European Communities (Amendment) Bill

HL Deb 13 July 1993 vol 548 cc126-89

3.8 p.m.

Baroness Chalker of Wallasey

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Baroness Chalker of Wallasey.)

On Question, Motion agreed to.

Clause 2 [Economic and monetary union]:

Lord Tebbit moved Amendment No. 18: Page 1, line 24, after ("unless") insert ("the principle of moving to the third stage and ").

The noble Lord said: My 'Lords, in moving Amendment No. 18, I shall speak also to Amendment No. 19. These amendments are highly focused and their effect may not necessarily he immediately obvious. Whatever one's views about the desirability of the objectives of the treaty, we are all at one as regards our anxiety about the ambiguity caused by its extremely poor drafting. We suspect that some of that may be because the drafting was deliberately arrived at in an effort to obscure meaning since the parties to the treaty wanted it to maintain different meanings. Nevertheless, that is a problem.

On 23rd June my noble friend Lord Caithness said: Before commenting in detail on some of the issues already raised, I should like to remind the Committee of two fundamental points. First, as my noble friend Lord Boardman said—and I emphasise in particular to the noble Lord, Lord Monson—we are not deciding in this Bill whether or not the United Kingdom should participate in a single currency or join the third stage of economic and monetary union. Both the treaty and the Bill provide watertight legal protection for that decision to be taken nearer the time and for Parliament to be fully involved".—[Official Report, 23/6/93; col. 375.] I think that the words, "to be fully involved", are worthy of note. We were not given a guarantee that Parliament will take the decision, but that it will be fully involved.

I do not know about the experience of noble Lords in this House, but I suspect that many of them will find themselves in the same position as I have often been in. For example, I fully involve my family in decisions which are taken but, at the end of the day, they may feel that I, and not my family, took the decision. There is a distinction to be observed here. After all, most employers these days also uphold the belief that they should fully involve their employees in decisions about the business. However, that does not mean that the employees take those decisions. I hope that my noble friend will clarify that point in his response and that he will be able to assure us that what he meant to say was that Parliament "will take the decision".

However, there is something more than that in the amendments. Perhaps I may refer noble Lords to Clause 2 on page 1 of the Bill which makes the point: No notification shall be given to the Council of the European Community that the United Kingdom intends to move to the third stage of economic and monetary union (in accordance with the Protocol …) unless a draft of the notification has first been approved by Act of Parliament". That is perhaps not quite accurate. The amendment seeks to insert after "unless" the words, the principle of moving to the third stage and". That would make it plain that what was to be discussed at the time was not the implementation of a decision or the manner in which we should move to the third stage, but a question of actually discussing the principle and voting upon the principle of whether the United Kingdom should move to the third stage of the Bill.

I believe that that is the Government's intention. Nonetheless, I take it that they will resist the amendment on the grounds that all amendments to the Bill are to be resisted because it would be administratively untidy if the Bill were to be returned to the other place with an amendment. However, I hope that my noble friend will be able to assure me that the Government intend that Parliament shall take the decision and that Parliament shall take that decision on the principle and not merely on the manner in which the United Kingdom might enter the third stage of monetary union. I beg to move.

3.15 p.m.

Lord Peston

My Lords, it is useful that the amendment has been tabled. I suppose that it is just a matter of wording. However, before speaking to the amendment, I must remind noble Lords that I favour going into EMU and wish that we were debating the principle of it now rather than waiting. I do not believe that the country has gained from the Prime Minister's opt-out. I believe that we should be taking such a decision at this stage. I only say that to remind noble Lords of where I stand.

I must admit that I am not an expert on such matters. I interpreted the Bill as it appears before us as saying precisely what the noble Lord, Lord Tebbit, wants to happen. It seems to me that the Prime Minister in negotiating the opt-out, much as I do not approve of it, must have been negotiating something which enables a decision to be taken. In so far as it will have to come—as I understand it will —before both this House and another place, then it must be at that point that the central decision will be taken. In other words, my interpretation, both in terms of what the Prime Minister said and what the Bill says, is that Parliament will be fully involved. It will not be a matter of anything going through on the nod. However, that does not mean that the Prime Minister will not use his majority if he happens to have it by some miracle at that time, or that he will not do so if he happens to be Prime Minister at the time.

I believe that the noble Lord, Lord Tebbit, is right to say that that is what we should be debating. I assume that the Minister will take the line that the noble Lord, Lord Tebbit, said he would; namely, that he does not want the Bill amended. Therefore, the least we require from him is for him to confirm that the Bill actually says what many of us have already assumed it says. However, if it does not mean that—which I would find hard to believe—I would have to say that the Minister's right honourable friend the Prime Minister has misled not merely the House but also the country as to what it is that he thought he negotiated at Maastricht. In this case, I hope that it is just a matter of the Minister clarifying what is in the Bill so that, whether or not we like the outcome, we can all agree that that is what the Bill says.

The Minister of State, Department of Transport (The Earl of Caithness)

My Lords, my noble friend Lord Tebbit in moving the amendment quoted what I said in Hansard on 23rd June at col. 375. I had hoped that my noble friend would continue and quote what I said later. Perhaps I may draw his attention to my remarks at col. 378 of Hansard where I said: any such decision will be taken by means of a full Act of Parliament". Similarly, I refer my noble friend to col. 381 of Hansard where I stated: It will be a matter for both Houses of Parliament because it would require a full Act of Parliament to implement". I also refer my noble friend to col. 382 of Hansard which reads: There will be an Act of Parliament". Then, further on, in col. 382 I said: they will bring a Bill before Parliament to be discussed in the usual way". I thought that it was very clear from what I said in Committee that the word "involvement" included a full discussion in both Houses of Parliament. Indeed, unless both Houses gave their approval to what was before them it would not be an Act of Parliament.

I understand what my noble friend is trying to achieve by way of his amendment. I am grateful to him for tabling it. But if a government wished to participate in Stage 3 and, therefore, introduced a Bill into another place, surely the government of the day would be indicating their support in principle for the matter of a single monetary policy. I put it to my noble friend that it would be rather ludicrous for a government who were against a single policy to introduce a Bill in order to get to a single monetary policy.

Lord Tebbit

My Lords, I thank my noble friend for his response. However, it is clear to me that I am not putting the point with sufficient clarity. I fear that that is a habit of mine in debate with my noble friend Lord Caithness. As the House may recollect, on the last occasion that we discussed such matters (at cols. 379 and 380 of Hansard) I asked my noble friend a question which I should like, politely, to put to him again today. I asked whether it was the policy of Her Majesty's Government that we wished to see Stage 3 in operation—not, noble Lords will notice, whether we wished to take part in it, but whether it was the policy of Her Majesty's Government that Stage 3 is desirable and whether they support the objective of the other 11 forming a union of a single currency.

Quite clearly, I was unable to get that question through to my noble friend because he did not reply to it. Perhaps I may now try again to make my question clear. If it is the policy of Her Majesty's Government that we should enter Stage 3, I do not doubt that they will bring forward a Bill with the intention that it should be enacted in both Houses of Parliament.

I would say to the noble Lord, Lord Peston, that there will not be a great deal of difficulty about a majority because of course the Opposition parties are involved in this conspiracy up to their necks. They will bail the Government out as regards anything the Government may do to implement such a policy. The point that I sought to establish, preferably in legislative form but, if not, through the words of my noble friend, is that this Bill and this treaty do not in any way constitute, and cannot constitute, an obligation upon Her Majesty's Government in principle that the United Kingdom should enter the third stage.

I would prefer that point to be made clear in legislation but it is not clear in legislation. There are many people, not least lawyers and a good many economists, who believe that if a single currency is created we shall find ourselves drawn into it either by the legislation and the treaty or indeed—I know those on the Liberal Benches take this view as well as those on the Labour Benches—willy-nilly because we shall be attached to it, like a tin can on the tail of a dog, by the provisions of the treaty. I hope I have made myself sufficiently clear.

I want my noble friend to say that it is the judgment of the Law Officers that this treaty cannot be construed as an acceptance in principle of entry into the third stage; that the support of Her Majesty's Government for the concept of economic and monetary union does not constitute a decision in principle; and that when the time comes the decision in principle will be put to Parliament and we shall not have such a thing as the use of the prerogative to take the executive action and for Parliament then to be told that it will be fully involved in the process of putting that decision into effect.

The Earl of Caithness

My Lords, with the leave of the House, I shall respond to the further supplementary question of my noble friend. It appears that for many years we have not misunderstood each other at all and we have worked closely together. I was saddened to learn that suddenly there seems to be a misunderstanding between us. I shall try to correct that misunderstanding. I refer my noble friend to my words at col. 375 of Hansard which he quoted when he first moved the amendment. The relevant passage states: we are not deciding in this Bill whether or not the United Kingdom should participate in a single currency or join the third stage of economic and monetary union. Both the treaty and the Bill provide watertight legal protection for that decision to be taken nearer the time and for Parliament to be fully involved". What we have in the treaty is a mechanism by which monetary union could work, but the decision of the government of the day is not one that is to be taken today, or indeed with this Bill. It is an entirely separate matter to be decided at a later date if the government of that day wish to introduce into both Houses of Parliament a Bill to take this country into a single currency and the third stage of EMU. I hope I have cleared the matter up completely for my noble friend and that there is no longer a misunderstanding between us.

The Earl of Onslow

My Lords, before the noble Earl sits down, I must say that he still has not answered—

Noble Lords

Order!

The Earl of Onslow

My Lords, I am perfectly in order. According to the Companion to the Standing Orders a peer may ask—

Baroness Trumpington

My Lords, I have to read from the "little red book" which states that only the mover of an amendment speaks after the Minister on Report save for short questions and elucidation to the Minister before he sits down.

The Earl of Onslow

My Lords, with the leave of the House, will my noble friend just say whether it is government policy to approve EMU among the other 11 or not?

The Earl of Caithness

My Lords, with the leave of the House, that was a question that we discussed at considerable length in Committee. It is for other countries to decide what they want to do. It is a matter for this country, with the opt-out, to decide what we want to do.

Lord Tebbit

My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 19 not moved.]

Clause 3 [Annual report by Bank of England]:

Lord Pearson of Rannoch moved Amendment No. 20: Page 2, line 3, after ("order") insert ("made by statutory instrument").

The noble Lord said: My Lords, in rising to speak to Amendment No. 20, I shall speak also to Amendment No. 23 with which it is grouped. These amendments constitute very important drafting improvements to Clause 3 of the Bill and follow the debate which I had with my noble and learned friend Lord Rodger of Earlsferry in our Committee stage proceedings on 30th June at cols. 842 to 845 of Hansard.

I should repeat what I said then, to the effect that these amendments, and those which follow under Amendments Nos. 26 and 28 to Clause 5 of the Bill, were not dreamt up by a layman such as myself. They were the result of detailed scrutiny and consideration by legal draftsmen who must be considered as at least as good as any the Government may be consulting. Indeed, I am unable to name them precisely because they are so senior and so respected in your Lordships' House and in another place. I am sure your Lordships would agree that it would not be appropriate for me to do so.

I regret to say that those who advise me find the replies given by my noble and learned friend on 30th June somewhat unsatisfactory. That is why I have brought the amendments back now. I believe your Lordships will again agree with me that this is a serious situation. Perhaps I could put it into perspective by reminding your Lordships of some of the debate which took place yesterday when some of your Lordships felt that the form of our debates on whether, and if so how, to import various titles of the Treaty on European Union into British law was so unusual as to require reference to your Lordships' Procedure Committee. I am sure most of us would welcome that because we might thus find a solution to the problem of debating and amending treaties bearing the huge significance of this Union treaty before the Executive signs them rather than after it has done so.

Indeed, yesterday I was tempted to say to those who are objecting to our present procedures that they must expect at least some unusual debating tactics on this Bill. After all, it is not every day of the week that your Lordships debate a Bill the eventual effect of which, many of us believe, will be actually to make your Lordships' House redundant.

Be that as it may, these amendments cannot be objectionable on those grounds. They offer what I am advised are essential amendments to the wording of Clause 3 of the Bill itself. It is therefore a very serious matter if the Government resist them without good reason. I would have to suggest to the Government if they do so that they are abusing not the procedures of the House but our function. Perhaps that does not matter so much if we are in any case soon to be made redundant, but as the Government and those who support this Bill will presumably say that we are not being made redundant, I believe they have no alternative but to take these amendments very seriously.

Having got that off my chest, I turn to the amendments themselves. I can but repeat what I said in Committee. The order referred to in Clause 3, so I am advised, should be a statutory instrument. It is that statutory instrument which should be subject to an affirmative resolution rather than the report of the governor of the Bank of England (or whatever he will be called by then), as the wording of Clause 3 may attempt to suggest. My advisers do not agree that it succeeds in this, and insist that technically the clause implies that it is the order, or we would hope statutory instrument, which should be subject to approval.

And then I found my noble and learned friend's reply at col. 845 somewhat disturbing. He pointed out that since these provisions of Clause 3 will be implemented only after we have joined Stage 3—that is, Stage 3 of the Treaty on European Union and monetary union and all that—and are therefore locked in irrevocable monetary union with Europe, the Governor of the Bank of England would be able to do what he wanted with his report if Parliament did not approve it. My noble and learned friend said that it would not be for us—by which I think he means the British Parliament—to decide what to do with it. I may have been a bit slow on the uptake here, but I had not realised that the proposed independent national bank would be so completely removed from the influence of the British Parliament. I wonder whether it surprises some others of your Lordships as well.

Be that as it may, my noble and learned friend seems to be in a bit of a cleft stick here, because if it does not matter what Parliament thinks of the governor's report, what is the point of making it subject to the approval of Parliament? If my noble and learned friend is correct, surely the Bill should be amended to leave out the last sentence of Clause 3. If my noble and learned friend is not correct and those who advise me are correct, then I suggest that the clause still requires redrafting, as I have suggested.

In order to help my noble and learned friend I wonder if I could suggest that those who advise me might sit down with those who are advising him so that we can improve the Bill by the time it comes back at Third Reading. Surely that is the function of your Lordships' House. I beg to move.

3.30 p.m.

Lord Elton

My Lords, as my noble friend has raised matters which in my view are extraneous to the amendment I shall be very brief in replying to them. However, it was I who suggested that the procedures of this Bill should, in retrospect; be referred to the Select Committee on the procedures of this House for purposes which I expanded upon at that time. The reason for my doing so was that those procedures seemed to me to have departed, in some cases almost violently, from the proper precedents of your Lordships' House and therefore it was proper that that committee, as the guardian of the procedures of this House, should see that no damage flowed therefrom. It had nothing whatever to do with the unusual nature of the Bill before us, which I find perfectly acceptable. I find the amendment absurd.

Lord Peston

My Lords, perhaps I may also say a brief word on procedure. I was one of those who objected to a particular amendment yesterday on the grounds that I thought that it went rather far in terms of the interpretation of our procedures. I am one of those who accept that the Bill is rather peculiar in terms of our ability to discuss the treaty, and on the whole I favour a broad rather than a narrow view of the matter. To reiterate, yesterday I felt that one amendment went so far that I agree entirely with the noble Lord, Lord Elton, that, once this Bill is over and done with, the time has come for us to interpret how we handle such matters, both with a view to ensuring that noble Lords who wish to comment on issues of importance can do so and also that your Lordships stick to our usual procedures wherever possible. I very much support the noble Lord, Lord Elton, in that regard.

Turning specifically to the amendment before us, I take it that we are not discussing Article 108 of the treaty, which is concerned with incorporating all that is required in order to set up the European system of central banks and to adjust all our legislation accordingly, but a matter of grammar and punctuation in the Bill.

Clause 3 seems to me perfectly clear. I do not speak as a lawyer, and that may be my disadvantage. However, first, the clause refers to implementing Article 108 of the treaty in legislation. That is clear. Secondly, it states (and I would have thought this highly desirable) that Her Majesty's Government will make provision for the Governor of the Bank of England to make an annual report to Parliament. I take it that that means both Houses of Parliament, and I assume that the usual channels would ensure that we debated that report. Finally, the clause says that we shall do that by order. Therefore, I see none of the ambiguities to which the noble Lord, Lord Pearson of Rannoch, referred. Perhaps I may put forward as one item of evidence the fact that I was able to interpret this particular clause in a way which makes sense, and as I am sure it was intended to make sense.

My only slight difficulty is that I am not one of those brilliant draftsmen to whom the noble Lord, Lord Pearson, referred. I have never drafted anything in my life. If the noble Lord tells me that all those extraordinarily brilliant but anonymous draftsmen say that the clause is ambiguous I can only ask him to tell them that at least one of your Lordships does not find it at all ambiguous. I shall be interested to hear from the Minister when he replies whether he agrees with me that it is clear and unambiguous or accepts that it is ambiguous. The wording could be more felicitous, but we do not usually judge Bills before your Lordships' House in terms of their stylistic qualities. In my view it is not the case that the clause is not clear.

Lord Campbell of Alloway

My Lords, in deference to the advisers, however eminent they may be, perhaps the noble Lord, Lord Peston, can take a crumb of comfort from the fact that, although a very knock-about lawyer, I happen to agree with him.

Lord Stoddart of Swindon

My Lords, when these amendments were moved in Committee the noble and learned Lord, Lord Rodger of Earlsferry, used these words: The position is, again, that the drafting is perhaps not as clear as it might be. But it was made absolutely clear by the Opposition spokesman in another place that the intention of the clause was that any report under the clause would need to receive the approval of Parliament before any submission was made to the Council or to the Commission". —[Official Report, 30/6/93; col. 846.] That appears to be acceptable, but I would want from him the absolute assurance that what the noble Lord, Lord Pearson, proposes is not necessary in order to make these two clauses work. I should like an assurance that we shall not be told at some later stage that because the clauses are defective Parliament will not he able to have the information and do what the Minister said at Report stage that it would be able to do. I hope that the noble arid learned Lord will be able to give those assurances. If not I hope that the noble Lord, Lord Pearson, will test the feeling of the House.

