Treaty on Stability, Co-ordination and Governance Debate
Full Debate: Read Full DebateDepartment: Foreign, Commonwealth & Development Office
Martin Horwood
Main Page: Martin Horwood (Liberal Democrat - Cheltenham)Department Debates - View all Martin Horwood's debates with the Foreign, Commonwealth & Development Office
Treaty on Stability, Co-ordination and Governance
Martin Horwood Excerpts(12 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Cash
Absolutely. I do not know whether the right hon. Gentleman was in the Chamber at the time, but I referred to that in reply to another colleague. We are effectively having a new qualified majority voting system for referendums.
The catalogue of breaches of the spirit and the specific legal requirements were epitomised in Madame Lagarde’s remarks on 17 December 2010 about the first bail-out fund, otherwise known as the EFSM—the European financial stabilisation mechanism. She said:
“We violated all the rules because we wanted to close ranks and really rescue the euro zone.”
That is the objective and the method. She is now head of the International Monetary Fund, and we are faced with the prospect of the United Kingdom being expected to contribute to the IMF for what everybody knows is a back-door arrangement to underpin and guarantee the bail-outs in the European Union, which the IMF was not set up to provide, as the United States and other countries have made clear.
Indeed, Germany and France broke the stability and growth pact as it was originally instituted. Now we have a new feature in the big political landscape: in the pursuit of a tax and fiscal policy and compliance with a so-called golden rule to balance their budgets by a form of coercion, 25 member states of the European Union have now come up with an agreement to increase the powers of the stability and growth pact as it applies to them, irrespective of whether a country held a referendum and voted no, as the right hon. Member for Belfast North (Mr Dodds) just suggested. The vote would simply be swept away by a majority vote of the other countries, which insisted on applying the golden rule. One is bound to ask what kind of golden rule it is and whether it is not possible for individual countries to balance their budgets out of self-interest and through their own democratic decisions, rather than having a rule imposed on them in pursuit of the ideology of economic and political union. Indeed, the imposition of such a rule will, of itself, not balance the budgets anyway, as has been found in the past. This is using rules of law to breach the rule of law.
The real solution to the European crisis, which is not confined to the eurozone and deeply affects the United Kingdom, is that the levels of public expenditure, which led to the breaches of the criteria in the treaties, can be solved only by generating growth and giving oxygen to small and medium-sized businesses, for example, through deregulating the massive over-regulation and multiplicity of laws, such as the working time directive, among many others. The list is vast.
Yet again, the whole treaty is a vain attempt to sacrifice practicality and democracy on the altar of ideology, just as the referendums in Ireland, France, Holland and so on were all simply thrown away.
Mr Cash
I will not give way again. I have listened to what Mr Speaker has said and I have no intention of giving way. I have given way a great deal already, as I am sure Mr Speaker appreciates.
Even today, the European Central Bank is departing from its established rules in providing what some suggest is as much as a trillion euros of guarantees, and flooding the markets with unearned money to support countries which are failing to run their economies properly. There is a further problem, which is an increasing trend towards coercion, again in pursuit of ideology.
There is an increasing tendency by Germany to impose its will on other member states, but it should not be forgotten that although Germany pays vast sums into the European Union, it benefits enormously from that, and it could be argued that both French and German banks have played roulette with the Greek economy, and are now, through the rules and the treaty, seeking to obtain repayment and bolster their own banks and their own economies by imposing new rules to suit their requirements. Germany, of course, wants to help the euro. It has an enormous investment in it, but I would argue that the tendencies to coercion are not in the interests of Germany, the European Union or the United Kingdom. Indeed, today, we read that the constitutional court in Germany yesterday blocked the powers of a special parliamentary panel to fast-track emergency decisions affecting the rescue fund.
