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Clause 2 — Addition to list of treaties

Orders of the Day – in the House of Commons at 4:56 pm on 6th February 2008.

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Votes in this debate

Photo of Mark Francois Mark Francois Shadow Minister (Europe) 4:56 pm, 6th February 2008

I beg to move amendment No. 237, page 1, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 12, inserted Article 2B TEC (TFEU), paragraph 1(b) providing for the establishing of competition rules necessary for the functioning of the internal market to be an area of exclusive competence of the European Union;
and

(ii) '.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

With this it will be convenient to discuss the following amendments: No. 231, page 1, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 12, inserted Article 2B TEC (TFEU), paragraph 1(e) providing for the common commercial policy to be an area of exclusive competence of the European Union; and

(ii) '.

No. 232, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 12, inserted Article 2C TEC (TFEU), paragraph 2(a) providing for the internal market to be an area of shared competence of the European Union and Member States; and

(ii) '.

No. 219, line 12, after 'excluding', insert—

'(i) Article 2, paragraphs 40 to to 45, inserted Title I and Articles 22a and 22b, renumbered Title Ia, amended Article 23(1), inserted Chapter Ia and Article 27a TEC (TFEU) relating to the internal market; and

(ii) '.

No. 239, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 45. inserted Article 27a TEC (TFEU), relating to customs co-operation; and

(ii) '.

No. 234, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 78, Article 88 TEC (TFEU), inserted paragraph 4 enabling the Commission to adopt regulations relating to the categories of State aid the Council has exempted from the State aid authorisation procedure; and

(ii) '.

No. 238, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 83, amendment to Article 96 TEC (TFEU) providing that directives to deal with distortions in competition shall be subject to the ordinary legislative procedure; and

(ii) '.

No. 235, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 158, inserted Article 188C TEC (TFEU), relating to the common commercial policy; and

(ii) '.

No. 224, line 12, after 'excluding', insert—

'(i) the provision for a "special committee" to assist the Commission in negotiating and concluding agreements under the Common Commercial Policy contained in Article 2, paragraph 158, inserted Article 188C TEC (TFEU), paragraph 3; and

(ii) '.

No. 195, line 12, after 'excluding', insert—

'(i) the Protocol on the Internal Market and Competition; and

(ii) '.

(a), in line 1, after 'Competition', insert

', unless arrangements have been made for the Secretary of State to report to Parliament each year on the operation and application of European Union competition policy according to the principle set out in the Protocol'.

No. 215, page 1, line 12, after 'excluding', insert—

'(i) Annexed Protocol No. 1 Amending the Protocols Annexed to the Treaty on European Union, to the Treaty establishing the European Community and/or to the Treaty establishing the European Atomic Energy Community, Article 1, paragraph 20(h), relating to the application to the United Kingdom and Ireland of measures relating to the free movement of persons, services and capital; and

(ii) '.

No. 223, line 12, after 'excluding', insert—

'(i) any provision relating to the Internal Market in so far as it could be applied to healthcare services; and

(ii) '.

No. 72, line 12, after 'protocols', insert of the Treaty on the Functioning of the European Union (which relates to measures to compensate for the economic disadvantages caused by the division of Germany to the economy of certain areas of the Federal Republic)'.

No. 73, line 12, after 'protocols', insert of the Treaty on the Functioning of the European Union (which relates to aid granted to certain areas of the Federal Republic of Germany affected by the division of Germany and the power of repeal by the Council)'.

No. 138, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 73, amendment to Article 78 TEC (TFEU) permitting the repeal of that Article (which relates to the economic disadvantages caused by the division of Germany); and

(ii) '.

No. 139, line 12, after 'excluding', insert—

'(i) Article 2, paragraph 77, amendment to Article 78 (2)(c) TEC (TFEU) permitting the repeal of that provision (which relates to the economic disadvantages caused by the division of Germany); and

(ii) '.

No. 236, in clause 8, page 4, line 8, leave out 'on Royal Assent' and add

'when arrangements have been made for the Secretary of State to report to Parliament each year on the operation and application of European Union competition policy according to the principle set out in the Protocol on the Internal Market and Competition'.

Photo of Mark Francois Mark Francois Shadow Minister (Europe)

Just before we voted at the end of our debate on the motion, Harry Cohen, who is not with us at the moment, made a point of order complaining about the relatively small number of Back Benchers who had managed to contribute. The Minister said that the Government had decided on a three-hour/three-hour split. I remind him that in our alternative proposal we argued for 18 days of consideration, which would have provided much more time to debate the treaty. In deference to the hon. Member for Leyton and Wanstead, I will attempt to keep my remarks relatively brief in the hope that the maximum number of Back Benchers can participate. I hope that the Minister will appreciate what I am trying to do.

Amendment No. 237 would prevent competition rules from becoming an exclusive competence of the European Union. That would, first, improve the treaty by removing a series of potentially damaging side-effects while allowing the UK to retain the freedom to complement the internal market where deemed necessary; and secondly, as the Minister for Europe must be getting used to hearing when we are discussing amendments, be in line with the Government's policy as laid out when debating in the European Convention. The Government's chief negotiator at the Convention, Mr. Hain, argued at the time—I know that the Minister enjoys these quotes, so I will read it slowly:

"The Community does not have exclusive competence in relation to measures to ensure free movement in the internal market...If the Community were to have exclusive competence in these areas, the Member States would have no power to take any measures (eg, in relation to the protection of health or consumer protection) which could affect free movement, nor to establish rules to promote competition. Plainly, the Member States currently exercise powers in these areas. The Community has power to harmonise the rules in these areas, but authority to take action in these areas is effectively shared."

Needless to say, that amendment failed. That is not surprising because, as my right hon. Friend Mr. Heathcoat-Amory pointed out last Tuesday, of the 40 or so amendments in justice and home affairs that were tabled by the Government at the Convention, only two succeeded, one of which was to change the word "safety" to "security". Unfortunately, the Government were hardly any more persuasive at the Convention in their arguments regarding competition policy.

What are the effects of the treaty on UK competition policy of which the Government originally disapproved? For the first time, the treaty characterises

"the establishing of the competition rules necessary for the functioning of the internal market" as an exclusive competence of the EU. Where there is an exclusive competence, the treaty explains that

"only the Union may legislate and adopt legally binding acts, the Member States being able to do so themselves only if so empowered by the Union or for the implementation of Union acts."

Therefore, unlike under current treaties, the UK will not be able to legislate on its own initiative to complement Union competition rules. It would not even be able to vary rules temporarily or permanently to protect the health or safety of UK subjects. The effects of the changes are wide reaching, so it is no wonder that the right hon. Member for Neath tried and failed, not once, but twice, to carry what we agree was a measured and sensible amendment.

In practice, the treaty will mean that UK authorities will no longer be able to supplement EU competition rules if they believe that EU competition law does not go far enough. That could lead to cases where distortions in UK markets go untreated while the UK waits as it tries to push through new competition regulations in Brussels. An example of that sort of situation may be found in the UK financial services industry, which is particularly pertinent to many of my constituents who commute into the City. If the UK decided that aspects of the industry required further competition laws or regulations, it could not legislate in that area on its own because the matter would be an exclusive competence of the Union. Likewise, if our Government found that they did not have sufficient rules to encourage competition policy in, for example, the UK's airports, they would have to argue for rules at an EU level, having given up the ability to legislate in that area.

A second problem was identified by the right hon. Member for Neath—he was prescient. Once competition becomes the exclusive preserve of the EU, the ability of the Government to legislate to protect health and to engage in consumer protection will be compromised. A persuasive example given by the Government in 2004 concerned a case brought against them at the European Court of Justice by tobacco companies, which was initiated in December 2002. The case highlighted the conflict between the implementation of health standards, such as maximum tar and carbon monoxide levels in cigarettes, and the EU's competition policy. In 2004, the Government argued that had competition policy been an exclusive competence rather than a shared one, they would not have been able to influence that important area of health policy.

Given all of those factors, I have three questions for the Minister. First, the wording of the competition laws regarding the abuse of dominant positions states that it will apply in any case that

"may affect trade between member states".

Given that the legal interpretation of the word "may" is extremely wide, will the Minister explain what that wording will encompass if the treaty goes through? Secondly, what discussions have the Government undertaken with the UK Competition Commission with regard to the treaty's provisions? Thirdly, with regard to the danger highlighted by the right hon. Member for Neath concerning the inability of the UK to safeguard health and consumer protection, has the Minister received any further reassurance during his negotiations with EU partners?

Turning to amendment No. 239 on customs co-operation, under the treaty, EU laws could lay down conditions under which UK Customs could check to ensure compliance with national criminal law regarding items entering the UK. That could oblige Customs to report its compliance with such matters to the Commission. Such laws could import all of the EU's human rights general principles, such as the charter of fundamental rights, into the applications of our Customs procedures, with unknown effects. We tabled amendment No. 239 to prevent that situation from arising.

I said to the House that I would be brief, so I shall conclude speaking on our amendments as follows. Amendment No. 237 would do only what the Government wanted to achieve but failed to secure when they negotiated the European Convention. It would allow the UK to complement EU competition policy when that is necessary and protect the UK from regulation when it is not. It would strike out elements that are full of unknown consequences. It would also preserve the House's ability to promote health and consumer protection, as the Government wished to do.

The First Deputy Chairman:

I apologise.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

It is not the first time that that mistake has been made. However, I believe that my hon. Friend is a full fortnight younger than me, so he is obviously not ageing in the right way.

I want to speak about the lead amendment and amendment (a) to amendment No. 195. I do not intend to speak at length, partly because others wish to speak and partly because some of the arguments were rehearsed earlier today.

My party enthusiastically supports the single market and regards it as one of the great successes of the European Union. I am not as worried as the Conservative spokesman about the inclusion of the word "exclusive" in the treaty. Indeed, our interpretation is that, if we do not try to enforce a single market and we allow people to pick and choose an opt-out when it pleases them, that may be detrimental to the United Kingdom, which tends to be an enthusiast for enforcing the free market principles of the EU with some rigour. We support powers that will enable the single market in the EU to function as effectively as possible. It does not take a huge leap of imagination to envisage some of our partner nations in the EU dragging their feet to the detriment of people in Britain. We cannot prevent them from doing that unless we give the EU some powers. It still means that the UK can have, for example, an Office of Fair Trading. "Exclusive" does not mean that the British Government can no longer make policies and apply them to the UK. However, that does not detract from the value of rigorous rules that are enforceable throughout the EU.

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

Does the hon. Gentleman agree that, were amendment No. 237 to be passed, it could disadvantage British business that was trading elsewhere in the EU because other EU countries would have protective measures, which we would find more difficult to dismantle or oppose unless we kept the wording as it is?

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I am grateful for that intervention because I agree with it. It is worth emphasising the hon. Gentleman's point. It is fair to say that different views exist in the EU about the way in which western advanced capitalist economies should go. That is a slight simplification but it helps explain matters. I believe that most members of all three main parties have much sympathy for what is regarded as the Anglo-Saxon model of rigorous competition. That view is not universally held but our Government and Conservative and Liberal Democrat Front Benchers subscribe to it. Competition and free trade create wealth and jobs and it is in our interests to promote such values throughout the European Union.

That view is not held at such high levels of government in some other European Union countries. France is commonly cited as an example of a country that has a political and cultural attachment to a social model, but many people in Britain would feel that that model restricted business. A great irony of our debate is that the Conservative party, which used to be the pro-business party in the UK, is now trying to make British businesses less able to exploit opportunities to expand elsewhere in the EU.

Photo of Jon Trickett Jon Trickett Labour, Hemsworth

At least we have a clear idea of where the Liberal Democrats intend to place themselves in the next election campaign, and possibly afterwards. By associating themselves so clearly with the principles of competition and the open market, they ignore the resultant inequities and inequalities. Does the hon. Gentleman accept that, if markets are to be a mechanism for disputing goods and services, strong social protections should be in place to prevent the breakdown in social cohesion that might otherwise occur?

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I am grateful for that—it was not so much an intervention as a statement. I hope that I can say with some confidence that the Liberal Democrats will favour free market economics in our manifesto at the next general election. Indeed, one of the reasons I am a Liberal Democrat is that I am an economic liberal. Economic liberalism has much to teach everyone across all three major parties in the House. At the risk of being pulled up short, I think that the great ideological debates of the 20th century about whether competition and free market economics are successful or whether there is a preferable alternative model was resolved fairly decisively in about 1989.

Photo of Mark Francois Mark Francois Shadow Minister (Europe)

I understand the hon. Gentleman's dilemma with regard to Liberal policy. Indeed, the whole House sympathises. If experience is any guide, the eventual outcome is that the Liberal Democrats will be pro-competition in some constituencies and against it in others.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

What I can say? If one wants to observe protectionism, one need only watch the Conservative party defending its vested interests. I am a keen advocate, as is my party, of rigorous competition, economic growth and British companies being able to trade throughout the European Union, which has been greatly to our benefit. Indeed, I am surprised that this position has proven so controversial—I thought that it was just a statement of the obvious.

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee

The problem with the Liberal Democrats is that one has to look at the policies that they espouse in other quarters to see what they are really talking about. Do the Liberal Democrats still take reference to the "liberal free market" in their policies to mean that they would sell the shares in the Post Office, a public service?

The First Deputy Chairman:

Order. That really is rather wide of the amendment under discussion.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

It is rather wide, but it emphasises yet again that the Liberal Democrats are at the centre of the national debate on such issues. I shall be happy to take further questions when we have a more widely framed debate—indeed, perhaps I should apply for an Adjournment debate.

