European Economic Governance proposals affect our fundamental relationship with the European Union in such a way as to require a referendum

The EU Bill has now passed its third reading on the House of Commons. During the debate Bill Cash made the following interventions:

Clause 1

PROVISION OF DOCUMENTATION UNDER PART

1 '(1) A statement laid before Parliament under section 5 of this Act shall be accompanied with all relevant documentation on the treaty or decision concerned, including all amendments sponsored by Ministers and other member states during negotiation of the treaty or decision.

(2) All decisions which as a result of any of sections 6 to 10 of this Act require approval by referendum or Act or resolution shall be accompanied with all relevant documentation on the decision concerned, including all amendments sponsored by Ministers and other member states during negotiation of the decision.'.- (Mr Clappison.)

Brought up, and read the First time.

Mr James Clappison (Hertsmere) (Con): I beg to move, That the clause be read a Second time. As another Member who willingly put his name to the new clause, I am delighted to do so.

Members who are familiar with the Second Reading debate and the proceedings in Committee will know that clause 5 is about a statement that must be laid before the House within two months of the conclusion of any of the treaty changes covered by the Bill, as part of the process whereby a referendum takes place. It covers treaty changes in both the ordinary revision procedure-the one with which we are all familiar, involving a convention followed by the full panoply of treaty change and agreement between the nations-and the simplified revision procedure that was introduced by article 48(6) of the treaty of Lisbon, which makes it much easier for the parties to the European Union to bring about treaty change. Under that article, all they need to do is reach an agreement within the Council and then put it to the member states, and unanimity is required for that. It is generally regarded as a measure that speeds up treaty change.

New clause 1 would require much more information to be included in the statement, or to be provided with it. When my friend the hon. Member for Birmingham, Edgbaston (Ms Stuart) drafted the new clause, she may well have had in mind what took place during this House's proceedings on the treaty of Lisbon, and I certainly had that in mind when I signed it. The then Government advocated all the measures in the treaty of Lisbon to the House-and to the country-but it was revealed during the debate that at the Convention that led to the drafting of the constitutional treaty which later became the Lisbon treaty, they had opposed a number of key proposals.

Mr William Cash (Stone) (Con): Is my hon. Friend also conscious of the fact that the Conservative party was, for the first time since 1972, united on that issue, and that it voted consistently against every provision that was worth voting against in the Lisbon treaty, yet subsequently accepted it?

Mr Clappison: Yes-and not only that, because my hon. Friend is being characteristically modest, as some of the warnings about the consequences that would flow from the treaty of Lisbon have proved right in the short time that has elapsed since its introduction. I am thinking in particular of the warnings that were given about what I regard as the unfortunate influence of the European External Action Service and the EU's new Foreign Minister, Baroness Ashton, which has not entirely served the interests of this country.

Mr Cash: Even as we speak, a gigantic deal is being done in Europe. It is called the "competitiveness package". It took me an urgent question-thanks to you, Mr Speaker-to elicit the truth about what was going on in European economic governance. What my hon. Friend says is absolutely right: a tradition of deceit lies behind all this, and it goes right across the whole of Europe.

Mr Clappison: I am grateful to my hon. Friend, because he has done the House a service. It was entirely due to him that the contents of the Van Rompuy report, as they affected this country, which they clearly did, were revealed to this House. We look forward to having a fuller debate on those in due course. We want a fuller debate on many other issues, but when a treaty change comes before this House and is the subject of a statement under clause 5 we need to have all the information. We need to have everything out in the open so that we can have a full and well-informed debate.

Mr William Cash (Stone) (Con): The right hon. Gentleman, in some dispute with my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), suggested that decisions taken by the Council of Ministers were not legislative acts. Can he think of anything that is more of a legislative act than when, by a majority vote, the decision that is taken is binding upon this House without our having any opportunity to intervene?

Mr Cash: On a point of information, I just wanted to put it to the right hon. Gentleman that the European conclusions of 4 February, to which he referred in the context of the eurozone and the other member states, specifically state:

"Non-euro members will be invited to participate in the coordination."

They also state that it will be guaranteed that

"the Heads of State or government of the interested non-euro area Member States are duly involved in the process."

I therefore do not think he was quite right to suggest that we would not be involved, because the conclusions state specifically that we will be. However, the whole system is completely crazy.

Mr Cash: The very paper that led to the urgent question that divulged what was going on with European economic governance was described as a "non-paper". In other words, it was a paper that no one was supposed to know anything about.

Mr Cash: The very amendment paper that my hon. Friend is holding in his hand demonstrates the amendments that have been tabled and that are available to everyone who cares to look at them. On the basis that the Council of Ministers is a legislative body, does he not agree that, if we have to receive its legislation and are then allowed to table amendments to it, we should be entitled to see the amendments that have been tabled during the preceding process? 

The Minister for Europe (Mr David Lidington): This has been a genuinely interesting debate which-somewhat unusually for European debates, dare I say it-has developed in a way that I did not altogether anticipate. We started by discussing a new clause dealing with transparency and public and parliamentary access to information concerning European negotiations, but as the debate continued it developed along the broader theme of the adequacy or inadequacy of our current arrangements for the scrutiny of decisions taken by successive Governments of the United Kingdom on behalf of Parliament and people within the institutions of the European Union. I thank all right hon. and hon. Members who have taken part in the debate.

