Ukraine

Lord Kerr of Kinlochard Excerpts

Tuesday 18th March 2014 Lords Chamber

[Lord Kerr of Kinlochard (CB)]

My Lords, I begin with a tribute to the speech made by the Minister, which I found extremely informative. I thank her for maintaining her tradition of keeping the House well informed as this crisis develops. I also agree with many of the things she said, particularly what she said about the role of the Prime Minister at the European Council 10 days ago. The constructive role he played was greatly appreciated, particularly in Poland.

I cannot claim any particular expertise on Ukraine. It is a very long time since I lived in Russia. I lived in Moscow many years before the noble Baroness, Lady Suttie, lived in Russia and probably many years before she was anything more than a gleam in her father’s eye, but I knew Kiev and Crimea quite well back in the 1960s. I know Kiev a little more recently, but there are many noble Lords in the House with more expertise than me. I will therefore approach the issue by trying to devise some principles.

The first principle that I think the British Government are acting on—it is very important to keep it in mind—is that the aim of policy should not be to punish Russia but to help Ukraine. Although helping Ukraine does of course mean direct support and assistance, it also means deterring Russia from continuing down its present course. I do not think that that amounts to reckless bellicosity. Provided we ensure that all our policies are designed to assist Ukraine, we will not go far wrong.

There are three traps that policy needs to avoid, and I think British government policy is avoiding them. The first is the pipeline heresy, which was well exploded in an excellent speech by the noble Lord, Lord Howell of Guildford. Pipelines mean that one has tied suppliers. The Russians, by choosing to invest in pipelines rather than LNG, have ensured that we have leverage over them. In the medium term, we, as the noble Lord, Lord Howell, said, can buy more Norwegian or Algerian pipeline gas. We can get LNG that is freely available, at a price that will go down, from Nigeria and the Gulf because there is no market in America any more thanks to fracking. If Gazprom cannot sell its gas to us, it cannot sell it anywhere because it has no other market to supply, so Europe has no need to cringe because of its energy deficit.

It must of course work to correct that energy deficit: the noble Lord, Lord Howell, was right again. To some extent, it has done so, compared with the 2008 crisis. Slovakia, Hungary and Poland are less exposed now than they were because the pipelines previously flowed in only one direction and they now have reverse flow from west to east. We need be less inhibited than we were at the time of the Georgia crisis in 2008.

In the long term, there is no doubt that fracking means that the United States will be exporting LNG. There is clearly a need for many more gasification plants. It is particularly astonishing that Germany does not have one yet. However, in the medium term this is not a big problem, and in the short term we have had a warm winter in Europe and stocks are high.

Coal is phenomenally cheap because Appalachian coal has been driven out of the American power generation market by natural gas. Therefore, it can underprice Russian coal. Forty per cent of coal in this country still comes from Russia, but it does not have to. We could, if we wanted, reopen those contracts. I am not saying that we should do these things: my point is simply that the pipeline heresy is a heresy. We do not need to feel that Gazprom controls the EU’s policy.

The second heresy is to believe that EU sanctions set a ceiling on what we, the French, the Germans or the Poles could do or threaten to do to help Kiev. They do not set a ceiling; they set a floor. A convoy does not need to move at the speed of the slowest ship and only as far as that ship will go. There is an argument that the UK and France should think about going further and faster because we are signatories to the 1994 Budapest memorandum, which has been described and discussed already. However, I will make the point that in 1994, Ukraine’s nuclear arsenal was the third largest in the world. It was bigger than those of the next three, the French, the British and the Chinese, put together. All that was removed as a result of the Budapest memorandum, so I do not think that our policy in the present crisis should be determined only by the need to support and help our friends in Ukraine. We need also to think about how to sustain the policy we have had for many years on non-proliferation. It will be harder to persuade the near-nuclear powers not to go for warhead and missile development and weaponisation in the future if it is seen that the guarantees that the Ukrainians certainly think they got in 1994 are worth nothing.

The third heresy is the shoulder shrug which says that Ukraine is a basket case and nothing can be done. Ukraine is still the world’s second largest grain exporter. The country is phenomenally rich in minerals and in largely unexploited hydrocarbons. It is, as I think the noble Lord, Lord Howell, also said, natural fracking country. No one is doing it yet because no one invests in Ukraine. That is because Ukraine has had the bad luck to have five successive corrupt kleptocracies. Twenty years ago, the per capita wealth of Ukraine was on a par with that of Poland. Today, Poland’s per capita income is four times that of Ukraine. It is a rich country that has been very badly governed, and of course it is bankrupt. Some 30% of its budget is spent on debt service, so no wonder it cannot pay its bills. However, with a good Government that could change very quickly, which would be in everyone’s interest, including Russia’s.

What should we do? I have four thoughts about this. First, it is obvious that generous emergency aid should be made available now. It should come from the IMF, the EU and bilaterally from the Americans. I see that there is a Bill in Congress for $1 billion; I hope it gets through. That is needed to get the country through the six months that will see the parliamentary and presidential elections, the new constitution and a new Government. In my view, we are talking not only about capital aid—much of which can be loan money because we are lending to a country that is potentially rich and will repay—but about technical assistance, particularly in the area of juridical, legal and constitutional reform on issues of governance, where I think there is a particular role for this country to play.

Secondly, the Russians must be deterred from disrupting the six-month process that the Ukrainians have set themselves. As the noble Baroness, Lady Suttie, said, Kiev must continue to be statesmanlike and conciliatory about language laws and minority rights, and not make the terrible mistake that arose briefly on the language laws. The world’s eyes and ears need to be on Donetsk, Kharkiv and Odessa. It was easy for the Russians to create facts on the ground in Crimea because the world was not watching and the OSCE monitors were not let in. The Kiev Government want them in now, so we, the EU, the OSCE and all those who are concerned for the future of Ukraine should be responding to that. We need observers on the ground to make sure that false facts are not created.

Thirdly, there is a need for a dialogue with Moscow about whether its current zero-sum game approach, as shown in Putin’s speech today, is really in its interests. I strongly believe that, as the noble Lord, Lord Howell, said, a prosperous Ukraine is in the Russians’ interest. I do not think it is in their interest that their near-abroad—the Kazakhstans, Turkmenistans, Azerbaijans, Armenias, Georgias and Moldovas—should see Moscow as threatening and overbearing. However, that is how Moscow is seen today as a result of what has just happened in Crimea, particularly in the Muslim republics. The reactions of the Tatars in Crimea were predictable, and their fate is of concern to their coreligionists.

The Russians also need their EU markets, so the points I made earlier about sanctions are relevant. They need the inward investment that their action in Crimea will certainly now deter. We need to encourage them not to believe their own propaganda: Ukraine is not about to join NATO and the US is not about to deploy missiles on the Russian border. In fact, NATO membership is not on offer and has not been on offer for a considerable time. It was US policy for a time to offer it, but the European allies did not agree. As far as I know, no British Government have agreed, and it is not British policy now that Ukraine should be invited to join NATO—I hope the Minister will confirm that. The Russians maintain that it is. It would be a great pity if it was, and it would be a mistaken policy, for reasons that have been mentioned in this debate. However, I do not think it is the case, and that needs to be made clear.

Being slightly daring now, I should like to go a little further and make what is perhaps a more constructive suggestion. Some recent statements from Moscow, including one yesterday, seem to imply that Russia would like a status for Ukraine comparable to that achieved by Austria with the state treaty in 1955. If that were genuinely what a freely elected Ukrainian Parliament wanted—I have no idea whether it is or might be—and if the Russians would genuinely back off, as they did in Austria in 1955, and could convince Ukraine that they would respect a Ukrainian state treaty, just as Russia respected the Austrian state treaty and not as it treated the Budapest memorandum, then it seems to me that a very interesting negotiation is possible. Of course, it all hangs on what the Ukrainians want. They cannot have access to the alliance but they could have some other form of collective security guarantee, perhaps more binding than the Budapest memorandum has come to be.

Lastly, we need to remember our other friends in the region that are now feeling threatened. For Moldova, the parallel between Crimea and Transnistria is disturbingly close—the Russians have 2,000 troops on the ground in Transnistria, and the illegal referendum has already happened. It happened in Gagauzia on 2 February and, astonishingly enough, produced a majority in favour of closer links with Moscow and no move towards the European Union. Russian Deputy Prime Minister Rogozin has already warned that Moldova will lose Transnistria if it continues to move towards the EU. So far, Moldova’s nerve holds, but where are our observers? Where is our presence on the ground in Moldova?

