
“( ) Where the European Council has recommended to the member States the adoption of a decision under Article 42(2) of TEU in relation to a common EU defence which is not covered by subsection (2), a Minister of the Crown may not notify the European Council that the decision is adopted by the United Kingdom unless the decision is approved by Act of Parliament.”

17: Clause 6, page 5, line 4, leave out from “Parliament” to end of line 5

18: Clause 6, page 5, line 5, at end insert—
“( ) A Minister of the Crown may not vote in favour of or otherwise permit a decision under Article 140(3) of TFEU which would make the euro the currency of the United Kingdom unless—
(a) the draft decision is approved by Act of Parliament, and(b) the referendum condition is met.”

19: Clause 6, page 5, line 5, at end insert—
“(3A) A Minister of the Crown may not vote in favour of or otherwise permit a decision under Article 4 of the Schengen Protocol that removes any border control of the United Kingdom unless—
(a) the draft decision is approved by Act of Parliament, and(b) the referendum condition is met.(3B) In subsection (3A) “the Schengen Protocol” means the Protocol (No. 19) on the Schengen acquis integrated into the framework of the European Union, annexed to TEU and TFEU.”

20: Clause 6, page 5, line 22, leave out paragraph (e)

21: Clause 6, page 5, leave out lines 45 to 49

Amendments 15 to 21 agreed.

Amendment 22

Moved by

[Lord Kerr of Kinlochard]

22: After Clause 6, insert the following new Clause—
“Decision to join the euro
(1) No notification shall be given to the Council of the European Communities that the United Kingdom intends to move to the third stage of economic and monetary union (in accordance with the Protocol on certain provisions relating to the United Kingdom adopted at Maastricht on 7th February 1992) unless—
(a) the notification is approved by Act of Parliament, and(b) the referendum condition is met.(2) The referendum condition is that set out in section 3(2), with references to a decision being read for the purposes of subsection (1) as references to a notification.”

[Lord Kerr of Kinlochard]

This is a slightly different order of amendment from those that we have just considered. I fear that it is Osric or Malvolio, but it is not much ado. It does not address any of the great questions that we have been debating. I promise your Lordships that I shall not mention Burke versus Rousseau. I promise you that it has nothing to do with the underlying debate about flexibility versus dealing with the disconnect; it has nothing to do with whether there should be a referendum should the Government wish us to join the euro—that is agreed—it is merely about the timing of the referendum in relation to the process of our joining the euro.

The Bill ties the referendum to a decision under Article 140(3) of the TFEU, which irrevocably fixes the rate at which the euro shall be substituted for sterling and takes the other measures necessary for the introduction of the euro as the single currency of the United Kingdom. It explains that this will be a proposal from the Commission which will be the subject of consultation with the European Central Bank and then decided by a unanimous decision of the existing eurozone member states and, of course, the UK.

The Government say that the referendum on our joining the union should be taken on that draft decision about the modalities and the rate. My contention has been—I spoke on this matter at Second Reading and on our fifth day in Committee—that to wait until there is a negotiated draft decision on the modalities of joining the euro and the rate at which we join would be a mistake. I argue that the decision that is appropriate to a referendum is on whether the pound is to be replaced by the euro, not the decision, as in the EU text drafted by the Commission, on the detailed arrangements for the transition, the timetable or the rate. My contention is that the referendum should be earlier in the process and not the last stage.

I was grateful to the Minister for a letter which he sent me and copied to a number of other noble Lords this morning dealing with my arguments at Second Reading. His contention is—and I hope that I in no way misinterpret his letter—that it would be possible for the Government of the day to prepare a draft decision on the modalities before making the initial notification to the Council and Commission in Brussels and make that text available during the referendum campaign. He states in the letter that the “detail of the decisions” could be prepared,

“prior to the UK’s initial notification to the EU of its intention to adopt the euro. The question of the UK’s notification would then be subject to a referendum, by the time of which a draft decision … would be available for public discussion”,

and,

“form part of the public’s consideration”.