The key choice that has to be borne in mind in considering the proposition put forward in the new clause tabled by my hon. Friend the Member for Hertsmere (Mr Clappison) and the hon. Member for Birmingham, Edgbaston (Ms Stuart) concerns the most effective balance between, on one hand, appropriate access to information that provides the flexibility to allow citizens and other interested parties to see documents that contributed to policy making and, on the other hand, the need to preserve a space for candid, confidential discussion, deliberation and negotiation to ensure the best possible outcome in the interests of our country. I have sympathy for many of the arguments-certainly the motivations-of the hon. Members who tabled the new clause, but I do not think that it would deliver the right balance. I will make my arguments in more detail in due course, but I hope that at the end of the debate they will not press the motion to a Division.

I want to start by addressing some of the broader issues that have been raised. The hon. Member for Birmingham, Edgbaston said that we needed to know when and how Ministers voted. Of course, one of the changes introduced by Lisbon is that we have new rules for the workings of the Council, including not only a public record but a public broadcast of the final deliberations at a Council session on legislative dossiers. At that point, it is apparent how each member state has voted, if indeed there is a formal division, and the arguments or the statement of position that the Minister or other representative of a member state chooses to put forward are also be made public. I have sat through a number of those public sessions over the past 10 months. I do not think that they will ever command a mass audience on a Saturday evening. I am not aware that they have ever been broadcast as part of the regular prime-time news bulletins in this country or any other member state.

The new clause and many of the contributions to the debate have tried to get at how Parliament, on behalf of the public, can hold Ministers to account more effectively, not just for that final, often rather formal, process of taking a decision on live TV, but for how the negotiating position of the United Kingdom is shaped in the numerous bilateral contacts and contacts with European institutions that are undertaken by Ministers and officials, sometimes over many months. A number of ideas have been suggested. My hon. Friend the Member for Ipswich (Ben Gummer) said that we need to look at the matter in the context not only of the EU, but of our participation in other international institutions and considering the use of royal prerogative powers more generally.

It is interesting that no hon. Member has mentioned the House of Lords, which has distinct and different scrutiny arrangements. There is a question for parliamentarians at both ends of this building as to what methods of scrutiny experience teaches us work best and most effectively. If Government and Parliament are to agree on new scrutiny arrangements, the position of both Houses will have to be taken into account.

Mr Cash: I am sure that the Minister would not want to misrepresent the differences between the two Scrutiny Committees. I know he is aware that the House of Lords has more generalised debates, whereas under our Standing Orders, our debates relate to particular legislative documents. To align the two might be a bit of a mistake.

Mr Cash: The Minister is moving away from the proposals put forward by the hon. Member for Birmingham, Edgbaston (Ms Stuart) into a much deeper question, and I know that he is taking this opportunity to do so. As Chairman of the European Scrutiny Committee, I ask him to consider also that because the decisions made by the Council of Ministers are of a legislative character and are binding on Parliament through section 2 of the European Communities Act 1972, it is incumbent on him to consider the idea-in fact, to implement it-that Parliament may decide to vote against proposals that have been cultivated by the Government and to reject provisions that have been decided in the Council of Ministers. Perhaps the Minister can throw that point into the pool of his considerations.

Mr Cash: I would very much welcome the idea of having, for example, European questions in the House. I have many proposals that would make the system more efficient. I remind my right hon. Friend of the current Home Secretary's pamphlet, which recommended not only that European Committees should have their proceedings properly advertised, but that if, for example, 150 Members decided that they wanted to have the matter in question debated on the Floor of the House, there should be a free vote on a motion to overturn a decision taken in the Council of Ministers, whether or not the Government had approved the provision there. Some of us would be more interested in the results of a vote than in a mere discussion.

Mr Cash: Has it not occurred to the Minister that if a serious question of accountability arises as a consequence of what he just said, as it does, there is a simple remedy if we are sovereign in this House: we simply override the EU and tell it to get lost?

Mr Lidington: The remedy that my hon. Friend seeks can be obtained by Committees and the House being energetic in holding Ministers to account for the positions that they take and for the way in which they agree to whatever compromise is eventually negotiated.

Importantly, the proposed new clause does not specify in any way to what "relevant documentation" refers. That came up earlier in the debate. It is not clear, for example, whether "relevant documentation" covers so-called non-papers submitted by member states, which are intended to be "without prejudice" contributions to discussions. Does it include Council working group documents that give the position in summary of each and every member state on a particular issue? There could easily be widely diverging views on what comprises "relevant documentation".

That lack of clarity could also cause confusion in relation to UK documents. Reference was made during the debate to whether legal advice given to the Government would be required to be made available under the terms of the proposed new clause. If so, that would clearly undermine the principle of legal professional privilege, the significance of which the Information Commissioner has generally recognised in the context of the Freedom of Information Act. Governments need to receive free and frank legal advice without fearing that it must be drafted in a form that is suitable for later public consumption.

Hon. Members may argue that we should try to use the current renegotiation of the access to documents regulation to implement the provisions of proposed new clause 1, but that measure would take us a long way beyond what would be acceptable in terms of releasing documents that are used at EU level for deliberations and decision making. The positions of other member states in respect of the documents that they make available to their Parliaments and public vary dramatically. Domestic regulations in several states lay out specific criteria on which documents can and cannot be released. Such criteria often allow for a great deal of discretion for Ministers or their officials, or impose strict limitations on the type and origin of documents to be released.

