My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The LORD SPEAKER in the Chair.]

Clause 2 [Addition to list of treaties]:

moved Amendment No. 25:

Clause 2, page 1, line 12, after "excluding" insert—

"(i) Article 1, paragraph 50, inserted Article 28E TEU, relating to permanent structured co-operation in defence; and(ii) "

The purpose of Amendment No. 25 is to remove from the treaty the framework now named,

"Permanent Structured Co-operation in Defence", rather than "enhanced co-operation". This is a probing amendment to generate debate. We do not believe the Government should ever have accepted this provision. Indeed, back in 2003 Peter Hain said:

"The UK has made it clear that it cannot accept the proposed ESDP reinforced co-operation provisions".

But at the negotiating table the Government caved into European pressure and gave way. These Benches entirely agree with their original stance. This is perhaps the most dangerous of the treaty provisions relating to European defence. It takes us further down the road towards the point where a single European defence is used to excuse the evasion of serious national defence capabilities.

The Explanatory Notes published with this Bill state, as the twelfth of twelve points within Note 5, that the principal changes made by the treaty of Lisbon include:

"Revised procedures for 'enhanced co-operation', under which fewer than all the Member States may be authorised to exercise EU competences through the EU Institutions. At least 9 Member States must participate initially and other Member States may participate following the initial authorisation".

We do not object to defence co-operation between the nations of Europe. Indeed, we welcome it and we would wish to encourage it. For such co-operation between one nation and one or more others to be enhanced would be a move in the right direction, but why do nine nations have to get together? Why does their co-operation have to be organised through Brussels? Why should they be exercising EU competencies?

The provision as it now stands points towards an inner core of countries capable and willing to participate fully in an integrated European defence. Other member states that choose not to join will be able thereby to opt out. They will thus be able to take a minimal role, both in self defence and in collective defence. That is how it works out and NATO's overall defence capability will not be improved as it needs to be. That capability will be damaged as some—perhaps the smaller countries—exclude themselves from such co-operation and decide to take no further part in either European defence integration, or more worryingly, NATO. They will be able to meet minimal EU military commitments, shifting the burden of fulfilling meaningful NATO expectations on to the larger EU members such as France, Germany, and of course, the UK.

Outside these three countries, EU countries spent an average of 1.7 per cent of GDP on defence in 2006. If permanent structured co-operation goes ahead there will be even less incentive for these countries to increase their military capabilities than is currently the case. NATO already suffers from a lack of military capability among its smaller members. This provision will make this worse. The treaty provides no reassurance as to how the PSC will operate. As with so much else, nothing has yet been finalised. Everything is to be decided after ratification. We have no idea of how many troops or how much money will be committed. Will the Minister tell the House what discussions have been had with other likely participants as to their plans for PSC? What other countries have stated their intention to join?

We fear that the Government are committing this country to sign up to an undefined commitment that will have no benefit for NATO's capability but which will needlessly drain our military capability, already under the most enormous pressure. When the Minister comes to reply to this amendment, the Committee—and indeed the country at large—would welcome a reasoned statement of HMG's precise intention in this respect. I beg to move.

I am sorry that the noble Lord, Lord Astor, takes such a negative view of permanent structured co-operation. The provision for permanent structured co-operation between a smaller group of member states is laid down in Article 28A(6), which allows greater co-operation in the area of capabilities. Article 28A(7) establishes a clause for mutual defence but without a security commitment along the lines of NATO's Article V.155. The provision for mutual defence is limited under Article 27(7) to,

"the obligation of aid and assistance, by all means in their"— member states'—

"power, in accordance with Article 51 of the United Nations Charter. This shall not prejudice the specific character of the security and defence policy of certain Member States".

Article 28E together with Article 28A(6) sets out the arrangements whereby member states can engage in permanent structured co-operation in defence matters.

The criteria and capability commitments for doing so are set out in the protocol on permanent structured co-operation. Article 1(b) of that protocol states that participating member states should have the capacity to supply by 2010 at the latest, either at national level or as a component of multinational force groups, combat units and supporting elements, including transport and logistics. Those would be capable of deployment within five to 30 days, in particular in response to requests from the UN. They would be sustained for an initial period of 30 days and extended up to a period of 120 days.

The protocol also sets out provisions in the area of capability harmonisation, the pooling of assets, co-operation in training and logistics, regular assessments of national defence expenditure and the development of flexibility, interoperability and deployability among forces. The possible review of national decision-making procedures with regard to the deployment of forces is also emphasised.

Jean-Yves Haine, of the Institute for Security Studies, commented on permanent structured co-operation when it was introduced in the constitution:

"The real novelty lies in the encouragement to co-ordinate the identification of military needs, to specialise national defence and to pool capabilities ... If implemented, permanent structured co-operation could offer a precious framework in which to change the dynamics of European defence".

That is why we on these Benches support permanent structured co-operation.

We had an excellent debate on defence issues during our previous Committee day. Amendment No. 25 relates to the provision on permanent structured co-operation.

Our discussion last week highlighted that capability development remains at the heart of being able to address effectively the security challenges facing us. As my noble friend Lord Robertson reminded us in his graphic phrase, we cannot send a wiring diagram to a crisis. Permanent structured co-operation is a new mechanism that is designed to address precisely that need, and it is focused solely on military capability development, as set out in the treaty article that has been referred to and the accompanying protocol. I underline that it is not about a smaller inner grouping undertaking operations. There do not have to be nine member states involved in PSC.

Improving the military capabilities of EU partners—this is cross-party—is a key UK objective. Improved military capabilities, whether it is having more deployable and flexible forces or new equipment needed for modern operations, will produce more equitable European burden-sharing and make interventions more effective. The mechanism of permanent structured co-operation is designed to take advantage of the ability to generate political leverage in the EU. Member states are more likely to sign up to developing further their capabilities if the alternative is being left out in the cold and left out of an EU grouping.

As one of the foremost capability players in the EU, we would expect to see the UK playing a key role in establishing and leading permanent structured co-operation. This provision is a good example of a pragmatic, UK-inspired initiative that is focused on producing practical improvements on the ground. There is danger of confusion between enhanced co-operation and PSC. They are separate mechanisms. The main difference is that PSC is confined to military capability development, and it has nothing whatever to do with some inner group co-operating on defence issues, whether those issue be common defence or anything like it. I think the noble Lord, Lord Lee, was making that point.

As has often been said, there is but a single set of forces in Europe. Investments to European military capabilities benefit not only ESDP but NATO. The EU-NATO capability group will provide a mechanism to ensure that capability improvements leveraged through permanent structured co-operation are compatible with capability development in NATO.

Permanent structured co-operation involves some QMV decision-making: to establish permanent structured co-operation; to confirm participation of a member state that subsequently wishes to participate; and to suspend participation of a member state. This is in line with our objective to make PSC easier to set up and easier for member states to join—and to make it easier, frankly, to suspend member states that do not perform and do what they have signed up to do. All other decisions will be taken by participating members by unanimity.

The noble Lord, Lord Astor, asked what discussions we had had with other countries. Until the treaty is ratified, we will not engage with partners in detailed discussions on how to implement the provision, but we expect to do so once the treaty is ratified.

The European Union Select Committee considered carefully the PSC provisions in the treaty in its deliberations and in its unanimous report. It is worth quoting—not at too great a length—the conclusions on page 202 of its much praised report. The committee said:

"Permanent Structured Cooperation is a form of enabling framework allowing the Member States who so wish to co-operate more closely in the area of defence capabilities development".

The committee went on:

"Permanent Structured Cooperation is not a major departure from current practice. Rather, it represents a continuation and deepening of current forms of co-operation. Its objective is to create a political dynamic among Member States towards the improvement of European defence capabilities. Most of these new capabilities should be available to both NATO and the EU and could therefore serve to strengthen both organisations".

The committee concluded that,

"the new Treaties will provide that 'national security remains the sole responsibility of each Member State'".

That, I know, is one of the great concerns of the House.

In putting forward the case for PSC, I can justifiably claim the almost complete support of our EU Committee.

I am sorry that the noble Lord, Lord Lee of Trafford, felt that I had taken a negative line. I thank the Minister for his full response and I agree that we had a useful debate on defence issues last week. I am not totally reassured by his assurances. We are concerned that the details of how the provision will work will be decided only after the treaty's ratification. We do not believe that it will help to expand European military capabilities and we worry that it will undermine NATO's attempts at improving its future military capabilities. We think that the Government were quite wrong to have accepted this provision. However, this was a probing amendment and I therefore beg leave to withdraw it.

Amendment, by leave, withdrawn.

moved Amendment No. 26:

Clause 2, page 1, line 12, after "excluding" insert—

"(i) Article 1, paragraph 55, new Article 46A TEU, relating to the legal personality of the European Union; and(ii) "

We come now to amendments that concern the conferring of a legal personality on the European Union in toto. They raise a number of issues that need careful scrutiny, in accordance with our remit and the recognition that we have the task of line by line scrutiny to perform on this complex and wide-ranging Bill, and on the treaty it embodies. Here, once again, we are largely in the hands of the lawyers—which may be nice for the lawyers—and of the Court, as we are on many issues in the treaty. This is because the treaty, which is almost word for word the constitution, lacks in itself the safe, secure legal provision to circumscribe and define the powers of the EU institutions, as opposed to the powers of member states. We will come to this debate later, when we look at competencies. All the while, we have to be aware that it is legal decisions and lawyers' judgments and assessments, views and counterviews that will decide how these things work out.

I anticipate that the defence of this provision in the treaty from the Government and their apologists will be that there is, of course, nothing very new—that the old European Community had just such a power to sign international treaties and had, in a sense, a legal personality. Indeed, even the European Union under the previous treaties had a treaty-signing power, which automatically gave the EU a kind of legal personality, which has been recognised by a number of professors and legal experts. Now the difference is a big one—with the collapse of the Third Pillar into the combined new constitutional structure of the Union, this power extends considerably from the limits of old Pillar 1 issues, mainly on trade, which the European Community possessed, to foreign policy, defence, crime and judicial issues, and covers all the Second and Third Pillar issues that were previously beyond the reach of the EU.

This is a big change. We will have different views on whether it is good or bad, but we must recognise that it is there. It will be, in the words of the former Commission President and former Prime Minister of Italy, Romano Prodi,

"a gigantic leap forward. Europe can now play its role on the world stage thanks to its legal personality".

Something very big is happening and we cannot be blind to that. The French authorities helpfully went on to explain that:

"The European Union naturally has a vocation to be a permanent member of the Security Council, and the Constitution will allow it to be, by giving it legal personality".

Even the present Labour Government choked on this one, because this is going very far. I do not know about the position of the Lib Dems obviously, because that is never too easy, but the Government found this very awkward.

Just to assist clarification of the Opposition's view, I ask whether the noble Lord is saying that the European Union did not have legal personality for the purpose of entering into international agreements.

I do not want to obfuscate in any way, but I said a moment ago that the European Community, under previous treaties, had a legal personality and that the EU under previous treaties, by virtue of its power in certain limited areas to sign international treaties, de facto had a degree of legal personality. That is argued by learned professors in lengthy papers. I hope that I understood the probably very deep question of the noble Lord, but that is what I said and that is the position. The clarification that I now seek from the Government on behalf of Parliament regards exactly what is implied in the future manufacture, construction and architecture of treaties that are negotiated and put together by the European Union. Obviously, some new questions arise.

I was referring to the past views of the Government, because those views have changed. Mr Hain, on behalf of the Government, said that we can support a legal personality for the Union only if the special arrangements for CFSP and some aspects of justice and home affairs have been protected. In our view, they certainly have not been protected. The previous Prime Minister, Mr Blair, specifically told the other place at the beginning of his premiership that,

"others wanted to give the European Union ... legal personality across all the pillars of the treaty. At our insistence, that was removed".—[Hansard, Commons, 18/6/97; col. 314.]

It seems that that insistence has evaporated and some very important questions arise, which I want to put to the Minister. The first is: what powers will the high representative—the Foreign Secretary of the Union—have in negotiating major new international treaties, particularly those governing, as all international treaties do, important areas of foreign policy? What will be the national parliamentary check on Ministers where major positions are taken up or conceded? I realise the difficulties involved as they have always been faced by Governments wishing to negotiate, with parliaments rightly wishing to know what is being conceded, argued or claimed, as it were, in private. I do not deny the difficulty, but we have heard a lot about giving Parliament a bigger say in decisions—about going to war, for instance—so what about powers over binding treaties in our name that could lead to major commitments in the future? Just what are we in for on that front?

At the very least, as our Amendment No. 26A proposes, both Houses need a clear report before the Bill rolls forward and it comes into force as an Act, setting out how the independent or interdependent representation of our national interest and purposes in international bodies and other international arrangements—arrangements that we value greatly in this country, giving us considerable sway on and entrée to the global scene—are going to be upheld once the extended legal personality power for the whole Union is in place. We believe that a report of that kind should require the affirmative resolutions of both Houses.

There was a time when arguing that Parliament should have a greater say in treaties before they were finally signed was a bit out of fashion. We were told that it was all a matter for the Executive and the royal prerogative and so on. I remember many decades ago being impertinent and bold enough as a young Member of the other place to argue that I was a Parliament man. Most people had no idea what one was talking about, but nowadays things have changed and it is all the rage to call for more parliamentary powers over the Executive and the royal prerogative, and for a greater say in all aspects of executive decisions. Indeed, as I have already mentioned, the proposal that Parliament should have a say in the declaration of war is now before us. However, there is a clear move in the treaty, alas, to make for fewer parliamentary powers by our Parliament over executive action, as competence passes elsewhere and accountability is obviously diluted. That trend, as in so many spheres that we are debating in the Bill, is not toward a stronger and more democratic Europe closer to the people but is in the wrong way. It needs to be resisted. For those reasons, I beg to move.

Lawyers have given their views about this matter, but what has not been made clear by the noble Lord, Lord Howell, is the unanimity expressed in those views. Indeed, those views have been supported by the Select Committee of this House, which set out very clearly in its report on the impact of the treaty that the provisions on legal personality were not innovatory and simply reflected what was de facto the position under the treaty of the European Union, although it had been explicitly provided for in the European Community.

The most compelling individual evidence given to this House was in the hearings of Sub-Committee C, chaired by my noble friend Lord Roper, by Professor Alan Dashwood. He is a lawyer well known to members of Her Majesty's Opposition, as I believe he advised them during the treaty of Maastricht on this very point. The noble Lord will no doubt have read his evidence, which indicated bluntly:

"It is my view that the recognition of the legal personality of the European Union is a purely technical change".

He went on to say:

"The present situation, which is quite amusing for lawyers but absurdly complex, is that the European Union considered as a whole has a separate legal personality for the European Community but its own de facto legal personality for the purposes of the second and third pillar".

I am most grateful to the noble Lord. Can he help me with a problem? If nothing has changed and the EU already has this legal personality, why does this provision have to be in the treaty at all?

I think it is clear that the purpose of this exercise was to clarify the matter beyond the sniping that has sometimes taken place and beyond the exaggeration by some commentators of the significance of the issue. The Union is clearly proceeding towards making comprehensibility a factor. I believe that recognising that the new treaty will spell this out will end the oddity of the situation in which explicit legal personality is provided for in respect of the trading matters under the original European legislation, the European Act and other international matters. The question of whether this has, as has been suggested by some anti-Europeans, the significance of conferring on the Union the attributes of a state has also been bluntly and clearly answered by the report of the European Union Select Committee. In answer to a question from the noble Lord, Lord Swinfen, whether de facto possession of a legal personality makes the Union a state, Professor Dashwood answered:

"No it does not. There are many international organisations that have international legal personality. States are in the unique position of being full subjects of the international legal order ... In the case of the European Union, the European Community has legal personality, so does the European Central Bank, so does Euratom".

It is clearly nonsense to suggest that the explicit conferral of a legal personality on the Union in any way makes this a conferral of a state on the Union.

It has been suggested that in some way this muddies the waters so far as concerns the representation of the Union in international organisations, such as the Security Council of the United Nations. Once again, the evidence is absolutely clear from all witnesses that this House has heard. The noble Lord, Lord Kerr of Kinlochard, asked questions about this and was again clearly answered that the status of individual member states was unaffected by the conferral of a legal personality on the Union as a whole. At any time, two permanent members or other members of the European Union may sit on the Security Council, and their role is in no way affected or diminished by the conferral of a single legal personality on the Union.

Perhaps most importantly, the question needs to be addressed of the impact of conferring a legal personality upon the competence of the European Union to enter into international agreements. It is clear, again without dissent from those lawyers who spoke to the House, that the conferral of a legal personality in no way affects the European Union's competence—the terms of the European Union treaty specifically provide for its competence to enter into international agreements. Nor does it affect the relative competences of the European Union and its member states, as summarised in the opinion of the European Union Select Committee.