I do not want to exaggerate the difference between us; my point is rather small. I accept that the sequence that the Minister has set out might work; I am not saying that it is unworkable. What I am saying is that it is a little unwise.

The process in Brussels starts with a notification by the member state that wishes to suppress its currency and join the euro. When that is received, it is the task of the Commission to make the proposal, the ECB in Frankfurt to express a view on it and the Council to reach a decision. On the Minister’s scenario, we would draft it here. I confess that I can think of several precedents where it has been possible to get the Commission to put forward a text precisely in the language which the British Government wanted it to do—I happened to glance at the noble Lord, Lord Lamont of Lerwick, as I said that. I can think of no precedent for us publicising such a text in advance, passing it by Act of Parliament, as we would do, making it subject to a referendum and still hoping to persuade the Commission to present it as its own. Nor can I think of anything more likely to risk some discussion among the existing eurozone member states than our announcing the rate at which our currency was going to join theirs and giving it to them to buy—giving them the text, the decision, the modalities, the transition, the timetable. One would expect to go through some process of negotiation. It would be easier for everyone to save face if the text had not been published in advance from the start.

18:30

Moreover, subject to the views of three distinguished former Chancellors, with all of whom I have worked, I argue that it would be rash to set the rate before you produce a text in Brussels on which you are going to ask Parliament to pass an Act and you are going to ask the country to approve by referendum. “Events, dear boy”—things happen in the currency markets. It would be wiser to set the rate at the end of the process when you are ready to have sterling join the euro rather than some months before the end.

I urge the House to consider the law of the land now, the 1993 post-Maastricht Act. The wording of my amendment replicates the wording of the post-Maastricht Act with the addition of the referendum requirement. We are talking about the European Communities (Amendment) Act 1993, this bit of which was drafted in Her Majesty’s Treasury—nothing to do with me; I was in Brussels. The wording of the Act is:

“No notification shall be given to the Council of the European Communities that the United Kingdom intends to move to the third stage of economic and monetary union (in accordance with the Protocol”,

and so on, which is the same language we have now,

“unless a draft of the notification has first been approved by Act of Parliament”—

a draft of the notification, not of the decision. Article 140 was there in the Maastricht treaty, under a different number. Article 143 was there but the Government of the day chose to make the issue for Parliament not the Act, the modalities, the transition details and the rate, but the question of whether we should join the euro. It was the notification that would trigger the parliamentary procedure. Therefore my amendment is in line with the precedent and the statute book.

I also think it is the honourable course. To try to force our partners to negotiate on a UK draft on the modalities of our adopting their currency, before this Parliament and this country have decided that we want to join the euro, seems quite difficult. I would not like to be the negotiator who had to attempt that task. Some of them might be inclined to say, “Go away and decide whether you want to join. We will focus on your draft text once you are clear whether you wish to join the euro”. To seek to drive through the Brussels process the text that we want with the modalities and rate that we want because it had been approved by referendum is equally unwise.

I am not arguing that the course dictated by the Bill and the specific reference to Article 143 is an impossible course. It is even possible that the rate you chose months before might still be right on the night, but why risk it? My amendment would not preclude the Government doing what the Minister said in his letter to me—which I tried to summarise a moment ago—would be the Government’s preferred course. It would be possible to negotiate and draft your decision in Brussels or publish your decision to the country during the referendum campaign, though were I still in some of my old jobs I would advise against it. However, given that this is merely about the modalities and not the principle, it would be much wiser to ask the country to take the decision of principle first.

The question for a referendum must surely be, “Do we want to join the euro?”. The Government lose nothing by adopting my amendment because they could still let events follow the sequence described in the Minister’s letter to me if that is what they prefer. I therefore believe that precedent, honour, prudence and common sense point to the language of Amendment 22. I beg to move.