In some member states, the approach is to accept the general principle that as much documentation as possible should be released, with the only limitations being the prevention of harm, with harm often being defined in terms of personal, legal or economic impact.

Mr Cash: My right hon. Friend is expertly demonstrating the complete, total lack of democracy in the EU. If ever a case needed to be framed and put in everybody's loo, it is this one.

Clause, by leave, withdrawn.

New Clause 2

PARLIAMENT ACT 1911 IN RELATION TO SECTIONS 1 TO 7

'(1) The Parliament Act 1911 is amended as follows.

(2) In section 2(1), after "five years" there is inserted "or a Bill amending or repealing sections 1 to 7 of the European Union Act 2011".'.- (Jacob Rees-Mogg.) Brought up, and read the First time.

Jacob Rees-Mogg: I beg to move, That the clause be read a Second time. The purpose of new clause 2 is to exempt most of the Bill from the functioning of the Parliament Act 1911. That would mean that were a Government to attempt to repeal it, they would have to do so with the consent of the House of Lords, without being able to re-present it a year later and get it into law regardless. The new clause would give the same protection to the rights of the British people to vote in a referendum on European matters as exists concerning the length of a Parliament.

It is one of the ironies of our constitutional system that the unelected Chamber has since 1911 been the final guardian of the democratic rights of the British people. Since 1911, it has been impossible to lengthen a Parliament without the willing consent of the House of Lords. It is the one part of the Parliament Act that the House of Commons cannot simply override. The last extension of a Parliament came, I think, in 1944, as a final extension-until the war had been completed-of the wartime Parliament. That principle clearly applies to referendum Bills, which relate to a right of the British people to exercise their democratic choice that should not be taken away from them lightly, and should be as protected as anything within the constitution can be. It is worth mentioning-I hope that the Minister will be interested in this point-that one criticism has been made of the Bill by people who otherwise are sympathetic to it. It is that an incoming Government who wanted to push through the euro, or whatever, could simply repeal this legislation and go ahead with what they wanted to do anyway. Quite rightly, no Act of a Parliament can bind its successors, but the Bill contains no protection at all against a Government who do not want to follow it. Given that the whole purpose of the Bill is to protect the rights of the British people from further Europeanisation, it would be extremely sensible to exempt it from the Parliament Act in order to strengthen it. That would remove the one criticism made by people who are otherwise well disposed to the Bill. It would make it a stronger Bill, and one more settled in our constitutional situation. I think that many of us would like to see that.

An important constitutional development is noted in volume 1 of the House of Commons European Scrutiny Committee's 10th report. It is a constitutional development that should concern the House, and on which the House should use its powers to set its seal, as it sees fit. It is essentially the Lord Justice Laws doctrine that came out of the metric martyrs case. He said:

"In the present state of its maturity the common law has come to recognise that there exist rights which should properly be classified as constitutional or fundamental.

And from this a further insight follows. We should recognise a hierarchy of Acts of Parliament: as it were "ordinary" and "constitutional" statutes. The two categories must be distinguished on a principled basis."

Lord Justice Laws went on to set out his definition of a constitutional statute as opposed to an ordinary statute. In the Bills we pass, however, there is no such difference. It is a distinction thought up by the courts, particularly to exempt the European Communities Act 1972 from implied repeal. As a matter of the most urgent constitutional principle, if there are to be two types of Act, it ought to be this House and the House of Lords who decide and determine that, not the judges. The judges are there to determine what we have said and rule on it, not to say that a new type-a whole new category-of law has been created. It seems to me that one of the ways the House could get round that is to make it clear when we think that a Bill requires particular and special protection. Fortunately-because, as some hon. Members may know, I am a great believer in tradition-we have a precedent for that in the Parliament Act, which allows the House of Lords to be overruled on everything, with the exception of a removal of a democratic right. The parallel with the Bill is exact: it is a protection dealing with a constitutional situation developed by the Lord Justice Laws doctrine.

Mr Cash: Will my hon. Friend turn his mind to this radical thought? If the House of Lords were to become an elected Chamber, it would not make the slightest bit of difference in respect of the argument that he is presenting, because the Parliament Act would remain on the statute book. The argument that my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) has put forward would also apply to an elected House. The question, in a nutshell, is one of judicial supremacy, which is why I strongly support what my hon. Friend the Member for North East Somerset has been saying.

Mr Cash: I should like to endorse the general thrust of the new clause tabled by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), although I must qualify that slightly by saying that I do not take the view that there is a difference between different types of statute. However, that does not make a material difference to the thrust of his argument, which is that we must at all costs preserve the right of this House ultimately to make the decisions. Indeed, in the 1870s-it might have been earlier-the statesman John Bright put forward the proposition that led to the Parliament Act 1911, some 30 years before it was implemented, precisely because he did not believe in privilege, in aristocracy or in the House of Lords as it was then constituted. The reality is that we can achieve the objectives by adopting the new clause without necessarily accepting that the House of Lords could not become an elected body if that were the view of this House in due course. I do not accept the proposition put forward by my hon. Friend the Member for Dover (Charlie Elphicke) because so long as we have a second Chamber, the House of Lords will be the House of Lords-irrespective of whether it is elected.