Photo of Alan Simpson Alan Simpson Labour, Nottingham South

Clarity is obviously the keystone of all Liberal Democrat thinking. Will the hon. Gentleman be absolutely clear on his party's support—or lack of it—for the EU agency workers directive?

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

Again, I fear that that would lead us astray and I anticipate being pulled up short.

We have strayed a long way, so let me bring the debate back to amendment No. 237. Does my party believe that it is in the interests of British business to have a properly and consistently enforced free market, where we can trade in goods and services, and does that add to the likelihood of British companies generating both wealth for their shareholders and extra employment? Yes it does, in my view and that of my party. Do we therefore need rules and regulations to ensure that we and other countries comply with those basic criteria? Yes, in my view, we do. Is it therefore unwise for the Conservative party to try to act to the detriment of British business, by making it possible for other European Union countries to restrict the operation of the free market? In my view it is. The Conservative party's pro-business credentials have been taken over by their Eurosceptic credentials. That is a mistake.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I am extremely generous and will continue to be so.

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

I have some sympathy with the position set out by my hon. Friend Jon Trickett, but I do not see that as necessarily contradictory. However, I should be interested to hear the hon. Gentleman's views on this. Through the rules governing the internal market, one can have levelling up, but it is too often assumed that there will instead be a levelling down, which is not what I want. I want levelling up, so that we can have free and open competition, but within a framework, so that we do not have, literally and metaphorically, "beggar thy neighbour" downwards competition, but instead move up together. British companies can compete by having good standards here, but also good standards on the continent.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

Perhaps we should write a pamphlet together on that subject, as I completely agree with the hon. Gentleman. It is crude to see us as advocating either completely unfettered capitalism or as going down the opposite path. I am in favour of enlightened social policies, but conducted within a framework of rigorous competition taking place within a European single market. That is a position that some people in the Labour party have come to view sympathetically, which is why we agree with the Government on this point and disagree with the Conservative party.

Before that fascinating question and answer session— [Interruption.]—fascinating for some, as I cannot speak for everyone in that regard, I was speaking to our amendment (a) to amendment No. 195. That amendment, tabled by my hon. Friends and me, is constructive: unlike many of the Conservative amendments, it is not designed to wreck the treaty, but to strengthen it. I do not anticipate that the House will decide on it, as that would require amendment No. 195 to be passed first, but I do not anticipate that that will be successful either.

The nub of the amendment is our concern about the concession widely recognised as having been made to placate the French Government regarding the taking out of the phrase "free and undistorted competition" from the original document when the revisions were made. We hear it said frequently by the Conservatives that the two documents are almost identical—indeed, so similar that no distinction can be made between them. On this point, there is a distinction to be made. I was in favour of "free and undistorted competition" in the earlier constitutional treaty and I regret its having been taken out. Yet again, I am in the unusual position of outflanking the Conservatives by being more pro-business than they are.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions) 5:15 pm, 6th February 2008

Having attended our earlier debate, I am now a little confused. The amendment tabled by the hon. Gentleman and other Liberal Democrat Members clearly demonstrates concern about taking out the phrase "free and undistorted competition". Earlier, however, Dr. Cable, while conceding that we had a point on that issue, chastised my hon. Friend Mr. Hammond, the shadow Chief Secretary, for labouring that point. However, given the spirit of the amendment, Mr. Browne seems to be saying now that our argument had rather more force than his hon. Friend suggested.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I recommend that Conservative Members always listen to my hon. Friend Dr. Cable, who is able to provide economic master-classes for them all. They should heed his words. I listen to them and I am slowly improving as a result of hearing his wise words.

I am asked whether the change has made a material difference. No, because the phrase I mentioned was not part of the status quo in any case and was not in the original documentation of the European Union. Do we welcome the fact that it was added to the constitution? Yes. Do we therefore regret that we have gone back again to the original status quo when we thought that the position put forward in the constitutional treaty was preferable? Our view is yes again. It does not make a material difference. In our view, we have taken a step forward and a step back to where we were. But does it send out a slightly unwelcome signal about protectionism, which we want to see less of, and about free trade and competition in the EU, which we support? Yes, our view is that it does.

Photo of Peter Lilley Peter Lilley Conservative, Hitchin and Harpenden

Will the hon. Gentleman explain to us and his constituents why he proposes not to vote for a referendum on the constitution, which he promised he would vote for at the election, even though he thinks that this treaty is slightly worse? How can he justify that?

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

The problem with Conservative Members is that when I am trying to talk about the interests of British business, all they seem to be interested in is their hang-up on the issue of a referendum. I risk being pulled up short, but let me try to take the House through the incremental steps in response to the question. Everyone recognises that this issue of the referendum is a rather small aspect of the overall treaty— [Interruption.] I see that the Minister for Europe, who virtually lives in the Chamber nowadays, probably feels that this conversation is taking up another 20 minutes or half an hour more of our time in the days and weeks of debate about the different aspects of the treaty. I would not see this aspect as the linchpin of the treaty.

Our view on the referendum issue is that the constitution superseded all previous treaty agreements and that the treaty is different in nature. The content—

The First Deputy Chairman:

Order. I understand that the hon. Gentleman is responding to an intervention, but I must point out to him that we are not now dealing with the constitution or the referendum. Will he return to the amendment under discussion?

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I was trying to be helpful, Mrs. Heal, but I made a mistake in doing so. All that I observe is that the Conservatives had 18 years in government to hold as many referendums on the European Union as they wished, and never once sought to do so, which many of my constituents regret.

The First Deputy Chairman:

Order. May I remind the hon. Gentleman of my ruling? We are not debating the matter of a referendum this afternoon.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

What a relief that is, I am sure, to us all, but not least to the exceedingly tedious people on the Conservative Back Benches.

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee

I have followed the hon. Gentleman's argument against this amendment and for his amendment to amendment No. 195. If he regrets the previous constitution being changed to the new Lisbon treaty, and the removal of the reference to undistorted competition, do the Liberals therefore not support the protocol on services of general interest, which fundamentally changed the previous position on undistorted competition? That seems to be the logic of his argument.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I will make an unusual concession in the House, which is that I do not feel that I have the same degree of expertise as the hon. Gentleman to give him as good an answer as I would wish. I can only look at the overall principles and say that free and undistorted competition is a value that the British Government are right to seek to promote in the European Union. We regret that it is not contained in the treaty, as it was in the previous constitutional arrangements.

Photo of Siôn Simon Siôn Simon Labour, Birmingham, Erdington

On the question of values, can we be clear about exactly what has happened? Free and undistorted competition has not been taken out of the treaty; it has been moved from the section dealing with objectives. Although it is very important, it is not an objective. Does the hon. Gentleman agree that prosperity is an objective, and that free and undistorted competition is a means by which one achieves the objective of prosperity? That is why it has been taken out of the section dealing with objectives but left in the treaty in a protocol, with the same legal status.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

The hon. Gentleman has made his argument, and it stands for itself.

To conclude, we do not support the Conservative amendment No. 237, and we wish the Government well in seeking to promote free and undistorted competition within the European Union.

Photo of Laura Moffatt Laura Moffatt PPS (Rt Hon Alan Johnson, Secretary of State), Department of Health

I want to oppose amendment No. 237. As I am Parliamentary Private Secretary to my right hon. Friend the Secretary of State for Health, I shall exclude from my comments amendment No. 223, which is on a health-related matter.

Our constituents watch us doing the important work of scrutinising the treaty and amendments and trying to improve it. It is right and proper that they ensure that we do a good job, but the principal aim of Members must be that the amendments make a difference to the treaty, which I believe to be a fantastic step forward for my constituents. Amendments Nos. 237 and 238 in particular will not achieve that—they will not improve the treaty that we eventually ratify, as I am sure we will, in any way, shape or form.

It is important to bear in mind where my constituents sit in the context of the United Kingdom's economic well-being. My constituency is at the centre of what is described as the Gatwick diamond—and a diamond of a constituency it is. What my constituents will want to know is how the amendments will make it easier for members of the local business community to do their job. The area is highly prosperous, and attracts businesses from all over the United Kingdom and, indeed, all over Europe to settle close to the second largest airport in the country. Those businesses will want to know whether the amendments will make it any easier for them to do their job, and I do not believe that they will.

The treaty is a reasonable and proportionate response to the need to ensure that businesses can do their job. It enables us to deliver the rest of the Government's agenda, and get more people into jobs and apprenticeships so that companies can thrive and extend their operations. Many of our constituents who will be affected by the treaty have openly expressed their belief that it will do in its current form, and they will take the view that the amendments will not help in any way.

In the earlier debate, Members quoted various experts. It was often quite difficult to understand who those experts were, and how they came to be experts. I think it more important for us to consider the views of members of the business community who are having to work in the European Union, and who are trying to do their jobs. They welcome the sense of partnership conferred not just by the internal market but by the benefits that it brings to the work force, and they are discomfited by proposals such as these from the official Opposition. They are made uncomfortable by the possibility of changes in the way in which they do business, gaining access to nearly 500 million consumers. We can feel confident that those consumers are being treated decently, and can reap the benefits of the good working conditions for which trade unionists in this country worked for many years. The European Union is now improving those conditions further, and the treaty is updating them.

Let me end by quoting not an expert or someone who has put himself forward just to oppose the treaty, but a letter written to The Times in the middle of last year arguing against one of its leaders. The letter accepts that there are difficulties, that the situation is tough, and that we must work together and understand each other to deal with the problems that have been discussed in the House today. It concludes:

"But over all the EU treaty is not a federalist monster but a sensible attempt to improve its institutional machinery."

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I strongly support amendment No. 237. I want to reintroduce a topic that was debated earlier. The single market, which is desirable in principle and was, indeed, one of the achievements of a Conservative Government, has ceased to be a mechanism for the reduction of barriers to trade and has instead become an excuse for regulation. It has released a regulatory impulse that is almost impossible to stop.

It has been observed that birds fly, fish swim and regulators regulate. Brussels and the European Union are full of regulators who make their living from passing laws, directives and more regulations. There is no proper countervailing force to stop that. It has become the hallmark of the European Union. Even business organisations—and certainly the Government—have been far too slow in realising the damage being caused to British and European competitiveness. The CBI has been instanced in our debates today, and its attitude during the Convention on the Future of Europe was feeble.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury) 5:30 pm, 6th February 2008

I share the right hon. Gentleman's antipathy towards excessive regulation, but does he accept that some regulation is required to empower consumers to make informed choices when they are active in different parts of the single market?

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

Of course any market needs a degree of regulation; that is obvious. The most extreme capitalist understands the need for laws; Adam Smith wrote books about that. Every market needs the rule of law, but that is not what I am referring to now. The point on over-regulation is not my observation; it as an observation the Government make. The Minister referred to attempts—of which we have had plenty—to turn back the tide and launch deregulatory initiatives in the EU. We have heard it all before; it never works or it never happens. I am a member of the European Scrutiny Committee. We are still on the receiving end of a blizzard of new proposals, directives and regulations. We were told that with enlargement everything would seize up if we did not get more majority voting in the constitution. That was another lie, of course. We did not need the constitution in order to enlarge, and we now have 12 new member states and even more laws are coming out of Brussels even without the extensions in majority voting in the treaty. So we are on the receiving end of a torrent of over-regulation, which far exceeds the rule of law necessary to regulate any free market sensibly.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

It is interesting to contrast my right hon. Friend's argument with that of Laura Moffatt, who also referred to the views of business people. My right hon. Friend will know that a recent ICM poll of 1,000 chief executives found that 59 per cent. thought the burden of regulation was rising and more than half thought the benefits of the single market were outweighed by the cost of regulation.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

My hon. Friend is entirely right, and I am familiar with those figures. It is sad that one of our leading business organisations, the CBI, did not wake up to what was happening in the Convention on the Future of Europe. During the Convention, I wrote to the director-general of the CBI, one Mr. Digby Jones, to alert him to what was happening. He never bothered to reply, but he then had the brass neck to complain—not to me, but to the European Scrutiny Committee—that Parliament was not doing its job in stopping all these regulations.

Photo of Bill Cash Bill Cash Conservative, Stone

My right hon. Friend and I put the Lord Jones, as he is now is, to the test in that Committee. He could not answer our questions, and although he was complaining about us he had never made any representations. In my speech on Second Reading of the 1986 single market measures, I made the point that it would help if organisations such as the CBI took an interest, and to my knowledge it has taken no interest in the Committee since then.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

My hon. Friend recollects Mr. Jones—as he was, in a humbler incarnation, in those days. He has, of course, since become a Labour Minister and he is now even more complicit in—

The First Deputy Chairman:

Order. Please can we now direct our remarks to the amendment?

Photo of Angela Browning Angela Browning Deputy Chairman, The Conservative Party

One of the problems is that although many of us agreed with the initial concept of the single market—to remove tariff barriers and to have mutual recognition of goods and services—the welter of regulation introduced to bring about total harmonisation throughout the EU has been used as an anti-competitive device within the EU. As a former Minister who had to deal with the food and drinks industry, I know that every time a small British company such as a soya milk or mineral water manufacturer started to gain market share, their competitors within the EU used the single market to see them off.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

My hon. Friend knows that well, and she is absolutely right. It is striking that no other trade bloc has gone down this route of handing over its powers to a central organisation that over-regulates. The rest of the world is steaming ahead of us. That model, which is held up to be a paragon by Labour Members, has not been followed by anyone else and it is doing terrible damage to European competitiveness.

May I again refer to the Convention on the Future of Europe, on which I sat? I raised the question of European competitiveness in the wider world, but there was no interest in that. This little European attitude—this inward-looking obsession with harmonisation and standardisation in Europe—dominated all the proceedings. The real question is not whether one country is more competitive or productive than another in Europe; it is whether Europe as a whole is competitive in the wider world, because that is where we ultimately have to earn our living. That issue was never addressed in the Convention.