Lord Beloff

My Lords, as another non-lawyer perhaps I may say that I find the clause extremely ambiguous, even now. The clause contains references to two documents: the order which sets up the machinery, and the report of the governor. I can see that if one has an order, whether or not it is a statutory instrument, one would say that it should be approved by Parliament. That is perfectly normal and natural. On the other hand, the grammar of the clause and the order of words suggests that what should he approved by Parliament is the annual report. We receive many annual reports and we often debate them, but we do not approve them. What would happen if either House of Parliament said, "This is an awful report, we strongly disapprove of it?" Would the governor resign? Would the European monetary system collapse? Can we have clarification as to what Parliament is to be asked to approve?

Baroness Carnegy of Lour

My Lords, I should have thought that it was perfectly plain. The clause refers to a provision made by order. That is what is discussed by both Houses of Parliament, not the report. One can see quite clearly that it is not the report.

Lord McIntosh of Haringey

My Lords, my syntax was learnt a long time ago. After the word "order" there is a comma. There is then a subordinate clause: make provision for the Governor of the Bank of England to make an annual report to Parliament". There is then another comma, and then there is the reference to approval by a resolution by each House of Parliament. The resolution and approval can only refer to the order and not to the subordinate clause.

The Lord Advocate (Lord Rodger of Earlsferry)

My Lords, there has been a great deal of discussion, even in this short debate, of the syntax of this very short clause. My understanding of the purpose of the clause—which is where I believe one has to start—when it was inserted into the Bill in another place was to provide an opportunity for Parliament to debate and approve the annual report of the Governor of the Bank of England. That, after all, is the matter of substance with which we are concerned. It is a matter of substance which would be of interest to Parliament when and if—as we would be ex hypothesi at this stage—we were in Stage 3 of the system of monetary union and we had an independent bank. Against that background I say to your Lordships that there is no ambiguity in the wording of the clause as it comes before the House.

The difference between myself and my noble friend Lord Pearson of Rannoch and his advisers is this. They believe that the intention of the clause is that the order rather than the annual report should be subject to approval by resolution. If what had been intended by the clause was merely that an order for a report should be subject to resolution, I can understand that the amendments suggested by my noble friend Lord Pearson would certainly be desirable and might indeed be necessary. But that is not the way in which the Government have interpreted the clause. On the contrary, the clause is interpreted as being intended to provide for the House to have an opportunity to consider the report of the Governor of the Bank of England every year when he makes such a report. On that basis, the amendments suggested by my noble friend are not only unnecessary but positively destructive of the legislative intention of the clause.

Despite the fact that the wording is perhaps not particularly felicitous—I take up the word used by the noble Lord, Lord Peston—nonetheless I am quite satisfied that the intention of the wording is quite clear. I am satisfied that it will indeed be possible to work this clause when and if it has to be worked when we come to Stage 3.

My noble friend Lord Beloff asked what would happen if Parliament did not approve the governor's report. I repeat what I said at Committee stage, which was referred to by my noble friend Lord Pearson of Rannoch; and it must be right. The reaction to that situation is one for the governor at that stage. He is the governor of an independent bank and a member of the ESCB. He is reporting on his activities and the activities of the ESCB in that connection. What he does in the light of his annual report not being approved must be a matter for the governor at that stage. I again remind the House that he is the governor of an independent bank. That is why I said that if his report is not approved, what he does is not a matter for the Government or for this House. At the end of the day it is inevitably a matter for the governor. No doubt he will carefully consider the fact that it has not been approved. But at that stage he is an independent governor of an independent bank and it is for him to consider his appropriate action at that stage.

For those reasons I ask my noble friend to withdraw the amendments. Not only are they unnecessary; they are indeed destructive of the clause.

3.45 p.m.

Baroness Seear

My Lords, before the noble and learned Lord sits down perhaps I may ask this. Does he agree that any ambiguity arising from the grammar would be removed if one simply blotted out the little comma after "Parliament" in line 5? It would then be quite clear that the approval applied to the report and not to the order. I do not believe that the measure would have to go back to the House of Commons.

Lord Rodger of Earlsferry

My Lords, I do not believe that it is necessary to make that change, however small it may be. I believe that the wording of the section and the explanation that I have given are sufficiently clear. If it ever had to be interpreted in a court, under the rules now available the consideration given to it in your Lordships' House and in another place by various speakers would be available to the courts for interpretation.

Lord Pearson of Rannoch

My Lords, with the greatest respect, I have done my best to follow my noble and learned friend's reasoning. However, I believe he still remains either in or on the cleft stick to which I referred earlier. I shall look at what he said in Hansard and review it further. However, if the governor of the national bank or the chief executive of the national bank—whatever he is called by then—is independent of Parliament, it is difficult to see why his report has to be subject to an affirmative resolution.

Apart from that, I am extremely grateful for the support that I have had from my noble friend Lord Campbell of Alloway and in particular from the noble Lord, Lord McIntosh of Haringey. His dissertation on commas is precisely the dissertation that I had from learned advice. They are in no doubt at all that this clause requires the order which they think should be a statutory instrument to be subject to an affirmative resolution of both Houses of Parliament. The clause does not say what happens if it does not. However, in order to accommodate my noble and learned friend, and in the hope that his advisers and my advisers may get together before Third Reading, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 21 had been withdrawn from the Marshalled List.]

The Chairman of Committees (Lord Ampthill)

My Lords, before calling Amendment No. 22, I remind the House that if it is agreed to I shall be unable to call Amendment No. 23A.

[Amendments Nos. 22 and 23 not moved.]

Lord Morris moved Amendment No. 23A: Page 2, line 5, after ("which") insert ("report").

The noble Lord said: My Lords, my noble and learned friend Lord Rodger of Earlsferry was characteristically extremely helpful not only at Committee stage but during previous amendments so ably moved by my noble friend Lord Pearson of Rannoch. He most helpfully repeated what he stated at Committee stage, the purpose of the clause being to allow Parliament to scrutinise, to examine and to pass comment on the terms of the governor's report".—[Official Report, 30/6/93; col. 845.] He went further today. Quite rightly in my view, he referred also to the approval of Parliament which is in the wording of Clause 3.

Since he has been so helpful, I am minded to be as helpful to him. He will no doubt greatly welcome the small amendment which inserts the word "report" after "which". That makes clear beyond doubt the intention of Clause 3. Some noble Lords have suggested that the purport was perfectly clear. However, my noble friend Lady Carnegy was absolutely clear that Clause 3 meant that the approval sought was for the order and not for the report. For that reason, I believe that the amendment is helpful.

Clause 3 deals with two issues: first, making provision for the Governor of the Bank of England to report; and, secondly, that the annual report be submitted for approval. Clause 5 deals with one issue alone—that Her Majesty's Government shall report to Parliament. It uses the term, which report shall form the basis of", and so on. I suggest that in the interests of clarity my noble and learned friend should accept the amendment using the excellent drafting style in Clause 5. I beg to move.

Lord Rodger of Earlsferry

My Lords, it is with a characteristic desire to be helpful that my noble friend has put forward this amendment. I hope he will not think that I am being ungrateful if I nonetheless ask him in due course to withdraw the amendment. I shall do so on the basis that it is, like the other amendments, unnecessary.

If one looks at the clause as it stands, despite what has been said I think that even the grammar and punctuation point to the construction for which I have already contended and spoken, which is the construction that it is on its natural reading the annual report which is subject to approval by resolution. If one looks at these, by now, well-known commas one will see that, Her Majesty's Government shall, by order,"— So there are two commas. "By order" is surrounded by commas. One reads on: make provision for the Governor of the Bank of England to make an annual report to Parliament, which shall be subject to approval by a Resolution of each House of Parliament". Had there been no comma before the words "by order" it might have been possible to read the clause with an ambiguity suggested by the noble Lord, Lord McIntosh of Haringey. But the comma before the words "by order" and the fact that those words are segregated by the commas shows in my reading of the clause that one has to take those words out and let the clause run through, in which case one finds that the word "which" refers naturally back to the words which come shortly before it, "an annual report". In other words, on the natural reading, even taking into account the commas, one finds that it is the annual report to Parliament which is to be subject to approval by a resolution of each House of Parliament. Therefore, even on the grammatical or syntactical points which are raised, that is indeed the correct reading.

I should also say that if one has regard to the whole purpose and sense of the clause it is designed to make the report subject to approval by resolution of each House of' Parliament. In that situation, and having regard to the rule of construction in Pepper v. Hart, I have no doubt that if this matter were to be tested in the courts it would indeed be construed in the way that I have suggested. In that situation there is no need for the word "report" to be inserted.

Lord Morris

My Lords, I am most grateful to my noble and learned friend for that explanation. I may be very much better informed but I am not very much wiser. I am grateful for what he said because he argued very cogently that the amendment is totally and absolutely unnecessary. Therefore, to help him even further at Third Reading, I intend to remove, as he suggested the House agree to, the word "report" from Clause 5, which is even more unnecessary. I am sure that on this argument my noble and learned friend will approve that amendment at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Information for Commission]:

Lord Bruce of Donington moved Amendment No. 24: Page 2, line 8, leave out ("submitted") and insert ("forwarded").

The noble Lord said: My Lords, I shall speak at the same time to Amendments Nos. 25 and 27. These amendments refer to certain aspects of the wording of Clauses 4 and 5 of the Bill. The clauses appear to have been added in another place without over-much debate upon them. I have been able to trace the complete assent of Her Majesty's Government to the proposals of the clauses which emanated from Mr. Robertson who speaks on behalf of my own party in another place.

Clause 4 refers to the provisions of Article 103(3) of the treaty. With your Lordships' permission I should like to remind the House of the contents and requirements of Article 103(3). It states: In order to ensure closer co-ordination of economic policies and sustained convergence of the economic performances of the Member States, the Council shall, on the basis of reports submitted by the Commission, monitor economic developments in each of the Member States and in the Community as well as the consistency of economic polices with the broad guidelines referred to in paragraph 2, and regularly carry out an overall assessment". It then states: For the purpose of this multilateral surveillance, Member States shall forward information to the Commission about important measures taken by them in the field of their economic policy and such other information as they deem necessary".

The obligation under this clause is for member states to forward information. As the Government and, apparently, the Opposition agree that this information should be provided, it appears on the face of it unnecessary for this to be reproduced in the Bill itself. Why should there be an additional necessity laying on the Government an obligation to provide information which is already accepted in the treaty? Clause 4 puts it this way: In implementing the provisions of Article 103(3) of the Treaty establishing the European Community, information shall be submitted to the Commission". I suggest the insertion of the word "forwarded" in conformity with the words in the treaty itself. The clause would then read: shall be forwarded to the Commission from the United Kingdom indicating performance on economic growth, industrial investment, employment and balance of trade, together with comparisons with those items of performance from other member states". Why, in addition to accepting responsibility under the treaty which the Government support, should it be necessary to rewrite it in specific terms into the Bill? The clause was proposed by Mr. Robertson and was agreed to with alacrity by the Government. As your Lordships will understand, I am a trifle suspicious about why that was done.

There are no precedents. I draw your Lordships' attention to the provisions of the original Treaty of Rome on the rendering of information by member states to the Commission. Article 14.6 provides: Member States shall report to the Commission on the manner in which effect has been given to the preceding rules for the reduction of duties"— Those are customs duties. It says "report" Article 15 says in regard to the provisions of Article 14 that member states, shall inform the other Member States and the Commission thereof". We accepted the obligations under the treaty, but I do not find any trace in the European Communities Act 1972 of a requirement that the Government submit to the Commission various pieces of information. There is nothing specific to reinforce the obligation which we entered into under the treaty by virtue of the European Communities Act 1972.

There was a broad obligation—it was a broad obligation only—in Section 12 of the Act which, with the permission of the House I shall read. Under the subheading "Furnishing of information to Communities"—noble Lords will please note the term "furnishing", not "submitting"—the Act states: Estimates, returns and information that may under section 9 of the Statistics of Trade Act 1947 or section 80 of the Agriculture Act 1947 be disclosed to a government department or Minister in charge of a government department may, in like manner, be disclosed in pursuance of a Community obligation to a Community institution". But there is nothing specific that requires Her Majesty's Government under the Treaty of Rome to submit the various reports that are required to be furnished to the European Commission. I wonder why this particular procedure has been adopted. More particularly so as under the protocol on the convergence criteria referred to in Article 109j of the treaty, at Article 5 it states, The statistical data to be used for the application of this Protocol shall be provided by the Commission". In other words, the Commission already has the responsibility. In any event, the statistical data published by the Commission and in use throughout the Community relating to EC matters is already the responsibility of the European Commission. I do not know about this.

What puzzles me is the use of the terms "submit" and "submission". It is purely a psychological question. I do not want to make too much of it. But there is a difference between forwarding information, rendering information, supplying information, providing information and submitting information. "Submitting" essentially means that one is supplying something to a superior body or a body on whom one is placing some reliance and some obligation. For example, one makes submissions to a court of justice; that is necessary. It is for that purpose superior to oneself.

I suggest that the term "submission" is quite inappropriate. I do not see the necessity for these clauses in any event. But if the clauses are to be there and are to lay specific obligations on the Government, they should be couched in approximately the same language, with the same gradation of meaning, as is contained in the treaty itself.

There is a further interesting factor which I would not wish to take time to enlarge upon, but it is an interesting point; namely, the assumption that Mr. Robertson will be a member of the next Labour government and that a Labour government will shortly be elected before the treaty is renegotiated in 1996. On that assumption it would appear to be a quite unnecessary provision. If Labour are to be the government anyway, why tie themselves down in an Act? It may perhaps be a subconscious indication that they are afraid that the next government will probably be of the same political persuasion as the present one and that therefore they will need binding. These are uncharitable thoughts. But the meaning and the attitude behind them are fascinating. I do not know whether the House senses the difference which I have endeavoured to convey. I am quite sure that it will be ridiculed, but I care none the less for that. I know that psychologically I am right. I beg to move.

4 p.m.

Lord Gray

My Lords, while attention is focused on this amendment and on Clause 4, I wonder whether I may ask. a question about the wording which I trust my noble and learned friend will be able to answer. It is a different point to that made by the noble Lord, Lord Bruce of Donington. I recognise that the Government are not wholly responsible for Clause 4, but I trust that their understanding of it will be adequate for them to be able to improve my understanding. What puzzles me are the words in the last two lines: together with comparisons with those items of performance from other member States". My question is this. How come that we are supposed to forward details of the performance of other members of the Community as well as of our own? How are we going to achieve that, and what possible purpose could it serve?

Lord Jenkins of Putney

My Lords, I should like to say a word in support of my noble friend's amendment. I have to do so now because I cannot do so, even if I would prefer to, after the noble and learned Lord has replied to the debate. I want to lend a word of support because I see some reason behind these changes which makes it all the more important that they should be questioned and perhaps even resisted.

The changes move always, or so it seems to me, in the direction of placing this House and the other place in a subservient position to the creations of the European Community. My noble friend has referred to a psychological difference. I think it may be a little more practical than that. If we were moving into the position of expecting, as some people do, the establishment of a federal government of Europe, then to such a government one "submits". One does not simply "inform" because one is subservient to them. Here we are preparing for a position of subservience. We get into the habit of saying, "They are the bosses and we are the provincial government who submit to the major organisation".

It may seem an unimportant point that one has to "inform" people rather than "submit" to them, but I do not think that it is unimportant. Those of us who are very much opposed to the creation of a federal Europe—and that includes a number of people who nonetheless support the Maastricht proposals, which I myself do not—would say that perhaps this goes a bit too far. Perhaps we are following in the footsteps of Ted Heath in wanting to establish a federation. In my view that would be a disaster. Any step, however small—even if it is only a question of nomenclature—which seems to move us in that direction should be resisted.

Lord Boyd-Carpenter

My Lords, I hope that my noble and learned friend will deal seriously with the point which the noble Lord, Lord Bruce of Donington, raised on the construction of the word "submitted". Certainly listening to this debate I could not help but feel that there was an element of subservience in the word "submitted". You "submit" reports to your superiors. You only "forward" them, to use the word in the amendment, to your equals. I hope therefore that my noble and learned friend will be prepared to treat that point seriously.

Some of us feel that there are certain elements in government today that rather like the idea of the superiority of the Commission and of the European authorities; and there are others, of whom I confess I am one, who are a trifle suspicious of it.

The Earl of Onslow

My Lords, it is interesting to note that in 1971–72, when the whole question of joining the European Community came up, Mr. Wilson, as he then was, accused Mr. Heath of rolling on his back like a spaniel and submitting to the European Community. I therefore wait with particular interest to hear what the noble Lord, Lord Clinton-Davis, has to say upon this very factor.

Lord Clinton-Davis

My Lords, I do not feel impelled to make a speech on the basis dictated by the noble Earl, Lord Onslow. In my submission there is nothing in the submission. My noble friend Lord Richard has now presented me with—submitted—The Concise Oxford Dictionary and it gives as one of the meanings of "submit": present for consideration or decision". The word can have other connotations and other definitions. But clearly, in this context that is what the word means. To suggest that on the basis of that word we shall build a federal Europe seems to me to be somewhat fanciful.

The argument is a strange one coming from my noble friend and those who have supported him. I should have thought that Parliament had decided to interpret in its own way how it intended to perform this duty. It was exercising subsidiarity in the performance of that task. Why there should be a complaint about it now when in fact the argument in our previous debates has been all the other way, I simply do not know. With great respect, I think that there is nothing in the submission at all.

Lord Rodger of Earlsferry

My Lords, the noble Lord, Lord Bruce of Donington, predicted that his suggestions or arguments would be ridiculed. In the short time that I have been in your Lordships' House, I have come to appreciate the feeling for language which the noble Lord, Lord Bruce, so obviously has and which he uses to such effect in his speeches to this House. It is very far from the case that I would in any way ridicule what he said about the word "submit". Obviously he feels deeply on the matter and he is someone for whom words and the nuances of words are extremely important. I take very seriously what he said.

However, that does not mean that I accept what he said. As the noble Lord, Lord Clinton-Davis, said, after reference to the Oxford Dictionary, it is plain that the word "submit" has several connotations and in certain circumstances has pejorative connotations. For example, when one submits at a judo match or something of that kind, obviously one is recognising superiority. But where I submit, for example, an argument for consideration by the noble Lord, Lord Bruce (who I hope will not find my words offensive), I do not thereby concede his superiority in the matter. I am simply putting it forward for his consideration.