[Lord Garel-Jones]

As the noble Lord, Lord Kerr, has already said—he has more experience than me—there are three very distinguished ex-Chancellors sitting below me. Would not the rate at which we enter—such a delicate matter as far as markets are concerned—normally be decided after markets had closed, say on a Friday, and revealed before markets opened on Monday? The risk of doing it any other way would be substantial. Perhaps former Chancellors have something to say on the matter.

[Lord Kerr of Kinlochard]

I agree with the noble Lord, Lord Garel-Jones. I was Private Secretary to the noble and learned Lord, Lord Howe of Aberavon, when he used to chair EMS realignment conferences as Chancellor of the Exchequer when we were not a member of the EMS. The standard form is exactly as the noble Lord, Lord Garel-Jones, lays down. One tries to avoid a market rumour on a Friday—that would be quite difficult if we had held a referendum on the Thursday—ECOFIN would meet on the Saturday, and one would have a decision on the rate very early on Monday morning or late Sunday night as the Japanese markets open. In this case it would be highly desirable to move fast after our referendum because there would be a lot of movement in the market. However, if you have decided that the rate is to be a matter for an Act of Parliament and a referendum, you are stuck with several months of volatile movement.

[Lord Lea of Crondall]

I wonder if there is a special case in this. Some of us approach this question from the hypothetical case that in a few years we might join the euro when it has parity with the pound. It might be relevant to the referendum that people might think, “If you can’t beat them, join them. It’s been around a long time—you might as well join”. Frankly, that is the way referendum decisions are probably made—in the pub. We are talking about making something quite technical into a demotic sort of fact.

Might the discussion in the press get a debate going? Something like the new clause proposed by the noble Lord, Lord Kerr, might be relevant, maybe with some adjustment, to the idea that we need to have the proposition about parity with the euro as part of the question. Could somebody enlighten me as to how that scenario—it is probable rather than possible; it has some common sense about it—would fit with this Bill and with the amendment?

[Lord Howe of Aberavon]

Since my name stands on the Marshalled List below that of the noble Lord, Lord Kerr, it is right that I should intervene at this point. There is a certain diffidence about my approach, because I am in the presence of two propositions with which I have been closely familiar for a very long time indeed. I refer personally to the noble Lord. As he has already hinted, our relationship with each other is antique. I first came across him as a bright young man in my early days as Chancellor of the Exchequer; he did not necessarily appear to know a great deal about the Treasury or economics at that stage. I learnt that he was on secondment from the Foreign and Commonwealth Office. He was already serving me very well in the more sophisticated Treasury environment and therefore in due course became my principal private secretary in that department. He continued in that job to serve my noble friend Lord Lawson. I do not think that he lasted in that humble job for long enough to be with my noble friend Lord Lamont. Certainly, we came to establish a respect for each other and a familiarity.

The noble Lord is a young creature in my memory, who has already made a lucid and compact presentation to this debate, which is frankly not a hugely politically controversial one. It is a debate directed to the ostensible, practical way of approaching this particular proposition —our accession to what used to be called the European monetary system. That also is a symbol of my antiquity. My two noble friends Lord Lamont and Lord Lawson, who are alongside me, will not need much prompting to remember that our manifesto for the European 1979 election, preceding our own manifesto for the general election later on, had this quotation:

“We regret the Labour Government’s decision—alone amongst the Nine—not to become a full member of the new European Monetary System. We support the objectives of the new system, which are currency stability in Europe and closer co-ordination of national economic policies, and we shall look for ways in which Britain can take her rightful place within it”.

I am still looking, with an enthusiasm that has fluctuated over the years, as the stability of the currency has fluctuated as well.

In this context, I support the amendment. Although my relationship with the ERM, as it was then called, has been insecure, it was the cause of the less than friendly relationships between my noble friend Lord Lawson and myself and our noble friend Lady Thatcher before the Madrid summit, where our paths certainly divided. Remarkably, not many months after I had been subsequently moved on from the Foreign Office to become Leader of the House of Commons, a decision was taken for us to enter the European monetary system—

18:45

[Lord Lawson of Blaby]

Will my—

[Lord Howe of Aberavon]

Not at this point, in the middle of a sentence, although I have often given way to my noble friend in circumstances like this.