The question of constitutional statutes has been introduced as a notion, but it is not intrinsic to the argument. What is essential is to ensure that we do not allow the Supreme Court to adjudicate over and above the decisions taken by our Parliament. That is the key issue. Some futile commentators-and, if I may say so, some Members of this House-mislead themselves from time to time by suggesting that sovereignty is not such an important issue. The reason for its importance is very simple: we Members are elected to make decisions, and all the other issues, such as dealing with burdens on business and so forth, stem from that. That explains my view of the European Union, which is that, where necessary, the sovereign Parliament should override through the "notwithstanding" formula to which my hon. Friend the Member for North East Somerset rightly referred and which I have employed on a number of occasions when I have been supported by Conservative Front-Bench Members-for example, when we were in opposition and with respect to the Legislative and Regulatory Reform Act 2006, and on other occasions.

What we need to insist on above all-it cropped up in the previous debate-is that this House on behalf of the electorate represents the democratic process whereby we are voted in to make decisions. We must insist on that at the expense of judicial supremacy. Even though I am the first to say that it is for the courts to interpret legislation, it is not for them to make it. That is the fundamental point. I thoroughly endorse both the sentiments and the wording of the new clause.

...

Mr Cash: Even if my right hon. Friend were right in his general assertions about elements of the Bill, the implications of clause 18, as the European Scrutiny Committee report made clear, puts it into a very special category. Despite our attempts to amend that clause, which were sadly and tragically defeated, the fact remains that clause 18 makes a very significant change to this country's constitutional arrangements. For that reason, the Bill should indeed be put into a different category.

Jacob Rees-Mogg: I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 3

Chris Heaton-Harris: I should begin by apologising to the House for being so keen to table a number of new clauses and amendments at this late stage. It is not as if there is anything better going on in my life. It is not that Arsenal are playing Barcelona tonight, and I could have been watching that. Actually, as a referee I do not like Arsenal that much, but I could have been refereeing the football game between the Press Lobby against the Crown Prosecution Service-and I have a family, and there is a dinner that I could have gone too. However, I did want to point out to the Minister that there are some fairly big gaps in the Bill, which came to my notice rather later than they should have. New clause 3 concerns the emergency brake, especially in the context of criminal justice matters. New clause 4 concerns the post-2013 financial framework. New clause 5 concerns own resources decisions and EU taxes. I have also tabled a range of complementary amendments.

New clause 3 deserves some explanation. Certain European laws proposed under the treaty on the functioning of the European Union are subject to the emergency brake procedure. Such proposals are adopted by qualified majority voting in the Council, and relate to social security and procedural and substantive criminal law. When an EU law on social security is proposed under article 48 of the TFEU, a member state can declare that the proposal

"would affect important aspects of its social security system, including its scope, cost or financial structure, or would affect the financial balance of that system", and, having done so, can request that the proposal be referred to the European Council. The proposal is then so referred, and the Council suspends its consideration of the measure. When an EU law on procedural or substantive criminal law is proposed under article 82(2) or article 83 and a member state considers that the proposal

"would affect fundamental aspects of its criminal justice system", that member state may request that the proposal be referred to the European Council. The proposal is then so referred, and the Council suspends its consideration of the measure. A member state's ability to stop the adoption of a proposal subject to qualified majority voting in that way is known as the emergency brake.

After the proposal has been referred to the European Council, the Council may refer the proposal back to the other Council, which then resumes consideration of the measure, taking decisions by qualified majority voting. However, there must be a consensus in the European Council for the proposal to be referred back. That means that any member state can block the proposal. Under United Kingdom law, the decision on whether to invoke the emergency brake lies solely with the Government. Parliament cannot insist that this happen, and the Bill, alas, will not change that. In contrast, the German Parliament can oblige the German Government to press the emergency brake on any of those matters. New clause 3 would cover all EU proposals subject to the emergency brake except for the proposals that would fall under clause 9(4) of the Bill. It would, however, require the final draft of the proposals to go before both Houses of Parliament, either of which could require that the emergency brake be pressed.

Back in January, in response to a letter that I had sent dealing with various aspects of the Bill, my hon. Friend the Minister for Europe wrote to me that there was nothing to prevent a member state from pressing the emergency brake repeatedly on a proposal. That means that, should Parliament remain dissatisfied with the proposal after it has been referred to the Council by the European Council following a use of the emergency brake, Parliament could insist that the brake be pressed again.

Subsection (4) of new clause 3 is intended to accommodate the possible scenario in which the European Council seeks to come to a consensus on a final draft of the proposal, which would be referred back to the Council for formal adoption straight away. It seems to make sense that the Government should be able to ask Parliament at that point whether the final proposal is acceptable, rather than the Government's simply agreeing to refer it back to the Council and not insisting that the emergency brake be triggered. I have been discussing new clause 4 with the Minister's officials, and have been told that its provisions are probably covered in the Bill. A handful of proposals subject to the emergency brake would appear to be covered by the Clause 9(4). I would appreciate the Minister's confirming that, at the end of a convoluted process-during which the British Government might know that a proposal under QMV is to be adopted so they do not vote for it or abstain, but vote against-we in this Parliament could still have our foot firmly on the emergency brake.

