European Communities (Amendment) Bill

HL Deb 29 June 1993 vol 547 cc717-86

3.9 p.m.

Baroness Chalker of Wallasey

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

Moved, That the House do now again resolve itself into Committee.—(Baroness Chalker of Wallasey.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause I [Treaty on European Union]:

Lord Stoddart of Swindon moved Amendment No. 213: Page 1, line 9, after ("II") insert ("except the following words in Article 171: "In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers appropriate in the circumstances' If the Court of Justice finds that the Member State concerned has not complied with its judgment it may impose a lump sum or penalty payment on it"").

The noble Lord said: In moving this amendment, perhaps it will he convenient at the same time for me to speak to Amendments Nos. 214 to 216, 219 to 222, 304 and 328 to 331. This group of amendments concerns the extension of the powers and decisions of the European Court of Justice and the Commission, particularly by Article 171 which gives the Court the power to impose a fine on member states to force them to comply with the judgment; and potentially, by Article 172, under which regulations may be made by the Parliament and the Council to give the Court unlimited jurisdiction with regard to the penalties that are provided for in such regulations.

Amendment No. 213, which leads the group, seeks to remove the power of the Commission to specify penalties for non-compliance with treaty obligations. Amendments Nos. 328 to 330 seek to remove completely any power to lay a penalty on a member state. It is on that issue that I wish to concentrate. While I understand the wish—particularly of the British Government who claim credit, I believe, for this amendment to the treaty—to penalise those countries who do not comply, I believe that the difficulties are substantial. I know of no precedent—others may well do so—for a sovereign nation to be fined by some other supranational body. It is outside my experience and I have been unable to find such a precedent. I feel sure that if there is one, the noble and learned Lord the Lord Chancellor will draw it to our attention when he winds up.

Interesting questions are raised by the proposition and I am sure that Members of the Committee will be interested in them. I should like to know exactly how it would work. The proposal is to fine a member state; not a person, not Her Majesty, not the Prime Minister, not the Foreign Secretary, not Members of either House, but the state. Who is the state? What is the state? Presumably we are all the state, and under these provisions we are to be fined.

First there is the difficulty of definition, but there are further difficulties. There are no provisions on the likely misdemeanours except that a member state has not complied with the treaty. Presumably, that is the only one. However, there is no guidance or definition of what will constitute a crime or misdemeanour, whatever it may be. No level of seriousness is suggested, let alone laid down. There are no minimum or maximum fines. Would we, in this country, pass a law where the fines were indeterminate and without restriction? Would we give any court the power to fine on the basis of whatever the prosecuting authority suggested? That is entirely outside our experience. The Court, therefore, has no guidance as to what parameters it should use in relation to the offence committed. The seriousness of the offence committed again receives no guidance from the treaty.

The prosecuting authority is, I believe, the Commission. Indeed, it must be the Commission, there is no one else to do it. The prosecuting authority will therefore decide the seriousness of the offence and the appropriate penalty. Under this treaty, it will suggest what the penalty is. It will demand of the Court that that penalty shall be imposed.

I am not clear whether the Court could increase the suggested penalty, decrease it, or throw it out entirely. So far as I can see in the treaty, there is no specific guidance on the issue. Will the Court be able to increase the penalty asked for? Will it be able to decrease it? We are entitled to a reply on that, unless I missed it in reading the complicated treaty.

Then there is the question of the view the Commission itself will take. For example, when it proposes the penalty, will it take into account the ability to pay? Will it say, in the case of larger countries, "Because you can afford it, you may be fined more for the same offence than a smaller country"? Will it be able to do that? If so, will it be done on the whim of the Commission or will we have a new unit fine system imposed on the Community? Is that the way it will be done? I sincerely hope not, because experience shows us that that was a complete and utter disaster. The Government are about to make amendments to the Criminal Justice Act on that system.

Then one has to ask an important question: will these proceedings, like other proceedings, be in secret or, to use a less provocative word, in private? Will they be open to the public? Will we, the taxpayers—who, after all, will have to pay the fine; no one else will have to pay it—be allowed into the proceedings to hear the arguments and to see and hear the proceedings? In other words, will the hearings be in public or private? Will it be possible to see justice being done rather than hear about it after the decision is taken? I think we should have an answer to that.

Then there is the other question. Normally, a criminal or person who has committed a misdemeanour has the right of appeal. Will there be any right of appeal? That is an important question. If there is to be the right of appeal, there is nothing about it in the treaty. But perhaps someone has been discussing it and there is some private arrangement on it. If there is to be no appeal, why will there not be one? Surely there must be some higher authority—perhaps the International Court of Justice—to which an appeal can be made. Perhaps the noble and learned Lord the Lord Chancellor can enlighten us on that. Is there to be an appeal? If so, to what authority will it be? If there is to be no appeal, it is a serious omission.

Normally any court has the means necessary to enforce its decisions. In this country the courts are enabled, by coercion, through imprisonment, and so on, to enforce their decisions. It is legitimate to ask: what happens if a member state refuses to pay? If it refuses to pay, what can the European Court do? What coercive powers has it at its disposal to ensure that its penalty is enforced, not on a person, but on a member state? There is nothing about that in the treaty. Again, we are entitled to ask what will happen in the case of a member state, a sovereign state, which does not comply with the decision of the court. Who makes that decision in the member state? Who will decide whether the fine is reasonable and should be paid? Will it be the Government, the Cabinet, the Prime Minister or Parliament? Let us suppose that the Treasury believes the fine reasonable, although perhaps only just reasonable, but that Parliament, as it still can, forbids the Treasury to pay it because Parliament believes it to be unfair or excessive. What happens then? How is the Community to enforce its will upon Parliament if Parliament decides that the fine shall not be paid?

Let us suppose, for example, that Parliament or the Treasury has decided that the fine will be paid, but in the meantime, before there has been a chance to pay, there is a general election. Another party—the Labour Party, for example—may well say that the fine is unjust and that if it is elected it has no intention of paying. Suppose that the party puts it in the manifesto, and it—the Labour Party, hooray—is elected. It says, "We have a manifesto commitment. We cannot pay this fine". What will happen then? Will the troops march in through the Channel Tunnel? Perhaps they will come en train, in one of the high-speed French trains. How exactly will the fine be enforced? These are very legitimate questions. And these are certainly probing amendments. It is most unfortunate that Parliament does not have all the details before it, as it would with any other Bill proposing that a court be given powers to fine or introduce penalties. Unless the system is clear and we know exactly what will happen, who will be responsible, and what powers the court will have to enforce its decisions, we are once again simply passing a Bill and agreeing to a provision without knowing its full effects. We are buying yet another pig in a poke.

Many Members of the Committee have a great deal of legal experience; I hope that they will be able to help in these matters. Under normal circumstances they would be bringing their considerable abilities to bear on whether this was a proper way to legislate. By passing this treaty and agreeing to its ratification, we are legislating, make no mistake about it. I hope that we can have some discussion on this group of amendments to see exactly where we are going and how this extension of the powers of the court will work in practice.

Lord Monson

I have two questions to put to the noble and learned Lord who is to reply. The first involves a question of simple semantics. At least, I hope it is simple. The second, in contrast, concerns matters of realpolitik.

Article 171, which is the subject of Amendment No. 213, refers to, the lump sum or penalty payment to be paid", or so it is hoped, by the offending member state. Can the noble and learned Lord explain what on earth the phrase means? Surely "lump sum" in this context ought to be synonymous with the words "penalty payment". However, my noble and learned friend Lord Wilberforce explained at Second Reading that every word and phrase in the treaty has been carefully vetted by teams of experienced lawyers. So, clearly, there can be no tautology in the treaty. Obviously, in this case, "lump sum" cannot be synonymous with "penalty payment". Are the non-lump sum penalty payments to consist perhaps of payments by instalment, or might they consist of payments in kind, possibly from grain mountains or wine lakes? I look forward to the noble and learned Lord's reply.

We must face the unintended, yet almost inevitable, consequences of the enforcement of a fine upon a particular country. The government of any country who acquiesce in the payment of a fine imposed upon that country face almost certain defeat at the next general election, such will be the normal, instinctive and indignant patriotic reaction of the inhabitants—particularly if the fine is a large one. The noble Lord, Lord Stoddart of Swindon, hinted as much in his introductory remarks.

As I asked at Second Reading, what will happen if the country—most likely, in practice, one of the slightly poorer ones on the periphery of the Community—is going through a period of economic hardship or experiencing political turmoil, with extremist parties on the left or right, or possibly extreme religious parties, waiting in the wings and gaining substantial popular support? We have seen in Serbia how economic hardship boosts the fortunes of extremist parties. However right and proper it may seem in theory (and it is right and proper) to impose a fine on such a country for a transgression of Community law—why, after all, should any one country be able to break the rules with impunity?—can one imagine in practice such a fine being enforced if to do so is likely to bring to power a government of the extreme left or right with a consequent destabilising effect upon the Community as a whole? I shall be interested to hear the noble and learned Lord's reply.

The Earl of Onslow

The joyous thought of my right honourable friend Douglas Hurd in a dock in Luxembourg clutching his cap and asking for time to pay because the public sector borrowing requirement has got out of control—as we all know it has—is quite amusing. The idea behind this point has some substance. How does one enforce the rules if one has joined a club? I believe that we have rather a good record of not breaking the rules. We have a record of being a little stroppy about the rules before they are introduced and discussing them at great length and in depth. But the idea of fines, despite its superficial attraction, becomes more difficult, it seems to me, the longer one looks at it.

Let us assume, for instance, that there is fraud by the Italians on durum wheat or by the Greeks on tobacco payments. I suppose one could say that those governments are not obeying properly the European legislation by not enforcing rigid honesty in its application. The idea that they will be asked to pay or will pay beggars description. I do not query the desirability of being forced to obey the rules of a club, a society or whatever. I just find that the whole system becomes slightly ridiculous the more one thinks about it.

How much will the fine be? Will it be ten bob the first time round? No one minds that. It can come out of the Foreign Secretary's petty cash. Or will the fine really hurt? In that case it will probably have to go before Parliament for approval and Parliament might say no. If the fine really hurts, it means that public finances will be upset.

I do not know the answers. I just hope that my noble arid learned friend can provide us with some form of clarification as to how this idea, attractive in principle but becoming slightly dottier the more one examines it, will work.

3.30 p.m.

Lord Belhaven and Stenton

I should like to help the Committee for a couple of minutes. So far as I know, the only occasion on which a nation state has been fined has been in the case of war reparations. After what happened at the end of the First World War, it is not easy to recommend that idea.

I believe it was said in Magna Charta that no man should be fined to his utter ruin. However, in this provision it is still possible that a state might be fined to its utter ruin, which I know is reductio ad absurdum. However, it is technically possible.

In the case of war reparations, fining of cities took place in the civil war in this country. I understand that 300 years ago Glasgow was fined by the great Marquess of Montrose. But that was a fine which was decided by the conqueror who was judge and jury. The only thing that remained to be resolved was the ability of the citizens to pay. Finally, the Soviet Union plundered its satellites but did not call it a fine. That was mainly done through the Comecon Bank—a possible precursor of the European Bank.

Earl Russell

I have just two points to make. Yesterday we were faced with a similar problem. There is nothing new about the problem of dealing with a state which fails to meet its obligations under international law or treaties. Yesterday the noble Baroness, Lady Chalker, who is enjoying a few minutes well earned rest, explained a situation in which the United States took action in a rather drastic form against a power which had failed to meet its international legal obligations. So there is nothing new about the problem. I do not wish to put words into the noble Baroness's mouth, but I do not have much difficulty in imagining which action she would find it more comfortable to defend.

The other point which was dwelt on at some length by the noble Lord, Lord Stoddart of Swindon, was the lack of specific detail. I can see why, coming from the English common law tradition, the noble Lord felt those anxieties. Perhaps I may draw his attention to a brief but extremely lucid passage in the Renton Report on drafting legislation which draws attention to the difference in the methods of drafting between British and European legislation. In British legislation the trend over several centuries has been toward making everything more specific. The noble Lord is familiar with that method. The trend in European legislation has been toward a general declaration which is then interpreted, refined and worked out in detail through a series of stages, with the interpretation guiding it by the assessment of intent.

English legislation used to work on the European principle. The classic example of it is the Magna Charta. I know of nothing more general than the words: to no one will be denied words, to no one will we sell or delay, right or justice. The meaning has been worked out very much in the style now used inside the European Community. I do not believe that it has led to the disappearance of the rule of law.

Lord Reay

As the noble Lord, Lord Stoddart, made plain in that part of his speech when his feet were still on the ground and before he had moved to the far fetched hypothesis with which he concluded, the principal change to the powers of the European Court of Justice which would be brought about by the Treaty of Maastricht is that the court will acquire the power to fine member states for failing to comply with Community law.

The Committee will remember that it has long been a complaint in this country, voiced frequently from all parts of this Chamber, that we are law abiding and some other member states are not. It is said that we enact and comply with Community regulations to which other member states frequently agree but then ignore and that it is much to the disadvantage of our country and our firms.

That is not merely a subjective impression. There are figures to support those claims. Between 1982 and 1989, for example, Germany was referred to the European Court of Justice for infringements of Community law on more than twice as many occasions as the United Kingdom. France and Belgium were referred on more than four times as many occasions and Italy was referred almost eight times as frequently as the United Kingdom. Over the past 10 years only Denmark has had fewer references to the court than the United Kingdom. By the end of 1989 only one European Court judgment was outstanding against the United Kingdom out of a total of 80 against member states as a whole. In contrast with other member states, I believe that we have never been taken twice to the court on the same issue.

The power to fine member states will for the first time enable the European Court of Justice to back up its judgments with penalties. It should therefore help to establish the level playing field for which we have long been calling.

The other principal changes introduced by the treaty with regard to the European Court of Justice aim to reduce the court's workload by enabling the Council acting unanimously to expand the jurisdiction of the court of first instance and by giving the court additional opportunities to sit in chambers. The court of first instance was established under the Single European Act with our strong backing (if I remember rightly), with the purpose of relieving the load on the court. Surely we have enough experience of legal delays in this country not to wish them on the Community.

Further articles expand the scope for judicial review both at the request of and into the Acts of the European Parliament and the European Central Bank and into the Acts of the Commission. The changes to the powers of the European Court of Justice brought about by the treaty will, I suggest, be entirely beneficial. One of them—the power to levy fines on member states—is of great importance and forms one of the main attractions of the treaty so far as we are concerned. These are practical and worthwhile proposals which will reinforce the rule of law. They thoroughly deserve our continued support. I believe that the amendments should be rejected.

Lord Jay

Surely the argument advanced by the noble Lord is weakened by the obvious question which follows. He says that a number of non-law-abiding states have simply defied the Community and that that can be put right by fines being imposed upon them by the European court. But suppose they refuse to pay the fines? What happens then? That was the question asked by my noble friend and the noble Lord did riot answer. If that happens, the situation will be exactly as it was before. If a state can defy the Community in not complying with the first instruction, it can equally defy it by declining to pay the fine.

Lord Reay

One should not assume that states will not pay fines. Thee situation till now has meant that the European Court of Justice has had no means by which to take action against member states which fail to comply; the treaty will give it such a means. We should leave the matter as it stands and see what turns out. We have no reason to believe that fines will not be paid.

Lord Harris of High Cross

I believe that there are more difficulties than the noble Lord, Lord Reay, allows for. I am extremely anxious that a change in the law that is intended to punish our partners in Europe should not rebound on our own heads.

As an economist I venture with some diffidence to comment on these legal matters. However, I remember that in the Second Reading debate my noble and learned friend Lord Wilberforce agreed that the European court was inclined to give, an extended purposive interpretation of the Treaty of Rome". Through the tuition of the noble Lord, Lord Cockfield, in studying the Stuttgart Declaration, I discovered that the European Court of Justice is accorded an important role in the progress towards European union, by securing compliance with, and development of, Community law". That opens up some rather serious dangers because lawyers do not always agree. In the Second Reading debate we had weighty pronouncements from my two noble and learned friends Lord Wilberforce and Lord Slynn. But other lawyers were involved with such reputable names as Denning, Leolin. Price and, my favourite, Howe. I do not refer to the noble Lord, Lord Howe, but to a kinsman, Martin Howe, who wrote the document Europe and the Constitution after Maastricht. He may be only a junior lawyer by our elevated standards, but in my view he presents a persuasive and worrying account.

Martin Howe takes one example dear to my heart; that is, the question of Sunday trading. A leading retailer said that it was appealing to the European Court in the hope of finding that our Shops Acts were against the Treaty of Rome and its free trading doctrines. I was asked to present myself as an expert witness—no fee was mentioned but various hints were given. Not being a lawyer I did not feel obliged to accept the commission and, indeed, I explained, first, that I thought that the question of Sunday opening should be fought out and decided in this country where it would have its main effect; secondly, that the question of whether shops should open on a Sunday seemed to be wholly irrelevant to the free trading open-market imperatives of European Community law.

Martin Howe explains that the European Court of Justice did not reject the application from a leading retailer, which seemed to me to be the obvious thing to do. Sunday trading did not seem to have any effect on international trade. But this is business; it is an opportunity for what my noble and learned friend Lord Wilberforce referred to in the Second Reading debate as, an extended purposive interpretation of the Treaty of Rome". I do not want to prolong the agony. Rejecting the appeal, the European Court said that it was a matter for the domestic court. But in so doing it entertained the possibility that Sunday opening or closing of shops was of relevance to Europe and within the ambit of the European Court. The issue turned on the question of how far it affected the flow of and quantitative restrictions on trade. The final ruling, which Martin Howe quotes, is that: National rules governing the opening hours of retail premises reflect certain political and economic choices in so far as their purpose is to ensure that working hours are arranged so as to accord with national or regional socio-cultural characteristics, and that, in the present state of Community law, is a matter for Member States". If we wished to change the present state of Community law then the court would be ready to apply its judgment to those matters.

A question is raised, and it is a serious question that I wish to put to the noble and learned Lord who will reply. According to the Stuttgart Declaration and the argument presented by the noble Lord, Lord Tebbit, of the pegs that are inserted on which later large constructions are made, an important part of the declaration is the development of social policy throughout Europe.

Britain has achieved an opt-out from the social chapter. There is dispute about how effective it might be. But one effect of the opt-out will be to reduce comparative costs of British production compared with those of our European partners. It could be interpreted as a distortion of competition. If our opt-out did not work and, in the name of the Stuttgart Declaration and other Frenchified phrases which are dotted around, it was decided that social Europe required conformity with the restrictions in relation to hours of work and conditions of employment, Britain may be found to be in default of the Treaty of Rome. It would have an unfair competitive advantage and therefore may find itself arraigned before the European Court of Justice.

I wish to have a clear undertaking from the noble and learned Lord the Lord Chancellor that there is no possibility of Britain being arraigned before that court by our partners on grounds that we have arrangements for employment, payment, holidays or pensions that imply some unfair advantage in trading with those other countries. Otherwise, a measure that was intended to punish our competitors will come back to haunt us.

3.45 p.m.

Lord Irvine of Lairg

I apologise to the Committee and in particular to my noble friend Lord Stoddart of Swindon that I was not in my place for the first few minutes when he began to move these important amendments. My only excuse is one which the noble Lord will well understand—the usual problems with the English transport system.