The news that we were joining the system reached me in rather a remarkable way. In my role as Leader of the Commons, on that day it was my job to go to Balmoral with a number of ministerial colleagues for a formal meeting for which I was Lord President of the Council. When I arrived in the presence of Her Majesty, before having a chance to talk to anybody else, her first question to me was, “What do you think of the news today, Sir Geoffrey?” I said, “What news, your Majesty?” She said, “Haven’t you heard?” I had not, indeed, but we had joined the European monetary system on that day. Although my private office in London had tried to get the message to me before I met Her Majesty, that had failed. So I found the whole thing embarrassing—but I was in a way a pioneer, because I first commended it to the other place as long ago as when I was Shadow Chancellor, on 29 November 1978. So I am quite impatient to see it fulfilled, as long as it is fulfilled on the right terms at the right time, but fortunately that is not for me to decide.

I see my noble friend is looking anxious. I have said all I need to say—

[Lord Lawson of Blaby]

I am sure that the whole House is fascinated by my noble friend’s trip down memory lane. I share a number of those memories with him, including sharing the noble Lord, Lord Kerr, as principal private secretary when I was Chancellor of the Exchequer. He was the first of a number of principal private secretaries whom I had as Chancellor, because I was there for quite a time. They were all good in different ways, but none of them was anything like as Machiavellian as the noble Lord, Lord Kerr. That makes one wonder what he is really up to with this amendment.

This trip down memory lane, fascinating as it was, is about the exchange rate mechanism of the European monetary system, which is a currency arrangement. This debate is about abandoning your own currency. There is absolutely no similarity whatever. So although I say with great respect and affection for my noble friend that what he said was of interest, it has absolutely no relevance to the amendment that we are discussing.

[Lord Howe of Aberavon]

With great respect to my noble friend, who always has a more ruthless and intellectual analysis of these questions than I do, it is broadly speaking the same thing. It was important, while that was the question, whether or not we joined the monetary exchange system; it is even more important whether we join the euro. Either way, we have reached the point where there has been a general acceptance of the need for a referendum on our accession to that currency. That arises not within the context of this Bill or this debate alone but has been on the agenda for a long time. The only question that we are actually debating now is the rather technical one of when precisely it should be required in the context.

I see my noble friend Lord Howell looking at me. When I reflect on his wisdom over many years, I am sure when he comes to wind up that he will recognise that is the flavour of the decision. Perhaps he is not winding up—he may be too nervous to handle this issue.

I am more than content to follow the wisdom and enlightenment of that splendid retired principal private secretary sitting over there. It was quite fun when we were together and I was presiding over the realignment of the European monetary system. It was quite nerve-wracking. We had one marvellously exciting day when it was agreed between the Germans and the French that there should be a 9 per cent realignment between those two currencies—2 per cent up and 7 down, or 3 per cent and 6 per cent down. That question, unhappily, for the first and only time, ran into a time when the currency markets were open on a Monday morning. That was our only failure. Apart from that, I am confident to give my backing to the noble Lord, Lord Kerr of—I can never remember the other half.

[Baroness Williams of Crosby]

My Lords, I am reluctant to intervene, even briefly, in this marvellous ballet of Chancellors, which has taught us all a very great deal. I apologise for having stepped in before the noble Lord, Lord Lamont, because I am sure he too will have a major contribution to make.

I want to raise one other issue before we move on to what one hopes will be the final remarkable occasion of this ballet, which we will all appreciate much. I want to talk for a moment, if I may, about being straightforward about the implications of this amendment. The noble Lord, Lord Kerr, talked with a degree of technicality I am incapable of following, and I am sure that he is probably right. It looks as if his former Chancellors, all of whom he managed to be a mentor to, will give him the full support that he needs on this amendment.