Mr Cash: I wish to speak about my amendment 1, because it is important not only in principle, but in practice as we move forward on the negotiations taking place on two main issues. The first is European economic governance as a whole and the other is the, as yet, unformulated competitiveness package, which is coming up in the lift and being promoted vigorously in some other parts of the European Union.

The issue turns on the Bill's proposal for the circumstances in which a treaty or an article 48(6) decision attracts a referendum. Under clause 4(4)(b), we would not have a referendum where

"the making of any provision that applies only to member States other than the United Kingdom"

came into play. It might sound obvious that we would not want to have a referendum if it did not affect us but, unfortunately, that rather innocuous wording raises a substantial and profound problem.

I remember Chancellor Kohl talking in the 1990s about the need to move forward with a two-tier Europe and he used the analogy of a convoy. The Minister for Europe is doubtless aware of what is coming up in the lift, but he should also be very worried about it because it is one of the greatest and most serious problems that we face. Many people, including distinguished commentators from the Financial Times and other newspapers, take an interest in these matters and get to the root of what is going on in Europe at the moment. Rather than merely having a convoy of ships travelling at different speeds with the slowest eventually being required to catch up-that was Chancellor Kohl's analogy-these proposals on European economic governance are the equivalent of having an aircraft carrier of the eurozone and a rowing boat of the other member states that are left behind.

I do not believe for one minute that we should be in any way trapped or lured-to use the Prime Minister's words-into engaging in the kind of European economic governance proposals that apply to the eurozone or to the competitiveness package on their own merits. Given the record of the European Union, neither has worked, is likely to work or will work. But there is a danger in our acquiescing in allowing the other member states to go ahead by participating in the given procedure, be it the ordinary legislative procedure, the special procedure, the special purposes vehicle or something that arises by virtue of a treaty. The key test is whether it

"substantially affects all or any of the political, economic, fiscal, social or constitutional relationship between the United Kingdom and other Member States of the European Union." That is how my amendment 1 puts it.

If something falls into that category, as I firmly believe these proposals do, it clearly affects our fundamental relationship with the European Union in such a way as to require a referendum. We went through the arguments about the constitutional treaty and all that followed from it, and we went through the subsequent arguments about the Lisbon treaty and insisted on a referendum on it, because these things affected this fundamental relationship. I am talking about the Conservative party, rather than the coalition, which is quite a different thing. The basis on which we presented our argument for a referendum was that the treaty was creating a fundamental difference in the relationship between the United Kingdom and the European Union.

I cannot think of anything more likely to demonstrate that fundamental difference than the implementation of these procedures, irrespective of the legal niceties of defining the transfer of powers or competences-I could argue that there is, but that is not the issue I am raising. I am saying that the key question is the substance of what is being done, not merely the choice of specific words employed-not in the Bill, but merely in the coalition agreement-about the transfer of powers or competences. I defy anybody to find the words in the Bill which say that wherever there is a transfer of power or competence there will be a referendum. That is not what the Bill says; it chooses a list of circumstances, specifically but not generically, where a referendum will be required. That is a fatal flaw in the Bill, but the real problem is the substance of what is being decided in a given treaty or article 48(6) arrangement. To my mind, the creation of a two-tier Europe, with the United Kingdom bound into it by acquiescence, puts us at risk because it creates the aircraft carrier of Europe and we are left in the rowing boat.

Ms Louise Bagshawe (Corby) (Con): I admit that, for the first time, I find myself mystified by my hon. Friend's arguments. Surely, the point about the Lisbon treaty was that it altered the relationship between the United Kingdom and the European Union in a most disadvantageous way for the United Kingdom. In the situation that he describes, where the Eurocrat nations are heading off at jet speed to unite themselves, I am quite content to be in the rowing boat, and I would prefer it if the rowing boat were being paddled very fast in the other direction. I cannot understand why we would need a referendum in those circumstances.

Mr Cash: The answer is that the hon. Lady completely misunderstands the nature of the European Union. That is the problem in a nutshell. I am afraid that she does not understand-I have to put this to her very bluntly-that the creation of a two-tier Europe on such disadvantageous terms would be very damaging to us. If, however, an association of nation states were to decide to go in one direction, while we retained our independence and did not acquiesce in treaty or other procedural arrangements that bound us into that association, I would be content, but that is not what is happening.

What is happening is that we are being actively required to become and are acquiescing in becoming part of a new treaty arrangement that affects us all-all member states as a whole-but they get their solidarity and concentration of power with the new arrangements that they enter into; we are left within the legal framework, subject to the European Court of Justice and all that goes with it, without being party in practice to the arrangements that they devise. That is why the social and employment legislation, the fiscal arrangements and all the rest of it will have a disadvantageous effect on us if they proceed with those arrangements.

My right hon. Friend the Minister may say that the proposed arrangements will be purely intergovernmental. We had a bit of a discussion about that in the debate on an earlier proposal, but that is a far too simplistic way to put it because, as I pointed out in an intervention on the right hon. Member for Rotherham (Mr MacShane), the proposals of the European conclusions of 4 February specifically state:

"Building on the new economic governance framework, Heads of State or government will take further steps"- I now refer to an answer that I received from the Financial Secretary, who put a lot of emphasis on this-

"to achieve a new quality of economic policy coordination in the euro area to improve competitiveness".