I rely heavily on evidence from that committee, because it is a body representing many different views about the virtues and limitations of the European Union. That that judgment was unanimously accepted seems compelling to me, and ought to put the whole debate about the legal personality to rest.

I was waiting for the noble Lord to finish his point. Would he agree that, of the 24 members of your Lordships' European Union Select Committee, only one is a declared Eurosceptic? Even he does not favour the position shared by millions of British people: that the United Kingdom should leave the European Union. Does the noble Lord understand that many of us—I made this point in November when the committee was reappointed—do not accept your Lordships' Select Committee report as having the authority which the noble Lord would wish to confer on it?

There is a spectrum of views among members of the committee, from those who might be described as enthusiastic Europhiles to those who are more sceptical. I do not accept for a minute that that in any way diminishes the authority of the unanimous view expressed by the committee on those matters. I believe it is also open, although it would be unusual, to those who dissent to indicate whether they did and were not in agreement. No such expressions of dissent were made.

We had this debate the other evening, when the noble Baroness, Lady Symons, was attacking my noble friend Lord Blackwell, the sole Eurosceptic on that committee. Does the noble Lord agree that it is not all that easy to produce a minority report of one? If, as he says, there is a broad spectrum of views on the committee, would he be good enough to name the other Eurosceptics on it?

I hesitate to intervene, but I feel I should come to the defence of the committee and, particularly, its membership. One important consequence of the committee's work on the Lisbon treaty was to produce what, by any standards, is a thoroughly objective impact assessment. The noble Lord shakes his head, but I assure your Lordships that having sat in the chair for many long days while working on this report, there was an absolute consensus in that committee that we would thrash out the issues around the table, but that what we wrote would be an objective impact analysis of the treaty and what changes it would bring about. So I have some reservations about and feel rather hurt by the implication that this was somehow a political exercise dressed up as something entirely objective. It was not.

I am very grateful to the chairman of our committee for that statement, which I think puts the matter beyond further argument.

In making my final point about the issue of single legal personality I want to reflect briefly on the reasoning already expressed by the Government, which it is perhaps better for the noble Baroness to express for herself and for them, but there were earlier stages in the discussion of this issue when the single legal personality was not explicitly endorsed for inclusion in the treaty because the Government, in their diplomatic exercise, were seeking to put beyond doubt that the retention of the common foreign and security policy would be a separate matter requiring unanimity in the Council before international agreements were entered into. They wanted that to be clearly defined, as it has been, in a separate treaty. That makes it understandable that the Government took the position that they did.

That position has changed and the Government have—to my mind, sensibly—accepted that there is a need to bring together the actuality—the existence of de facto legal personality—with a juridical legal personality in respect of other matters, such as trade. That is a sensible clarifying move, and one that I hope will now be considered to be beyond dispute, at least by lawyers. I find the hesitation about lawyers rather surprising, because I am not entirely clear who else the noble Lord believes we should turn to for expert advice on interpretation of the language of treaties.

The noble Baroness has spoken to a number of us to ask us to keep our speeches as short as we possibly can. That is exactly what I intend to do, but I want to support the amendments. They are important and they should be properly discussed and replied to.

I say to the noble Lord, Lord Maclennan, once again that he makes a big mistake in accusing those of us who believe that we should not belong to the European Union of being anti-European. That is a serious charge that I refute absolutely. I am not anti-European, but I do not want to be governed by the system imposed on us by the European Union. I hope that he will not again accuse people like me of being anti-European.

As the noble Lord, Lord Howell, pointed out, there seems to be a complete difference between what our Government believe a single personality means and what other people think it means. There is no question but that Romano Prodi jumped with joy when he saw the article appearing in the constitution, now transferred to the Lisbon treaty. He said that this is a gigantic step forward. Where a chap like Prodi speaks like that, we must take some notice of him. When he is supported in that view by the French during the referendum and then when you listen to people in this House, we are entitled to ask what the position of Her Majesty's Government really is. Did they oppose it in the first place? Have they opposed it at any stage? Did they oppose it during discussions on the constitution? Did they oppose it during discussions on the treaty? Perhaps they are not going to defend it and I hope that they will not. .But if they are going to defend it, why on earth are they going to defend this article being in the treaty when they were previously against it and other people think that it is going to take the business and the policy of integration forward by a great step?

It may be that the noble Lord, Lord Maclennan, and others favour this project of European integration—I associate myself there with the remarks of the noble Lord, Lord Stoddart. The process of European integration, the EU, is a completely different thing from the Europe of nation states which we all love and support.

Legal personality is, to some of us, the most important aspect of the new treaty. Today, Bruno Waterfield of the Daily Telegraph quotes from various bureaucrats involved in drawing up the new constitutional position. He quotes one of these bureaucrats as saying:

"A lot people are just beginning to realise what they have signed up to".

One EU official said that the Lisbon treaty was,

"more profound and far-reaching than anything else in the EU's 50 year history ... for us here it is the most important time in our lives. There has never been such a constellation of jobs and institutional changes aligned at the same moment. A lot of people are talking about a new epoch".

That is what is going on in Brussels. It is underlined and supported by the new legal personality, which is regarded as the jewel in the crown in many of the corridors there.

I do not know whether the Leader of the House is aware that the proposal for legal personality for the whole European Union—as opposed to just for the Commission in trade matters and so on which we agree has been there since 1972—was vetoed by Chancellor Kohl at Maastricht. He thought that it gave the European Union too much power. That power will, in the end, be exercised by the Luxembourg Court of Justice on whose judicial activism we have already commented in these proceedings and doubtless we will return to them.

In the draft constitution, the wording for legal personality was that the EU,

"shall have legal personality superior to that of the member states".

However, in the final version the last seven words were amended, in order, I understand, not to expose this huge advance of the EU's power too clearly to the unhappy public.

Can the Minister tell us what limits are put on this new legal personality? The noble Lord, Lord Howell, has already mentioned that the pillars—justice and home affairs, and the common, foreign and security policy—are now gathered under this legal personality. Perhaps the best way of asking the Minister that question is to quote two Written Answers she sent to me on 28 February this year when I asked:

"On which areas of United Kingdom national life the European Union is not able to legislate".

I also asked her:

"On which new areas of United Kingdom national life the European Union will be able to legislate if the Lisbon Treaty is ratified".—[Hansard, 28/2/08; col. WA 133.]

The noble Baroness has not yet answered that question. It would be helpful if she did so this evening, because it would enable us to define the borders of this new power, which we maintain do not exist. In the end, this power confers on the European Union, supported by the Court, almost unlimited power, bearing in mind the European Charter of Fundamental Rights and various other aspects of the treaty.

I will quote the noble Baroness's Answer to her, in case she does not have it to hand:

"For the first time the Lisbon Treaty defines the Union's competences, setting out where the EU can and cannot act".

We will come to that later. Then she says:

"These competences are set out in Article 2(12) of the Treaty of Lisbon ... presented to Parliament in December 2007. The treaty explicitly states that competences not conferred on the EU remain with member states".—[Official Report, 28/2/08; col. WA 133.]

What are those competences? What remains with the member states in which the EU cannot interfere at all when it has this new overarching legal personality that is superior to that of the member states?

If you invent fairy stories and keep telling them, they acquire a life of their own; they go down as bedtime reading for children down the generations. What we have is much more precise than the noble Lord, Lord Pearson of Rannoch, would have us believe. The whole question of legal personality is not a new phenomenon in international organisations; it is a constancy. It applies in the United Nations and in the International Criminal Court. It even applies in the Universal Postal Union. All these bodies have legal personality.

The change that has been made, bearing in the mind the need to clarify "legal personality" for the European Union, is very simple and quite clearly backed up by Declaration 26 of the Intergovernmental Conference. For the sake of everyone having the same song sheet, I will briefly read one sentence from Declaration 24 on the legal personality of the European Union:

"The Conference confirms that the fact that the European Union has a legal personality will not in any way authorise the Union to legislate or to act beyond the competences conferred upon it by the Member States in the Treaties".

That will satisfy the overwhelming majority of people. I do not expect it to satisfy the noble Lord, Lord Pearson of Rannoch. He will continue to tell his fairytales, and the rest of us will continue to ignore them.

Perhaps the fairy story that we need to think about is Little Red Riding Hood and the question that we need to ask ourselves is who is in the bed. Is it grandma or something different? The words that the noble Lord read out are completely irrelevant. He is confusing two things. One is what the European Union will do; the other is the question of its legal personality. As I asked the noble Lord, Lord Maclennan, if all this is just clarification and the EU has had this personality before, why is it necessary to have this in the treaty? As the noble Lord, Lord Stoddart, asked, where were the Government on this and why did they fight so hard to prevent the creation of this legal personality through the treaty if this is all a fuss about nothing? We come back to what we were told at an earlier stage when we discussed the same document, which then was called the constitution and which at one stage Mr Peter Hain and others argued was simply a tidying-up exercise. So we are back to the argument that this is just a tidying up exercise and nothing of any great import. I very much support my noble friend Lord Howell in tabling the amendments which go to the heart of the issue.

The noble Lord talked about confusion, but does he accept that one source of the confusion is assuming that a legal personality is equivalent to statehood, which it is not? The fact that many international organisations have legal personality shows that it is not an attribute of statehood. Therefore, it is not conferring statehood on the European Union to clarify that it has legal personality. That is one misunderstanding in this discussion.

There is no misunderstanding. There are two models for developing our co-operation with Europe. The noble Lord, Lord Pearson, would rather be out of it altogether but, for those of us who wish to remain in the European Community, there is the model that sees it as an organisation in which there is co-operation between member states and there is the Liberal model, which is basically about creating a federal state and a federal Europe.

The noble Baroness shakes her head, but I thought that the Liberals were very keen on European federalism. It is difficult to know what the Liberals think on these matters because they have not tabled amendments; they are simply acting as cheerleaders for the Government and are not providing any detailed scrutiny. However, I thought that there was support for European federalism. If you are a federalist, you want to create an organisation that has a legal personality because you want to create a country called Europe. Those of us who think that that will destroy Europe see legal personality as a particularly sensitive issue. That is why my noble friend Lord Howell is right to move this amendment.

Having been there myself, I feel sorry for the Minister. She will no doubt reassure us that none of this really matters—that it is just a matter of clarification and the rest. However, two or three years down the line, we will find that it means considerably more than that and that there is no going back. If this is just a matter of clarification, taking it out will not make any difference to the progress of the European Union. The reason why Mr Prodi was so ecstatic is that he is a member of the group that sees Europe as having a federal structure and wants a constitution accordingly.

The noble Lord has given the Committee a wonderful description of one group that is charging ahead for a federal Europe and the others, who believe, as he does, in co-operation between sovereign states. Will he say why, in a large number of intergovernmental organisations that involve purely co-operation between sovereign states, the organisation concerned is given international legal personality? Why on earth is that? I can answer the question perfectly easily, although probably not in terms that are very helpful to him. The reason is that it is a useful thing to do and the totality of the member states of that organisation believes it to be so. That is precisely what the Lisbon treaty will do.

I am confused; no doubt the Minister will be able to help us in her response. Those who are arguing for this say that it does not represent a change; they say that the EU has always had this legal personality and that there is no need to make a change. Therefore, why is it necessary to go further? I give way to the author.

Perhaps I may help the noble Lord. The answer given by the noble Lord, Lord Maclennan, was that many thought it right to make this explicit. My answer is that many think it right to make it clear that we are no longer talking about legal schizophrenia. There was a time—from the beginning—when the European Communities had an acknowledged legal personality, which was recognised by all, and a treaty-making power. From about the time of Maastricht, when the party of the noble Lord, Lord Forsyth, was in office, it became clear that the European Union had a legal personality. It was running cities in Bosnia and had to be capable of being sued for its deeds or misdeeds. So it is clear that it had a de facto legal personality from the early 1990s. However, some still argued that it had two personalities: when it was the European Union it had one; when it was the European Communities it had another. The discussions in the first months of the convention, in which the noble Lord, Lord Maclennan, took part, established that there was no need to maintain this schizophrenia.

The question of a single legal personality is interesting. The noble Lord, Lord Howell, asked precisely the right question: what does that mean for the powers of the high representative? What can he do with the single legal personality? The answer is, of course, exactly the same as the rotating president of the Council could do. It is not the legal personality that confers new competencies or powers; it is what the rest of the treaty says.

After listening to the debate, I agree that the amendment serves a valuable purpose. We come full cycle again. Whether or not we have a legal personality is not the point; the point is whether or not it is a legal personality of a federal structure. It is the federal structure that matters and this debate brings out its essence. I do not wish to be a party to criticism of the membership of any committee of the House, but we are not dependent on this report. We can assess the merits of a debate that the members of the committee may well not have entertained and we can look at it as we wish. I support my noble friend because the debate brings us back to where we have to start.

In response to the noble Lord, Lord Kerr, who knows a great deal about this matter, having been very much involved in the early drafting of the treaty, I need to reflect on the concept of a split personality and schizophrenia. The real schizophrenia is between those people who wish to create a federal Europe and the rest of us, who want a Europe that is based on co-operation. Therefore the concern at the heart of my noble friend's amendments, as my noble friend Lord Campbell indicated, is precisely what this legal personality will be used to achieve and what it will mean in the longer term. It is an important matter and should not be rushed through.

I am getting signals from the Leader of the House to speak briefly—and people have spoken rather briefly—but this is of fundamental importance to the future of the Community and to our ability to govern ourselves.

I was not trying to signal that to the noble Lord; I was seeking to see whether or not he had finished. The noble Lord was interrupted and I thought that I would let the noble Lord, Lord Campbell of Alloway, move on from an interruption to a new speech. It was purely a point of clarification.

I have spoken to noble Lords about how far we might get today and, as there are so many noble Lords who reasonably wish to speak in the debate, whether we could keep our remarks succinct. I rise only when I think that we have said everything that can be said and are in danger of saying it again. At that point, it benefits us all if I at least give my response to what has been said. Often noble Lords wish me to do so.

We have to be careful that no one impugns the integrity of anyone in the House. The committee did a fantastic job in looking through the treaty and I pay enormous credit to it. I also pay credit to all the noble Lords who spent an enormous amount of time and energy reading the treaty and coming to their own opinion on it.

The noble Lord, Lord Pearson, does not need to interrupt me. I am not impugning his integrity. I am simply saying that I think that we should, as a general way of operating, regard all that is done to improve the clarification of this treaty as being positive. In no way does that prevent noble Lords from disagreeing with conclusions that have been reached. I do not accept that, just because one holds an opinion, one cannot look at information properly.

I thank the Minister for giving way. My question is about the use of this phrase "impugning the integrity" when looking at the views on a committee. Let us take as an example the committee with which the noble Baroness is involved that is looking at the future of this House. I think that I can say that all the people on that committee have a view on the reform of this House that is not in line with the feelings in the rest of the House. Her committee represents a particular view and, when it reports, I think that we will be entitled to say, "Well, they would say that, wouldn't they?".

I have no doubt that the noble will say that, but that committee represents the views of all the political parties. It represents policy for the Conservatives, the Liberal Democrats and the Labour Party. The noble Lord may wish to disagree, but I suggest he takes it up with his own party. The shadow Leader of the House in another place is clear in her representation of the policy.

However, let us not get involved in that. Of course, the noble Lord is right that noble Lords can disagree with the conclusions of a committee. That is my point. What I am arguing is that we have to be a little bit careful, particularly in your Lordships' House, that we do not, by accident, impugn anyone's integrity. That is all that I want to say on that. The noble Lord was clever in getting the issue of Lords reform into this debate.

I agree with the noble Lord, Lord Howell of Guildford, on his non-lawyer point. I am a non-lawyer, too, so I am in the happy band of people who wish to look at these issues from that important perspective. I begin by addressing the concern that noble Lords have raised about the position of the Government in 2004 and of my right honourable friend Peter Hain in his then capacity as Minister for Europe. The great concern of the Government at that point was the potential impact on the separate intergovernmental nature of CFSP—common foreign and security policy. Once safeguards had been agreed—and within the Lisbon treaty we are very comfortable with the distinct nature of CFSP—our concerns went away. Noble Lords are completely right that the Government raised concerns. The concerns, as far as we are concerned, were addressed. Once we had the present position, we were content to move towards a single legal personality.

Noble Lords have indicated far more eloquently than I can that this is not a new or particularly unusual concept. Lots of different organisations carry legal personality. My favourites are Vine and Wine and the Western Indian Ocean Tuna Organisation Convention. There is a raft of different organisations—some very familiar to noble Lords, some less familiar—that have legal personality. It is a standard characteristic of many international organisations, including the UN, and enables them to conclude international agreements where those are necessary to carry out their work.