My point has finally been recognised in some quarters of the Commission. I am referring to a figure that has been published by the Commission. It is the estimate that the annual cost of all the over-regulation is as much as €600 billion. That exceeds the Commission's own estimate of the added value of having a single market. Its website estimates that figure to be only €240 billion a year. Even by the Commission's own arithmetic, the cost of all the regulation exceeds the supposed benefits of the single market in the first place.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I agree entirely with my right hon. Friend. We cannot overstate how much over-regulation there is. Later tonight, we will probably approve European Union document No.14,277—that relates to 2007. The amount of regulation is extraordinary.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

That is another example of the point. I think that all hon. Members have their own examples. I still cherish the memory of the physical agents (vibration) directive. [Laughter.] It really exists. It deals with the problem, only identified by the European Union, of something called whole body vibration. One would experience that if one sat on a tractor for too long.

The First Deputy Chairman:

Order. Limited time is available and many Members wish to contribute, so may I ask hon. Members to confine their remarks to the amendments before us?

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I shall do that, but I must just mention the Lisbon process—I think that it is in order to do so. It was launched in 2000 and aimed to make the Union by 2010

"the most dynamic and competitive knowledge-based economy in the world".

We only have two years to go, and those words are almost comically at variance with what has happened. The gap between ourselves and the United States and far east has widened since, and the treaty does nothing to deal with it.

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

Before I entered this House, one of my fields of expertise was vibration. I would be happy to talk to the right hon. Gentleman outside about the problems of vibration white finger and whole body vibration, which he pooh-poohs. Those are significant health problems in the European Union.

Secondly, the right hon. Gentleman said that nobody in the world is going in the way we have gone, but I must caution him on that. Since the founding of the Common Market—now the European Union—the North American Free Trade Agreement has been introduced and is expanding, and Mercosur in Latin America, which is on more or less the same track as the European Union —[Interruption.] Mercosur has a political dimension as well as an economic one. I would caution him against making a sweeping generalisation that nobody else is taking this approach—they are, because we are successful.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

The hon. Gentleman is entirely wrong. I know a little about Mercosur because I was once a junior Minister in the Foreign Office and responsible for Latin America. I recall visiting Brazil, which is of course part of Mercosur and saying that one piece of advice that I wanted to give was not to set up anything remotely resembling the European Commission. The Brazilians said that they had learned that lesson. They said, "We know the damage caused by unaccountable bureaucrats sitting in private and dreaming up new schemes for everyone else. We do not want those proto-regulators with awesome powers, accountable to no one. We are not going down that route." The hon. Gentleman will not find in the North American Free Trade Agreement or in Mercosur anything remotely resembling the European Union.

The customs union that we have in Europe is also practically unique and it has a damaging effect on the developing world. If a country is a member of NAFTA, it can do side agreements and bilateral deals with poorer countries to take their goods tariff-free. As we are in a customs union, we cannot do that. We are the fifth biggest economy in the world, but we have handed over our powers on trade to the European Commission. We are prevented by treaty law from making trade-expanding agreements with the poorest countries in the world. That is shameful, but it is the result of having a customs union and not being a member of a free trade area.

Photo of Patricia Hewitt Patricia Hewitt Labour, Leicester West

I must challenge the right hon. Gentleman on that point. It was the European Union, with the British Government and public in strong support, that led the way in offering to the poorest countries in the world the "Everything but Arms" agreement, which allows quota-free and tariff-free access for goods from the poorest countries to the largest market in the world. The European Union led the way on that and the right hon. Gentleman is simply wrong on that point.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

Again, the right hon. Lady is wrong on that. The European Union is now trying to force economic partnership agreements on to those countries, which they do not want. We used to have a trade Department in this country, but now we have only half a Minister. If that Minister wants to do something practical for the poorest people in the poorest countries, he or she has to go off to the European Commission and try to be nice to Mr. Peter Mandelson, in the hope that he will do something.

Photo of Angela Browning Angela Browning Deputy Chairman, The Conservative Party

Having handed powers over to the commissioner, the UK Government no longer have their own seat at the table.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

That is what happens when countries export their powers as we have done, and grant a monopoly to a jurisdiction that they do not control.

The single market powers, as expanded in the treaty, will not protect us. I cannot be alone in witnessing de-industrialisation in my constituency. It must be even greater in more industrialised areas further north. I have seen manufacturing firms relocate from my constituency to eastern Europe as part of the single market. I have no quarrel with that if the firms are simply moving into another part of the European Union that can exert its comparative advantage of lower costs and perhaps greater efficiency. But they are doing that on subsidies given to them in the European Union budget. The workers in my constituency, through the taxes they pay on their wages, are contributing to the budget and paying to have their jobs relocated. They are contributing to the undermining of their own security. Of course, the situation is getting worse. Under the European Communities (Finance) Bill, which we debated and passed last month, our net contributions will go up to £6 billion a year. The bulk of that increase will go towards giving additional subsidies to the newer countries of the EU to aid the process of transferring jobs from this country.

Any idea that the EU is somehow a protective organisation is at variance with the facts. In my view, the EU is emphasising the rights of workers to move because of the fantasy that people displaced in such a way can relocate, as they do in the United States. The US is a genuinely free market within a single country. People locate from one state to another. They speak the same language and they have the same federal laws. If that is the aim for the EU, we should be told. It is quite wrong to expect that workers should pursue their jobs in different parts of the country and the different—

The First Deputy Chairman:

Order. That subject comes under the next group of amendments to be discussed.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

Of course, I want to stay in order, Mrs. Heal, but I think that the mobility of labour and the so-called protective features of the treaty are the subject of the amendments that we have tabled.

The main feature of the European Union that I want to explore in the time remaining is the use of the powers in the existing treaties that establish a single market to extend European legislation into new areas of policy. That is why my hon. Friends and I have tabled a number of amendments to cut and define better those powers.

I am thinking particularly of articles 94 and 95 of the existing treaty. They are increasingly being used not to establish a single market but to legislate in areas that are quite disconnected with it, because they use qualified majority voting. In a sense, everything can be traded or can cross borders. That is confirmed by a paper I was helpfully given by the Foreign Office during the Convention on the Future of Europe, which listed all the items of legislation that have been passed under the single market powers given by articles 94 and 95, of which 104 go far wider than the establishment of a single market. They deal with things such as money laundering, the art market, transnational organised crime, summer time arrangements, noise emissions, units of measurements, member states' balance of payments, combating terrorism, anti-personnel landmines, counterfeiting, civil protection, budgetary discipline and social security relating to employed persons.

Of course, the same idea relates to the matter of health, which is the subject of a number of amendments in this group. The EU regards health as a legitimate area for legislation under the single market articles because health can be traded and because health care can be experienced across borders. Using the single market, the EU has expanded its powers into the new areas. That so worried the working group that I was on during the Convention that it recommended amendments to the treaties to redefine the market powers and to ensure that they are used only to bring down barriers and to enact measures that are genuinely and intimately connected with the establishment of a single market, rather than to expand EU powers into new areas by qualified majority voting in the way that I have described.

Those amendments were entirely rejected by the secretariat and the presidency of the Convention on the Future of Europe. To me and others, that showed that the exercise was a sham and that there was never any intention to relinquish any powers. Even though a majority in the working group supported some amendments to restrict those powers, they were overturned and ignored. No such change ever found its way into the final document or the constitution, and so nothing to that effect is in the Lisbon treaty.

I end by supporting the conclusions expressed by my hon. Friend Mr. Francois about exclusive competence. It is quite wrong that competition policy should be made an area of exclusive competence, and I can claim in support of that contention a letter written by Ms Hewitt to the European Scrutiny Committee in January 2004, when she was Secretary of State for Trade and Industry. In the letter, she made the correct observation that

"competition rules under Articles 81 and 82 are an area of shared competence."

I agree, so why are they now to become an area of exclusive competence? The distinction is very important, as the Government recognised at that time. If competition is an area of exclusive competence, member states are forbidden to legislate in respect of it, even if the aim is to promote it. Therefore, if the treaty goes through in its present form, we will not be able to have a competition policy or authority or competition laws even if they support the EU aim of encouraging greater competition.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

The right hon. Lady shakes her head. Perhaps she has forgotten what she wrote in 2004, and it might be slightly unfortunate for her that I have kept some of her letters They were very good, and the European Scrutiny Committee relied on them. Has she changed her mind? Does she now support a treaty that overturns her earlier observations and turns the articles that we are discussing from areas of shared competence into areas of exclusive competence?

Another of the amendments that I have tabled deals with shared competence. As things stand, the whole of the internal market will become an area of shared competence. That is not as bad as it all becoming an area of exclusive competence, but the treaty's definition of shared competence means that, when the EU legislates in this area, we cannot. That goes very much further than what the Government wanted at the time. They tabled an amendment to define shared competence differently, and it stated: "Member States shall respect the obligations imposed on them by the relevant Union measures".

That was sensible, and it meant that member states could not legislate in direct conflict with a specific bit of legislation passed by the EU. That was a narrow definition of shared competence that all of us could support, but the definition in the treaty goes much wider. The whole area is therefore vulnerable: if the EU legislates in that competence, member states cannot. Once again, that shows that the treaty amounts to an enormous transfer of power, from Parliament and the people whom we represent to the EU.

With those observations, I support amendment No. 237 and the associated amendments, and urge the Committee to vote accordingly.

Photo of Ian Lucas Ian Lucas PPS (Mr Liam Byrne, Minister of State), Home Office, PPS (Mr Liam Byrne, Minister of State), HM Treasury

I strongly oppose amendment No. 237. We had an instructive debate earlier this afternoon, and the amendment, too, is instructive, because it goes to the heart of the problem facing the Conservative party in 2008.

The Opposition seem to believe in the single market, but for the UK only. Essentially, in addition to the powers that will exist at EU level, amendment No. 237 would give the UK Government power to legislate in specific areas within the single market. Of course, if the UK Government could legislate in that way in the single market, other Governments across the European Union would want to do the same. That would drive a coach and horses through the entire concept of the single market. It would break down access to the markets that create jobs in the communities that we represent.

I have been sitting in the Chamber waiting to talk about the single market for a considerable time, because it is an extremely important issue for the individuals whom I represent. It is of vital concern to everyone in Wrexham. It is not an abstract constitutional concept; it is about people's livelihood, future, wealth, and education. It is about the way in which they live their lives. Since 1997, when a Government who believe in the single market and the balance of social protection came to power, there has been a civilised improvement to the lives of the people whom I represent. The Conservative party does not understand that. It has no concept of which issues are important to the people I represent.

I was appalled to hear what Mr. Heathcoat-Amory said about de-industrialisation. I will tell him about de-industrialisation: it is what happened when I was growing up in Tyneside in the 1980s. I took advantage of the single market and went to work in Germany because there were no jobs in Tyneside. De-industrialisation happened in Wrexham, the community that I represent, where 20 per cent. of the population were unemployed. Today, that figure is only 2 to 3 per cent. One of the big issues in Wrexham now is people from other EU member states travelling to the town to work. We do not have de-industrialisation. Let me tell the Conservative party why Labour won the last three general elections: it is because we have success—

The First Deputy Chairman:

Order. I must remind the hon. Gentleman of the large group of amendments on which he should focus his remarks.

Photo of Ian Lucas Ian Lucas PPS (Mr Liam Byrne, Minister of State), Home Office, PPS (Mr Liam Byrne, Minister of State), HM Treasury

The amendment is essentially about imposing additional burdens on the single market. The Opposition need to be honest about their position. The Conservative party does not believe in the single market; it is a protectionist party, and it is proposing a protectionist measure. There is no question about that. Anyone who can read can see that set out in black and white.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

If what the hon. Gentleman says is true, how does he explain the fact that Mr. Hain, who did some of the negotiation for the Government, tried to change the constitution by doing exactly what our amendment proposes? The difference is that he failed.

Photo of Ian Lucas Ian Lucas PPS (Mr Liam Byrne, Minister of State), Home Office, PPS (Mr Liam Byrne, Minister of State), HM Treasury

I do not agree with my right hon. Friend the Member for Neath, because I believe that the proposal is protectionist and should be opposed.

Photo of Patricia Hewitt Patricia Hewitt Labour, Leicester West

My hon. Friend is making an extremely important point. Does he agree that by strengthening the EU institutions' powers on the competition rules that are necessary for the internal market, the treaty will allow Britain to ensure that its businesses can get access to markets in other parts of the European Union where protectionist tendencies have been all too evident? The Opposition claim to oppose those tendencies, but they do not support the strengthening of the EU powers that is needed if we are to counter them.

Photo of Ian Lucas Ian Lucas PPS (Mr Liam Byrne, Minister of State), Home Office, PPS (Mr Liam Byrne, Minister of State), HM Treasury

My right hon. Friend makes an excellent point. The reason why companies such as Wockhardt of India, Sharp of Japan, and Ipsen Biopharm of France have moved into Wrexham is that it is in the European Union and has access to a market of 500 million people, and they wish to export. Many of the manufacturers in my constituency, where unemployment has fallen from 20 per cent. under the Conservatives to 2 or 3 per cent., are exporting. They are manufacturing and exporting in the single market.

Photo of Chris Ruane Chris Ruane PPS (Caroline Flint, Minister of State), Department for Communities and Local Government

My hon. Friend is giving an excellent exposition from the perspective of Wrexham. Does he agree that 68 per cent. of Welsh exports go to the EU, and over 500 companies in Wales export to the EU? To go down the track proposed by the Opposition would lead to another Tory recession in Wales.