What about the Baltic states? When they suffered, in 1940, precisely the same fate that has now befallen Crimea, the United Kingdom, greatly to its credit, never recognised their incorporation into the USSR. Most other countries did, but we have never recognised it. We maintained the embassies of the three independent republics in London right through until the collapse of the Soviet Union. Now they are our allies and are in NATO. They have a deep bond with this country because we did not let them down the way everybody else did. It is really quite important that we should be seen to be standing by them again lest President Putin mistakenly think that Article 5 of the Washington treaty is a dead letter. Foreign Minister Steinmeier was in the three Baltic capitals 10 days ago. I hope that we will follow.

The noble Lord, Lord Cormack, spoke of the Monroe doctrine. Alas, the Brezhnev doctrine is probably more relevant. I do not like it at all. I do not believe in spheres of influence. I do believe that democracy and self-determination must take precedence. That is why I think our policy should rest on the central pivot of: what can we do to help Kiev and others who currently feel threatened?

European Union (Referendum) Bill

Lord Kerr of Kinlochard Excerpts

Friday 24th January 2014 Lords Chamber

[Lord Giddens (Lab)]

My Lords, I follow up on the comment that the noble and learned Baroness has just made. I speak in this debate as an academic more than as a Labour Party member. If the UK were to leave the European Union, it would be a really wrenching process of readjustment. When a country is contemplating such a profound and consequential decision, it is crucial that the question chosen in the referendum should be as clear and impartial as possible. For that reason I think we should have some academic discussion of it, because, as has been said, questions are crucial in a referendum.

The report of the Electoral Commission is sound, sensible and well researched. For maximum clarity it makes absolute sense to have the formula proposed in this amendment, which is endorsed by the commission. Contrary to all kinds of political babble, I would hope that most Members of the House will support the amendment because it is in the interests of the country. It is not a party-political issue. It is in the interests of the country, if we have a referendum on a decision crucial to the future of the country, that the question asked is impartial and proper.

[Lord Kerr of Kinlochard (CB)]

My Lords, I speak in support of the amendment in the name of the noble Lord, Lord Armstrong. I have a dog point—but the noble Lord, Lord Armstrong, made it himself. I would put it in a slightly different form. I would say, “Why have a watchdog and ignore its barking?”.

I also have a tartan point—but the noble Lord, Lord Forsyth of Drumlean, made it himself. When Mr Salmond put forward his question for the Scottish referendum, loud were our complaints and strong were our strictures, particularly from the former Secretaries of State for Scotland. Their wizened locks shook. In the case of the noble Lord, Lord Forsyth, his head shook. Loud was our condemnation of Mr Salmond for ignoring the advice of the Electoral Commission. What happened? He listened to us, or he listened to the Electoral Commission, and he changed his question. He did as the House of Lords encouraged him to do. That seems to be quite a relevant precedent.

My third point you could call cui bono. I disagree with the noble Lords, Lord Grenfell and Lord Lipsey. They say that the question in the Bill—the slanted question—was written by Conservative Central Office. However, we know from the Second Reading debate that that is not true, because we were told then that the form of the question that the Tea Party in the other place has chosen to put in the Bill was not the one it was given by the Conservative Party hierarchy. The Conservative Party hierarchy provided a question very like the one proposed by my noble friend Lord Armstrong of Ilminster in the amendment before the House.

You have to say, “cui bono”. There will be people in this House who think that it is a very good idea to have a slanted question because they are not seeking a referendum; they are seeking a referendum that says we leave the European Union. Those on the other side who are thinking of opposing the amendment of my noble friend Lord Armstrong—and I hope they are very few—should reflect that this is not what the Conservative Party sought. This is a question that is not accidentally defective but deliberately defective. I support my noble friend’s amendment.

[Baroness Falkner of Margravine (LD)]

My Lords, I apologise on behalf of my noble friend Lord Lester of Herne Hill, whose name is added to Amendment 1 and the other amendments in this group, spoken to by the noble Lord, Lord Armstrong. My noble friend is unable to be in the House this morning because he has a medical appointment.

I agree with Amendments 1, 28 and 31, in the name of the noble Lord, Lord Armstrong, and with Amendment 32, and I want to speak briefly to them—but, before doing so, I want to take on what the noble Lord, Lord Forsyth of Drumlean, said. I tend not to tangle with the noble Lord—normally he is far too ferocious for me to lift my head above the parapet— but I remind him that it was Mr David Cameron, the Prime Minister, who undertook in a speech in January 2013, famously known as the Bloomberg speech, to negotiate a new settlement with our European partners. He said that once the settlement had been negotiated, there would be an “in or out” referendum in which the British people would choose to stay in the EU on these new terms or come out altogether. He undertook that this would be done in the first half of the next Parliament. He said:

“Legislation will be drafted before the next election. And if a Conservative Government is elected we will introduce the enabling legislation immediately and pass it by the end of that year”.

In fact, what has happened is that the Bill before us is the enabling legislation. It should not be before us in this Parliament; it should come as enabling legislation after the next general election.

I will now speak to the amendment. I note that I am the first member of this House’s Constitution Committee to so do and I regret that our chairman, the noble Baroness, Lady Jay, is unable to be here now. However, I draw the House’s attention to the Constitution Committee’s report on the Bill. The report is brief but clear. It clearly sets out that the Electoral Commission has, in Section 104, a duty,

“to ‘consider the wording’ of a referendum question and to report on its ‘intelligibility’. In doing so the Electoral Commission considers whether the question presents the options to voters ‘clearly, simply and neutrally’”.

It recommends that the question be amended from the question in the Bill, which is:

“Do you think that the United Kingdom should be a member of the European Union?”,

to one of two alternatives. One is:

“Should the United Kingdom remain a member of the European Union?”,

and several noble Lords have spoken to that, and the other is:

“Should the United Kingdom remain a member of the European Union or leave the European Union?”,

with the possible answers to the second option being, instead of yes or no, remain or leave. We should discuss both options.

My personal preference is not, as this group of amendments recommends, that the question should require a yes or no answer but that it should ask whether the UK should remain a member of the EU or leave the EU, with a “remain or leave” option clearly put to the electorate. The reason I say that is that when the Electoral Commission conducted its research—in the way that the noble Lord, Lipsey, might have found flawed, although I will not address his concerns at this point—it discovered that significant numbers of the public were confused as to whether we were members of the EU or members of the eurozone, and indeed there were people who did not know that we were members of the European Union. In the light of that, the committee certainly suggests that the House should carefully consider whether it is satisfied with the question and that it should do so in the spirit of its obligation to carry out scrutiny and revision.

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For all those reasons, I strongly support the amendment moved by the noble Lord, Lord Roper, and I hope that the noble Lord, Lord Dobbs, will give very serious consideration to accepting it.

[Lord Kerr of Kinlochard]

I, too, support the amendment moved by the noble Lord, Lord Roper. The analogy with 1975 is interesting. As the noble Lord, Lord Dobbs, has reminded us again and again, the House of Lords passed without difficulty the Bill for the referendum. Of course, the difference was that the governing party had had in its election manifesto a commitment to having a referendum, and the renegotiation was taking place; it had taken place by the end. It was not a future renegotiation and a referendum in another Parliament; it was a referendum in the here and now. It was completely uncontroversial as a Bill, the question was in no way slanted and it went through like a dose of salts.

That was a totally different situation from the one we face with the Bill in the name of the noble Lord, Lord Dobbs. In 1975 there was a public information campaign in a very narrow sense. There was in Whitehall a referendum information unit, staffed partly from public service, partly from outside, which provided— genuinely impartially—information to the two campaigns, and the campaigns made what use they wished of it. There was very little direct communication by the Government with the elector.

The requirement then was not nearly as great. It was not long that we had been in the European Union. People could remember what it was like to be outside the European Union. There had been huge debate about Mr Heath’s application. There had then been an election, which was fought on a number of issues but that was one of them. The public were pretty familiar with the issues. People who have for a generation and a half assumed that the rights they acquire by being members of the European Union are permanent rights, people who live in Spain or Italy or Ireland, and enterprises that have made their decisions about investment on the assumption that our membership of the European Union single market is permanent are going to have to think about how these things would change.

The noble Lord, Lord Turnbull, got it exactly right and I agree with everything he said. The noble Lord, Lord Hannay, was correct to say that the four assessments called for in this amendment would have to be genuinely factual, impartial and independently produced. It is a serious requirement which should be in the Bill. I agreed with the noble Lord, Lord Liddle, when he said at Second Reading that it was a principal defect of the Bill that there was nothing in it about facilitating unbiased debate before the referendum was held. This amendment would correct that defect, and I support it.