As the noble Lord, Lord Howell of Guildford, said in his opening remarks, the European Community has had legal personality since the treaty of Rome in 1957. It has concluded hundreds of international agreements that cover all fields of Community activity—trade and development with third countries and international organisations, for example. As the noble Lord, Lord Forsyth, knows and as the noble Lord, Lord Kerr, described—and I will not put it in terms of schizophrenia—the European Union was not expressly given legal personality when it was set up. As the noble Lord, Lord Maclennan of Rogart, said, it has always been regarded as having legal personality in that it now has the power to conclude agreements in its own name. It has concluded about 100 such agreements in its own right.

Since the treaty of Amsterdam in 1997, it has had the explicit power to do that in CFSP and in police and judicial co-operation in criminal matters. So, for example, agreements with the United States of America on extradition and mutual legal assistance were made in 2003, a co-operation agreement with the International Criminal Court was made in 2006 and there have been a number of agreements concerning EU police missions referred to by the noble Lord, Lord Kerr, to operate in the Former Yugoslav Republic of Macedonia, Bosnia-Herzegovina, the Democratic Republic of Congo and Afghanistan.

What would happen at present—this is the simplest way of describing why we need to move to the single legal personality—is that the European Union and the European Community would need to accede separately to agreement, each within their own area of responsibility. That inevitably creates a degree of complexity, particularly for the third country or organisation concerned when, instead of concluding agreements with one organisation, it has to do so with two. The treaty simplifies the existing position, where there are two bodies, the EU and the EC, by providing that there will just be one body—the European Union. We believe that that will enable it to operate more effectively internationally and will help to make the actions with regard to third countries and organisations more coherent.

My noble friend Lord Tomlinson has already read out Declaration 24, which expressly says that the treaty will not create any new powers for the European Union. As the noble Lord, Lord Maclennan, and others have said, the EU Select Committee of your Lordships' House made it clear in its impact assessment that:

"The Lisbon Treaty confers legal personality expressly on the EU, giving it the capacity to enter into legal relationships with other parties in its own right".

It goes on to say that the European Community expressly and the European Union implicitly have had legal personality before.

The noble Lord, Lord Howell, asked whether the legal personality would somehow allow the European Union to become a member of the Security Council or be more involved in it. The answer is no. As I have indicated, a vast range of international organisations have legal personality but none of them can join the UN, let alone the Security Council. As noble Lords who are more familiar with this subject will know, under the UN charter, membership of the UN and of the Security Council is open only to states, so the only way in which the European Union could join the Security Council would be by amending the UN charter itself.

Noble Lords have asked what this means for the high representative. The noble Lord, Lord Kerr, indicated that the noble Lord, Lord Howell, had asked the right question. As the noble Lord, Lord Kerr, said, the high representative will take over the role of the rotating presidency in negotiating, where mandated by the Council, in the area of common foreign and security policy. It is for the Council of Ministers to mandate the negotiation of such agreements and to conclude them. In the area of common foreign and security policy, that would be by unanimity within the Council. We have already discussed that at some length in Committee with regard to the relationship between the high representative and the Council.

On parliamentary control of treaties, the position will be exactly the same as at present: where the EU, rather than the UK, is a party, the decisions are subject to parliamentary scrutiny in the usual way that has applied for many years. There is no change on that. As with all international organisations with legal personality, the EU can act only within the limits of the powers conferred on it by the treaties.

Because this is, one could argue, a way of tidying up and making it easier to conclude agreements with other organisations and states beyond the European Union, we see no reason to lay a report about this before your Lordships' House or another place. We think that this is an important way of ensuring that the treaty deals with outstanding issues where business could perhaps be transacted better by taking us forward into a single legal personality, but it is nothing more than that. It is an important step, and one that I hope noble Lords will support. I hope that the noble Lord will withdraw his amendment.

I am grateful to the Minister for her reply. Quite a lot in this brief debate has turned on the remarkable and voluminous work of the European Union Committee. The chairman of that committee does a splendid and superb job, but not even he would claim that every word of every report was the gospel truth that shall not be gainsaid or questioned. Like all bibles, it is capable of a certain amount of interpretation in rival ways.

I notice that the noble Lord, Lord Maclennan, was quoting great legal authorities giving views in one direction, but there are views in another. Mr Neil O'Brien has pointed out that the Government have traditionally resisted the conferral of a legal personality on the Union. The Minister tried to explain why, but there are some big gaps. It was not only traditionally resisted; the Prime Minister said that the Government were not having it and that the idea of EU legal personality would not be accepted and had been stopped. Of course, in the end, it had not been stopped.

If the whole parliamentary system is going to work properly within the European Union context, we need to know the reasons when there is any change of gear. That seems to be missing, even from some of the reports submitted to your Lordships' House and the other place. Is it not our role to ask why? Is ours not to reason why? Listening to this debate—

If the noble Lord looks at the paragraph which quotes Mr Neil O'Brien and makes precisely that point, he will see that we then asked the Minister for Europe why the Government had changed their mind. In paragraph 2.49 the Minister gave us exactly the reply to the point made by Mr O'Brien. It is important to see that the committee followed up the point which the noble Lord is raising, and we believe that we got a satisfactory reply from the Government.

The Minister gave the noble Lord and other members of the committee a counter-assertion, which was that, "It is all okay now because we think JHA and CFSP are protected". That is not a grown-up or fully mature argument to present to the Houses of Parliament. There are deeper and more important reasons, which I would like to hear. We are not going to hear about them now, I realise. All I ask of the Government at the end of this short debate, and I shall probably ask it at the end of others, is please do not tell us that nothing has changed when it clearly has. In the excellent EU report, the last, quite long, sentence of paragraph 2.58 begins:

"Conferring legal personality expressly on the Union".

I will not read it all out, but it points out that it will apply to the EU and the areas currently covered by the Second and Third Pillars. That may have nothing to do with competence. It may not change even the underlying pattern of behaviour—although who is to know, when the whole process is step by step, over the years, and one thing grows from another—but it is a change. So please do not tell us that nothing has changed when it has. In the same way, over the whole constitution and the word-for-word translation of it, please do not tell us that something has changed when it has not. If we follow those two precepts, we will get on a lot quicker with processing this Bill. I have finished, but I think the noble Lord wants to speak.

I am grateful to the noble Lord for giving way. No one was asserting that nothing had changed. We were asserting—and the committee asserted—that there was de facto legal personality in respect of matters that did not fall within the European Community treaty. The change that has taken place is from de facto to de jure. That is the only change of any import. We are not being as fundamentalist as is implied by the final statement of the noble Lord.

I said as much in my opening remarks, although I live in a world where de facto may be what we face but de jure still matters. What is the law and what is going to be the law still matters in this country, as far as I know. We do not live in a totally relativist world where all legal absolutes can be cast aside in favour of the immediate de facto situation. Having said all that, as I was about to say before the noble Lord stood up, in light of this frankly rather unsatisfactory but interesting exchange, I believe that we should return to these matters and not let them rest. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 26A not moved.]

We come to Amendment No. 27, to be moved by the noble Lord, Lord Willoughby de Broke.

moved Amendment No. 27:

Clause 2, page 1, line 12, after "excluding" insert—

"(i) Article 1, paragraph 58, inserting a new Article 49A TEU, relating to withdrawal from the Union; and(ii) "

It is the fluffy end of the lollipop—Lord Pearson of Rannoch. My noble friends and I tabled this amendment to cancel the new arrangements in the treaty for a country to withdraw from the European Union. Our reason for doing so is that the new procedure appears to make it more difficult to leave the EU than at present.

Noble Lords:

Oh!

I am glad that I amuse the noble Lord, Lord Wallace, and his colleagues.

To us this new clause in the Lisbon treaty is not the democratic and helpful advance claimed by Europhiles generally. At the moment all that is necessary to leave the European Union is for Parliament—the House of Commons and your Lordships' House—to repeal the European Communities Act 1972, thus also repealing all the subsequent treaties which have been passed since as amendments to it. That is simple and highly desirable. I should be grateful to know if the noble Baroness the Leader of the House disagrees with that analysis. If we want to get out now, all we do is repeal the 1972 Act and we are out. But if we are forced to follow the arrangements set out in Lisbon, we have to go through a rigmarole lasting up to two years and we would be able to leave only on conditions agreed with the Council whose meetings about our withdrawal we would not have been able to attend. I call that much less satisfactory and much less convenient, and that is why we want to remove it.

I have only one question for the noble Baroness the Leader of the House: if we ratify Lisbon, just how binding will the new arrangements be? I appreciate that we like respecting our treaty obligations and all that, but surely if Parliament decided that the UK should leave all it would still have to do is what it has to do now, which is to repeal the 1972 Act. Since the Government have agreed in these proceedings that one Parliament cannot bind its successors—and I ask the noble Baroness to reconfirm that briefly and clearly—surely a simple cancellation of the 1972 Act, and subsequent and depending Acts, would do the trick and set us free. What is the new position? I beg to move.

There is clearly no pleasing some Eurosceptic Members of your Lordships' House. It was for many years a staple in the Eurosceptic documents I used to read from time to time as a painful duty that there was no mechanism provided for leaving the European Union. We all understood that one could leave it and that there was no way of stopping a sovereign state from doing so, but to clarify this some thought it would be a good idea to put this explicitly into the text. Having been presented with a gift horse, the noble Lord, Lord Pearson of Rannoch, as always, has looked in great detail at the back of its mouth and discovered a number of teeth with which he is not at all satisfied.

We are on the fourth day in Committee on this Bill and we need to make progress. The characteristic search of our Eurosceptic colleagues for some statement or document which suggests malign intent or even conspiratorial purpose sometimes stretches the indulgence of the Committee.

Following the previous Committee day I searched Google for the Farnborough agreement 2000. When I entered "Farnborough agreement 2000", the top three most-cited responses were: an agreement between the Ministry of Defence and Farnborough aerodrome; an agreement with Farnborough local authority on environmental management; and an agreement which the Farnborough football club had made with a Canterbury company for the distribution of a newly designed football shirt. The Farnborough agreement between defence ministries has not enormously grabbed the public's attention, which perhaps makes it a little less than the issue of central importance which the noble Lord, Lord Pearson, suggests it is.

We recognise that Mr Prodi has been a gift to our Eurosceptic colleagues, partly because he has such an unfortunately loose manner of expressing himself. He is not one of the most talented of European leaders. We also recognise that unnamed officials quoted by the Daily Telegraph—or an unnamed French official quoted by Le Figaro, as the noble Lord, Lord Pearson of Rannoch, was suggesting the other day—are not always the most reliable, particularly when we cannot discover who they were or whether they even existed.

This claim to uncover a secret understanding behind the false consensus of normal political discourse, which we keep hearing again and again on different amendments, seems a little—

If the noble Lord wishes to accelerate our proceedings, would it not be more reasonable to confine defence matters to our defence debates and perhaps bring this up on Report?

If I may finish my point, I am attempting to accelerate. I was merely complimenting the noble Lord, Lord Pearson, on his familiarity with the neoconservative approaches of the United States in which the followers of Leo Strauss claim to have a secret knowledge that is much clearer than the understanding of the masses. Last time round, the noble Lords, Lord Blackwell and Lord Pearson of Rannoch, insisted that they knew better than the former Secretary-General of NATO what the European members of NATO felt—although I was happy to see, just as we reached 11 o'clock, that the noble Lord, Lord Pearson of Rannoch, admitted his underlying hostility to France and Germany. If I understood what he was saying and what the noble Lord, Lord Stoddart, was saying, they are not anti-European, they just do not like these wily continentals.

Will the noble Lord bear in mind what the Leader of the House said about impugning integrity? If, as we accept, it is thought out of order and inappropriate to say that a committee has too many members with pro-European opinions, surely the tone of the noble Lord's comments also is inappropriate.

I refer the noble Lord to col. 551 of the Committee's last sitting on the Bill.

I take grave exception to the noble Lord's attitude to those who might have a different point of view from his own. People such as myself—and I meet a lot of people like myself—do not disagree with these "wily continentals". Our view probably is that the really wily people are the Liberal Democrats.

I certainly do not wish to prolong this. I simply make a brief call for a larger grouping of the amendments that we have to consider in the next three days. I note that my Conservative colleagues have been extremely generous in grouping amendments. UKIP members have been a good deal less generous. We had on our last Committee day a constructive debate on the defence dimension of this treaty. I hope that later today we will get on to a constructive debate on the justice and home affairs dimension of the treaty. It is towards that which I insist the Committee should be moving towards.

My name is added to this amendment, to which I shall speak briefly. I do not think that the noble Lord, Lord Wallace, said a single word about the amendment—he went off slagging off Eurosceptics and talking about conspiracy theories that people may or may not have. Perhaps I may draw his attention back to the amendment, which concerns the withdrawal provisions in the treaty. Speaking for UKIP, as my noble friend Lord Pearson did, I can say that we are at one with the Government on this. I say that because, a few years ago, the former Foreign Office Minister, the noble and learned Baroness, Lady Scotland, stated our position exactly. In January 2000, she said:

"We see no need for the Treaties governing membership of the Union to include a specific provision on unilateral withdrawal. It remains open to Parliament to repeal the European Communities Act 1972, the logical consequences of which would be to withdraw from the EU. The terms of such a withdrawal would be for the Government to negotiate with the other member states ".—[Hansard, 11/1/00; col. WA 96-97.]

That is the UKIP position, and I am very happy that it is the Government's position as well; or it was the Government's position. One of the first things that we should negotiate is to tell our ex-fellow members that we are no longer sending them a cheque from the British taxpayer of £14 billion a year.

Since my name is added to the amendment, I must say a few words in support of it. The reason why I support it is that the treaty appears to put a constraint on our ability to withdraw by repealing the European Communities Act 1972 as and when we wish to, without any constraint by the European Union and its institutions. I would like to have the assurance that once Parliament has repealed the European Communities Act 1972, that is the end of it. There may be further negotiations with the EU, but they would be on our terms and not on its terms.

I will just say a brief word on this really rather astonishing debate, without seeking to impugn anyone's character. I find the amendment mischievous, because the European Union is in fact doing what I think noble Lords opposite wished it to do, which is to systematise the possibility for a member state to leave if it wished and decided so to do. The doctrine that the noble Lord, Lord Pearson, is adumbrating is the doctrine of unilateralism in regard to international obligations. You enter into them when you feel like it, you tear them up when you feel like it and you tell everyone else to go to hell when you feel like it. I do not happen to think that is a very good way of running international affairs, whether in the European Union or anywhere else, and I hope that the amendment will be withdrawn, because it is totally mischievous.

I was smiling to myself when the noble Lord, Lord Willoughby de Broke, said "slagging off", because I used the word "impugn" when I was trying to think of a posh word for slagging off. That is what I came up with, with the help of my noble friend Lord Bach. I apologise for smiling when that was said. I love the idea of the noble Lord, Lord Pearson of Rannoch, being the fluffy end of the debate.

I will try to be brief, because I think that everything that needs to be said has been said. The first time that we have the opportunity to consider as a group of 27 states the possibility that a member state might wish to leave is through the Lisbon treaty. It is right and proper that rules to enable people to leave should be properly considered in the treaty and delivered appropriately. The noble Lord, Lord Stoddard, is not completely right in saying that repealing the 1972 Act is all that has to happen. That is true for domestic law but, as a consequence of being part of the European Union, we have entered into treaty agreements of many different kinds from which we would also have to withdraw. We would have to do so in a way that did not detrimentally affect our national interests. We need to consider that.

The decision to leave the European Union is for the member state and the member state alone. It is its decision to do so. There is no question of seeking permission to withdraw, which noble Lords might have been concerned about. It is simply about notifying that the member state has decided to withdraw. The European Council would provide guidelines for withdrawal, and the Union would negotiate an agreement with the withdrawing member state because, as noble Lords will be aware, there are issues to be resolved beyond treaties, such as what happens about arrangements for Members of the European Parliament from nation states, for officials in the Union institutions from the withdrawing member states and so on. There are people who would need to be considered in that process. Making sure that was done properly and in an orderly fashion is important.

There may be financial implications, as noble Lords have said, of not contributing to the European Union. Equally, there might be financial considerations of other kinds. It is important to have a mechanism that could ensure smooth withdrawal. Noble Lords can be reassured that the decision would be for the member state. In our case, the repealing of the 1972 Act would be the domestic way in which we would do it, but there would be much more to do. This sets out a process to make that happen as smoothly as possible. I hope that we would never leave the European Union, but—as I hope noble Lords will agree—if a member state chose to leave, this is a very good way of making sure that it happened properly.

It might be, or it might not be—I think that the noble Baroness has just said that it would be for the elected Government of the day to decide. I am grateful for the rest of her reply—it is very helpful to have that on the record. In the 15th minute of this debate, which I think is near to setting a record in our proceedings, I feel that I should say to the noble Lord, Lord Wallace, who entered into a debate about defence, that in our most recent proceedings, I merely queried the present status of the Farnborough agreement. I named the countries involved, I named some of the provisions and I asked what its present status was—no more than that. It is not a fairy tale—the noble Lord even found it on Google.

