European Union Bill — Committee (1st Day)

Part of the debate – in the House of Lords at 5:30 pm on 5th April 2011.

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Photo of Lord Liddle Lord Liddle Opposition Whip (Lords) 5:30 pm, 5th April 2011

My noble friend Lord Kinnock, for whom I have enormous respect, corrects me on this point. I was trying to make a point about whether our European partners were aware of the new constraints being imposed on the British Government's flexibility in relation to provisions which the British Government have already signed up to. Has the Prime Minister written or otherwise communicated to his European Council colleagues to explain that the deal which Britain did in 2007 is now off the table? Can Parliament be informed of the reaction of our partners to the knowledge that the flexibility which they thought the British had signed up to is no longer available? If we have not got that from our European partners, there should be a pause-after yesterday, pauses in the legislative process are almost a formal part of our proceedings. There should be a pause while this communication with our partners takes place, because it is not right to go back on these promises.

I would like to talk briefly about what I regard as the impracticalities of the Government's proposals, to which several nobles have referred. The most notable instance of the use of Article 48(6) is the way in which it is being used for the establishment of the European stability mechanism in the euro area. That is clearly not a decision that extends the EU's competence because the Maastricht treaty provided for the creation of a single currency and the establishment of an economic and monetary union, both objectives to which the previous Conservative Government subscribed. However, a gap emerged in the framework for managing the euro when the sovereign debt crisis came about. The stability mechanism was established to deal with the crisis, and the clauses of the treaty have been used for this purpose.

This is the point about practicalities. Let us imagine that Britain was in the euro and that we were engaged in those discussions about the establishment of the stability mechanism. That is not as much a flight of fancy as it would be to assume that the Bill will get through this House unscathed. If you were David Cameron and in the euro and facing this situation, you would have to say, "Sorry, I'll have to consult my Foreign Office lawyer before I can decide whether we can go along with this". The Foreign Office lawyer would point to Clause 4(4) of the Bill and say, "There are three possible ways we can avoid a referendum on this. It is clearly not an accession. If we are in the euro, it clearly applies to us-so the basis we are using for avoiding a referendum on this thing, which does not apply to the UK, could not be used. Is it a codification? Well, it might be". I suppose that if you were a politician in a tight corner, you might try to argue that it was a codification. However, the point that I am trying to make is that in a crisis situation where Article 48(6) is being used, these provisions would prevent a British Government having the flexibility to act in a sensible way in British interests.

If we were forced into having a referendum in such a situation, the bond markets would be gyrating with the movements of the opinion polls. Obviously that is ridiculous, because we are not in the euro and we are not going in at the moment, but am I hypothesising a completely ridiculous scenario? Let us think for a moment about a situation in which we faced a second banking crisis in Europe and action had to be taken to recapitalise banks across the Union at very short notice. I do not think that that is an entirely negligible risk although I obviously do not want to see it happen. At present, as regards competence on this issue, the Commission is requiring member states to set up their national systems as we have under our Banking Act 2009 to deal with that kind of national crisis. If we had to deal with it on a European basis, what would be the position? If we were faced with a choice of whether to set up an EU-level agency, would it be subject to the referendum lock provided for in the Bill? As a result, the ability-this is a very serious point-of a British Government to defend our national interests would be gravely affected because they could not take emergency action to put in place a European solution to the problem.

These amendments are extremely important. We on this side of the House believe that the provisions of the Bill are not at all realistic or practical. They are from the world of Eurosceptic fantasies. They raise difficult legal issues and difficult political issues. Worst of all, they just do not make practical sense.