So they are creating a new kind of co-ordinated arrangement. It continues:

"without undermining the single market."

I believe that my right hon. Friend the Prime Minister was very insistent on including those words, so that the proposals would not put us at a disadvantage. My argument is that, whether or not those words are included, they will do so.

The proposals then go on to say-this is all part of the manner in which the system is being devised, which I regard as extremely dangerous and implausible-

"Non-euro members will be invited to participate in the coordination."

It then says in respect of the President of the European Commission:

"He will ensure that the Heads of State or government of the interested, non-euro area Member States are duly involved in the process."

In other words, the appearance is given, contrary to what the right hon. Member for Rotherham said, that we would not be party to those arrangements. In practice, that is a perfect example of the two-tier system in operation. It requires some careful analysis, but it does us no favours whatsoever.

Mr Cash: Indeed. As my hon. Friend the Member for Daventry (Chris Heaton-Harris) pointed out, the aircraft carrier is owned by the Germans and the French. That is all part of the problem.

Let us come to the crunch: the reality is that the creation of a German or Franco-German dominated Europe lies at the heart of this. That has been one of the major concerns that has permeated the Government's thinking for a very long time, right back to when I was advancing similar arguments about the Maastricht treaty. In fact, it was one of the reasons why I took such exception to the treaty, not only because it created European Government, but because, as I said in several books and pamphlets at the time, it was creating a German Europe as well. We need not engage in shock, horror anxiety about that, but it is part of a new dimension that will now have a significant and very damaging effect on the United Kingdom. For that reason, we should not acquiesce in these proposals; we should do everything to defeat them.

Ian Swales (Redcar) (LD): I give due credence to the hon. Gentleman for all his knowledge on the issue, but can he think of an historical precedent where the citizens of one country have had referendum rights over a treaty to which their country is not a party?

Mr Cash: That is a very interesting question. Conversely, there have been three referendums-one in Denmark, one in France and another in Ireland-that would have an impact on us and people voted against, but the process of European integration carried on notwithstanding those results. In fact, to use an analogy, we got the rough end because, although the referendums went the way that some of us wanted, they made no difference and integration carried on anyway.

We need to understand perhaps that these proposals are, in fact, extremely dangerous. I suspect that my right hon. Friend the Minister will argue that, although we are being denied a referendum, the proposal will require approval by the United Kingdom Parliament in due course. The essence of my case is that it will have such a profound impact on the United Kingdom, by creating a two-tier Europe, that a referendum would be required because it involves a fundamental change in the relationship between the United Kingdom and the European Union.

I should like to say many other things about the proposal-perhaps I will have an opportunity to do so on Third Reading-but I have described its essence. This is a very dangerous move towards a German Europe, or a Franco-German Europe-it does not matter which way we look at it-and it is a fundamental strategic mistake. I see the Foreign Secretary, sitting on the Front Bench. He has bought this argument. I warned him before the general election that we should not enter this landscape. I am glad that he nods his head, because I was explicit about that at the time.

Finally, I recall the words of Thomas Mann who proposed what I still believe to be one of the great questions of our time, as yet unresolved, but probably resolved by these proposals of a two-tier Europe along the lines of the Chancellor Kohl's analogy of a convoy, and ask, "What will it be-a European Germany or a German Europe?"

Mr Cash: Will the Minister attempt, even in the last 30 seconds, to say whether he accepts the principle that lies behind my amendment 1? So far he has not even touched on it. Mr Lidington: We debated that issue at some length in Committee. My position and that of the Government remain that it is the sovereign right of member states to decide to agree treaties which affect them. What we are concerned about in the United Kingdom is defending the right of the British people to have a lock on anything that transfers powers away from this place to European Union institutions, and not to interfere with what other Governments decide independently that they wish to do.

Chris Heaton-Harris: I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Mr Deputy Speaker (Mr Lindsay Hoyle): Does the hon. Member for Stone (Mr Cash) wish to move his amendment formally?

Mr Cash: I will not move the amendment, but I do not agree with what the Minister has just said.

Third Reading

Mr Cash: It will not be the first time that my right hon. Friend has found I am not taken in by flattery. The real question is the one to which I referred a few moments ago when he was in the Chamber, which relates to the landscape of the European Union, increased Europeanisation as it affects this country and the manner in which the predominance of other countries is clearly moving further and further upstream. Does he really believe that the Bill will make any substantial difference to that question, particularly if we go down the route of a two-tier Europe?

Mr Hague: The Bill does make a material difference. It does not address the whole question my hon. Friend raises, because there are many different dimensions to it, but it is an important measure. In any future negotiations about the EU, British Ministers will be in the European Council saying very clearly that, under a vast range of provisions set out in the Bill, proposals that may be put to them in the European Council would require a referendum in the UK. That does change the negotiating position in Europe and the freedom of manoeuvre of British Governments, and it means that Governments have to be very alert to that point-not just British Governments, but all the Governments of the European Union. I can tell my hon. Friend that when I explain that point to them, as I already do, it makes a considerable impact on them.