In that general context I believe that the word "submit" is used in that spirit in this text. I take the point that in the treaty the word "forward" is used in Article 103.3. It is perfectly plain that the word "forwarded" could have been used effectively in Clause 4. But for the reason that I have indicated, I do not accept that by using the word "submitted" in this context one in any way accepts any position of inferiority or anything like that vis-à-vis the Commission or the other Community authorities.

It is proper to notice that in certain other areas different language is used, for example, in connection with what one finds in Clause 5. At the end of Clause 5 there is a reference to Article 104c. In paragraph 9 of Article 104c the word "submit" is used. Therefore the point is different in connection with Clause 5. For the reason that I have put forward I do riot accept that the wording is defective.

I turn to the other point taken by the noble Lord, Lord Bruce, in connection with the specification found towards the end of Clause 4. There one is dealing with what the other place—or Mr. Robertson who has been referred to—felt was proper to be included in the information which was before it. At the end of Article 103.3 one sees that what was before it was information about important measures taken by the member states in the field of their economic policy and: such other information as they deem necessary". It is perfectly clear that it is open to member states to take a view as to what is or is not necessary to be submitted. Here we have an expression of the will of Parliament as to what the United Kingdom should consider necessary to be included in the information to be forwarded. What is included there, as one can see, is specification of matters relating to performance of economic growth, industrial investment, employment and balance of trade. Those are matters which are not specifically required elsewhere in Article 103 or by reference to Article 102a. They are matters which Parliament indicates should be taken forward—information given to the Commission for consideration by the Council.

My noble friend Lord Gray asked about the comparisons of those items and asked whether that could be done. I can assure him that it can be done. Indeed, already there exists an annual procedure for examining the relative economic performance of all member states in the preparation of the Commission's annual economic report on the Community. The United Kingdom already plays a full part in that process. Therefore, in that connection, it is already possible to make comparisons with various items of performance of other member states.

Against that background there is no great departure in the idea that if that information is being provided, it will be provided together with comparisons with items from other member states. I hope that I have explained the position and in the circumstances I hope that the noble Lord, Lord Bruce, will withdraw his amendment.

4.15 p.m.

Lord Boyd-Carpenter

My Lords, before my noble and learned friend sits down perhaps he will confirm a point which I believe was implied in his speech; namely, that if the word "forwarded" were substituted for the word "submitted" the clause would remain perfectly effective.

Lord Rodger of Earlsferry

My Lords, the word "forward" would be a synonym which would be perfectly effective. However, it is not necessary to make such a change. It is not necessary for the legislation to reflect precisely the wording in the treaty. It is perfectly satisfactory as it stands and there is no need for the amendment.

Lord Bruce of Donington

My Lords, I should like to thank the noble and learned Lord for his constructive and sympathetic reply to the observations that I ventured to make to your Lordships. It must be very difficult for him within the terms of the concordat that has been established between the Government and the Opposition over the treaty as a whole to put himself in the invidious position of having to defend a couple of clauses that were inserted in the Bill at the instance of the Opposition. I deeply appreciate the way in which he sought to deal with the matter. I am also most grateful for the support from the noble Lord, Lord Gray, and in particular the noble Lord, Lord Boyd-Carpenter.

Although the noble and learned Lord has not answered the point, neither has my noble friend. If the term "forward" was in Article 103.3, to which the clause refers, why was the word "submit" substituted for the ready-made word that was already in the treaty? There is a psychological aspect to the matter. Moreover, although my noble friend had the opportunity, he did not avail himself of it to explain why it was necessary to table these amendments at all in view of the clear obligations under the treaty upon all member states, including the United Kingdom, to provide the information required.

I shall not press the noble Lord upon that point. However, in the weeks and months that lie ahead there may be some necessity for me to return to that aspect, as controversy grows and as the Maastricht arrangements progressively crumble. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Convergence criteria: assessment of deficits]:

[Amendment No. 25 not moved.]

Lord Pearson of Rannoch moved Amendment No. 26: Page 2, line 15, leave out ("for its approval").

The noble Lord said: My Lords, Amendments Nos. 26 and 28 are similar to Amendment Nos. 20 and 23 to Clause 3 which I moved a little earlier. What I said in regard to the function of your Lordships' House applies equally to these amendments as it did to those, and I regret that my noble friend Lord Elton is not here to hear me say that.

The defects of Clause 5 are even clearer than those of Clause 3. There is no doubt this time that we are dealing with annual reports, nor is there any doubt that the reports must be approved by both Houses of Parliament. The trouble is, as I mentioned in Committee on 30th June, that the clause is silent as to what happens if a report is not approved by either House. l referred to that in cols. 843–6 of Hansard, when I said that the clause as drafted simply left the problem "hanging in the air". In his reply of 30th June my noble and learned friend agreed (at col. 846) that the drafting was, not as clear as it might be". He therefore gave an assurance that the reports would be submitted to the Commission only if both Houses of Parliament approved them. Those who advise me regard that assurance as inadequate and not in accordance with the high standards of revision which your Lordships' House always brings to drafting amendments. My advisers feel that the Government are honour bound to accept the amendments because they reflect exactly what my noble and learned friend agreed in Committee was the position with regard to Clause 5 and because without them it is defective.

I am happy to repeat the same suggestion as I made to my noble and learned friend while discussing Amendments Nos. 20 and 23; namely, that our advisers should sit down together and agree accurate drafting of both Clauses 3 and 5 which could be introduced by the Government at Third Reading.

Lord Bonham-Carter

My Lords, the advisers to whom the noble Lord refers are anonymous. If they are to meet the advisers of the Government, presumably that anonymity will have to be removed. Would it not be better for the noble Lord to tell us who is giving him advice?

Lord Pearson of Rannoch

My Lords, the noble Lord will understand that I am at present under restraint not to reveal who my advisers are. I assure him that the advisers in question would find no difficulty in sitting down together and in preserving their anonymity afterwards.

I repeat the suggestion that the advisers should sit down together and agree accurate drafting of both Clauses 3 and 5, which amendment could be introduced at Third Reading. At the same time they could clarify the drafting of the penultimate line of Clause 5, which at present is telescoped to require the reports to be submitted to both Commission and Council in deference to Article 104c of the treaty. My noble and learned friend admitted in Committee that he did not "carry a torch" for Clause 5 either. I therefore hope that the light which my advisers have been able to cast on the clause will prevail and that the Government will agree to bring forward a suitable amendment at Third Reading. I beg to move.

The Earl of Onslow

My Lords, I shall not break a confidence. I know who the advisers are. Without a shadow of a doubt they are important and intellectual people who are not a million miles away from either the City of London or the City of Westminster. I tried to persuade my noble friend Lord Pearson to disclose who they are. He feels that he cannot do so and I respect his confidence. However, the quality of the advice that he is receiving is of an extremely high standard.

It seems to me to be stubborn, to put it mildly, for the Government to say, as they have in effect said, that the clauses are unsatisfactory—"I will not carry a torch for it"—because under no circumstances do they want the Bill to go back to the House of Commons. In effect they are denying us the right to act as a revising Chamber, even though the revision has nothing to do with the substance but only with the form of the Bill. That does not show the political courage which I had hoped a Conservative administration would show.

Lord Harmar-Nicholls

My Lords, I am mystified by the battle of the advisers. Why should there be any mystery about it? In the years that I have spent in one House or another the only advisers who are absolutely acceptable are the parliamentary clerks. They are not clerks to the Government or to the Opposition; they are clerks to Parliament.

If there is any doubt as to whether something comes within the realm of what is correct in parliamentary terms, the clerks are the ones to ask. Has nobody thought of doing that? Have the Government not shared their feelings with the parliamentary clerks? That applies in both Houses. I remember the days of Barnett Cocks. He was extremely proud of the fact that he was the Clerk of the House and not just of a section of it. One could take great advantage of his guidance.

I am bewildered by the mystery. It is what is happening in the whole of Parliament. It is no longer Ministers and Back-Benchers who argue. The Back-Benchers have their researchers and the Government have their researchers and advisers. Everybody works on the advice of the researchers, so it is not a battle of Parliament or Members of it; it is a battle of researchers.

We have a wonderful parliamentary system where we have all the expert advice we need. If there is any doubt about something, why can we not use the proper source—the open door of the parliamentary advisers who sit at the Table in both Houses of Parliament?

Lord Boyd-Carpenter

My Lords, my noble friend Lord Pearson of Rannoch refers regularly to "my advisers", no doubt with proper respect. But for the rest of us who have not the faintest idea who they are the position is less easy. I would be much more impressed if I knew that the advisers were people of standing, experience and wide knowledge and if I were told who they were. But to be told again and again "my advisers say" without any reference to who they are does not make debate any easier. I ask my noble friend, if he is going to rely on the views of his advisers, to consider telling us who they are.

Lord Swinfen

My Lords, I have no advisers in the matter, neither am I legally qualified. But as a layman reading Clause 5 I am under the impression that any submission of the report to the Council and Commission could be made before the approval of Parliament. At the same time, I wonder what will happen if either House of Parliament does not approve the report. Would then the submission based on that report still be made to the Council and Commission? It does not say in this clause that it could not be made; and, as I understand the amendment put down by my noble friend Lord Pearson of Rannoch, that would clarify the position and make it perfectly clear to all concerned that any report would have to be approved by Parliament before being submitted to the Council and Commission.

4.30 p.m.

Lord Morris

My Lords, if I may react to what my noble friend Lord Boyd-Carpenter said, of course a man of his stature with such wisdom and knowledge need take nothing whatsoever other than his own counsel. The reason why, quite rightly and properly, my noble friend Lord Pearson mentioned his advisers was refreshing humility, because he also quite rightly recognises the fact that he, like so many of us, is in great need of counsel.

Lord Bruce of Donington

My Lords, in returning to the question that I originally posed about Clause 5 of the Bill, I must ask the Government whether they want to submit an assessment of the medium-term economic and budgetary positionin relation to public investment expenditure and to the social, economic and environmental goals in Article 2. Do they want to send such an assessment to the Commission? I want to avoid using the controversial term "submission" for the moment. I wonder whether the Government themselves are really happy about this.

We have had a rather unfortunate history, as I am sure your Lordships will agree—and I am talking now in quite non-controversial terms—of publishing quite firm economic and budgetary forecasts. It will be within the recollection of your Lordships that practically every year they have been way out. I question the desirability of, as it were, writing on blocks of stone what our predictions are, forwarding them (or submitting them, if you like) to the Commission and running the risk at a later stage of being reproached by this august, learned and all-seeing body for having, either intentionally or unintentionally, misled them.

I think the Government have been perhaps a little careless in accepting the representation of my colleagues in another place who, quite understandably—here perhaps the party interest is beginning to exert itself a little—would be only too happy to see the Government put their necks in a noose in this respect. If that be so, they have certainly fallen for it. However, I return to the original position which stipulates—and I accept it for what it is worth—that Her Majesty's Government shall report to Parliament for its approval.

How is that approval to be expressed? Is it going to be a Motion for Approval and, if so, will that rank as real approval? What can be the objection to the amendment put forward by the noble Lord, Lord Pearson of Rannoch, to the effect that no such submission shall be made unless the report referred to has been laid before, and approved by, both Houses of Parliament?

Surely that accomplishes the purpose. This is a way of obtaining parliamentary approval of the report. However, are the Government saying, alternatively, that if Parliament disapproves of the report referred to, which is going to be submitted to the Commission and Council, they will override the disapproval of Parliament? I wonder where they stand in this matter. It will be very interesting to find out, because for the life of me I cannot see a better way of obtaining the approval of both Houses than by laying and approving it.

Your Lordships will observe that the reference is to "Parliament". The clause does not refer exclusively to the other place but to this place as well. And, as your Lordships are well aware, especially in regard to the recent debates we have been having during the past few weeks on Maastricht, the House has generally shown itself to be pretty well informed about these matters, and might be highly critical of such a report.

Lord Peston

My Lords, I have no problem with the clandestine advisers of the noble Lord, Lord Pearson of Rannoch, although being an inquisitive person, I should naturally like to know some day who they are. However, I do not think that the merits of the amendments depend on the ad hominem arguments in these cases.

Equally, I think my noble friend Lord Bruce of Donington has slightly widened our debates beyond the two amendments we are considering, since he now wishes to discuss Article 103(3). I have to tell him that the party of which he is a member is fully committed to closer co-ordination of economic policies and sustained convergence. Indeed, since occasionally he speaks as a Keynesian economist, I have to tell him that to those of us who are in the mainstream of the Keynesian tradition, that is central to our view of economics. There may be other economists with other nomenclatures who might take a different view, but I mention that to him for the purposes of consistency.

Turning to the clauses themselves, I have my usual difficulty. I entirely agree with what the noble Lord, Lord Pearson of Rannoch, says in his amendments: my difficulty is that that is what this clause says precisely. I am trying to imagine this whole set-up of the Government either submitting them for approval but nonetheless still submitting them without approval; or various other things. The Government are always doing this sort of thing. They will put matters before both Houses of Parliament and both Houses debate them. They may be changed, they may be approved or they may be disapproved. The Government have to get their business agreed to; they would do that and then submit them. I agree that the points made by the noble Lord, Lord Pearson of Rannoch, are correct; but I would—to go back to the earlier debate—submit that this clause says exactly what he thinks it ought to say. I await to hear the Minister on this, but I do not think there is any problem with clarity here at all.

Lord Stoddart of Swindon

My Lords, surely when we are passing legislation it is better to get it correct. My noble friend in fact has conceded to the noble Lord, Lord Pearson, that the wording of the amendment is in fact correct. Presumably in so saying he believes that it expresses what the Opposition intended when they moved this particular clause in another place. Therefore, for the sake of making absolutely certain that the intention of the Opposition is realised within the Bill, would it not be better to put in the wording proposed by the noble Lord, Lord Pearson, which then would apparently leave no room for doubt as to what this particular clause meant.

I thought that was the role of this place—to ensure that when legislation leaves this House it is as pure as it possibly can be and as well drafted as it possibly can be. Therefore if my noble friend, whose party—and of course my own party—is behind these amendments, believes that the drafting by the noble Lord, Lord Pearson, would make it a better drafted clause, why on earth does he not urge the Government and the Minister to accept the amendments which are proposed by the noble Lord, Lord Pearson?

Lord Rodger of Earlsferry

My Lords, although my noble friend Lord Pearson brought similar amendments before your Lordships in Committee, I think we have had a longer debate on them on this occasion. But in essence what it all boils down to is what is the meaning and the effect of Clause 5, which we have before us? Again, there is no doubt about the intention of those who moved the amendment in the other place. The intention was that the report was to be submitted to both Houses of Parliament before the information was supplied in terms of Article 103.3. In that case the only question which arises is whether or not it was the intention that it would then be transmitted onwards only if the report had been approved or irrespective of that fact.

The intention of those who moved the amendment in the other place was made absolutely clear in a speech there. The Opposition spokesman said that the intention was that any report would need to receive the approval of Parliament before any submission was made to the Commission or to the Council. That position was accepted by the Government. At Committee stage I made it clear and gave an undertaking that any report made under Clause 5 would be submitted by the Government to Parliament for approval and that the information would be submitted to the Commission or the Council only when approval had been secured.

Therefore, in answer to the point made by my noble friend Lord Swinfen, if Parliament does not approve the report then the information will not be supplied under the terms of Clause 5. It can be supplied only when the report has been approved. That is what has been said by those who have moved the amendment and also consistently in this House by myself.

I believe that one gets to that position in any event from a perfectly natural construction of the wording of the clause. One might ask oneself: What would the conceivable purpose be of adding the words, Her Majesty's Government shall report to Parliament for its approval"? What would be the purpose of those words if it were not that the submission could only be made if the report which was to form the basis of the submission and which was a report to Parliament for its approval, had been approved? It is perfectly plain on the wording of the legislation itself that these words, by their presence in the clause, indicate that the report can only be passed on when it has been approved. One gets that from the wording itself and also from what has been said consistently by those who moved the insertion of that provision in this House. I repeat, if and when—I cannot myself see the circumstances when it would be likely to arise—this matter came to he tested in the courts the question would be: What is the appropriate construction of the clause?

Let us assume that, contrary to what I have said, it was somehow thought to be ambiguous. What then? We know that following Pepper v. Hart the courts would have regard to what is said in Parliament about the intention of the clause. In that circumstance it would be perfectly plain to the courts what the intention was both of the people who moved it and of the Government in accepting it. In that situation the courts would apply the interpretation which reflected the intention of Parliament and would indeed hold that the information could be submitted only where the report had been approved.

For those reasons, quite clearly the substance of the matter is covered by the clause and one is discussing only the exact wording. I repeat that one does not need to carry a torch for the way in which the clause has been drafted, but nonetheless, its wording does not cause ambiguity of the kind which my noble friend Lord Pearson and his clandestine advisers consider it does. Nonetheless, because it does not have ambiguity there is no need for the amendment which my noble friend has tabled and I ask him to withdraw it.

4.45 p.m.

Lord Pearson of Rannoch

My Lords, I begin by apologising to noble Lords who are understandably irritated by my inability to reveal the exact identity of those who advised me. I particularly welcome the suggestion of my noble friend Lord Harmar-Nicholls that perhaps the Clerk of the Parliaments should be consulted on that matter. If those who advise me were to sit down with those who advise the Government, and the Clerk of the Parliaments were to join that meeting, I do not believe that it would be increased very much in size. Those who advise me are in an unusually delicate position because I understand that from time to time they do work which bears on our legislative process. In those circumstances I believe that they are right to wish to advise me confidentially.

Turning to the amendment itself and what my noble and learned friend has said, I accept that it was the intention of those who moved the amendment in another place that any report would need to receive the approval of Parliament and that it would not be submitted unless it had been approved. Here again, I am in the hands of experts, but the trouble is that that is not what Clause 5 says at the moment. That is why I feel sure that the meeting which has been suggested would be very helpful. My noble and learned friend has now found it necessary to give no less than two undertakings that the report will not be submitted unless it has been approved by Parliament.

Our position is that, as the clause is worded, it still leaves hanging in the air what happens if the report is not approved by Parliament. I do not want to take up more of your Lordships' time now. However, I shall have to bring this matter back at Third Reading and, I hope, after our various advisers have had the opportunity of a meeting. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 27 and 28 not moved.]