Article 171 is the most important new power to be given to the European Court of Justice by the Maastricht Treaty. Can the noble and learned Lord confirm that it was included on the initiative of the United Kingdom Government? The basic issue is whether there should be real sanctions available against members of the Community which do not comply with their legal obligations.

Although I do not want to clothe this country in a white sheet, particularly because we will have fallen down from time to time in relation to workers' rights, is it not a fact that our record of complying with our legal obligations in Europe is generally rather good? As I understand it, between 1987 and 1991, Italy had 87 references to the European Court; Greece, 52; Belgium, 47; France and Germany, 34 each; Luxembourg, 16; Spain, 12; Denmark, eight; Portugal, five; and the United Kingdom, a much larger country than the last two, nine only. Am I also right that other member states have been taken to the Court —this point was made by the noble Lord, Lord Reay—have been found to be in breach, have still not complied and so have been taken back to the Court a second time? Am I correct that that has never happened to the United Kingdom? I invite the noble and learned Lord to say whether the Government consider that it is in the interests of the United Kingdom that the European Court should have the right to back up its judgment with a fine?

I accept, however, that the notion of fining a nation state is a difficult one. How much? It really has to be a very large sum if it is going to hurt the nation state's Exchequer. What order of fine is contemplated? Did the Government have any idea of what was contemplated when they signed up to, and perhaps initiated, this part of the treaty? What thought was given to whether the Court's powers in this regard should be subject to an upper limit? I appreciate that under existing treaties there are powers to fine under competition policy. There is no upper limit, and that is thought to work in practice. However, I should be grateful if the noble and learned Lord could comment on these points.

Is it a good idea for the Commission to recommend to the Court a specific fine? I appreciate that in the end it is for the discretion of the Court, but what is the point of having the Commission seeming to lean on the Court in what is essentially a judicial function—the fixing of the amount of a fine? Why is there no procedure in the treaty —my noble friend Lord Jay called attention to this point —for the enforcement of fines against member states? It would not, as my noble friend said, be a happy state of affairs if we found that we paid our fines—if, unhappily, any were ever imposed on us—but that others did not. Since there have been egregious cases of non-compliance with Community law, why should there not also be equally egregious cases of non-payment of fines?

I imagine—and no doubt the noble and learned Lord will confirm—that thought was given to a mechanism for direct deduction of the amount of any fine from payments due to any member state from the Community budget. I can, on the other hand, see that the intended beneficiaries of these payments from the Community budget might well have no actual responsibility for a failure by a member state to implement a directive which resulted in a fine.

I raise these questions and I hope that the noble and learned Lord will agree that they are serious and call for a response. I desire to make it plain from this Front Bench that we support the general principle of these articles which are under attack by the amendments. Just as the rule of law must prevail in this country, so it must prevail within the European Community. I do not regard it as tolerable that if there is a judgment against a member state it can get away with doing nothing at all about it. As to Article 175, it seems to us that it is needed to enable the Court to fulfil its basic duty under Article 164 of the original treaty to, ensure that in the interpretation and application of this Treaty the law is observed". Similarly, I regard Article 173 as a welcome extension to Europe of something very closely akin to our system of judicial review. I do not think that anyone would dispute in this country that where a government department, a local authority or any statutory body overreaches itself and acts beyond its statutory powers its acts should be struck down by our courts and it should be ordered to act lawfully. Such a system is at least as necessary to ensure that the European institutions act in accordance with and not beyond Community law.

I find it difficult to understand how those who are perhaps understandably concerned by the width of the powers of the institutions of the Community should be opposed to a system of judicial review within the Community which will ensure that those institutions do not trespass beyond their powers. I can understand the position of those who would wish that we were not part of the European Community. But I cannot understand the position of those who would deny the European Community an effective legal system.

Lord Monson

Before the noble Lord sits down, does he agree that these amendments do not seek to attack the principle in itself. We are seeking to clarify the numerous grey areas to which he himself has referred, and which he himself has questioned, and also to highlight I he difference between theory, which may be excellent, and practice, which may not work quite so well.

Lord Irvine of Lairg

I do not agree with that. I have forborne from addressing the specific amendments before the Committee although it is in accordance with the tradition of the House to do so. I find the form of Amendment No. 203, for example, very curious because the sentence in Article 171 reads: If the Member State concerned fails to take the necessary measures to comply with the Court's judgment within the time-limit laid down by the Commission, the latter may bring the case before the Court of Justice". That sentence remains but the rest of Article 171 goes, so that if this amendment were to pass, a case of non-compliance by a member state with a judgment of the Court would be brought before the Court without the Court being given any jurisdiction to deal with it. That amendment, in my respectful submission, makes no sense. Amendment No. 216 would take out the whole of Article 173, which is intended to give the Court of Justice extensive powers of judicial review. I am not bowled over with admiration for the form of these amendments but I accept that the questions which arise are important ones. I have no doubt that the noble and learned Lord will endeavour to deal with them.

The Lord Chancellor (Lord Mackay of Clashfern)

It is my intention to seek to deal with the spirit behind these amendments and the questions that have been asked in relation to them so far as I can. Obviously, a number of points can be made about the form of the amendments. As the noble Lord, Lord Stoddart, explained, they are intended to be probing amendments. So long as they produce the probes, the precise form in which they are couched may not be so important.

First I want to say in answer to the noble Lord, Lord Harris of High Cross, that the legal function of the Court of Justice is defined in Article 164 of the Treaty of Rome and has remained unaltered during all the treaty amendments that have taken place since, including, if Maastricht is ratified, that treaty as well. The provision is: The Court of Justice shall ensure that in the interpretation and application of this Treaty the law is observed". My noble and learned friend Lord Wilberforce pointed out at Second Reading 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. As I understand the development of the law in this country also over recent years, under distinguished leadership in this House including the leadership of my noble and learned friend Lord Wilberforce, the courts here have also tended to go much more towards a purposive construction than they may have at some times in the past. Those who practise in the law would regard that as a proper and welcome development in the principles of statutory construction.

The new provision which this treaty puts forward for the Court of Justice is the new Article 171. I shall read a little of it, beginning with paragraph 1: If the Court of Justice finds that a Member State has failed to fulfil an obligation under this Treaty, the State shall be required to take the necessary measures to comply with the judgment of the Court of Justice". The noble Lord, Lord Stoddart of Swindon, asked: what are the misdemeanours? How serious must they be? The answer is that a necessary misdemeanour is the failure, to fulfil an obligation under this treaty That is what founds this jurisdiction. It is developed in paragraph 2: If the Commission considers that the Member State concerned has not taken such measures it shall, after giving that State the opportunity to submit its observations, issue a reasoned opinion specifying the points on which the Member State concerned has not complied with the judgment of the Court of Justice". The Court of Justice itself is, of course, adjudicatory only. The reason for the Commission to have the role which I have just read out is in order that action may be initiated if there is a failure to comply with the judgment of the court. The provision continues: If the Member State concerned fails to take the necessary measures to comply with the Court's judgment within the time-limit laid down by the Commission, the latter may bring the case before the Court of Justice". So it has the responsibility of bringing the matter to the attention of the Court of Justice. The provision goes further: In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it"— that is, the Commission— considers appropriate in the circumstances". So in looking into the circumstances the Commission is required, having brought the precise failures to the attention of the member state, to specify what the Commission considers appropriate in the circumstances.

The noble Lord, Lord Monson, asked me a semantic question. The answer is that a lump sum is intended to deal with a single omission. The penalty payment is intended to deal with a continuing default which might relate to the amount of time for which the default continues. For example, it may be a question of putting something right which has not been put right. The court could impose a penalty based on the number of days for which the default continues. It is intended to make clear that these two forms of financial penalty are possible.

That is the Commission's role; namely, to investigate; to bring to the attention of the member state what is wrong in its failure to comply precisely; to give it a time limit within which to comply and, if nothing happens, to state—

The Earl of Onslow

I am grateful to my noble and learned friend for giving way. Can he give us some idea in what range the penalties will be? Will the sum involved be £50 billion or will it be 10s. 6d? Presumably, the figure must be somewhere between those two. Can my noble and learned friend tell me what is the range and how much the penalty will be?

The Lord Chancellor

I shall come to that matter in a moment or two if my noble friend can give me a minute in which to develop what is supposed to happen. I am endeavouring to deal with the first amendment moved by the noble Lord, Lord Stoddart of Swindon, which deals with this aspect of the Commission's part in the matter. The Commission is supposed to indicate the form of financial penalty which it considers appropriate. It would have a knowledge of all the circumstances and be in a position, for example, to know the financial situation of the member state, and the nature of the difficulties which the member state faces in carrying out the obligations, and so forth.

The position so far as the member state is concerned is that once the Commission has made its decision the matter goes to the Court of Justice. The provision goes on to say: If the Court of Justice finds that the Member State concerned has not complied with its judgment"— in other words, the decision of the Commission on this matter is not final. It is for the Court of Justice to decide whether the Commission is right or wrong in the matter. The member state will have an opportunity of being heard. In passing, perhaps I should answer the question about the proceedings being in public.

The decisions of the Court of Justice are always given in public. Normally there is an oral hearing of the court before the judgment is given. It would certainly be so as regards this type of case. When I had the honour of appearing on behalf of Her Majesty's Government (when my noble friend Lady Thatcher was Prime Minister) I found to my surprise that the methods of publicity surrounding the Court of Justice were even greater than in this country. I was appearing in the Court of Justice seeking to defend a regulation in relation to fishing made, I believe, by the previous government. I found myself in the court with Danish television cameras because it was a case which concerned that country. The court allowed the formal proceedings to be filmed for the interest of Denmark. I gather that the film was duly shown on Danish television. So the Court of Justice does everything possible to make sure that its justice is not only done but seen to be done, using all modern technology. Publicity and the hearing in public is part of the ordinary system of the Court of Justice.

I come now to deal particularly with the question raised by my noble friend Lord Onslow. There is no limit or prescription as to the amount either of the lump sum or the penalty payment. If I were allowed to guess the probabilities I would say that 10s. 6d, which my noble friend mentioned, is probably on the low side. The noble Lord, Lord Stoddart, said that in this country we legislate always for definite penalties. One of the functions of the independent judiciary of this country, generally speaking, is to determine the amount of the penalty. As regards fines I believe that the noble Lord will discover that it is normal to give the court power—in the Crown Court, anyway —to impose unlimited fines in many cases. So this Parliament, with all its appetite for precision to which the noble Earl, Lord Russell, referred, does not seek unduly to restrict the courts in the discretion which they may exercise in the amount of the penalty.

I come next to answer the question on whose initiative it was which put this particular provision in the treaty. I believe that it is fair to say that it was initiated by the British Government, quite early on in the intergovernmental conference proceedings. One of the points we often hear is that we obey the rules and others do not. What has been added is the power of the Court of Justice to impose a lump sum or penalty payment. There is no provision for enforcement.

The question arises as to what the situation should be. I believe that there is a question as to how far one can go at particular stages. The noble Lord, Lord Stoddart, asked about precedent. There is no exact precedent for this particular power just as there is no exact precedent for the Community itself, the nature of its functions and its constitution. These are being developed for the particular purpose of suiting the unique gathering of nation states which we are.

But there are some analogies. For example, we are participants in the European Convention on Human Rights. Where a member state of that council is found to have breached one of the conditions there is provision under which the person injured by the breach may be compensated. The experience is that those payments are made although there is no enforcement machinery available. The noble Lord, Lord Irvine of Lairg, referred to some of the issues that have been considered in relation to this, but I believe that an important additional power is being given and that it would be undesirable at this juncture to go further than give that power to the court. If it was found that it did not work, something further might have to be done. But this is an important step to mark the fact that the Community is a community under the rule of law and that it is expected that the member states, along with companies, organisations and undertakings within the member states, will obey the rule of law as administered by the Court of Justice.

As I said, the precise amount is a matter that is left —wisely, I think—to the Commission in the first instance and then to the Court of Justice. It is the Court of Justice that determines this. In answer to the point raised by the noble Lord, Lord Irvine of Lairg, about the Commission leaning on the Court of Justice, perhaps I may say that the Commission puts forward its proposals and indicates the area in which it considers that proper adjudication would lie, but it is for the Court of Justice unencumbered to decide what precisely the result will be.

The noble Lord, Lord Irvine of Lairg, and my noble friend Lord Reay, indicated that hitherto we have had a very good record in observing the judgments of the Court of Justice. I believe that to be entirely correct. Although it is always unwise to throw stones, and I do not like to engage in that particular exercise, perhaps I may refer briefly to the record of others in this respect. The Commission's 1991 report on the application of Community law records, for example, two second judgments by the court against Belgium which had still not been complied with by the date of the report, and two against Italy. The United Kingdom has, I think, never been brought before the court on such a basis. We have always complied within a reasonable time with the decisions of the Court of Justice.

I turn briefly to the matter raised by the noble Lord, Lord Harris of High Cross. I have already dealt with what I understand to be the method of construction of the treaty provisions and other legislation which the Court of Justice uses. I believe that that is very like what is used in this country now. The noble Lord referred to the article by the holder of a distinguished name in this field in relation to the cases about Sunday opening. It is obvious that, by regulating any kind of opening by reference to the nature of the articles which are being sold in the trading, one could distort competition. If one said, for example, that no articles made in France were to be sold on any day except Saturday whereas everything else could be sold on all other days, it is obvious that that would be a way of distorting competition. So there is a basis on which, hypothetically, such a point could arise. The noble Lord said that the Court of Justice did not reject this out of hand. The Court of Justice is a court of justice and the matter came before it by virtue of a reference from the courts of this country. The matter came before the Court of Justice under Article 177 for an opinion. After considering the matter carefully, the Court of Justice came to the conclusion which the noble Lord has indicated. Therefore, it does not appear to me that that creates any difficulty in this particular matter.

My noble friend Lord Reay referred to the court of first instance. He is, of course, right that we were anxious that there should be a court of first instance to take the easier cases, and that the full machinery of the Court of Justice should not be required in every case. That was in order to secure more speedy justice in the courts of the Community than had been possible previously, having regard to the total caseload and the fact that only one court was available to deal with it until the court of first instance was set up.

In my submission, therefore, for those reasons this is a wise and careful step forward. It does not take matters the whole way. One has to hope that the additional authority which is being given to the Court of Justice will be used wisely and that members states will respect it. There is, of course, no right of appeal from the Court of Justice because there is no higher court within the Community than the Court of Justice. One might as well ask for an appeal from the House of Lords in this country because, on the whole, once one gets to the top court in a system that precludes further appeals; and the Court of Justice is the top court in the Community system.

I think that I have answered most of the questions put by noble Lords who have contributed to the debate. I entirely agree that this is an important matter and I think that we have addressed ourselves to the principles of it rather than to the details of the amendments. However, for the reasons I have given, I think that the Committee will appreciate that my advice is not to accede to the amendments.

4.15 p.m.

Lord Harris of High Cross

I wonder whether I may persist in the matter which I raised although I am grateful for many of the clarifications which the noble and learned Lord has given to the Committee. On the issue of the court in, as the noble and learned Lord said, its correct and acceptable basis having a case brought before it by one of our continental competitors on the ground that British abstention from many of the Community's social policies would give an unfair advantage to British producers, is the noble and learned Lord sure that we would not find ourselves arraigned and subjected to large fines?

The Lord Chancellor

Assuming the noble Lord is right, what would be his proposals? The answer is that we have taken steps to secure ourselves in that respect by the agreement of all member states to out opt-out. The opt-out is part of the total agreement that was reached. However, the noble Lord, Lord Harris of High Cross, will be aware that certain steps have been taken under the existing treaties—nothing to do with Maastricht, but under the Treaty of Rome plus the Single European Act—which attempt to put upon this country regulations of the type that he has in mind. I am not going to forecast—it would be unwise for me to do so—what the decision of the Court of Justice would be on such an attack, but the point raised by the noble Lord arises very sharply in the present situation. I believe that the agreement to the opt-out that we have obtained from all our partners in Europe is of extreme importance in limiting the argument that existing arrangements could be used to promote the object of the social chapter.

Lord Hacking

I wonder whether I may intervene briefly. I do so offering apologies to the noble and learned Lord and to other noble Lords who have spoken in the debate for not being present for the earlier part of it but, as at least the Government Front Bench know, the change to your Lordships' programme prevented me and, indeed, the noble Lord, Lord Slynn, from participating at the beginning of this debate.

I participate briefly to draw the attention of the Committee to a point that I understand has not been raised so far. It relates to Article 173. Article 173 is the only article under which members of the Community have general access to the European Court. The other main form of access to the European Court lies under Article 177, but that is through a reference from the national court to the European Court.

There is a limitation to that access under Article 173. Under the first paragraph (or, as amended, the second paragraph) of Article 173 only member states, the Council, the Commission and institutions of the Community can bring an action under Article 173. That applies also to "natural or legal persons" provided that the measure in question is a regulation or decision and provided that that natural or legal person has been affected "directly and individually". The result is that when there has been a breach of the treaty, and when an ordinary citizen or corporation of the Community has been seriously adversely affected —for example, suffered serious damage—there is no access to the European Court. That is what distinguishes the application of Article 173 from judicial review in our own country where there is access to our courts in the circumstances that I describe.

I know that this a matter of concern to the noble and learned Lord, Lord Slynn, to myself and, I believe, to other Members of the Committee who are aware of the workings of Article 173. I do not intervene to say that that is a reason why we should not ratify the treaty or why we should disturb the Bill. But it is a matter of importance and it is worth pursuing by the United Kingdom with other member states so that there can be better access to the European Court than currently exists.

The Lord Chancellor

I am grateful to my noble friend for raising that matter. It is not one raised by any of the amendments that we are now discussing, but we have discussed them in principle, so it may be in order that we should direct attention to the point. In setting up a system of justice, as the Treaty of Rome has done, one must have some regard for the rate at which it will progress. The total workload, and so forth, has to be taken into account. This is one court of justice which has recently been added to by the court of first instance.

Access for individuals is normally through the national courts and the reference system under Article 177. There is a good deal to be said for that system. Apart from anything else, there is the sieve of the national courts having to decide that a question of European law is in issue. The national court system is required, if one is at the ultimate appeal court, to refer the case to the European Court of Justice. If one is in a lower court, the court has discretion to refer the case to the European Court of Justice. At the present state of the development of Community law, that is a reasonable arrangement. I am aware that in some jurisdictions, even large jurisdictions, openings have been given for individual petition with ease and simplicity. Our own courts have that power. There is of course the question of the total number of cases that may be expected. Having regard to the present size of Europe, to allow direct application by individuals to the European Court of Justice would be to invite the clogging up of the whole system, which would be detrimental to the functioning of the Community as a whole.

The Earl of Onslow

Perhaps we may return to the method of enforcement. Does my noble and learned friend see any way in which the Commission, in the event of a fine imposed by the European Court, could withhold grants under the CAP or social fund? Some countries are gross recipients of money and some are gross payers. Will my noble and learned friend comment upon that point?