I say to the Liberal Democrats, who have not tabled any amendments, that their lengthy interventions are prolonging our proceedings and are slightly naughty. I trust that they will do better in future and I beg leave to withdraw this amendment.

Amendment, by leave, withdrawn.

[Amendment No. 28 had been withdrawn from the Marshalled List.]

moved Amendment No. 28A:

Clause 2, page 1, line 12, after "excluding" insert—

"(i) Article 2, paragraph 12, inserted Title I, relating to categories and areas of Union competence; and(ii) "

When I heard that we should have to look at things line by line, I did not intend that we should spend too much time examining whether or not we should leave the European Union. That is of no interest to us, and I would advise my Liberal Democrat friends to leave the matter alone if they want to get on with business.

We want to look at the very hard and important issues that arise in the context of membership of the European Union. We turn now to what might be called, in the words of the treaty-makers, the horizontal issue of competences—that is, the defining of the division of powers between member states and the central EU authorities. I hope that, in discussing this horizontal issue, we do not drift into all the specific areas of new competences, which are listed fully in the treaty and in other documents, because we are going to debate some of those competences later on. That would be unnecessary duplication. Nevertheless, the competences issue is sitting there in the middle of the treaty, and it is an area where the UK Government used to be deeply worried—and rightly so—about creeping competences and the extension of the areas of competence. There they all are, on page 53 of the treaty—Article 2B for exclusive competences and Article 2C for shared competences, which are substantially extended. They were all in the constitution document and are replicated in this one. They are intended to clarify, but do they?

The point of the Laeken declaration, which gave birth to the plan for a new constitution, and to the disastrous and mismanaged convention that all ended in tears, was to clarify the different layers of power, and to stop the bit-by-bit erosion of what I call the coastal rock cliffs of national interest by the ceaseless pounding sea of Brussels power—the late Lord Denning had even more emotive and evocative words to describe what he thought was happening. That was the intention behind the convention, the constitution treaty and its replica, the Lisbon treaty. However, even the most objective reader, and certainly 1,000—or 100, I must not exaggerate—different authorities throughout the European Union have had to admit that it does the opposite. This is a very confusing document. More powers are now shared. The sharing concept has come to the centre of the treaty yet no one is clear what the sharing means. The phraseology is that it allows member states to act only if the EU chooses not to do so.

The treaty states that:

"The Member States shall exercise their competence to the extent that the Union has not exercised its competence".

With the best will in the world, there is a lot of room here for misunderstanding, subjective judgments, legal interpretations, analysis and argument. Certainly, clarity comes at the bottom of the list. It is no surprise that when these texts were drafted at the time of the convention for the previous treaty, the UK argued, first, that shared competence should be a residual category, but of course it is not; secondly, that the idea of an indicative list of competences and shared competences would be the "worst of all worlds", which is exactly what we have; thirdly, that competition should not be an exclusive competence, which it is; fourthly, that employment, public health and consumer protection should not be shared competences, which they turn out to be in the treaty; and so on.

I shall not delay us any more than is necessary by listing all the new competences. They are extensive and go into areas that were vigorously opposed by the Government, yet there has been a change of heart without any reasonable explanation so far. I hope that we will now hear one. All this badly needs to be clarified. I beg to move.

I support my noble friend's concerns on the definition of competences in this treaty. It is one of those issues whereby those who seek in our debates to minimise the impact of these treaties will say, "Here you have things listed in black and white that limit the powers of the European Union, and therefore that must be a constraining thing". Others will look at the same text and say, "Actually it is enabling of the European Union, because it is sufficiently ambiguous and vague to allow huge extensions of the role of the EU". We will hear both arguments about this use of language.

In my view, the definition of shared competences was, in the words read out by my noble friend, that the EU can legislate in any area where there is a shared competence with unlimited scope. Once the heading is there—and he did not quote an exhaustive list—the treaty prescribes that, as long as the EU can make some tangential reference to the matter in hand as being related to one of the headings, the EU can claim the competence to legislate in that area. We know that as a result of the extensions that the treaty brings in, the EU will have a right in most of those areas to legislate by qualified majority voting. Therefore, these provisions open up almost any area in which the EU might want to legislate as being accessible to it through an extension of these so-called shared competences.

It is notable that the wording of the treaty states that national Governments can—it does not include the word "only", but it might as well do so—legislate in areas where the EU has not legislated. In other words, we have given the EU the first right to legislate in all these areas. Our national Governments are allowed scope to legislate only in areas where the European Union has not legislated. If those were only a few tight areas related to the working of the Common Market or trade policy, one might think that that was reasonable, but when the headings are as broad as they are, covering just about every conceivable area of domestic policy—whether economic, social, political, environmental, or on justice and home affairs—you realise that we are creating a European Union that has carte blanche to legislate in all those areas. The few areas that were not thought of to be included under those headings are then put in another category of supporting legislation, whereby the EU can act to support or complement the laws of nation states. It does not take too much insight to understand that most of these areas will rapidly be turned into areas where the support and complementarity of the European Union is also becoming a major driving force for legislation.

There is a genuine concern that this aspect of the treaty gives the European Union carte blanche. It is a significant innovation and needs further explanation.

I recall that I made a declaration of interest when we began Committee, many years ago, it seems. We come now to the proposed inclusion in the treaty of categories and areas of Union competence, and I certainly do not support the amendment to exclude that from the Bill.

Surely it is right, and overdue, to make the competences clear in the treaty. I must say that, over a long career, I have never read a plain sentence that opponents of the treaty have found clear. I have found the competences very clear and some have always maintained that they are not. These elements in the Bill are perfectly clear and I think that the actions taken by member states and the European institutions over a long period—at least 35 years, and before our membership—have made them clear. If, 20 years ago, I had been asked to write the exclusive, shared and supporting competences of the Union I would have written them in terms identical with those in the treaty, other than the addition of one or two points that I understand, such as energy and so on. Over 20 years, they are exactly what I have understood to be the shared and exclusive competences and supporting actions of the European Union. Those who have read the innumerable booklets, pamphlets, books and other things written about the European Union would have found them there very many times. We are now putting them in the treaty because there is a spirit of greater transparency, and I think it is reasonable to put them in for that purpose.

We see a small number of exclusive competences, and most people are very surprised by that. There are a larger number of genuine shared competences, but in some of the areas the Community acts—and we want it to act—so its role is bigger, and there are a large number of areas where the Union can support member states' national action. That is the pattern we have been working on throughout our membership of the Union. If it has not been fully understood before, perhaps it is a good thing if we put it in the treaty now.

I thank the noble Lord, Lord Williamson, once again for putting the whole matter in historical perspective. It is nothing to be frightened of and therefore I was rather surprised by the anxieties expressed by both the representative of UKIP and the mover of the amendment.

I suppose that there is an understandable anxiety about the inevitably complex appearance of legalistic language, when treaties are drafted, of the relationship between individual member states and the Union itself. This is a codification exercise that is bound to be progressive. If you consult carefully the leading representatives of the 10 member states that have joined recently—and the two others following them, including the two Mediterranean islands, of course—you will notice an enthusiasm always expressed by them for the fact that, as the Union is becoming bigger, allocation of competence, power and duty at the margin is bound to be increased to make the whole thing capable of going forward. If you do not do that, it would stall. The new member states wanted that when they signed up to the treaties and the acquis communautaire.

Once again, if you are an enthusiastic member of the club, the old example of that is that you have to occasionally do what the other member states say. In fact, I distinctly remember a former senior Minister of the Conservative Government, the noble Lord, Lord Lamont, actually saying that in the House of Commons many years ago. It was quite a surprise to hear him say that, and I was very pleased at the time. It is a reality that we have to accept.

The anxieties of the Conservative spokesman and the succeeding speaker, supporting Amendment No. 28A, would have been more justified if there had been any increase in the exclusive competences. As the noble Lord, Lord Williamson, rightly said, they are very brief. Of course, they cover major areas of collective endeavour—I certainly would not deny that. Nonetheless, it is a very short and modest list that we have all tended to accept, with the exception of monetary union in this country of course—and I regard it as a great pity that we have not yet joined what is rapidly developing as the most successful currency in the world, at least for the moment. It may not always be like that but it is obviously an impressive currency in international terms.

However, with regard to the other matters, the list of exclusive competences does not create anxiety at all. It includes the customs union under Article 19 of the treaty of Rome 1957, and the competition rules, which I am sure most Members of this House would support. The only way in which there can be a completely free market with an open competition policy is for the Commission to have an exclusive competence to decide that in a European-wide sense, while not in any way infringing on the right of the member states to have their own national competition procedures and frameworks. The list also includes monetary policy, to which I have just referred. We are not yet members of that; we are part members of part of the consultative process but I hope that one day we will be full members. Although this may sound more unusual and esoteric, the list also includes the conservation of marine and biological resources. Perhaps that will be referred to later when we discuss common fisheries policy. One can see that that issue had to be exclusive because the conservation measures could operate only on sea areas that were wider than one member state's ownership. Also included are the common commercial policy under Articles 110 to 116 of the treaty of Rome 1957, and the international agreements whereby it has been agreed that in future the Union can sign on behalf of all members.

The areas of shared competence and supporting competence are more interesting from the point of view of those who have reservations or are not such enthusiastic Europeans as most members of the Liberal Democrat party in this House and, I hope, the other place. However, again, here the treaty simply sets out rationally the relationship between the Union and the nation states making up membership of the Union where those nation states, in free discussion in the Council of Ministers and the European Council, and by signing treaties on previous occasions, have agreed in a sovereign way that they are prepared to let the Union have some of that competence. Therefore, we on these Benches cannot understand the anxieties, and we hope that the amendment will not be pressed.

I have been listening to the Leader of the House and will take only two or three minutes. I want to express some sympathy with the point made by the noble Lord, Lord Williamson, but it would be nice if we could table amendments to the treaty itself. Unfortunately, our procedures do not allow us to do that and therefore we can only amend this short Bill. That is why those of us who want to make amendments have to say, "Okay, you can have the treaty except this". I agree that that is not a satisfactory way to proceed.

I have just one question for the noble Baroness the Leader of the House. Up until now, replies to Written and Oral Questions have stated that about 70 per cent of our legislation emanates from Brussels. Will that figure increase—or perhaps even decrease—as a result of this treaty? Some of us believe that the European Union is doing far too much. If this treaty is to increase the percentage of legislation that comes from Europe, rather than decrease it or leave it as it is, one begins to wonder what on earth this Parliament is here for. Why do we need 649—I think that is the figure; it goes up and down—Members of the House of Commons and why do we need 750 people in this place if the European Union is responsible for at least starting the legislation and powers which we then have to enact?

I wonder whether I can help the noble Lord. With respect, the important question that he addresses is not actually relevant to the articles of the treaty on which these amendments focus. If the noble Lord looks at article 2A, paragraph 6 states:

"The scope ... and arrangements for exercising the Union's competences shall be determined by the provisions of the Treaties relating to each area".

That is why the noble Lord, Lord Howell, said quite correctly that he did not intend to focus on the definitions in each case because we will come to debate them in subsequent amendments; he was concerned simply with these broad categories at the start. The proportion, amount and focus of legislation will not be affected by these articles, which are headline articles that describe categories of competence but do not affect the content of competence at all.

That was the question I was asking the Minister. I appreciate what the noble Lord says; his intervention is very helpful, but because I wanted to save time I had not entered into the specifics of the competences. All I wanted to know was whether this treaty would increase the percentage of legislation coming from Brussels—a simple question, to which I hope to have a simple answer.

I am grateful to the noble Lord, Lord Stoddart. I did not see him stand up; I was not trying to cut him off in his prime from our discussions.

The categorisation of competences does not do anything new. The Committee will be aware of exclusive and shared competences, and areas where the EU can "support, co-ordinate or supplement" national actions. No change of substance is being proposed here; the categories reflect existing case law and, I believe, provide greater clarity than we have had before. The Select Committee said:

"We consider that setting out the categories and ... listing ... areas of competence is a useful clarification".

I hope that all noble Lords will agree with that quite important point.

It is also explicit in the Lisbon treaty that powers are given to the European Union by its member states, not the other way round. Again, it is important to clarify that that is how this works. It sets out exactly where the European Union has a power to act and in what way, and that it has only those competences expressly conferred on it by the treaties. I would describe that as making it absolutely clear that the member states are, importantly, in control of the treaties—"masters of the treaties" is how the German constitutional court put it.

Another important clarification is that the treaty also specifically recognises that competences can be transferred back to member states. If it is better that one be taken away from the European Union and go back to member states, that can now happen. It is important to recognise that, as Chancellor Merkel said, it is no longer a one-way street; that is absolutely right when there is the ability for things to be returned. Also, in the area of shared competence, if the Union ceases to exercise its competence it reverts back to the member states.

First, then, this is a clarification of what is exclusive and shared, and where the EU is acting to support member states. It is important to say that that is the extent of what the European Union can do, that competencies can be returned to member states and that those are conferred on the Union by member states. I should have thought that all noble Lords would welcome those important points of clarification.

Can the Minister help us a little by answering some questions? First, have any powers been returned to nation states since 1972 and, if so, can she identify them? Does she agree that the word competence is very unfortunate, because competence usually means an ability to do something and to do it well? We have come to use the French word "competence", which means power, so perhaps we should use the word "power" in future when we discuss these matters.

What will be the procedure for returning those powers in future, which I maintain have never been returned in the past? Will that be by qualified majority voting or unanimity? Supposing that the other member states do not want to return powers that we might want returned, how will that work?

I have never known the word competence to have had such an emotive response from the noble Lord. Competence is a word that, as I understand it, has a legal meaning; that is why it is used. Words in the European Union often have meanings that are understood across all member states. I do not know of any powers that have been returned; the noble Lord may well be quite right. If I can get the answer to that now, I certainly will.

I do not know what procedure would be used, because that has not has yet been determined. My point was different; it was to say that the treaty recognises the possibility that powers could be returned. That of itself is novel and not to be underestimated as a potentially important aspect of thinking about the role of the European Union now and in future. As noble Lords have said, we are not going to get into the detail of what those competencies would be today. If noble Lords read the evidence given to the Select Committee by my honourable friend Jim Murphy, they will see set out the areas of difference in competences relevant within the Lisbon treaty; for example on sport, which is new; on space, which noble Lords have mentioned; on energy, tourism and so on.

When, as we will, we come to debate the issues raised in some of the amendments about specific policy areas, we may as part of that deal with the competences in the treaty. My point on this amendment is simply to say that we believe that categorisation is positive, that it is important to list the competences to understand the limits and parameters of the role of the EU and, as I said, to recognise that this is power—if the noble Lord wishes to use that word—conferred on the European Union by member states, not the other way round. I can confirm to him that no powers have been returned thus far.

The noble Baroness says that in the treaty there is the opportunity to get powers returned, but that has been the position since 1992, when John Major was Prime Minister and negotiated the subsidiarity clause. He came back to this country and declared, "Game, set and match", because he had got that introduced into the Maastricht treaty. Since then, no powers or competences have been returned to this country at all, as the noble Baroness has just confirmed.

Does my noble friend remember that Mr Major said that 25 per cent of all EU legislation was going to be repatriated to member states as a result of his brilliant negotiating skills at Maastricht? The noble Baroness has just confirmed that not one such power has since been returned.

Finally, I put this to the noble Baroness. She says that these powers are conferred by treaty on the European Union by the nation states. If she cannot tell us how those powers are eventually to be returned, and if no powers ever have been returned, does this not confirm that we are dealing with a one-way ratchet? We are dealing with the acquis communautaire. The treaties, the protocol on subsidiarity and all the rest confirm that once a power has been passed, it cannot be given back without unanimity in the Council, which is unrealistic. I do not think that it helps to say that these are merely conferred powers.

The noble Lord is not going to agree with me on this, but he is right to say that you would have powers returned by unanimity, except in some areas of shared conpetence where, if the EU does not act, qualified majority voting might apply. As we move forward with the European Union of 27 member states, and begin to think about how it is going to operate in the future, one of the interesting points in the treaty is the recognition—whether or not it has been recognised before—that powers could be returned if that were most appropriate. I should have thought that the noble Lord would welcome that.

Those were two interventions on my speech, but I have finished anyway.

I am grateful to the noble Baroness for summing up the position as she sees it. There is an important thought here that we always plunge into the jargon of these treaties and of the law. It appears that here too we are to some extent in the hands of the lawyers and forget that there is a vast world outside that probably has little clue what we are talking about.

My mind has been set to the question of what competence really means. It is defined in the 10th EU Committee report, where there is an excellent piece on the whole issue of competences which answers most of the questions. It is clear that competence defines certain areas in which the EU institutions have conferred on them by member states the powers—if they were to use them and if the processes, whether vetoed, unanimous procedures or procedures that could not be vetoed, were launched—to make laws and regulations and interest themselves in these areas. I notice that in the excellent report from our committee, Professor Chalmers said that there was,

"nothing in the Lisbon treaty which would prevent or limit the European Court of Justice from extending competences from the base established by the Lisbon Treaty".