The new treaty is described as the “treaty on stability, co-ordination and governance” in the EU, yet it is not, contrary to what the Opposition said at an earlier stage, an EU treaty. The Lisbon treaty lays down specific requirements before changes can take place. They specify that the rules shall not be changed unless everyone agrees. The false assumption underlying the new treaty between the 25 is that, despite the failure to achieve unanimity, and even though the rules on enhanced co-operation have not been used, they claim that it remains legitimate to obtain those ends by a different route. I put that to the Minister for Europe the other day—namely that the treaty is based on the dangerous assumption that the end justifies the means, and that they would argue that, even if it is unlawful, the requirement to introduce the treaty for political reasons overrides the law. The question is whether it is lawful for the EU institutions, such as the Commission and the European Court, to be involved in such an agreement.
The new treaty is the triumph of expediency over the law. Professor Paul Craig sets out his arguments in 11 pages of carefully analysed argument. I am certain that the Government know all that and I am glad that the Attorney-General is here. If he wishes to intervene, I shall be only too happy. As a former shadow Attorney-General, I am sure that my right hon. and learned Friend knows the parameters of the unlawfulness of this treaty, which is why I suggested that he should come today.
I believe profoundly that the Government know that the treaty is unlawful and, in the words of Professor Paul Craig, it is important to consider whether it can
“confer new functions on EU institutions.”
He continues:
“I believe this would be contrary to the existing Lisbon treaty and to legal principle.”
He then examines articles 7 and 8, which I have no time to go into, as well as articles 3(2) and 273. They all raise questions that are before the European Scrutiny Committee about detailed matters, which we will tackle in due course in our report.
Emma Reynolds (Wolverhampton North East) (Lab)
I congratulate the hon. Member for Stone (Mr Cash) on his innovative use of House procedures to secure this debate. In fact, it would have been unnecessary for him to use such innovation if the Government had agreed to re-establish the pre-Council debates that Labour held when it was in government.
I welcome the opportunity to debate this important issue. The Opposition would not usually want to intrude on the private grief of the Conservative party, or indeed of the coalition, but we nevertheless have a duty to point out the inconsistencies in the Government’s position. I might not always agree with the hon. Gentleman, but I sympathise with him today, because the only thing that is clear is that the Government’s position is manifestly unclear.
The fighting talk we heard from the Government in December and January flies in the face of reality. Ministers loyally and repeatedly rehearse the script that the Prime Minister vetoed the use of the European institutions. The Foreign Secretary was categorical in his assertion that EU institutions were reserved for the use of the 27. He stated:
“What we are clear about is this, that the institutions of the European Union belong to the 27 member states”.
On the eve of the January European Council, the Secretary of State for Work and Pensions, who is listened to closely on those issues by Conservative Members, could not have been clearer. He said:
“The fact is the prime minister vetoed them using the institutions”.
The Chancellor took to the airwaves just hours after the January European Council ended, saying, without hesitation and seemingly without equivocation:
“If we had signed this treaty…we would have found the full force of the…European Court, the European Commission, all these institutions enforcing those treaties, using that opportunity to undermine Britain’s interests…We were not prepared to let that happen”.
Martin Horwood
The hon. Lady makes a robust call for clarity on policy. Can she confirm whether the Labour party is in favour or against the use of EU institutions by the 26?
Emma Reynolds
If only the position of the Liberal Democrats were clear on that matter—[Interruption.] I will come to that.
There was a guarantee from the top of the Government that EU institutions would not be used—I hesitate to describe it as a “cast-iron” guarantee, because it might upset some Conservative Members, but none the less, the position seemed to be clear. The evidence seemed compelling and the Government seemed to be clear what they were saying, but how quickly things unravelled—on the European Commission, on the use of the buildings and on the role of the European Court of Justice. One by one, the Government’s guarantees faded into yesterday’s headlines, and their empty rhetoric was painfully exposed.
Martin Horwood (Cheltenham) (LD)
It is always a pleasure to follow the right hon. Member for Rotherham (Mr MacShane) in debates on Europe. He is the authentic voice of Euro-enthusiasm on the Labour Benches—[Interruption.] He is one of the authentic voices. I could not, however, work out from listening to his speech whether he was in favour of the treaty or not.
