New Clause 1 — Impact of the European Stability Mechanism on the UK

Part of European Union (Approval of Treaty Amendment Decision) Bill [Lords] – in the House of Commons at 7:00 pm on 10 September 2012.

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Photo of David Lidington David Lidington The Minister for Europe 7:00, 10 September 2012

New clause 1 would require the Government to report annually to Parliament on the impact of the ESM on the UK economy. As the Committee will no doubt be aware by now, the Chancellor already reports regularly to Parliament on Britain’s economic performance through the Budget and the autumn statement. In addition, the Government regularly publish details on our financial relationships with the International Monetary Fund and the European Union and on our bilateral loan to Ireland. As my hon. Friend Jacob Rees-Mogg so brilliantly pointed out, placing an additional reporting burden on the UK Government in respect of information that will largely be in the public domain has no apparent gains and serves no purpose.

The other new clause proposes that the Government report on the impact of the ESM on the economic performance of the EU. I hope that Members would agree that it would not be appropriate for the UK to produce reports on the economic policy and performance of our European neighbours. I can guess what the reaction would be in this place if we were to hear about a debate in the Bundestag or the Greek Parliament about the economic policy of the UK; I can envisage the angry points of order, the protests to Mr Speaker, the early-day motions and the requests to invoke Standing Order No. 20.

The new clause is not needed. The Chancellor has regularly updated the House throughout this crisis, including on developments in the euro-area assistance programmes and on negotiations over the ESM. Furthermore, the Opposition have overlooked the fact that the Commission already annually produces a report on the borrowing and lending activities of the EU, including under the different financial assistance mechanisms. The Government, under the normal scrutiny system, produce an explanatory memorandum for Parliament that summarises the report. That is sent to the European Scrutiny Committee, which, as with any such memorandum, has the option to refer the report for debate. It is also within the remit of the Treasury Committee to launch an inquiry into it, or for the Backbench Business Committee to schedule a debate.

These new clauses would create an unnecessary and burdensome obligation, with no clear benefit. As my hon. Friend Martin Horwood said, they would merely serve to tie up civil service resources in order to report on a mechanism that the UK is not even a part of, and has no intention whatever of joining.

An analogy with the Schengen agreement can be drawn. We are not a part of that, and the Government do not publish an annual report on it to Parliament. Of course, however, Home Office and Justice Ministers will answer questions and hold themselves to account if there are any important developments in that agreement that affect this country. In the event of there being any justice and home affairs measures into which the UK Government might choose to opt, the normal scrutiny system would apply, with the possibility of debates being held either in the ESC or on the Floor of the House.

The Bill is concerned only with approval of the decision amending article 136 of the treaty on the functioning of the European Union, and not with the ESM. These new clauses are therefore wide of the mark. In fact, the only reason I can conceive of as to why Parliament might wish to accept such a reporting requirement is if we were planning to be part of the ESM, which, of course, would in turn mean we were planning to be part of the euro. The logic of the Opposition new clauses is that they still have in mind that prospect for this country.

Of course, as we know, the weasel words have already been employed. In this Bill’s Second Reading a week ago, the shadow Foreign Secretary, Mr Alexander, was challenged as to the prospect of the UK entering the euro, and he said there was no immediate prospect of that happening. We know, too, that when the Leader of the Opposition was pressed on this same matter, he said that whether or not the United Kingdom were to join the euro would be a matter of how long he were to remain as Prime Minister.

Not only did we hear from my hon. Friend the Member for North East Somerset a clear and devastating exposition of why the Opposition new clauses are completely otiose, but we can see in the Opposition’s decision to bring such new clauses before the Committee this evening some hint of the policy yearning which dare not speak its name: they still cherish that lingering dream of taking this country into the euro one day. The Committee should have nothing whatever to do with these new clauses, and we should reject them.