We are on the edge of a very fuzzy, permeable line. It is right that, as parliamentarians, we should seek to get a little more precision into the limits which ought to circumscribe the use of power by those who hold it.

Beyond that, I was pleased to hear the noble Baroness talk about the provisions for transferring back certain competences. She was asked which competences. She did not immediately have an answer from the past and, by definition, we obviously do not have an answer from the future yet. But that is the spirit. That is what many of us have been asking for all along—let us look in the 21st century at all the powers that piled up in the EU institutions during the 20th century. Let us re-examine them and see those that need unravelling, the acquis that needs unscrambling and the possibilities of decentralisation in an age of decentralisation, the reassertion of the democratic national parliaments as the anchor elements in the entire structure of the European Union. Let us look at those things, work on them and make suggestions about them.

None of these ideas seems to have come forward in the past few years—whether at the Hampton Court summit, which was supposed to be the great opportunity, or at other summits. However, it pleases me to hear this language raised. I am so pleased that, as long as my pleasure lasts, which may not be very long, beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 29A:

Clause 2, 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, 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 on the Internal Market and Competition; and(ii) "

I thought that it might be helpful to the Committee if, instead of moving a range of separate amendments all dealing with some aspects of the economic issues to which the Bill gives rise, I brought my 10 amendments together and spoke to them in the same group. I hope that that will be useful. In my zeal to do so, however, I should point out that the group includes Amendment No. 80, which unfortunately it should not, so I shall not speak to it. If other noble Lords agree, I will endeavour to do so later.

Amendments Nos. 29A and 29B are not wrecking amendments but follow very closely the arguments that were pursued in the other place, in particular those of Philip Hammond and Vince Cable on the alteration of the wording on competition. Amendment No. 32A deals with the internal market. We have the benefit of a European Union Select Committee report, The Single Market: Wallflower or Dancing Partner?, to which I shall refer in a moment. Amendment No. 39 deals with customs co-operation; Amendments Nos. 62 to 64 deal with state aid, competition and warnings on economic policy; Amendment No. 71 deals with common commercial policy; Amendment No. 72 deals with intellectual property and foreign direct investment; and Amendment No. 163 refers back to Amendments Nos. 29A and 29B.

I recall that, back in 2000, the Lisbon strategy set out its aim of making the European Union,

"the most dynamic and competitive knowledge-based economy in the world ... by 2010", so it is a good moment to work out where we are today and what this treaty will do in taking us to that goal. I regret to say that, as we look across the European Union today, we find a shaky, diverse economy. The nation states in the eurozone, which are forced to have the same interest rates, are suffering to varying degrees from that situation. The Minister may seek to persuade us otherwise, but an immediate case cannot be evolved for the management of the economy to move to Brussels. Certainly so far as the treaty is concerned, there are signs that the nations that agreed to the treaty have decided to move in that direction.

What do I mean? I am talking about free trade and open markets. I have always regarded those markets as crucial to creating an outward-looking Europe that can compete on the global economic world stage. It is sad that, in the treaty, there is so little about the single market and helping us to achieve those open markets. There is plenty in the treaty about EU values, but nothing about what was, after all, a founding principle of the European Union.

In evidence to the European Union Select Committee, John Hutton admitted in his written submission on 17 December last year:

"The Reform Treaty does not change arrangements for the internal market in any significant way".

Let us ask the Government why, at such a crucial moment, there is no significant change. There was one significant change, which is known as the Sarkozy clause. The one good thing in the treaty—the clause allowing free and undistorted competition—was struck out as a result of Monsieur Sarkozy's intervention. After his success, he commented:

"Competition is now just a means, not an end in itself. This opens the way to a different jurisprudence, one that favours European champions and brings a true industrial policy".

He said:

"We have obtained a major reorientation of the objectives of the Union".

He went on:

"Competition is no longer an EU objective or an end in itself ... The word 'protection' is no longer taboo".

I hope that the Minister will explain why the Government agreed to that deletion. Peter Mandelson has already responded in strong terms. He said:

"Competition is how we keep our markets efficient and dynamic; keep prices low for the consumers and maintain innovation. Competition is a source of creativity. Without it, our economies would stagnate".

I agree with Mr Mandelson, but why don't the Government?

Why are the objectives of full employment and social progress now going to have a higher legal status under European law than free competition? What has caused the Government to agree to this move? We need to know. I recall Commissioner Mario Monti, seen as one of the great prophets of competition, responding:

"If this goes through, it's the first step towards disintegration".

He continued:

"I am deeply surprised that the British are allowing this to happen".

Well, so I am and I think that the Minister has to give us an explanation.

I read in the press at the time that our Prime Minister, Gordon Brown, had "hit the roof" when he heard about the concession on the Sarkozy clause. The Sunday Times said that the Prime Minister "went ballistic" when he heard. From the plethora of memoirs at the moment, we are led to believe that that is a frequent occurrence. However, I am particularly concerned about this instance. If the Minister is going to tell us that very little has changed, why did the Prime Minister go ballistic?

There is so much else that I could deal with, but I want to try to conclude my remarks. However, I will say that, on this occasion, I am looking for support from my noble friend Lord Dykes, as much of what I have said was echoed in the other place by Vince Cable, who said that,

"the concession made by the British Government ... is rather damaging ... the concession represents a step backwards in political terms, and that is why we have tabled some amendments to ensure that that aspect of the treaty is monitored as it proceeds".

Sadly, his colleagues in this House did not table amendments. However, I have and these are those amendments. Vince Cable continued:

"There was a retreat from the commitment in the treaty from an undistorted internal market".—[Hansard, Commons, 6/2/08; cols. 1003-08.]

I look forward to hearing whether my noble friend Lord Dykes will support Vince Cable's amendment. I am particularly attracted by Amendment No. 29B, which is not a wrecking amendment but merely states that the Secretary of State shall lay,

"before each House of Parliament a report setting out the arrangements under the Treaty for securing an open market economy and requiring free and undistorted competition throughout the European Union".

What could be less wrecking than that? All it requires is for the Government to focus on what they have done—or is it what they have not done? Perhaps they should have focused a little bit more on the effect of what has happened in the treaty.

The protocol, no doubt the Minister will say, should do much to reassure us. However, there has already been extensive debate in this House about the difference between what is in the protocol and what is in the treaty. I am concerned about the changes that have taken place. I hope that the Minister will explain why she supports them.

We also have the report of our European Union Committee on the single market. Much of what it says is very worrying. On page 19, paragraph 59 states:

"We believe that the Single Market has great potential to deliver benefits to consumers and businesses, and yet, despite its impressive record, its future appears at risk. We are concerned that the momentum behind the Single Market has been weakened. We therefore call on the Government and the Commission to instil a sense of urgency into the review of the Single Market".

On page 20, paragraph 71 continues:

"The Minister for Europe assured the Committee that the removal of the words free and undistorted competition from the text of the Reform Treaty had not led, and would not lead, to a change in policy ... We call for a renewed commitment to the importance of competition and the need to complete the Single Market for the benefit of consumers and businesses alike".

We also need to hear from the Government about the effect on customs co-operation, state aid and common commercial policy. How will this affect our ability to continue to secure for our Commonwealth partners their rightful historic concessions? Over the years, these have slowly diminished in their effect, but they are still vital. We need to know what the Government will do under the new provisions to continue to secure them.

On Amendment No. 64, can the Government say who is going to define the warnings on economic policy? Who is going to be the arbiter? Who is going to set the benchmark against which nations will be judged? No doubt the Minister will seek to reassure us on intellectual property and foreign direct investment, too.

I hope that the Minister is happy that I should have brought together so many amendments in one debate. I hope that she will be able to respond to all the questions that I have raised and to all the amendments. I beg to move.

I support what my noble friend on the Front Bench has said. The Sarkozy amendment was widely seen as a strange development and all the more odd because the British Government appeared to go along with it. It was not only Peter Mandelson who spoke out against it; my noble friend Lord Brittan—with whom I do not always agree on European affairs, although he is a good friend of mine—also spoke out strongly against this change being allowed. It was also roundly and firmly condemned by the Financial Times, which, in general, is supportive of the Government's policy.

The removal of the words to which my noble friend referred is seen as a big reversal for competition policy. As everyone in the Committee knows, it has always been an objective of French economic policy to get this power in Brussels modified so that the strain of French policy that has always favoured the backing of national champions could continue. Those of my noble friends and noble Lords opposite who heard the speech of President Sarkozy in the Royal Gallery will remember that when he spoke about competition he referred to it being accompanied by support for national champions.

In this country and in other parts of Europe, we have got used to there being a strong competition authority in Brussels to police the internal market and to ensure that there is no backsliding to the long-past, long-discredited era of subsidies and backing national champions. Alas, in recent years, there has been some evidence that Governments in Europe are increasingly resisting the powers of the Commission. Noble Lords may remember that, after the troubles at Société Générale, the French Minister of Finance declared that the French Government would not let the bank be taken over by another European bank or another bank from elsewhere. It was only when Brussels started making some noises that that was not within the power of the French Government that they decided to say that they had never said this at all. Similarly, there were instances in Spain where, in contested bids for companies in the energy sector, the Spanish Government indicated that they did not wish the full flow of market forces to have effect.

The amendment that my noble friend has put down is extremely important. These powers are needed more than ever today because of the way in which Europe has been slipping away from what we call the internal market, which is always said by the Government and others to be the great achievement of the European Union. Nobody would applaud the internal market more than me. However, I have heard it declared many times that the internal market has been completed, whereas it is never completed but goes on and on. Anybody who knows anything about takeovers in the financial sector with countries such as Germany knows that the internal market is not the reality that people always claim that it is. The removal of the powers at the centre of the European Union to police competition and to ensure the full play of market forces is extremely important. I put it to the Government that it is a most retrograde step that the treaty was altered in this way. I strongly support the amendment of my noble friend.

I support these amendments generally, of course. I would like to underline a point made by the noble Lord, Lord Hunt, in introducing the amendments, which is the absurdity of the European Union's aim to make the single market one of the most dynamic economies in the world. I have to ask the Minister whether she still believes that that is the vaguest of possibilities when we consider the emerging economies of China, India, Brazil, Russia and so on.

One has only to look at the European Union's financial services action plan, a group of some 41 directives that appear to be aimed at making the City of London uncompetitive with the rest of the world. If that is not a deliberate aim, it will certainly be the effect. If the Minister and her advisers have not seen it, I suggest that they look at Open Europe's analysis of the financial services action plan, Selling the City Short, which analyses all those directives: the market abuse directive, which we certainly do not need, as we can do it ourselves, the markets in financial instruments directive, the prospectus directive and so on. Open Europe, which we have prayed in aid before in these proceedings and on the whole found to be extremely accurate, estimates the cash cost of implementing these regulations at some £23 billion over the next three or four years. But it is the knock-on effect from this regulatory atmosphere that is already beginning to drive valuable businesses in the City overseas.

Through its competition policy and its economic policy generally, the European Union imposes the Franco-German social and labour model on the rest of us. This does not suit the United Kingdom; it suits us less than anyone else. As I have mentioned before, only some 10 per cent of our economy trades with the single market, another 10 per cent, roughly, trades with the world outside the single market and 80 per cent stays here in the domestic economy. That gives the lie to our Europhile friends who constantly tell us that, if we were not in the European Union, we would have to obey its regulations but we would not be able to take part in making them. The 9 or 10 per cent of our economy that trades with the European Union would indeed have to obey the rules set by the single market just as, if one is selling a motor car to the United States of America, it helps to put the steering wheel on the left. It is precisely that analogy.

The overregulation of the single market has been recognised by Competition Commissioner Verheugen, who, about a year ago, put the cost of EU regulation at some 6.5 per cent of GDP. That is a colossal figure and higher than figures that have been produced by various British analyses of our position in relation to the single market. It is not just the rabid Eurosceptics who are saying this. No less a body than the Conseil d'Analyse Economique, the top French economic think tank, which reports directly to the French Prime Minister, said some 18 months ago that the single market had done nothing for the French economy. It also said that the euro had done nothing positive for the French economy. It is true that this institute, having carried out this accurate analysis to say why the single market had done nothing for the French economy, went on to say that of course the answer is "more Europe". It is at that point that we Eurosceptics part company.

In conclusion, it gives me great pleasure to agree with your Lordships' Select Committee on the European Union when it says that the future of the single market appears at risk. I very much hope that it is and that we can get back to open free trade between consenting democracies as this unfortunate project of European Union crumbles over the years to come.

While I have the opportunity, I would like to say that I did not earlier in our proceedings "impugn the integrity" of our Select Committee on the European Union. I merely pointed out that, if 23 people out of 24 are on the whole passionately in favour of the project of European integration and only one is fairly strongly against it, it would not be human unless that committee produced a report that was favourable to such integration and not favourable in the other way. I hope that that does not impugn the integrity of anyone and I certainly would not want to impugn the integrity of its chairman, the noble Lord, Lord Grenfell, of whom I am extremely fond.

I was not going to intervene in this debate but we have had very much one tone in it. I begin by congratulating the noble Lord, Lord Hunt, on a skilful speech in which he cleverly mentioned the key point—that there is a legally binding protocol—at only the very end. Everything that has been said would stand. It is perhaps a pity that we no longer have the wording about the free and undistorted competition as one of the constitutional treaty's objectives. As the noble Lord, Lord Hunt said, and he is always an honest man, there is this legally binding protocol to the treaty of Lisbon which ensures that,

"the internal market ... includes a system ensuring that competition is not distorted".

That is the key quote. The protocol says that the single EU market, which is a clear objective in Article 3 of the new treaty, includes a system ensuring undistorted competition. There are references to competition in the existing treaties, and they all remain in Articles 4, 27, 34, 81, 89, 91, 96, 98, 105 and 157. The idea that competition has somehow been wiped away from the whole of the European Union is way over the top, and is not true. When this legislation goes through, the legal position in relation to competition will remain unchanged.

Could the noble Lord explain the point of going through the exercise? It is exactly the same question that the noble Lord, Lord Forsyth, put earlier to the noble Lord, Lord Maclennan. What is the point of doing this if it does not make any difference? Is he sure, and can he assure the Committee, that when a case comes before the Court of Justice it will not use the fact that free and undistorted competition has been taken out of the main body of the treaty and put in a protocol at the back as an indication of intention for its judgment?

If the noble Lord, Lord Radice, has finished, I was hoping to hear from the Liberal Benches; I thought we might hear a speech in support of their amendment. I support the amendment so ably moved by my noble friend Lord Hunt. I sat at his feet when he was Secretary of State working for these very objectives, to reduce regulation in the European Community and promote the open market. I sat in disbelief listening to the noble Lord, Lord Radice, trying to tell us that the declaration that has been taken out and replaced by a protocol means the same thing. It does not mean anything of the sort.

We need to be honest here and point out what is going on. Once again, just as we have a split personality in the Liberal party on the legal personality of the Community—the Liberals in the other place think one thing while the Liberals up here apparently think another—so we have a split view about the overall direction of the Community. I understood that the British position has always been that we want an open market, free of barriers to trade, that recognises that a policy of national champions will, in the end, make those so-called champions weaker and less able to create wealth and prosperity for the peoples of Europe.

The whole point of being in this club is to maximise its economic success by promoting open market competition. The French may take a different view, but that is what has been incorporated in the treaty. It is regrettable and disappointing that the Government, who are so committed to the treaty, did not fight somewhat harder. I hope, if only to find out just how split a personality the Liberals are, that my noble friend presses his amendment to the vote so that we can see the names in the Lobby.

It might be helpful to the Committee if I quote from the report, because this has not been mentioned. It says in paragraph 9.14:

"The rules on competition contained in previous treaties would be unchanged by the Lisbon Treaty. Articles 101-103 of the TFEU are the same as Articles 81-83 of the TEC. They give the EU power to legislate to combat practices 'which have as their object or effect the prevention, restriction or distortion of competition'."

That is an addition to what is in the legally binding protocol.

I thank the noble Lord, Lord Hunt of Wirral, for putting these amendments together into one block—a great advantage—and for using the old English word "zeal", which I have not heard from the opposition Benches for some time. I also support what the noble Lord, Lord Lamont, said, about the incredible importance of this part of the responsibilities of the European Union. I accept that Amendments Nos. 29A and 29B are not wrecking amendments; none the less, they put up quite a big hurdle, in the sense that Amendment No. 29B would require an affirmative resolution of both Houses before the Act could come into effect.