It is also traditional to congratulate the hon. Member who secured a debate such as this, but in this case I think that the hon. Member for Stone (Mr Cash) has missed the point on a colossal—almost historic—scale. There are questions of legality and politics around the treaty, but they are dwarfed by the really big issue, which is the future of the European economy. The treaty represents a sincere and concerted attempt to make that future stronger, safer and more prosperous. We can argue about its chances of success, but I think that the hon. Gentleman is trying to have his cake—perhaps I should say “gâteau”—and eat it. He is calling on European economies to practise fiscal responsibility without the treaty, while simultaneously criticising them for not sticking to the previous, more flexible, regime. I do not think that he can have it both ways.
That is in stark contrast to the letter written by the Prime Minister and 11 other Heads of Government in the run-up to the summit, which tried to address the real issue of promoting prosperity in Europe. It talked about completing the single market in service markets and promoting the digital economy, as well as
“providing a secure and affordable system for cross-border on-line payments, establishing on-line dispute resolution mechanisms for cross-border on-line transactions”.
It also proposed promoting an “internal market in energy” and “energy interconnection”, as well as a
“commitment to innovation by establishing the European Research Area, creating the best possible environment for entrepreneurs and innovators to commercialise their ideas”.
That is exactly the agenda that should be dominating our discussion of the summit. We should be talking about how we are going to get the whole of the European economy back on track towards creating jobs and sustainable prosperity.
We have to ask ourselves: what is the real threat to the UK’s national interests? Is it really the use of EU institutions by fiscal compact countries? Could that not be interpreted as a connection that will strengthen the interests of the 28, relative to the fiscal compact countries? That connection, and the involvement of the Commission, will mean that at least one institution will have to uphold proper adherence to the European Union treaties and the safeguards in the fiscal compact treaty.
Is there any threat to the single market, which is one of Britain’s primary interests in all this, given the safeguards that we have succeeded in inserting into the treaty by having a seat at the table and being part of the discussions that led to the drafting of the treaty, despite not being a signatory to it? That is in contrast to the view expressed by the hon. Member for Wolverhampton North East (Emma Reynolds), who is no longer in her place. I believe that that was a positive step by the Government, and a positive example of the re-engagement that we have seen since December.
Mr MacShane
Does the hon. Gentleman still share the view of his leader, now the Deputy Prime Minister, that the Conservative party’s colleagues in the European Parliament are “nutters”, “anti-Semites” and “homophobes”?
Martin Horwood
I think that the right hon. Gentleman is misquoting the Deputy Prime Minister, who was referring to the other parties that are members of that group. I obviously have a great deal of sympathy with that point of view, but I can assure the right hon. Gentleman that our leader was not accusing Conservative MEPs of that.
What is the most serious threat to the UK’s national interests? Is it the use of the EU institutions? Is there a threat to the single market, given the safeguards that have now been inserted into the treaty? I would say not. The most serious threat to the UK’s national interests is the most serious economic crisis in Europe’s post-war history. It is a real and present danger to British jobs, British prosperity and British companies. Why would we now throw a spanner into the works of the only vehicle with a chance of bringing that crisis under control? To use the term used by the hon. Member for Stone, I think that such an idea reveals something about his own pursuit of ideology, rather than any real defence of the UK’s national interests. For that reason, I think that he might even be losing sympathy among his Conservative colleagues for what must now count as the political equivalent of antisocial behaviour in continuing to be completely obsessed by the legal minutiae and institutional details, rather than the really big picture that is facing Europe and Britain within the European economy.
Graham Stringer (Blackley and Broughton) (Lab)
The hon. Gentleman said that he was going to make a really big point, but I do not think that he is doing so. The really big point is surely that Europe cannot grow while policies for competitive deflation are in place. They involve either one country, Greece, which is bankrupt and will never be able to pay its debts, or four countries. That situation is never going to lead to a stable Europe that can grow and with which we can trade. Is not that the really big point? Would not we all be better off if Greece left the euro in as stable a way as possible?