[Lord Kinnock]

I support the amendment. If I can be biblical for a moment, I shall take as my text what no less a person than the Prime Minister said in his Bloomberg speech. He said:

“If we left the European Union, it would be a one-way ticket, not a return”.

There can be few bigger questions ever to present themselves to the British people in this or any other age, certainly in peacetime—questions about war, of course, are characteristically not put to the British people. If that is the dimension of the decision, it is very clear that it must be subject to a full assessment, not as an addendum or an afterthought but as a basic prerequisite of conducting a referendum and a meaningful vote in it.

The reason for that is very straightforward: there is no commercial organisation of any dimension, even quite small concerns, which would begin to undertake any significant shift in its product range, in its marketing, in its location and in a proportionately big investment decision without undertaking a full evidence-based assessment of the impact of taking that decision. It would be an assessment of the impact not just on the firm and its labour force but perhaps on the locality, the environment and on transport needs. Anyone who has been part of such decision-making, as many people in this House, including me, have been, is familiar with the very refined techniques that now exist for undertaking comprehensive and thorough impact assessments. That is what the whole of commerce does. Indeed, it is what the whole of local government does. There can be no significant decision facing any council in this whole country that has any kind of recognisable implication for the community, the budget of the council or the well-being of the citizens that is not subject to rigorous impact assessment, particularly risk assessment. Useful techniques exist for undertaking those exercises in ways that are comprehensible to the citizens of the locality as well as to the decision-makers, executive and elected, in the council.

If we are faced as a country before 2017, or maybe after it under the terms of European Union Act 2011, with this monumental choice whether to book a one-way ticket, not a return—in the words of the Prime Minister—an assessment of impact that is comprehensive, thorough and communicated in understandable language would be a basic, vital requirement.

To the list that exists in the proposed “Referendum condition” clause, which is commendable and touches on most of the issues that would be of significance to people, we could add some more words from the Prime Minister. He said that we would have to think about,

“the impact on our influence at the top table of international affairs … That matters for British jobs and British security”.

It is not a detached, academic consideration of whether we have lost an empire and still seek a role, or anything esoteric at all. He said, rightly, that it matters for British jobs and British security.

We could add that question to the list: can we realise the Prime Minister’s and the Chancellor’s ambition of remaining in the single market, whatever happens to our membership of the European Union? The Prime Minister said that that is the most important single reason for us belonging to the European Union. If that is the case, surely the issue must be examined with great rigour. What would be the impact, that we could assess, on our participation in the single market? The results of that assessment should of course be available to the British people for prolonged discussion and comprehension before they come to casting the fateful vote.

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Moved by

[Lord Kerr of Kinlochard]

10: Clause 1, page 1, line 4, leave out subsection (2)

[Lord Kerr of Kinlochard]

My Lords, the amendment would remove the specific 2017 date from the Bill; it would not, of course, remove the insistence in Clause 1(1) that there should be a referendum but would merely leave open the date.

At Second Reading, in my usual low-key, modest, respectable, Cross-Bencher way, I touched on the reasons why I, as a negotiator, thought it unwise to put our negotiators in the forthcoming renegotiation under time pressure by locking them into a 2017 requirement for the successful completion of a renegotiation, which it seems that we will not start until 2015. Reading Hansard and seeing what I said at Second Reading, I am reminded of Warren Hastings in Westminster Hall at his impeachment, standing amazed at his own moderation.

I am struck by the fact that we do not know what it is that we will be renegotiating. We do not know what we want. The noble Lord, Lord Owen, had a point at Second Reading when he suggested that we should start now trying to win friends and influence people on whatever it is we want to achieve. I rather agree, but we do not know what we want to achieve. We have seen three or four hints in recent weeks. We have been told that we may want to scrap free movement of persons, in Article 3 of the treaty, or to have the EU drop its Charter of Fundamental Rights, in Article 6 of the treaty, and resile from the European Convention on Human Rights.

We may want to roll back EU competence in labour and social law and change the single market rules to give Whitehall a veto on EU laws on financial services. Indeed, on that, we have been told that the message for the foreigners is, “Reform or we leave”. All that sounds quite big stuff, involving fairly fundamental issues. Putting it as mildly as I can, I warn the House that all that would take time. Perhaps I should touch very briefly on the timetable for treaty revision.

[Baroness Farrington of Ribbleton]

My Lords, will the noble Lord please explain to me—if he is able to—when he uses the term “we may”, which “we” is he talking about? Is he talking about “we” meaning the country, “we” meaning the Government or “we” meaning part of the Government?

[Lord Kerr of Kinlochard]

I am sorry; I spoke loosely. I was talking about the Government of the day in the United Kingdom seeking treaty renegotiation.

There are four stages to treaty amendment, and the Conservative Party has argued that renegotiation will end in treaty amendment. It has defined success as treaty amendment. Stage one is that one has to find 14 other member state Governments who agree that one’s proposals for change make sense, or at least that they are worth considering in a convention. You have to have a simple majority.

The second stage would be a convention in which the national Parliaments, the European Parliament, the Commission—

[Lord Cormack]

I just want to say that many of us cannot hear the noble Lord. There must be something wrong with the loudspeakers.

[Lord Kerr of Kinlochard]

I hate to deprive the noble Lord, Lord Cormack, of my wisdom, and he has been far too polite in the past.

The second stage of the process of amending the treaty is the calling of a convention. The last and only convention so far lasted for just over 18 months. The convention has to end up with consensus. The next stage is an intergovernmental conference in which one needs the unanimous agreement of every other member state to one’s propositions. Nothing is agreed until everything is agreed. The final stage would be ratification of the outcome. If it involved treaty amendment, the changed treaties would require new national ratification in every member state’s capital. I assume that before we have the referendum, we would want to know, and be able to tell the country, whether the renegotiation deal had stuck and had been accepted in other member states. A very awkward and complex situation would arise if you had a referendum on the assumption that the renegotiation deal would be ratified everywhere, and that turned out not to be the case.

We do not begin those four stages until after an election in 2015. It does not add up. The first stage, the bilateral diplomacy, we do not appear to be doing. We do not appear to be collecting the 14 friends to get past the first hurdle. As to the second stage, the convention, I do not know how long it would take. It might take much less than the 18 months taken last time, but it is a finite hurdle to get over and it will take time. As to the third stage, the intergovernmental conference, Maastricht took a year. This one might take less but, on the other hand, it sounds as if the propositions that the Conservative Party envisages bringing forward are rather fundamental. Finally, as to ratification in 2017, one would be asking the French and the Germans in their election years to agree with the British on, say, restraining free movement of persons, taking human rights out of the treaty, exempting the British from social law or giving them a veto on financial law. You would be seeking agreement on that in the year in which a French Socialist President was seeking re-election, and a German Government who strongly believe in human rights would be facing the polls.

[Lord Deben (Con)]

The noble Lord has not mentioned the danger that ratification would not have taken place. If the British had a referendum and wished to remain in the EU, but ratification did not take place after that decision was made, that would put us in a constitutional position of great severity.

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[Lord Kerr of Kinlochard]

I entirely agree with the noble Lord. The point that I am trying to make is: because the renegotiation is envisaged to take place before the referendum, the date set for the referendum in 2017 cannot be right. It does not work.

[Lord Forsyth of Drumlean]

I am struggling with this argument because we are going to have a referendum in September on whether Scotland should remain part of the United Kingdom. The proposition then is that the referendum should be held before the negotiation. I did not think that the noble Lord had any difficulty with the idea of that referendum.

[Lord Kerr of Kinlochard]

It depends on where you are starting from. It is not an easy position, but if the position of the noble Lord, Lord Forsyth, is that he wants to get us out anyway and we should not bother with renegotiation, that is fine. Why not? However, the Conservative Party’s position, as clearly explained in the Prime Minister’s Bloomberg speech—in which, by the way, he was speaking explicitly as leader of the Conservative Party, not as Prime Minister—was that he hoped to renegotiate a different relationship with Europe, put it to a referendum and recommend that we stay in the European Union. I am just saying that that timetable does not work. It does not add up.

At Second Reading, a lot of noble Lords commented on the date. A lot of noble Lords made the point—better than I am making it—of the unwisdom of locking the negotiators’ feet in concrete and putting them under time pressure. That is not a wise idea. The noble Baroness, Lady Falkner of Margravine, said the date was arbitrarily picked out of the air. We have not been told in this debate why it has to be 2017, other than that was the date in the Bloomberg speech.

[Lord Spicer (Con)]

The noble Lord makes some very interesting points but are they not rather academic in view of the votes that have now taken place and that the House to some extent has already passed wrecking amendments?