The Lord Chancellor

As I believe I indicated, consideration was given as to whether that would be a good method to include in the treaty. It was concluded that it would be best to leave matters as they presently are. One must not underestimate the deterrent effect of the Court of Justice having the power to impose a fine, although one hopes fervently that it may never be required to be exercised because it will have a deterrent effect. If it does not, further consideration would have to be given as to what should be done. Consideration was given to that method, but it has defects, as the noble Lord, Lord Irvine of Lairg, said. There are difficulties in following that course. On the whole it was felt that it was better at this stage to leave matters as they are.

Lord Hamilton of Dalzell

In view of the cautious opinion my noble and learned friend gave to the noble Lord, Lord Harris, on the possibility of being taken to the European Court on matters to do with the social chapter, does my noble and learned friend take the same view about the possibility of being taken to the European court on phases 1 and 2 of monetary union? There is no protocol which opts us out of that.

The Lord Chancellor

It is not wise for me to discuss the possibilities of particular cases. So long as a member state obeys the law as laid down in the treaties and the legislation properly made thereunder, it need have no fear of being brought successfully before the Court of Justice.

Lord Stoddart of Swindon

This has been an interesting debate. I thank everyone who has taken part in it and particularly the noble and learned Lord the Lord Chancellor.

The noble Earl, Lord Onslow, mentioned clubs and the rules of a club. If a club has rules and it fines a member and the member does not pay the fine, the club eventually kicks the member out. I do not know whether that is the ultimate sanction in relation to the EC. If it is, then I advocate never paying the fine. That would be an excellent way of carrying on.

The noble Lord, Lord Belhaven, mentioned war reparations as a precedent. I do not know that they would constitute a precedent because war reparations are imposed upon the vanquished by the victor. That is a different matter. It is almost like the spoils of war.

The noble Earl, Lord Russell, made an interesting suggestion about enforcement. He sought to show that there were means, such as those used by the United States against Iraq, which could be used. I am sure that no one has that type of thing in mind.

The noble Lord, Lord Reay, felt that I should keep my feet on the ground. I find it strange that he should think that my feet were not on the ground when I was asking some legitimate questions about the treaty we are discussing, which he discussed well and intelligently. I do not know why my feet should be off the ground when I am asking questions, whereas when he is asking similar questions his are on the ground. I can assure the Committee that the questions I asked were relevant, and some of them have been properly answered by the noble and learned Lord.

The noble Lord, Lord Harris of High Cross, raised an interesting point about Sunday trading. It is interesting, is it not, because in this country there is a considerable difference of opinion on Sunday trading. Let us suppose that the European Court—this is hypothetical—decided that British law was against European law in that respect. It lays that down, and the British Government, in seeking to comply with the European directive and perhaps the court's decision, go to the British Parliament and say, "Now, you must alter your law in compliance with the European directive and the court's ruling". What if the British Parliament refuses to alter the British law? What then would be the position? The court would fine us; Parliament would say, "We are not prepared to alter the law"; so what do we do about such a situation? It is a purely hypothetical case, but of course strange things do happen. When passing legislation of this kind we should be clear about what we are doing.

My noble friend Lord Irvine repeated many of the questions which I had asked. However, he wished to emphasise that there have been many breaches of the treaty by other countries, notably France, Germany and Italy. The question still arises: if they are fined by the court and they refuse to pay, what are the enforcement procedures? The noble and learned Lord the Lord Chancellor sought to deal with that but he did not do so satisfactorily as far as I am concerned. There are no provisions in the treaty for enforcement. Unless there are such provisions the question of imposing fines cannot be serious because fines will be paid only by those people who wish to pay them. In other words, they are voluntary fines. I do not accept that the possibility of fines will act as a deterrent. I am not sure that fines act as a deterrent against shoplifting, for example, and many other crimes. Indeed, we know that they do not.

That brings into question the level of fines, which is extremely important. It simply will not do to be told that the court has unlimited discretion. In what way does it have unlimited discretion? Will it be able to impose, and will it be wise for it to impose, on larger countries higher fines for the same offence? Will it be able to impose smaller fines on smaller countries for a more heinous offence? Those are real questions. The noble and learned Lord has done his best to answer some of them, but he has not dealt with them all satisfactorily. He certainly has not reassured me as regards questions which, I fear, remain in my mind.

We have had a long discussion. As I said at the beginning, it is not my intention to press the amendment to a Division. The amendments are proper probing amendments on an important issue. We shall examine closely what was said in particular by the noble and learned Lord the Lord Chancellor and we may seek to come back to the matter on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 214 to 216 not moved.]

[Amendments Nos. 217 and 218 had been withdrawn from the Marshalled List.]

[Amendments Nos. 219 to 222 not moved.]

4.30 p.m.

Lord Bruce of Doningion moved Amendment No. 223 Page 1, line 9, after ("II") insert ("except Article 188a").

The noble Lord said: I seek the indulgence of the Committee in reminding it that the purpose of debates which have taken place in another place and in this Chamber is to obtain parliamentary consent for the ratification of the Maastricht Treaty. Owing to the nature of our parliamentary procedure, the only means whereby that may be done is through tabling amendments to the short. Bill by virtue of which the treaty will become valid and can be ratified. It may be smart for Members on the Government Front Bench, the Liberal Democrat Benches and my own Benches to pretend that that is not so and that every amendment tabled must be taken precisely on its merits, and to endeavour to ridicule arguments directed towards the provisions of the treaty by referring narrowly to the amendments on the Marshalled List.

Perhaps I may therefore make it clear that Amendments Nos. 223 to 227 and 239 to 245 are probing amendments. They are tabled purely in order to enable a discussion to take place on aspects of the Maastricht Treaty. I should have thought that they would be of considerable interest to the British Parliament. Amendments Nos. 223 to 227 refer to the provisions in the Treaty of Maastricht relating to the Court of Auditors. Amendments Nos. 239 to 245 relate to the revised financial provisions as incorporated in the Treaty of Maastricht, which are an improvement, allegedly—truthful or otherwise—on those in the Treaty of Rome as amended by the Single European Act. Therefore my remarks will be directed towards those aspects of the Maastricht Treaty.

I do not necessarily wish to criticise the articles in the treaty. They are important in particular to a country which contributes £2.5 billion a year of taxpayers' money to the Community. That figure would have been much larger were it not for the efforts of the former Prime Minister, the noble Baroness, Lady Thatcher, in obtaining a rebate on the contribution that we should otherwise have had to make. But for her the contribution could have been £1 billion more. I have already paid tribute to the noble Baroness in public but not in this place and therefore I wish to express my thanks to her now. I trust that the Committee will not take that amiss.

Noble Lords

Hear, hear!

Lord Bruce of Donington

I am convinced that the Government negotiated these and other parts of the treaty in good faith and that they made certain assumptions in negotiating. They were aware that the institutions of the Community would inevitably become involved with the carrying out of the provisions of the treaty. They assumed that during the course of those negotiations and in the conduct of their ordinary affairs the institutions and their representatives also acted in good faith and told as much of the truth as possible in order that people could arrive at their judgments.

There must be trust somewhere. Evidently there was trust in the complete integrity of the members of the Commission. There was complete trust in, for example, the personnel of the Court of Auditors. There has even been trust in the Members of the European Parliament to perform their tasks with due diligence. Members of the Committee will recall that when the financial provisions of the treaty have been discussed, not necessarily within the context of the treaty but in the discussions which we have had from time to time upon the Community's budget, it is always assumed that the facts are available to enable judgments to be made and that in some respects the European Parliament is the custodian of the Community's finances. In other words, it has certain budgetary powers and is our safeguard in the proper expenditure of Community funds.

The first sentence of Article 188a reads: The Court of Auditors shall carry out the audit". What a mind-boggling revelation that is! However, it is deceptive in its simplicity, because people look at audits in different ways. The attitude of people in the United Kingdom towards an audit—and I speak now as a professional accountant—is that it is something that really probes. It probes not only the specific legality of a transaction; it actually endeavours to ascertain whether the transaction has taken place. In addition, there has recently been a concept of value for money.

If one looks at the proceedings of the Comptroller and Auditor General in this country, one finds that the probe is very deep indeed. It includes not merely the legality of a transaction, its propriety and authorisation, but also whether fraud has taken place. If one reads the reports of the Comptroller and Auditor General in regard to public finances and the deliberations that take place afterwards in the Public Accounts Committee in another place, the depth of the probe is clear. That is quite normal in ordinary commercial transactions where firms of professional auditors are employed. Those auditors do not merely pass observations on the legality of a transaction and whether it is permissible in law; they seek to find out the basic essence of the transaction itself and, if fraud has been committed, to reveal it.

On the Continent of Europe, with the possible exception of Holland and, to a limited extent, Germany, the emphasis is totally different. The emphasis is more on whether the transaction that has taken place is legal; in other words, whether there has been proper authorisation. That is the basic emphasis and, I regret to say, it underlies the rather permissive content of the financial regulations of the European Community that govern the conduct of its affairs.

Last year, Mr. C. J. Carey, who was the British member of the Court of Auditors until his premature resignation—indeed, he resigned before his time—had a meeting with the budgetary control committee of the European Parliament in which he explained the reasons for his resignation and made certain observations about the attitude of the Court of Auditors towards a whole series of transactions and the conduct of financial affairs by member states coming under the purview of the actions of the Court of Auditors. In his memorandum he said: Building a Community Court of Auditors is not like building a Community Court of Justice … There is no equivalent consensus underpinning the Court of Auditors similar to that underpinning the whole concept of a court of justice. On the contrary there are huge differences in the perceptions of the proper role of a public auditor which the different Members of the Court bring to Court discussions … The Special Report"— I shall have occasion to refer to that in more detail presently— which is on today's agenda [December 1992] is a good illustration of the problem. This Committee has been angered and also, I believe, a bit mystified by the Court's reluctance to transmit officially and openly to the Parliament the detailed audit findings on which that report is based. To understand the Court's position you need to remember that there is no consensus in the Court that detailed, on-the-spot audit investigations at the level of individual operators and transactions are a proper task, let alone a priority task". Such a concept of an investigation being out of the ambit of the Court of Auditors (or out of an audit, as we understand it) is quite remarkable. It means that the Court of Auditors as then constituted came to the conclusion that there were certain matters which it was not proper for it to investigate and which really lay outside its terms of reference.

4.45 p.m.

Baroness Elles

Perhaps I may first pay tribute to the noble Lord for all the work that he carried out in the budgetary control committee of the European Parliament. Taking his point that the amendments he has tabled are in no way wrecking amendments, I should like to refer the noble Lord to the last sentence of paragraph 4 of Article 188c. I am sure that he welcomes that in the Maastricht Treaty. The sentence says that the Court of Auditors, shall assist the European Parliament and the Council in exercising powers of control over the implementation of the budget". Does the noble Lord accept that that is something that both he and I would warmly welcome?

Lord Bruce of Donington

I am most grateful to the noble Baroness. I shall return later to that point. In the meantime, I wish to refer to the special report concerning Mr. Carey, who was a very distinguished official in the Treasury prior to his going to the Court of Auditors and who, as I said, retired before his time. I want to draw the Committee's attention to the two versions of that special report. The draft special report prepared by Mr. Carey and by the staff operating under him was available in October 1991 in its then form. The version which appeared and which was considered by the Select Committee of this place was published on 22nd April 1992 nearly six months later. It was on the basis of the latter report that the Select Committee prepared its own report in investigating export refunds. Moreover, it was the only document available to the Select Committee; the only document available to the budgetary control committee of the European Parliament; and, the only version available to the European Parliament itself.

What then was the original version that was not presented to the budgetary control committee? It was something totally different. I shall now cite from its conclusions. They are extremely important from an international point of view. They are important from the point of view of the whole of the European Community and from the point of view of this Chamber.

I should mention to the Committee that some three weeks ago I handed a copy of the original version of this document to the Government as I thought they should know what was happening behind the scenes. I did not ask for a reply from the Government and I make no complaint in that regard. I am not asking for a reply today. However, I am sure the Government will acknowledge that I provided a copy of the document. The original draft report was written by Mr. C.J. Carey, the British member of the Court of Auditors, on the basis of the findings of the audit teams from the Court of Auditors who investigated the matter of export refunds. The report's conclusion states: The findings in this report raise serious questions about the ability of the Commission to ensure correct use of Community funds, and about the quality of Member States' stewardship of those funds. The report demonstrates yet again the inadequacy of the physical, documentary and a posteriori controls operated by national authorities over export consignments and refund payments. It also demonstrates the manner in which the application of the regulations can be manipulated to maximise their income from export refunds. The evidence available to the Court illustrates how laxity in enforcement of Community Regulations, together with the complexity and imprecision of those Regulations, facilitates exporters of milk products and their associated producers and suppliers in inter alia:

—declaring a single product under more than one tariff heading (3.2, 3.11);

—claiming refunds for products (including products destined for use as food aid) which did not meet the regulatory requirements for the rate of refund claimed (3.10, 3.13–3.15, 3.36–3.45, 3.47–3.49);

—claiming refunds for the export of products which were unfit for human consumption (3.21–3.27, 3.46, 3.69, 3.76);

—overstating quantities (3.24–3.32);

—conspiring with other traders to circumvent the conditions of export licences (3.50–3.62);

—presenting full landing certificates as a basis for validating refund claims in respect of lost or damaged goods (3.72)". That was the indictment which the British member of the Court of Auditors wanted to present to the budgetary control committee, the British Parliament and to the public at large. The Committee will find, when examining the official report—that was all the British Parliament, the budgetary control committee and the European Parliament had in their possession —that all that has been excised and does not appear in the published report.

I have spoken for too long and I am conscious of that. I now conclude my remarks. The Government are composed of elected politicians arid politicians like ourselves who are summoned to serve. The Government are bound to rely and place trust in someone. In the negotiation of this treaty, and in the formulation of the various clauses that appear in the group of amendments we are discussing, they are entitled to presume good faith on the part of the European Commission and on the part of the European Parliament.

I have no time today to refer to the role of the European Parliament in all this unless the Committee is prepared to grant me exceptional indulgence and permit me to take up a further 20 minutes of its time. However, I shall not do that. Nevertheless, I give the Committee notice that I shall raise this matter again on Report. I give the Committee notice that I shall deal with the role played by the European Parliament —I have read the proceedings of that Parliament—in each of these transactions in the hope that when Members of this Chamber consider whether this treaty should be ratified they will take those matters into account and at any rate have some marginal doubt as to the wisdom of taking for granted the complete open, forthright and honest co-operation of officials as distinct from elected Members of Parliament. I beg to move.

Lord Hamilton of Dalzell

I wish to speak in support of the amendments proposed by the noble Lord, Lord Bruce of Donington. However, at the same time I agree with the noble Baroness, Lady Elles, that it would be crazy to scratch the Court of Auditors out of the treaty when it is our only hope. I would argue—much of the debate has concerned this point —that what we are signing up to are arrangements which are highly unlikely to work. One of the troubles that I have with the Treaty of Rome, the Single European Act and now with the Maastricht Treaty is that they are all engines for taking money from taxpayers, on the one hand, and giving it to worthy causes, on the other. Yesterday we were accused of objecting to the Community spending money on education, culture and other worthy causes as that meant taking money from taxpayers. The vast costs of the common agricultural policy were questioned.

The bigger the flows of money flowing between taxpayers and consumers, the greater the possibility that people will get their sticky fingers into the cash. Even the British Parliament has had its troubles in this respect. I refer to DeLorean and the Poulson affair. Even now I believe we are tackling a large scandal in Liverpool. Those are all cases of government money going astray.

There will always be crooks and the bigger the sums of money involved the more temptation there will be for crooks to seek it out. I agree with t he noble Lord, Lord Bruce, that we have a firm system of accountancy in this country. However, traditions in other countries are different. In the course of my career I had to handle my family's affairs in Athens. The Greeks have ingenious arrangements for organising their affairs. Here one produces one's bills and the taxman accepts those bills. However, in Greece, if one sells property as I did, it is traditional that 25 per cent. of the transaction is provided in cash. If one says as an alien, "I am an English gentleman and I do not approve of this procedure", the Greeks will not proceed as no one wants an idiotic foreigner to upset the basis on which they organise their affairs. Therefore, one is committed to following their arrangements. I am not saying that the Greeks are fundamentally a dishonest race. That is just the way that they work. The enormous quantities of cash which resulted from such procedures were carried about by girls from bank to bank. They had no fear of being hit on the head. At least, that was the arrangement until a short while ago. I should not like to carry large sums of money about in London.

One approaches the taxman in Greece and tells him a price one received for the property, which is obviously 25 per cent. less that what one received. The taxman will then say, "Oh, no! It was 50 per cent. more than that". An intriguing haggle then takes place. Greece is far closer to the Middle East than it is to Europe in that respect. If one takes the matter to court, there are penalties which stack the game against one. As a result of this haggle, one may pay 25 per cent. above or below the figure which one declared. However, that is a mistake. So one pays the extra tax and no questions are asked. On the other hand, if one breaches the 25 per cent. level, that is a felony and one pays a fine on top. That is how it works in Greece. When there are practices of that kind in a country I wonder how one can ever know what is going on and stop money filtering away.

One might also consider the position in Italy. I had a conversation with a journalist there who said that the same thing happens in Italy in relation to income tax. The danger is that if as a journalist one writes an article attacking the government and the government disapprove of it, they then open one's income tax affairs. I wonder what it would be like to be an auditor in Italy. We have seen what happens to judges who try to take on the system in Italy. One day when they are driving home there is a colossal bang and their car is turned inside out. It is not easy to enforce laws on the Italians.

Therefore, I regard this exercise with great trepidation. I believe that the right way to deal with the matter is to have less money floating about in the system, transferred from the taxpayer to the customer. I believe that the matter is virtually uncontrollable. I should very much like to hear from the Government how they consider that this measure would effectively control such expenditure in Europe.

5 p.m.

Lord Desai

I wish to discuss Amendments Nos. 239 to 235 and 339 to 344. I am in some difficulty because the doctrine of the Tebbit peg means that amendments which are put down do not necessarily represent the views of those proposing the amendments. Nevertheless, I am surprised that Amendments Nos. 239 to 245 seem to be aimed at excluding articles of the treaty which impose the principle of sound financial management on the Commission, especially Articles 201 and 201a which are dealt with in Amendments Nos. 240 and 241. Those articles state that the Commission shall be prudent and shall not ask for budgetary sources which are not properly laid down and collected in advance. I would assume that sound financial management, which is a principle with which I am sure we all agree and which the Government could follow, should not be excluded.

Lord Bruce of Donington

I am most grateful to my noble friend for giving way. I thought that I had made it quite clear that the purpose of putting down the amendments was to secure discussion.

Baroness Trumpington

Will the noble Lord address the Committee?

Lord Bruce of Donington

I am sorry. The purpose was to secure discussion. It is the only way in which we can discuss the treaty. It appears to have escaped my noble friend that that was the purpose.

Lord Desai

I said that I was in some difficulty because sometimes it is agreed and sometimes it is not. I shall continue to discuss the matter in any case.

I want to commend Articles 201 and 201a. Instead of being excluded they should be heralded because the principle of sound financial management is clearly something with which we all agree.