Lord Tebbit moved Amendment No. 29: After Clause 5, insert the following new clause: European Union: "means necessary to attain its objectives and carry through its policies" (". To the extent to which Article F.3 is imported into United Kingdom law by section I above, the "means" referred to therein shall be confined to the means provided for in Titles II to VI of the Treaty on European Union and shall not import any further or wider obligation on the part of Her Majesty's Government.").

The noble Lord said: My Lords, this new clause springs from our debate in Committee on 22nd June. Noble Lords may recollect what happened on that particular occasion in the closing stages of the debate. I asked my noble friend Lord Henley whether I was correct in assuming that the word "means" in the treaty can be translated into "financial resources''. That was the implication that arose in the debate.

My noble friend said: I would rather not go quite as far as that". I believe it is important to note the words, quite as far as that". My noble friend continued: The French word was 'moyens'. I accept the correction of my pronunciation from my noble and learned friend Lord Hailsham", who I believe is not here to correct my pronunciation today. To define it quite simply as purely financial resources, as my noble friend would wish us to do, might limit it more than I would care to go at the moment. It is something I would prefer to come back to, if my noble friend would bear with me, and explain to him later on. At the Dispatch Box at the moment I would rather not agree, in the straightforward manner that my noble friend would wish us, to the definition which he has put forward".—[Official Report, 22/6/93; col. 336.]

True to his word, my noble friend Lord Henley subsequently wrote to me on 29th June, as he had undertaken to do, stating: You asked whether the term 'means' was confined to financial resources. I write to confirm the answer I gave that it is not so confined". It might have been fairer if he had said, "I write to extend the answer I gave that it is not so confined". The letter continues: My earlier answer to you and to Lord Monson had concentrated upon financial resources since those were the focus of your questions. But although in English the term 'means' is often used in a purely financial sense the French 'moyens' which was the original language of this paragraph is a wider concept—resources in the general sense". It is important to note how the word "means" became incorporated into the treaty and the hazards of translation.

My noble friend went on to explain—I think that I put it fairly—that the objectives of the treaty for which the means are to be made available are set out in Article B, but are to be achieved through the provisions of Titles II to IV. Finally, my noble friend stated: The 'means' by which the Union accomplishes the objectives set out in Article B are those provided, in terms of finances, structures, organisations and policies in Titles II to IV". That seems plain enough. However, if I am in any way misinterpreting this, I shall be extremely glad to give way to my noble friend Lady Chalker.

Baroness Chalker of Wallasey

My Lords, I am grateful to my noble friend. I hope that he will forgive me correcting him at this point, but so that no one else is muddled, I should point out that the reference is to Titles II to VI.

Lord Tebbit

My Lords, I am sorry. I am grateful to my noble friend. It is extremely important to the argument that the reference is to Titles II to VI. I misread my own note which, if I may say so, is a hazard of using Roman numerals.

Provided that I am not misreading the Roman numerals, that all seems plain enough, but let us look a little closer. Your Lordships will note that through Article F.3, my noble friend tells me, Title V on foreign and security policy and Title VI on justice and home affairs are brought essentially within the scope of the Bill. What is more, the distinction between the Treaty of Rome and the separate pillars is further eroded. This is a very important matter, which is close to the heart of my noble friend Lady Chalker, who explained only yesterday at col. 44 of Hansard how extremely important it is and how anxious the Government are to avoid such a process of muddle between the two pillars represented by Titles V and VI and the remainder of the Treaty of Maastricht which, of course, amends the Treaty of Rome.

Let us examine how far the provision of "means" might go. I would appreciate some guidance from my noble friend Lady Chalker as to how widely "means" could be interpreted. Let us look at foreign policy, for example. Suppose that it were to become European foreign policy that arms should be supplied to participants in the war in the former Yugoslavia. That is possible. Alternatively, it might be possible for it to be decided that it was to be an object of foreign policy that a cordon sanitaire should be established which would prevent the supply of arms to the participants. Neither of those developments is impossible. Would the word "means" then include the purchase and delivery by an "organisation" in order to accomplish that policy and that objective?

More prosaically, Article K.1 of the treaty contains provisions enabling the Union to accomplish a number of very worthy objectives, for example, combating drug addiction, combating fraud, judicial co-operation in civil matters, Customs co-operation, and, police co-operation for the purposes of preventing and combating terrorism, unlawful drug trafficking and other serious forms of international crime, including if necessary certain aspects of customs co-operation, in connection with the organisation of a Union-wide system for exchanging information within a European police office, Europol". That all sounds pretty laudable stuff, and we wish everybody success in achieving those objectives. But what could that be enlarged to under the provisions of this treaty? What, finances, structures, organisations and policies might be useful to those objectives? Could that European police office be expanded into an office, the personnel of which reported not to their domestic governments, but to the Commission, the Union or the Community? That would seem to me to be part of an "organisation" or a "structure" which comprises the means to achieve the objectives set out herein.

Of course, the consent of Ministers would be required for that to be done. It is not my purpose to suggest that it could be done without the consent of Ministers in the Council. I am inquiring as to whether any further legislation would be required for such a thing to be done. That is the key question that we must ask ourselves. Let us look at the provisions of a common economic policy or the duties of the citizen, if I may mention such a delicate matter. Perhaps we have found another route into those matters. What about Article 130 relating to industrial policy? Can the items which are listed there be expanded? The article states: their action shall be aimed at: speeding up the adjustment of industry to structural changes; … fostering better exploitation of the industrial potential of policies of innovation, research and technological development". Those provisions are pretty wide already. But does the provision give cover for new organisations, as yet uncreated, without the seeking of further powers? I should be obliged if my noble friend can reassure me that new powers would be needed to take those matters further than the way in which they are set out in the treaty.

If such a provision had been included in domestic legislation introduced into the other place, I do not think that we would be discussing it in this House. It would have been torn out in the other place. It could not survive. It seems to me that to enunciate policy objectives in terms so broad as they are set out in this treaty and then to provide that Ministers of our own Government should provide themselves with, finances, structures, organisations and policies", to cover all that was needed to implement those policies would be thought somewhat adventurous.

I accept that there is one control at the moment on all this —the fact that the global finance available to the Community for these purposes is limited. However, there is a good deal of freedom to switch between one programme and another. That freedom is far greater than we would grant to our Government through our own domestic legislation.

There are some real concerns here. I should be grateful if my noble friend would deal with them when she replies. It might be worth adding to them the fact that in what she said yesterday she seemed slightly at odds, as I read it, with what my noble friend Lord Henley said in his letter to me. As I understood what she was saying yesterday in the House, it was that Title VII includes the words "final provisions". If that is so, it is worth noting that Article N in Title VII calls for treaty revision in 1996. It says that the revision will be conducted in accordance with the objectives set out in Articles A and B; that is, the wide objectives of the European Union. That seems to go a little further than what my noble friend Lord Henley was implying in his letter. I am sure that it is I and perhaps one or two other noble Lords who have been confused by the complexity of these matters. I should be most grateful if those difficulties and uncertainties could be cleared up concisely and clearly by my noble friend when she replies to the debate. I beg to move.

5 p.m.

Lord Bruce of Donington

My Lords, Article F.3 of Title I of the treaty (common provisions) commits itself in precise terms to the financial support of all institutional expenditure: The Union shall provide itself with the means necessary to attain its objectives and carry through its policies". Hitherto, and in the foreseeable future, it would seem that in the main the funds will be provided from the Community budget itself. The Community budget is not something which normally attracts much attention. The other place is very much concerned, and rightly so, with all public expenditure. It addresses itself to the problems of raising the revenue or the loans to meet that expenditure. Despite the efforts it makes in that direction, which take hours of its time, the other place appears to exercise little supervision over Community expenditure.

Your Lordships will recall that on many occasions have ventured to draw attention to the fact that this country contributes net, after all receipts, something like £2.5 billion per annum to Community funds, thereby no doubt ensuring its permanent place at the heart of Europe, although that is not always universally acknowledged. The attention paid to the European Community budget is not comprehensive. In fact in your Lordships' House periodically—the noble Lord, Lord Boyd-Carpenter, occasionally joins in the matter; indeed, initiates it—concern is expressed about various headings of the Community budget itself.

The assumption seems to be—this is to some extent echoed by the noble Baroness, Lady Chalker, but it is most carefully emphasised by my noble friend Lord Clinton-Davis—that effective supervision is exercised by the European Parliament. Indeed, the noble Baroness, Lady Elles, has referred to the role of the European Parliament in that regard. I have ventured to exchange opinions with her on the subject. Are we right to assume that Community budgets and expenditure are safe in the hands of the European Parliament? I propose to address myself to that aspect of the matter presently, but in the meantime I should like to draw your Lordships' attention to the further developments in Community expenditure that have taken place.

In the preliminary draft budget for the year 1994, which has recently come into my possession, it will doubtless be noted that, despite all the alleged economies and continual pruning of Community finances and spending, agricultural expenditure under the CAP is due to rise by £1.338 billion, That is despite all the nice noises that have been made about the necessity of controlling Community expenditure. We should bear in mind particularly that the Common Market still costs the average family of four, in addition to all the tax burdens that it bears, anything between £17 and £20 a week according to official figures.

It will also be noted that the sum for the staffing of the Commission in the budget for 1994 is due to increase by £105 million. I in no way begrudge proper remuneration being paid to highly skilled and dedicated civil servants, whether they are members of the collegiate body or not, but it is something that we should bear in mind. More particularly-—here I am sure that I shall be joined by the noble Lord, Lord Boyd-Carpenter, whose interest in tobacco finances has been so frequently expressed in the House, and rightly so—we should bear in mind that, despite all the fraud and corruption, sometimes at state level and once at Commission level itself, expenditure on tobacco during the year 1994 will be only marginally less than it was in 1993. For 1993 the outturn is £1.019 billion. In 1994 it is due to be £982 million. I am not necessarily blaming the Government for that. In fact, I am trying to be helpful, if they will let me. I am not suggesting that it is even possible, within the deals that are done behind the closed doors of the Council, or within COREPER or the various other committees, to get one's own way in every field.

We may be prepared to accept, upon the basis of some deal done in other spheres, expenditure going up at that rate, but it cannot be said that at the moment Her Majesty's Government are exercising any considerable control. I hope to be proved wrong, because of course the figures that I have given are for 1994 and the complete Council budgetary procedure, by virtue of which a draft budget is produced later in the year, has still to be completed. The Government: may well be able to obtain further economies, and incidentally reduce the burden which our net contribution to the Community places upon the British taxpayer.

I refer also to the expenditure on the European Parliament. Expenditure on the European Parliament. continues still to rise. I have not yet received the details of the 1994 budget but I am bound to draw the attention of the House to the most extraordinary items of expenditure by the European Parliament. I am not referring to salaries, expenses and various allowances which are available to members. I may sound too envious. I could do with the financial cushion which is afforded by the considerable amounts which may justifiably be paid to European Members of Parliament.

It is the other items which trouble me. For example, in Title 3 of the general budget for 1993, £7 million is paid for secretarial expenses of political groups; £4 million is paid for other political activities unspecified; £9.5 million is paid for information work; and then for some obscure reason which is not explained, there is a contingency reserve amounting to £9.5 million. Those items are not subject at all to audit by the Court of Auditors. They are subject to private audit by the individual party groups which employ their own internal auditors for the purpose of satisfying their party members. But as the noble Earl, Lord Caithness, pointed out in answer to a question which I ventured to address to him recently, the European Parliament determines its own budget. Her Majesty's Government accept no responsibility for it. And yet, there is a rather touching faith that the European Parliament—by its very existence, deliberations and active of intervention in the affairs of the Community—can exercise some restraining influence and is capable of and does monitor Community expenditure.

I am afraid that that is not how it turns out in practice. I except from the criticisms that I am about to make, the activities of one or two Members of the European Parliament, including principally Mr. Tomlinson, who is a Member of the European Parliament representing a British constituency. He has been most assiduous in his pursuit of fraud. That is a pursuit in which very few other Members of the European Parliament have joined him.

I do not have the time and would not wish to weary the House with the results of my researches into those questions. But I have examined in detail the proceedings of the European Parliament from the 26th to 30th October 1992 right up to March of this year. I assure your Lordships—and the noble Baroness, Lady Elles, will confirm it—that that includes all the discussions relating to the budget and the discharge of the Community budget and other financial matters.

I have been through those. I cannot read out some of the matters to which I have referred because it would take far too long, but I should give your Lordships a flavour of the way in which expenditure is monitored. There is a budget committee of the European Parliament which comprises some 30 members and has 30 alternates. The attendances at the budget committee meetings are decidedly patchy and the personnel varies considerably. I do not believe that the noble Baroness, Lady Elles, will dissent from that.

The budget control committee of the European Parliament comprises 25 members with 25 alternates. That is extremely convenient and accommodates, as in the case of the budget committee of the European Parliament, the various social needs which are inseparable from holding the office of a European Member of Parliament. Once again, that does not make for continuity.

Therefore, in order to save time, I have made an analysis of those reports and the proceedings of the European Parliament which have a bearing on the matters that I am discussing. I should tell your Lordships that I am referring to documents 3–423, 3–424, 3–425, 3–426, 3–427, 3–428 and 3–429 in the current Official Journal series. Therefore, your Lordships can look up anything to which I refer.

On analysis, I find that in the proceedings up until 12th March from the previous 26th October, the speeches occupied some 1,805 pages; and some 90 contained references to financial matters. That includes the budget, discharge of the Community budget, the financial plans, consideration of the Court of Auditors and consideration of the various items which come before Parliament from time to time. Therefore, at most, some 5 per cent. of the time spent is spent on monitoring those various matters.

As to the nature of the monitoring, I draw your Lordships' attention to the following observation made on one occasion by a European Member of Parliament by the name of Blot—a Frenchman. After the conclusion of a debate on budgetary matters he said at page 74 in document 3–423: As regards the budgetary procedure, the fact that this Chamber is almost empty is proof that it does not operate properly. I am not blaming our colleagues for that, but the system itself which does not work. There is no longer any real debate, any real exchange of views in this Parliament. The recent deliberations of the Committee on Budget were an utter caricature in this regard. Why bother to call a committee meeting when everything has already been fixed outside by the Socialist and EPP groups? In these conditions, there is no real parliamentary life any more. There is merely a cartel. We denounce this profoundly undemocratic situation! On going through the procedures of the Parliament, I am bound to concur with that. I challenge any noble Lord to go through the somewhat tedious business of reading all those reports. If any noble Lord can find in total, out of a total membership of a European Parliament of 518 members, more than 20 different people who have taken part in any budget debate or even a series of them, I should be greatly obliged. I include in that group the rapporteurs, who obviously speak for longer, and those whose allotted time may be as much as five minutes or as little as two. I should be delighted to hear if there were more than 20 people during the period of time to which I referred who took an active part in actually supervising the budget or in monitoring or going into the detail of the various fraud reports that are produced from time to time. I challenge anyone to do so. If anyone can correct me, I should be very glad to afford that person the time to confront me with the results of any research that yields a different result.

I have one further quote to put before your Lordships. On 22nd October 1992, Mr. Cassidy of the PPE said at page 76 of No. 3.423 of the Official Journal, after considering certain budgetary items: I believe in a certain amount of budgetary stringency. I believe that it is our job in the European Parliament to pay some attention to the fact that the money we spend is not our money; it is the money which is paid by the citizens of the Community, some of whom elect us to this Parliament. In particular, I am very concerned about Parliament's own budget for 1993. The President-in-Office is well aware of my views on the subject. I reproached him on an earlier occasion with not being sufficiently rigorous in applying the pruning knife to Parliament's budget. I discovered there is a sort of conspiracy of silence between the institutions of the Community that they will not rock each other's boats; in other words, we do not cut each other's budgets. It is a matter of some regret that Parliament has sought to go right up to the permitted ceiling of 7 per cent. when there is absolutely no justification for that either in terms of the economic situation of the Community as a whole or indeed on the rate of inflation in the Community as a whole". That is the view of a practitioner, although I venture to say so myself.

Indeed, I believe on an earlier occasion I outlined the position whereby there was an agreement between the officials of the respective institutions that the Commission would produce its starting requirements in its preliminary draft budget for the consideration of Parliament but that it would inflate them to a degree so that the Parliament could have the honour of reducing the Commission's budget and thereby, presumably, attracting the admiration of Members of this House and of the citizens of the Community for being so rigorous.

At the same time there is always a private agreement which I said existed between Members of the European Parliament, on the one hand, and the Council, on the other, that Parliament will not interfere with the Council's budget on the basis that the Council would not interfere with the Parliament. I am glad that the remarks I made from my own memory have now been confirmed nearly 20 years later. It shows that the procedure still operates.

It is not generally understood—although it will be by examination of the proceedings of the Parliament to which I invite your Lordships—that the whole trend within Parliament when it comes to budget time is not to prune expenditure. Under Article 206 of the old treaty, every year in respect of expenditure (cash limited expenditure, not expenditure that is regarded as compulsory) Parliament is always allowed a margin of increase. I can say from my own personal experience, which I am sure will be confirmed by that of the noble Baroness, Lady Elles, that the whole trend in the budget committee, in the budget control committee and in the Parliament itself is to get as much as possible of the permitted increase that is notified to them on 1st May every year. The urge is always to increase, not to decrease. If the noble Baroness can deny that on the basis of authentic evidence, I should be very glad to see it.

In my view, the European Parliament, which has many virtues upon which I should be quite prepared to enlarge at a more convenient time, is not a safe instrument for the supervision of the Commission or for the control arid monitoring of public expenditure. In fact, as a reading of the record will show, it does not really do that at all. Therefore, we are back to our own control; in other words, we are back to the control of member states.

I am sorry, once again, to have to refer in admiration to the noble Baroness, Lady Thatcher. We need to return to the situation where, when it comes to expenditure, our Ministers of the Crown are prepared to say, emphatically, "No, no, no". It would do our country and our taxpayers much good and it would, perhaps, ease the misgivings that some of us feel about a Maastricht Treaty which gives even more powers to the non-elected executive and which maintains the dubious tranquillity of the Council of Ministers and of the members from member states that comprise it.