Photo of Ian Lucas Ian Lucas PPS (Mr Liam Byrne, Minister of State), Home Office, PPS (Mr Liam Byrne, Minister of State), HM Treasury 6:00 pm, 6th February 2008

My hon. Friend is right. Wales benefits hugely from the single market and from the EU.

The contribution by Mr. Gummer was instructive. He made an excellent speech, which should be read by anyone who suggests that the Conservative party is moving towards a position in the centre. The right hon. Gentleman is entirely out of step with all those at present sitting on the official Opposition Benches.

Protectionism will not bring jobs to my constituency. I oppose it absolutely. It is the wrong way to go. What we need is a balanced approach, as set out in article 2 of the treaty of Lisbon, which takes into account social responsibilities and social rights, balanced by a successful internal market. The amendment must fall.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

I start by picking up seamlessly from where Ian Lucas finished. It is worth noting briefly—I shall not labour the point—that one of the benefits that Welsh companies have had is some of the objective 1 funding, which has done nothing more than move some of the jobs from constituencies like mine, in England but on the border with Wales, a few miles down the M4. It has not been job creation so much as job moving.

Photo of Ian Lucas Ian Lucas PPS (Mr Liam Byrne, Minister of State), Home Office, PPS (Mr Liam Byrne, Minister of State), HM Treasury

On a point of clarification, Wrexham has not benefited at any stage from objective 1 funding.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

I was not referring specifically to the hon. Gentleman. I was referring to the point about Wales generally, which Chris Ruane made. I know for a fact that many companies in Wales have had some of that funding. Instead of locating in constituencies like mine, they have moved to constituencies in Wales. There has not been a net benefit to the UK at all. The funding has simply moved the jobs around.

I shall speak to the amendments tabled by my right hon. and hon. Friends, starting with amendment No. 237. As I said briefly in an intervention, the Government—and Mr. Hain was working on behalf of the Government at the time—wanted to do exactly what our amendment says. I shall read out an amendment that he tabled at the Convention, on which my right hon. Friend Mr. Heathcoat-Amory served.

The amendment tabled by the right hon. Member for Neath stated:

"The Community does not have exclusive competence in relation to measures to ensure free movement in the internal market. . . If the Community were to have exclusive competence . . . Member States would have no power to take any measures (e.g., in relation to the protection of health or consumer protection) which could affect free movement, nor to establish rules to promote competition."

We shall even be restrained from taking measures to create a more competitive market if the exclusive competence measures go forward.

The right hon. Member for Neath made the point that

"Member States currently exercise powers in these areas. The Community has power to harmonise the rules in these areas, but authority to take action . . . is . . . shared."

That is a perfectly sensible arrangement. Maintaining the status quo will hardly lead to all the appalling outcomes that some Labour Members have tried to scare people with.

One of the key points, which was not touched on in the debate on the motion and has so far been dealt with only by my right hon. Friend the Member for Wells, is that competition is not an end in itself. On that I agree with one or two Labour Members. The purpose of a competitive market is to make our businesses more able to compete not just within Europe, but with the rest of the world. As a number of hon. Members said, Europe currently accounts for a significant chunk of the world economy and a significant chunk of world trade, but those of my generation are looking at what will happen over the next 10, 20 or 30 years. Because of the economic growth in other parts of the world, we need to make sure that we win business in India, China, Russia and the fast-growing markets in south America such as Brazil and Mexico, and that we continue to do so in the United States, which will continue to grow very fast.

My concern is that this debate is in danger of becoming not little Englander—I have heard that phrase thrown over from the Labour Benches—but little European. We are focusing on the European market to the exclusion of the world outside. My right hon. Friend the Member for Wells highlighted a danger of regulation—if we regulate within the European Union thinking only of the EU, we could handicap ourselves in competing in a global market.

Photo of Doug Henderson Doug Henderson Labour, Newcastle upon Tyne North

I want to make a serious business point, not a party political one. Does the hon. Gentleman agree that there will be temptations in a global world and global market for a company such as Airbus to source from areas with a cheap labour supply, provided that everything else is in order, and that it would be difficult to counteract that? Airbus, however, is in no way constrained by basic regulation in the EU; it can still compete internationally with Boeing. If there are constraints, they are to do with labour costs, not over-regulation.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

I do not think that the industry and companies chosen by the hon. Gentleman are a terribly good example. They are very important to our economy and that of the US, but that industry and both those companies are heavily subsidised, either directly by the taxpayer or, in the case of Boeing, indirectly—it is alleged—through defence contracts and so forth. Governments are already heavily involved in those companies because of direct or indirect subsidies, so they are not a terribly good example of competitive businesses.

Before I came to the House, I worked for an American multinational that competed and had manufacturing operations across the world, including some in Europe. I know some of the realities of business and how it is conducted around the world. I am keen for British companies, those based in Britain employing British workers, and companies owned by British people, to be successful globally. That is one of my concerns.

My right hon. Friend cited the EU's own estimate of the cost of regulation compared with the cost of the single market. I just caution Members on both sides to remember that however important the single market is today, it will become relatively less important for British companies as we go forward, simply because of the fast growth around the world.

Rob Marris made the point that some of the countries currently competing on the basis of cheap labour costs, such as India and China, are rapidly industrialising and want to compete at a higher level of added value. They are looking at design and moving up the food chain, as it were. We have to make sure that we sell to them, and they will be good competitors.

That is my concern about giving the EU exclusive competence in this area. There is a role for a British Government, still able to legislate in this area, to be moving faster and to be a good example of moving things forward. One of the tragedies of the EU is that the Government have not been successful, with others, in moving that agenda forward.

Photo of Graham Brady Graham Brady Conservative, Altrincham and Sale West

My hon. Friend is making an excellent contribution. In the context of what he is saying, does he agree that maintaining a more flexible labour market and less regulation is essential not only for the health of Britain's economy but for the wider EU economy? Within the EU, we present a competitive challenge that sets the direction and tone that the EU has to try to meet. That allows the rest of the EU to compete globally.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

My hon. Friend makes a good point. It is good if, within the EU, countries have the flexibility to think about more competitive economic policies and to set each other challenging goals to demonstrate what is possible in the world.

Just before my hon. Friend made that important point, I was going to mention the previous Lisbon process and the Lisbon European Council of March 2000. This is particularly relevant to this group of amendments. The Council's aim was to

"make the European Union the most competitive and dynamic knowledge-based economy in the world".

That is exactly what hon. Members on both sides of the House have been talking about today.

However, the Government carried out their own study last year, and in January 2007 the Treasury and the then Department for Trade and Industry published a joint assessment of the single market. Among its findings were that

"the rate of progress—in terms of strengthening and deepening the Single Market—has slowed down".

The key points were that

"Europe still lags behind its main competitors, notably the US", that the "long-standing challenge" that I have just outlined was a "far-off aspiration", and that

"competition can be expected to become more intense, with the rapidly emerging industrialising economies of India and China catching up fast."

That is exactly our concern. Since this Government have been in office, they and other European Governments have set themselves the right challenge—to make Europe more globally competitive. However, according to their own assessment of just one year ago, they have comprehensively failed to meet the goal set during the previous Lisbon discussions.

One of the challenges for a future British Government—I think that it will probably have to be ours, because this one has simply failed—will be to set the bar higher, and to challenge Europe to be more globally competitive.

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

May I suggest to the hon. Gentleman that he and I would draw completely opposite conclusions from the research to which he has referred? My conclusion is that the current European Union framework relating to competition and the knowledge-based economy mentioned at the Lisbon 2000 Council has not worked, so we need to change things. The difference between us is that he would change them by what I would regard as the somewhat protectionist domestication of this stuff, whereas I would do it through the EU reform treaty. We agree that we need change; it is simply a question of what change we need.

Photo of Mark Harper Mark Harper Shadow Minister (Work and Pensions)

I do not think that the hon. Gentleman can have been paying attention. I was not talking about a British Government legislating domestically in a protectionist direction; I was talking about moving in a pro-competitive direction and setting the bar higher, so as to set a powerful example for other European countries to follow.

I want to touch briefly on trade matters, and to remind Members that we do not have a trade policy any more, because such policy is now effectively governed by the European Union. We rely on influencing the single Trade Commissioner, Peter Mandelson, to make good agreements on our behalf. Using that model, however, the evidence is that some of the recent agreements have not been particularly successful. We all remember the agreements of a few years ago on textiles and shoes. They were protectionist in nature, so as to protect some of the southern European countries, and they damaged poorer countries in the third world. We should be giving those countries a leg up by trading with them, yet our agreements actually put poorer workers there out of work.

Those were very protectionist measures, and I do not want to see that kind of thing in the competitive field. I want the British Government to be pro-competitive, and I would like to see a bit more of that ability on the trade side. I want us to set a good example. That is why I support the amendments tabled by my hon. Friends, and why I do not support the Government's approach.

Photo of Colin Burgon Colin Burgon Labour, Elmet

As ever, Mrs. Heal, I hang on your every word. You have told us to be precise and to the point, so I shall try to do that. I know that many other Members wish to speak.

I rise to speak to amendment No. 224, which has been tabled in my name and those of other enlightened colleagues. It might appear to be a technical amendment, but I would argue that it goes to the very heart of the debate that many of us have wanted to have during the passage of the Bill. We are essentially arguing for a social Europe, rather than a neo-liberal Europe.

The amendment deals with a provision in article 2, paragraph 158 of the Lisbon treaty, which replaces the old article 133 establishing the common commercial policy. That part of the treaty forms the underpinning for the single market. The new article 188 includes the existing provision for a special committee appointed by the Council to advise the Commission when negotiating trade agreements. No doubt hon. Members are thinking that this sounds a bit boring and bureaucratic, but it is a tremendously exciting subject—they should not be put off by the anaesthetising language that usually emanates from Europe. I can already sense the vibration going round the Chamber.

The so-called article 133 committee, perhaps to be known as the article 188 committee if the Bill is passed, is one of the most serious concerns among the international development non-governmental organisations. Ministers have constantly cited those NGOs when praying in aid their support for a few of the treaty provisions in the development aid sections of the treaty, although I think that they have somewhat over-egged the pudding. Either way, the Trade Justice Movement, representing all the major NGOs and trade unions and including the TUC, has this afternoon issued a new statement on the treaty outlining its broad concerns about the trade sections of the Bill, in particular its objection to the operation of the article 133 committee. It is fair to say that the Trade Justice Movement supports the thrust of my amendment, and I hope that the Minister will take it as seriously now as the Foreign Secretary did when he mentioned it in support of his arguments on Second Reading. Its concern is that the European Union's role in international trade is perhaps the biggest single force behind global neo-liberalism. At the same time, international trade is also perhaps the biggest single role of the EU.

However, that transfer of power to the EU has not been accompanied by a comparable increase in transparency, democracy or accountability, especially not to this Parliament. Indeed, Commissioner Mandelson—I nearly called him Comrade Mandelson—is now one of the world's most powerful bureaucrats, and he will be even more so once this treaty is passed with the provisions for exclusive competence on trade. At this stage, I will resist a launch into a critique of neo-liberalism and move swiftly on. One influence that member states do still have over Commissioner Mandelson is through our representation on the article 133 committee, yet that committee is even less democratically accountable to us than even other EU institutions.

Most Members will be aware of the role of the article 133 committee, but in case one or two do not, I will summarise it. It scrutinises, amends and approves Commission proposals for EU negotiating mandates on trade arrangements. Its members attend the international negotiations as part of the EU delegation, and they are usually the largest single delegation at World Trade Organisation talks. Indeed, I believe that 800 EU representatives attended the last WTO talks, which demonstrates the EU's sheer power in the WTO. The committee agrees EU position papers in principle which are, as I understand it—the Minister will put me right if I am not correct—passed for formal approval, first, by the Committee of Permanent Representatives, which again comprises unelected bureaucrats, and then by the Council, where they finally reach elected Ministers representing our national Governments. However, approval usually comes at what is called in Euro-jargon an A point, which means that the policies are endorsed without discussion.

Over the years, more and more issues have become settled by the article 133 committee, and Ministers rarely debate EU negotiating mandates at the political level. Nor do we have any power in this Parliament to mandate the Minister, let alone officials. We cannot even find out how people voted, because the committee does not seem to take formal votes. It seems very hard to get information about the committee. I understand that we are represented on it, but we still cannot find out the necessary information. It deliberates in secret and publishes neither agenda nor minutes, and records of how decisions are taken are not made available to the public.

It is true that copies of outcomes of meetings can be requested by members of the public, but they take several weeks to arrive and are so heavily censored as to be meaningless. For example, about two thirds of the text is often deleted, and all references to the positions taken by participants are simply blacked out. It is therefore impossible to hold our Government to account for the positions that they take in our name.

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office 6:15 pm, 6th February 2008

Perhaps I have misunderstood my hon. Friend's amendment. The situation as regards the article 133 committee is worrying, but his amendment would remove from the treaty provisions that would make the special committee more accountable. Article 207 in the consolidated texts of the treaties says:

"The Commission shall report regularly to the special committee"— that is the bit my hon. Friend wishes to remove—

"and to the European Parliament on the progress of negotiations."

Would his amendment not remove the accountability that he feels is currently lacking?

Photo of Colin Burgon Colin Burgon Labour, Elmet

In many respects, my amendment is a tactical response to drag into the public domain one of the key issues that we should be facing, and the very fact that we are discussing these matters means that we have achieved that.