Article 206, which is referred to in Amendment No. 243, is also an important article because it gives the European Parliament a role in relation to the way the Commission spends its resources. One of the best things about the Maastricht Treaty is that it gives a greater role to the Parliament vis-á-vis the Council and the Commission in considering how the Commission operates.

Two criticisms have been laid against the European Community. The first is that the Commission is spendthrift, although the Commission's budget is tiny in comparison with national budgets. Therefore, the principle of sound financial management is a good one. The second criticism is that the Commission is unaccountable. Giving the European Parliament a role to play will make the Commission more accountable than it has been hitherto.

Amendments Nos. 339 to 344 relate to court review of the legality of actions of the Commission and a European central bank. I cannot find Articles 173a or 183a, which are referred to in those amendments, in my copy of the Maastricht Treaty. That may be because I am using a new and improved version and not the original version.

Lord Aldington

I had the same trouble myself. If the noble Lord looks very carefully at the amendments he will see that they refer to Title IV which relates to the Euratom Treaty. There he will find it all.

Lord Desai

I am most grateful to the noble Lord. One should welcome Article 173 because, to the extent that a European central bank is thought to be independent and autonomous, one should welcome the fact that its actions are justiciable by the court. We should welcome that article and reject the amendments.

Lord Aldington

I have difficulty with the procedure advocated by the noble Lord, Lord Bruce, but I understand that the Committee regards it as in order. However, it strikes me as very odd that one puts down on the Marshalled List a series of amendments, first, to insert and then to leave out—in this case to leave out—a number of provisions which seem to me to go to the root of the improvements made by the Maastricht Treaty to the financial procedures of the Community. That is what the first two groups of amendments propose.

Apart from the speech of the noble Lord, Lord Desai, which I followed generally and support, so far the Committee has listened to two speeches which were not about Maastricht but about the position pre-Maastricht. In one case the speech concerned financial dealings in Greece. Having done some financial transactions in Greece in the old days I can confirm what my noble friend Lord Hamilton of Dalzell said. The speech of the noble Lord, Lord Bruce, concerned Court of Auditors' reports and parliamentary procedures in the European Parliament under the old regime. The noble Lord did not draw the Committee's attention to the changes in the regime which should follow from the ratification of these articles.

The noble Lord, who is a member of the Select Committee on the European Communities, may have forgotten that in its report on the Commission's proposals for Community finances for 1992, which was ordered to be printed in November of last year, it said: The Committee attach the greatest importance to Articles 201a, 205 and 209a of the Treaty on European Union signed at Maastricht". That is because of the improvement in sound financial management.

Likewise, in another report, the same Select Committee set out the importance it attaches to the new articles relating to the Court of Auditors from the point of view of eliminating fraud. Some of the articles which the noble Lord proposes should be left out come straight from Article 206 of the existing treaty. That has happened before. We have had to deal with suggested amendments proposing that we leave out part of the Treaty of Rome. However, as it has been explained to us that those are pegs on which to hang debates I shall not repeat what I said on that subject previously.

I find it very odd that any Member of the Committee, particularly one who has had high office in a government, should have any objection to the great improvements made by the Treaty of Maastricht to the financial disciplines and procedures of the Community and to the status and function of the Court of Auditors and the treatment of its reports.

Baroness Elles

Perhaps I may revert to the interjection which I made when the noble Lord, Lord Bruce of Donington, spoke. First, I accept that the amendments are not wrecking amendments but are a means of initiating discussion. They are very valuable, because unless one reads the provisions of the Treaty of Maastricht very carefully a great deal is missed and misunderstood by Members of the Committee who are seeking to attack the treaty. Within the Community there is fraud against the Community. One of the issues on which the Community is always being attacked is for spending too much money and wasting it. Perhaps we should remember that the Community budget as a whole last year was about £46 billion. The noble Lord, Lord Bruce, will correct me if I am wrong. It is the equivalent of what the United Kingdom local authorities spent in the same year. That has been roughly the position over the past four or five years. The figure represents about 2 per cent. or 3 per cent. of Community GDP. Therefore we have to take that into account.

I wish to make two points. First, I reiterate that the Court of Auditors now has a duty to assist the European Parliament through its Budgetary Control Committee. The European Parliament has the task of discharging the budget of the Commission. Having all the information that it can demand from the Court of Auditors, the European Parliament will be in a better position to fulfil that role.

I wish also to draw attention specifically to a point to which the noble Lord did not refer. Article 209 states: The Council acting unanimously on a proposal from the Commission and after consulting the European Parliament and obtaining the opinion of the Court of Auditors shall: make Financial Regulations specifying in particular the procedure", and so on.

National parliaments have been asked to co-operate in the work of the Community. There is a declaration in the Maastricht Treaty to the effect that national parliaments shall work together with the European Parliament. Therefore it is not beyond the wit of man to imagine that noble Lords, with all their experience of auditing, accounting and financial measures, should contribute to the Council of Ministers, through the Chancellor of the Exchequer, by advising on how the financial record should be drawn up. When adopted, the document will probably be one of the most important for the efficient and effective running of the Community's finances.

I recommend Article 209 to the Committee's attention. With its wide range of expertise, knowledge and experience, this Chamber could contribute to the better control of the finances of the Community.

5.15 p.m.

Lord Tebbit

I do not wish to pick up any of the points which I understand were raised earlier in the debate when I was not present. However, I refer to a rather narrow but important point. It is raised by Amendment No. 425, which stands in my name. Amendment No. 425 seeks to control better the use of public moneys. It provides that, The 1972 Act", —the accession Act— shall be taken only to authorise payment out of the public funds of the United Kingdom for the purposes of the European Community as set out in the Treaties and the Community Treaties as defined in section 1(2) of that Act.

"It shall not be lawful to make any payment to the Community or to member states for any other or wider purposes, including the purposes of Titles V and VI, nor shall any such payment become a charge on the Consolidated Fund". The matter was dealt with briefly last night by my noble friend Lord Ferrers. However, I hope that the Minister will be able to clarify the matter a little further on the amendment. Article K.8.2 is on page 86 of the treaty. It refers to, Administrative expenditure which the provisions relating to the areas referred to in this Title —that is Title VI— entail for the institutions shall be charged to the budget of the European Communities". Of course, Parliament can if it wishes provide for such a thing in this treaty. However, as I see it, that does not of itself give the authorisation for expenditure of funds unless there is an earlier authorisation. That point was taken by my noble friend. It is worth considering what he said because it is the kernel of the question that I wish to put to the Minister. He stated: My noble friend"— that is me— also referred to Article K.82"— as it is reported in Hansard; it should be Article K.8.2— and asked whether there was a provision of domestic law which covers the payment of administrative expenses. I am bound to tell him that Article 199 of the Treaty of Rome (as amended by Title II of the Maastricht Treaty) provides for administrative expenditure and, if agreed, operational expenditure under Title VI to be charged to the Community budget. Section 2(3) of the European Communities Act 1972 gives power to pay our share of the Community budget". [Official Report, 28/6/93; col. 697.] It is there that I believe the matter becomes interesting. The European Communities Act 1972 is in the treaty. I shall read what it states. There is quite a long provision at the beginning of Section 2(3) which confirms the right to be charged on, and issued out of, the Consolidated Fund, the amounts required to meet any Community obligation to make payments to any of the Communities or member States, or any Community obligation in respect of contributions to the capital or reserves of the European Investment Bank or in respect of loans to the Bank, or to redeem any notes or obligations issued or created in respect of any such Community obligation". Quite clearly the moneys about which we speak do not fall into that part of Section 2(3). I suspect that Ministers are relying upon Section 2(3) (a), which states: any other expenses incurred under or by virtue of the Treaties or this Act by any Minister of the Crown or government department may be paid out of moneys provided by Parliament". The question is not about moneys required for expenses which are caused in the carrying out of any obligations which arise under the treaties. That must clearly refer to the Treaty of Rome and the treaties which amend it. Indeed, at that time it referred to the Treaty of Rome, the treaties of the European Coal and Steel Community and the other allied treaties.

What could clearly not have been envisaged at that time was that we would be faced with a treaty—the Maastricht Treaty—which does not relate solely to the Treaty of Rome. It is a point which has been made most energetically by Ministers and by the Prime Minister himself. Titles V and VI of the Treaty of Maastricht are not part of the Treaty of Rome. The Treaty of Rome does not affect them. But what is proposed is that the administrative arrangements for the implementation of Titles V and VI should be carried out by the institutions of the Community. We debated the matter last night. All the institutions are involved: the presidency, the parliament, the Commission, and even, potentially, the court.

However, let us keep our attention firmly on the Commission, because that is the nub of the argument. The Commission will be the administrative body which cares for the administration of Titles V and VI. Where is the authority for that expenditure to be incurred? It cannot be incurred under the Treaty of Rome because those matters do not relate to the Treaty of Rome.

It is perfectly fair for Ministers to say, "These are expenditures which arise. They do not arise from the Treaty of Rome, so there must be a special provision for them to be paid. That amount of money should be apportioned and decided on in some way". I suspect that at that moment it was realised that it would be extraordinarily difficult to decide the exact share of the total expenditure of the Commission, for example, which should be laid at the door of Titles V and VI and thereby invoiced in some manner to member states.

The procedure adopted was to insert into Article K.8.2 the idea that this would simply be met out of the provisions of moneys voted under Section 2(3) of the 1972 Act. But it does not seem to me that that Act gives such authority. I am still intrigued, and as yet unconvinced by Ministers' answers, as to where the authority for that expenditure arises and when the other place voted those moneys and that authorisation.

Lord Monson

This is an extremely wide-ranging group of amendments, covering many different fields. For reasons of time, I wish to speak solely to Amendment No. 427. It is in the name of the noble Earl, Lord Onslow. I thought that I had added my name to it but obviously there was a slip up and it does not appear on the Marshalled List. I have no doubt that the noble Earl will follow if he so wishes. However, just in case he has prepared nothing on it, I thought it essential to speak.

It is astonishing that a treaty which professes, among other things, to encourage and assist friendship and co-operation among the nation states and the different peoples of the Community does nothing to encourage those nations which make territorial claims on other member states or their dependencies or colonies to renounce those inherently unfriendly and unco-operative claims.

On the first day of our Committee stage, I drew the Committee's attention to the fact that every man, woman and child in the Republic of Ireland—a country which makes territorial claims upon the United Kingdom, which claim has recently been upheld by the highest court in that land—receives £121 a year net from the United Kingdom taxpayer. It is true that the German taxpayer gives each man, woman and child in that country almost £360 a year, but that is the Germans' business. In any case, I do not believe that the Republic of Ireland makes any claims upon Germany.

So far as I know, we also give substantial sums to Spain—I do not know how much—and we are all aware that Spain makes claims upon Gibraltar and causes great difficulties for its people when they wish to cross the border.

The amendment does not seek to enforce withdrawal of those unfriendly claims; no such thing would be possible. Nor does it seek in any way to reduce our contributions to the countries concerned. All it does is require the Secretary of State to inform the House of Commons each year, of the United Kingdom's budget contribution under the Treaty to the European Community detailing that part of the United Kingdom's contribution spent by the Community on Member States having or making territorial claims on other Member States or their dependencies or colonies". What it does is to allow the British voter and the British taxpayer to see where their money goes and how much of it goes to countries which, sadly, make those inherently unfriendly claims. That may encourage those countries of their own free will eventually to relax the claims.

Lord Peston

I was hoping to speak, but I am in a slight difficulty because we seem to be debating amendments when the movers of those amendments have not yet spoken. My noble friend Lord Desai spoke to Amendments Nos. 339 to 344 and the noble Lord, Lord Aldington, said that he understood them. They are in the name of my noble friend Lord Stoddart, who ha; not spoken to them, and I found it impossible to understand what they were about. Given our current rules, are we to assume that we ignore that?

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

Those amendments are fairly straightforward; they mirror earlier ones. They relate to Euratom rather than the Community itself. I believe that one Member of the Committee, possibly my noble friend Lord Aldington, made that clear.

Lord Peston

I thank the Minister. I did not know that they related to Euratom because I am much less of an expert than other Members of the Committee. The easiest way to deal with them is for me to pretend that they are not there and to proceed.

I entirely accept that Members of the Committee who wish to scrutinise the Bill with a view to scrutinising the treaty have to put down such amendments. I have no disagreement with them. That is the only way. Of interest to all of us from the beginning has been the contrast between the slimness of the Bill—which contains essentially nothing —and the thickness of the treaty. The treaty is what we want to debate and it is our duty to scrutinise it. Therefore there is nothing between me and both my noble friends and other Members in all parts of the Committee about this method of dealing with the Bill. We must do it that way, even though we end up with the paradox of sometimes criticising parts of the treaty or suggesting that we take out parts of it when we are actually in favour of them.

I hope that my noble friend Lord Bruce of Donington agrees that what the treaty says about auditing is a step forward compared with what was said earlier about it. However, the only way we can debate auditing is to put down an amendment suggesting that we take out what is in the treaty. Thus, there is nothing between me and other Members of the Committee on that.

I take it that the Minister will confirm that in the area of auditing and the related area of parliamentary scrutiny the Maastricht Treaty takes us in a progressive, forward direction. I think it could go further. I could devise a better treaty, but nonetheless it is a step forward. I understand that the reason why the amendment was put down in this way is that we can still emphasise that, in my judgment, the Community wastes a fair amount of money. I do not believe that Brussels has what I would call a "culture of economy", a culture scrutinising expenditure which is anywhere near what would be expected by the Parliament of this country. Therefore, I am always with those who are highly critical of Brussels in that regard. There is something in what those who refer to "a gravy train" say. I speak as one who strongly supports the Community, but I worry about its attitude to spending money. The EBRD is about as appalling an example as any of us have seen in recent times.

Having said that, I still believe that the treaty takes us forward. I also agree with my noble friend Lord Bruce. I hope that in its work the Court of Auditors will not merely ask, "Have these funds been spent legitimately?", which is an auditing question. But, "Is there any fraud?" If they ask that question they will find quite a lot of fraud. However, there is also the equally important question which in this country the Audit Commission and the National Audit Office ask for us: "Has the money been well spent?"

I did not speak in the debate on the common agricultural policy. My noble friend Lord Eatwell did so for me. No one could devise a more stupid way of spending public funds than the CAP, and I speak as someone who knows that we have to support agriculture. The CAP achieves something which I thought impossible: it is the worst way of supporting agriculture that anyone could dream up. There is a debate as to the best way, and I believe that what we used to do in this country is probably the best. Now we have the worst way. I say that as an economist. It is the most obvious question that any first year student could answer. I hope, therefore, that my noble friend Lord Bruce will accept that I agree with him—and I speak from the Front Bench—that we must continuously look for value for money.

My noble friend Lord Desai drew attention to the wording in the Treaty of Maastricht on the principles of sound financial management. I then looked to see whether any other section in the treaty would tell me what those principles were. I do not know what is taught at the London School of Economics these days —perhaps it has a suitable course on the principles of sound financial management—but I for one would like to know what those principles are. Also, if I may be a trifle acerbic, if we can be told what those principles are I should like to draw the nature of them to the attention of Her Majesty's Government. I feel that a £50 billion a year deficit is slightly wide of the principles of sound financial management.

It is important to raise these matters, but the main lesson that we learn is that we must scrutinise continuously. I do not believe that it would be appropriate to amend the treaty at this stage. I stand second to none in my criticism of the Prime Minister. Noble Lords very rarely hear me say a word in favour of the Leader of the Conservative Party. But in this area of the Treaty of Maastricht he has not done a bad job. The words stick in my throat, but he has done a good job. I promise the Committee that I shall never say anything like that again. I shall find some way of being nasty about him before our deliberations are over.

I found the later amendments, such as Amendments Nos. 413 and 416, very interesting, and I am glad that they have been raised. My reading, in particular of Amendment No. 425, which the noble Lord, Lord Tebbit, raised, is that Article J.11 on page 83 and Article K.8 on page 86 provide the legitimacy that he seeks if he is looking at legitimacy within the treaty. If the noble Lord is asking whether further legitimacy is required within British law—in other words, whether we have to pass laws which say that the Treasury can authorise money for this purpose —first, I have to say that, even though I am supposed to be an expert in this field, I do not know the answer. Secondly, to wriggle out of it, I take it that the noble Lord, Lord Henley, will give us the answer. I take it for granted that once the Government have accepted a treaty, it follows that it is legitimate to spend money in that way. Otherwise, how could the Government ever agree to any treaties? I say that, but I do not know.

5.30 p.m.

Lord Tebbit

The noble Lord is on precisely the right point. Quite clearly there are provisions in the treaty which make it legal in that sense. The question that I asked is: where is the authority for the expenditure of the money in the first place? It would not appear to me that the 1972 Act gives that cover, and therefore there should be some other measure, a money Bill of some kind, to make that possible.

Lord Peston

I thank the noble Lord for that comment. I find solace in the fact that it is for the Government to tell the Committee about matters of that sort and not for me to do so.

On amendments such as Amendment No. 416—I believe it was spoken to, but I am not completely sure —and Amendment No. 427, which has not been spoken to but which I take it is implicit in what has been said, my own judgment is that what is in those amendments is a good idea. Clearly there ought to be a report. The amendments mention the House of Commons, but I would have thought it should be to this House as well on matters of this kind. I take it that the noble Lord, Lord Henley, will say that all this material may be in the public domain and opportunities may be made available for noble Lords and others to debate matters such as budgetary contributions. I say only that I do not believe that this is the treaty into which one would put that kind of amendment. But I believe it is perfectly reasonable to raise precisely that sort of point.

To the noble Lord, Lord Hamilton of Dalzell, I say that I was puzzled as to what the large scandal in Liverpool was, unless it refers to the position of the two great football teams in that great city last season, which was, as the noble Lord rightly says, a scandal. I hope that it will be put right in subsequent years.

To summarise, this debate has brought out the benefits of this treaty. I hope therefore—and I look forward to hearing what the Minister says—that noble Lords will agree that, while we thank the critics for bringing the matter up, these amendments should not be supported but are nonetheless helpful to the Committee.

Lord Henley

Like other noble Lords, I accept entirely the statement by the noble Lord, Lord Bruce, that his amendments are purely probing, designed, quite rightly, to discuss these very important matters. I accept that he does not wish to criticise the articles that we are discussing, unless he thinks that they do not go as far as possibly they might. Certainly, like my noble friend Lady Elles, I should like to congratulate the noble Lord on all that he has done in the past to expose fraud in the Community, or wheresoever it might exist. I also congratulate him—I am sure that the whole Committee will join me—on his valiant fight against fraud over the years. Certainly we would welcome his support in possibly a somewhat greater endorsement of the improvements that have been brought about by the Maastricht Treaty.

I believe that the specific improvements in financial management that were agreed at Maastricht should be welcomed on all sides of the Committee. I intend to highlight some of the improvements that we have secured and, like my noble friend Lord Aldington, to stress that we are now looking forward rather than backwards, looking to the future and not to the past, and stress the improvements secured in the Maastricht Treaty, and specifically the ones secured by the UK on these particular issues. I shall of course refer to the new articles in the EEC treaty. As was pointed out when the noble Lord, Lord Desai, was speaking to some of the later amendments, those improvements are mirrored in the other two Community treaties, to which some amendments still relate. One has been withdrawn, but there are still some amendments which relate to Euratom.