Martin Horwood
The hon. Gentleman has raised some of the issues that we should be debating, although they are not the subject of the motion, which is about legal compliance. There are issues about whether the compact will work and whether it will do enough to stimulate growth, and the Prime Minister and the other Heads of Government have addressed them in their letter, and in the agenda for growth, jobs and sustainable prosperity that they are pursuing. I think that that addresses the hon. Gentleman’s question.
Those questions about the economic situation are what we should actually be debating here, and there is an argument for reinstituting regular debates in advance of European Councils. It is unsatisfactory that we have ended up debating this matter with less than a day’s notice and with very little preparation, at the very last minute before the European Council. There is also an argument for a thorough revision of the whole scrutiny procedure for European legislation in this place. With all due respect, I think that the European Scrutiny Committee keeps bringing us back to discuss the technicalities, yet we never seem to have debates on the substance of issues such as the fundamental economic questions and the structure of the European economy, as the hon. Member for Blackley and Broughton (Graham Stringer) has just pointed out.
Martin Horwood
I will not give way again, because I will not get any more time and the Deputy Speaker has instructed us to be brief.
Where is the report from the European Scrutiny Committee on the economics of this matter—and where, come to that, is the report from the Treasury Committee on the economic aspects? We must address these issues in revising the way in which the House of Commons scrutinises European affairs; we need to take a step up and get away from this constant obsession with legal technicalities and the minutiae of organisational details. We need to get away, too, from Eurosceptic obsessions that see conspiracies everywhere to try to undermine British sovereignty, and to get on to the real issues of how to promote jobs and prosperity in Europe as a whole. That is the mission that the Prime Minister with the other 11 Heads of Government has set out in the letter. I think that is exactly the right agenda, and it is in stark contrast to some of the suggestions made in today’s debate.
Chris Bryant (Rhondda) (Lab)
It is a delight to follow the hon. Member for Cheltenham (Martin Horwood), even though we were in English classes together at school and I still bear grudges about that. He was broadly right in his analysis—I appreciate that my right hon. Friend the Member for Warley (Mr Spellar) will worry that I am praising a Liberal Democrat—and I agree with him. I agree, too, with all those who said that it is a shame that we had to use the Standing Order No. 24 procedure to secure a debate on one of the biggest issues affecting parliamentary sovereignty, our economic future and our relationship with some of our biggest allies in Europe. In addition, we do not usually get to hear enough from the Minister for Europe.
If the Government take away one thing from today’s debate, I hope it is the fact that we need properly structured debates before European Council meetings, so that they have a strong mandate from us and we are able to inform what they take to the meetings.
It is a shame that the hon. Member for South Northamptonshire (Andrea Leadsom) is no longer in her place. I gather she is often referred to nowadays as the new iron lady—although I do not know who will get an Oscar for playing her in the future. I profoundly disagree with her that a multi-tier Europe is a good idea. During my four and a half seconds as Minister for Europe the BRIC economies—Brazil, Russia, India and China, and for that matter, Mexico—repeatedly told me, “It is essential that we know that we are dealing with a single market.” If we decide to cut up the single market, with lots of different tiers of different elements of legislative proposals, it will do us damage with the growing economies of the world. China is not interested in dealing with 27 different countries in Europe; it is interested in doing business in Europe. If it is going to be more difficult to do business in Europe, it will do business elsewhere—and we will have cut off our nose to spite our face.
I wholeheartedly agree with the hon. Member for Stone (Mr Cash) about the danger of technocratic Governments being imposed on other European countries. There has always been an element of democratic deficit within the European Union. In a sense, it is almost inevitable—unless we choose to elect a single President and Government of Europe, to which I would be wholeheartedly opposed because I do not think that there is a single people of Europe. That is why we will always have a strange mixture of elected Governments in member states working alongside a European Commission and a European Parliament. It will never be perfect, but I would say that this House is not perfect in different regards either. The historical process of parliamentary democratic reform in this country has always been a matter of trying to improve on what we had last year—not some golden ideal, but improving on what we had and have last year and this year.