People may say, "Let's use the EU's freedom of information legislation to find out about the 133 committee." A group of Irish parliamentarians recently made 32 written requests, submitted under the legislation, to find out about the article 133 committee and the Irish representatives on it. However, 31 of those requests were refused.

Photo of Colin Burgon Colin Burgon Labour, Elmet

No, I am just drawing to a close.

I am minded at this stage not to press my amendment to a Division—[Hon. Members: "Oh no!"] Members should not tempt me. First, I want to hear the Minister's opinion on these questions. Secondly, how can he assist us in opening up EU trade policy? Can he promise that the crucial information in question will be laid before the House? Will we be told who represents us on the committee, what their mandate is, what positions they will argue for and how they have voted? Will he guarantee to lay before the House the outcomes of the meetings and other relevant documents?

To be helpful, I shall not press my amendment to a vote, but we should revisit the matter because it is really important. The Minister may not agree with me on a wide range of issues, but I hope that I will get some response to some of the points that I have raised.

Photo of Bill Cash Bill Cash Conservative, Stone

Today is Ash Wednesday, which is the day on which we ought to repent. I went to a service this morning in Westminster cathedral. I am going to repent the mistake that I made in 1986 of voting for the Single European Act. It was then called the European Communities (Amendment) Bill, which is not unlike the name of the Bill we are debating, except we are talking not about European Communities but about the European Union. I want to put that on the record because my hon. Friend—my dear friend—Mr. Shepherd, who voted against that Act, knows what it means for me to say what I say now.

I shall say one other thing, however. I tabled an amendment to that 1986 Bill that stipulated that nothing in the Act should derogate from the sovereignty of the United Kingdom Parliament. As I was going through the Lobby, a certain other person came to join me—the predecessor of Rob Marris, who has intervened a lot in this debate. It was Mr. Enoch Powell, and he said to me, "I have put my name to your amendment." And those two names stood there on the Order Paper, completely alone on the sovereignty of this Parliament with regard to the 1986 legislation.

On 23 April 1986, I made several points about the internal market. I said that I had

"some reservations about how we might move to majority voting."

I also pointed out—to pick up the points of my right hon. Friend Mr. Heathcoat-Amory—that the CBI and other trade organisations should make proper representations. In the internal market, it is essential that representations are properly made so that we can respond on matters such as exclusive competence, shared competence and so on—the subject matter of the amendments.

At that time, I spoke after the then Minister for Trade. I said that we must put our British interests first. I emphasised:

"We live in a global economy but have to keep our interests ahead of other people's. We must have regard to our own interests while working in the EC."

I believe that that remains the case. In my short speech, I also mentioned that I had recently served on the Financial Services Bill Standing Committee, in which all the issues that crop up in the group of amendments arose. I said that

"we shall be exposed to international pressures in investments, capital movements, competition, biotechnology, intellectual property... banking, financial services, and telecommunications."

I said that, in all such matters—

The First Deputy Chairman:

Order. With that amount of knowledge, perhaps the hon. Gentleman could address his remarks to the amendments.

Photo of Bill Cash Bill Cash Conservative, Stone

I am simply making the point—I am not trying to avoid the ruling—that, ultimately, I had to say:

"We must learn to live in the modern world... of protectionist pressures", which are inherent in the problems of exclusive and shared competence that we are considering today. I continued:

"We must bear in mind the consequences of giving legal effect to the proposals in the Single Act. The European Court of Justice will be involved. We must be sure that we know what we are doing. Who will control it all? The Government? Parliament? The Commission?"—[ Hansard, 23 April 1986; Vol. 96, c. 378-9.]

By Parliament, I meant this Parliament. I simply wanted to get that point on the record.

I repent because it has become abundantly clear from all our debates in the past few days that the European Court of Justice and our inability to invade the acquis communautaire, unless we have a "notwithstanding" formula, will prevent us from achieving our objectives.

The Lisbon agenda has been mentioned several times and I especially commend the speech of my hon. Friend Mr. Harper, who enlarged the debate to encompass subjects that matter. The internalisation of the market is in the framework of the current proposals. We are dealing with an internal market but also with protectionism within it. There have been several exchanges about Mr. Sarkozy's comments. Our main objectives should be to look outwards, as my hon. Friend the Member for Forest of Dean said, to a globalised economy, as I attempted to predict—I believe correctly—some 20 years ago in 1986. I believed that the single market was intended to operate in that way. It has not worked in that way. Indeed, it has internalised, not externalised and it has therefore failed. That is why the Lisbon agenda has failed.

The Minister for Europe is not personally responsible for the documents that relate to the Lisbon agenda, which were submitted to the European Scrutiny Committee in January. However, he is representing the Government and I simply want to repeat the European Scrutiny Committee's comments about those documents. We were given an analysis and I am sorry to say that we had to be critical of the Government's response to them. In a nutshell, we said that the Exchequer Secretary to the Treasury could not justify the report that she gave. That related to the entire Lisbon agenda and every single matter dealing with competition policy and the re-launching of all the initiatives that had failed since 2000, in respect of which Will Hutton, the rapporteur and an extremely distinguished economist, made some critical comments to the European Reform Forum, which I helped to initiate.

We in the Committee said that the degree of explanation in the

"two...paragraphs in the Treasury's Explanatory Memorandum, one of which is little more than an elaboration of the titles of the seven documents and annexes concerned, is a wholly inadequate description of the content of the almost 400 pages of these papers."

The Committee asked the Exchequer Secretary to ensure that the documents would explain things properly in the future, and so on. I mention that because it is made clear in the documents that those who run the European Community are aware of a thing called reform fatigue. There is a reluctance to tackle issues that require reform, and we are not getting the reform required.

Let me turn to the question of exclusive competence—I shall deal with shared competence in a minute. The article in question—article 2B—concerns the enhanced approach through which the Union will grab and maintain new areas of exclusive competence. In particular, it will dictate competition rules. We heard an interesting speech from the erstwhile temporary leader of the Liberal Democrats, Dr. Cable, but as I pointed out to him, he missed the main point. Although he explained the layer upon layer of development of the internal market, the reality is that we have reached an apex and have to retrieve the situation in order to prevent the over-regulation that is literally destroying British business and European business, too.

In fact, the leviathan has engulfed the European single market. That is the problem, and it cannot be changed except by invading those regulations and the acquis communautaire, and by ensuring that we reform all the regulations—

Photo of Bill Cash Bill Cash Conservative, Stone

My right hon. Friend will have to restrain himself for just one second. I know that he does not agree with me, but that does not bother me one jot.

The reality is that the £450 billion of over-regulation described by Mr. Verheugen, who is the commissioner responsible, speaks for itself. As my right hon. Friend Mr. Heathcoat-Amory correctly pointed out, if we evaluate the cost-benefit of the European Union—that is, assess the amount claimed as benefits of the Union against the actual costs described by Mr. Verheugen—the answer is that the European Union is not functioning as it was claimed when I voted for the Single European Act in 1986. However, I am delighted to give way to my right hon. Friend Mr. Gummer, because I know that he will attempt to disagree with me.

Photo of John Gummer John Gummer Conservative, Suffolk Coastal

I was present at exactly the same service as my hon. Friend this morning, but I am not saying that I was guilty of voting in the way that I did, either at that time or since. Indeed, I have been consistent. However, as a business man working over the whole of Europe and advising large numbers of international companies working in Europe, I have to tell him that the picture of the European Union that he has given is totally foreign to anyone who does the job. It is about time that people talking about business in the House showed that they knew about it and did it, rather than making the sort of comment that one can make only if one has no knowledge of how business actually works.

Photo of Bill Cash Bill Cash Conservative, Stone

I am delighted that my right hon. Friend has said that. As it happens, for 20 years before I became a Member of this House I was advising many, if not most, of the biggest companies in the UK on the whole question of the impact of legislation. I have also written many articles on the manner in which business, as I mentioned in a speech in 1986, has failed to concentrate on getting the European regulatory system right. That is why I was so cross—as was my right hon. Friend the Member for Wells—when Lord Jones as he now is came as Digby Jones to the European Scrutiny Committee and had the brass neck to say that we were not doing our job properly, when the CBI under his director-generalship had actually made no representations to us at all. My right hon. Friend the Member for Suffolk, Coastal should therefore be more careful about the amount of experience to which he alludes.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Speaking as someone who ran a manufacturing plc, which exported all over the world, including to Europe, I have to say that I recognise the analysis of my hon. Friend, not that of my right hon. Friend Mr. Gummer.

Photo of Bill Cash Bill Cash Conservative, Stone

I am grateful to my hon. Friend, but in a spirit of amity with my right hon. Friend the Member for Suffolk, Coastal, who I find to be a most engaging person, and because he went to church this morning—even though he did not repent—let me say how glad I am to move back to the issue of exclusive competence. If we carried on any further with our current topic of debate, I suspect that the Chairman might well intervene and encourage us to return to the issue of exclusive competence.

As I was saying before I was diverted by my right hon. Friend the Member for Suffolk, Coastal, the Union will grab and maintain new areas of exclusive competence. In particular, the Union will dictate competition rules, misleadingly justified under the functioning of the internal market as an exclusive competence. Currently, article 5 of the treaty on the European Union stresses that in areas that do not fall within its exclusive competence, the Community shall take action in accordance with the principle of subsidiarity

"only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore by reason of the scale or effects of the proposed action, be better achieved by the Community".

That represents a big problem, because it makes certain assumptions. First, it assumes that subsidiarity can be applied, but as I have said in previous debates, I simply do not believe that it ever has been. Secondly, there is the problem that somebody has to judge what is being "better achieved". Indeed, it has not been determined in which areas the Community has exclusive competence, which has inevitably led to legal disputes.

The European Court of Justice has been recognising the exclusive power of the Community within certain areas where it had not previously had competence. Now it has those competences and the new article is a reflection of ECJ practices and existing case law. The European Community common policy approach will take greater precedence than British obligations to third countries and Commonwealth countries, for example. That matter relates to what Colin Burgon said a few moments ago about third countries and Commonwealth countries and the representations of non-governmental organisations. I take a great interest in matters pertaining to aid, as does my right hon. Friend the Member for Suffolk, Coastal and my right hon. Friend Mr. Lilley, who chairs one of our policy groups on international aid. We should take very careful note of the way in which economic partnership agreements are working and of the damage that that is doing. As I was saying, European Community common policy will take greater precedence than British obligations to third countries and Commonwealth countries, and the European Court of Justice has said that we would

"no longer have the right" to maintain existing relations.

That is the seriousness of the situation. The European Court has said, in relation to our obligations to third countries and Commonwealth countries, at the very time when we should expand our interest in the globalised economy—particularly in relation to India and its new-found opportunities, Malaysia, the all-party group on which I chair, and all the other Commonwealth countries with which we have a common heritage—that we will no longer have the right to maintain our existing relations. Control over the customs union, establishing the competition rules necessary for the functioning of the internal market, monetary policy, common commercial policy, the conservation of marine biological resources under the common fisheries policy—all are locked into the Union. On the last of those, the Union will be allowed further to regulate catches or ban fishing in several areas. To conserve stocks, therefore, fishing quotas will be further reduced. Moreover, the Lisbon treaty introduces the Union's exclusive competence to conclude an international agreement when

"its conclusion is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence, or insofar as its conclusion may affect common rules or alter their scope."

Against that background, this is not a game. In relation to the realities of competition, it involves the whole question of the extent to which we are able to succeed as a country. As I said in an intervention on my right hon. Friend the Member for Suffolk, Coastal, I simply do not agree that the whole of the European Union has been a success. As many statistics and figures demonstrate, regrettably, the European Union is dropping down the league. The predictions are that, largely because of over-regulation, the failure of initiatives such as the Lisbon agenda, and the failure of the integration process, by 2020 the EU'S actual GDP will take us even further down the league table. That will affect our constituents. We must therefore spring the trap and start renegotiating the treaties, and get ourselves into a relationship of an association of nation states.

I would strongly recommend to Members a fascinating book that has just come out by Professor Paul Taylor, recently a professor of international relations and director of the European Institute at the London School of Economics. He has written about the failure of the European Union integration process. He gives examples of how the European Union has failed in relation to trade and other matters, and effectively argues that that failure has demonstrated that the Eurosceptic arguments, which have been developed over the past 20 years, have been proved right.

Do I take great satisfaction from that? Twenty years ago, I did make this speech on the Single European Act, and I have not repented of the speech but I have repented of the vote. I take no satisfaction, and never have done, from the failings in the European Community or the European Union. In its origins, it was a good idea. In 1945, people probably would have thought that the European Coal and Steel Community and all the rest of it was the right thing to do. The bottom line, however, is that it has gone in the wrong direction.

For example, on the question of exclusive competence, I would refer to another European Court of Justice case, Commission v. Council, case 22-70, concerning a European agreement on road transport, better known as the ERTA case, in which the ECJ delineated the concept of exclusive competence. It stressed that

"each time the Community, with a view to implementing a common policy envisaged by the Treaty, adopts provisions laying down common rules, whatever form these may take... the Member States no longer have the right, acting individually or even collectively, to undertake obligations with third countries which affect those rules or alter their scope."

This provision in the treaty, with the single personality, will remove from the member states most of their current treaty-making powers in those areas.

The Lisbon treaty has formalised the idea that member states' competences will be limited once the Union has acted. Article 2C includes the internal market as an area of shared competence. My right hon. Friend the Member for Wells and my hon. Friend the Member for Forest of Dean touched on these issues. The article lists as areas of shared competence the internal market; social policy; economic, social and territorial cohesion; agriculture and fisheries; environment; consumer protection; transport; trans-European networks; energy; the area of freedom; security and justice; common safety concerns in public health matters; research; technology development and space; development co-operation; and humanitarian aid. Energy and space are new Union competences. A vast range of activity that should be in the remit of this Parliament and this Government will be handed over to European control.