[Lord Spicer]

That is the likelihood. This House has been so careful of the interests of the British public against the shenanigans of the other place that it is going to deny them any voice at all.

[Lord Kerr of Kinlochard]

Nothing in this amendment in any way affects the first line of this Bill that says that there shall be a referendum. This amendment concerns only whether it is wise to set in the Bill the end date by which time the referendum must have been held. That is my sole point. I have heard no rationale for the 2017 date. I look forward to the explanation of his rationale from the noble Lord, Lord Dobbs. It will not be sufficient for me to hear that the Prime Minister said in the Bloomberg speech that it would be by the end of 2017. He said the first half of the Parliament. That would not be a sufficient rationale for me because it was not put in advance through the political process and raised in Parliament and is not, as I understand it, government policy. It is the policy of the Conservative Party, just as the Bloomberg speech was the policy of the Conservative Party. If we have to have a date in the Bill and it has to be the end of 2017, please tell us why. I can think of only one reason and I am not of a suspicious mind. If you wanted a referendum to produce the result that the UK leaves the European Union, you could not pick a better time. You are saying that the Government must bring their renegotiation to a head in what must be, because of the French and German elections, absolutely the worst year to do it. You are saying that they have to try to cut corners and accelerate the timetable, which the European Union will want to follow. You are maximising the chances that they lose friends, fail to influence people and do not get the renegotiation objectives they have in mind—

[Lord Anderson of Swansea]

Clearly the date chosen—before 2017—appears to be the worst possible time, as the noble Lord properly points out. It is also during the UK presidency and it will prove extraordinarily difficult for the UK objectively to be chairing the European Union as president and at the same time be pursuing objectives the purpose of which we do not yet know.

[Lord Kerr of Kinlochard]

I agree. Again it is the cui bono question. Why would you want to set this timing unless your aim is to get us out? I look forward to hearing an alternative, more encouraging explanation of the rationale from the noble Lord, Lord Dobbs, and until I do, I think that we should take this date out of the Bill.

I am very uneasy about the whole renegotiation process. I am very uneasy that we are raising public expectations in this country by saying week after week, issue after issue, “Yes, we will sort that out in the renegotiation”. Everybody agrees that the EU needs reform but reform is an amorphous, amoeba-like creature, and it seems to go off in different directions depending on whatever the Daily Mail says this week. We are always told, “Don’t worry, it’ll be dealt with in the renegotiation”.

I think that there are issues that can be renegotiated, and I am absolutely not, in principle, against renegotiation. However, one has to be clear with the country, preferably before the election, about precisely what kind of European Union one is trying to create and whether it is going to work—how many friends you have and how negotiable are your aims—and one needs to be honest about it.

If your Lordships want a renegotiation and they want it to succeed, Amendment 10 deserves their support, because a successful renegotiation is incompatible with a 2017 deadline.

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[Lord Dobbs]

I could dig out another quote, but that would take another five minutes, and I think that this debate has gone on long enough and I wish to conclude.

In conclusion, I thank the noble Lord, Lord Kerr, for the positive engagement that he has encouraged between us outside the Chamber on the issues; it has been very helpful to me. Of course, we disagree about this matter across the Floor of the House, and I think that it is now time for us to decide. With great respect, I ask the noble Lord to withdraw his amendment.

[Lord Kerr of Kinlochard]

My Lords,

“Half a league, half a league,

Half a league onward,

All in the valley of Death

Rode the six hundred”.

—or 158, I think.

I have great respect for the noble Lord, Lord Dobbs, and the Earl of Cardigan was not responsible for the loss of the Light Brigade, although he was the commander. Missing was the Earl of Lucan—he is in Davos, I think—and the Earl of Raglan, the commanders of the Army. It has been a very gallant charge and it was probably the case that halfway down the valley of death, the Earl of Cardigan turned to the chap on his left and said, “We have made a lot of very good progress today”.

It is very difficult to answer this debate, because I am supposed to deal with the objections to my amendment; I am still waiting. The most interesting suggestion, which I am rather inclined to follow, was in the speech of the noble Lord, Lord Higgins. Act I of the play was quite nasty, with a lot of talk about people misbehaving—hijacking was a word used from the Front Bench—and plotting. In my view, that was not worthy of the House. Act I is over. As the noble Lords, Lord Higgins, Lord Cormack and Lord Deben pointed out, we are now in Act II and our job is to try to turn the Bill, which a lot of us think is a rather bad Bill, into a good Bill. We need to amend and improve it.

I do not know why the date is here. I thought that I had argued, with a degree of support from around the House, that it does not make sense, because the renegotiation cannot be completed. The noble Lord, Lord Dobbs, says that we could change the date, but we would need a darn good reason. I thought that we had given two hours and 10 minutes of darn good reasons. However, I think that the noble Lord, Lord Higgins, is right: in Act II one ought to try to be a bit co-operative. There is a point knocking around here which I have not quite grasped. It is not the point of the noble Lord, Lord Dobbs, about distrust, but the point of the noble and learned Lord, Lord Mackay of Clashfern, about an enforceable undertaking. Although I do not agree with that point, one needs to think about it because it seems a solid point.

The provision does not need the date of 2017; I am not even sure that it needs a date. Perhaps it should be something about “the term of the next Parliament”, and it may be that an amendment could emerge from the Earl of Raglan and be voiced by the Earl of Cardigan. The question that the noble Lord keeps asking us—if not then, when?—is a question that we are entitled to ask him.

[Lord Spicer]

The noble Lord talks about Act II. How long is he going to go on with these acts—until Act X? Will he give a date for that, and will that be somewhere in the middle of summer?

[Lord Kerr of Kinlochard]

My amendment would remove any date. That seems clean and surgical and would leave the options open to the Government of the day. However, I accept that it does not meet the point of the noble and learned Lord, Lord Mackay of Clashfern. It would still be a Bill to have a referendum, and Clause 1(1) would still say, “There shall be a referendum”. The noble and learned Lord believes that there ought to be some time factor in there and he may be right. I do not know, but I am inclined to act now, on the advice of the noble Lord, Lord Higgins, and withdraw my amendment at this stage, while asking the noble Lord, Lord Dobbs, to consult with his friends and the commanding officers when they come back. If there is no satisfactory amendment proposed by the proposers of the Bill, I will revert to Amendment 10 on Report.

Amendment 10 withdrawn.

--- Later in debate ---

[Baroness Anelay of St Johns]

My Lords, I am not seeking to interrupt for bad reasons the progress of the Bill or to prevent the next Peer speaking on the amendment. For the last hour or so, Members of the House have been asking what happens next. When my noble friend Lord Popat was challenged about rising times, he was unaware that amicable discussions were going ahead between myself and the Opposition Chief Whip with regard to today’s business.

The expectation of the Opposition Chief Whip and myself is that the House will rise after the conclusion of Amendment 48, which is shortly ahead of us now. I am saying this now so that those who wish to speak to the amendment after Amendment 48 but may not be involved in the rest of today’s business will have a better certainty about the planes and trains they need to catch.

There is an agreement that we should conclude today’s business at the end of Amendment 48 and I shall not seek to prolong the Committee stage beyond that. At that stage I shall seek to resume the House and shortly after that I shall adjourn the House. I will, in the normal way, as a courtesy to the House indicate formally—I am doing it informally now—that we will continue the Committee stage of this Bill next Friday, 31 January at 10 o’clock. My expectation is that the Committee stage will conclude on that day and, given the progress today, I believe that is a reasonable assumption.

I hope that that is helpful to all concerned who, in different ways, have been working hard on this Bill and for different reasons. I now invite those noble Lords who are taking part in the debate on Amendment 40 to continue to do so. I am grateful to the noble Lord, Lord Bassam, for the helpful discussions we have had today.

[Lord Kerr of Kinlochard]

I have added my name to probing Amendment 49, to which the noble Baroness, Lady Quin, has just spoken.

The credibility and authority of the result of a referendum is very important. I do not buy the argument that a referendum will lance the boil. The 1975 referendum singularly failed to lance the boil given the positions adopted by the Labour Party within a few years afterwards. Lancing the boil is not a good argument.

However, if you are seriously contemplating leaving the European Union, you should not do that unless you have a clear majority in favour of doing so. This is a very conservative argument which I put forward for the delectation of the noble Lord, Lord Dobbs, and his colleagues. The status quo should be changed only if a majority of the country want the change. That is why I support the threshold amendment proposed by the noble Baroness, Lady Quin.

However, I, too, do not wish to press the amendment now. I hope, following the suggestions of the noble Lord, Lord Higgins, today, that when we come back on Report, when we will be in Act 3 of the play, there will be a different spirit about, the question of thresholds will be approached in an apolitical way and people will be presenting constitutional arguments rather than party politics. On that basis, like the noble Baroness, Lady Quin, I shall be happy not to press Amendment 49 at the moment.