Of course there need to be changes in Europe, but if the economic solutions effectively being enforced on some European countries have so little support within those countries, there is a danger not only that the individual Governments will face riots and significant civil disturbance, but that the whole European Union could face big problems.
I agree with the hon. Member for Stone in his analysis of Germany, too. That country has tended to suggest to the world that it is paying for rescuing the countries in trouble. That is far from the truth. The honest truth is that Germany is making an awful lot of money out of the present arrangements and intends to make even more money out of the arrangements on the table in the near future. We sometimes need to push back to the Germans and say, “Actually, you need to be little bit more honest about exactly where your economic and financial interests lie in all of this.”
The broad position is that there are two choices. We can try to make the euro work because the UK believes that if it were to fall apart it would lead to significant dangers, particularly given that we are the banker and the financial powerhouse of Europe. I believe that that is the right approach for us. There were problems with the initial creation of the euro, particularly when there was no enforced audit, and countries could simply make up the numbers, sometimes even employing extremely expensive accountants to help them to do so. Some big countries in the EU wanted to turn a blind eye to it because they themselves worried about the enforcement of the stability and growth pact, so they allowed some countries to do that. It is important that we rectify some of those inherent problems in the creation of the euro, which is why, broadly speaking, advancing towards some kind of fiscal union, as adumbrated in the treaty, is the right direction for us to take, although there might be some details about which I would be worried.
There is an alternative route, however, which is essentially to dismantle the euro. I know that some Conservative Members believe, for perfectly legitimate reasons, that that is the right course to take. They believe that we cannot have a single currency with a single interest rate for the very different labour markets across the whole of the EU. I just think that that they are wrong on that. I believe, and I suspect I will be proved right, that not a single country will leave the euro this year or next year; in fact, a couple more might join it.
There were problems with the UK veto exercised before Christmas. It has, to coin a term, left us with a Bulgarian muddle. In truth, we have neither an EU treaty nor a not-EU treaty; we have a sort of European treaty that is a halfway house with legal dubiety at its centre. That is where the hon. Member for Stone is absolutely right. I think it would have been better if we had stayed at the table and made sure that we had an EU treaty that was right for Britain. I disagree with those who say that this is a question of more Europe or less Europe—
Mr Clappison
My hon. Friend is absolutely right, and the apposite point is that this treaty is a new form of mission creep by the European Union. We need to be clear that something new and important is happening in the European Union, as has been suggested by learned legal opinion submitted to the European Scrutiny Committee. We have seen in the past, under our European Union treaty obligations, that notwithstanding the promises made to us, there has been a massive erosion of the United Kingdom veto and a substantial extension of EU competences—but at least we have always known that that has been done within the framework of the treaties themselves and that we have conferred power on the EU within that framework.
We are now dealing with something novel, because when hon. Members come to look at this agreement in detail they will find that it is not within the framework of the EU treaties; it is a separate international agreement that deals with how the European Union might act. Although it is said to be an international agreement, it is not an EU treaty and it will not describe itself as such, but the EU runs through it like a golden thread. It is as if the EU has come up against an obstacle in proper legal procedure and just decided to ignore proper legal procedure and go its own way; it has looked at the rulebook, the rulebook was not convenient for it and so it has torn up the rulebook and drawn up a new set of rules. The way in which it may act within that new set of rules could have substantial implications for our country. I hasten to add that our Government have taken the right course so far in dealing with that.
Martin Horwood
The moment had almost passed, but the question I was going to ask was: if the hon. Gentleman is questioning even back to Maastricht, does he still support the single market, which Conservatives would surely see as one of the greatest achievements the European Union has delivered?
Mr Clappison
With the Single European Act, we had a single market established before the Maastricht treaty. I do not have time, in the seven minutes available, to go over the whole Maastricht treaty, but a very wide body of opinion now suggests that it should never have been signed—I have heard that said from the Government Front Bench. All the safeguards that were put in place have turned to dust. Let us bring things a little more up to date. The hon. Gentleman will recall that his party was so upset about the signing of the Lisbon treaty that it wanted a referendum on getting out of the EU altogether, and Liberal Democrat Members walked out of the House.