I believe, in a nutshell, that the European Union as a customs union will continue to prevent us from pursuing an independent trade policy. I believe that the rules establishing the internal market will remain the same and that an uncompetitive Europe will continue, with very serious consequences of the kind illustrated by my hon. Friend the Member for Forest of Dean. The internal-market question is being internalised, and it is not being understood that we live in a global economy in which India, China, Malaysia and other countries are developing just as we developed in the 18th century. We want to work with them in a peaceable fashion.

Free trade is the essence of peace and prosperity, as Cobden and Bright demonstrated in the mid-19th century. This is the key: we should understand that the rules that are being developed—involving the concentration of power, the apex of decision making being taken away from the free markets and the decisions becoming the arid, dry, desiccated decisions of the European Court of Justice—are not the way to go. They will not allow us to secure the flexibility in trade that I know is desired by my right hon. Friend Mr. Cameron. He wants economic competitiveness, and I wholeheartedly support him in that aspiration. That and the sovereignty issue are two of the reasons why I voted for him in the leadership election.

We must put our money where our mouth is. We will only secure that economic competitiveness if we change the basis on which the European Union functions, alter the rules relating to the customs union and the internal market, and return to the EFTA system. That has not yet been mentioned today. We should bring back the European Free Trade Association in a modified form. We need an association of nation states working peaceably together, within a framework that enables us to trade not only among ourselves but throughout the global order, as I said in my speech in April 1986.

My hon. Friend Sir Michael Spicer has just entered the Chamber. In 1996, with great prescience, he wrote a book about all these issues and the necessity to maintain free trade. He and I had such a firm alliance with others during the entire Maastricht proposals, in part because we eschewed the idea of a European Government and we wanted free trade, liberalised markets and to ensure that the internal market did not become protectionist. That is why we fought that battle.

The politics of the treaty of Lisbon, the deceit that lay behind its origins, and the manner in which the mandate was imposed upon the people of this country and other European states in defiance of referendums in France and Holland, demonstrate that the politics has been leading the economics. I believe that democracy and freedom of choice must lead, and that this House represents the democracy of this country through its representatives. The politics of choice in politics must, however, be paralleled by the politics of choice in economics. That is what this debate is really about, and I totally agree with the exceptional speech of my hon. Friend the Member for Forest of Dean, because he identified the real problem that we must face up to in this globalised world.

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee 6:45 pm, 6th February 2008

I am a humanist, not a confessional person, and I must say that because Mr. Cash is a member of my Committee, I feel that I have a duty of care towards him, but I can only stretch to sympathy—I cannot offer him empathy for his speech or for his views on the European Union.

Judging by the Opposition Front-Bench speech, the point of amendment No. 237 is either to allow the United Kingdom to apply protectionist policies because the Opposition are afraid of the Commission carrying out the functions given under sole competence, or to allow the social structure of this country to be ripped apart by a return to the Conservative policies of the 1980s. I remember the damage done by competitive tendering, when there was an unbelievable imbalance fuelled by the fact that local authorities could not compete for services that other local authorities were providing, but only the private sector could compete to take services away from the public sector. It is a good aspect of the treaty that, along with the protocol which I shall mention later, the Commission are given a duty to secure a balance between competitiveness and the destruction of services by unfair competition.

Unfortunately, often when I listen to Conservative Front-Bench Members they seem to have to drag in the negotiations on the Convention and the constitution. This is not the constitution; this is the Lisbon treaty, because many things have moved on in Europe since then. The great debate on the services directive was fought and won to exclude the destruction of public services, particularly the health service, from that directive. The protocol that has been added to the treaty was not in the constitution; those protections were not there. The debate that my right hon. Friend Mr. Hain had in the past reflected a fear of unbridled competition with no protection. It is important that we focus on what we have now, rather than praying in aid past debates and negotiations, because we are in Europe, now and in the future. Unfortunately, Opposition Front-Bench Members often fail to recognise that. I have great respect and affection for Mr. Francois, but he does keep talking about the past rather than the future.

I now turn to amendment No. 195 and the Liberal Democrat amendment (a) to it, tabled by Dr. Cable. The Liberal Democrats are the Janus party—the party of the god with two faces facing in two directions at the same time. The dilemma for the Liberal Democrats is that what we are being shown tonight is the uncaring free-market face, which wants to look towards the more right-wing Conservative voters.

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee

I shall let the hon. Gentleman in when I have finished my analysis, because he has the right to take in what I have to say. He said that we should have had the provision in the original treaties and in the original constitution—undistorted competition. When I asked his opinion about the protocol that has been added on services of general interest, which protects the services that would be damaged by undistorted competition, he could not tell me whether the Liberal Democrats supported it or not. His own opinion would appear to be that he does not. It would appear that he wanted what was contained in the unbridled, and I believe destructive, competition policies contained in the four great freedoms in the past. One of those freedoms must be constrained or people are damaged because they are the users of the services that are destroyed.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I merely observe something about the Labour party. I believe that Colin Burgon, who made his speech about neo-liberalism, was elected in the same general election as Tony Blair, who was elected Prime Minister three times. The idea that the Labour party speaks with one voice on all these matters is absurd.

I believe in free market economics, but of course they should be tempered with social constraints to ensure that we live in a civilised society. Free market economics are an important way of generating wealth, and that is why I am in favour of competition within the European Union.

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee

I remind the hon. Gentleman that he speaks as a member of the Liberal Democrats Front-Bench team. Neither I nor my hon. Friend the Member for Elmet, who spoke from the Labour Back Benches, have ever been on the Front Bench. Perhaps I should try to temper the Liberal Front-Bench team's enthusiasm for the free market with the same social concerns that he expresses today. If I have moved on the hon. Gentleman's thinking and that of his party in the right direction, I am happy, because at least I will have done some good work this evening.

The phrase "a duty of care" springs to mind when I think of Mr. Heathcoat-Amory. When I hear his description of the EU, I am traumatised. If I were to think about his view, I would not sleep well when I go home tonight. I know that he had a distinguished career in the Conservative Front-Bench team. I can only suppose that the Convention was a traumatic experience for him, because he returns again and again to the things that happened. We must talk about what this treaty says and offers, rather than about what happened in the Convention. I do not know whether this is a cathartic experience for him, and for the hon. Member for Stone, but if it rids him of that obsession and removes the worry presented to him by the Convention, I would be pleased for him.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

The hon. Gentleman said that the Convention was a traumatic experience, and indeed it was for everybody, because it totally failed. It failed because it did not stick to its instructions, which were to create a more democratic and simpler Europe, and a Europe closer to its citizens. Instead, it went down the centralising route and it failed at the hands of the French and Dutch electorate. We all ought to be thoroughly ashamed of how that Convention was conducted and of its outcome. I was not traumatised—Europe was.

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee

The right hon. Gentleman laboured the point about regulation. I shall give him a book that I have read called "The Mad Officials". I kept it because it is worth referring to again and again. It was written in the 1990s by a former senior UK civil servant who pointed out that the regulation madness was actually driven by the UK civil service, because it gold-plated everything that came from Europe. That practice made the regulation weigh much more heavily on our firms and on our legal procedures than it did in other parts of Europe.

I have seen that effect at first hand in respect of a big petrochemical refinery and petrochemical plant in my constituency. It was formerly a BP plant, but it is now owned by Ineos. The regulations on the gases coming out of its flares are four times stricter than they were in the European directive, because our Departments decided to quadruple the severity of their application. That happens again and again, and it is not necessarily the fault of the EU, but of the way its regulations are added to the law in this country.

We will be protected from some things if the Commission has sole competence, and some of them have already been mentioned. The new phrase going around Europe is "economic patriotism", but it is protectionism. We introduced liberalisation of domestic energy, but that means that the power needed to switch the lights on in this august place, in No. 10 and in the rest of the Seeboard Energy area comes from EDF. But the French had to be threatened with infraction by the Commission before they would liberalise their markets, and that was after the last day of the last month in the directive to which they had signed up. That is why the Commission needs the power. We should not let countries have shared competence, because they will use economic patriotism and obstruction to block the free market that we argue about every time I go to COSAC.

I will go to Brussels during the recess to argue about energy production and distribution unbundling under the Lisbon agenda. Resistance is now building to the domestic patriotism excuse, but it can be broken down only by giving power to the Commission and not allowing Governments to block it. Our Government will not try to block it very often, but all over Europe other countries will form alliances to try to block the very liberalisation and free market that Conservative Front Benchers say that they want. They can only get it if they give up the power for this country to block changes, so that other countries cannot block changes.

The postal services directive should be due to be introduced in 2009 throughout Europe, but we introduced it a little early in 2006. That has caused us all problems in our constituencies, but it will not lead to the collapse of the Post Office, as was suggested in the general debate by Adam Price. There will be a postal service in the UK, but it should have been able to enter a wider market, using its new slimmed down abilities to win work, in 2009. The general agreement might not come in until 2011, and some countries will not implement it until 2013. That is what happens if the Commission does not have the power to force through the market that we want to work in, as well as live in.

In the international sphere, the Commission will be responsible for driving forward commercial agreements with the Council, in unanimity. There has been much talk about how the EU has slowed up the benefits for other countries, but the World Trade Organisation is driving the liberalised market internationally. It is the WTO that has been threatening other countries' ability to benefit, but the EU has, for example, been defending the African, Caribbean and Pacific countries by giving them time to move out of their lock-in on certain products. Even at a later stage, they need only be 80 per cent. of the way to a completely liberal market, and that will give them some leeway. The European Union and the Commission are doing a good job in that respect.

It is important to talk about what the treaty is about and why the amendments tabled by the Liberal Democrats and by the Conservatives are inappropriate and unnecessary. I have been going to conferences in Europe for some time now and I have been on the European Scrutiny Committee for nine years, with one year as the Chairman. I have regularly attended meetings, often with officials, to see how matters are developing. For all that other Members say that they wish to challenge what happens or how they are interested in the strategy, I am often alone in attending those conferences. There are no other volunteers from this Parliament to go. I know that the one I am going to in a few days is during the recess, and people will be off having a holiday somewhere. It may demonstrate that I am sad, but people do not even want to go when Parliament is sitting. If they did, they could argue their case on the development of the market face to face, across the table with colleagues in the European Union. I commend the Chairman of the Treasury Committee who also often goes alone to argue the case for the UK in those forums.

I turn now to amendment No. 237 and article 3 of the consolidated treaties, which is called article 2B in the amendment. I am not sure what it is that scares those on the Opposition Front Bench. Even when sole competence is given to the EU, it is quite clear that if we say that we do not want article 2B, which is about

"the establishment of the competition rules necessary for the functioning of the internal market", that will be because of the sole competence. Article 2 specifically states:

"The Member States shall exercise their competence again to the extent that the Union has decided to cease exercising its competence."

It also says that member states will be able to do things themselves to carry out the policies that the Commission lays down.

It is as though the Opposition think that the Commission has a blank sheet and can write any law, which will then somehow be enforced. It is not a blank sheet. There are 27 columns that contain the parts of the Union: the 27 Prime Ministers, Chancellors and Foreign Secretaries. They write the script for the Commission, in the main, and the proposals are carried out on their behalf. The Commission can think up and propose ideas; it cannot carry them through without the Council or the European Parliament, if co-decision making applies. It is as though some organisation out there gives us instructions without our participation, which is nonsense.

Article 26 of the consolidated treaties, on the internal market, states in paragraph 3:

"The Council, on a proposal from the Commission, shall determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned."

That is what happens in the creation of an internal market. The Council decides after a proposal from the Commission what should be put into the internal market rule. Let us consider article 22, under title II of the consolidated treaties, which is entitled, "Free movement of goods". It is important that we accept that it says clearly that there should be free movement of goods—and of people. Let me ensure that I make it clear, as I do not want to misquote these wonderful and important articles. Article 28 says that we will provide a customs union—a move that was criticised roundly by the hon. Member for Stone—and that there should be a free movement of goods in that union.

How can anyone say that the EU is a failure, as the hon. Member for Stone did? It is clear that when the barriers to trade in the EU were brought down, many companies came to the UK so that they could trade in the EU. That was certainly the case in my constituency. At one time, Scotland was the source of more televisions and computers for Europe than any other country in the EU. Those were boom years for the Scottish economy, using the free movement of goods title.

Photo of Bill Cash Bill Cash Conservative, Stone 7:00 pm, 6th February 2008

Why does the hon. Gentleman believe that a customs union is necessary in order to be able to trade between different countries, whether in Europe or in the rest of the world? We need free trade throughout the world to enable people to do exactly what he would like; we do not need a customs union or a European Union, with all these exclusive competences, to do so.

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee

If that is the case, why was Scotland a bit of a wasteland for manufacturing under the Conservative Government until we joined the EU? When we joined the EU, Scotland was suddenly part of a larger union with free movement and clear rules about tariff barriers. The treaty contains rules about not only tariff barriers but other technical barriers that tried to stop the free movement. We had the benefits about which I am talking because we moved into the larger free market zone. [ Interruption. ] The hon. Member for Stone can protest from a sedentary position if he likes. He does not like the other parts of the EU, and maybe he does not like parts of the customs union, but it is a fact that his constituents and mine benefited—and continue to benefit—from being part of that larger union.

We had some controversy about service liberalisation, which is dealt with in articles 56 to 61 in chapter 3 of title IV. I would be worried about that too if we did not have the protocol on goods of common interest to which I referred earlier, but we need free markets, without barriers, in goods and services, and in services provided by individuals.