We attach great importance to sound financial management of Community finances. That is why Article 205 of the treaty makes explicit the responsibility of the Commission to implement the budget, having regard to the principles of sound financial management". That was certainly something that was added as a result of United Kingdom proposals. In addition, under Article 201a —and I am grateful for the endorsement of the noble Lord, Lord Desai, of Articles 201 and 201a—no proposal for Community action can be put forward by the Commission unless it is accompanied by an assurance that it can be financed within the Community's agreed own resources ceiling.

The Government, and the work of this House—again, I should like to praise the European Select Committee which has produced reports on this matter that have been debated on a Motion moved by my noble friend Lord Aldington as recently as March of this year—have played a key role in formulating Community policy in the fight against fraud. Article 209a, which again was added as a result of United Kingdom proposals, makes explicit that member states should treat fraud against the Community budget with the same vigour as fraud affecting their own financial interests. I shall make a few comments on fraud later.

I turn to the European Court of Auditors and Articles 188a, 188h and 188c. I do not intend to follow the noble Lord, Lord Bruce, with his excessively detailed analysis, if I may say so, on the rather brief Article 188a. I should like to stress—and I think the noble Lord would be the first to agree with me here —that the European Court of Auditors plays, and will play, an increasingly important role in measuring the effectiveness of Community spending. The Court of Auditors uses its reports, and in particular the annual report on the implementation of the Community budget, to highlight deficiencies in controls.

Article 188c introduces a new requirement for the Court of Auditors to provide the Council and the European Parliament with a statement of assurance as to the reliability of the accounts it examines and on the legality and regularity of the underlying transactions. This is an improvement that has been welcomed by this Chamber, by the Select Committee and certainly by the European Select Committee in its 13th report entitled The Fight Against Fraud, a point which I believe was mentioned by my noble friend Lord Aldington, who certainly commended the Court of Auditors on its role in the fight against fraud. We certainly agree that it plays an effective role in promoting the effectiveness of Community spending.

Further, the Court of Auditors will become a Community institution under the treaty. That will increase its status and its authority. As a Community institution it will be able to bring before the Court of Justice an action under Article 175 against the Council or the Commission for failure to act in breach of the treaty.

I understand the anxiety of the noble Lord, Lord Bruce, about the report on export refunds. The Court of Auditors produced an interim report in April 1992 which was considered by this Chamber. I understand that the court's investigations are continuing. The Council and the Commission have discussed the report, agreeing that there should be better mutual assistance and better co-operation between member states and with the Commission, which would certainly like to take a stronger co-ordinating role, including producing an audit package for use with multinational corporations. These are positive steps which would not have taken place without the valuable report published by the Court of Auditors on the basis of Mr. Carey's work, to which the noble Lord, Lord Bruce, referred.

The European Parliament also has a role to play in ensuring that the Commission corrects deficiencies that have been identified. Article 206 of the treaty would give the European Parliament enhanced powers to examine the Commission on the basis of the Court of Auditors' observations and request it to report on action that it takes in response. These changes to the treaty represent an important move forward in strengthening the framework necessary to improve the management of the Community's finances.

We believe that Maastricht was a very important step in the battle to fight Community budget fraud. It marked an important change of attitudes to fraud arid financial management issues. Following Maastricht there has been a clear shift in the attitude of member states and the Commission in that fight. That is further reflected by the reference in the Copenhagen Council conclusions on the importance of fighting Community budget fraud.

In the Council of Ministers we believe that the political will now exists to take on fraud. This Chamber expressed its concerns in the debate on 8th March when it discussed the European Communities Committee's report on the fight against fraud. But the Chamber also acknowledged that concrete steps have been taken.

We should be the first to recognise that more has to be done. Work has continued in the Community since that debate in March. In particular ECOFIN discussed the Commission's latest annual report on fraud on 7th June. The Council welcomed the Commission's new work programme, which is very much along the lines sought by ECOFIN under the United Kingdom presidency last autumn. The Council emphasised as priorities the simplification of legislation and the extension of risk targeting. It asked the Commission to consider how to develop further the Community's strategy against fraud.

The Commission has outlined further concrete ideas for tackling fraud which it is considering, including its intention to strengthen both its central anti-fraud unit and the other Commission services concerned with combating fraud. The Government have generally welcomed the Commission's ideas while making some further suggestions of their own and offering assistance in the extension of risk targeting techniques and with secondments. Further, the European Parliament is actively considering how the Community and member states can improve their performance.

I turn to some of the later amendments that stand on their own rather than in the earlier group tabled by the noble Lord, Lord Bruce of Donington. With regard to Amendment No. 416, I believe that only the noble Lord, Lord Peston, referred to it and I am not aware that the mover of the Motion spoke to it. The noble Lord asked whether the amendment was necessary and whether all information would he available. I can give him that assurance. Certainly in keeping with the recommendation by the Public Accounts Committee, Her Majesty's Government publish annually a White Paper on the Community's budget. That annual statement gives full details of the current Community budget, including expenditure on economic and social cohesion and the United Kingdom's contribution to finance the budget. It also gives out-turn information on previous years. We believe that that will be sufficient. We do not believe that the amendment in the name of my noble friend Lord Belhaven was in fact necessary.

I turn to Amendment No. 425 tabled by my noble friend Lord Tebbit. The purpose of the amendment was to raise various queries as to whether payment of administrative expenses (Titles V and VI) is legitimate under the European Communities Act. The answer given by my noble friend Lord Ferrers is certainly correct. By Articles J.11.2 and K.8.2 administrative expenditure is chargeable to the budgets of the Communities and as such payment of our contribution to the budget, including such expenditure, will be a Community obligation for the purposes of Section 2(3) of the 1972 Act. I hope that my noble friend will be satisfied with that explanation.

5.45 p.m.

Lord Tebbit

I thank my noble friend. I take it that he rests upon the provision in the Treaty of Maastricht in the second paragraph of Article 199 (which is on page 56) which appears, as he says, to give that amendment to the European Communities Act 1972.

In conclusion, we have now established that the separate pillars which have nothing to do with the Treaty of Rome will be worked by the Council of Ministers, will be administered by the Commission, will involve the presidency, the Court of Justice and the Parliament and will be provided for under funds administered through the Treaty of Rome. I just wonder how separate they are.

Lord Henley

My noble friend is correct. I should like to rely on Article 199. The further point I wanted to make clear to my noble friend is that certainly any further operational expenditure under either pillar—at the moment we are talking only about expenditure on administrative matters—would require unanimity. On that basis, in this country we have a veto over its use. In certain instances it might make sense to use the Community budget to implement policy which has been agreed by unanimity. Certainly it is a matter that can be decided on a case-by-case basis. It is a matter on which we have a veto and we shall use our veto should it be necessary.

Lastly, I turn to the amendment tabled by the noble Lord, Lord Monson. He proposed that the Secretary of State should have a duty to inform the other place of just how much we spend on other countries that happen to have territorial claims against either this country or for that matter other countries. It is difficult to see how the Government could meet the requirements that such a clause seeks to impose. As the noble Lord will know, there is no hypothecation of the Community's own resources save for one very specific purpose, which is financing the agricultural monetary reserve. In other words, revenues are used without distinguishing from where they come to finance all budget expenditure. There is no specific United Kingdom contribution towards Community spending in other countries. It is not possible to say that × pounds from member state Y has been spent in country Z. That is perfectly normal and certainly in line with most United Kingdom practice as regards tax revenue, where it is used to fund expenditure without it being possible to tell on what an individual taxpayer's tax is spent.

I am not clear as to the purpose behind the new clause. It seems to imply that there are some very fierce burning territorial claims between member states. I accept that there may be one or two territorial claims that some member states have against others. But I do not accept that they are burning territorial claims and do not believe that they are so life threatening. One of the triumphs of the Community has been helping to ensure peace in Western Europe. Any war between most of our colleagues is virtually unthinkable. In fact, even if the new clause were implemented, it would highlight unnecessarily, and in an unwanted and unhelpful manner, a small number of problem areas such as those mentioned by the noble Lord.

Lord Monson

I am grateful to the noble Lord for giving way. He says that he does not think that such territorial claims are life threatening. I would accept that comment in the case of Spain's claim upon Gibraltar. But does not the Republic of Ireland's claim upon Northern Ireland give aid and encouragement to the IRA and stimulate its members into greater acts of terrorism?

Lord Henley

The noble Lord puts his case. That point is certainly arguable. I do not want to go into the individual problems that the Irish Republic may have about certain parts of its constitution. It would be wrong for me to speculate on that. An amendment such as that proposed by the noble Lord would not add to our relations with the Irish Republic; it would not add to our relationship with any country. I was trying to make clear the point that it would highlight what I believe to be a relatively small problem in what is a much greater problem—one that has been going on for 20 years. I do not believe that those parts of the Irish Republic's constitution are necessarily the key to the problems in Northern Ireland. For that reason the amendment is distinctly unhelpful.

As I have tried to make clear, we believe that the Maastricht Treaty brings important improvements to the financial management of United Kingdom taxpayers' money. It will give the Community a clear treaty basis for tackling anxieties about waste and fraud which have been expressed today and over a number of years—for which we are grateful—by the noble Lord, Lord Bruce. The Committee and the noble Lord should be at one in wanting the improvements. I hope that the noble Lord—I appreciate again that the amendments are merely probing amendments—will accept that the articles are a considerable improvement and are the right way forward.

Lord Bruce of Donington

I am grateful to the noble Lord for his constructive response to the various points that I ventured to lay before the Committee. I am bound to say to the noble Lord, Lord Aldington, and the noble Baroness, Lady Elks, that the conduct of which I complained whereby the Commission deliberately misled, with or without the collaboration of the Court of Auditors, Parliament and the public, could happen even under the revised wording of the Maastricht Treaty relating to the Court of Auditors.

The new provisions relating to financial control, regulation and so forth, have no bearing on the disclosures that I made earlier about bad faith on the part of the Commission and/or the Court of Auditors. Nothing in the new provisions could have prevented that. With respect to the noble Baroness, Lady Elles, for whom I have a great respect, in the passage of time since the events about which I complained nothing has been altered in any way by the new provisions of the treaty.

The noble Lord, Lord Aldington, must by now be aware that the report of the Select Committee, produced after consideration of the published report on export restitution in relation to the milk sector and so forth, and our report would have been different if we had had the original in our possession rather than the truncated copy with which we were ultimately provided.

The noble Baroness, Lady Elles, I am sorry to say, fell back on the old dodge of saying of the amounts of money involved that the odd billion or so was only a small percentage of the total expenditure. That is a classic device for obtaining support for expenditure with which one agrees. When one disagrees, one always calls it taxpayers' money. When one wants support, one always says how small it is.

Baroness Elles

Perhaps the noble Lord will give way. He knows as well as I that fraud involving any sum is a disgraceful way of behaving, particularly with public money. If we want to talk of size, we need only look across the river where local authorities grossly misuse and abuse their powers. Therefore, whatever the sum, in my view it is fraud on the Community and the taxpayer. I condemn it as much as he does.

Lord Bruce of Donington

I am glad to see that the noble Baroness is in agreement with the substance of what I was saying. We are dealing with Community funds and with the proportion provided by the British taxpayer towards the net amount that we have to pay. It is extremely important that we deal with those questions.

I took note of the noble Lord's observations in regard to the Community's priorities in relation to fraud. I have seen the various memoranda that emanated from the Commission on the whole question of how it proposed to tackle the problem. I am hound to say that it comes low down its list of priorities. I have before me the Commission's programme for 1993–94, dated 26th January this year. The battle against fraud does not feature in it. I am not saying that it does not regard it as a matter of priority; it probably does. But it is not given undue emphasis in the programme that it has ventured to lay before the Community as a whole.

I want to deal with one further aspect raised by the noble Baroness, Lady Elles, in regard to the European budget and the control which, presumably, she feels the European Parliament exercises over it. At the time I sat in the European Parliament, whenever the staffing contents of the Commission, the Council, the European Parliament and the Court of Justice were discussed in the budget committee and in plenary, we all knew that there was close contact between the officials serving the budget committee, those in the Council, in the Court of Justice and in the Commission as to how those matters should be managed.

The policy was agreed informally, but we ultimately devilled it out and discovered what was happening. When the Commission came to its staffing requirements for incorporation into the budget for the following year, it would always put down a few more for staffing that it needed in order that the European Parliament could move an amendment reducing the expenditure and thus gain a considerable amount of prestige. That was common knowledge. Indeed, when it came to the budget of the Council and of Parliament, there was an unofficial arrangement between them of, "You scratch my back and I'll scratch yours". In other words, Parliament never interfered with the Council's staffing budget and, in return, the Council never interfered with the Parliament's staffing budget.

It is a very cosy arrangement. I looked up the reports in the European Parliament covering the past year. I shall not read them because of the time. I found that the arrangement still exists and was indeed referred to. That is what goes on. The budget is not paid any serious attention by the European Parliament. I have been through all the proceedings of last year when the European budget for 1993 was discussed. The perfunctory interest expressed in the plenary sessions towards the budget was almost conspicuous by its absence. I can refer on Report, and will if necessary, to exactly what I am referring to now.

I want to make one final point about the Court of Auditors. I agree that the new responsibilities given to it are good. I am not quite sure whether it is wise to elevate it to an institution in the way that it is. It may give it nominal prestige. It can call itself a court and its members can possibly wear robes. But it will not induce it to do the investigative audit that we in this country and other parts of Europe really understand the job of an audit to be. I leave the Minister with this thought in his mind. At present, whatever powers are contained in the treaty, the Court of Auditors has no powers to interrogate. If the noble Lord can point out any part of the financial regulations, which have been brought forward by the Commission and approved by Parliament, or anything in the Treaty of Maastricht or any regulation anywhere which gives it the power to interrogate, I shall he very greatly obliged because it will save me an enormous amount of trouble. I beg leave to withdraw the amendment.

Amendment. by leave, withdrawn.

[Amendments Nos. 224 to 228 not moved.]

[Amendments Nos. 229 to 237 had been withdrawn from the Marshalled list.]

[Amendments Nos. 238 to 245 not moved.]

[Amendments Nos. 246 and 247 had been withdrawn from the Marshalled List.]

6 p.m.

The Earl of Onslow moved Amendment No. 248: Page 1, line 9, after ("II") insert ("except Article 228").

The noble Earl said: I rise to move Amendment No. 248 in the method which we have now agreed among ourselves is a sensible way to do it, the noble Lord, Lord Tordoff, excepted. At the moment foreign policy in the European Community is run by European political co-operation, or EPC. It either fails or works because of an informal arrangement. I suspect that both Her Majesty's Government and probably the French would have wanted to keep it that way but in deference to others have allowed the Commission to have some say in this arrangement, but only on an informal basis. How can we have a common defence or foreign policy when Ireland is constitutionally committed to neutrality and Austria, Finland and Sweden all have a constitutional duty of neutrality?

Even under the present arrangements we have got ourselves into the most awful pickle in the Balkans. First, the Greeks are being paranoid over Macedonia and are not allowing anyone to recognise Macedonia or to call it Macedonia. It has to be called the Republic of Skopje. Far worse, the Germans made the European Economic Community recognise Croatia and Slovenia prematurely without having made sure that the arrangements would be in place for a settled post-Yugoslavia. Consequently, Bosnia-Herzegovina was recognised against the advice of our Foreign Office and, I strongly suspect, the advice of the French Foreign Office, and certainly against the particularly vehement advice of my noble friend Lord Carrington. Unfortunately, the Foreign Office, and probably the French Foreign Office, and certainly my noble friend Lord Carrington, have been vindicated hut at the cost of a quite extraordinary large loss of life.

When Germany's capital moves to Berlin, which it is constitutionally supposed to do, the whole psychology of Germany will alter. It must do. It will start thinking—I am not using this term in any way pejoratively, I am just stating what I believe to be a fact—more like Prussia towards the east than it does at the moment and less like the palatinate or a part of Western Europe. Germany's psychology will move to being much more middle European than western European.

Article 228a of the treaty reads as follows: Where it is provided, in a common position or in a joint action adopted according to the provisions of the Treaty on European Union relating to the common foreign and security policy, for an action by the Community to interrupt or to reduce, in part or completely, economic relations with one or more third countries, the Council shall take the necessary urgent measures. The Council shall act by a qualified majority on a proposal from the Commission". That shows that the Commission can propose and the Council can, by qualified majority, make all 12 break off economic relations with a third party. Will this happen, for instance, over Germany's recent agreement with the United States regarding access for its businesses to public sector telecommunications contracts; or if the Council thought, by qualified majority, that the United States had been at fault were the GATT negotiations to break down, could we by any outside chance be forced to impose economic sanctions on Washington? I know that sounds a rather extreme idea.

Lord Hacking

I think it does.

The Earl of Onslow

I am sure the noble Lord thinks it does but it is within the book. That is the point. One should be careful about things that are in the book and not just think, "Oh, it is such a silly idea that nobody will do it". Silly ideas have been grasped with relish by people in this world over a long time in history.

The Government cannot leave specific reference to Title V out of Clause 1 of the Bill. We are seeking to put Title V into the Bill but the phrase on lines 10 and 11 of the Bill, together with the other provisions of the Treaty so far as they relate to those Titles", does embrace Title V because foreign and security policy is already covered in part in Title II of the treaty, and Title II is mentioned on line 9 of the Bill, and therefore Title V or Article J is embraced by the expression, together with the other provisions relating to Title II". Article J states quite simply: A common foreign and security policy is hereby established which shall be governed by the following provisions". The remaining articles then go on to amplify that. Article J.1 tells us that the European union, shall define and implement a common foreign and security policy … covering all areas of foreign and security policy". It tells us that the objective of such policy is to safeguard the independence of the union. It goes on, to strengthen the security of the Union", and, to preserve peace and strengthen international security". It continues: to develop and consolidate democracy and the rule of law, and respect for human rights and fundamental freedoms". I wonder that it does not mention motherhood and apple pie, but it actually does not. Article J.1 goes on to say: The Member States shall support the Union's external and security policy actively and unreservedly in a spirit of loyalty and mutual solidarity. They shall refrain from any action which is contrary to the interests of the Union or likely to impair its effectiveness as a cohesive force in international relations. The Council shall ensure that these principles are complied with". In that context the Union sounds suspiciously like a state.

In Article J.3 the procedures for adoption of this joint foreign and security policy—this policy of the Union—are laid down. It can be seen that in almost all areas policy will be decided by majority vote and not unanimous vote.

Article J.4 contains the assertion that the eventual framing of a common defence policy, might in time lead to a common defence". Members of the Committee will note that in Article J.5 the permanent members of the United Nations Security Council of the Twelve—in other words Britain and France—will, in the exercise of their functions in the Security Council, ensure the defence and interests of the Union. In future, therefore, will not Britain's and France's permanent seats on the Security Council be used as but appendages of the Union?

I ask Members of the Committee to think back to 1982. General Galtieri was a general of Genoese extraction and Argentina had Spanish antecedents. Would it have been possible for the British Foreign Office, under even existing arrangements, to have done the superb diplomatic job that it did when it lined up the Security Council in our support if we and France had been acting as Union delegates or if we had had to get Spanish and Italian consent for its achievements?