My view is that the European Union has great achievements to its name: the single market; the enlargement of its membership, which has done so much to strengthen the spread of freedom and democracy in Europe; and the effective use of European nations' collective weight in the world, which remains of high importance to our values and interests, as we have seen on sanctions and on Iran and hope to see in response to events in north Africa. There are great challenges for the nations of Europe, in growth and global competitiveness, where action in the European Union on widening further markets in services, energy and the digital economy could do much to help to lift our economic prospects, but all that will be ever more overshadowed if the EU's treaties change yet again to enlarge its powers still further without popular consent. That is the point that the Bill addresses. Mr Redwood: I am all in favour of that democratic consent, but there is about to be a very substantial strengthening of power over economic governance for euroland, and, although we will be opted out of the most severe penalty, many of us believe that the measure will have a very big impact over the years on this country. Why cannot we have a vote on that crucial new treaty?

Mr Cash: I am fascinated by the line that the Opposition are taking. I am not impressed, if I may say so, by the line being taken by the coalition Government. It is difficult to resist the idea that a referendum is necessary in certain circumstances, so I rather anticipate that there will not a Division this evening, since the Bill is associated with what is really no more than the unlikely event of a referendum being called in respect of any of the provisions contained in it. The circumstances and the facts that we have had the opportunity to examine in the course of proceedings on the Bill, and indeed the trend, as I said in my earlier speech, of the UK being drawn in to the legal framework of a two-tier Europe but actually being neutered at the same time, increase the necessity of a proper referendum-an in-or-out referendum-so that the British people can decide whether they want to be Europeanised or absorbed, like ectoplasm, into the strange new world being created, over which we have increasingly little influence, let alone control.

This is, fundamentally, about a democratic deficit. I do not believe that the Bill will make any substantial difference to the landscape to which I referred in my previous remarks to the Foreign Secretary. A strategic mistake is being made in respect of Europe. Europe is failing. There is incredibly high unemployment in other member states: Spain's youth unemployment, for example, is 43%. Very serious damage is being done by burdens on business-50% of all our economic regulation comes from the EU-and there is a failure to provide oxygen for the small business community in this country. The Bill does not, in my opinion, make any difference to those matters.

We have faced for some time now an economic crisis in Europe, but none of the measures-including the 2020 strategy, which will be no more successful than the Lisbon agenda, which had to be abandoned-will make any substantial difference to the mistakes and distortions associated with the European Union as it now is that continue to affect the United Kingdom. We need to renegotiate the treaties, and the Bill will not change that fact.

At the beginning of our debates on the Bill, the European Scrutiny Committee proposed to have a proper investigation into it. I am sorry that the Foreign Secretary did not feel that he could attend, but I am glad that the Minister for Europe came to see us, albeit somewhat late in the day. The Committee gave careful consideration to the Bill, but it is not evident that the Government paid very much attention to what has been described in many quarters as one of the best Scrutiny Committee reports produced in recent years. I am afraid that they have substantially ducked the issue.

I shall address a number of the points as they cropped up. Much play was made of the idea that the Bill would reaffirm the sovereignty of the United Kingdom Parliament, but when I tabled a motion to that effect the entire Conservative party, with some honourable exceptions, voted against it, which struck me as somewhat bizarre and extremely dangerous.

The European Scrutiny Committee report, which took evidence from many of this country's pre-eminent constitutional experts, came to certain very clear conclusions. First, we noted:

"Clause 18 did not address the competing primacies of EU and national law",

which is a matter of grave concern, and that on the evidence we received, clause 18 was "not needed". We also concluded, on the evidence that we received, that

"If Parliament wills it may legislate to override the European Communities Act 1972 or the EU Treaties by repealing them, amending them or any provisions in them, or by clearly and expressly legislating inconsistently with them in respect of EU legislation or generally."

That is a very important statement from the European Scrutiny Committee, because for many years it was asserted that, owing to the nature of the European Communities Act and the treaties on which it is based, with their amendments and their additions, it would not be possible for Parliament to legislate "notwithstanding the European Communities Act". There was a movement towards the assumption-it was a dangerous habit of thinking and attitude of mind-that somehow we were locked into a situation that would never allow the United Kingdom to reassert its sovereignty in respect of European legislation.

For reasons that I have given, including the burdens on businesses, which are costing about 4% of gross domestic product, and the fact that since 1999 as much as £128 billion-it might be more now-has been lost to the British economy through over-regulation, we have to deal with these questions. That is the flipside of the idea of having a referendum on any further transfer of competencies or powers. We have to deal with the existing European Union, not any future EU or any future extension of powers or competences. That is something for the future; we have to deal with the EU as it is now, and it is doing great damage, in many respects, to the UK's national interests.

Mr Redwood: I am grateful to my hon. Friend, who as always is doing a great job on this issue. Will he agree that the legislation would be much more convincing if the very huge transfers of power now taking place-the power to regulate all our financial and banking services, the power in criminal justice and, soon, economic governance powers-were to be the subject of a referendum as a result of the Bill?