Articles 107 and 108 in chapter 1, section 2 of title VII deal with state aid. They are fundamental to what the Commission will do, and they make very clear what will happen in respect of state aid. Article 107 states:

"Save as otherwise provided in the Treaties, any aid granted by a Member State or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall...be incompatible with the internal market."

Every year. the European Scrutiny Committee sees reports that deal with investigations into state aid—

Photo of Michael Connarty Michael Connarty Chair, European Scrutiny Committee

I see that the hon. Member for Stone has the relevant papers. I shall not read from them, but it is the Commission that will break down the barriers and make sure that, in the absence of joint competence, countries will not get away with subsidising their steel industries or transport networks so that they can undermine people in our jurisdictions.

In the consolidated text, chapter 1 of title VII contains rules on competition. Along with section 2, article 107 of the same title, it is fundamental to what we believe in. My hon. Friend Jon Trickett referred earlier to the rules on competition policy. The text also states that the Council "shall act unanimously", and then lists the areas in which it has unanimity when it comes to controlling the instructions given to the Commission on matters of competition, and especially international competition.

We have a framework for policy making that ensures that the Commission is driven by the interests of all 27 countries, including the UK. To take that away would mean that increasingly we would become a victim of economic patriotism and protectionism. That is why I am happy to support the Government in accepting this element of the treaty.

Photo of Peter Lilley Peter Lilley Conservative, Hitchin and Harpenden

It is always a privilege to follow Michael Connarty, who brings enormous knowledge to these matters. He focused on the way in which the single market works and, unlike the other Labour Members who have spoken, he did not try very hard to portray the amendments as being fundamentally opposed to the single market.

Conservative Members are not fundamentally opposed to the single market. We have always believed in it, and even my hon. Friend Mr. Cash has confessed that he voted for it. I was moved to look up some of the speeches that I made when I was a Minister. When I was still Financial Secretary to the Treasury, I said that Britain had been a most enthusiastic and consistent supporter of the single market, and that we led in implementing the single programme. I added that the philosophy of the single market was very much compatible with Britain's vision of the future of the European Community.

In 1992, I was Secretary of State for Trade and Industry, with responsibility for supervising the introduction of the single market and the response to it. I said that the single market programme had been a success, in part thanks to our enthusiastic and consistent support. I added that we had fought successfully to keep the single market open to the rest of the world rather than building a fortress Europe, and noted that we had seen off proposals to refuse foreign banks licences in Europe if they did not reciprocate to European banks. I also said that we had argued successfully against giving favours to certain firms as Euro champions.

We were somewhat over-optimistic in those days. The European Commission's Cecchini report forecast that the single market alone would add a minimum of 4 per cent. and a maximum of 7 per cent. to Europe's gross domestic product. I looked on the internet for reviews of how the Cecchini report had worked in practice. Reviews showed that there was no sign of any impact on the growth rate across Europe, and certainly no sign of growth of the magnitude forecast in the report.

I do not say that the single market has been a failure. It has not been as successful as we hoped, but it has made a contribution. However, we must ask why it did not make as much of a contribution as the European Community, the European Commission and optimists such as I hoped it would. That bears heavily on the amendments before us. There are a number of answers to the question. First, the single market was over-hyped. That is fair enough; people always over-hype things, and I think that we can forgive that, in retrospect. Secondly, sadly, we did not foresee the over-regulation of the single market. Far from being a purely deregulatory removal of barriers and borders between countries, it became a mechanism through which the European Commission could regulate, harmonise and introduce new burdens on business. That has offset many of the gains that we hoped would result from the removal of barriers to business.

Thirdly, we overstated the size and scale of barriers to business between countries. The barriers had already been removed through the general agreement on tariffs and trade and successive trade reforms, so there was not much gain to be made. I can demonstrate that by referring to a speech that I did not give. When I was Secretary of State for Trade and Industry, I planned to give a speech emphasising the benefits that British companies had gained from the introduction of the single market. I asked my officials for specific examples of what British companies were doing as a result of the introduction of the single market that they had not been able to do previously.

My officials came up with lots of examples of things that British companies were doing that they had not done previously, but on inspection it was found that the companies could have done them earlier. It was not the single market programme that had opened up the possibility of doing those things. I said, "Well, let's get lots of businesses in and ask them, so that I'll have examples to put in this speech." We asked businesses from the service industries, where we hoped the greatest gains would be made, the privatised utilities and other sectors. I am afraid that none of them was able to give a single example of anything that they were doing that they had not been able to do before. However, lots of them were doing things that they had not done before, so the psychological impact of the single market was wholly beneficial. It gave British companies the aspiration and the vision to see that there were opportunities on the continent that they could take, but the actual measures were not as beneficial as we hoped.

It would be sad if the single market had taken people's eyes off the other markets in the world that offered greater opportunities. As my hon. Friend the Member for Stone said, one of the sad things about today's debate is how few, if any, references there have been—apart from those made by Mr. Harper—to India and China, the really big markets on which our industries ought to focus, as they are fast-growing and offer enormous opportunities.

It has been suggested that if the amendment is made, it will have no effect. It is claimed that if we persist with it until the bitter end, it will lead to us not ratifying the Lisbon treaty; the treaty will therefore fall, and we will gain nothing. However, the impact of making and persisting with the amendment, thereby not ratifying the Lisbon treaty, would be much the same as the impact made by the French and Dutch people's rejection of the constitution. They won major changes. I know that they are major, because the Government say that there are major differences between the constitution and the treaty. Funnily enough, they have resulted in major improvements for Britain, although the Dutch and the French wanted to make changes that take us in the opposite direction to that which we tend to want to take. Or are the Government saying that negligible gains resulted from the rejection of the constitution, and that we would therefore get negligible gains and improvements if we sent our negotiators back to gain improvements?

The Government cannot have it both ways. They cannot say that when the Dutch and the French were given a referendum and rejected the original constitution they secured major improvements, but that if we, through the House passing amendments to the Bill, were to cause the Lisbon treaty not to be ratified, we would not in the subsequent renegotiations be able to get significant improvements to the single market and other aspects of the Bill.

I hope the House will take seriously the amendments tabled by my hon. Friends and the amendment tabled by my right hon. Friend Mr. Heathcoat-Amory, and that it will have no compunction about passing them, amending the Bill and amending the treaty. That can only lead to an improvement in what is still the European constitution implemented by other means, and it would be our duty and, above all, the duty of Government Members, who promised a referendum. If there is to be no referendum, the very least they can do is amend and send the treaty back for renegotiation.

Photo of Jon Trickett Jon Trickett Labour, Hemsworth 7:15 pm, 6th February 2008

I understand that we are operating under time constraints. I shall speak to amendment No. 223 in my name, which refers to our earlier debate on health.

The House may well have listened with respect when my right hon. Friend Frank Dobson, who used to be Secretary of State for Health, spoke about the potential effects of the health directive that was published in draft form in December last year. My right hon. Friend described the effects on the NHS as extremely damaging because the directive envisages the possibility that the single market will extend into health provision across the whole of the Union, including the United Kingdom, thereby allowing citizens to cross boundaries.

Following the Watt decision in the European Court of Justice, the directive envisages that citizens of one country travelling in the jurisdiction of another may seek health care and bill back to their home country the cost of that care, whether or not their GP considered such health care urgent and necessary. The dangers of such a policy are immediately clear and I do not need to spell them out. The draft directive causes great concern. I tabled the amendment to probe the Government's position, not necessarily to press the amendment to a Division.

There seem to be two competing principles at stake. I accept that the Lisbon treaty makes it clear, as have previous legal provisions, that health is a matter reserved to the home country. In some ways that is clearer in the Lisbon treaty than it was previously. However, there are other references in the Lisbon treaty that appear to give a certain degree of competence to the Commission in relation to health matters.

The problem is that when the European Court is making decisions, as I remarked yesterday on another matter, it is asked to balance a number of competing principles. One of those principles is the one that we have been discussing all day—the internal market. Whenever goods or services are tradeable, as health now seems to be in the United Kingdom—lamentably, a market in the provision of health care is being created in the United Kingdom—they become subject to the principles of the internal market directorate. There are therefore two competing principles: the principle that health should be reserved to the national Government, and the principle of the internal market. Those two principles conflict.

Then there is the intervention of the terrible twins—the European Court of Justice and the Commission. The trade commissioners include the former right hon. Member for Hartlepool, whom we know well. We have seen the process operate in a number of ways. First, as we discussed yesterday, the ECJ has applied the principle of the internal market above other principles. The beginning of a wedge is driven into the legal provision governing how the EU operates; the wedge is then driven further by the commissioners, particularly those responsible for the internal market.

In the Watt case, a UK citizen received medical treatment abroad without having consulted her GP. The treatment was delivered and paid for; the individual must have had access to resources. She sought repayment from the NHS. The ECJ looked carefully into the matter and concluded that because health has become a tradeable service, the principles of the internal market must apply to it. That is the substance of the Watt judgment.

The commissioners dealing with the internal market then said that notwithstanding the fact that health is a supposedly reserved matter for each home Government, the court had indeed ruled that the principles of the internal market must apply. A draft directive, published in December last year, was quickly withdrawn when it was realised that it might be contentious and could cause problems for the ratification of the treaty in the UK Parliament and others. Nevertheless, we have had sight of the draft directive, which extends the principles of the free market and marketisation to health.

The principles of the NHS are that treatment should go first to those with the greatest need and that it should be free at the point of service. We have certainly rejected the principle of co-payment—that the patient should pay something, as well as the health service.

Photo of Jon Trickett Jon Trickett Labour, Hemsworth

I will, but only briefly, as the Whips are asking me to sit down sharply.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

This is important. The hon. Gentleman's precise concerns about single market powers being used to interfere in health provision were spotted in the drafting of the constitution by working group 5, on which I sat. However, its recommendations to amend the single market powers to take account of those concerns were overridden and ignored in the final document. In a sense, the hon. Gentleman is too late unless he votes for the amendment to overturn that aspect of the treaty, in which case there could be a rethink along the lines proposed. Is he prepared to do that?

Photo of Jon Trickett Jon Trickett Labour, Hemsworth

That intervention was slightly odd, as I have tabled precisely such an amendment; I am speaking to amendment No. 223. It says that for the avoidance of doubt—to use a Government expression on another matter—health will not be subject to the internal market provisions.

I was referring to the Commission's draft directive, which clearly extends the principle of open competition and marketisation to the health service. Perhaps the Opposition parties are perfectly comfortable with such a proposal, but it cannot be right and I cannot believe that they would support the idea that such a change should be imposed on the United Kingdom's national health service through an ECJ ruling, which I think inappropriate, and its reinforcement by the Commission. If the NHS were to distribute its services differently, that would normally be the subject of a debate during a general election. The people would decide whether to vote for a party, such as the Conservative party, that proposed such a system, or for one such as ours that rebutted it. I would have thought that Members on both sides of the House agreed that to subvert the NHS's founding principles in this way was an undemocratic and inappropriate way to change health service provision.

I want to draw to the attention of the House the Commission's response to the objections that were expressed in an early-day motion that I tabled some time ago. I do not have time to read out the whole text, but the Commission says that some stakeholders have raised concerns about the potential of cross-border health care to alter the overall choices of member states with regard to the mechanisms of control of access to health care. It goes on to say that, be that as it may, it may not be a bad thing if competition is introduced, because that may lead to the shortening of waiting lists, the increase of choice for patients and a shift from systems of distributions of health care such as the one in the NHS which is free at the point of delivery, to mechanisms involving such things as co-payments.

Co-payments were clearly rejected at the general election. They will no doubt be the subject of debate in future, but I hardly think it appropriate for the Commission—an unelected body—to echo the voices of the marketisers in the ECJ by saying that the UK's health care is inappropriately distributed and that the mechanisms by which it is introduced should therefore be subject to change by what I regard as the inappropriate use of internal market principles, which have a generic application, rather than by the application of the principle that the United Kingdom Parliament should decide these matters. The way in which our health services should be distributed is a reserved matter.

That is the burden of my case. It is important for Labour voices to speak up for our national health service, and to say that it is something that we created and that we are proud of. We will fight for the principle that the distribution of health care should be done according to the principles of the forefathers and foremothers of the health service. Beyond that, however, there are major questions to be asked about the way in which the European Union is determining policy. If all the nations have agreed that health should be a reserved matter, it cannot possibly be right to adopt a policy of driving a wedge in so that the ECJ can apply other principles to that reserved matter and gain competence in that area, or for the Commission to say, "Well, the ECJ has established a principle, and we intend to build on it." Yet that is precisely what is happening.

The purpose of my amendment is to allow us to have this debate tonight and to listen carefully to what the Minister says. I have to say that his earlier response was not entirely satisfactory, although he did go some way towards giving us some reassurance. I shall listen to any comments that he makes when he winds up the debate. I want to say to him, with all due respect, that, unless we are given clear assurances that the Commission will not be allowed to delve into health in this way, I shall seek to table an amendment at a future stage in the Bill's proceedings, particularly on the health service.

Photo of Richard Shepherd Richard Shepherd Conservative, Aldridge-Brownhills 7:30 pm, 6th February 2008

I was grateful for that intervention by Jon Trickett, and I want to refer quickly to what Colin Burgon said about accountability. The whole construct is not about accountability in any sense that this House, this country, this electorate or this people understand. No Minister will be responsible for the consequences of all these policies, including the health policy, in front of an electorate. That is what underlies this matter. We should therefore vote to ensure that this treaty is renegotiated. Some amendment has to be made to ensure that that happens; if not, there has to be a referendum.