I have suddenly thought of another idea which I am sure my noble friend Lord Hacking will say is impossible. I believe it is possible, but equally silly. It is the idea of M. Poos, or some such official, deciding that it would be in the Community's interest to get involved in Sino-British discussions on Hong Kong. I hope that that is only an impossible nightmare.

It must be noted that Title V amounts to a single foreign and defence policy for the Europe of the Twelve. The term "Union" is frequently used throughout Title V: it is used to express a single entity with its own policies. When Article J.1 tells us that the Union, shall define and implement a common foreign and security policy it also tells us that the purpose of that policy would include safeguards for the independence of the Union. Those are the words of a single political Union and a single state.

I move this amendment in a spirit of worried inquiry with the ghosts of Castlereagh, Palmerston and Bevin hovering over my shoulder. I hope that my worries are unnecessary, but I fear that they are not. I beg to move.

6.15 p.m.

Lord Jay

I ask the Minister to make clearer how far the inclusion of the Community in foreign and security policy is really an inter-governmental matter and not fully operated by the Brussels machine. Listening to the Prime Minister's speeches after Maastricht, I was much encouraged because they were all to the effect that foreign and security policy would be purely inter-governmental and would not be operations of the Commission involving all the paraphernalia of Brussels.

I was extremely surprised when, reading the treaty and particularly page 83 of the blue book, I came upon Article J.9. It is surprisingly emphatic and explicit. I believe the Committee should note that the article states: The Commission shall be fully associated with the work carried out in the common foreign and security policy field". Nothing can be clearer than that. I believe that it would justify M. Delors intervening in any way that he wished. He could say that the treaty says that the Commission will be fully associated. After discovering that, I was even more surprised to read the Foreign and Commonwealth Office's own popular booklet. I am sure that the noble Baroness has seen it. It is about the only effort to inform the British public or what the treaty really means. The booklet is called Britain in Europe: The European Community and Your Future.

Perhaps I may quote from page 9: The Maastricht Treaty will help build closer cooperation on foreign policy and justice/home affairs, but on an inter-governmental basis, without the Commission arid European Court of Justice having the roles they enjoy under the Treaty of Rome". It seems to me that that is a direct falsification of what is in the treaty, which is rather discreditable to the Foreign Office. I am not accusing the noble Baroness personally of having engaged in falsification. Even now there is such a thing as ministerial responsibility. Before the end of the debate I hope that the noble Baroness may be prepared to express some apology for those words and to see that the Foreign Office does not finance propaganda of that kind in Future. It is all the more questionable because the booklet was presumably published at the expense of the British taxpayer.

I raise this partly because there has been a long trail of deception in the whole of this story. The noble Lord, Lord Rippon, was here earlier but is not now with us. I do not believe that he would contradict me when I recall that in the debates in the other place in 1972 on the European Communities Act we were all assured that it was little more than a trade agreement which would be beneficial to British exports. Those of us who tried to argue, as some of us did, that it meant legislation involving bodies outside this country but which would be valid within this country, had their arguments brushed aside as being clearly a technicality and that nobody need worry about nightmares of that kind.

Later came the 1975 referendum. We were repeatedly assured that the Luxembourg compromise would solve all problems. Government publicity stated that no tax or law could be approved in Brussels without the approval of the British Government. When we reached the 1980s the Luxembourg compromise had become rather a ghostly creature hanging ambiguously in the air, rather like the Liberal Party, one might say. No doubt we shall clear up the exact status of the Luxembourg compromise before the end of these debates.

When we reached the Single European Act in 1986 we were again assured that nothing in the Act would be relevant for any purpose other than achieving a single market and there was no question of the Commission being allowed to intervene in foreign or security policy. I therefore view the whole proceedings with a little suspicion when I find the extraordinarily precise words, The Commission shall be fully associated with the work carried out in the common foreign and security policy field and at the same time find that flatly contradicted by a Foreign and Commonwealth Office document. I hope, therefore, that the Minister will explain exactly what the scope and powers of the Commission will be in this field of foreign policy and security. Perhaps she will also explain how this falsifying document, as it seems to me, came to be issued by the Foreign Office

Lord Beloff

I think that it would be generally agreed that matters of life and death are more important even than matters of money. The clauses of the treaty which we are now considering, dealing with the aspect of defence and security policy (which are, of course, one—one cannot have a foreign policy which does not have a defence implication and vice versa) are therefore extremely important. It is certainly desirable that they should be explored and that we should have the reaction of Her Majesty's Government to the points which have been raised.

Many of the points which I might have raised have been made by my noble friend Lord Onslow, but perhaps I may put them in a more general context. It is difficult to imagine that there can be satisfactory machinery for co-ordinating the foreign and defence policies of a series of states unless, to begin with, they see their objectives as reconcilable and have a degree of common purpose in fulfilling any obligations which they may incur if those policies are put into operation. My noble friend Lord Onslow referred to the case of neutral actual or prospective members, and that is one aspect.

Another aspect of much greater importance is the constitutional position of the German Republic, because Germany is, we know, prohibited constitutionally from giving material military aid to activities outside the territories of the members of the Community. It is difficult to think of a foreign policy which does not, in some respects, affect foreign policy which is outside the boundaries of the Community, and that, in turn, has clear defence implications. I should have thought that it was impossible for the governments of countries which have no such inhibitions (and which have shown that by, for instance, their expeditions for humanitarian purposes in Bosnia and elsewhere) to accept a system in which decisions on a common foreign policy might be taken in conjunction with countries which, if those decisions were taken, might be unable to play a part in making those policies effective.

There is perhaps a lesson to be learned. I know that I bore your Lordships with history, but perhaps I may call the Committee's attention to the experiences of the former American colonies in the period immediately after they achieved their independence in 1783. The United States was then governed by the Articles of Confederation. It was less than a federal system and was certainly less intensive and less centralising than would be Europe governed under the provisions of Maastricht. Nevertheless, they lived in a hostile world and had to work out foreign policies jointly. They found that extremely difficult to do—partly for reasons of geographical spread. The southern states were concerned with the future of the Mississippi and the gulf. The New England states were concerned to preserve their trade with Europe, while others looked to the moving frontier to the west. The inability to come to common policies was one of the principle reasons why the Articles of Confederation were abandoned for a proper federal system under the constitution which was drawn up in 1787.

I should have thought, therefore, that if we accept this first stage we arc either asking for total frustration and anarchy or we are saying that we shall very soon have to move to a single state because only a single state can operate a single foreign and security policy. To those who say, "Well, we don't much mind", and to noble Lords who would clearly welcome that, I can only say that the adoption of the American federal constitution did not altogether solve the problem. When the United States was confronted, like other countries, with the revolutionary and Napoleonic wars, the states divided as to their possible reactions. The bulk of the states were sympathetic to the French attitude towards the maritime conflict. We would say that the New England states opted out of the conflict —although they had a much better vocabulary in those times. They set up a mini-confederation within the United States to preserve their neutrality and their profitable trade with the United Kingdom and its colonies.

So one must not think that there are simple solutions to these problems. In the light of that fact, I think that we should like to know first of all what the Government's attitude is. Do they envisage that these articles should be taken seriously? If that is the case, do they accept that they would demand political institutions of a much more rigid character than is now envisaged, or do they believe (against all the evidence of recent years) that it would seriously be possible to devise policies by unanimity in principle and then, by qualified majority voting, to implement them, which could actually help us to solve the serious problems with which we and the other members of the Community are likely to be confronted in central and Eastern Europe in particular?

It is no good thinking of these things in the abstract. The trouble is that one is so easily led away by words. It is, for instance, suggested in these articles that the WEU could act as a sort of surrogate defence Community. I think that we should like to know whether we take the French view of that—that it would be an independent pillar of European defence —or do we take what I think has been the British and probably the German view, that this is simply a territorial expansion and enlargement (for operational purposes) of the North Atlantic alliance, on which the serious questions of security must ultimately depend?

It is common ground that we cannot envisage the defence of Europe if there were to be a renewed threat from the East. I am not talking about a timescale of six months or a year —after all, even this treaty is meant to last until 1996 —we are thinking of a long period. It is common ground that only the military capacities of the United States, with its awesome technological powers, of which we have just seen an example, could seriously balance a threat from powers potentially with nuclear weapons and so forth. So it is desirable to be clear where this country believes its security lies and not to play around with concepts which are reconcilable on paper but which raise serious questions as to where we believe our future lies. Those are serious matters, and I hope that the Committee will give them serious attention.

6.30 p.m.

Lord Sanderson of Bowden

My noble friend Lord Onslow moved Amendment No. 248 which I understand removes Article 228 from the treaty. On Second Reading, many noble Lords talked about GATT. We know only too well how difficult it was to bring the French Government into line on that issue. As I understand it, if Article 228 is removed, paragraph 7, which provides, Agreements concluded under the conditions set out in this Article shall be binding on the institutions of the Community and Member States", would be deleted. That would be a retrograde step, because there is no guarantee that all the countries of the Community will find it easy to sign up to the GAIT. If one takes with that provision Article 228.1, which allows the Council to act by qualified majority in entering into agreements with international organisations, I should have thought that, as the GATT Round conclusion is so important for the industrial communities of the world, not least this country, it would be a retrograde step to allow the amendment to be passed.

The Earl of Onslow

May I ask—

Lord Harmar-Nicholls

I should—

Lord Parry

Perhaps—

Baroness Chalker of Wallasey

Lord Parry.

Lord Parry

I thank the Committee. In introducing that fascinating piece of history, the noble Lord, Lord Beloff, was self-deprecatory. He felt that he bored the Committee. In fact, I found his words challenging and apposite to the amendment. It bore some relationship, I believe the Committee will realise, to my small intervention earlier in this series of debates when I referred to the fact that even in the USA they are debating whether the federation can hold against the strains in the current domestic, economic and, finally, military situation. It was in the Gettysburg Address that the words first appeared. Abraham Lincoln questioned whether a federated state, "so conceived" —those were his words—"could long endure". In fact the United States has long endured upon the basis of its great productive capacity. It has been able to evolve systems that withstood the strains.

It is interesting that the Committee has been debating, clause by clause—sometimes Members of the Committee have been bored by the detail into which my colleagues have gone —a Bill at a time when the general public of this country, who certainly have not read the detail of Maastricht, have had a demonstration of the incapacity of the burgeoning united states of Europe to face up to the challenges that have arisen from the disintegration of the systems under which most of us have grown up.

The people of this country at this time are not merely not particularly interested in the Maastricht Treaty; they feel deep down that Europe has failed to meet the challenge and has demonstrated the weakness of its current systems in the face of the challenges that have arisen out of the disintegration of the former Yugoslavia and on the eastern edges of Europe. The people who brought the Committee to examine, clause by clause, the sweeping generalisations contained in some parts of the Maastricht Treaty will be quoted in the future, as the Committee will be quoted, because of the detailed examination of the system that there has been. I shall support the amendment as I have supported the others, because I believe that it makes an important contribution to the continuing debate.

Lord Harmar-Nicholls

In addition to the weighty arguments that have been adduced so far on this group of amendments, there is one personal one. That is why I have been persistent in wanting to get it on the record. It is a personal one which applies to pretty well all the Government's supporters on this side of the Chamber. I want to believe the Prime Minister. He is my Prime Minister. I approve of him. He talks with the authority of a Prime Minister. He made it clear, as the noble Lord, Lord Jay, reminded us, that on matters to do with foreign and security policy, the paraphernalia of the treaty would not be involved. He said that with the authority of the Prime Minister, I have no doubt that when he said it he meant it and hoped that it would be true.

We are then asked to pass this Bill, and Article J.9 makes it clear that the Commission will be fully associated with the work carried out in the common foreign and security policy field. That is a completely different message from the one that the Prime Minister —whose message I want to accept—gave to us. We would not be true to ourselves if in accepting what the Prime Minister said we passed easily a treaty which includes the article which I have just read. One might. ask why we should have doubts. Surely we have enough confidence in the Prime Minister and his interpretation, and that should be one that should carry weight.

There are those of us who have been at this for 22 years now from the beginning of the Treaty of Rome. Prime Minister Macmillan made statements; Prime Minister Heath made statements; Prime Minister Wilson made statements. They made those statements in answer to questions which many of us in another place were putting to them.

What are we to think when something opposite to what those various Prime Ministers said is being put into operation? People say, "But it is what is in the Act. That is what you approved". They do not refer back to what the Prime Minister said. They refer back to the treaty that we have signed. I want to believe the Prime Minister. There is no joy in being in opposition to so much of this. I approve of the Prime Minister. I approve of his type of leadership. I have every confidence that when he said what he did he believed it. We cannot have his statement and this provision and expect the statement to be referred to in the future and not the provision that we have passed. If my noble friend can give me a satisfactory answer to that, it will give me a great deal of pleasure and reassurance. But I do not see how she can.

Lord Tebbit

Let me, first, thank my noble friend Lord Onslow for moving the amendment. I have some difficulty with my timetable today. I believe that the noble Lord, Lord Jay, was a little harsh in what he said about the government document to which he referred. I do not believe that his charge of falsification stands up, though the charge of being economical with the truth does, for what is written there is literally true.

Lord Jay

Yes.

Lord Tebbit

But the impression that the reader would gain is one which is contrary to the facts which have been brought out: that the Commission is involved deeply under the treaty in questions of foreign policy.

Let me make plain one general proposition upon which I think we would all agree. The more often member states of the Community can agree on foreign policy, can come to common positions and can act in some way together, the better it is for all of us. Such tragedies as the Bosnian conflict, which was not caused by but was undoubtedly sparked off by the unilateral move of Germany in this regard, should be a lesson to us all.

Perhaps we may look at Title V, which governs these matters. It is full of what I referred to in earlier debates as "pegs". They are all there, waiting for the next inter-governmental conference when we shall be told, "There are no surprises. You agreed that this would lead to a common defence so why are you now complaining about it? If you did not want it to lead there you should have said 'No' back in 1993". Indeed, I take a little further the proposition put forward by my noble friend Lord Beloff. I believe that these provisions are unworkable in practice. I shall, when dealing with the detail of the amendments, say why I believe that to be the case.

We shall have all signed up to the purposes of Title V and shall find that its provisions do not work. They simply do not deliver for the reasons set out by my noble friend Lord Beloff. What will the Community do then? Will the Commission throw up its hands in horror and say, "It was a terrible mistake. Let's drop all that stuff and go back to inter-governmental co-operation procedures."? Oh no! If you believe that you really would believe anything. The Commission will go forward and insist on pushing and pushing for the single foreign policy dealt with in the mainstream in the Treaty of Rome to lead eventually to the State of Europe. The Commission wants a foreign policy because it wants to be a state in the same way as it wants citizens because it wants to be a state. These are the accoutrements of statehood which it is gathering about it steadily, step by step, one treaty after another and this treaty above all.

The final words of Article J.1.4 on page 80 are: The Council shall ensure that these principles are complied with"— "Shall ensure"? By what means shall the Council ensure? After all, it is that: The Member States shall support the Union's external and security policy actively and unreservedly in a spirit of loyalty and mutual solidarity". That characterises so much of our experience of the European Community. The article continues, referring to the member states: They shall refrain from any action which is contrary to the interests of the Union". —"any action which is contrary to the interests of the union"? Let us suppose that it is an action which is favourable to the interests of the member state. Are we signing ourselves up to refrain from actions which are favourable to the interests of the people of this nation? It would so appear. The member states will refrain from any action: likely to impair its [the Union] effectiveness and a cohesive force in international relations". Such idealism! I guess that there is one country in the Community which will abide by that and we all know which one. I do not believe that it will be on the other side of the English Channel.

I turn to Article J.2.3 which states: Members States shall co-ordinate their action in international organizations and at international conferences. They shall uphold common positions in such fora.

In international organizations and at international conferences where not all the Member States participate, those which do take part shall uphold the common positions". One important international forum is, of course, the United Nations. To see more clearly matters affecting that forum we turn to Article J.5.4 on page 82. It states: Member States which are also members of the United Nations Security Council will concert and keep other Member States fully informed. Member States which are permanent members of the Security Council"— the United Kingdom among them— will, in the execution of their functions, ensure the defence of the positions in the interests of the Union, without prejudice to their responsibilities under the provisions of the United Nations Charter". What do those last words mean? Why are they there? Do they form a get-out clause which would allow the United Kingdom, or indeed France, to exercise its veto in the United Nations contrary to a common position? My noble friend is eager to reply and shortly I shall give her the opportunity. Alternatively, is it that once a common position has been reached a permanent member of the Security Council with a veto will exercise that veto in the interests of the Community, in the interests of the Union, even if it is against the interests of the member state?

I know the reply which is already being fashioned in the mind of my noble friend. I am sure that she will refer me to Article J.8, which is there in all its glory at the foot of page 82. It states: The Council shall act unanimously, except for procedural questions". We shall be told that that protects us against anything which is against the interests of the United Kingdom. Let us think that through for a moment for this may well become an issue of supreme importance. Let us suppose—and it is not an absurd assumption—that were this treaty in operation today there could be established by unanimity a decision in the Council that arms should not be supplied to any of the participants in the Yugoslavian conflict. Members of the Committee will agree that that is not an absurd decision that might come by unanimity. Supposing that following a general election there were elected in this kingdom a government which had as part of their election manifesto the belief that arms should be supplied to, let us say, the Moslem communities for their self-defence in Bosnia. Again, that is not an impossible situation. With a mandate from the British people that the policy should be changed the incoming Foreign Secretary would bravely go to the Council and be politely told that unless there were unanimity the policy could not be changed. Where does that leave that government? Where does it leave the electors of this nation? Where does it leave our parliamentary sovereignty?

Let us then consider the earlier provisions. That unfortunate Foreign Secretary would be required at international fora, including the United Nations, to uphold the policy which was contrary to that upon which his government had been elected. It is not a question of whether it would happen; it is only a question of on what issue and when it would happen. IF foreign policy is to be made by unanimity, it can only be changed by unanimity. Therefore, the policy of one member state being changed by a general election within that member state has to be brushed aside by the provisions of Title V.

My noble friend Lord Beloff is right. Member states will no more act in the end against their national interests than did those New England states of the young United States of America. The article under discussion is shot full of the very causes of the next step and of the argument that such matters can only be resolved, and that we can only have the common foreign policy which we all desire and have signed up for, if we take another giant step down the road. If he is still here at that time—and I hope that he will be —I am sure that my noble friend Lord Cockfield will say, "Why are you surprised? It was all written out in the treaty for you to see. You trooped through the Lobbies of the House of Commons and of the House of Lords knowing it, so don't complain now".

Lord Moran

The amendments under discussion provide an opportunity for the Government to clear up some of the thick fog that surrounds the foreign and security policies prescribed by the treaty. When the noble Baroness responds to the debate, I hope that she will do so. It seems to me that the major part of the Maastricht Treaty covering foreign and security policy is Title V—also, rather confusingly, called Article J. First, can the Minister say why there is no specific reference to Title V in Clause 1 of the Bill?