Baroness Elles

My Lords, I feel that I should comment on the remarks made by the noble Lord, Lord Bruce of Donington. However, the noble Lord raised so many issues in his most interesting speech that, obviously, I shall not even attempt to reply to all of them. I should like to take the opportunity to thank him for his courtesy in informing me that in respect of this amendment he would be raising the role of the European Parliament. I am most grateful to him.

I should like to draw attention to what is actually in the Maastricht Treaty. I do so beca use I believe that that is the purpose of Report stage. It is actually changing the situation which we hope very much will give the European Parliament not only more authority and confidence but also more duty in order to fulfil its obligations in controlling the expenditure of the Community.

As noble Lords will know—I do not think that the noble Lord, Lord Bruce, mentioned this—it is the Council and the Parliament that have joint authority. There is an institutional agreement which stipulates a maximum sum beyond which the Parliament cannot increase the budget amount, however much it may wish to do so. Similarly, the noble Lord did not mention a most powerful power of the European Parliament; namely, that when it disapproves of the Council's ultimate recommendations, it cart reject the budget. I should like to remind noble Lords of the two occasions upon which it rejected the budget.

The first occasion took place amidst strong disagreement about the way in which the CAP was being implemented. Urgent reform was asked for because of the great expenditure in proportion to the rest of the budget. Perhaps one figure would reveal that about 90 per cent. was spent on agriculture out of the total budget in 1973, whereas it is now somewhere between 50 per cent. and 60 per cent. I wait for the noble Lord, Lord Bruce of Donington, to tell me the exact figure. However, according to the last figures that I saw, it is somewhere around 56 per cent. of the total Community expenditure. That means that the Parliament has pushed down expenditure on the CAP in relation to the rest of the budget, much of which comes back to the United Kingdom in the form of regional expenditure, and so on.

The second time that the Parliament rejected the budget was precisely on the basis of the United Kingdom's unfair contribution to it. Following that—although, of course, not because of that—we can express our deep gratitude to my noble friend Lady Thatcher not only for the way in which she was able to reduce the sum of our budget contribution to a certain level, but also for the way that that level has been maintained over the years since that time. That is one of the most important contributions that has been made so far as concerns the Community resources.

I should like to take up the point made by the noble Lord, Lord Bruce, about the 20 people. If may say so, I believe that to dwell on that point is to neglect the way in which the European Parliament works. Indeed, it is easy to make fun of an institution the functions of which very few people —perhaps, fortunately—know about. As the noble Lord, Lord Bruce, will know—unless this did not apply in his day—only the leaders of each group on the budget committee are entitled to speak and they have a limited time in which to speak. They have to sit down after five or 10 minutes, or whatever the period of time may be. Some of us might wish to adopt that procedure in this House, particularly as we have spent 41 minutes on this item. However, I do not intend to sit down immediately as I wish to draw attention to one or two points.

The new provision in Article 206 of the Maastricht Treaty states that the Parliament has a duty to receive financial statements from the Commission. The Parliament did not have that duty before. It can now demand financial statements as of right and there is an obligation on the Commission to produce all the details of its financial expenditure, for which of course it is responsible in implementing the budget. The Parliament also has a duty to demand from the Court of Auditors a financial report whereby it can now go into the detail of the way in which expenditure is incurred. Many noble Lords will be aware of the extent to which we in this House have relied upon reports from the Court of Auditors to inform us of some of the misdemeanours, mishaps and activities of the Community with regard to its finance. We would not otherwise have been aware of those activities. I welcome the provisions in the Maastricht Treaty which give not so much more power to the European Parliament but a deeper and stronger obligation to ensure that the finances of the Community are being used wisely and properly and to the benefit of the citizens of the Community and the United Kingdom taxpayer.

At this juncture I join with the noble Lord, Lord Bruce, in paying tribute to the assiduous work that has been carried out by John Tomlinson who is a Member of the European Parliament and who has produced report after report on the European budget and, recently, on the fight against fraud. While there is no one more assiduous than the noble Lord, Lord Bruce of Donington, in looking into the expenditure of the European Parliament—we should be extremely grateful to him for that as we must keep an eye on these things—I believe that matters will improve with the treaty. I hope that next year, when the treaty has been ratified and the Parliament can use its powers, a happier picture will emerge of the finances of the Community.

5.30 p.m.

Lord Richard

My Lords, as I understood the amendment, and as I listened to the speech of the noble Lord, Lord Tebbit, it seemed to be a discussion on the meaning of Article F.3 of the treaty. I listened to my noble friend Lord Bruce of Donington very carefully. I could not do other than that as he is sitting close behind me and he is not exactly noted for being a shrinking violet when expressing his views. His views tend to boom out in one's ear but I suppose they are no worse for that.

As I listened to my noble friend's polemic against the budgetary powers of the European Parliament it appeared to me that we had strayed a little from the subject under discussion. As my noble friend approached the 27th minute of his speech, I recollected an incident that occurred shortly after I went to New York to be the British Ambassador to the United Nations. As was customary for a newly arrived ambassador, my predecessor gave me thumbnail sketches of the various personae who performed at the United Nations. For example, I was told that Ambassador X was sound on the Middle East but a little wobbly on nuclear weapons, or that Ambassador Y was terribly good except when he received instructions from his own government at which point he became unreliable. Ambassador Z had better remain nameless, but I fear that he came into my mind as my noble friend was speaking. My predecessor said of Ambassador Z "words fail me". I can only hope that at some date words will fail my noble friend too. I say that kindly, but after 37 minutes spent on the deficiencies of the budgetary procedures of the European Community when we were discussing an amendment which concerned the definition of Article F.3 of the treaty, I hope that my noble friend will forgive me for the thought that strayed gently across my mind.

The word "means" is either confined to money or it is not confined to money. As I understand the position, the noble Lords, Lord Henley and Lord Tebbit, have entered into correspondence on this matter. I believe that "means" cannot be confined to money. If it were confined only to money, it is inconceivable that one could use that kind of catch-all provision (which drafters of treaties and international agreements are fond of including), to justify additional and extra expenditure either in those fields in which the treaty has already authorised expenditure, or—I understand the noble Lord is more concerned with my next point—to authorise expenditure in fields which are not covered by the treaty. I believe that the word cannot be construed in that way and it is inconceivable that it could be so used.

If "means" here means finance and money only, I would say, despite the strictures of my noble friend Lord Bruce of Donington, that there are budgetary provisions in the treaties which are drawn up precisely to consider the way in which Community money is expended. Any Community money that is expended is by definition money that has to be expended in accordance with the terms of the treaties. To construe "means" in the way that at one stage it was being construed is, frankly, wrong. If the word "means" can be construedߞ

Lord Tebbit

My Lords, I may be able to help the noble Lord here. It was my question which originally sparked off whether "means" was in that sense so constrained. It is clear from the letter which my noble friend wrote to me that it is not so constrained. I entirely accept that it includes finances, structures, organisations and policies. I believe it is easier to have a debate on that basis. I do not believe that the finances can be used for purposes which are not within the treaty. However I question whether and to what extent they can be shuffled within and what kind of organisations can be created.

Lord Richard

My Lords, I am obliged for those remarks. In that case we can narrow the argument. We can forget about the money, the budget procedures and the powers of the European Parliament in budgetary terms. Those are all matters which are important but the noble Lord's amendment is not concerned with them. If "means" includes the matters to which the noble Lord has just referred, I believe that Article F.3 is permissive rather than obligatory. In effect it says that the Community shall require general powers—which at some stage it may use—which can only be used in accordance with the treaties. Therefore by definition those powers must be powers which the treaty has provided should be there and available for use. I do not refer merely to this treaty but to the other treaties too. In that case I believe that the use of those powers, which have to be authorised by the treaties, is permissive rather than obligatory.

As I said a little earlier, this is a catch-all phrase. It is a kind of wind-up generality at the start of the paragraph that is headed "Common Provisions" in Title I. One should not forget in this respect that Article D of Title I provides that the European Council, shall provide the Union with the necessary impetus for its development and shall define the general political guidelines thereof". If "means" means what the noble Lord, Lord Henley, says it does—the noble Lord, Lord Tebbit, accepts that definition —those means can only be employed in accordance with the treaty. Further, they could not therefore by definition be used to justify further expenditure. They can only be used in accordance with the general guidelines provided by the European Council. I believe that the noble Lord, Lord Tebbit, has perhaps been raising issues here which are more apparent than real.

Lord Monson

My Lords, I think that we are now all agreed that it is quite clear that the word "means" does not only refer to financial means but also to structures, organisations and policies. In other words, the powers are totally open-ended and without limitation of either cost or scope and presumably are entirely beyond the control or scrutiny of national parliaments. I am sure that the noble Lord, Lord Richard, is correct in saying that they are permissive and not obligatory, but that makes them no less worrying.

It has been suggested, for example, that the powers to be allowed the new Union in consequence of the unrestricted scope of the term "means", or "moyens", could theoretically include the power to set up its own police force. The noble Lord, Lord Tebbit, alluded to that possibility. It would probably be an unarmed police force, but it would have the power to cross national frontiers in pursuit of enforcing the objectives of the Union.

If that theoretical possibility is a total non-starter it would be useful to have unequivocal confirmation of that fact from the Minister. However, I doubt that she will be in a position to give such unequivocal confirmation because however unlikely the formation of such a force might seem in the near future the drafting of the article is such that no such possibility can be ruled out entirely.

Reverting to the question of means in general, the United Kingdom should not be allowed to find, contrary to assumptions made by Ministers, that it has been bounced into a wider obligation than it thought. We therefore need some legally watertight clarification.

5.45 p.m.

Baroness Chalker of Wallasey

My Lords, this has indeed been an interesting debate on Amendment No. 29, or rather less on Amendment No. 29 than on other matters. Before I respond to my noble friend Lord Tebbit and his amendment perhaps I may explain to those of your Lordships who have not fully taken this in that I believe that we have discussed this subject because, although my noble friend Lord Henley and I had happily expected to have this debate last night on Amendments Nos. 14 and 15, those amendments were not moved and therefore the noble Lord, Lord Bruce of Donington, has taken this opportunity to put on the record his very real anxiety about budgetary control. He knows that we share that anxiety in the sense that there should be improved budgetary control, but we do not share all his fears and many of his criticisms. I shall deal with some of those briefly in a moment, but only very briefly indeed.

I thought that the noble Lord, Lord Richard, described the matter to a "t" in his summing up of the situation. However, in order to quieten the fears of my noble friend Lord Tebbit perhaps I may deal with the specifics and the letter which my noble friend Lord Henley sent to him on 29th June.

During the debate which we had on Amendment No. 15 during the Committee stage my noble friend Lord Henley sought to explain exactly what was meant by "means". As my noble friend Lord Tebbit said, he subsequently wrote to my noble friend. I should like briefly to reiterate what was said in that letter. My noble friend Lord Henley made it clear that the word "means" contained in Article F.3 under Title I, "Common Provisions", is not confined to financial resources but refers to resources in the general sense.

It is important that the whole of Title I and the previous articles (Articles A to E) should be read in conjunction with Article F because, like those other provisions in Title I, Article F.3 looks forward to the substantive provisions of Titles II to VI. The reference to the Union providing itself with means in Article F.3 is explained and given substance, and also limitation, in the substantive provisions of the following titles. Therefore, the means by which the Union accomplishes the objectives set out in Article B are provided in terms of finances, structures, organisations and policies in Titles II to VI of the treaty. That is what I mean by reading the whole of Title I and not merely one part of it.

I can assure my noble friend Lord Tebbit that Article F.3 in no way commits the UK to agreeing increased resources for the Community to fund its activities. The structure of the treaty itself and the subsequent titles in the treaty to Title I ("Common Provisions") leave no room for ambiguity.

I noticed when my noble friend Lord Tebbit was speaking that he implied that the provision of means through Article F.3 brings Titles V and VI within the scope of the Bill. It does not. Article F.3 is part of Title I, which is in the Bill only to the extent that it relates to Titles II to IV, which are the Community titles, not to the two pillars, which are Titles V and VI.

My noble friend Lord Tebbit also asked about the granting of further powers. He gave some examples of matters which concerned him. Article F.3 does not commit us to granting further powers or resources to the Community or the Union other than those expressly set out subsequently in the titles. That is why some moments ago I said that the reference to the Union placed a limitation in the substantive provisions of the following titles.

I must explain to those who may not have followed our debates in detail that the common provisions at the beginning of the treaty are an important lead in, but without the other titles of the treaty they could mean nothing. It is the other titles of the treaty which contain the powers.

My noble friend Lord Tebbit also asked me about Title VII, which relates to other provisions. Those provisions are incorporated in the Bill to the extent that they relate to community Titles II to IV. The reference in Articles A and B of Title I ("Common Provisions") in Article N.2 simply indicates that the European Community would need to consider whether any further provisions might be necessary to implement objectives which we have already decided upon and accepted. I believe that it is right that from time to time such a review should be undertaken, but the reference in no way prejudges the outcome of the review. Article N.2 simply provides that it should be so.

What I have said means that the anxieties which my noble friend Lord Tebbit expressed about purchasing arms for use in Yugoslavia or other equipment for a cordon sanitaire are not covered by Article F.3. He also went on to talk about the provisions of the pillar on justice and home affairs and quoted some of the K Articles. They are covered by their own subsections under Title VI.

I understand that my noble friend has real anxieties, but I can assure him that this is a limited provision, as both my noble friend Lord Henley and I have explained. It must be so because the Union itself has no financial resources.

Before I leave the subject perhaps I may say a brief word to the noble Lord, Lord Bruce of Donington. I know that he has been concerned about lack of scrutiny. But the documents detailing all budgetary proposals are deposited in the Libraries of both Houses. The explanatory memoranda from the Government are presented by the Paymaster-General to Parliament, and the annual budget is debated in another place following the recommendations of the House of Commons European Scrutiny Committee, which examines all the budgetary documents in the explanatory memorandum. There is also the further scrutiny referred to by my noble friend Lady Elles, which occurs on a regular basis. While I agree that not all Members of the European Parliament are the scrutinising angels that the noble Lord, Lord Bruce, would have them be, there are those who work exceedingly hard to scrutinise the expenditure. As my noble friend Lady Elles said, they raise many questions on exactly what the expenditure covers.

I believe that my noble friend put this down as a probing amendment. But because Article F.3 in no way commits the United Kingdom to agreeing increased resources for the Community, and because the structure of the treaty leaves no room for ambiguity as to what those means are, which are as explained in the letter sent to my noble friend on 29th June, I urge your Lordships to reject the amendment. I shall ensure that a copy of the letter from my noble friend Lord Henley is put in the Library, because it makes the position clear beyond peradventure.

Lord Tebbit

My Lords, I am grateful to my noble friend. I shall look carefully at what she said, in particular about Title VII and Titles V and VI and their relationship to the Bill and to the treaty. I shall consider it carefully alongside what she said last night, reported at col. 44 of Hansard. They are complex relationships. I believe that it is better to consider the issues at some leisure.

However, my noble friend replied with great skill and charm, as always, to a number of questions which I did not ask and failed to reply to questions which I did ask. I never raised the issue of whether the proposal committed us to increased expenditure. Such words did not escape my lips. It is quite clear that the provision does not commit us to such a thing. I did not ask whether it committed us to anything. I was inquiring whether the provision gave cover for the Community, through its appropriate institutions, to expand the treaty in the way that we have seen the predecessor treaties expanded.

For example, I asked a clear and specific question. I referred to Title VI, Article K.1(9) on page 84 of the treaty in which there is a reference to the European Police Office. Noble Lords will recollect that my noble friends Lord Henley and Lady Chalker referred specifically to the creation of organisations. I sought reassurance that that provision could not be enlarged to create an organisation of police officers who would report not to their domestic governments, nor to their national governments, but to an agency of the Community.

My noble friend did not reply to that question. The only reply she needed to have given was, "My noble friend is over-fanciful. There is no conceivable way in which such a thing could happen". Significantly, she did not give that answer. Unless she wishes now to give me that answer, I can only conclude that she did not do so because her brief does not allow her to do so.

Baroness Chalker of Wallasey

My Lords, I am grateful to the noble Lord for giving way. I should have referred to the same advice as I gave him in not taking Article F.3 apart from the remainder of Title I: that is, not to take any of the provisions of Title VI, Articles K, K.1, K.2, K.3 and so on without referring to Article K.9. I shall read Article K.9 to the House. It states: The Council, acting unanimously on the initiative of the Commission or a Member State, may decide to apply Article 100c of the Treaty establishing the European Community to action in areas referred to in Articles K.1(l) to (6), and at the same time determine the relevant voting conditions relating to it. It shall recommend the Member States to adopt that decision in accordance with their respective constitutional requirements". Article K.9 is the safety clause, and a very important safety clause, for any of the horror stories about which my noble friend Lord Tebbit seems to dream each night.

Lord Tebbit

My Lords, it will have been noted that my noble friend gave me quite a long and complex reply. She did not give me the answer no. She invited me to read the treaty, to interpret it and to consider the matter again. All I ask for is the reply, "No. It is not possible under the treaty for this to be done". I fancy that it is one of those occasions when, if the Minister does not say no, it is, as I have suggested, because the Minister's brief specifically excludes the possibility of saying no. I have in the past been on the Front Bench for a sufficient number of years to recognise when a Minister has a brief which says, "Do not say no", or even, "Do not say yes. Quote the complex matter back. Let them consider it again".

I invite my noble friend to say that it would simply not be possible to use Article F.3 in relation to Title VI, Article K.1(9) to establish an organisation of police officers who would be carrying out the objectives and policies of the Union and who would report not to their home governments but to a Community organisation. I do not say that I believe that we could be committed to that by the treaty. I am asking whether the treaty could be expanded to accomplish that if that was the will of Ministers in the Council at the time. I ask: yes or no?

The Earl of Onslow

And answer came there none.

Lord Tebbit

My Lords, I believe that the answer has been heard in the silence. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hamilton of Dalzell moved Amendment No. 30:

After Clause 5, insert the following new clause:

Exchange Rate Mechanism

(". Nothing in this Act shall have the effect of imposing any obligation on Her Majesty's Government to place the currency of the United Kingdom within the Exchange Rate Mechanism or any comparable mechanism for fixing exchange rates.").