The hon. Member for Rhondda (Chris Bryant), who is no longer in his place, made some apposite points, as did the right hon. Member for Rotherham (Mr MacShane), although he was completely wrong. He asked what was wrong with groups of states coming together within the European Union to do something where not all member states are participating, as in the case of the Schengen agreement and many other things. That comes back to my main point, because that was all being done within the framework of a treaty. A completely different treaty is being set up now, but it is one within which member states are still co-operating and operating within the framework of the European Union, using the EU institutions, as we know. It was apparently drawn up by the European legal service, the European Commission has a central role in it, the European Commission is mentioned in the whole of the preamble and throughout every article, and the final decision-making body with arbitration powers over this is the European Court of Justice.
Mr Clappison
I will give way to my hon. Friend at the end, if I may, because I need to make one or two other points before then.
I would respectfully draw to the attention of the Minister the fact that although we are rightly not a part of this treaty, it brings about some fundamental innovations in decision making among EU member states. In particular, I refer to articles 7 and 8. My hon. Friend the Member for Stone rightly referred to the coercive powers being taken by the European Union, and I urge my right hon. and hon. Friends to consider just how coercive those powers are and to try to ensure that they are never brought to bear against this country. No pressure should be put on us to submit.
There is a body of opinion in the EU that wants to make this country submit to the EU deficit procedure and we have, unfortunately, entered into some commitments on that. We must keep out of those commitments because they run completely counter to the principles of democracy both in the individual member states and in the EU. Under article 7—let us remember that this is not an EU treaty and is outside the EU—when the Commission is of the opinion that a country is in breach of the deficit procedure, it brings the matter before the other member states and unless there is a qualified majority vote against taking the decision that the commission wants to take, the matter must be treated as a breach and the offending country will be hauled before the European Court of Justice. This is a very significant procedural development.
We are familiar with how we used to have a veto in European Union matters. It goes back to 1975 and we were promised when we joined the European Union that we would always have a veto. That was eroded and we agreed to abide by the qualified majority vote for more and more things, particularly in the single market, but at least it was a qualified majority vote and a qualified majority of states had to be in favour of a measure before it could take effect and legally bind this country. Under the new EU method of decision making, the Commission gets its way unless there is a qualified majority vote against what it wants to do. There could be a clear but simple majority of EU member states against the Commission’s finding a member state in breach, but it will still legally be necessary for the country to be considered to be in breach and hauled before the European Court of Justice even though a majority of EU states were against that course of action, and despite what individual electors in the countries concerned might want. There could scarcely be anything more coercive than that.
My hon. Friend the Member for Stone is right to ring the alarm bells. This is a new procedure—it is very new—and it is taking EU integration to a completely different level.
Mr Clappison
I have given way to the hon. Gentleman once and I am afraid I am not going to go back to all the treaties—Lisbon, Maastricht, Amsterdam— we have had in the past. He has had his chance to have his say.
I warn right hon. and hon. Members to look at the detail of the treaty. It is new and very important and is worrying in the context of what is taking place in Europe, particularly as regards the lack of democratic control that countries now have over their decision making and over very important fiscal and economic matters that go to the heart of democracy. I urge colleagues and my colleagues on the Front Bench to be vigilant. The Government took the right decision in vetoing the treaty—we had the right to do so, it was in our interests to do so and we should never have considered being part of such a framework.
My right hon. and hon. Friends have been right to reserve the Government’s position, as they have through the letter that has communicated the Prime Minister’s view through Jon Cunliffe to the European Council. We reserve our position on the use of EU institutions, which we are entitled to do, and there should be no criticism of the Government—the Opposition are being very opportunist if they try to make something out of it—but, in its typical way, the EU has taken no notice. We should take no notice of the EU, however, and we should insist on the strict letter of what we are entitled to under the treaty provisions and be extremely vigilant to ensure that there is not, to use the words of my hon. Friend the Member for St Albans (Mrs Main), any further mission creep by the EU. We should ensure that we have no part in these matters. We are not part of the euro and we should be very careful to ensure that the EU does not try to extend the scope of what it is trying to do over this country. If it does, it will be at the expense of democracy and of this House. We have seen far too much of that already in my time in the House, and we need to be vigilant and to stand firm against these very worrying new legal developments in the EU.