Mr Cash: Indeed, it would. For example, the fact that the City of London and its jurisdiction has legally been transferred to the EU is an indictment of the trends in the wrong direction. The landscape is changing in the wrong direction. With respect to the Foreign Secretary, the Prime Minister and other Ministers, I say that these matters need to be very carefully reviewed. All is not lost; the Bill is now going off to the House of Lords, and as I said earlier this evening, I hope that over the next few months serious consideration will be given to the impact of the European proposals on the competitiveness package, and the encroachments of European economic governance. I hope that these matters will be tackled. We need to ensure that we not only deal with future referendums, which we have been told will not happen until the next Parliament anyway-that is some years away-but tackle the crisis and the danger that we should be addressing now.

I trust that the House will not mind me mentioning that today I published a new note-perhaps I might even call it a pamphlet-entitled "Saving the British economy for the British people". It sets out the history of the stabilisation mechanism and how it has drawn us into a dangerous situation regarding bail-outs. However, I will not go down that route now, because I want to return to what the European Scrutiny Committee said about the Bill. We concluded that

"if the legislative supremacy of Parliament is under threat, it is from judicial"

supremacy. That is the problem. It is a British constitutional problem, not only one of the assertions of the European Court of Justice; it is an internal domestic constitutional question, as Professor Tomkins made clear in his superb evidence.

We said:

"we attach weight to the warnings expressed by Professor Tomkins if the Government maintains clause 18 in the EU Bill."

He spoke of the Bill overall as going

"out of its way to invite litigation".

That is precisely the direction in which we do not want things to go. We need to be certain that the sovereignty of Parliament is a matter for Parliament and the people, not the judiciary or the Supreme Court, particularly in the light of the trend shown in assertions by the likes of Lord Steyn, Lady Hale and Lord Hope of Craighead, all of which we looked at in detail in the evidence that we received and the judgments reached when we concluded our review of that evidence.

Furthermore, we concluded:

"Clause 18 is not a sovereignty clause in the manner claimed by the Government, and the whole premise on which it has been included in the Bill is, in our view, exaggerated."

We were also concerned about the manner in which the explanatory notes had been devised. We debated the matter at length, concluding:

"The Explanatory Notes present as fact what the evidence we have received tells us is disputed, viewed from any perspective."

In other words, we were deeply dissatisfied with the way in which the explanatory notes dwelt on the idea of the common-law principle. Indeed, I moved an amendment to clause 18 in an attempt to remove it from the framework of judicial interpretation, but that amendment too was defeated by the Government. In fact, I would say-I say this with respect to the Foreign Secretary and my right hon. Friend the Minister for Europe-that despite the soft words that the Foreign Secretary offered at the beginning of this debate, he knows well enough that we will not be put off or seduced by any flattery; we are interested in the arguments and the facts.

The European Scrutiny Committee analysed this Bill and found it wanting in many different ways. The other thing to say about clause 18 is this:

"The real point is whether a government can, in law, make it difficult for a future Parliament to amend or repeal the legislation it has passed"-

in a word, the point that the shadow Foreign Secretary made just now. We concluded firmly that

"in our view it cannot. Our conclusion therefore is straightforward-that an Act of Parliament applies until it is repealed."

Sovereignty is not an arcane, theoretical or abstract question; it is, as I said in opening the inquiry, about the vast array of activities and functions that have been conferred on the authority of the European Union by the Lisbon treaty-a treaty that was passed by the previous Government but has since been adopted by our Government, despite the fact that we opposed its passage through the House tooth and nail when in opposition-and how they affect the daily lives of the people and businesses of this country in such a wide variety of ways, making it essential that we reassert the right of Parliament to override those provisions if they are deemed not to be in our national interest.

There is no presumption that merely because of the European Communities Act 1972 we have to accept as a matter of compulsion whatever is served up to us by the European Union. If it is not in our national interest, we must repudiate it. I see the Minister for Europe shaking his head. He knows that this is an important question, but he disagrees with me on it. I do not hold that against him; I simply say that he is wrong. There are those who will continue to argue that there is no way in which we can override European legislation, but no way will those of us who take the view that we do change our minds. We put the national interest first, and if what is being done under European Union proposals is not in the national interest, we will have to override it.

There are many aspects of the Bill, including the whole problem of the creation of a two-tier Europe and the extent to which a referendum is being denied to us under clause 4, that will cause grave difficulties for us over the next few months as we deal with the question of the eurozone and the countries that are not part of it. I regard this as a matter on which we will be judged as time goes on. On the exceptions, including clause 4, that preclude a referendum on matters that will dramatically affect the United Kingdom-such as a two-tier Europe or an accession treaty-the Committee concluded:

"the exceptions...have been drafted to allow the Government to support certain EU policies, such as strengthening of the eurozone, including through harmonisation of economic, fiscal and social measures if necessary...or enlargement, without triggering the referendum lock."

The reality is that we will need a referendum if the creation of a two-tier Europe affects the United Kingdom in the way that we anticipate. If we are so affected, and we are put at a grave disadvantage, the responsibility will lie with the Government for refusing to allow a referendum. We are not only moving towards a situation in which the creation of a new kind of Europe is in prospect; we are on the brink of it. That landscape will not be an attractive one unless we move down the route of an association of nation states. The Foreign Secretary knows perfectly well that the arrangements in the Bill do not deal with the present. They deal only with the future, but we are confronted as I speak with the present danger of a European system that does not serve our national interest. We must meet that challenge, and meet it now.

Bill accordingly read the Third time and passed.

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