The noble Lord said: My Lords, the amendment seeks to put into the Bill a new clause which reinforces what I understand to be the government's position: that they consider themselves to be under no obligation to rejoin the ERM, which is the stepping-stone to monetary union—and, I might add, the string which keeps the can of my noble friend Lord Tebbit attached to the back of the car.

I spent 20 years of my life between 1960 and 1980, working in the City. My work involved a study of the politics of British economic policy over the period. Alter all that happened then and since, it seems incredible to me that it is possible to contemplate the idea that a government could claim to be managing the economy without having control over their exchange rate and hence their interest rates and monetary policy.

I believe that to be so regardless of the emphasis which a government might wish to give to any of the variables of economic policy available to them. Therefore, the more I think about the treaty, the more I come to the conclusion that that part of it in particular is an illusion, a conjuring trick and a confidence trick played either on the electorate or on our partners in Europe.

The provisions for monetary union are the key to the full Union envisaged in the treaty. The matter is straightforward for those noble Lords who welcome the vision of a single currency and the inevitability of a single government in Europe. They believe that it is the magic potion which will lead to the prosperity which eluded us during the time when some of them were in office. "More of the same, writ larger", is their nostrum.

Others see in the opt-outs that we have arranged the fact that we have no need to confront. the daunting constitutional questions that acceptance would entail. We can agree the treaty in principle but not in practice. I believe that to be the position of the Government; and I believe that it is a gamble. In my view it is an irresponsible gamble on 'which the Government have staked the constitutional rights of the British people to choose in an election the party offering economic policies they think will be best for them. Political control over financial matters by another place was, after all, the essence of the constitutional crisis of 1911.

In my opinion, the first gamble we have taken is that the system will not work. My noble friend Lord Caithness said in Committee: We will need to take account of any developments within Europe before the government of the day, of whichever party, decides whether or not to put forward a proposition… That is the advantage of the opt-out".—[Official Report, 23/6/93; col. 380.] In other words, let us first see whether it will work. But the Government have taken, and I quote my noble friend Lord Caithness again: a most active part in producing a treaty which has workable and practical conditions for a Stage 3 of economic and monetary union".—[Official Report, 23/6/93; col. 380.] If we thought that the conditions, which we took an active part in devising, were workable and practical, what reason did we give for opting out of them? This seems to raise a question of good faith which must be essential in a treaty. Can we morally stay out?

The second leg of the accumulator is that we can stay out of Stage 2—that is to say, ERM and economic convergence. Of course, before we get to Stage 3, we will have had to go through Stage 2 and had a fixed exchange rate for two years. There is nothing to stop this beginning at any time after nex t January, when the time appears to be right or we have a government in power who think that it would be a good idea —perhaps in five or 10 years' time.

It is easy enough to see, given a two-year period of calm in the currency markets, that the sleeping dog could metaphorically be chained and we would be back on course in the ERM. The time is therefore likely to come when phase 3 —the single currency— will be back before your Lordships' House. What attitude will we take to it then? Will we turn it down on the grounds that it takes away the sovereignty of Parliament? Or will we be told that not to approve it will put us on the slow track in Europe; or that it is unconstitutional to resist the will of the elected government; or that by signing the Treaty of Union, we agreed to follow the path to union and this is just another step in that direction which we cannot now resist? Why not decide it now?

The third leg in this gamble is whether we can in fact stay out of Stage 2. Are we in reality immune from action by the European Court of Justice to compel us to join it under Articles 109M and 109J of the treaty? Your Lordships have heard the opinions of the noble and learned Lord, Lord Wilberforce, confirmed by my noble and learned friend the Lord Chancellor, that the supreme court in these matters is the European Court of Justice and not the House of Lords. They also said that the Court of Justice was in the habit of using a purposive construction of the regulations and provisions of the law with which it had to deal.

What, my Lords, is the purposive construction of the terms of Articles 109J and 109M on which other notable legal opinions have taken the view that they bind us to re-enter the ERM? It seems to me—and I intend no discourtesy to my noble and learned friend—that in matters concerning the supreme court his is no more than a legal opinion. He told us last night that there was only one thing certain in the law; and that was that 50 per cent. of litigants went away dissatisfied. We cannot afford to lose any of these bets. The amendment which your Lordships have before you dispels some of these uncertainties. I beg to move.

6 p.m.

Lord Harris of High Cross

My Lords, I am very glad strongly to support this amendment which I think is wholly in keeping with the undertakings given by the noble Earl in the earlier stages of the debate. However impatient some noble Lords may be, they must believe that on this issue we have no other interest than to strengthen the Government's stand against EMU. Whether right or wrong, we believe in the desirability of this opt-out. Our anxiety is that we are not confident that it will be effective.

That lack of confidence has been intensified by the Minister's reluctance to say with the lack of equivocation that, for example, the noble Lord, Lord Bruce, gives his views, that the Government have a view one way or the other on the desirability of Stage 3 for the other members of the Community. We know where the Labour Party and the Liberal Democrat Party stand on this matter. The Liberal Democrats are indiscriminately in favour and the Labour Front Bench at any rate is strongly in favour of EMU. We know that the noble Lord, Lord Tebbit, and other critics are opposed to both EMU and ERM.

We do not know what the Government's view is on the desirability of the single currency, whether for the other 11 or, in the longer run, including ourselves. We do not know whether they would still secretly prefer the old hard ecu which attracted a good deal of support and would have provided a common or parallel currency alongside other currencies without federal strings. It would have been a perfectly satisfactory way of conducting international trade. We do not know—I should like to know very much—whether the Government accept the basic programme of the European People's Party, to which British Conservative MEPs are affiliated, which calls quite specifically for the creation of a single currency. The most that the noble Earl, Lord Caithness, would say in Committee was that the Government would make up their mind at the last moment when Stage 3 stares them in the face. We believe that is not a satisfactory stage at which to leave this argument.

According to the Minister's version in Committee on 23rd June (starting at col. 375 of the Official Report) British economic and monetary policy can continue exactly as at present up until the moment—December 1996 or January 1999 —when the Government would decide whether or not to proceed with Stage 3. Meanwhile, as I understand it conscientiously, he denied any obligation to rejoin the ERM or even to make the Bank of England independent. Even convergence (at col. 378) seemed to be a pure matter of choice. With, I thought, gay abandon, he declared that the question of moving to Stage 3 would be decided exclusively on what was, in the interests of the United Kingdom".—[Official Report, 23/6/93; col. 382.] As I watch the noble Earl, I think sometimes that he is rather like a subaltern in the First World War. He throws himself above the trenches. He leads his troops forward with reckless disregard to danger on the assumption that the enemy is using rubber bullets or blank cartridges. He thinks that it is all dummy ammunition and that these kinds of questions are not to be taken too seriously. But we now know that there are minefields in the area he is moving towards. There are long-range shells with delayed action fuses that have already been set in motion, so to speak, by the Stuttgart Declaration, beloved of the noble Lord, Lord Cockfield, who is not here with us.

Leaving aside those hypothetical dangers, we come now to the detail of the Maastricht Treaty. I am not able to afford legal advice, and I do not have anonymous influential friends who will tell me anything worth knowing about the legal implications of these very complex matters. But I have a guide in a document by a lawyer with the famous name, Howe. It is not my old friend the noble and learned Lord, Lord Howe, but is, I believe, a nephew, Martin Howe: Monetary policy after Maastricht: How much independence will Britain possess? It seems to me to be totally persuasive. I look forward to the noble Earl pointing out where Martin Howe and I are in shared error. My informed guide points out that Articles 102 and 103 commit members to, conduct their economic policies with a view to contributing to the objectives of the Community", and, to regard their economic policies as a matter of common concern". The "subaltern", the noble Earl, in replying, said: economic and monetary union is nothing new. It has been on the Community's agenda since before we joined it".—[Official Report, 23/6/93; col. 375.] So the noble Earl's view is plainly that we can forget it and carry on, business as usual. That seems to be the particular reassurance that he provided on this occasion.

Alas, we then come to Article 109m. This binds us to treating our exchange rate policy "as a matter of common interest" throughout Stage 2 and under Stage 3, unless we join. Article 109e threatens us with assessments, multiannual programmes, opinions on exchange rate policy and recommendations on monetary policy. Yesterday, our Chancellor was up before ECOFIN to answer questions on our efforts to bring about convergence. It was not quite a firing squad; but nor is it wholly "dummy bullets". He has to give an account of his policy to satisfy our European partners.

It is plain that we are committed to taking convergence seriously, including honouring the intention and making the effort to join the ERM as a necessary qualification for deciding whether to enter Stage 3. It is not good enough for the Minister to shrug off such commitments as though they are no more than what the Prime Minister (in a different context, I agree) derided as "Euro-waffle". The intention of the treaty is plain, even to those of us who regard the whole enterprise as being misguided, unrealistic and doomed in any event to fail. Here we come to other dangers in no-man's land: what we say and think here is not as important as what our partners may think and how they will interpret the intention of these articles. While they struggle in their varying ways to conform to the convergence criteria, they will watch us carrying on, guided only by the national interest of the United Kingdom. It would not be perverse of them to accuse us of pursuing a narrow, nationalistic, non-communautaire policy, and of seeking an unfair competitive advantage by allowing our exchange rate to float. We may recall that when Hoover shifted its production from Dijon to Glasgow, we were accused of having an unfair advantage after we had withdrawn from the exchange rate mechanism.

I have to ask the noble Earl this question. What happens if one of our partners or the Commission takes us before the dreaded European Court, now fitted out with new powers to impose fines on defaulters? Shall we bear in mind, as we answer, the Stuttgart Declaration, which acknowledged the political objective of the European Court, its essential role to play a part in progress towards European union, by securing compliance with, and development of, Community law". That is the frame of mind that the European Court will bring to a judgment of Britain's guilt or innocence on the matter of unfair advantage through a floating exchange rate.

We might bear in mind what my noble and learned friend Lord Wilberforce acknowledged at Second Reading about what he called "the extended purposive interpretation of the Treaty of Rome", which was a commonplace part of the European Court's activities.

Our anxiety is a perfectly conscientious and serious one. It does not keep us all out of our beds every night, but it certainly bothers us as we look at this Bill and at the Maastricht Treaty. Our concern is that, faced with the Minister's rather cavalier view about Stage 2, the court could find Britain in clear breach of Stage 2, without needing to call in aid the spirit of previous solemn declarations about transforming relations into a European union. It would need only to rely on the strict letter of the law as set out in the Maastricht Treaty.

We do not seek further easy assurances which the noble Earl produces with much grace from his briefcase, which is possibly stuffed full of assurances. We ask the noble Earl either to accept this amendment, to which he cannot object on the basis of the words I have quoted, or to put unequivocally on the record the Government's irreversible determination to refuse to submit to the jurisdiction of the European Court of Justice on the issue of rejoining the ERM before any decision may be made by Parliament to join Stage 3. Without an unequivocal pledge of that kind, we may have to call the Minister's bluff in the Lobbies.

Lord Boyd-Carpenter

My Lords, this amendment does not exclude our joining the ERM. As I understand it, all it does is to lay down that no obligation to join the ERM will be imposed under this Bill when it becomes an Act. I believe it is important for noble Lords to bear that in mind.

I have always been a critic of the ERM. Not only did we have a disastrous experience of its working with the famous events of Black Wednesday, but I believe that it is in principle wrong. I suggest that it is wrong to tie the exchange rate of one's currency to any other currency or any other particular mark. One of the advantages of a floating and mobile exchange rate is that it helps very much the working of the economy.

It is obvious that if one has a bad period of trade and is in economic difficulties, a freely moving, exchange rate moves down. That of course helps to correct the tendency which one is suffering economically because it makes at the same time one's exports cheaper and one's imports more expensive. Therefore, it works automatically to restore the balance of payments and the position of the economy. Equally, if one is highly prosperous and doing extremely well, one's exchange rate goes up, and that again is to the benefit of the other countries with which one deals. It enables one to import from them in increased amounts and makes them deal in a more balanced way with you.

Therefore I believe that the ERM is a thoroughly bad thing. The Government have answered a number of questions since Black Wednesday. They indicated that they have no immediate or undue enthusiasm for rejoining the ERM, though they have not gone very far in disputing the possibility that at some later stage we might return to it. It seems to me very valuable that we should have this discussion. I very much hope that my noble friend the Minister will be able to give us a view on how the Government see the matter. If he keeps to the narrow terms of the amendment that will deal merely with the question of whether the Bill could be used to create an obligation. However, it would be helpful if he could go a little wider and indicate the Government's thinking on the general issue of the ERM. I do not ask him to prophesy into the indefinite future but some indication that the Government are not likely to go back to the ERM in the near future would be very reassuring to many of us.

Lord Aldington

My Lords, I want to put a slightly contrary view to that of my noble friend who sits in front of me and with whom normally I agree. I do not want to argue with him about the desirability or otherwise of the ERM. One day I might argue with him, but I hope that it would be in a debate about that matter and not about the rather narrow point in this amendment. I hope very much that my noble friend will not, in his seductive words, force from my noble friend on the Front Bench too long a statement of policy on the Government's attitude to the ERM. That is not the point of the amendment.

The simple question is whether there is anything in the treaty which imposes an obligation on Her Majesty's Government to place the currency of the United Kingdom within the ERM or any comparable mechanism for fixing exchange rates. That is a question to which I thought we had already had an answer; namely, that there is not.

There is a requirement that any member state that wishes to go into Stage 3 must have been in the ERM and within the normal fluctuations for two years. But it seems to me—I should like to be assured of it—that that does not impose any obligation on us at this time, particularly in the light of the important option that my right honourable friend the Prime Minister successfully negotiated for us.

There are a number of other points, made in his usual discursive way by the noble Lord, Lord Harris, to which on this occasion I shall not reply, other than to make my usual once a day bleat; namely, that I wish, in the proceedings in this House on the Bill, that we could obey the normal rules of order and conduct our debates with reference to the amendments on the Marshalled List and not with reference to the great issues about which we have many chances in wider debates to talk and about which we have happily talked and will continue to talk for many years to come.

Lord Tebbit

My Lords, as my noble friend Lord Aldington suggested, I shall make my remarks absolutely relevant to the amendment. It seeks to increase our ability as a nation to resist being pulled into the exchange rate mechanism. That is what the amendment is about. Why should we want to do such a thing? It must depend upon whether or not we take the view that membership of the exchange rate mechanism is likely to be to the benefit of the United Kingdom.

Therefore it seems to me that the noble Lord, Lord Harris, was absolutely right to spend some time discussing the merits of the exchange rate mechanism. If we all agree that it is a wondrous gift to mankind in general and the United Kingdom in particular, quite clearly we should have no truck with this amendment. But if we are inclined to the view that it is a dangerous device which has already done grave damage to the United. Kingdom, we should begin to consider whether or not this amendment should be supported. I hope that my noble friend Lord Aldington will manage to restrain himself while I say just a word or two about the exchange rate mechanism.

It is now mid-July. It does not seem long ago—does it? —that we had the excitement of what has been so foolishly called Black Wednesday. I christened it Bright Wednesday and was much criticised by Ministers for going on the radio and saying with great glee, "And with one bound we are free." It is a song that has since been taken up at considerable length by Ministers. They have sung it very well indeed. My concern is to encourage them to keep singing. I like the tune, I like the words and indeed I like the results which have sprung from Bright Wednesday.

Until Bright Wednesday, there had, to be sure, been reports of green shoots appearing in the economy. But everyone of those reports later turned out to be false. There was not a green shoot in sight. I am sure that noble Lords on the Opposition Front Benches will agree that there was not a green shoot around. They told us so—frequently. Since then, one after another the green shoots have appeared. It is not yet an economic spring but it is much more encouraging than anything we saw before. We have had the encouraging news of the progress of the British motor industry, in stark contrast to the disasters that are befalling our competitors, who have chained themselves into the exchange rate mechanism. There has been news today of a further increase of 1.8 per cent. in industrial production, as my noble friend Lord Morris observed. That is very encouraging indeed.

We have what successive Chancellors have described as a competitive exchange rate. I ask: A competitive exchange rate? With what is it competing? With what is our exchange rate competing if it is not with the exchange rates of our commercial rivals? That is not a very communautaire thing to be doing, is it? It does not fit into the exchange rate mechanism. We are doing it and Ministers are proud of it. Quite contrary to the forecast that, were we to commit the terrible folly of leaving the mechanism, interest rates would soar to unprecedented heights, we found that interest rates fell. They went up in countries which stayed in the exchange rate mechanism. It seems to me that there is at least an argument that it may be beneficial for us to keep out of that mechanism.

I turn more closely to the amendment. I take up the point made by the noble Lord, Lord Harris. In my experience Mr. Kenneth Clarke is one of the most robust politicians that I have ever met. He seldom neglects a challenge to his views. I feel that he is almost incapable of turning aside from an argument. The concept of proffering the other cheek has not come into his experience. He is an extremely able man. The other day he was at the ECOFIN meeting. The reports that I received, and, indeed, some of those we saw in the press, suggested to me that he was not on his normal form. He did not turn to his fellow Finance Ministers as they lectured him on the British economy in the way that he would have turned to a consultant at Bart's Hospital who sought to lecture him on reforming the health service, nor to a teacher in a secondary school who might have lectured him on his education reforms.

He was unnaturally reticent and conciliatory. That is the kind of thing that worries me about a man. I like to see a man playing his natural game. As we have seen. there is no worse spectacle at a cricket match than a natural stroke-maker and aggressive player being sent in with an instruction not to be unduly unkind to the bowlers. Yet that seems to be what is now in the mind of my right honourable friend the Chancellor.

Could it be that there is some constraint laid upon him which is preventing my right honourable friend from playing his natural game? There may be. Could it be that he is aware of the obligations which will flow from the Treaty of Maastricht to treat our exchange rate as a matter of common concern, rather as though M r. Botham were instructed by his captain to treat the number of runs he scores as a matter of common concern with the other team? It seems to have the same sort of effect on Mr. Clarke as it would have on Mr. Botham. I hope not. I hope that Mr. Botham would have remained robust, not least to his captain.