I shall speak about the competition rules because they are an area we should be careful about changing, and the amount of work put into that sector by the European institutions, particularly the European Commission, is important. It is not just the big issues; there are a large number of small issues about subsidies to individual companies and so on where we urgently need the Commission to continue the sort of work it has carried out over many years. We cannot afford to lose them because we cannot play our European matches without a referee, and obviously we do not want to give the referee a red card—although some teams sometimes wish that would happen in European competitions.

This is an important area for the United Kingdom. I stress that in any one period there are a large number of decisions, not just the important ones on competition issues that we need to have taken in order to protect the free market. The consequence of the large number of decisions, many of which are directed to one country only, is that they are mostly short-lived because action is taken, but generally there are six to 10 times more decisions in a year than there are directives in the European Union. In consequence, a large number of them are withdrawn. Those who quote figures about legislative Acts might bear in mind what a large number are withdrawn; for example, in 2006, 943 European legislative Acts—that is, directives, regulations and decisions—were repealed, withdrawn or expired, and 532 of those were decisions. As a matter of interest, because I am sure we can put anything into the debates here, in 2006, 264 Council decisions were adopted while 296 decisions expired or were withdrawn or repealed, so the net effect in 2006 was minus 32 decisions from the Council. We have to be careful how we handle this issue to continue benefiting from the competition rules, and we want to see those fully carried forward in the Lisbon treaty.

A number of the amendments in this grouping relate specifically to the single market and the customs union. Those, at least in the shape of the Common Market, have been part of the European Union since its foundation. Before we nod these changes in the treaty through, however, we need to consider whether they take those two institutions in the right direction and whether we are close to the point where they may no longer be acting in our best interests. One has to compare anything that is bound up in these treaty structures with the alternatives of simply adopting a system of free trade and free capital movement. We may be moving in the wrong direction because the treaty—as we have heard from its objectives, which introduce the objective of a social market economy—is moving the regulations and apparatus of the single market further away from free trade and free competition and closer to the objectives of a protectionist, high-cost, uncompetitive market structure that may not be in our best interests.

We no longer have dedication to liberal markets in the European Union. The movement towards a social market, as opposed to a liberal market, is an explicit adoption of a political philosophy that ends up producing harmonisation by legislation and regulation that is not always intended to achieve the most competitive outcome for our businesses and our competitive standing in the world. The alternative is to have harmonisation driven by market forces, by businesses adopting those standards and regulations that they believe it is in their interests to adopt to be able to sell in those markets that they want to sell in. Increasingly, those markets are not in the European Union but, by selling into those markets, our businesses are now burdened by the costs and regulations imposed by this protectionist market in Europe. We are reaching the point where the balance of costs from the single market, as it has evolved, is too high. A number of noble Lords have mentioned aspects of that. The City of London is an important example of the single market being used in ways not necessarily in our interests. We are reaching the point where we need to take stock of whether further moves in the direction that this treaty takes us in, towards a social-market view of the single market, are in our interests.

Similarly, the customs union has increasingly become a protectionist vehicle, where deals which we might have done and supported to open up free trade to benefit third-world countries as well as our own economy have been blocked because of the CAP hostage that the European Union has put as a blockage to any further trade liberalisation. Again, this is not necessarily in our interests. While I understand the point that will be made—that the customs union and the single market are, in essence, part of the foundation of the European Union and are not introduced by this treaty—we need to consider that the changes this treaty is bringing about, and the objectives that it puts into the European Union in the operation of those aspects of the Union, are taking us in the wrong direction. It is, at best, a missed opportunity for the Government not to use this treaty to try to get those reforms. At worst, it takes us in a direction that may be very damaging for the UK.

Would my noble friend agree with a point that I forgot to make in my recent brief intervention? The overregulation from Brussels applies to 100 per cent of our economy, including the 80 per cent that takes place in the domestic market. It also hits the 10 per cent of our vital trade with the emerging super-markets of the East, and so on. Is that not another important consideration when we consider our relationship with Brussels?

I am happy to endorse the comments of my noble friend.

This has been a very surprising debate. We have heard from the other Side about a world of economics that I do not recognise. I know I am a professor, but I also sit on the advisory board of EDF Energy and I have a small company that operates around Europe. The changes that have taken place in Europe from the European science and technology programmes, through regulatory software from the UK now being used in France, Germany and other countries, are extraordinary. When I began in this business 30 years ago I never thought it would be possible for UK governmental regulatory software to be used by the French Government. Such things are quite normal now. They are stimulated by the EU. Talk to businesspeople, scientists and technologists across Europe about this world we are in, and the difference in attitudes is extreme.

As the noble Lord mentioned EDF, could he tell us what he thinks the prospects are for access to provide utilities in France, compared to the opportunities for French and Spanish companies to provide utilities in Britain?

I think it will happen slowly. We are benefiting. We had a debate on nuclear energy when many colleagues from the noble Lord's Side quite rightly welcomed the idea of the development of nuclear energy, wherever it came from, in the UK. You have to go to the United States; you will see far more restrictive policies in many areas. We have a combination of science, technology and an emerging free market. This would not happen if we went back to a more old fashioned kind of Europe.

I think we all agree that there has been substantial progress from the tone of the noble Lord, Lord Hunt of Wirral, when he moved his amendment. We are grateful for what he did in the clustering of the amendments, because the clustering was re-formed, if I remember rightly, following the change in the list. We are also grateful for the fact that the Conservative Opposition are withdrawing amendments, or reducing their number occasionally, to try to speed up the process, which we need to do in Committee. It is necessary to register that point.

The noble Lord, Lord Williamson, or another noble Lord, may have said that this was not a wrecking amendment. In a way, it is the first one of this kind. We understand the natural enthusiasm of the Conservative Benches for open competition and free markets. That is axiomatic. Indeed, an aspiration to, and affection for, that philosophy is shared in all parts of the Committee. The tone has changed and I welcome that. The previous kind of amendment was not so much in that category. As the noble Lord, Lord Hunt of Wirral, quite rightly said, the Liberal Democrats proposed a particular amendment because the anxiety over President Sarkozy's intervention was enormous at the time, and it was necessary to make sure that that was clarified. It has been partly clarified in quite a positive way, but perhaps not quite enough. We need further clarification when the noble Baroness the Lord President has time to refer to it tonight.

Coming to the main point of the amendments, I do not find it easy to understand the anxieties that have been expressed by certain Members. The noble Lord, Lord Hunt of Wirral, in his own words, referred to Mario Monti as one of the people who was, perhaps, a bit difficult on this score, from the general British viewpoint in this area. We remember a previous, far nobler episode when, at the time the Labour Government were new, Mario Monti was the Commissioner who insisted that duty free be abolished. There was ferocious opposition from British sources, including large corporations in Kent and elsewhere, who said that 100,000 jobs would be lost in Kent if duty free was abolished. Germany supported from behind with less strength. The British led that campaign to keep duty free. A more restrictive practice I cannot think of. We proudly did that and many people supported it. The Conservative Party was enthusiastically trying to make sure that Mario Monti was defeated. With enormous courage, he stuck to his guns and insisted that duty free be abolished. We saw the benefits of that process. It did not in any way dent the ability of each member state to charge its own indirect taxes, levies and duties on alcohol and other goods.

It goes to show that there is always a package of aspirations and impressions, does it not? Some countries have good examples and bad; we all have good examples and bad. The other countries quite rightly regard our failure to join the single currency as one of the greatest restrictions on a genuine single market. British Ministers in the previous Conservative Government used to say repeatedly that one could not, in essence, have a real single internal market without a single currency. That is the reality for those counties that had the courage to join the euro, which they have done with increasing success. You can tell because it is mentioned less and less in British newspapers, which is always the yardstick of success.

On these Benches we recognise that, in practice, the primacy of Community competition law inevitably restricts the ability of member states to legislate for additional competition and controls. In cases where those controls may directly or indirectly affect interstate trade within the market, that is an important part of the panoply of the European Commission's powers. I hope that the British national Parliament, in both its Houses, will make sure that it continues to support the Commission in creating that Europe-wide competition and, indeed, in ensuring that international competition spreads beyond the boundaries of the EU itself. After all, we are the major supporter of this much more active and effective competition policy under Wim Kok, and Lisbon mark 1 and mark 2, which are reinforced.

I agree with the noble Lord, Lord Hunt of Chesterton, that the idea that the European economy is not successful is absurd. It is very successful in many ways. Unfortunately we only have 110 kilometres of high-speed track. Even Spain is now aiming for 10,000 kilometres by 2014. France already has 7,000. There are many examples either way, some initiated by the state sector. The first very successful people carrier on the Continent was the French Renault Espace, which was produced by a public sector corporation. So the idea that one has to be ideological about all these points is incorrect. However, we need a very strong internal market and we welcome the opportunity for the noble Baroness the Lord President to explain the Sarkozy syndrome to us again.

Before the noble Lord sits down, will he indicate whether—perhaps I missed this—he will support the amendments which were tabled in the other place by Vince Cable, and which my noble friend has tabled here tonight?

Speaking from memory, the Vince Cable amendment was accepted on its own by the Speaker of the Commons. We were not supported then—again, I speak from memory—by the Government or the Tories. We put forward the amendment on our own and we lost the vote.

I promised the Lord President that I would be extremely brief. I am delighted that the speeches which succeeded that of my noble friend Lord Hunt afforded enough time for the noble Lord, Lord Dykes, to receive instructions on how he should play this debate, given the turn of events.

I am a bear of very little brain but late at night on the first night in Committee I revealed that I had served on the Budget Council of the European Union for four years. During those four years we knew when we had won an argument and when we had not. I agree that some victories are not clear cut. In the War of the Spanish Succession, Ramillies and Bleinheim were clearly profound victories, Oudenarde and Malplaquet were more doubtful. But nobody has ever suggested that the Battle of Waterloo was other than a victory, even if Prince Blücher sought to persuade Wellington in the picture that looked down on President Sarkozy when he made the speech to which my noble friend Lord Lamont referred, that the title should be changed to the name of the pub, the Belle Alliance, in which Napoleon ran his campaign during the battle and which is in the background of the picture. Nobody has suggested that it was other than a clear victory.

The question which we have to ask the Lord President from these Benches is, notwithstanding what the noble Lord, Lord Radice, said about the legal protocol, why was the Sarkozy amendment allowed to go through, given the pride that he self-evidently took in the matter at the meeting in the Royal Gallery, to which reference has been made? How can the position which we were defending as we went into that meeting—like the Duke on a ridge in front of the village of Waterloo—have been reinforced by making the concession that we did?

I am extremely grateful to the noble Lord, Lord Hunt of Wirral, for bringing together this group of amendments to enable us to have a broader debate although noble Lords have inevitably focused on the President Sarkozy issue, particularly as regards Customs, which I shall come to, and other issues. I shall try to deal with each of the amendments, albeit it somewhat briefly in some cases, so that they are dealt with by the Government Front Bench.

The noble Lord, Lord Brooke, always gives me the benefit of a classical education. I was not trying to suggest that he should be brief. I seem to have gained a reputation for insisting that noble Lords should be brief. The noble Lord, Lord Forsyth, nods, which suggests that I might be trying to beat noble Lords into submission. Heaven forfend. I was merely trying to ensure that I noticed everybody who wished to speak. I had not noticed the noble Lord, Lord Brooke, for which I apologise.

I shall deal with the amendments in order to ensure that I cover them all. Amendment No. 29A has two parts. The first relates to the confirmation that the Union has exclusive competence to establish competition rules. Noble Lords will know that this competence is not new; it simply confirms the current position. By definition, rules necessary for the operation of the internal market—an EU-wide market regulated at EU level—must be an exclusive competence of the EU. If rules necessary for the operation could be set aside, it is hard to see how it would function effectively. The reason there has not been a change in terms of the single market in this amending treaty is because we believe that the arrangements and the rules that are staying in force are appropriate and good and there is no need to tinker with them. We believe that our access to the single market makes the UK such an attractive destination for investment. With that access comes certain common rules that are necessary for the functioning of the single market. Competition rules are among the most fundamental of such essential rules. As noble Lords will know, that does not mean that the whole area of competition law is an exclusive competence. The UK can, and does, set additional competition rules for other purposes that do not obstruct the operation of the EU's rules.

This is one of the central planks in the economic debate about our relationship with Europe. Can the noble Baroness tell us why we would be any worse off if we had a simple free trade agreement with the single market as opposed to being in the Customs Union that is a single market? Why would we be less attractive to foreign investment? Why would we suffer at all if we merely had a free trade arrangement instead of all the baggage that goes with membership of the EU?

The EU is not just about a free trade agreement, important though that is. From his perspective the noble Lord sees that that is an adequate and appropriate relationship with other member states. That is his opinion. In the opinion of the Government and, I think, that of the Conservative and Liberal Democrat Front Benches, and probably that of many Members who have had the privilege and pleasure of being involved in the European Union, it is much more than that. The noble Lord believes that that is as far as he wishes to go and, indeed, his political party would say so. That is for them to put forward. The Government's contention is that the EU brings much greater benefits, not least, as we mentioned in earlier discussions and will do so again, in terms far beyond simply trade; for example, in terms of how we tackle some of the big issues that face our countries such as climate change. The noble Lord and I differ on that principle.

The second part of the amendment concerns the publishing of the report. The European Commission publishes its annual report on competition policy which we ensure is deposited with explanatory memorandum for scrutiny by the relevant European Committee of both Houses of Parliament. We do not as a matter of policy comment on the competition enforcement activities of independent competition authorities, be they at national or European Union level. It is important that they are able to carry out their function free from political interference. I hope that the noble Lord will consider that I have addressed that amendment.

Amendment No. 86, which refers to the protocol on the internal market and competition, goes to the core of much of the discussion that we have had on this group of amendments. Noble Lords identified the importance of President Sarkozy's position in this regard and the importance of the change that was made within the treaty. First, negotiations are negotiations. Many noble Lords present this evening and in the House overall have been involved in negotiations and will know that they are a give and take process in which it is often important to look at the domestic situation of those trying to put forward a proposition. The second element to a negotiation is to look at what would be the impact of that negotiated position. As I said in response to an Oral Question by the noble Lord, Lord Campbell of Alloway, I cannot read President Sarkozy's mind but I know that in putting forward his own negotiating position he will be very mindful of his domestic position. That is what Heads of Government must always be aware of. Therefore, I presume that the President of France put forward a proposition that he felt would find favour, and which he has subsequently said does not have legal force. I believe those were his words. I promised that I would not quote overseas leaders but I think that is a particularly relevant symbolic comment. I believe that the President of France made a symbolic gesture without legal force that was important in terms of his domestic circumstances.

The response of the UK Government and the other member states involved will be to look at what is being proposed and assess its relevance and importance in terms of what was being negotiated. As the noble Lord, Lord Lamont, and other noble Lords said, this is a very important aspect of the functioning of the European Union and of the Lisbon treaty. As noble Lords will know, we considered carefully the other articles to which my noble friend Lord Radice referred: articles 4, 27, 34, 81 to 89, 96, 98, 105 and 157, where references to competition remain as they were. We will also have looked at the protocol strongly supported by the then-Prime Minister Mr Blair and the now-Prime Minister Mr Brown. I have no idea whether Mr Brown was upset, but I know that he supported fully the ambition of getting a protocol.

I apologise for interrupting the Minister: I do not want to detain her. I am reflecting on the words she used about President Sarkozy: "a symbolic gesture without legal force". Does that mean that it is the Government's position that what President Sarkozy promised his people was an empty promise?

I am just quoting what President Sarkozy said in the last speech I heard where he referred to this. He said that this was an important symbolic gesture but it was not a legal change in any way. I am merely quoting him. I am not suggesting or trying to get into the mind of the President of France, nor indeed what he "promised to his people". That is simply my understanding of what he believes. It is a consequence of what happened. The point that I was moving on to is, having got that, it is important to see what the effect of what is being put forward would have. In any negotiation one looks at what is being put forward and determines whether it has an impact that would be detrimental either to the functioning of the European Union or to the Government's national interests.

I have already explained that the other articles remain the same and read them out. I have also indicated that we promoted and pushed for a protocol to be clear on the matter. We then had to consider the question of whether a protocol has the right kind of status. I am going to quote John Major in 1992, who said:

"The protocols agreed at Maastricht will become an integral part of the treaty of Rome under article 239 and will have equal legal force".—[Hansard, Commons, 21/5/92; col. 218.]

Seventeen protocols were annexed to the treaty of Maastricht. The opinion in many different places but not least the Commission is that the protocol is as legally binding as anything else. That is the nature of protocols within European Union treaties.

The question for the Government is simple. President Sarkozy has put forward a proposition for his own reasons. I do not pretend to suggest that I want to interpret them. Having put forward that proposal, which is important to the President of France, the responsibility of the UK Government is to consider whether it has an impact on the functioning of the European Union and national interest. Looking at the treaty, taking the right kind of legal opinion, it is clear that it does not. Noble Lords might have preferred to have the original text within the treaty but the bigger question for the Government is whether it makes any difference. The answer is no.