My point reflects more on our debate up to this point. We are showing an inclination to look more at the ways in which we can escape from some of the consequences of the growing interdependency of the world economy of which we are part. Quite simply, we all know that it is highly unlikely that there will be movement under this Government towards the eurozone or the euro. It will be important to take account in the future of the amendment of the noble Lord, Lord Kerr.

We will not be able to escape the presence and the problems of the euro by not joining it. I recognise that most people in this Parliament and probably most people in the country at the moment would not wish to join the euro. However, I also recognise that the euro’s future and its strength are of crucial importance to this country whether we join or not. We now do something like half our trade with the eurozone. The positions taken by the eurozone are of major influence in global financial meetings. Therefore, although we may not belong to it we do not escape all the consequences of it. We should make it quite clear as we continue to discuss this part of the Bill that time and again we will be caught in the gradually increasing interdependency of the economic world whether or not we happen to already belong to some of its institutions.

Why did we help to support the Irish in the desperate situation that they encountered last year? Quite simply because there were so many British interests—banking interests, shareholder interests—affected by what happened to the banks of the Republic of Ireland that we felt it irresponsible and unwise to stay out of the discussions about it. In just the same way, we will find it irresponsible and unwise to regard the possibility of a major crack in the eurozone between its richer and poorer nations as if it did not in any way affect us.

We know already how close this is. Already there is much closer investigation of the European stability pact, with the possibility of mounting greater surveillance on those who are within it as well as the possibility of moving towards some degree of control over the group of countries within the eurozone. I will not go into all that now because there is not time and it is not appropriate, except to say very directly that this is bound to have implications for Britain as well. We simply cannot stay wholly outside these things.

When my noble friend Lord Goodhart was talking earlier about the European prosecutor’s office, one of the things he might well have pointed out, though he was too nice to do so, was that already we in this country had been caught up in the OECD’s Financial Action Task Force very directly on the issue of when we moved and finally passed the bribery convention. We cannot escape from some of the massive international institutions—the G20, the OECD and many more—which are bound to affect our sovereign right to do as we will. To pretend that we do not live in such a world, that it is not becoming more and more that kind of world, is to live in a world of illusion which we cannot possibly afford to. I simply make the point on this discussion on the euro that we have to look all the way through at how the United Kingdom will survive, strengthen and prosper in a world which, like it or not, is becoming increasingly global, increasingly interdependent and increasingly without room for people taking pure sovereign attitudes because those are no longer possible, whether you live in China, the United States or anywhere else.

[Lord Martin of Springburn]

I thank the noble Baroness. I have listened to her not only here but in the other place and I have always had great respect for what she has to say.

I recall when we spoke here about the help that we would give Ireland, a country of which I am very fond, and everyone in this House, to their credit, supported that move. However, there is a big difference between helping out a friend and neighbour and taking on the same currency as that neighbour. The men and women, particularly in the west of Scotland, which I know well and which is so near Ireland, hear the stories of how difficult things became for Ireland when they entered the euro and gave up their punt. Those stories will have a big impact on any decision. I do not think that anyone, any Member of Parliament in the House of Commons, would want to join the euro at this particular stage.

[Baroness Williams of Crosby]

I agree with the noble Lord, Lord Martin, but I think he misunderstood my point. I was not advocating that we join the euro—indeed, I went so far as to say that I saw no possibility in the near future of our doing so or even wishing to do so. My point was that we cannot walk away from the plight of Ireland because we do not happen to belong to the euro. We have to address those issues whether or not we belong to the euro, and that is an issue on which I would have thought the noble Lord and I would find ourselves sharing a very strong sense of agreement.

[Lord Lamont of Lerwick]

My Lords, I hope the noble Baroness, Lady Williams, will forgive me if I do not entirely follow her down the road of her argument and her thoughts. Of course I agree that what happens to the euro has a profound impact on us and I certainly want to see the crisis resolved in as orderly a manner as possible.