Of course, there could be the suspicion that Mr. Clarke is a robust supporter of membership of the exchange rate mechanism. That does not mean that he is a dishonourable man. There are many good and honourable men who believe that we should be in the exchange rate mechanism. It is a matter of judgment. But we are left puzzled. Is he behaving in that way because he wants to be in the mechanism but feels that it would be politically inexpedient? Is he behaving in that way because there is some constraint laid upon him? It is a matter of extremely interesting debate. But sooner or later we can be sure that, whatever he wants to do, he will be restrained by the provisions of the treaty.

We are frequently told of the marvellous protections which exist in the British protocol. So they do. It is an impressive list. Page 115, paragraphs 3 to 9 in particular, list all the exemptions from the earlier provisions. There is only one snag; they do not become operative until the United Kingdom gives notice that it does not intend to proceed to Stage 3. That is the rub. It can be argued that even after we gave such notice we would still be in the position of what I describe as the tin can attached to the tail of the dog—being dragged along by the policies of the other 11, distancing and insulating ourselves from any discussion on how those policies should be arrived at.

Those on the Opposition Benches have a powerful argument when they say that that would be a mistake. But until we trigger those protections the full rigour falls upon us, almost without exception. Perhaps therefore there is an opportunity for my noble friend—who may have taken further advice or gone for further and better particulars from his client, the Treasury, since we last debated the matter—to indicate when we can expect the Government to seek the protection of paragraphs 3 to 9 on page 115.

I hope that we shall be given some indication of that. Above all, I hope that when he replies we shall have a robust and clear statement from my noble friend that the provision is not needed. I hope that he will say with absolute clarity that there is no circumstance whatever arising from the treaty by which any pressure or requirement can be placed upon the United Kingdom to re-enter the exchange rate mechanism under any form of duress. I should like him to say that Her Majesty's Government are convinced that a policy of fixed exchange rates would be a folly which we have committed in the past but which we have no intention of committing in the future. But I realise that that may have to remain merely a hope.

Perhaps more realistically we can expect my noble friend to reiterate in his robust terms the statement which was made by the Chancellor, that there is no prospect under any circumstances of a re-entry during the lifetime of this Parliament. That would be something. Above all, I hope that my noble friend will be able to reassure us that there is no way in which the provisions of the treaty could act as any form of duress and that the expression, making our currency and its exchange rate matters of common concern, is a meaningless jumble—a bit of dust in the treaty which can be assuredly and safely ignored by Ministers. In my view, our currency and its exchange rate should be matters of concern to the people of these islands and be governed by the policy of this Government and none other.

6.30 p.m.

Lord Simon of Glaisdale

My Lords, I agree with the noble Lord, Lord Aldington, that this is not the occasion on which to debate the merits of fixed rate mechanisms for exchanges or floating exchanges. I wish to say only two things. First, the argument is far more complicated and controversial than anything that has been heard so far in the debate. One has only to think of the arguments which led to the Bretton Woods agreement.

The second point I venture to make is this. Before one enters on vilification of our entry into the exchange rate mechanism, your Lordships would wish to hear the eminent statesman who advocated our entry and took us into it. I would add that the noble Earl was pestered when we last debated the matter to commit himself on what the position might be in a few years' time.

A famous statesperson was recently reported as saying, "Never take a political decision until you have to". That is eminently the case here. None of us knows what the economic state of the world will be in two or three years' time. The noble Earl would be very much amiss if he committed himself on the line that he has been pressed to do, so I hope that the amendment will not be pressed to a Division.

Lord Hacking

My Lords, in yesterday evening's debate I ventured to suggest to your Lordships that we should have a little more discipline in our proceedings. I am rising now because my noble friend Lord Tebbit has invited my noble friend on the Front Bench to explain to the House that there is no need for my noble friend's amendment and to give my noble friend the necessary assurances in that regard.

But, in my submission, the starting point should be whether the noble Lord, Lord Tebbit, and the other noble Lord who have proposed this amendment have satisfied your Lordships that there is a need for the amendment. In order to do so, my noble friend should identify to your Lordships the clause in the Bill where there is a threatened obligation on Her Majesty's Government to join the exchange rate mechanism. Moving into the treaty, and Title VI, the proponents of this amendment should then show your Lordships with precision which article carries this "obligation" which is the concern of my noble friend. What is most noticeable is that at no stage in this debate have the proponents of this amendment identified to your Lordships any clause in the Bill or any article in the treaty where their fear lies.

Lord Pearson of Rannoch

My Lords, I think that I can help my noble friend Lord Hacking. My noble friend Lord Hamilton, in moving this amendment, has cast doubt on the Government's contention that we are free to stay out of the exchange rate mechanism for the foreseeable future. I think that the usual expression which we hear from Her Majesty's Government is that "We have no intention of rejoining the ERM during the lifetime of this Government"—which I trust will last until at least 1996 or later.

A number of us fear that Britannia will not be able to say "No" to eventual monetary union after all the preliminary activity contained in the Union Treaty. Be that as it may, this amendment seeks to prevent us from having to return to the ERM without the consent of Parliament. Returning to the ERM would be the first definite step of such preliminary activity. A number of us believe that we shall in fact be obliged to make that first step; indeed that we shall make it if we ratify the Treaty on European Union signed at Maastricht.

It might be that some of your Lordships would not be inclined to accept this view from a humble international insurance broker such as myself, although I have to say that my profession does bring me daily into contact with the forces of our currency markets. In those circumstances I must apologise for the fact that I have again consulted an expert, although, unlike the legal experts I referred to earlier today, I am happy to reveal his identity this time. The expert in question is Professor Charles Goodhart, who is the Professor of Banking and Finance at the London School of Economics. But he is more expert than that, because he was chief economic adviser to the Bank of England from 1980 to 1985, and so I trust that my noble friend and the Government will take his opinion very seriously.

Professor Goodhart has been consulted about the question of our return to the ERM under the Union Treaty. He has also read the excellent booklet by Martin Howe entitled Monetary Policy after Maastricht, to which the noble Lord, Lord Harris of High Cross, paid such a learned tribute. Professor Goodhart gives the following opinion, and I quote: Article 109e(2) of the Maastricht Treaty requires each member state to adopt, before the start of Stage 2 of monetary union on 1st January 1994, a multi annual programme of convergence for achieving economic and monetary union. I consider that this article, read in conjunction with Article 109j(1), which sets out the 'convergence criteria' for entry to the third stage, will oblige the UK either to give a date in its multi annual programme for intended return to the Exchange Rate Mechanism or at least to set out clear criteria for such a return, and to express a statement of intent to work towards that". Those are not my words, but the words of someone who is really very well versed in this subject. Assuming that Professor Goodhart has got this right, can my noble friend tell us whether the United Kingdom intends to make such an expression of intent or whether it does not? Could I ask him also to say how much weight Her Majesty's Government will attach to that statement, assuming that under the Union Treaty we are obliged to make it?

6.45 p.m.

Lord Peston

My Lords, I start by saying that I agree with the noble Lord, Lord Tebbit, and the noble Lord, Lord Pearson of Rannoch, about two things. It is perfectly reasonable to be discussing the exchange rate mechanism and I would say this to the noble Lord, Lord Hacking: there is tremendous pressure in the treaty to get us to rejoin the exchange rate mechanism. One reason I say that is because I take EMU to be the central part of a very important treaty. I also assume that we are not dealing with a dishonourable or disreputable government. Even though it has got the opt-out, it does not mean that we have opted out: it means that we are taking all this very seriously indeed. So I do not for one moment reject the notion that we should look at this.

I go further. I favour returning to the exchange rate mechanism. I find myself in a tiny minority at the present time. I can only remind your Lordships that at about this time last year I was one of an enormous number of people who favoured being in, including the right honourable gentleman the Prime Minister, the right honourable gentleman the previous Chancellor of the Exchequer, the current head of the Treasury and the current chief economic adviser to the Treasury. The Treasury itself has published more than one paper saying that the exchange rate, according to purchasing power parity and competitiveness criteria, was a competitive exchange rate, and so on. The only difference is that I still hold to my view, because I am not easily swayed, particularly on intellectual matters, by very short-term considerations. Equally, I fully accept that there are others, as the noble Lord, Lord Tebbit, pointed out, who have never believed in the exchange rate mechanism. That seems to me to be a valid point. What I find difficult to live with is the fact that there are those who thought that it was marvellous to start with but that it was marvellous not to have it any more. I find that a very unattractive frame of mind.

Lord Tebbit

My Lords, I am grateful to the noble Lord for giving way. He can very properly place me in the category of those who were relatively agnostic about it, to the extent that I went along with our admission to the exchange rate mechanism but since then I have concluded that it was not a worthwhile exercise.

Lord Peston

My Lords, of course I accept what the noble Lord says. I wanted simply to point out that I am very puzzled at how opinion, particularly expressed by certain people, is swayed. The central issues are those which have been raised, and I think it is right to take a view on this. I actually believe, as opposed to other noble Lords, that what is in the treaty and in earlier treaties was right. I believe that economic policies are a matter of common concern to those of us who are in the European Community. I believe that exchange rates are a matter of common concern, and ought to be. I again accept that there is an alternative view. What bothers me is that there are those who cannot decide between either and want to blow it. I would not wish noble Lords to misunderstand my position. My view and that of most of my noble friends is that this is something that we favour.

In this connection I think that the noble Lord, Lord Harris, went slightly too far when he referred to the Government's stand against EMU. As I understand the Government's position, and perhaps the noble Earl, Lord Caithness, will tell us more about this, the Government have no stand against EMU. As I understand the position, they are undecided. That is a very difficult position when it is undecided about what to do. It would totally change the nature of economic debate in this country if we were to be told that the Government are actually against EMU. However, as I understand it, they are not. To go back to the point that I made earlier, I do not believe that noble Lords can wriggle out of this by saying that none of it will happen, so let us pretend that none of it will happen. We really have to take a view, as I do and as those who disagree with me do.

Chapter 4, Article 109j, is the transitional provisions part of the treaty and is central to the whole matter. That transitional provision states that we have to be in the exchange rate mechanism for two years—I believe that the noble Lord, Lord Aldington, has already drawn attention to that—and within the narrow bands. If we take the view that we are not going to do that, that is equivalent to saying that we have already taken a decision on EMU. It is the same thing. Therefore, we should he back in the ERM at an appropriate exchange rate and proceed from that point. What I find totally mystifying—unless we assume that this Government are going to fall any day now—is the statement by the current Chancellor of the Exchequer that we shall not enter the exchange rate mechanism within the lifetime of the present Parliament. That is the same as saying that we are going to exercise the EMU opt-out because by then it will he too late.

There is a great deal I would like to say as regards the case for ERM and EMU, but I accept that this is not the occasion. What I, and the noble Lords, Lord Tebbit, and Lord Hamilton of Dalzell, would wish to do, is flush out the Government on where they stand. We have at the moment the preposterous position of needing to pursue a serious economic policy with a Government that will not make a serious statement on the matter. We cannot go on like that.

Needless to say, I oppose the amendment, but for obvious reasons. I go back to the point made by the noble Lord, Lord Hacking. I do not accept that nothing in this Act shall have a certain effect, and so forth. There is a great deal in the Act which puts pressure on us to rejoin the ERM and to proceed to EMU. Putting the matter at its mildest, I shall be rather surprised if there is no pressure on our Government to do something about it when the finance Ministers and Prime Ministers meet. Where we differ is that I favour such pressure and want to see it effective; but other noble Lords disagree. One thing we do agree is that we should like a yes or a no on this issue instead of the continuous greyness which we constantly experience from the Government.

Lord Stoddart of Swindon

My Lords, unlike my noble friend, I support this amendment. It is very necessary to get some kind of statement from the noble Earl this evening. To date, government statements as to what we shall do in future as regards ERM have been very equivocal indeed. Statements from the noble Earl himself have been equivocal. Despite what has been said by a number of noble Lords, at this particular juncture it is right for us to gel a proper statement from the Government. The decision whether we re-enter the ERM is going to have such a wide and important effect on our economy, either within EMU or without it, that it is necessary for noble Lords to understand exactly what it means.

My noble friend Lord Peston has pointed out that it is legitimate for us to be discussing this particular amendment in the context of the treaty. In Article 109j there hangs the peg for future entry or re-entry into the ERM. The noble Earl will know perfectly well that I have been, and always have been, opposed to our entry into the ERM because I believe, and believe correctly, that it would do extreme damage to our economy. That has proved to be the case. Therefore, he cannot grumble about people like myself who now say that we want an unequivocal statement from the Government that nothing in this treaty—or at least that he believes that there is nothing in the treaty—will compel us to go back into a system which caused such damage, particularly to our manufacturing industry.

I say not only to the noble Earl but to my noble friend, that wherever fixed exchange rates have been tried for any length of time in recent economic history, they have failed. As they know, the gold standard failed miserably; the Bretton Woods system collapsed under its own weight; and the ERM, as we know, is collapsing at the moment. It did this country extreme damage economically. So the system of fixed exchange rates is too rigid and hurts the economy of each of the countries to which it applies. There is no economic system that I know of that can keep rigid parities between exchange rates without bringing in turn a rigidity of economic performance. That rigidity usually means that instead of improving the economy. it stagnates, causing unemployment and the loss of businesses. Therefore, it hurts all of us in that way.

Within the context of Europe, if we have a fixed exchange rate that would not eliminate the movement of money around the world between other countries or blocs. It could very well mean that, because we were within the European monetary system and the ERM, people were speculating against our economy which might be strong because they needed to do so against Italy's economy which was weak. That is a damning indictment of a system inherent in this treaty. I sincerely hope that the noble Earl will be able to give us the assurance that nothing in this treaty compels us to go back into the ERM which, as he knows, and as I am sure he will admit, has been so damaging to our economy, to the unemployed and to business.

The Earl of Caithness

My Lords, we have had a most interesting and very wide-ranging un-Reportlike discussion on this amendment. There have been two distinct strands. I believe that about 99 per cent. of the discussion has been about the ERM and where we should go in that regard, and about 1 per cent. has been about the amendment itself. I listened with interest to what the noble Lord, Lord Stoddart of Swindon, has said. The fixed exchange rate and the single currency between England and Scotland has stood the test of time quite well. I remember when the Labour Party devalued the English pound I tried to pretend that the Scottish pound had not been devalued at all. It did not seem to wash.

Lord Stoddart of Swindon

My Lords, I am very grateful to the noble Earl for giving way. Does he realise that there are many people who believe that EMU between Scotland and England, and in particular between Ireland and England, was a disaster because it led to the depopulation in two of those countries?

The Earl of Caithness

My Lords, the noble Lord knows of the enormous benefit to Scotland and England from having Scotland as part of a single currency. As he also knows, the Scots did so much to boost the City of London to make Britain such a wonderful place and a very good place in which to live.

7 p.m.

Lord Tebbit

My Lords, I am grateful to my noble friend, who has made an excellent point about EMU in the United Kingdom: it is only possible because we have political union. In that, he is endorsing what Chancellor Kohl has said—that monetary union without political union is impossible. We have experienced that in the United Kingdom, have we not?

The Earl of Caithness

My Lords, I was talking specifically about fixed exchange rates, a matter which the noble Lord, Lord Stoddart of Swindon, raised. He said that they had not worked well, but I was giving one example of where a fixed exchange rate had worked extremely well and for the benefit of both countries.

Perhaps I may deal now with the amendment rather than with the ERM. The Maastricht Treaty nowhere imposes any obligation on sterling to rejoin the ERM. I made that absolutely clear earlier. I am glad to see the noble Lord, Lord Monson, in his place. If he refers to col. 381 of Hansard, he will see that when he raised the question of our rejoining the ERM as a condition of Stage 2, I dealt with that point when I said: Of course there is no requirement during Stage 2 for us to rejoin the ERM. I know that the noble Lord will have read the treaty. If he can find anything in it that commits us to do so, he is a better man than I".—[Official Report, 23/6/93; col. 381.] I have warned my office, the office of my noble friend Lady Chalker, the Treasury and my wife and children to have a pad and pencil beside the telephone in case the noble Lord, Lord Monson, rings to tell me that he has found something in the treaty that commits us to rejoining the ERM under Stage 2. I must tell your Lordships that my telephone has been silent, just as the noble Lord, Lord Monson, has been silent in the debate today.

What is true within the treaty is that membership of the narrow band of the ERM is one of the preconditions of eligibility for a move to Stage 3, but that is all. In the absence of an obligation to be or to remain a member of the ERM, member states are therefore free to decide whether or not to join or rejoin.

I must advise the noble Lord, Lord Peston, that I disagree with him. I refer him to the EMI statute and Article 3(1) which clearly states that monetary policy remains in the hands of national authorities during Stage 2 of EMU. This would scarcely be compatible with an obligation to rejoin the ERM. The United Kingdom's position is further protected by the UK protocol which states that if we notify the Council that we do not intend to move to Stage 3—and here I quote— The United Kingdom shall retain its powers in the field of monetary policy according to national law". That again shows that it would be inconsistent with this provision if the UK could be compelled to rejoin the ERM.

If the intention had been to impose an obligation to be or to remain a member of the ERM, it would have been only too easy to put that in the treaty and to say so, but the treaty does not state that. Nothing in the treaty imposes an obligation on sterling to rejoin the ERM.

I listened with great care to what my noble friends Lord Boyd-Carpenter and Lord Tebbit and the noble Lord, Lord Stoddart of Swindon, had to say about ERM, but I thought that the noble and learned Lord, Lord Simon of Glaisdale, was correct in saying that the whole question of the possible rejoining of the ERM is far more complicated and far wider than the scope of our debate today. I look forward to having that debate with my noble friends and with noble Lords opposite at any time. As your Lordships know only too well, we have had such a debate previously and we shall do so again in the future. However, today is not the occasion to go into that matter in the detail that many of us would like.

I listened with increasing sadness to the speech of the noble Lord, Lord Harris of High Cross, whom I had admired. His selective and partial quoting did not do him justice. I can assure him, as I can assure my noble friend Lord Pearson, that the Howe opinion, to which he referred, was dealt with extremely effectively in the Treasury's submission to the memoranda of the Select Committee on the Treasury and Civil Service. Knowing that the noble Lord pays attention to detail, I am sure that he has read that document.