I turn now to Article J, which introduces the provisions of foreign and security policy and which begins, A common and security policy is hereby established". Can the Minister say how far that process has gone, how far it is intended that it should go, and how far the Government wish it to go? That is what I should like to know.

Article J.1, which has been quoted by some previous speakers goes on to say in paragraph 4 that, Member States shall support the Union's external and security policy actively and unreservedly". Can the Minister say what the word, "unreservedly" means? To what precisely does it commit us?

I should like to remind Members of the Committee of something that was said on Second Reading by the noble Lord, Lord Carrington, who speaks with great authority on such matters. While talking about Yugoslavia he spoke of, the lack of foreign common policy and the catastrophic consequences of trying to pretend that there was one". He made a most important point. The pretence of a common policy when there is not in fact one is very dangerous and could lead us into the sort of morass in which we found ourselves as regards policy over Bosnia. Immediately after that comment the noble Lord also said: There can be no common defence policy at the present time since there is a wide difference of opinion about the role of the Americans and the relationship of a European defence policy to the North Atlantic Treaty Organisation".—[Official Report, 7/6/93; col. 570.] Coming from the noble Lord, I believe that those words were most important. Can the Minister say whether the Government agree with the assessment of the noble Lord, Lord Carrington, and whether they accept that there can be no common defence policy at present? If that is so, it seems to me to be important.

Finally, I should like to refer to the matter raised by some previous speakers about the position of this country and of France as permanent members of the Security Council. Under paragraph 4 of Article J.5, the two countries will, according to the treaty, in the execution of their functions, [in the Sccurity Council] ensure the defence … and the interests of the Union". What precisely does that mean? Does it mean that in future, if the treaty is ratified, Britain and France will have to act in the Security Council as delegates of the union and conduct their policies along those lines? As Members of the Committee know, there is already pressure from the United States to put Germany on the Security Council, despite the fact that Germany's constitution, as I understand it, prevents it from taking any active part in security measures. If that should be done at some stage in the future, there would obviously be pressure to reduce what would he seen as excessive European representation on the council and pressure for either France or ourselves, or both, to come off the Security Council. That would seem to me to be most unfortunate.

However, that pressure would be greatly increased if we were to be seen to be acting not on what we ourselves thought was right but simply representing what had been agreed by a qualified majority vote in the Council. I should be most grateful if, in her response, the Minister could reply to those points.

Lord Aldington

I should just like to refer to the attack on the good honour of my right honourable friend the Prime Minister made by the noble Lord, Lord Jay, and apparently supported by my noble friend Lord Tebbit. That attack was based on Article J.9 which reads: The Commission shall be fully associated with the work carried out in the foreign and security policy field". Certain Members of the Committee put that to us as if it was something absolutely new. As chairman of the Select Committee at an earlier stage, it so happened that I had to look at the working of the EPC— European Political Co-operation. The provisions for that are set out in the Single European Act, which was enacted at the time when my noble friend Lord Tebbit was in office. In that document at paragraph 3(b) of Article 30 appear the words: The Commission shall be fully associated with the proceedings of Political Co-operation". It is outrageous that Members of the Committee should impugn the honour of my right honourable friend the Prime Minister and that a noble friend of mine should also do so without informing the Chamber that there is absolutely no change in what is happening now and what has been happening since 1985. That is all I wanted to say.

Lord Jay

The fact that those words may have been used earlier does not alter the fact that the Prime Minister gave such impressions in his speeches this summer. Moreover, they do not turn out to be fully confirmed in the document. That is still true.

7 p.m.

Lord Aldington

If the noble Lord had understood how EPC worked, he would know perfectly well that anyone who understood how it worked would understand those words in that document in the same way.

Lord Stoddart of Swindon

The noble Lord, Lord Aldington, is absolutely correct. Those words were in the Single European Act. The noble Lord, Lord Bruce of Donington, and I sat here on consecutive Fridays pointing out that that was a peg upon which further action would follow. We were pooh-poohed. We were told we were talking nonsense and that we were trying to frighten little children in their beds. However, Article J contains the provision exactly as we predicted. In actual fact, this Chamber, the House of Commons and the people were taken for a ride because most were convinced—I was not convinced —by the Government that this really was an innocuous little phrase and did not amount to a row of beans.

I wrote an article predicting exactly what would happen, and so it has come about in Article J of Title V of this treaty. The fact is that the Commission believes that European political co-operation is not satisfactory as it is. The Commission believes that there needs to be a much closer knit Community with closer knit policies having a common aim, a common objective and a common decision. That is what the Commission wants and that is what it is about to get. There can be no question about that. Unfortunately, where the Community has attempted to act in unison as one authority—many Members of the Committee have already mentioned this—and as one state, so to speak, its actions have gone disastrously wrong. That is not a good augury for this new political co-operation that we have in the Maastricht Treaty.

When Mr. Major returned from Maastricht he said that Maastricht—never mind what he said about game, set and match—was a great prize of inter-governmentalism in foreign and security policy. The fact of the matter is that previously we had absolute independence. What we have given up to inter-governmentalism—and no doubt later on to federalism—is independence in our foreign policy. Let us not be under any illusion. We are giving up an independence, which we previously had, to these institutions.

The portfolio on foreign affairs has already been issued under this treaty. There is already a foreign affairs commissioner in place as I understand it. His name is Mr. Hans van den Broek and he is a former Dutch foreign minister. That might not sound so bad but a week or two ago I saw Mr. van den Broek on television. He was disagreeing with the position that the member states had reached on Yugoslavia. Already we have a commissioner who believes that it is his duty to disagree with the Council which is supposed to be his boss. That has come about before the Maastricht Treaty becomes fully operative. That does not augur well for the way decision taking will occur under Maastricht.

I do not wish to speak for too long. However, I must refer to paragraph 5 of Article J.8 which establishes a political committee. Where have we heard those words before? I do not need to refer the Committee to the origin of those words. Article J.8.5 states: Without prejudice to Article 151 of the Treaty establishing the European Community, a Political Committee consisting of Political Directors shall monitor the international situation in the areas covered by common foreign and security policy and contribute to the definition of policies by delivering opinions to the Council at the request of the Council or on its own initiative. It shall also monitor the implementation of agreed policies, without prejudice to the responsibility of the Presidency and the Commission". It appears that we now have a new committee. It is a political committee which will advise the Council of Ministers. Will that make our Foreign Office redundant?

Lord Aldington

I am sure the noble Lord does not wish to mislead the Committee. He said we were talking about a new committee. Paragraph 10 of Article 30 of the Single European Act refers to the setting up of that committee. It is not very new.

Lord Stoddart of Swindon

Did I say it was new? It is a committee. This matter underlines the necessity to discuss treaties and Bills. The noble Lord, Lord Aldington, was the chairman of the European Communities Committee and he is a great expert on these matters. However, no one else knows that that provision was contained in the Single European Act. The reason they are unaware of that is because we discussed the Single European Act on Fridays when there were very few Members in the Chamber. That is why some of us have tried to ensure that the Maastricht Treaty is dealt with in prime time when Members are present in the Chamber to listen to the debates. I hope no one will tell us again to get on with it. This discussion is necessary. I am obliged to the noble Lord, Lord Aldington, who has brought this whole matter to the surface. We must know what we are doing. I do not wish to contribute much more to this debate except to say—

Noble Lords

Oh!

Lord Stoddart of Swindon

At least I have contributed to this debate. I wish that some Members of the Committee who sit with smirks on their faces would take part in the debate. The noble Lord, Lord Archer of Weston-Super-Mare, is well liked, respected and known. We would welcome his contribution to the debate. Of course, there will be plenty of time for him to contribute tomorrow, on Report and at Third Reading.

Lord Archer of Weston-Super-Mare

I will speak in the debate if the noble Lord promises never again to say that he has the right to speak for as long as he wishes. I have now heard him say that about 14 times. I accept he has that right, but if he promises not to mention it again we shall probably save a couple of hours' time.

Lord Stoddart of Swindon

As I have never said that I have the right to speak for as long as I wish, I am happy to give that undertaking. I do not believe I have the right to speak for as long as I wish. However, I have the right to speak for as long as this Chamber will hear me and in accordance with the Standing Orders of the Chamber.

I shall sit down now, because there are others who wish to speak and we want to hear the Minister's reply. I simply want to emphasise once again that here we are handing over another part of our sovereignty and another part of our independence. I urge Members on all sides of the Committee to recognise what they are doing, to understand what they are doing and perhaps—although I am aware that it will not happen—to try to slow it all down.

Lord Reay

The Treaty of Maastricht seeks to strengthen and extend something that has in any case been developing rapidly in recent years—namely, European Community foreign policy co-operation under European political co-operation, or EPC as it has been called. The aim now is to establish a common foreign and security policy. No doubt, as often tends to be the case in these matters, the title runs somewhat ahead of the reality. Nevertheless, the goal is one which I believe we should strongly support.

Foreign policy co-operation is one of the areas in which we as a country bring a great deal to the Community, with our worldwide experience and interests, our seat on the United Nations Security Council and, not least, our special relationship with and understanding of the United States. I believe that on our own we would count for very much less than we can as a leading member state of the Community, able to play a formative role in Community foreign policy.

Indeed, I would go further and say that the field of European Community foreign policy co-operation provides us with a creative outlet which we ourselves need. More than anything else, it helps to give us a constructive role in the world—something which otherwise we have been without, probably since the days of empire.

Similarly, I support the coverage by the treaty of security issues and the provision therein for the eventual framing of a common defence policy which might in time lead to a common defence, in view of the safeguards in the treaty which the British Government sought and obtained: first that any new arrangement should be compatible with NATO: secondly. that defence issues should be dealt with by the Western European Union and not by the Community; and, thirdly, that the Western European Union should not be subordinated to the European Union.

Of course this chapter, (CFSP), as we wished, will continue to proceed on an intergovernmental basis outside the scope of the treaty. The Commission will be present, "fully associated" in the treaty wording of Article J.9, as it is entirely sensible that it should be, given its responsibilities in foreign trade matters. Incidentally, I believe that the words "fully associated" are those which exist at present to describe the Commission's position within EPC.

The European Community has come under much criticism for what it has done or failed to do in Yugoslavia. I should like to say a word about that. Horrific and deplorable though the events in Yugoslavia are, and lamentable though it is that no one has been able to put a stop to them, I believe that the situation would be very much more alarming if no attempt had been made to forge a common European policy. The fighting has not been ended in former Yugoslavia, but it has not spread outside former Yugoslavia. We have only to think back to the last time Balkan nationalism was loosed upon the world as the Turkish empire collapsed. As everyone here knows, the events that followed played a major part in engulfing Europe in war.

In some ways the collapse of communism has produced in the Balkans a situation similar to that produced by the Ottoman collapse. Once again. Balkan nationalism has been unleashed. The greatest efforts need to be made to achieve a common European policy for that part of the world and to avoid a situation once again arising in which outside powers ally themselves with different client groups and. once again the fate of a wider Europe comes to depend on what happens in the Balkans.

So far we have largely been spared that, and for that we can be thankful that Community foreign policy co-operation. imperfect though it is, has developed as far as it has. I welcome attempts to extend it. I believe that the treaty seeks to take a modest step forward in what is entirely the right direction. I congratulate the Government on all they achieved in the negotiations and I hope that this evening the amendments will not be proceeded with.

7.15 p.m.

Lord Jenkins of Putney

There is no reason why should not say a few words at this stage of the proceedings. My view of this matter is the same as that of Conor Cruise O'Brien, who drew a distinction between nations and states. He took the view that a union of nations may be a possibility but that a union of states was a much greater possibility. The noble Lord, Lord Tebbit, pointed out that in the early days of the United States great difficulty was experienced, and they even had to have a civil war before the United States of America could be established. As Conor Cruise O'Brien said, a union of nations is a different kettle of fish altogether. He begs leave to doubt—and I believe that he may be right—that it is possible to form the sort of organisation which we are trying to create in these proceedings, or perhaps it would be more accurate to say that it is being foisted upon us.

The Government have issued a little booklet to make everything clear to everybody. It has a foreword by the Prime Minister, which is not as obscure as the rest of the booklet. In that foreword he tells us that the treaty is quite simple if one looks through it and, as has just been said, we can play the role of a leader in the European Community. The booklet goes on to suggest objections which might be raised, such as: We thought we were joining a common market. Now we are to have a European union. Aren't we on a slippery slope to federalism? The answer given in the booklet is "No". Tell that to Ted Heath. Tell that to a large number of enthusiastic federalists. In their view we are on a slippery slope. They regard it as an admirable slippery slope; they want to slide down it towards federalism.

What other purpose is there in forming a common defence and foreign policy if not the simple purpose of creating a state? How can any common policy among a group of nations be other than for the purpose of expressing the views, opinions and actions of the state to be formed? That is what we are moving towards. Anyone who says that that is not the case is blinding himself to the fact that it is certainly a slippery slope.

A nation is very different from a state. If it would take a civil war before we can become the united states of Europe can we be confident that what we are embarking on here will not lead to a European disaster of one sort or another?

What about the formation of a common policy in relation to nuclear arms? There are wide differences between states. The policy of this country, little as I like it, is different from—and I would say worse than —that of America. Is that a good argument for becoming involved: that everyone else can share the British nuclear and defence policy? So far as I am concerned the answer is no. Other people may take the view that it is. That presents us with a problem.

The final point that I want to make—and I shall not take up too much of the Committee's time—is that, if there is one thing that the world needs at present, it is clarity. In the old days of the two super-states the situation was trying and dangerous. But it had the virtue that we knew where we were. We knew that the European Community had been formed to be the economic background to NATO, and NATO was the organisation which was going to do the fighting. It was a Western organisation. It existed for the purpose of defending or, as the Russians saw it, for attacking.

We are now saying that the economic background is to take over and to become the policy-making organisation which will control NATO and will determine defence policies. Why do we want a defence policy? So that we can have a European collective decision. The idea that once we have achieved that objective we can still conduct our own affairs and our own policies beggars belief. Surely people cannot believe that we are going through this complicated procedure in order to achieve—what? Nothing? Is that the objective? If we are not going in that direction, where do we stop?

Is not one of the purposes of the provisions to which we refer—it is one of our objections to them —that we end up with the state of Europe having an armed foreign policy? Despite the fact that we are in such a state of confusion, I believe that we must not try to solve the confusion in this way. To do so would lead to worse than confusion; it might lead to a European war. For that reason we must support the amendment.

Finally, it is difficult to find impartiality. The issue is not an inter-party matter. However, within parties differences of view are widespread. The nearest that one gets to an impartial statement is contained in one of the House of Commons Library publications. What is its conclusion on the common foreign and security policy? After stating how difficult the situation is, the final sentence states: What is clear, however, is that the European security system is in a state of flux and it is difficult to foresee its development over the next decade". That is not an issue with which we wish to become involved.

Lord Swinfen

I wish to speak briefly to Amendment No. 281, in particular Article J.1.4. As the Committee will be aware, the Argentines still lay claim to the Falklands. Argentina is populated by descendants and relatives of Italians and Spaniards, all within the EC. Article J.1.4. states: The Member States shall support the Union's external and security policy actively and unreservedly in a spirit of loyalty and mutual solidarity. They shall refrain from any action that is contrary to the interests of the Union"— This is the important part— or likely to impair its effectiveness as a cohesive force in international relations. The Council shall ensure that these principles are complied with". If an invasion of the Falkland Islands were to take place, and we, quite rightly, went to their defence, we would not be supported by Spain or Italy and possibly other countries in the EC, one of which (if memory serves me right) sent weapons of a very effective nature to Argentina during the last conflict. That would very definitely impair the Community's effectiveness as a cohesive force in international relations. How do my noble friend and the Government overcome that problem?

Lord Richard

Perhaps I may say a few words about the debate to which we have been listening for an hour and a half. Let me say at the outset that I marvel at the ingenuity of Members of the Committee on both sides of the Chamber to find plots where I do not perceive a plot to exist, to find dangers where I do not see dangers, to find rocks where on the whole I believe that the water is smooth, and to find implications where the wording seems to me to be at least reasonably clear. The noble Lord, Lord Tebbit, has tried to persuade us this evening that where the Council must act unanimously it means exactly the opposite. I have another similar example; I have forgotten it at present.

Lord Tebbit

Perhaps I may—

Lord Richard

With respect, perhaps the noble Lord will let me get launched first. I listened to the noble Lord quietly and peacefully when he made, in my opinion, some quite outrageous statements about the way in which the Community and the Commission work.

Perhaps I may ask the noble Earl, Lord Onslow, as I am sure he will, to compare Article 228 in the new treaty with Article 228 that it replaces. The noble Earl spoke about the way in which the Commission was to become involved in trade negotiations and economic relationships. He seemed to see a great danger in that. If he will consider the Maastricht Article 228 which replaces the old Article 228, he will find that in the old version the power of the Commission was much greater. It was expressed in much broader terms. It was much less circumscribed. If the objective of the exercise of the noble Earl was somehow to corral the Commission—I may not share that view but it is the view that came across from him—so that it cannot act independently, he may care to consider the old and the new versions. The new version is infinitely more restrictive of the way in which the Commission can act than the previous version.

Article J.9 states: The Commission shall be fully associated with the work carried out in the common foreign and security policy field". The noble Lord, Lord Jay, finds that sinister. Not only that, but he thinks that the Prime Minister lied about it. I leave to the judgment of the other side whether the Prime Minister lied. If one can put aside for one moment whichever side of the fence one is on, and whatever prejudices one has, it is impossible to read Article J objectively as giving more power to the Commission in the foreign and security field. Under Article J.1 it is the Council that is to do it.

Article J.2 states: Member states shall inform and consult one another within the Council. Whenever it deems it necessary, the Council shall define a common position and so on. The initiative is with the Council. The power is with the Council. The power to take decisions is with the Council. The power to act is with the Council. In the phrase on which the noble Lord, Lord Tebbit, and I disagree, the Council shall act unanimously.

Lord Tebbit

I am grateful to the noble Lord for allowing me to intervene. He must not ascribe to me views and expressions which I do not have and did not put. In fact I very carefully read—at a moment when perhaps his attention had lapsed on some more important aspect—the provision of Article J.8.2 and emphasised that the Council shall act unanimously.

Lord Richard

In that case there is no difference between us. If the noble Lord accepts that on these issues the Council shall act unanimously, that would seem to be to most people reading it a great safeguard so far as concerns the national interests of any individual country.

Lord Pearson of Rannoch

Perhaps I may intervene

Lord Richard

With great respect, I think not. The noble Lord can come back as much as he likes. If he had been present from the beginning of the debate I might have been more inclined to give way to him.

I have remembered the other phrase to which the noble Lord, Lord Tebbit, referred. It was, without prejudice to their responsibilities under the provisions of the United Nations Charter". Again, it seems to me that anyone objectively reading Article J.5.4 would come to the conclusion that those words had been inserted deliberately to preserve the powers of the French and British for freedom of action in the United Nations Security Council. Inevitably one can only give certain evidence based on one's experience.

At the time when I had the privilege of holding the British veto in the Security Council, the fact that we were a member of the Community and that I could discuss and try to co-ordinate the British and French positions with the other members of the Community was a positive advantage in the job I was trying to do. The idea that somehow or other I was diluting my independence of action is, frankly, nonsense. Being a member of the Community and able to co-ordinate policy in such a way gives us two enormous advantages. One is that it can give you cover in situations when you need it; otherwise you can be picked off one by one. It also gives you infinite additional clout. Whether one likes it or not, on the international stage one needs cover and clout.