I shall be extremely brief. I am not intervening in this debate simply because two other Chancellors have spoken, although I did feel under a certain obligation, like both of them, to speak when the noble Lord, Lord Kerr, had tabled this amendment—not only tabled this amendment but talked to me, dare I say it, incessantly in the bars about it and written me a letter about it. I have the greatest respect for the noble Lord, Lord Kerr. In fact, he, I and, above all, the Prime Minister, John Major, all worked hard over the piece of paper that we are debating now: Protocol 15 of the Maastricht treaty. Although I spent a large part of my life poring over this, I have spent what seems an eternity this afternoon poring over it again trying to work out what on earth it means and trying to work out how some parts that seem to contradict it actually come together. Of course I owe it to the noble Lord to consider very seriously what he said, because he gave me great support when I was Chancellor, although when I knew that the noble Lord was putting forward this amendment, the story of Talleyrand came to mind—having been told that someone had died, he asked whatever had he done that for.

I confess that even having thought about this a little, I am not entirely convinced that there is a massive difference between the way that the noble Lord, Lord Kerr, wants to tackle it and the way that my noble and learned friend Lord Howe wants to tackle it. My noble and learned friend said that he was quite sure that I and my noble friend Lord Lawson needed no reminding that joining the ERM was in our manifesto in 1979. I confess that it was only when I became Chancellor that I expressed exasperation about the whole thing and the Permanent Secretary at the Treasury reminded me that it had been in our manifesto. It did not come quite so easily to my memory as to that of my noble and learned friend Lord Howe.

I turn to the subject of the debate. An extremely important point is that the referendum should not be about the exchange rate. Anxiety has been caused by whether Article 143 would give rise to a situation in which the actual exchange rate at which we joined the euro—perish the thought that we ever did—would be on the ballot. It is my understanding, and I hope that the noble Lord will be able to confirm this, that it does not follow that it will have to be on the ballot paper. It is an option but not essential. As I understand it, the Government are proposing a package approach. They are intending that the negotiation of the draft content of the Article 143 decision should take place before the Government formally notify the Council that it intends to adopt the euro; that is, that the negotiations should take place first. I do not see that as a great problem and I think it can be done that way. This is something which, as I understand it, has happened before.

19:00

In all honesty I do not really see the exchange rate and market uncertainty as an issue, given that we have a floating rate and that we would be proposing, if this ever happened, to move from a floating rate to a fixed rate. Even if it were known what the terms were, it could be within a range. I always listen to the noble Lord, Lord Kerr, but this could be done either way around. However, as I have said, the one thing that should not be on the ballot paper in the referendum, if there were ever to be one, is the actual exchange rate.

[Lord Liddle]

My Lords, from the Opposition’s point of view, exotic as it may seem that we should at this moment be debating the circumstances in which we might join the euro, this Bill is intended to bind future Parliaments for a long time. Indeed, that is one of our major difficulties with it, which is why we will be moving the sunset amendments on Wednesday. However, given that it is a Bill that is intended to bind Parliaments for the future, it is important to get this right. We have listened to our colleague the noble Lord, Lord Kerr, at great length on this subject and are persuaded that he is right. The Opposition will therefore be supporting his amendment.

[Lord Wallace of Saltaire]

My Lords, no Parliament can bind its successors. That is one of the principles of parliamentary sovereignty. I am grateful to the noble Lord, Lord Kerr of Kinlochard, for following up the previous Committee discussion with his letter of 19 May, in which he outlined his concerns in more detail: namely, that Clause 6(5)(e) of the Bill might be legally defective. We have therefore taken careful legal advice. The Government have now been able to reply to that letter and a copy has been sent to those of your Lordships who participated in the Committee debates. A copy of the letter has also been deposited in the Library of the House. On the basis of that legal advice, I hope to reassure your Lordships that we do not judge there to be a risk of more than one referendum on the euro being required and that the provision does what we and noble Lords on all sides of your Lordships’ House intend it to do.