--- Later in debate ---

[Lord Kerr of Kinlochard]

This debate is in danger of being hijacked by a filibustering gang of Montagnards opposite—the Robespierre and the Danton, the noble Lords, Lord Cormack and Lord Higgins. They are behaving disgracefully, leading us away down these alleyways. We are talking about how many angels dance on the head of a pin. Whatever the referendum is called, consultative or mandatory, it will be decisive. There is no doubt that if the country voted to leave the European Union, the Government of the day would have to start the Article 50 procedures laid down in the treaty for secession. There is absolutely no doubt about that.

The question is simply, as the noble Lord, Lord Foulkes, says, should the Bill be honest and say that the people are being consulted? The noble Lord, Lord Dobbs, says that there is no need to do so because that is all it is: a consultative referendum. I have no idea who is right but if the noble Lord, Lord Dobbs, is correct that it is a consultative referendum, then I agree with the noble Lords, Lord Hannay and Lord Foulkes, that it should say so. But it should also be clear—and we should be in no doubt—that once the people have been consulted and have spoken, that is it.

[Lord Dobbs]

My Lords, would it help us if I made this suggestion? I agree with the passion that the noble Lord, Lord Foulkes, puts forward on this and with so many comments that have been made by my noble friends. If it is consultative, it is perhaps up to me to find a way to make sure that it is unambiguously consultative. If the noble Lord, Lord Foulkes, will allow me to engage in some conversation with him at a little later date, I will see what I can do. Certainly, my heart is entirely in line with his on this issue and on that basis, I beg him to withdraw the amendment.

European Union (Referendum) Bill

Lord Kerr of Kinlochard Excerpts

Friday 10th January 2014 Lords Chamber

[Lord Kerr of Kinlochard (CB)]

My Lords, when speaking at number 59 in the list one can reflect, as one hears all of one’s points made by others, on how very much better one would have made them oneself. One can also keep score. I have to tell the noble Lord, Lord Dobbs, whom I greatly admire for his cavalry officer skills, that it begins to look a bit like Balaclava. At the present rate it is 2:1 against, counting on the side of the noble Lord, Lord Dobbs, those who are all-out supporters of his Bill and those in the Cormack school, who believe that the Bill has warts but, warts and all, it must be “waved on its way”—I think I heard that. That school combined amounts to half those who have spoken in favour of the House of Lords doing its job and amending the Bill.

I had intended to try to deal with what seemed to be the two central heresies in the brilliant speech of the noble Lord, Lord Dobbs—the heresy that if one gets this Bill one is guaranteed a referendum, and the heresy that if one does not get the Bill one does not get a referendum. Those are both nonsense but that was clearly explained most recently by my noble friend Lord Armstrong of Ilminster, so I see no reason to trouble the House with that.

There is a third argument lurking in the House, about which the noble Lord, Lord Dobbs, needs to think as he considers how he proposes to handle Committee and Report. That is the feeling in the House, from the bias of the question, from what the Bill says about the franchise and from what it does not say about the rules, that it is all slightly slanted—that this is a Bill to produce not just a referendum but a referendum result whereby the UK is to leave the European Union. That feeling is quite prevalent in the House and it would be good if the promoters were to consider what adjustments to the Bill could be made to deal with that point.

I want to add only two points that I genuinely think have not been made so far in this debate—one on timing and procedure and one on perceptions. On timing, the big point is the one made by the noble Lords, Lord Hannay and Lord Owen. You would be plumb crazy if you seriously thought that the right year to bring to a climax a renegotiation of the terms of British membership of the European Union was the year of a French presidential election and a German federal election. You would be mad if you thought that the last thing Mr Hollande would like to do before he seeks re-election is make concessions to the British in order to, in his judgment, increase his electoral chances. You would be mad if you thought that the SPD in the German coalition which will be in office for the first half of 2017 would be likely to agree to the changes to, say, the human rights or social elements of the treaty, or to the free movement of persons, all of which government spokesmen have told us in the past four weeks are to be elements in our renegotiation strategy. The noble Lord, Lord Owen, also made the important point that it would be quite a good idea, if renegotiation were intended, to start now defining what we want rather than going with whatever the Daily Mail suggests this week is the right element to be in the renegotiation.

Our foreign friends greatly enjoyed the Bloomberg speech and admired a lot of things in it, but they are very puzzled that, in the year that has passed since the speech, no papers have been produced and no attempts have been made to secure allies. Indeed, in recent weeks it has rather looked as though we have decided that it is essential for domestic reasons that we have a major row with the Poles, the Romanians, the Bulgarians and all eastern Europeans.

I turn to the issue of procedure. I do not know why we want to amend the treaty. Mrs Thatcher secured the rebate after five years’ hard work, as my noble friend Lord Armstrong reminded us, without any treaty change. However, if we have decided that it is really important that the reforms we need are changes to the treaty, we have to go through four stages. First, we have to secure a simple majority. That means that we need to find 14 member state Governments who agree with us. We have not started that task and it looks as though we are not going to start it until after the election. Secondly, we have to get a consensus in the necessary convention. The last convention took 18 months. The third stage is that we have to get unanimity in the intergovernmental conference—Maastricht took a year—and the final stage is ratification.

This Bill tells us that the referendum will happen in 2017. Even if renegotiation finished in 2017, would we really want to have our referendum before we knew whether everybody else could sell the deal in their countries? Supposing that we have our referendum and the Latvian or Luxembourg referenda go the wrong way. What would then happen in this country? What would happen to our position in the European Union and the world? All four stages have to be gone through and it is crazy to lay down a deadline now, in advance—a point which I think is almost bound to come back in Committee.

I turn to my point about perceptions. This concerns what foreigners think. I do not know what all foreigners think but those whom I meet—I am sorry but from time to time I do meet some—find this all very puzzling. They are waiting for the British proposals. They are sorry that the British seem to be slightly out of the game and will clearly be staying out of the game for another 18 months. It is their treaty too and they all need to get ratified whatever changes we secure. We need to buy their consent and they need to get their publics to buy it. They find it very odd that this Bill appears to be slightly slanted towards producing a no vote and that it appears to lay down a deadline which they know—because they are going to be in the IGC and the convention—is impossible.

They are beginning to wonder about our motives and about why the Prime Minister, in the year since the Bloomberg speech, has not filled out the speech or produced anything to follow it up. They are beginning to find it very sad that the party of the noble Lord, Lord Carrington, Alec Douglas-Home, Ted Heath and Margaret Thatcher is behind this kind of Bill, which they find, as a minimum, surprising. They suspect our motives. This has an immediate effect. I am talking not merely about the future but about today and our negotiating clout in Brussels. Eleven months ago, Herman Van Rompuy, the President of the European Council, came to London and made a speech at the Guildhall in which he warned us about the effect of our present position on our negotiating clout in Brussels. He asked us:

“How do you convince a room full of people, when you keep your hand on the door handle? How to encourage a friend to change, if your eyes are searching for your coat?”.

He was right. This Bill is not just nugatory; it is also noxious because it increases that perception abroad.

EU: Prime Minister’s Speech

Lord Kerr of Kinlochard Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Kerr of Kinlochard]

My Lords, the Prime Minister has given notice that we want to invoke Article 48 of the treaty, and change the treaty which everybody sees as their treaty. Therefore, other Governments will now be trying to work out precisely what we might want.

On the five principles set out in the speech and listed by the noble Baroness, Lady Noakes, nothing that the Prime Minister said on competitiveness cannot be done inside the Council and inside the present treaty. The Monti report sets out what should be done and we do not need to change the treaty to do it.

On democratic accountability, the noble and learned Lord, Lord Howe of Aberavon, gets it right. I would add that I personally would find it offensive if any EU treaty should purport to lay down how a Government should be held accountable by their national Parliament.

On the fairness agenda, the noble Baroness, Lady Noakes, got it right. The aim is to try to ensure that, when the dwindling band of euro-outs do not constitute a blocking minority, they can still block in Council. I would have thought that the Prime Minister would have learned in the middle of the night in the European Council in December 2011 that it is not possible to do that. To get all member states to agree, and to entrench in the treaty, that the UK should have a blocking veto seems completely impossible.

On the fourth principle, that we should abandon the one-size-fits-all approach, the fact is that it was abandoned 21 years ago at Maastricht. EMU, Schengen, fiscal union, banking union—flexibility exists, and there is no attempt to force everybody into the same, rigid pattern.