Jacob Rees-Mogg
Indeed, but one never knows what people might say in relation to the European Union.
As I was saying, it is a shocking state of affairs that our partners in Europe should want to proceed with a treaty without even bothering to go through the proper forms to ensure that that treaty is lawful under EU law. They have not even asked the question. It may be that they know what the answer will be, but if they do, they are one up on most Members of Parliament.
The other point raised in Sir Jon Cunliffe’s letter is that
“we must reserve our position on the proposed treaty and its use of the institutions”.
This, again, is very important because what we are trying to find out is whether the Government are reserving their position on the current legality of the treaty, or how the treaty will be used in practice. If it is the former—if the Government are concerned about the current legality of the treaty—it is important that they act now to establish their concern and to have a judgment from the European Court of Justice, rather than waiting. If the Government wait, as my hon. Friend the Member for Stone said earlier, he who is silent is seen to consent, and we will find that we have allowed the treaty to be implemented and we will have lost our ability to have recourse—
Jacob Rees-Mogg
It is a particular honour to give way to my hon. Friend the Member for Cheltenham.
Martin Horwood
It is an equal pleasure to intervene on my hon. Friend. I am grateful to him for allowing me to do so. Does he accept that by reserving their position, the British Government may gain something of a tactical advantage by perhaps retaining the ability to challenge any future perceived breach of this treaty and therefore encouraging compliance with the European Union treaties?
Jacob Rees-Mogg
I am afraid I do not agree with my hon. Friend because a key part of the treaty may already be in breach of European Union law. I refer hon. Members to article 8, which states:
“If the European Commission, after having given the Contracting Party concerned the opportunity to submit its observations, concludes in its report that such Contracting Party has failed to comply with Article 3(2), the matter will be brought to the Court of Justice of the European Union by one or more Contracting Parties.”
What that says is that the European Commission may end up enforcing requirements under the stability pact in direct contradiction of TFEU—the treaty on the functioning of the European Union—126(10). We discussed this at length in the European Scrutiny Committee and the Foreign Office’s wise legal counsel, Mr Ivan Smyth, gave us a very helpful answer—that in treaty terms, “will” is not an obligation, and if it were an obligation, the wording would have to be stronger than “will”.
It seems to me that that is a pretty narrow basis for maintaining the legality of what the treaty requires the Commission to do. Let us bear in mind that under the treaty law, the European Commission does not have the authority to enforce the requirements of the stability pact on member states; under this treaty it does not quite have that authority directly, but it is so close to doing so that it would not make any difference at all.
A further aspect of the treaty concerns me. Article 16 says that the treaty will be rolled into the TFEU within five years, so it will become part of the whole package of European Union law within five years. It is currently thought, though others may think differently, that it would not have been possible for this treaty to be brought in under enhanced co-operation. However, there is a school of thought that maintains that the European Stability Mechanism treaty which is awaiting ratification by Parliament would allow enhanced co-operation to be used, in which case this treaty could be rolled into the European Union’s treaties without the say-so of the House, under enhanced co-operation. We should be deeply concerned about that, not least—going back to article 8—because it refers to how countries may be fined. Let us bear in mind that the treaty is supposed to be all about the eurozone member states, and is nothing to do with non-eurozone members and nothing at all to do with the United Kingdom because we are not a signatory and it is not yet part of the TFEU. But if that is the case, why does it say
“The amounts imposed on a Contracting Party whose currency is the euro”—
that is, a fine of up to 0.1% of GDP—
“shall be payable to the European Stability Mechanism. In other cases, payments shall be made to the general budget of the European Union”?