Unlike other member states, the UK is not under an obligation to adopt the euro. Protocol 15 of the consolidated treaty begins with the clear statement that the United Kingdom,

“shall not be obliged or committed to adopt the euro without a separate decision to do so by its government and Parliament”.

That protocol, which needs to be read alongside Article 140 in the British case, sets out in detail the steps that must be satisfied before the UK could adopt the euro. Paragraph 9 of the protocol states that after the UK has notified,

“the Council … of its intention to adopt the euro”,

as its currency,

“decisions in accordance with the procedure laid down in Article 140(1) and (2)”,

of the TFEU must first be taken, to which protocol 13 is also relevant.

The process starts in practice by examining convergence criteria as set out in Article 140(2). That is bound to happen before the UK formally notifies, even if it is not part of the formal procedure. It might be helpful to consider what needs to be done following notification of our intention to join the euro. It is not a matter of negotiating terms of entry but of economic criteria being satisfied in terms of the treaty. The final step of the process is to take a decision in accordance with the procedure laid down in Article 140(3) of the TFEU. Paragraph 9(c) of Protocol 15 commits the Council,

“in accordance with the procedure laid down in Article 140(3)”,

to “take all other necessary” measures to enable the UK “to adopt the euro”.

Clause 6(5)(e) is designed to catch this final step in the process, thus ensuring that as much of the complex detail as possible is available to Parliament and the public in deciding whether to join, while giving the Government of the day the flexibility to set the timetable for when to seek approval from Parliament and the British people. If I may say so, the noble Lord, Lord Kerr, might almost be old enough to remember the first applications for Britain to join what was then the European Economic Community. Before formal application was made, a number of informal negotiations established the terms for potential negotiation. We envisage something of that in this situation. It will allow the Government to seek a referendum when sufficient detail is known about the circumstances and conditions of entry, but will allow the UK to seek approval from the people before the exact point at which the exchange rate between the euro and the pound would be set. We all recognise that the exact exchange rate will have to be set at the end of the process to avoid market turmoil and speculation against the rates declared.

In contrast, the amendment proposed by the noble Lord would require the referendum to be held and approval given before the UK could notify the EU that it intended to adopt the euro. The Bill nevertheless allows for matters to be arranged in this way if the Government so wished, again providing the degree of flexibility which noble Lords, including the noble Lord, Lord Kerr, have so often called for on this Bill. It would be open to the Government of the day to undertake negotiations with the EU in line with paragraph 9 of the protocol before the UK issued its notification. This would allow draft decisions under Article 140(3) on the rate at which the euro would be substituted for sterling and other measures necessary for its introduction to be prepared—with perhaps a range of rates being negotiated—before notifying our final intention to join the euro.

On that basis, I do not consider that the Bill would lead to what we all view as an unwelcome situation in which two referendums would have to be held on the euro: the first on the UK notifying that it wished to join; the second in a rushed weekend on determining the specific question of the exact rate at which the euro is to be exchanged for the pound. Instead, it is possible under the Bill for the Government to submit the question of adopting the euro to a single referendum.

[Lord Lawson of Blaby]

My noble friend mentioned the lawyers early on and I am quite sure that the lawyers worked this out. To me, this is too redolent of lawyers. The practicalities might in fact tell the other way. The noble Lord, Lord Kerr, for whom I have a high regard as I indicated earlier, has raised a point that at least merits further thought and discussion. Quite apart from the problems that might or might not occur on the currency markets, it would be very confusing to the British people if there were no referendum on the principle of joining the euro at the first stage, when the Government of the day had decided that.