On the question of convergence, perhaps I may advise the House that this is not something new that has happened as a result of the Maastricht Treaty. I know that the noble Lord, Lord Harris of High Cross, is well informed and he will know that this has been the case since 1991 and the Luxembourg European Council.

I should like to take up one other point on which I felt that the noble Lord did not do justice to his case. He referred to Article 109m and said that we must use our exchange rate policy as a matter of common interest. If the noble Lord had fully completed the quotation from col. 377 of Hansard, he would have seen that I went on to say: those are almost exactly the same words as in Article 107 of the Treaty of Rome, which for decades has required us" to treat exchange rate policy as a matter of common concern". —[Official Report, 23/6/93; col. 377.] The words "common concern" are exactly the words that my noble friend Lord Tebbit used. He has been used to that expression. I know that the noble Lord, Lord Harris of High Cross, is against the Treaty of Rome, but he must make that absolutely clear. I assure the House that this is not something that has come about as a result of the Maastricht Treaty. It is something to which we have been used and which we knew about before we signed up to the Treaty of Rome.

Lord Harris of High Cross

My Lords, I am grateful to the noble Earl for giving way. Incidentally, I am not against the Treaty of Rome, although I find some parts of it unattractive. However, I really am puzzled because if we say that our exchange rate is a matter of common interest and if we then say, "No, we shall conduct our policy in the exclusive interests of the United Kingdom", there is immediately a certain element of looking both ways and of saying one thing at one time to our European partners and something else more reassuring back in the United Kingdom. The noble Earl has not dealt with my argument that our partners can interpret a Boating exchange rate as an unfair competitive instrument against their own economies. It seems to me that it is still open to them to do that.

The Earl of Caithness

My Lords, I disagree with the noble Lord. We have been in a situation where we have been treating our exchange rate policy as a matter of "common concern" for many years. We have been out of the exchange rate mechanism. We have been in the ERM, and now we are out of it. Other countries were in it, but are now out of it, while some have not even joined it. I do not see the difficulty which the noble Lord tends to see in this matter.

I should now like to deal briefly with the United Kingdom's attitude towards the ERM. I can do no better than quote my right honourable friend the Prime Minister when he said in the House of Commons on 9th June: Certainly, I could not recommend that sterling return at present. We should need greater convergence between the monetary policies appropriate for all the Community economies, and we should need to be satisfied that the system would be operated to the benefit of all its members.

In January, I made it clear that those circumstances would not apply this year. I now doubt whether they will apply for some years ahead—possibly they will not apply in this Parliament".—[Official Report, Commons, 9/6/93; col. 302.] I can add nothing to what my right honourable friend the Prime Minister said.

My noble friend Lord Tebbit asked me to be robust in my reply. I must tell my noble friend that I shall be as robust to him as I was in Committee. I shall quote again from the Official Report because my noble friend likes to do so, and so do I. I refer to col. 376, when I said: I wish to take up a point made by my noble friend Lord Tebbit with regard to the ERM and the question of whether the ratification of Maastricht will require sterling to rejoin the ERM.

As we have repeatedly made clear, the treaty does not contain any such obligation".—[Officiol Report, 23/6/93; col. 376.]

Lord Tebbit

My Lords, before my noble friend sits down, perhaps he will answer a question. Paragraph 4 on page 115 of the protocol states: The United Kingdom shall retain its powers in the field of monetary policy according to national law". But that provision is not triggered until we have given notification of our intention not to proceed to Stage 3. Does that mean that until we have given that notification the provisions of paragraph 4 stating that we shall retain our powers are not valid?

The Earl of Caithness

My Lords, no, of course not. My noble friend has not studied with as much care as I should have hoped the EMI statute in the treaty which clearly states that it is a matter of national interest.

Lord Monson

My Lords, as the noble Earl referred to me twice in reiterating—

Baroness Trumpington

My Lords, I think that the noble Lord is out of order. He did not speak before the Minister.

Lord Pearson of Rannoch

My Lords, I believe that it would be in order for me to press my noble friend on the question that I put to him as to whether he agrees with the opinion which I quoted from Professor Charles Goodhart. I can do no better than to repeat it.

Noble Lords

No, no!

Lord Pearson of Rannoch

My Lords, well, simply then, I understand the pressure of time upon your Lordships, but the opinion of that eminent man is that the Maastricht Treaty will oblige the UK either to give a definite date in its multi-annual programme for intended return to the ERM or at least to set out clear criteria for such a return and to express a statement of intent to work towards it before 1st January 1994.

The Earl of Caithness

My Lords, I am sorry that I did not deal specifically with the point raisedrby my noble friend Lord Pearson. I thought that he would have understood that I dealt with it when I was referring to the noble Lord, Lord Harris of High Cross, because he linked what he was saying with the Howe opinion. I had said that the H owe contention was effectively demolished by the Treasury in its submission to the Treasury and Civil Service Select Committee.

Lord Pearson of Rannoch

My Lords, actually Professor Goodhart is not—

Noble Lords

No, no.

Noble Lords

Order!

Lord Hamilton of Dalzell

My Lords, I thank all noble Lords who have taken part in the debate. What divides us is that some of us like the idea of the ERM and monetary union while others do not. What joins us together is that the noble Lord, Lord Peston, feels, as I do, that despite the fact that he has no fears of the ERM or monetary union, we shall inevitably be pressured into it in the long run. I accept the assurances of my noble friend Lord Caithness that he can find bits of the treaty which say that we definitely do not have to join, whereas I can choose other bits of the treaty which seem to say the opposite. In that regard, I take the view of the noble Lord, Lord Harris. As it is, all one has to do is cross one's fingers and hope that we do not find ourselves in the situation by mistake.

I fully appreciate that the party opposite could take us straight into all those things, and the amendment would not prevent that. Nonetheless, it would be a tragedy if we found ourselves in the system by mistake. I am anxious about what my noble and learned friend the Lord Chancellor calls the purposive interpretation of those issues, which we have seen before. A great deal of what we are discussing is known to come forward into legislation from the Treaty of Rome. It has been sleeping there for years and suddenly emerges. As I can see that my noble friend the Whip is looking enthusiastic about dinner, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7.15 p.m.

Lord Monson moved Amendment No. 31: After Clause 5, insert the following new clause:

Assurances made to Parliament by Her Majesty's Government

(". If, in the course of implementing the Treaty on European Union, it is found that any statement or assurance about the Treaty or its intended operation made by any Minister of the Crown to either House of Parliament and not corrected or withdrawn in that House before the commencement of this Act—

1. (a) was incorrect at the time when it was made; or
2. (b) is subsequently rendered ineffectual by any interpretation of the Treaty by any court of law of the United Kingdom or by the European Court of Justice; or
3. (c) is subsequently rendered ineffectual by any action within any of the institutions of the Community which Her Majesty's Government is unable or unwilling to prevent;

then Her Majesty's Government—

1. (a) shall forthwith enter into negotiations with the other Member States of the Community to change Community law so that it corresponds to the position as represented in the statement or assurance in question; and
2. (b) shall not agree to any further revision of the Treaty of Rome until such alteration to Community law shall 184 have been made or unless the revision proposed shall contain a binding commitment to make such alteration.").

The noble Lord said: My Lords, when discussing Amendment No. 29, the noble Lord, Lord Tebbit, and I did not receive from the Government the assurances for which we had hoped, from which your Lordships will be able to draw your own conclusions. However, during the course of the Bill's long scrutiny in both Houses of Parliament, Ministers have given soothing assurance after soothing assurance that things are not as sweeping, all-embracing or ominous as they seem; that certain potential threats to our economy, or parts of it and to our traditions or way of life will never become a reality; that we should definitely never be forced back into the ERM in consequence of our obligations under Stage 2, as the noble Earl, Lord Caithness, has just told us for the second or third time; that our opt-out of Stage 3 can be sustained in practice as opposed to theory; that the European Court will cease interpreting the numerous grey areas and ambiguities in the treaty to the disadvantage of the declared intention of the Government to oppose the evolution of a federal state or, worse still, a unitary state, and so on and so forth.

I do not for a moment doubt that Ministers have given those assurances in good faith, infused though those assurances may be with a hefty dose of optimism. If any fingers were surreptitiously crossed at the moment that the assurances were given, that surely indicates a hope that luck will be on the Government's side rather than any desire to be economical with the grim reality.

I am prepared to believe that most—perhaps all—Ministers are as opposed to the idea of the UK being subsumed into a federal state, as are those of us who support the amendment, and that only the Liberal Democrats, plus a few Conservative Back-Benchers and perhaps a rather larger number of Labour noble Lords and honourable Members from both Front and Back Benches, would rejoice if the Government's assurances about maintaining what is left of our national independence proved over-optimistic.

However, we know from bitter experience just what tends to happen to the best laid plans of fallible men, particularly where the EEC is concerned. Like my noble friend Lord Harris of High Cross, I intend to go on using all three letters (EEC) until such time as it becomes illegal to do so in a few weeks' time.

Until now we have had to shrug off those disappointments when the expectations proved to be false. But Amendment No. 31 would give us a chance to retrieve the situation, to some degree at any rate. It is a clear and self-explanatory amendment. To précis it, if it is found that any assurance about the treaty made by any Minister of the Crown was incorrect at the time when it was made, or is subsequently rendered ineffectual by any interpretation of the treaty by any court, not least the European Court of Justice, or is subsequently rendered ineffectual by any action by one or more of the Community institutions, then Her Majesty's Government must forthwith enter into negotiations with other member states to change Community law so as to correspond to the assurances originally given. That is backed up by the fact that Her Majesty's Government shall not agree to any further revision of the Treaty of Rome until such alteration to Community law shall have been made. What could be fairer than that?

If the amendment is accepted—and I hope that it will be —it would reassure those who might be in two minds about the treaty and who might be wondering through which Lobby they should troop tomorrow evening. Therefore, I believe that the Government will think it wise and reasonable to accept the amendment. I beg to move.

Lord Richard

My Lords, I am bound to say that I regard the amendment as a constitutional outrage. When one has sat through all the Second Reading speeches and the whole Committee stage, and heard so much about parliamentary sovereignty and the rights of Parliament, to put in the amendment a deliberate attempt to bind successive Parliaments to what they should do in the event of an assurance given in good faith by Ministers proving not to be capable of being implemented because there has been a change of circumstances, or what have you, I find a most astonishing proposition.

I can well understand that the noble Lord, Lord Monson, from the Cross-Benches would wish to bind this Government so far as concerns their assurances. I share his view of many of the things the Government have said. I am sure that some of them were incorrect when they were said and an awful lot of them were rendered ineffectual. But they were not rendered ineffectual by the European institutions. But to say that in that event what the noble Lord has put into his clause should, so to speak, be triggered so that it brings all Community activity by the UK to a complete stop, I find outrageous on sovereignty grounds. In terms of practical politics, I find it totally fanciful.

Baroness Chalker of Wallasey

My Lords, not for the first time I find myself in considerable agreement with the noble Lord, Lord Richard. I say that because my experience is that none of us is perfect. We sometimes make errors; we sometimes have to correct those errors; but we do so. We do not need the legislative form such as that suggested by the noble Lord, Lord Monson, to make us do so. I understand the noble Lord's anxiety that one can make mistakes. It is not difficult, standing at this Dispatch Box, cross-questioned, taunted and teased by Members of the Opposition, to begin with, that occasionally words do not come out in the right order. When it happens behind me as well from a third flank, it becomes all the more complicated and one needs to have eyes in the back of one's head in order to know what will happen next.

To be serious, because the noble Lord, Lord Monson, proposed Amendment No. 31 in all seriousness, I assure your Lordships that Ministers always seek, so far as is humanly possible, to give clear and correct interpretations of Community obligations. We do all that we possibly can, when proposing to accept new international obligations, to make sure that the text means what we believe it to mean. There have been occasions when, for example, the Commission—and I am sure that the noble Lord, Lord Richard, will remember occasions such as this—has interpreted the treaty in a way that a member state had not anticipated. That occurred in our case when Article 128 of the Treaty of Rome on general principles of vocational training was used to introduce specific measures in the field of education. Many of your Lordships will know that for us that was a most unsatisfactory state of affairs. In our opinion it was a loophole and we sought to close that loophole at the next available opportunity. That next available opportunity was afforded to us by the Maastricht Treaty as implemented by this Bill.

Article 126 of the Maastricht Treaty codifies and clarifies Community competence in the field of education. It lays down specific guidelines as to what the Community can and cannot do and excludes harmonising measures. Arid so, by using Article 126, we have succeeded in preventing the use of a general principle to introduce specific measures in the wider field of education.

Likewise, as regards new provisions. on health, consumer protection and culture, we have once more built specific guidelines into the Maastricht Treaty. I believe that that is the sensible way to go.

I understand the anxieties expressed by the noble Lord, Lord Monson. However, I should say to him that, if loopholes of the kind that I have mentioned become apparent, then the Government use every means at their disposal to put the matter right. I do not believe that there is any way in which there needs to be a legislative requirement to do so. It is the job of government to do so, as the noble Lord, Lord Richard, said. He may have described the amendment in rather colourful language but he is absolutely right. It would be an outrage if government were not left to put those matters right, as they must surely do.

In preparing for this amendment I sought, although I found it impossible, to search through all the doings and comments of my noble friend Lord Tebbit. He is not in his place and so I cannot talk about his doings and comments but I am sure that there have been occasions in his days on which, with the very best advice and the very best of intentions, he gave an assurance at the Dispatch Box in another place and subsequently he found that it was not quite as he wished it to be. I did not have the resources to research how he dealt with such occasions but I can remernbeir some of his famous comments in another place. Therefore, it is not just those of your Lordships who disagree with the amendment standing in the name of the noble Lord, Lord Monson, but also noble Lords who agree with him who will have faced that situation and will realise that the amendment is not necessary to correct what may need to be corrected from time to time.

I believe that a requirement of the kind proposed by the noble Lord, Lord Monson, would be damaging to the whole operation of the Community because it could not operate in one country alone. Let us imagine that similar amendments were introduced into the domestic law of our partners—because that is what the noble Lord, Lord Monson, asks us to do. A Continental Minister under pressure might have said at some point that the government in question would not countenance a relaxation of any kind in agreed Community environmental standards. I give that purely as an example. The legislative provision would then operate to obstruct debate. For example, that would prevent the review—a review which is going on at this very moment—to introduce new flexibility into the operation of the drinking water directive. That would impede and completely mess up a very positive and constructive issue being tackled on a Community basis.

I must consider how the proposed amendment might operate were there to be a change of government, when incoming Ministers, who might have argued against Ministers in a former Administration on a particular point, sought to carry out their policies which might have been manifesto commitments. According to this amendment, they will be quite unable to do so and, if others moved in the direction of that policy, they would be required to hold the Community to ransom until their partners desisted.

In debate it is extremely easy in a chamber such as your Lordships' House or in another place to be asked to give one-word answers. There was an example two amendments ago. My noble friend wanted me to give an assurance that Article K.1(9) would not be used in conjunction with Article F.3 to create a European police force conducting cross-border operations. I did not answer then, not for the sinister reasons which were implied but because I do not wish to give unconsidered answers to hypothetical questions. I will answer noble Lords when I have had an opportunity to think about their questions, particularly if they are hypothetical. That is the very area in which the amendment would operate and it might create a most disastrous situation.

I shall write to my noble friend Lord Tebbit, as he is not in his place, about Articles K.1(9) and F.3 and I will place a copy of the letter in the Library so that all may read it. Whether it be a hypothetical question, which that was, or a real question, Ministers are extremely careful to try to give a fully honest answer but a direct answer. I can only say how grateful I have been to the noble Lord, Lord Bruce of Donington, who happens also not to be in his place. He has said on a number of occasions how grateful he is for the direct answers that we have given from this Dispatch Box.

The kinds of undertakings which the noble Lord, Lord Monson, seeks are quite honestly not properly enshrined in legislation. I assure him that not only I but also my noble friends on the Government Front Bench are very careful as regards what is said. Should a Minister inadvertently mislead the House or another place, I know that the matter is corrected at the earliest possible opportunity.

This amendment is not only unnecessary but it would also lead us down paths which would be very complicated indeed, particularly when one considers how it would complicate issues for future governments. I am sure that the noble Lord, Lord Monson, while not being a Member of the Opposition Front Bench, would not wish to tie the hands of future governments. Therefore, he will understand why there is a constitutional objection to the amendment. I sincerely hope that he will withdraw it.

7.30 p.m.

Lord Monson

My Lords, first, I must say that I am rather surprised by the attitude of the noble Lord, Lord Richard. I should have thought that the Labour Party would be delighted at the chance, at some unspecified time in the future, to draw attention to the mistakes of a Conservative Government. One can only conclude that they are so besotted with everything emanating from Brussels that they are prepared to abandon the adversarial role that the Opposition normally plays.

I am most grateful to the noble Baroness, Lady Chalker, for her very full, detailed and considered reply. However, I cannot agree with her that there is any question of trying to hold the rest of the Community to ransom. In my view, there is no question of frequent revisions and alterations to the Treaty of Rome. But, of course, if they happened on an annual basis—heaven forbid!—that might be the case. However, that is not so. I do not believe that the amendment goes as far in that direction as the noble Baroness imagines. Perhaps she should read it more carefully.

I am also surprised that the Government are so cool about the matter. If the amendment were accepted, it would help those noble Lords who are very much in two minds about the benefits or otherwise of the treaty. If they felt reassured by the acceptance of the amendment they might, perhaps, troop through the Lobbies in support of the Government tomorrow. However, so be it. It also seems to indicate a certain lack of confidence on the part of the Government in their own judgment, together with a suspicion that their own assurances are by no means as well founded as they claim.

My purpose was not to highlight Ministers' misjudgments; indeed, no one on these Benches wishes to do any such thing. We all make mistakes and every government makes mistakes. Moreover, I do not think that the present Government make any more mistakes than their predecessors. My purpose was simply to provide a means for putting things right to the great benefit of everyone in the country of whatever political persuasion. However, as everyone is clearly eager for the gastronomic delights that await us, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Trumpington

My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, may I suggest that the Report stage begin again at 8.30 p.m.

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