Therefore, in the spirit of negotiation, it is reasonable for the UK Government to say that, provided we have all the other articles and the legally binding protocol, we believe that the position remains as it did. That is the position that the Government took and stand by.

I turn to Amendment No. 63, which seeks to introduce co-decision for the proposals to address distortions in competition. We support that shift and we believe that it is important to involve the European Parliament in the process. It adds to democratic accountability and transparency.

Amendment No. 62 relates to EU state aid rules intended to ensure fair competition and a single common market. Noble Lords know that the rules prevent state aid that would seriously distort competition. It is not in the UK's interest. We should have to notify all UK aid to and seek approval from the Commission before the aid could be given, not least because that could result in a delay of up to a year and hold up aid being given to small-scale projects that are unlikely to distort competition.

Amendment No. 64 refers to the promotion of structural reform, the core of the Lisbon agenda which the UK has championed since 2000, referred to by the noble Lord, Lord Hunt of Wirral. Those treaty provisions introduced by Maastricht set a framework by which member states can co-ordinate their economic policies in order to boost competitiveness and productivity, which is a UK interest. The Lisbon treaty makes only limited changes to that framework. It retains the existing provisions for the co-ordination of economic policies by Ministers within the Council. That ensures that it is the member states themselves that remain responsible for their economic policy. It allows the Commission to address a warning to a member state on the same grounds on which the Council can address recommendations. It is an extra procedural step but a warning carries no legal force. It is another route by which our common approach to achieving economic reform could be held up to the light and examined.

Amendment No. 32A refers to the confirmation in the Lisbon treaty of the fact that the single market is a shared competence. In order for the single market to operate effectively it is essential that some activities are managed at EU level to make sure that we have coherence, fairness and transparency. Amendment No. 39, to which the noble Lord, Lord Blackwell, referred, is about customs co-operation. There is nothing new in customs co-operation. We participated in it before we joined the European Union. We carry out important co-operation work with member states and the Commission. As the noble Lord will know, that is to do with money laundering, counterfeit goods and illegal meat products. Those are important areas in which we would wish to continue to be involved.

Amendment No. 71 is on the common commercial policy, which covers trade. It has been part of the treaty since 1957 and has brought huge benefits to the UK. The process does not change under the Lisbon treaty. The key changes are the inclusion of foreign direct investment and the enhancement of the role of the European Parliament.

Amendment No. 72 proposes inclusion of the words,

"and services and the commercial aspects of intellectual property, foreign direct investment".

The treaty merely reflects reality. It is also made clear that unanimity is preserved for CCP agreements in those fields when unanimity would be required for the adoption of internal rules.

Amendment No. 80 looks at the extension of co-decision to the establishment of staff regulations.

I am not moving that amendment.

In which case I think I have covered all the amendments. I hope the noble Lord is happy.

Happiness is relative. I am grateful to the noble Baroness for her response. I am particularly grateful to my noble friend Lord Lamont for pointing out once again that there is some evidence that Governments are resisting the Commission's competition policy. He instanced in particular France and Spain, and a number of my other noble friends have given other examples. I certainly agree with my noble friend Lord Blackwell that we are probably looking at more than a missed opportunity—it is an indication that things are moving in the wrong direction. My noble friend Lord Brooke of Sutton Mandeville told us about the Napoleonic war, which the noble Baroness referred to as "a classical education". It was a classic example of exactly what we have been talking about; I agree with that. My noble friend Lord Forsyth instanced a number of questions that were aimed really at the Liberal Democrat Benches, and I shall come to that in a moment.

To the noble Lord, Lord Radice, I shall say just this. Without going into great detail, there is some evidence that the European Court has questioned the validity of protocols. That is why one is cautious about putting one's faith into the changes that have taken place.

The noble Lord mentioned his concerns about the European Court of Justice, but surely the European Court of Justice would not ignore all the many clauses that have been quoted by the noble Lord, Lord Radice, and the noble Lord, Lord Grenfell, which are in the existing treaties and which have a clear commitment to undistorted competition.

Yes, I agree. I mentioned the noble Lord, Lord Grenfell, who has been meticulous in ensuring that we get the full text of what his committee has deliberated on. He has done what the noble Baroness, Lady Quin, has just done—instant the existing provisions which have always been there. My concern is with the provisions that are no longer there and the replacement with the protocol which I was just referring to the noble Lord, Lord Radice. I cannot agree with the noble Lord, Lord Pearson. I think that he has already identified me as a Euro-enthusiast, which in his view is a derogatory term. I regard it as a symbol of something that I have believed in for so long: a prosperous, peaceful Europe. That is why we want always to improve the way in which the future will pan out.

I agree with the noble Lord, Lord Hunt of Chesterton, not only because we have the same name, but because he made a very important point about the need for constant co-operation. It was my privilege to be associated with a number of instances of that co-operation when I had the honour of having ministerial responsibility for science.

One strange comment came from the noble Lord, Lord Williamson, which I have been trying to work out. He said that the problem with Amendment No. 29B was that it would impose a hurdle. What is the nature of the hurdle? It is that the report must be approved by affirmative resolution of both Houses of Parliament. To a bureaucrat, that is a hurdle. To a democrat that is exactly what should happen. What is the point of being in this House if we do not from time to time affirm important resolutions? I find his comment slightly mysterious; no doubt he will explain it to me in greater detail.

What lies behind this debate is the worry—a deep sense of foreboding—that it is not exactly just symbolic. Charlie McCreevy, the Commissioner for the single market, recently said that,

"in reality, many countries give lip-service to open and free competition".

I agreed with the noble Lord, Lord Pearson, on financial services, because we urgently need in that arena a more efficient and integrated market. In response to the noble Lord, Lord Williamson, I want to consider Amendment No. 29A, which has no mention of a hurdle. On an area on which I think all sides have reflected concern, it merely says that the Secretary of State should report annually to Parliament,

"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"— which meets the point raised by the noble Lord, Lord Radice. We are just keeping an eye on it. Therefore, I wish to test the opinion of the Committee.

On Question, Whether the said amendment (No. 29A) shall be agreed to?

Their Lordships divided: Contents, 63; Not-Contents, 162.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 29B not moved.]

moved Amendment No. 30:

Clause 2, page 1, line 12, after "excluding" insert—

"(i) Article 2, paragraph 12, inserted Article 2B TEC (TFEU) paragraph 1(d), relating to the conservation of marine biological resources under the common fisheries policy; and(ii) "

This amendment was tabled by my noble friend Lord Howell of Guildford. I am still feeling confused by the reaction of the Liberal Democrats to their own amendment being moved in this House. Luckily, the noble Lord, Lord McNally, put us on notice at the end of his article in the House Magazinewhen he said:

"My stratagem for the bill is now clear—we are going to confuse our opponents with the facts".

If they have not confused themselves, I am sure that they have confused most other people.

Perhaps my noble friend can help me. How can it be that the Liberal Democrats voted against an amendment that they put forward in the other place?

Is that not a question for the Liberal Democrats?

How is it that the Conservatives voted differently in this House from how they voted in the other place? I said in my Second Reading speech that we were determined not to fall into Conservative elephant traps. Those will have to be a lot better than the one that they just tried to get us to trip into if they are going to succeed over the next few weeks. But I thank them for the advice.

This amendment opens up a subject that has caused a great deal of pain and confusion since the United Kingdom signed up to the treaty on the European Community in 1957. Since then, a proud industry has been decimated. This is particularly true in regard to the management of fish and marine stocks around these islands. It is incontrovertible that, so far as conservation of marine biological resources is concerned, if the common fisheries policy has existed at all, it has been an unmitigated disaster.

When debating this issue in another place, my honourable friend Bill Wiggin pointed out that the Minister had affirmed that the EU competence on marine biological resources and fishing derived from Article 102 of the UK treaty of accession, which said that,

"the Council, acting on a proposal from the Commission, shall determine conditions for fishing with a view to ensuring protection of the fishing grounds and conservation of the biological resources of the sea".

Until now, that is the sole text to which the UK Government have signed up. This wording was found to be unclear, and a ruling passed by the European Court of Justice in 1979 said that:

"The power to adopt ... measures relating to conservation of the resources of the sea has belonged fully and definitively to the Community".

Noble Lords will be aware that this means that all control of the resources of the sea, right up to our shoreline, comes under the administration of the European Community. It is only by the grace of three derogations from the starting date of this ruling that we are allowed to administer our own territorial waters between the shore and the six-mile limit. Between the six-mile and the 12-mile limits of our territorial waters, the rules have to be acceptable to all member states. Defra has the responsibility for policing the area, and this is where it can impose its own regulations on British fishermen, but not on the vessels of other member states who have not given agreement. The type of thing that happens is that British fishermen, if they catch crabs that are below a certain size, have to put them back. However, if the French boats are fishing next to them, they can catch those same crabs and take them away, because a different size restriction applies in France.

This derogation will expire in 2012. After this treaty, will this derogation be renewed under the codecision procedure or by the Council of Ministers? Whichever, it is bound to be an open question as to what new rules will be agreed under a regime that is founded on unrestricted access to the seas. Surely, when asked to clarify our treaties, we should consider going back to the original document before we sign up to any rewording of the provisions.

The proponents of this treaty tell us that they wish to bring clarity to all European arrangements. In this case, clarity consists of adding to the heading of Article 1, Title II, which is "Agriculture", the words "and Fisheries", and then going on to codify the powers in Article 2, paragraph 12, Articles 2B and 2C, by saying that in the area of conservation of marine biological resources under the common fisheries policy, the Union will have exclusive competence. The treaty goes on to say that the common agricultural policy and the common fisheries policy will be areas of shared competence. So much for increased clarity.

Does the Minister know what marine biological resources do not come under the common fisheries policy? Is it oil or something else? He will be aware that when an amendment on this topic was discussed recently in the other place, MPs who know the fishing industry—Members of all parties—expressed dismay at this allocation of competences. They all know that, at a time when it has been found in most countries that the success of the fishing industry is highly dependent on having reasonably local control, our Government have been prepared to sign a treaty which amounts to a power grab by the European Union of the management for all time of our considerable marine resources.

Anyone would think that the UK would be in a very strong position when it comes to discussing fishing. Within the EU, some 70 per cent of fish landed come from within our 200-mile fisheries limits, although only 12 per cent are landed by British boats. The Minister will be aware of the importance of fishing to the Scottish economy. I believe that 65 per cent of fish landed come ashore in Scotland. Under the devolution settlement, Scotland administers the area of sea from Scotland out to the six-mile limit, but it is the control of the highly productive area between six miles and 12 miles that raises most concern and is the responsibility of Defra. Unless the UK is prepared to take a very strong stand on the issues in this area, one can see why the Scottish Executive will be demanding to take the prime negotiating responsibility in any future negotiations on the CFP. Even the European Parliament's Committee on Fisheries voted against the proposal in the treaty. The committee stated that,

"within the context of the other exclusive competences of the EU which are detailed in the draft Constitution, the inclusion of the conservation of marine biological resources is anomalous and unjustified".

All those in the industry who are trying to follow any programme of conservation or management around our coasts can feel only totally frustrated. The implementation of the clauses in this treaty will not help one bit. Fishing is bound to be an area of great interest and importance regarding marine biological resources, but there are many other areas, of course. What effects will these powers have on the Government's much vaunted marine Bill? It really looks as if all the questions of special protection areas and marine reserves will be dealt with at the say-so of Brussels. There will be spillover into permits for the abstraction of minerals. It looks as if, unless some other directive intervenes, the only areas on which we will have sole competence are the quality of the water and, possibly, leaving minerals undisturbed.

What will the standing of the six regional advisory committees for fishing be? They have recently been set up and have been seen as a reasonable step towards resolving some of these issues on the waters around England.

The main part of the common fisheries policy that has destroyed any credibility in its efforts at conservation has been the total allowable catch regime and the inevitable consequence of discards. The latest EU publication on this topic gives figures of the discards of flat fish in certain areas by beam trawlers at an estimated 70 per cent by weight and 80 per cent by number. Overall, it is an estimate of five tonnes of fish discarded for every tonne landed. Where can one see conservation in that? Even then, the EU has to admit that its knowledge of discards in some areas is poor, let alone the lack of accurate information on the catches of foreign vessels within the six-mile to 12-mile area. No wonder the fishermen out at sea all the time reckon that they have a much more realistic estimate of the status of the stocks than that obtained from the official statistics.

There is some comfort for us in the determination of the present Commissioner for the CFP that, by the end of his term of office in 2010, there should be a new regime on discards for all countries. However, the record so far does not give us grounds for great optimism. Can the Minister say if and when the UK reckons to be able to submit its proposals for meeting this deadline?

A properly managed and sustainable fishery is in the interests of all fishermen, and the fact that Britain should argue that it should manage its own fisheries does not mean that all the fishermen would have to be British. The only way that properly managed fisheries could be ensured would be to remove our waters from exclusive EU competence, as the amendment proposes. The only other solution would be an insistence on having the same powers that we have for six miles extended uniformly to 12 miles in the next EU derogation. But I think that we would have to wait an awfully long time before we could expect that concession. I beg to move.

I was somewhat bewildered at the speech of the noble Duke, the Duke of Montrose. The treaty states that the EU should have competence over marine biological resources and shared competences over everything else to do with the CFP and the common agricultural policy. That seems pretty straightforward. Biological resources clearly do not include oil, minerals, water, wave power, energy and all other issues in that area. We on these Benches would support the status quo. I was for five years on the European Parliament's fisheries committee, which it was good of him to mention. We were very clear about these issues of where the current treaties and practice actually stood.

It is absolutely right that the common fisheries policy does not work. That issue is not one of biological resources. The Conservative Government in 1973 overwhelmingly handed a huge proportion of their allocation of channel stocks to the French and the Belgians. During their most recent period of government the Conservatives made no effort whatever to change the common fisheries policy, much to the dismay of other colleagues of mine in the European Parliament. I am delighted that the Conservatives are now repentant and that they have changed their minds on that policy—and that we might have from their Front Bench an apology for the misallocation that started back in the 1970s.

Yes, the common fisheries policy needs to be radically changed and needs to become a regionally managed policy that involves not one member state and its national territorial waters, but nation states around natural fish stock areas. It is clear that renationalisation of the seas does not work. We have marine biological resources—mainly, but not exclusively, fish—that strangely do not have passports, despite e-borders programmes. They go from one national territory, sea or EEZ to another without any hindrance whatever. We can control our fish stocks as tightly as we might wish to nationally, but when the fish cross a boundary, another member state can take those fish stocks. That is why regional management around areas such as the channel, the North Sea and the Irish Sea is the basis on which the common fisheries policy should change, not the principle of a common biological resource.

One of the things clear to me in terms of my fisheries work was that the states and regimes particularly successful at fisheries included New Zealand and Iceland, which had exclusive control and sovereignty over a continental shelf. That is not physically possible in the countries of the European Union, but we can get somewhere towards that if we have—as we have had since we joined the European Economic Community in 1973—at least a basis on which we can change the common fisheries policy to something far more satisfactory. To move it back to a sort of exclusively national regime would be a disaster for the fishing industry generally. I absolutely agree that we need to keep control of coastal waters and I am sure that that derogation will be renewed in the future, as it has been in the past. It is in the interests of all member states to do that.

Therefore, from these Benches we see no problem with the status quo as it is described now, but I absolutely welcome the Conservative Party's determination to change fundamentally the common fisheries policy. It is a pity that they never lifted a finger to do so in their last Administration.

I would like to intervene briefly, particularly following the speech of the noble Lord, Lord Teverson, who seemed to say, "Yes, the common fisheries policy is not working at all but we have to retain it". That seems a rather odd position to be in.

I remember being on the Environment and Agriculture Sub-Committee, Sub-Committee D. We studied the common fisheries policy on several occasions. I remember members of the committee and the Opposition making passionate speeches about how dreadful the policy was. We had evidence from fishermen whose livelihoods were being taken away from them by the provisions of the common fisheries policy. I think that everyone agreed about it then, as they seem to now. The noble Duke who moved the amendment made that clear.

I was shocked to hear that discards seem to have gone up rather than down during the intervening period. I think that the general discards are something like 60 per cent of the total catch and I cannot believe that the Government believe in retaining or pursuing a policy where 60 per cent of the catch is thrown overboard or, as was said, where 5 tonnes are discarded for every one sold. That seems to be an absolute monstrosity.

Yet this policy is supported. It is not working but we do not want to change it, according to the noble Lord, Lord Teverson, because it is all part of the treaties and we should not have given it away anyway. Of course, I agree that we certainly should not have given our fisheries away. We managed them perfectly well before we handed them over to the European Union and, of course, countries manage their fisheries individually far better than the Union is able to do. Examples include Norway, Iceland and even Namibia, as well as New Zealand and Canada. They can manage their fisheries in an exemplary—

That is easy to say, but I just point out that the Grand Banks off Newfoundland are still as barren as they ever were and Canada has had complete control over its territorial waters. Canada has suffered very much, and there has been exactly the same problem with Pacific salmon. I am sorry, but it does not work.