The last of the Prime Minister’s principles was flow-back—the return of powers. That is in the treaty already, in Article 48. But what exactly do we want to flow back? The only example given was the working time directive, which is nothing to do with the treaty. That is Council business. If we want to change it, we must raise it in the Council.

So how are Governments in other capitals interpreting all this? I guess that they think that it is more to do with party management, and they understand that. But we are asking them to change their treaty, and I very much fear that the noble Lord, Lord Howell of Guildford, will be proved wrong; I wish that he was going to be proved right, but I think that the noble Lord, Lord Williamson, is correct that the audit exercise here in Whitehall is crucially important. That is going to be the foundation of the Government’s negotiating position, and I very much fear that it will be a demand for a series of opt-outs: a bout of cherry-picking from the treaty.

That would be unprecedented. There has never been a retrospective opt-out. Opt-outs are invoked when most want to go forward and somebody does not want to go forward. An opt-out has never been invoked because somebody wants to go backward. If that is the position in which we find ourselves after 2015—arguing that we want everybody else to carry on if they want to, but we want to take bits back—then we may be in the awkward “blackmailing” scenario to which the noble Baroness, Lady Noakes, referred.

I am afraid that other Governments will not agree, that it will not work, and that they will tend to say, “Make your minds up: in or out. No unravelling. Stop wasting our time. We have got work to do. Solve your domestic problem or invoke Article 50 and get out”.

Korean Peninsula

Lord Kerr of Kinlochard Excerpts

Monday 21st January 2013 Lords Chamber

[Lord Kerr of Kinlochard]

The reason that I so much admire the persistence of the noble Lord, Lord Alton, on North Korea is because I share his view that ostracism is not the answer. I was the negotiator on the opening of diplomatic relations with the DPRK and I visited Pyongyang to open an embassy there. I do not think that was wrong. It seems to me that however awful the regime and its human rights record— it is awful, and its human rights record is awful—it cannot be the right answer to break off contact. The object of the exercise must be to find ways of incentivising reform. This means doing business with a very unpleasant regime, and there are no easy answers.

As the right reverend Prelate said, food aid is a difficult issue. One knows that most food aid goes not to the intended recipients but to the armed forces. The industrial zone, Kaesong, is a difficult issue. It generates employment but the foreign exchange it brings in serves to prop up the regime.

We should take our lead from Seoul, which clearly wants—it must, as they are relatives, friends and the same people—reform in the north as much or more than anybody else, and has more right to demand it. However, it does not want the implosion of the state. It does not want revolutionary change. It would like to see a staged reform process. This may sound idealistic but there have been one or two little signs in the changes to the current regime in Pyongyang that we ought to be trying very hard to encourage.

I am very grateful to the noble Lord, Lord Alton, for instituting this debate—and I am very grateful to him and to the noble Baroness, Lady Cox, for all that they do. Contact really matters, even if often one meets people with whom one thinks one is making no progress whatever. Ostracism is not enough.

European Union: Recent Developments

Lord Kerr of Kinlochard Excerpts

Monday 17th December 2012 Lords Chamber

[Lord Kerr of Kinlochard]

My first task is to commend to the House the EU Select Committee’s timely report on European banking union. I do so in the absence of the noble Lord, Lord Harrison. This is a riveting report and a riveting read. Clearly, the Leader of the House, given his polite remarks about it, has already studied every word closely. I congratulate the noble Lord, Lord Harrison, whose sub-committee produced it, on his sagacity. He had to deal with some pretty intractable material; I do not mean just me and the noble Lord, Lord Hamilton of Epsom, but the issues, which are quite difficult. They certainly engaged ECOFIN and the European Council last week.

We spent the autumn taking evidence from, among others, the president of the European Council, the Commission vice-president, the vice-president of the ECB, the chairman of the EBA and the Financial Secretary to the Treasury. Our conclusion was that, given the urgent need to break the vicious circle between banks and sovereign states, there was much sense in the Van Rompuy three-pronged approach: a single supervisory mechanism, a common resolution mechanism and a common deposit insurance scheme. We were concerned that the second and third elements had been consigned to the back-burner; we thought all three were necessary. However, we thought that the SSM proposal—the supervisory mechanism—was an important first step, and we accepted that the ECB was the appropriate institution to take on the role.

We stressed the need for triple safeguards, first, to deal with possible conflicts in the ECB between the requirements of monetary policy and concern for the banks under supervision; secondly, to ensure equality in decision-taking between euro-area countries and those non-euro-area member states which wish to participate; and, thirdly, while respecting the ECB’s independence in its monetary role, to provide for effective accountability in the supervisory role, including to national parliaments as well as the European Parliament.

The agreements reached in Brussels last week are only partial and will be reviewed in the European Parliament this week in respect of the EBA. However, I note that the first two safeguards, which we thought important, appear to have been secured; there will be strict separation of supervisory and monetary policy tasks; and the eurozone and non-eurozone member states participating in the mechanism will have full and equal rights. I also note that the new regime will, at least at first, apply only to a small minority of participating member states’ banks. In our report, we thought this realistic. We thought it unrealistic to envisage the ECB taking on intensive supervision of 6,000 banks straight away. We suggested that it should focus on the largest cross-border, systemically important banks, but with the power to step in quickly in respect of others if need be. Possibly for slight different reasons, Mrs Merkel seems to have taken the same view.

In our report, we noted that though—I would say “because” but the report says “though”—the UK would not participate, UK interests could be affected, with a significant risk of our becoming marginalised as others move towards closer integration. We thought that the EBA, the organisation tasked with building a rule book for all member states, could itself be marginalised, or find its decision-taking predetermined in the ECB or by caucusing among SSM member states. We called on the Government to do all in their power to ensure that London’s pre-eminence was not imperilled. It is clear that the Government took these risks seriously. They have secured Council language promising a level playing field between member states that take part in the SSM and those that do not. They have also secured the double-majority voting system for the EBA, which the noble Lord the Leader of the House described and the strength of which he said was rock solid. My noble friend Lord Williamson asked whether it was watertight; some think that it looks a little fragile. That is no doubt one of the points to which the Committee will return as we go on watching developments in banking union in the weeks and months ahead.

Until now, in speaking of the report of the noble Lord, Lord Harrison, I have tried to emulate his admirable even-handedness, breaking with the habit of a lifetime. I will now add two more personal and more partisan points of my own. They are gloomy predictions. I know Cassandra’s fate, but her track record, sadly, was very good.

First, although there is disagreement across the EU—including, strikingly, between Paris and Berlin these days—about the appropriate pace, there is near-unanimity on the direction of travel. The papers which the European Council considered last week made it clear that the SSM, the banking supervision arrangement,

“will constitute a first step towards a financial markets union”.

For most member states, what is envisaged is the deepening, the further integration, of the single market. Our Government take a different view, as our Prime Minister explained after the October European Council:

“you do not need a banking union because you have a single market; you need it because you have a single currency—so Britain should not, and will not, be part of that banking union”.—[Official Report, Commons, 22/10/12; col. 699.]

After this European Council, the Government take pride in having secured a promise of,

“full respect for the integrity of the single market”.

However, those words have a different meaning for those who see the single market not as a finished artefact to be preserved, but as a process to be pressed forward in everyone’s interests. That is what we used to think, because we believed that the general EU interest in open, competitive markets coincided with the UK interest, including in the health of the City of London. That is why the noble Baroness, Lady Thatcher, fought to obtain qualified majority voting for single market legislation. That is why UK Governments and UK commissioners drove the process forward. They were right; London did benefit, strengthening its lead as Europe’s pre-eminent market.

However, looking ahead, as eurozone Finance Ministers meet more and more often with their other fiscal and banking union colleagues, but without us, it seems reasonable to suppose that they will from time to time discuss financial market legislation. When such legislation comes to Council, they will have their qualified majority. As the Leader of the House clarified, the double-lock majority system, about which my noble friend Lord Williamson was a little sceptical, applies only to the EBA, not to the Council.

The French say, “Les absents ont toujours tort.” I wonder whether it is plausible that those envisaging and working for a financial markets union will always agree that its principal location should be for ever offshore. What we have been hearing from Paris from Monsieur Noyer in recent weeks could be a harbinger of real perils ahead.

My last point is that talk of a “new deal” to be negotiated after the election alarms me, whichever side of the House it comes from. I was encouraged by many aspects of the speech made to the CBI on 19 November by the leader of the Labour Party, although, for me, it did not excuse the irresponsible alliance of opposites struck with Eurosceptic Conservatives to seek to embarrass the Government on the EU budget. But even Mr Miliband spoke of working,

“to ensure that this more flexible European Union, where some countries pursue deeper integration and others don’t, still benefits all”.