My noble friend the Minister said that this can be played either way, early or late, but we cannot know what a future Government might do. They might decide to play it late, which would not be desirable. It would be most undesirable for, and, as I say, very confusing to, the people, who would not quite understand why it was happening in that way. It might therefore be sensible if the noble Lord, Lord Kerr, could be persuaded to withdraw his amendment on an undertaking by the Government that they will give this matter further thought. That would be the right way forward.

[Lord Wallace of Saltaire]

I am very happy to give an assurance that the Government will look at this further, but we have consulted—we are dealing with legislation, so it is entirely appropriate to consult—lawyers on the implications of that legislation. The process is long by which what necessarily begins with informal exploration becomes formal notification, then, under the terms of Article 140(2), as the noble Lord, Lord Kerr, will know, entails a degree of negotiation on how far the UK meets the convergence criteria and then moves towards the final negotiation in Article 43. What we provide for under the existing arrangement is a degree of flexibility over at what stage in that process the Government put the—

[Lord Hamilton of Epsom]

Is not the other side of my noble friend Lord Lawson’s argument that if we take the decision in principle, we are put in a much weaker position in all subsequent negotiations because, in practice, the country has already voted in principle to go into the single currency and therefore we have to give way on many of the negotiations that follow?

[Lord Wallace of Saltaire]

That, of course, is partly why, in all three British applications to join the European Economic Community there were informal conversations before Britain made a formal application—we needed to know what potential terms were available before we formally declared our hand. For the reasons I have outlined, we conclude that Clause 6(5)(c) is not legally deficient and that there is no risk of the Bill requiring more than one referendum on the issue, the second referendum being on the rate at which the UK would join the single currency. I therefore urge the noble Lords to withdraw their amendment.

[Lord Kerr of Kinlochard]

I always listen very carefully to what my former bosses say and I take very seriously the advice of the noble Lord, Lord Lawson, but I did not hear from the Minister any suggestion of thinking further or looking again. I agree with the noble Lord, Lord Lamont, that there is not a great deal between the Minister and me. My language, which is the language of the existing Act plus the referendum requirement, would permit the Government to do everything that the noble Lord, Lord Wallace, has said they would wish to do. It is perfectly permissive; they could do that because the notification could be done informally and the formalisation of the notification could be saved up till the end. They could do absolutely as the noble Lord, Lord Wallace, says.

[Lord Wallace of Saltaire]

I was using the language of the consolidated treaty. The noble Lord was using the language of the Maastricht treaty, and I suggest that the current consolidated treaty might provide the more appropriate language.

[Lord Kerr of Kinlochard]

I was using the language of our Act, the Act in force in this country now. I am talking the 1993 Act language, which is replicated precisely in my amendment. I am very glad to hear the Minister agree that we must avoid a second referendum and that we must avoid the crisis weekend drama, but in a plain reading the Bill says that what should be put to Parliament and the people is the draft of the decision under Article 140(3), which sets out the rate. That is the decision that we are going to take over a weekend, and it is going to be a busy weekend if ECOFIN starts on Friday, Parliament sits on Saturday and the referendum is on Sunday. It is not going to be fun.

I agree that under my language the Government could do exactly as they want. Under their language, I believe that the country would think it very odd if they did not see the draft decision including the rate, because that is what Article 140(3) of the consolidated treaty says. It uses the rate; the rate is there in the treaty. So although I regret that I have taxed your Lordships’ patience long enough, I think that I really have to test the views of the House.

19:15

Division 2

Ayes: 187

---

Labour: 145
Crossbench: 26
Liberal Democrat: 5
Conservative: 4
Ulster Unionist Party: 1
Independent: 1

Noes: 188

---

Conservative: 116
Liberal Democrat: 58
Crossbench: 7
Ulster Unionist Party: 2
Independent: 1

19:28

[The Deputy Speaker (Baroness Fookes)]

My Lords, I have to announce a correction in the voting figures in Division No. 1. The correct figures are: Contents, 214, not 213 as announced; Not-Contents 209.

Consideration on Report adjourned until not before 8.30 pm.