The savagery of this guillotine is denying the House the opportunity properly to consider propositions such as the treaty's impact on the national health service. Although I may not entirely agree with the conclusions of the hon. Member for Hemsworth, I agree with the principle that someone in this House must be accountable to the people who vote us here.

Let me turn to what my hon. Friend Mr. Cash had to say between the pancakes of yesterday and the ashes of today. He recanted, in a curious way, on the single market. Twenty years ago, the great idea was that we had to have a single market. Mrs. Thatcher believed that this would open up Europe. The distinction, of course, is between a common market and a single market. I want very rapidly, in light of the time constraints and the fact that the Minister for Europe wants yet again to reprise the same arguments that we have heard for the past few days, to show wherein lies the more dynamic model. The United States, for all its sins and everything else, is a common market. The vitality of the American economy has outshone that of the European economy over the past 20 years, and it is still an enormous engine for growth. The competition between those accountable units of government enables the dynamic of capitalism, if that is what one believes in, to flourish.

We have been told that £450 billion of regulatory costs now rain down upon this structure. At the heart of all these arguments lies this question: who is accountable? We have a constitutional arrangement that means that the people of this country are sovereign in terms of the activities of this House. Within the amendment tabled by my hon. Friends, and within this group of amendments, lies the opportunity to give this Government a message about the treaty that they negotiated, despite the history. Unfortunately, the Chairman of the European Scrutiny Committee castigated my right hon. Friend Mr. Heathcoat-Amory for remembering the past, but we should remember Cicero, who said that those who know nothing of the past will for ever remain a child. In a sense, this great parliamentary Chamber has collective amnesia as regards remembering to whom we are accountable and who should form our laws. A common market beats, every day, a single market as constructed by the Commission and this treaty arrangement.

Photo of Jim Murphy Jim Murphy Minister of State (Europe)

I am delighted to have the opportunity to respond to this evening's debate on the amendments. I remind the House collectively that the structure of the debate, and in fact this afternoon's debate, is not the structure initially proposed by the Government in their business motion but that proposed by Opposition Front Benchers in their amendment—three hours followed by three hours.

Photo of Mark Francois Mark Francois Shadow Minister (Europe)

Let me nail this one now. In their amendment to the motion, the Opposition proposed 18 days of debate, and the Government turned that down. The Minister should not blame us for his bad motion.

Photo of Jim Murphy Jim Murphy Minister of State (Europe)

There are four Conservative Back Benchers here at the moment. The hon. Gentleman's amendment to the business motion suggested one day on this issue, divided into two parts of three hours each, which is exactly what we have had today, so we are following his recommendation.

Photo of Richard Shepherd Richard Shepherd Conservative, Aldridge-Brownhills

This is entirely nonsensical—the fancy dance before the guillotining of a constitutional motion. This debate could have had an open theme, and we would have been able to discuss the issues. Look at the home affairs debate, look at today's debate—huge rafts of matters have been unable to be discussed properly and functionally. The line that the Minister is taking is to say that the repression of the House of Commons is in the best interests of the House of Commons.

The First Deputy Chairman:

Order. We are now getting on to the mechanics rather than the substance of the debate.

Photo of Jim Murphy Jim Murphy Minister of State (Europe)

The only point I was making was that the framework for today's debate has been the one set out by Opposition Front Benchers.

On the amendments that were proposed and discussed during the past three hours or so, the debate started with Mr. Browne making his debut in our proceedings. He is a leading Liberal Democrat orange booker—or the leading orange booker. I did not know that before he rose to speak, but the House was in no doubt about it by the end of his contribution. He is a leading ideologue in the Lib Dem party on such matters. Despite that, his speech was very well informed and on occasion, where appropriate, it was remarkably self-deprecating—something that we do not hear often enough in his House.

We also heard from my hon. Friends the Members for Crawley (Laura Moffatt), for Hemsworth (Jon Trickett) and for Wolverhampton, South-West (Rob Marris). On several occasions, my hon. Friend the Member for Crawley talked about the crucial need for stability in Europe and businesses in what she described as the Gatwick diamond—I have no idea where that is— [ Laughter. ] It sounds very expensive. She talked about fact that the stability that businesses in her constituency relish is offered by the European Union.

We also heard an authoritative speech from my hon. Friend Michael Connarty. Publicly—on television, in this House and in Select Committee hearings—we have not always seen eye to eye. We have disagreed on occasion, but the whole House respects the dogged and determined way in which he carries out his job as the Chair of the European Scrutiny Committee.

Mr. Cash is now in his place, so it is appropriate to mention him. He has made his contribution on this Ash Wednesday. Unfortunately, but understandably, I had to miss mass today in order to listen to the hon. Gentleman. I have not yet decided what to give up for Lent— [ Laughter. ] Thus far, my life, because it has been lived this Chamber. The hon. Gentleman repented, on this of all days, his previous votes. I was counting: he denied himself three times during his speech. I wish to congratulate him and Mr. Lilley on what, in my 11 years in Parliament, is a first—a parliamentary innovation. It is the first time I have ever heard hon. Members quote as an authoritative source in the debate none other than themselves, from their previous speeches.

Photo of Bill Cash Bill Cash Conservative, Stone

In the same spirit, the Minister cannot blame us for quoting predictions we made in those days if, as far as we are concerned, they appear to have turned out to be right.

Photo of Jim Murphy Jim Murphy Minister of State (Europe)

I cannot blame the hon. Gentleman. I missed his speech the first, second, third, fourth and fifth time that he gave it, so I was delighted to hear a reprise of it this evening.

We also had an uncharacteristic contribution from Mr. Heathcoat-Amory. He is not here now, so perhaps I shall refer to it later. In passing, I shall just say that he had all the passion of a convert in paying penance for his role in almost single-handedly achieving parliamentary ratification of the Maastricht treaty while deputy Chief Whip. If he returns to his place later, I shall respond to him in more detail, if time allows.

The first group of amendments represents a systematic attempt by those on the Conservative Benches to undermine, in specific ways, the basic foundations of the single market—foundations that have been accepted by successive British Governments since the UK's accession. Amendment No. 237 is a good illustration of that point. The right hon. Member for Wells celebrated the fact that every market needs rules, which of course, it does. However, that amendment would remove the principle of exclusive EU competence over competition rules for the single market.

As the House will be aware, EU competition rules are an exclusive competence. How could they be otherwise? The Lisbon treaty defines competition rules as rules that are

"necessary for the functioning of the internal market".

In other words, they are EU-wide rules. By definition, only the EU can adopt rules that apply across the EU. That is not new. Competition rules that are necessary for the functioning of the single market have always been an exclusive EU competence. It is important to note that the EU already occupies that well-established competition ground. The core competition rules are contained in articles 81 to 89 of the current treaty and their effect is carried over unchanged.

Amendment No. 232 attacks the recognition in the Lisbon treaty of the fact that the single market is a shared competence between member states and the EU. It would remove the UK from the operation of the single market, which cannot work except as a shared competence. For the single market to operate effectively throughout all 27 EU member states, it is essential to manage some activities at EU level. Thanks to the shared competence, barriers have been removed throughout the single market, making free movement of goods a reality. That has brought billions of pounds of additional income to UK citizens.

Amendment No. 195 would prevent the UK from effecting the protocol on the internal market and competition. It attacks the legally binding protocol language that the UK secured to reproduce the competition wording from the current treaty, which guarantees that the legal effect is unchanged. The legal nature of a protocol has been the subject of much conversation before today, as well as in today's proceedings. However, 17 protocols were annexed to the treaty of Maastricht. Protocol 11 was a legal guarantee that the UK was not obliged or committed to move to the third stage of economic and monetary union. That was arguably the most important item in the Maastricht treaty for the UK. Claiming that protocols matter less than treaties is therefore nonsense.

The Lisbon treaty states:

"The Protocols and Annexes to this Treaty shall form an integral part thereof."

Former Prime Minister John Major said that the protocols agreed at Maastricht would become an integral part of the treaty of Rome and have equal legal force.

Photo of Bill Cash Bill Cash Conservative, Stone 7:45 pm, 6th February 2008

We are obliged under the protocol to which the Minister refers to comply with convergence criteria and a range of other matters, which are mentioned in the Red Book that the Chancellor produces every year, and are inimical to this country running its economy. The protocol creates a framework, which, unfortunately, does us no good whatever.

Photo of Jim Murphy Jim Murphy Minister of State (Europe)

The hon. Gentleman makes a case for the effectiveness of the protocol, not the opposite.

The majority of Conservative Back Benchers who attended this afternoon's debate are members of the Law Society. The Law Society has made it clear that a protocol records that the EU's internal market includes a system that ensures that competition is undistorted. It also says that that does not change the current legal position. Those views were expressed not by some foreign unaccountable entity, about which Conservative Members have spoken, but by the Law Society of England and Wales.

Conservative Members have launched regular tirades against President Sarkozy. Yet he has occasionally described the Lisbon treaty as the British treaty, because the changes that we put in place are so important.

Amendments Nos. 224, 231 and 235 would exclude the provisions in the Lisbon treaty that define a competence on common commercial policy from having an effect in UK law. The EU has had exclusive competence over common commercial policy since the treaty of Rome, and that has brought great benefits to the UK.

Four amendments seek to remove articles and declarations that relate to the reunification of Germany. No Opposition Member saw fit to speak about them, but the Opposition nevertheless tabled them. They are of limited benefit and have consequences only for Germany.

Photo of Jim Murphy Jim Murphy Minister of State (Europe)

Unfortunately, I have only two minutes left and I wish to conclude.

The fact is that those amendments have consequence only in respect of Germany and German reunification, although I have no idea whether the Opposition have discussed in detail with their friend Angela Merkel whether she would wish the House of Commons to alter the treaty as it applies to Germany alone.

In the limited time that I have left, let me deal with the points that my hon. Friends raised. They raised specific points about the role of the article 133 committee, which has existed since the treaty of Rome. The committee is not a conspiracy at the heart of the European Union, but my hon. Friend Colin Burgon raised some important points about European trade policy and the way trade negotiations are conducted. Decisions are ultimately taken not by the committee but by the Council of Ministers. However, my hon. Friend's point is important: we have to have more detailed discussion, and on occasion perhaps even scrutiny of the workings of that committee or other relevant committees, undertaken by this House and the European Parliament in particular, which has an increased role.

My hon. Friends also raised the issue of health, but were fair enough to acknowledge that the consolidated text makes the matter absolutely clear:

"Union action, which shall complement national policies, shall be directed towards improving public health".

Public health was the important point in that text. The consolidated treaty continues:

"Union action shall respect the responsibilities of...Member States for the definition of their health policy and for the organisation and delivery of health services and medical care. The responsibilities of the Member States shall include the management of health services and medical care and the allocation of the resources assigned to them."

Photo of Jon Trickett Jon Trickett Labour, Hemsworth

Will my hon. Friend therefore agree to veto any Commission directive of the kind that we have seen, should it re-emerge?

Photo of Jim Murphy Jim Murphy Minister of State (Europe)

There is currently no proposal on the table, but we will look at the detail of any Commission proposal, and that issue will rightly be discussed in the House. I cannot be invited to veto a proposal that does not yet exist, but the text in the Lisbon treaty is very clear and strengthens the language about the autonomy and authority of member states in respect of their health services.

Mr. Francois rightly wants to respond, so to conclude, the amendments in the group would remove the protocol on competition and the provisions on self-employment, EU trade policy and intellectual property, the removal of which, in turn and cumulatively, would undermine the provisions of the single market. I invite my hon. Friends to oppose the amendment.

Photo of Mark Francois Mark Francois Shadow Minister (Europe)

Following your instructions, Mrs. Heal, we will not reprise the debate about the business motion, but I cannot help but observe that yet again, three groups of amendments have not been touched at all. We therefore did not get a chance to discuss social policies, intellectual property, or economic and monetary policy. Again, this is not the line-by-line scrutiny that the Prime Minister promised the House.

The Government have prayed in aid some businesses in defence of their position. I remind the Minister that the Institute of Directors pointed out the strong similarities between the EU constitution and the treaty of Lisbon, and that 90 per cent. of members of the Federation of Small Businesses, which was polled internally because of concerns about the business implications of the treaty, said that they wanted to have a referendum. I put that to all on the Government Benches and to the Liberal Democrats.

The Chairman of the European Scrutiny Committee, who was polite to me, said that we needed the changes in the treaty to promote the single market, but he made a mistake. He said that the Commission had undertaken infraction proceedings against a French utility to break up a monopoly. He is right, but the Commission is doing so under the existing treaty base, so Lisbon is not necessary for that. I need to correct the hon. Gentleman on that.

The Chairman of the Scrutiny Committee also accused me of dwelling in the past, because we have an irritating habit of reading all the Government's failed amendments in the constitution negotiations. We shall continue to do that, so that the British people understand the extent of the volte-face that has been carried out. Indeed, the Government's position this evening has been to criticise us for having the temerity to table an amendment very similar to one that they attempted to press some years ago, but failed. It is rather rich of them to criticise us for trying to put right what they did wrong.

Amendment No. 237 would prevent the Commission from having exclusive competence in the area that we have debated tonight, so that if this House needed to legislate to maintain areas of competition, it could still do so. That seems to me eminently sensible, not least because the Government failed to do it. That is why I shall press the amendment to the vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 135, Noes 336.

Division number 76 Lisbon Treaty — Prevent competition rules from becoming an exclusive policy area of the European Union — rejected

Aye: 135 MPs

No: 336 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 171 MPs

Absents: A-Z by last name

Question accordingly negatived .

To report progress and ask leave to sit again.— [Mr. Blizzard.]

Committee report progress; to sit again tomorrow.