In my view, the others he speaks of are very few and not very popular.

In his October Berlin speech, the Foreign Secretary spoke of many countries wishing different kinds of integration. Most member states actually want to stick together, in my view. We in Britain resist the idea or talk of a two-tier Europe; we prefer to talk of multi-tier or variable geometry or flexibility. Yet our friends abroad are sadly noting that a common feature nowadays of the groups who opt out—or choose to stay out—is that Britain is in them all: monetary union, banking union, fiscal union, Schengen, and now apparently justice and home affairs. We used to try to shape EU developments. In US football parlance, we played offence. Now we play defence. Our aim is to stop further integration, or at least to ensure that we do not have to comply with it. We used to look for opportunities; now we see only threats, perhaps because we are always looking over our shoulders at UKIP, whom I look forward to hearing from later in the debate.

Against that background, I think we have to recognise that we are losing our friends in Europe. Supposing we turn up after an election seeking a “new deal”, which would mean that we would remain full members of the single market, although we are perceived as obstructing or opting out from its further development, while trying to insist that EU laws affecting social policy, or labour costs, or fisheries or agriculture would not apply to us, or brandishing a totally new blueprint of the kind recommended by the noble Lords, Lord Howell of Guildford and Lord Tugendhat. Is it realistic to expect that such proposals would win the necessary unanimous support of all other member states? Unanimity is required to change the treaties. What we heard from Paris, from President Hollande, last week may be indicative. I think we might well be told to make up our minds, either out or in.

As the Prime Minister prepares his long-awaited EU speech, I really hope he will avoid the temptation to hold out a false prospectus. One should not talk about “new deals” unless one is sure that they are realistic. Better still, when thinking about UKIP, remember Kipling and his warning that the trouble with paying the Danegeld is you never get rid of the Dane. They will always come back for more. You have to stand up to them and make to the people of this country a realistic, positive case for Britain’s EU membership.

EU: Recent Developments

Lord Kerr of Kinlochard Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Kerr of Kinlochard]

The Minister ranged widely in his elegant opening remarks but the debate has tended to concentrate on the eurozone crisis. It benefits from the report of the Select Committee under the noble Lord, Lord Roper, to which the noble Lord, Lord Hamilton, paid a sort of tribute. Like the noble Lord, Lord Hamilton, I sit on Sub-Committee A and, like him, I also wish to pay a tribute to the noble Lord, Lord Harrison, for his chairmanship. The noble Lord, Lord Hamilton, spoke of the markets as the elephant in the room. As I said, I serve on Sub-Committee A with the noble Lord: I can recognise an elephant in the room.

I want to talk about the new treaty to be signed on 1 March and to consider it in a totally deadpan, analytical style from four aspects: constitutional, legal, economic and political. I start with the economic aspect. I find myself in the awkward position of agreeing with the noble Lords, Lord Flight and Lord Hamilton, and the noble Lord, Lord Lamont, who has fled to avoid hearing me saying this. They are entirely correct: the economic significance of the new treaty is virtually nil. I think that it is irrelevant, or nearly irrelevant, to the crisis we face. It is a new version of the stability and growth pact—this time we have the stability and no-growth pact, which is even more Germanic. The eurozone needs: greater growth and competitiveness, born of supply-side reform and the deepening of the single market of 27; the correction of current account imbalances; the further strengthening of the banking system; the resolution of the Greek crisis one way or the other; and more fire-power for the EFSF and the ESM to fight the contagion risk, though I would rate that risk much lower than do the noble Lords, Lord Hamilton and Lord Flight.

The treaty is narrowly drawn and addresses none of these issues. Moreover, the new mechanisms in the treaty add relatively little to those that already exist at 27, or are being considered at 27 under Article 136, which permit us to take part in the negotiation of measures applicable to the eurozone and would have been—but for the line we took—for us precisely the ideal vehicle for the new formulations that now find their place in the separate treaty. However, the principal economic significance—perhaps the only economic significance—of these formulations is indirect: promises of future southern virtue, written in treaty form, in blood, and into national constitutions, may make it easier for northern electorates to contemplate greater generosity. That, presumably, is Chancellor Merkel’s calculation. I do not think this treaty matters much in straightforward economic terms. It probably does more harm than good. However, in institutional terms it matters a very great deal.

The key innovation, which is noted en passant at paragraph 77 of the Select Committee report, is that the treaty will come into force before all its signatories have ratified it. Once the 12th of the 25 signatories ratifies it, the treaty applies among those 12 and, when others ratify, it applies also to them. There is no EU precedent for that. Up to now the rule has been that the convoy moves at the speed of the slowest ship and a single failure to ratify sinks a treaty for all signatories. One could now envisage a member state—in this case hypothetically an Ireland unable to win a referendum, or a Hollande-led France talking of a renegotiation—stuck in a limbo, unwilling or unable to ratify but equally unable to prevent the convoy sailing on. I note that access to support from the ESM will depend on ratification. I think that tells us the answer to the question asked by the noble Lord, Lord King: how many will actually ratify? I would not bet on there being a referendum in Ireland.

The serious point, though, is that in the European convention in 2002-03, some argued that the constitutional treaty we were then drafting should have similar entry-into-force provisions, as the noble Lord, Lord Maclennan, will remember. However, I cannot recall that any single member-state Government supported them—now 25 have. An important precedent has been set and we in this House, with our EU referendum Bill debates fresh in our memories, would do will to reflect on it. As the noble Lord, Lord Howell, said of a different outcome, this really could profoundly change the nature of the EU. I am not sure that those who share his views on European integration have been firing at quite the right targets. I do not believe that this would have happened—that this would have been the entry-into-force provision—if this had been an EU treaty. In other words, this provision is here as a consequence of the position we took. Careful reflection is needed on whether that is a good or a bad thing.

I have a further point about the legal issues. None is as significant as the constitutional point that I have been addressing, but the treaty is a bit of a mess in legal terms, and that too is largely of our making. It is good that the Commission and the ECJ are allowed to do their job, not least because they are the best defence for us against eurozone countries infringing the prerogatives of the Union of 27. However, the various divergences and overlaps of existing provisions would have been better avoided. So I agree with the Select Committee’s comments at paragraph 112 and 129 of its report that in the interests of all member states, including the United Kingdom, the folding of the new provisions into the main EU treaty framework would be desirable. I agree, and when that desirable outcome is achieved, all the legal issues that will worry the lawyers for the next couple of years will automatically fall away.

For the life of me, having read all six draft versions of the treaty, I really do not understand at all why we could not sign up to it. It contains no provisions that could damage UK interests. The provisions apply only to eurozone countries and to any others among the 25 signatories that choose to apply them. For us, there is no transfer of sovereignty involved, and there would therefore be no question of a referendum requirement. The UK negotiators who were involved in the negotiations did very well. I can see improvements, text to text. I see no sign that they were ever obliged to seek any of the mysterious “safeguards” that were sprung on the European Council in the middle of the night on 9 December and have been kept under wraps ever since, including today. That seems wise. I cannot for the life of me see any objective reason why we should not sign the treaty, but I am being entirely analytical and will not therefore press the point.

My final point is political. Does our self-exclusion matter? I fear so. I have argued previously in this House that leaving an empty chair is always unwise. The noble Lord, Lord Radice, must be right to say that it is easier to defend your interests if you are there. When the treaty becomes operational, our officials who helped in the drafting have to leave the room. Most of their colleagues from non-eurozone member states will be able to stick around. Are we sure that the Poles, the Danes and the Swedes have got this wrong and we have got this right? Why are we sure that they have got it wrong? When this group meets at European Council—Heads of Government—level, 25 Governments will be represented. The others will be able to influence the thinking of the eurozone and what it decides to do. Why do we not want to do that? For all this talk of a veto, all we vetoed was our own attendance. I cannot explain that. I shall have to ask our Czech friends—Kafka was a Czech, after all, so they may know.

I conclude with a personal reflection. I think I know what went wrong on the night of 9 December. We suddenly found ourselves without allies. This should never happen. There are alliances to be had all the time on every issue, bar one, in Brussels. Alliances overlap, they wax, they wane, they need continual cultivation, friends need to have the perception that they are being consulted—perhaps they really are being consulted—surprises need to be avoided, advice needs to be sought and taken, and other people’s priorities need to be understood. That is what usually happens. In this negotiation, Mrs Merkel was our natural ally, until we contrived to drive her into the arms of the French. When we got into a hole, the Dutch and the Swedes rode to our rescue and tried to help us out, until we spurned their help. There are natural alliances all the time—the free trade alliance; the northern liberal alliance; the blue water alliance with us, the French and the Spanish; and the budget disciplinarian alliance with the Germans, the Dutch and us in the lead. To find oneself isolated in Brussels is extraordinary. There is a huge alliance over there of those who believe that the EU needs to retain one great big global financial centre on a par with Tokyo and New York. These people will fight for the interests of London, because it is the only plausible candidate to play that part.