We have here a treaty that is making provision for fining non-euro members for their budgets, even potentially ones that have not signed up to the original treaty if it is rolled in within five years, as the treaty itself requires. That is why this debate is so important to establish the legality and see whether we can at this early stage stop this treaty—a genuine veto, rather than a soggy veto—or whether we will find that by doing nothing now, by being friendly, kind and generous to our neighbours, we do not really help them with the economic situation that they face. I agree with those who say it would be better for some countries to default and devalue. We will instead find that by being silent, we have consented to a treaty that is against our fundamental national interests.
Mrs Main
I thank my hon. Friend for that intervention, and I end this part of the debate on that conciliatory note.
I have sincere concerns, however, that the mission creep that I mentioned in an intervention has led us to the point at which a democratic country can have something imposed upon it, leading to riots and civil unrest, because it is not willing to take the necessary pain that the EU must inflict on it. Although we are not today debating whether Greece should leave the EU, we all should heed the warning that when Greece signed up to being a full member of the EU it did not sign up to have something imposed upon it, as it has had.
Mrs Main
No; the hon. Gentleman has made many speeches and many interventions, and I am sure that as the lone representative of the Liberal Democrats today he has had more than his fair share of the debate. I shall not take interventions from him.
I am extremely concerned that we will find ourselves dancing on the head of the same pin as we did in the previous Parliament. The hon. Gentleman was a Member then, so he will remember the Liberal Democrats saying, “We need to have a full EU in/out vote on this, and we will give you a genuine vote,” whereas the Conservatives, in opposition at the time, said that we needed to have a vote because there was a treaty. We were assured, “Oh, no, no, it is not a treaty. It is just something we don’t need to have a referendum on.” Such dancing on the head of a pin is what most of us on the more Eurosceptic side of our party find worrying about this particular treaty-that-is-not-a-treaty, into which we supposedly do not need to have any form of input.
Mrs Main
No, I am not giving way to the hon. Gentleman. I have made my views clear about why I will not. He has had plenty of opportunity.
I am extremely concerned also that the package under discussion could be incorporated into EU law within five years, because this situation is very much like our bleating about the Lisbon treaty, when we kept saying, “It does have a big effect, it does have a big effect,” and we were constantly told that it did not. The treaty under discussion has a potentially big effect, and that is why I offer encouragement to the Minister, which I am sure he has been offered by many hon. Members today, including my hon. Friend the Member for South Swindon (Mr Buckland). The Minister has the huge support of the House and the political will of this Parliament, and the Prime Minister had the support of the majority of the House in using the veto. He had robust support, which I believe he has also among the public, for exercising the veto, but, despite the fact that we are not ultimately part of the process, what we do not want is to become a part of it because of mission creep.
So I say to the Minister, who is going along to discuss those matters, that we could be affected by them, despite the fact that they are not designed to affect us. They are designed to affect those countries that are happily allowing themselves to be influenced in that way, but my fear is that, like all the other treaties that have come our way over the years, including Maastricht, ultimately five years down the line, when this one is incorporated, we will somehow feel its chilling effects.
I felt the need to jump up and down when my hon. Friend the Member for South Swindon said, “What does the EU make us do that we don’t wish to do?” Well, I should like to deport Abu Qatada, but I cannot. I should like not to be fined or pursued in the European Court of Justice for trying to introduce a means of not allowing people who have never paid into our benefits pot to claim—a habitual residence test—which was overturned on the ground that we were somehow being discriminatory. Those are just two examples of our regularly being made to feel that we must do something, and, what is more, the European courts now have a punitive nature, whereby they routinely fine countries that are non-compliant and say, “If you don’t do so we will place people in your country to deliver whatever we want delivered.”
The European courts are intent on getting their own way, and they have found a new method of getting around the rather difficult matter of our veto. They have decided to ignore us, inasmuch as they have said, “This agreement isn’t to do with you,” but ultimately it will be because we will feel its effects. So I encourage the Minister to go along to the discussions with a truly sceptical mind, based on his long and distinguished career in the House, during which time he has seen these arguments made again and again, and seen how in reality the situation has translated into something very different further down the line.