I think that the noble Lord might have to take that up with the Canadians, because I believe that the situation is improving significantly, particularly since they kicked out the Spanish fishermen who were overfishing Canadian waters. The Spanish have a long history of fishing in those waters. The noble Lord should read Kipling's Captains Courageous.

The fact is that the common fisheries policy simply is not working, yet we seem to go along with it as part of the deal. There are passionate speeches made about how deplorable it is and Ministers make speeches saying that they do not agree with it, but it carries on and there is no sign of improvement. The Fisheries Commissioner may wish that things will change, but they do not seem to. Therefore, the amendment is definitely worth pursuing. If something is not working, why continue banging your head against a brick wall? Why not try to change and return to where we were, in control of our own fisheries? When we had a proper fishing industry, we could easily police our territorial waters, so that would be no problem at all. I am not persuaded by the arguments that, because we have handed over our fishing industry to the European Union, we should go on doing so even though it is not working. Everyone admits that it is not working, so why do we not change and do something different?

I, too, support the amendment. Perhaps I may add an interesting statistic to the figures given by the noble Duke, the Duke of Montrose, who estimated that for every tonne landed some 5 tonnes are discarded. Another way of putting that is that some 30,000 articulated lorriesful of dead fish are thrown back into the sea every year. That is about the measure of the problem; indeed, it is the lowest estimate that we have from the European Union. Other estimates put the figure at 50,000 articulated lorries, quite enough fish to fill the Palace of Westminster and the whole of Whitehall several times over—and there must be a number of fishermen who have lost their livelihoods who might feel that that would be a more positive use of those premises.

The argument put forward by the noble Lord, Lord Teverson, that fish do not have passports and do not respect national boundaries does not work for the United Kingdom. I think that, the night before Edward Heath signed away our fisheries in a side agreement to the treaty of accession in 1972, we owned 70 per cent of the fish that swim all year round in European waters. Of course, that is why our dear partners-to-be in the European Union were so keen to get hold of them.

Again, Canada is not a good example. One has only to look at the Faroe Islands, Iceland and Norway to see how a fishery can be successfully managed by a democratic nation state on its own. The average take-home pay of a Faroe Islands fisherman has become £45,000 a year under the islands' policy.

The noble Lord, Lord Teverson and, I have no doubt, the Minister will say that the common fisheries policy requires radical change. I believe that the words "and fisheries" were added at the end of the heading on the common agricultural policy chapter in the Maastricht treaty. If you read on through the treaty as it was before those words were added, you will see that everything refers to agriculture—merely "and fisheries" was added at Maastricht. Now, in the treaty of Lisbon, there is an attempt to adjust that by saying that any phrase that comes in that part of the treaty and sounds as though it is to do with agriculture also covers fisheries.

My question to the Minister is: why is it impossible to change this policy? Does it require unanimity? Can we not get a famous qualified majority vote? Who is it who opposes change to this scandalous policy? It must be one of the most destructive environmental policies on the planet, yet we are told that we need to be in the European Union to benefit from its environmental wisdom, weight in international negotiations and all the rest of it.

Is it true that the bureaucrats who designed this policy in the first place had never been to sea? They had probably never seen a ship, let alone a fish unless it was sitting on their plate. Is it true that they did not realise that when the nets come up from the sea most of the fish in them are already dead? The attempt to practise conservation by limiting the number of fish that are landed in port was the mistake that caused the discards.

I trust that that was a refreshingly brief intervention, but the question remains: why cannot this policy be changed? How is it possible that the nations of the European Union cannot come together and make discards illegal, as is done in these other countries, and simply eat or otherwise use all the fish that we have taken out of the sea and which are dead? Why do we have to throw them back?

I am certainly no expert on fishing, but during the time that I have been involved in the issue of Britain's membership of the European Union—originally, the Common Market—I have received a lot of letters and representations from the fishing industry. Certainly those who go out and catch the fish have found their livelihoods reduced time and time again. The large fishing industry that we had before 1973 is now a shadow of its old self, yet we are apparently giving even more power to the European Union to decide not only where and what we should fish but to whom we should give the fish.

I understand—I may be wrong and I have no doubt that I will be corrected—that fish and other biological beings in the seas surrounding the EU are allocated to those who are not surrounded by sea. That seems to be an unfair distribution of a resource which this country used to own absolutely and which, generally speaking, it fished well. We had conservation measures in hand and I think that they were largely supported by the fishermen. That is why the industry maintained quite a large presence, whereas it now has a very small presence.

The European Union's policies on fishing are, to put it mildly and kindly, rather crazy. As the noble Duke, the Duke of Montrose, pointed out, this country has 70 per cent of the good fishing in the European Union, yet we have seen foreign fishermen allocated quotas within British waters. They have been allowed to fish when our own fishermen have been told to stay at home. As I know, because I have been down there and talked to them, fishermen in the south-west are sitting in their houses having been banned from fishing. They see Spanish fishermen catch the fish that they used to be able to catch but can no longer because of some bureaucratic decision made in Brussels. What sort of policy is that? However, we now want to give the EU more power.

Since 1973, we have had no opportunity to protect our fishermen. We tried to protect them. We said to the Scottish fishermen, "You are being unfairly treated. The Spanish are coming in and are catching fish that you should be catching but are barred from doing so to a certain extent". The House of Commons and this House enacted a Bill to protect the livings of Scottish fishermen, which was the right thing to do, but what happened? There was an appeal to the European Court, and the Court said, "You can't do that; they are no longer your waters. They're EU waters and the Spanish have every right to fish there".

I am sorry; I shall not intervene again. The whole point is that that episode had nothing to do with the common fisheries policy; it was to do with the single market. It was a great problem at the time because the Conservative Government had allowed free trading and quotas to be sold abroad in a way that other EU countries did not. It was a single market issue, not a common fisheries policy issue.

Can that be right? If the foreign boats had not been in our waters because we were controlling those waters, and once we had satisfied our own valuable industry, we would have let out our fishing to foreign boats that could use the surplus. Therefore, without the common fisheries policy, we would not have been at square one in the first place.

That is a very good point but the Scottish fishermen could not care less under what policy it happened. The fact is that the Government and Parliament tried to protect them from the depredations by the Spanish fishermen but were told by the European Court that they were acting illegally. Indeed, I think that they had to pay £200 million-worth of compensation to the Spanish fishermen—money that would have been better in Scottish rather than Spanish pockets, as these were, after all, fish that the Scottish fishermen had previously owned, so to speak.

To date, the whole policy has been one of squandermania of our fishing resources, undermining this country's fishing industry and hurting the livelihoods of our very good fishermen, not only in Scotland but throughout the United Kingdom. A lot of decent, good people burnt their boats because they were no longer required, as they could no longer fish in the waters where they had traditionally fished.

I am coming to an end but I should like to say something to the Conservative Front Bench. The Conservatives once had a very good idea. They said that the common fisheries policy was bad for our fishing industry and that when they got into government they would withdraw from it. Unfortunately, having said that they would withdraw from the policy, they then withdrew from that promise. If they examined the matter again and said, "In spite of this treaty and in spite of what the article says, if we get back to power"—they can get back to power if they have the right policies—"we are going to take back our fishing waters", that would be very popular; I assure them that it would help the Conservatives a great deal in the south-west of England. I do not expect a reply tonight of course but I think that it is something on which the Conservatives should reflect.

I thank noble Lords for their contributions to this debate. I remind the Committee that Amendment No. 30 refers to a provision in the treaty setting out the Union's exclusive competence on the conservation of marine biological resources under the common fisheries policy, which reflects previous European Court of Justice case law.

The Lisbon treaty makes no changes to the competence of either member states or the Commission when it comes to fisheries. Community competence over fisheries is shared, except for conservation measures, where, as we have been told, it has been the exclusive competence of the Community since the UK's treaty of accession came fully into force in 1979. The treaty merely codifies this.

Judgments of the European Court of Justice in the 1976 Kramer case and the 1979 case of the Commission v UK have established that the conservation of marine biological resources under the common fisheries policy falls within the exclusive competence of the Community. The Lisbon treaty reflects that judgment by expressly stating that the conservation of marine biological resources under the common fisheries policy is within the exclusive competence of the European Union—in other words, it codifies existing case law. Fisheries will continue to be managed by the EU's member states and the European Commission, working together. The Commission will continue to have the lead on conservation measures.

In moving his amendment, the noble Duke made it clear that he wanted to start a discussion on this issue. I do not think that he was for a moment proposing that his party favoured getting rid of the common fisheries policy—he will tell me if I am wrong—and although the noble Lord, Lord Stoddart, tried to persuade him that it would be a successful electoral move, I wonder about that.

Concerning the common fisheries policy, everyone understands the wish to protect fish stocks in our waters and ensure that the benefit of them goes to the UK. However, what the noble Lord, Lord Teverson, said was absolutely right; fish do not respect national boundaries and our fishing interests extend well beyond the 200-mile limit. We need to have a policy based on the shared interests of countries that exploit the stocks in European waters. For better or worse—

I—

If I may carry on; the noble Lord has had his say, so perhaps he would sit still for a moment.

The common fisheries policy provides the mechanisms for doing that, so our case is that even if there were no such policy, we would have to invent something like it. We have to co-operate with those countries that share the fish stocks with us, and as a member of the EU we can, and do, negotiate improvements to the policy. Where there are problems with the common fisheries policy, the answer is to negotiate improvements to it, as we did in the common fisheries policy reform of December 2002, and as we continue to do.

The noble Duke asked which processes will decide the arrangements up to six miles and on six to 12-mile limits, and whether the UK derogation would stay. We will be consulting on common fisheries policy reform, which will be dealt with by ordinary legislative procedure.

I merely wanted to repeat; does the Minister accept that when we joined the common fisheries policy in 1972, somewhat secretively, our fish resources were then enormous? Our national resources, all the year round, amounted to some 70 per cent of the fish that swam in European waters. Why, then, did we need to bring anyone else in to share them? Why could we not manage them ourselves for the benefit of our own fishermen, then lease out any surplus fish to foreigners?

On the same point, the Minister just said that we will have to make arrangements with other countries that had fishing interests. That is fair enough, as we have always had to do that, but now we have to make arrangements with people who have no fishing waters. They are in the majority in the EU, which is one of the problems.

I think that the noble Lord, Lord Stoddart, gave the answer to the noble Lord, Lord Pearson, because we have to deal with European countries that are also involved in this problem. That would be so whether we were in inside or outside Europe, and whether there were a common fisheries policy by name or a rose that would smell as sweet. We would have to negotiate, talk and work with other European countries. I want to put one thing to rest. It is not right to say that some of our fish will be allocated to countries with no coastline; I am advised that that is completely untrue.

I wanted to come back on the point that the Minister was making before he had to give way. I understood that the derogation we had, giving us those rights within the six-mile limit, was given by the Commission. Under the new regulation, where it would be done under the treaty, would that be by co-decision or by the Council of Ministers?

My response is that, as I understand it, it will be done by ordinary legislative procedure—that is, QMV by the Council—and co-decision.

Unilateral withdrawal from the CFP, which some have suggested, would do a number of things. First, it would leave the UK in breach of its treaty obligations. Infraction proceedings could then be commenced against the UK at the European Court of Justice and, if that Court were to find against us, we would incur a fine on a daily basis while the breach continued. Even more importantly, perhaps, withdrawal would not solve the fundamental problem of low fish stocks and the tough conservation measures required to restore them to healthy levels.

We have been in the lead—not alone, but in the lead—in pointing out that the common fisheries policy has not met its aims, but our answer is to improve the CFP, not to pull out of it. That is what we have been doing, first, by getting the instruments of the CFP improved in the 2002 review, and by working to secure better decisions since then under the improved mechanisms. The industry and others with an interest in fish stocks need to work together with scientists, government and our partners in Europe. I am delighted that the noble Duke was fair and reasonable, as he always is, about the operation of regional advisory councils, where the kind of co-operation I am talking about has begun. Those regional bodies represent a wide range of stakeholders, who provide advice to the Commission on the common fisheries policy and its implementation.

On which marine biological resources are not covered by the common fisheries policy; the policy is one tool with which to manage marine resources. There are others, which can afford protection to the marine environment, including the habitats and species directive and the marine strategy directive. The CFP does not cover issues unrelated to marine biological resources, such as oil exploration.

On discards, withdrawal from the CFP would not address the issue of discarding fish. Everyone agrees that that is a real waste of a valuable resource and no one wants to see it. Because of the mixed nature of a wide variety of UK fisheries, with large and small fish and various species of different sizes all swimming together, discarding would be an inevitable consequence of any limitation on fishing activity designed to protect particular stocks, whether under a CFP management regime or otherwise.

For that reason, we believe the focus of attention should be on working within the established mechanisms of the common fisheries policy to make fishing activity more selective, so that unwanted fish are not caught in the first place. The worst management measures that would lead to discarding would be no measures at all. The key indicator is fishing mortality, or the proportion of the stock removed by fishing—for cod in the North Sea that is, thankfully, now at its lowest since 1969.

There will be no one-size-fits-all solution to this problem, and we are seeking targeted solutions. We have worked with the industry on ways to avoid North Sea cod but still allow fishermen to continue to fish stocks that are sustainable, such as North Sea haddock. We are currently operating a system that provides additional fishing days, which are otherwise restricted, to fishermen who adhere to closures to avoid spawning or young cod and are willing to change to gear that catches fewer young fish—and such gear does exist—or to introduce fishing plans that commit to significant reductions in cod discards. We are also funding a range of further work to assess the value of other options.

I apologise for interrupting, but the noble Lord said that since the Fisheries Council of 2002, the Government have worked for improvements, but the figures that the noble Duke, the Duke of Montrose, produced are still truly shocking. Will the Minister not admit that to have 60 to 70 per cent of the catch still thrown overboard as discards cannot conceivably be called an improvement since 2002? That is six years ago. Has nothing happened since those alleged efforts by the British Government to improve stocks? We are still discarding the vast majority of the fish that are caught; that cannot be an improvement.

What I was saying is that the CFP itself had improved in certain ways since the 2002 reform. I have already said that it is unacceptable; whatever the real figure is, the discard amount is too high. That is why we are doing our best to make sure that the figure comes down, but we have to do that in the right way. The mechanism has to be right. No one has put forward a realistic alternative to some sort of common fisheries policy, whatever you call it.

I have completed what I have to say. The Committee ought to move on and the noble Duke should decide what he wants to do with his amendment.

Before the noble Duke does that, the Minister has not answered the question of how the Faroe Islands, Iceland and Norway, to name but a few, manage their own fish stocks for the benefit of their own people. The Minister has not answered the question I put to him, which is very important: why can that policy not be changed? What is the position between the Commission and the Council of Ministers? How is it possible that a group of 27 nations cannot get together and agree unanimously to change that policy?

I also cannot let the Minister off with his statement that we would still need to collaborate with our European neighbours on some form of common fisheries policy. We would not. We would simply tell them to leave our waters while our fish stocks recovered and work for the benefit, in the first instance, of our fishing industry, which would recover. We would address discards in that way; like other countries, we would simply ban them. With our growing fishing industry, we would land all the fish that we catch. We would eat those that we want for human consumption; we could use some for animal consumption; and we could use the rest for fertiliser. We would not have to throw 30,000 articulated lorries-worth of fish dead back into the sea every year if we were managing our own fish.

I will bring this to a conclusion. It has certainly been an interesting discussion around the Chamber. I am grateful to the noble Lord, Lord Stoddart of Swindon, for emphasising the efforts that have been made on behalf of Scottish fishermen over the years; we are all very concerned with that. I point out to him that I suggested solutions other than withdrawal—although withdrawal was within my remarks. No doubt my colleagues at the other end will look at what he said, but I do not know what value they will put on it.

I was very interested to hear the noble Lord, Lord Teverson, say how well he understands the difference between marine biological resources and the common fisheries policy. I suppose that one could say that until the point when a fish is caught, it is part of the marine biological resources, but the minute that it is in the net it becomes part of the common fisheries policy, but someone will have to work out how those two elements could go together. His remarks about the question of individual national management were a bit sweeping. Certainly some very successful countries control all their continental shelf. Norway does not have sole rights to the whole of its continental shelf, but that does not mean to say that some countries cannot do quite well managing a larger share of their inshore fisheries. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 31 and 32 had been withdrawn from the Marshalled List.]

[Amendments Nos. 32A and 33 not moved.]

[Amendments Nos. 34 to 37 had been withdrawn from the Marshalled List.]

[Amendments Nos. 38 and 39 not moved.]

I beg to move that the House be resumed. In moving this Motion, I suggest that the Committee stage begin again not before 8.24 pm.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.