We do best in Brussels for the City when we advance the EU arguments for the City. That is what we do, usually, and I agree with the noble Lord, Lord Mandelson: the Chancellor of the Exchequer is clearly good at this. But it is not what we do back home. Fleet Street wants to hear about a Manichaean struggle, a gallant, lonely, Churchillian defiance of overwhelming odds. Everyone else is a monolithic bloc opposed to us. We stand alone. We triumph, or we veto.

It is not really like that over there. It would help us now to rebuild the alliances that we need if we could refrain from pleasing Fleet Street by shouting from the sidelines. I repeat the points made by the noble Lords, Lord Newby and Lord Monks. The raucous shouting from the stand to those who are engaged in a big fight to save their currency does not readily make friends and influence people. He who refuses to pay the piper should be cautious about calling the tune. Now I will follow President Sarkozy's sensible advice to the Prime Minister.

Iran

Lord Kerr of Kinlochard Excerpts

Tuesday 24th January 2012 Lords Chamber

[Lord Howell of Guildford]

We cannot yet to talk in terms of undertakings, but there have been indications. Obviously it is up to Saudi Arabia and other major oil producers in the region, such as Kuwait and the United Arab Emirates, to undertake to make up the shortfall. The indications are that this will be possible but we are not yet at the stage where I can say that undertakings have been officially agreed; they have not.

There is also a problem of matching the quality of oil concerned. As the noble Baroness knows, although the Iranian oil that Greece, for instance, has been heavily reliant on is slightly sour, the make-up oil from Saudi Arabia would be considerably sourer and would carry a much heavier sulphur content as well, so there would be difficulties for refiners. The usual complexities that arise when one moves oil flows around inside the oil market would occur, of the kind that I have just described. Therefore, I cannot say that there is a neat package of additional oil supplies ready to come into place. One has to realise that the Iranian oil does not necessarily disappear; it will not stop being produced and will probably continue to enter the market, although one imagines at a certain discount in relation to the major customers such as China.

[Lord Kerr of Kinlochard]

My Lords, the effect of sanctions may be to cause opinion in Iran to coalesce behind the Government, the risk to which noble Lords’ attention has been drawn by an expert. Will the Government do everything they can as imaginatively as possible to make clear that we have no quarrel with the Iranian people and that the quarrel is purely with the regime? Will the Government also urge their European partners to avoid unnecessary irritants in relations with Turkey, a country which has enormous experience of peaceful coexistence with Iran and a country whose expertise and experience is extremely important to us at this difficult time?

[Lord Howell of Guildford]

I give a most emphatic yes to both those propositions. Indeed, in relation to the second one, it is very important that we work very closely with Turkey, which has indicated very clearly that the idea of Iran becoming a fully weaponised nuclear power is extremely unwelcome to it and that it will combine with the necessary actions and strategies to prevent that. At present, the main strategy is pressure through sanctions, but there are other tracks of diplomacy to develop as well. One can pursue more than one track in these matters, but this is the one that we are now engaged on, which we hope will bring results.

European Union Bill

Lord Kerr of Kinlochard Excerpts

Monday 13th June 2011 Lords Chamber

[Lord Howell of Guildford]

My Lords, this amendment seeks to remove Article 346(2) of the Treaty on the Functioning of the European Union from Schedule 1 to the Bill. The article has appeared verbatim in every European treaty since 1957, so it is not new on the scene. At present, unanimity is required for changes made to the list of military products for which single market provisions do not apply. Under the Bill, a proposal to move to QMV would require approval by Act and by referendum. The noble Lord, Lord Hannay, and others are correct that it does not immediately mean that the veto is removed. It merely means that the move would require approval by Act and by referendum. The amendment of the noble Lord, Lord Davies, would remove that requirement.

The noble Lord, Lord Davies, spoke at length on this issue during day six in Committee, and he has spoken again now. Of course, he has considerable experience as Minister for Defence Equipment and Support, and in my view he has made the case extremely well that there could be some benefits to the UK from a move to QMV in this area. Having conceded that point, I hope that he and other noble Lords will excuse me if I now at least set out the other side of the argument, particularly as the noble Lord, Lord Davies, has just said that there is no guarantee that his proposal would work. Why is that so? It is because a move to QMV would also come at considerable cost to the UK, which a responsible Government have to consider. We must remember that this article is sensitive, as it applies to national security and defence. It is one of the wires that feeds directly into the red lines that all parties in the United Kingdom and other member states have always maintained during treaty change negotiations. Obviously that applies to previous Governments as well as this one.

The noble Lord, Lord Davies, said with some passion that Article 346 of the TFEU is a protectionist measure and he portrayed the Government as,

“using a referendum to block the removal of a derogation from the single market legislation”.—[Official Report, 17/5/11; col. 1364.]

The noble Lord, Lord Triesman, has spoken in the same vein just now. I have to point out that the UK’s veto could be used also to block any proposals to extend the protectionist measures with which the noble Lord understandably takes issue. A qualified majority could push through decisions which would favour greater national discretion and protection. The list, which has been unchanged—

[Lord Kerr of Kinlochard]

I thank the Minister for letting me intervene. The point that he is making is absolutely right—it could work either way—but the trouble is that the list is very long now. The UK interest is to have the list reduced. The list is very long because particular countries have particular little defence industries which they are keen to protect. The chances of it being possible to reduce the list are therefore low but would be enhanced if there were qualified majority voting on the composition of the list. We are starting from a bad place. It is unlikely to get worse; it is difficult to get it better; but you cannot get it better without qualified majority voting.

[Lord Howell of Guildford]

It is unlikely to be shortened, but I do not think that any of us can be sure. Protectionist pressures operate all the time, particularly in the defence industries. as the noble Lord, Lord Davies, knows better than all of us, and will continue to do so. The noble Lord said that the position is unlikely to get worse, but I think that we have to guard against that. A qualified majority could push through decisions which favoured greater national discretion and those pressures exist. The list has been unchanged since 1958 and can be expanded as well as contracted. I have before me the list as it is at present; it is a long list. It could certainly be expanded, so keeping the veto is as much, if not more than, a guard against protectionism as a barrier to liberalism, much as one believes, as I believe very strongly, in liberal free markets. The noble Lord’s zest for liberalism, which is certainly equalled by mine, could end up the opposite way round.

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[Lord Kerr of Kinlochard]

The Minister is now making a general argument against the Single European Act and against having qualified majority voting on any area of the single market because it might go the wrong way and in a protectionist direction. All history suggests that the Single European Act was a good bargain. On the whole, it got us a more open market. It was a good, Conservative, market-driven measure which worked pretty well. The exception of defence goods is there because it was there before we joined the European Union. We have to my knowledge always argued against applying single market disciplines, which we believe in, to all sectors of the economy. That is the argument for the amendment.

[Lord Howell of Guildford]

I am not a Latin scholar, but I have a feeling that there is a Latin phrase to describe what the noble Lord is doing, which is projecting from a particular area which has its particular features and qualities, with which we are all quite familiar, on to the general case for free markets and expansion of trade, which we all seek, as we have done throughout the history of our membership of the European Union and will continue to do. I suppose that the noble Lord’s proposition is that the interweaving of political pressures and the defence and security industries operates just the same as everything else. I do not believe that it does; I just have to disagree with him. In this case, we are dealing with different pressures which are evident to those who examine these patterns. There are dangers as well as gains.

Retaining unanimity does not prevent product list changes, but it ensures that we can oppose any decisions that seek to install greater, inappropriate levels of protectionism for products—weapons, equipment, trucks, APVs and all the rest—that we feel should not be exempt from single market provisions. This allows us to take decisions on the basis of what would be best for the effectiveness of the single market and our own defence industry. Unanimity enables us to oppose removal of any products in the list where that would have unwelcome consequences for the UK and might prevent us from acting quickly to secure the right equipment for our troops in times of urgent need. I reassure noble Lords that, despite the doubts that have been expressed, the Government fully support the goal of better value for money through collective arrangements for identifying gaps and procuring equipment, pooling our multinational capabilities and forces wherever we can.

European Union Bill

Lord Kerr of Kinlochard Excerpts

Monday 13th June 2011 Lords Chamber

[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.

--- Later in debate ---

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.

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[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?

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[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.