One last point is that what slightly depressed me about the debate was the thread running through it that somehow British interests in the future will be radically different and divergent from the interests of our Community partners. I do not believe that that is true. It seems to me that if one solemnly sat down, as perhaps Foreign Office mandarins or their minions are inclined to do from time to time, and tried to draw up a list of British interests at the moment and then tried to draw up one of the French or German interests, on the whole I suspect that the lists would he pretty similar. If that is so, I believe that most people would agree that foreign policy is based upon interests which, one hopes, have a certain moral force and moral backing. If there is a greater identity of interest between the members of the Community, it seems to me to be a logical and sensible step that we should try to co-ordinate our foreign policy to the maximum extent possible so that those interests may be better safeguarded.

I read all parts of Title V, Article J as being a step towards the greater co-ordination of foreign policy in which, at the end of the day, the individual member states preserve their eventual freedom of action. If I am right about that, it seems to me that a great deal of what has been said in the past one-and-a-half hours about the implications of the article is not justified.

7.30 p.m.

Lord Pearson of Rannoch

This group of amendments, which I support, proposes to leave out Article J of Title V of the Treaty on European Union. Amendment No. 283, to which I speak particularly, would exclude Article J.3. I have already referred twice to the possible dangers of Article J.3, first in a debate in your Lordships' House on 17th February and then when I attempted to sum up, in the early hours of the morning of 8th June, the Second Reading debate which started on 7th June. I confess that on the latter occasion I was not repeating a worry which had been expressed by another noble Lord but I wanted to repeat the question I put to my noble friend on 17th February when I did not receive a reply.

I regret to say that I was no luckier on 8th June, so I fear that I must put the question again now. I expect it is only some clarification which I seek from my noble friend. In order to elicit that, I refer the Committee to Article J.3 and the relevant clauses which state: The procedure for adopting joint action"— I shall come back to joint actions— in matters covered by the foreign and security policy shall be the following". It then states how the Council should decide and so on. Article J.3.2 states: The Council shall, when adopting the joint action and at any stage during its development, define those matters on which decisions are to be taken by a qualified majority". We can skip a few paragraphs in order to reach my point, which is to be found in Article J.8. I refer particularly to the second paragraph of Article J.8.2 which states: The Council shall act unanimously, except for procedural questions and"— this is the point which the noble Lord, Lord Richard, missed— in the case referred to in Article J.3(2)". So perhaps when adopting a joint action, but certainly at any stage during its development, the Council may define those matters on which decisions are to be taken by a qualified majority.

I ask my noble friend to tell the Committee exactly what "a joint action" is to be. Is it to be any form of military action involving the use of British troops? If so, do these clauses suggest that British troops could be committed to military action, perhaps by a unanimous vote of the Council, but that the ensuing action could be prosecuted by a qualified majority vote of the Council, even if it was against our will? I should be most grateful for my noble friend's reply on this occasion.

I say "perhaps by a unanimous vote" because the quality of that unanimity must be in some doubt. I draw the Committee's attention to the declaration on voting in the field of common, foreign and security policy which Britain has signed and which states: The Conference agrees that, with regard to Council decisions requiring unanimity, Member States will, to the extent possible, avoid preventing a unanimous decision where a qualified majority exists in favour of that decision". I understand that declaration to put considerable pressure on us to agree to a unanimous decision with which we may not agree when a qualified majority vote may exist against us. I ask my noble friend to let me know on this occasion whether these worries are well founded.

Baroness Chalker of Wallasey

Having listened to the debate with great care, as I have done to each of the debates, I wish to state a few facts about the provisions on a common foreign and security policy contained in the Maastricht Treaty. I hope that it will not be too damaging to the noble Lord, Lord Richard, to say that I believe that he was absolutely right in the way he approached the subject some moments ago.

There is already close co-operation among member states on many foreign policy issues under the existing arrangements —the European political co-operation to which my noble friend Lord Reay referred. The Maastricht provisions will build on that co-operation and make it more effective. They will not, however —I repeat not—undermine our national sovereignty over our foreign policy or ability to protect our own British interests.

Perhaps I may give an answer to the noble Lord, Lord Swinfen, who brought in a comment about the Falklands, but it could have been anywhere else in the world. There is nothing in the common foreign and security policy that prevents Britain from acting alone. If we had to re-fight the Falklands war, which was the example given by my noble friend, we would be able to do so. We would have agreed by unanimity on the common positions and joint actions, the common foreign policy. I shall come back to that when I go through Title V. Clearly, we would not be doing so in a way which would prevent the UK defending its overseas dependent territories, should that prove necessary. It is misleading to bring up such matters when it is absolutely clear.

The lead amendments in this group—Amendment No. 248 to Article 228 and Amendment No. 251 to Article 238, spoken to by my noble friend Lord Onslow—relate to the Community pillar (amendments to the Treaty of Rome) as opposed to the common foreign and security pillar. The difference is fundamental between Amendment No. 248 and Amendment No. 251 and the rest. Whereas action under the Treaty of Rome is on the basis of proposals within the Community treaty structure and legal order, the common foreign and security policy pillar is outside that Community treaty structure and legal order and so is inter-governmental in its nature. That is the answer to the question posed to me by the noble Lord, Lord Moran, asking why Title V was not included in Clause 1 of the Bill.

Let me turn to Amendment No. 248, which was moved and which refers to Article 228 of the Treaty of Rome. Article 228 sets out the procedures for the negotiation and conclusion by the Community of agreements with third countries and international organisations.

Just as it did before—this point was made by the noble Lord, Lord Richard—the Council approves a negotiating mandate, on the basis of which the Commission conducts negotiations in consultation with the member states. The Commission then reports back to the Council, which, after consulting the Parliament, decides whether to approve the result of those negotiations. But if an international agreement carries important financial implications, then it was agreed at Maastricht that it would be appropriate (in view of the budgetary involvement) for the European Parliament to play a fuller role in the process. That is why European Parliament assent will be required in such cases and where the agreement would entail amendment of a measure adopted under the new negative assent procedure. If the agreement is about trade and falls under Article 113, there is, as before, no EP procedure, not even consultation.

Let me now turn to Amendment No. 251 which focuses on Article 238 of the Treaty of Rome. Under Article 238, the Community may establish an association with a third country or an international organisation. But the changes agreed to Article 238 at Maastricht do not alter the previous long-standing arrangements. It is on this basis that the Community has signed agreements involving reciprocal rights and obligations with many countries over many years, including, for example, Turkey, Cyprus and Malta. Most recently we have concluded agreements with Hungary, Poland and the former state of Czechoslovakia. It was by these means that the Community demonstrated its encouragement to those countries' eventual membership of the Community when they are ready by offering generous trade concessions to help their fragile economies at a time when they are struggling to adjust to the new and challenging demands of the post Cold War world. It is this aim that is at the heart of the United Kingdom's determination to see the enlargement of the Community without delay. I wanted to mention that because, given these amendments on the Marshalled List, I believe it right that we should understand exactly what removing the articles would do.

Perhaps I may also say that anything agreed at Maastricht does not change the way that Article 238 will be carried out in the future. The Council has acted and will continue to act by unanimity. That is exactly the point that we sought to make.

I now turn to Title V—which is not part of our Bill but very much a part of our debate—and the inter-governmental provisions on the common foreign and security policy. The British Government fought hard to secure in the negotiations that foreign policy co-operation under the CFSP pillar would remain an inter-governmental process, outside the Treaty of Rome. CFSP will not therefore take place under the Community's normal rules and the European Court of Justice will have no jurisdiction in these matters. Because it is a separate pillar outside the Community, the Commission has no monopoly of initiative in CFSP. That is covered under Article J.9. I shall come back to the articles in a moment because a large number of the questions relate to them.

The Commission will be fully associated with CFSP, as it is with foreign policy co-operation today. My noble friend Lord Aldington made quite clear where that occurred in the Single European Act. That full association has been, I must tell the Committee, very useful indeed in situation after situation. I shall come to individual instances in a moment. It is a sensible arrangement. It helps us to ensure that there is coherence between the economic issues covered by the Treaty of Rome and the political issues quite separately covered by European political co-operation at the moment and under the Maastricht Treaty by the separate pillar of CFSP. Of course there will be an overlap between the responsibility of the Community and the responsibility of member states in intergovernmental co-operation. One cannot put political and economic matters into watertight compartments. The most obvious example is that of sanctions. I can assure the noble Lord, Lord Jay, that full association does not mean parity with member states. The Commission can initiate and participate in the debate, but the decision-making and the decision-taking will continue to be for the 12 member states.

In this debate we have heard a number of comments about the former Yugoslavia. I should like to leave that question for a moment and concentrate on other earlier comments that were made and the questions that have been asked.

Both the noble Lord, Lord Jay, and my noble friend Lord Harmar-Nicholls referred to the question of full association. I have already made clear that the Commission has been fully associated with European political co-operation. That full association is in no way equality with member states. I know that sometimes foolish things are said, as I must admit; and perhaps foolish things will always be said by members of the Commission. But to participate in a debate, or to share the right of initiative with member states, does not mean that the Commission is dictating. The CFSP will remain an inter-governmental process. Decision-making will remain a matter for member states. Perhaps I may refer the noble Lord, Lord Jay, my noble friend Lord Tebbit and others to a booklet which is rather fuller and uses the full language that a popular booklet could perhaps not use. On page 16, under section 114, it explains most clearly: The Commission's role remains as under … Political Co-operation: it is 'fully, associated' with Common Foreign and Security Policy". This has been available and it is quite clear. It gives the Community the ability to initiate, but not an exclusive right; nor the watch-dog role on implementation. That is the CFSP.

7.45 p.m.

Lord Jay

Would it not be rather better if that language had been used in the other pamphlet also?

Baroness Chalker of Wallasey

When trying to explain a treaty which is as complicated as Maastricht —I have never made any bones about the fact that it is intricate, as all treaties are always intricate, as the noble Lord, Lord Jay, knows—one cannot explain in, a pamphlet for the general public every detail in such explicit form as in that booklet, or indeed in the treaty itself. If the appetite is whetted by the booklet from which the noble Lord, Lord Jay, read, then people will perhaps go further and wish to refer to Command 1934 on the treaty. There it is laid out in full. Article J.5 also makes clear that the presidency and riot the Commission will represent the 12 nations in CFSP matters.

A number of questions have been asked, so let me now turn to those. My noble friend Lord Onslow, when he moved this particular set of amendments, talked about the problems that he saw, and said that we would have to agree common positions. Article 228a does refer to a common position and joint action. Yes, indeed, we would need to agree common positions and joint actions but we would have to do so by unanimity. As the noble Lord, Lord Richard, said, it is important that there should be coherence between EC external policy and the inter-governmental process of CFSP. I have already mentioned sanctions as an example of that.

But perhaps I should say to the noble Lord, Lord Stoddart, who made a number of comments about having seen Mr. van den Broek on television, that it is not surprising that there are different views. Mr. van den Broek was for a long period the Foreign Minister of Holland. He has his own views. But the views that count when it comes to CFSP are the views of the 12 member states. Of course there is no reason whatsoever why from time to time the commissioner —he is not the only commissioner for foreign matters because other commissioners also have an interest in various aspects of foreign matters and they will have views and will express their views—should not express his views, provided that decision-making rests where it should rest.

Lord Stoddart of Swindon

We are all in favour of free speech, but surely it must be understood that there will be a Council position—a position reached by the Council. Is the noble Baroness saying that there can also be a Commission position which will be expressed by the Commissioner for Foreign Affairs while the presidency is expressing another position? We have to get that matter absolutely clear. Surely you cannot have one organisation speaking with two voices.

Baroness Chalker of Wallasey

We should not have one organisation speaking with two voices. Before a decision is taken it will be quite clear that different views will be expressed, perhaps among different member states. Once the decision has been taken by the Council and the decision taken on CFSP, as on EPC, it is the decision of the Council which runs and not the decision of the commissioner. I know that some commissioners find that difficult to take but it is one of the safeguards that has been built into Title V, the J articles of the treaty.

I shall continue with the other questions that have been asked by going as quickly as I can through the provisions of this title. Several Members have indicated that perhaps the obligations of Title V are too strong and impinge on UK freedom of action. I have already answered my noble friend Lord Swinfen. I believe that this text meets three key objectives which we set ourselves. One was to keep CFSP outside the Treaty of Rome as an inter-governmental process; the second was to ensure that all significant decisions are taken by unanimity—that is a key safeguard for us. The third was to create a stronger European foreign policy through stronger commitments to common positions.

Another comment hinted at by some Members of the Committee was that somehow our policy will be absorbed into European Community policy. The question before us in CFSP is not one of absorption; it is of co-ordination. That is why effective inter-governmental work under CFSP will strengthen the case against absorption and in favour of co-operation.

A number of Members questioned Article J.1—the principles and the objectives. EPC already covers all foreign and some security areas. It was we, the United Kingdom, who advocated that the CFSP should be extended to cover more security areas. The security policies of the Union must be compatible with the common security and defence policy established in NATO. That comes up under Article J.4.4.

I know that my noble friend Lord Tebbit was very anxious about whether we should try to support CFSP unreservedly. Perhaps he thought that it would not be in our interests. He mentioned Article J.1.4. The more that member states can co-operate the better. It goes back to the point I have mentioned more than once already; namely, that this is an inter-governmental process, with all the major decisions taken by unanimity. We simply were not prepared to agree and certainly would not agree to a policy which was not in the UK national interest. It makes sense that, if we can get an agreed policy with our partners, we are stronger, which is the very point made by the noble Lord, Lord Richard, about the time when he was the United Kingdom's permanent representative to the United Nations.

With regard to other articles of Title V, particularly J.2.3 —co-ordination in the international fora—my noble friends Lord Tebbit and Lord Onslow and the noble Lord, Lord Moran, asked about our independence and French independence in having to defend positions and interests of the Union within the UN Security Council. Unfortunately, my noble friend Lord Onslow failed to read the rest of Article J (in other words, Article J.5.4) which goes on to say that such representation shall be: without prejudice to their responsibilities under the provisions of the United Nations Charter". It is quite clear from reading the whole of Article J that our position as a permanent member of the UN Security Council is acknowledged by the treaty and allowed for. The same is true for the French. Perhaps I may say that in other international organisations of which we are members we seek to uphold common positions and joint actions. But by the same token others are also obliged to follow agreed lines that we altogether have helped to form.

With regard to a question raised earlier—I am not sure whether it was raised this evening but certainly it has been raised on other occasions—matters of the international financial institutions and the G7 are in no way covered by the common foreign and security policy.

Lord Tebbit

I am grateful to my noble friend. She used a form of words concerning the United Nations Security Council which clearly had been prepared for her. But she did not say that there will be no requirement whatsoever under this treaty that the views expressed in the United Nations Security Council or the use of the veto by a permanent member of the Security Council will not be affected in any way by this treaty. Those are the words that I want her to say.

Baroness Chalker of Wallasey

I hope that my noble friend will possess himself with a little patience as I seek to hurry through. There is no problem. If we needed to use the veto, we could use the veto in the United Nations.

Lord Tebbit

It would be contrary to the policy.

Baroness Chalker of Wallasey

It would indeed perhaps be contrary to the policy of some others, but it certainly is not the problem that my noble friend seems to think it is.

Finally, in answer to the noble Lord, Lord Pearson of Rannoch, who asked me about being forced to take military action that we might oppose because we were bound by joint action, we have a double veto over the use of qualified majority voting under Article J: first, we put the subject into joint action under QMV only if we all agree; and, secondly, in agreeing to use that qualified majority voting. In any case, qualified majority voting can apply only to second order decisions.

We want to make the common foreign and security policy work. We see an advantage in being able to speed up some of the decision-making through the use of qualified majority voting, but only in carefully chosen circumstances to which we subscribe. The text now allows for that. But there is no question of qualified majority voting applying as a general rule, as suggested by my noble friend Lord Pearson of Rannoch. That is covered by Article J.3.2. I give way to the noble Lord.

Lord Pearson of Rannoch

My noble friend has said no less than six times in her speech that the Council can only act by unanimity. We must read the words from Article J.8.2, which states that, The Council shall act unanimously, except for procedural questions and in the case referred to in Article J.3(2)". Article J.3.2 clearly says that that comes into play when the Council is adopting a joint action, which I must assume includes military action and British troops and, at any stage during its development, [when it may] define those matters on which decisions are to he taken by a qualified majority". The wording may be even more abysmal than is usually found in the documents in front of us. But that is what it says. It is not a matter for unanimity; it is a matter for qualified majority voting.

Baroness Chalker of Wallasey

Let me try to explain again in simple words. Before we ever reach qualified majority voting under Article J we must have a unanimous decision to do so. Therefore, if we are not prepared to use qualified majority voting—as we are not on matters military and defence—we do not decide to use qualified majority voting by unanimity, as we would have to.

I am sorry that my noble friend cannot see how the two articles apply together. He asked me the further question as to whether joint action could commit British troops. The answer is no. If he cares to look at Article J.4.3 he will find that it says, Issues having defence implications dealt with under this Article shall not he subject to the procedures set out in Article J/". I do not believe that that could be clearer.

My noble friends Lord Onslow and Lord Tebbit and the noble Lord, Lord Moran, asked about the specific responsibilities in the Security Council. Article J.5.4 safeguards the UK's ability to fulfil its responsibilities effectively as a permanent member. That was the answer to the question put by my noble friend Lord Tebbit when he referred to the words "without prejudice" in the last phrase of Article J.5.4. I believe that I have covered that point.

The noble Lord, Lord Stoddart, asked particularly about the Political Committee. In all these debates I have rarely seen him enjoying himself so much as when he put that specific point to me. He was grinning from ear to ear and thought that he had landed on something new. However, my noble friend Lord Aldington put him right. The Political Committee is in Article 30.10 of the Single European Act. Article J.8.5 —and it was a UK proposal—establishes the role of the Political Committee in the CFSP pillar. The article merely says that this is without prejudice to COREPER's role. COREPER will continue to function, preparing Councils, as part of the single institutional framework.

The political directors, to whom the noble Lord referred with great suspicion, meet to prepare work for the European political co-operation. They have been doing so for my seven-and-a-half years in the Foreign Office and do a good job of ironing out some of the non-political but basic wording. When it comes to the policy points, it is the Ministers who are involved in the EPC committee—we have always called it a committee—who decide what goes on. I hope that that reassures the noble Lord on that point.

Lord Stoddart of Swindon

I am grateful to the noble Baroness for giving way. It is a short point. She seemed to believe that I was unaware that that article was contained in the Single European Act. I was perfectly well aware of that, but I am obliged to her for explaining exactly what it means. That is what the debate is about.

Baroness Chalker of Wallasey

I do not object to explaining. However, I know that there are one or two people who have noted that it has already gone eight o'clock and wish me to hurry towards my concluding words.

My noble friend Lord Beloff expressed anxiety about references to defence in the treaty. He went into some detail. I shall not answer in such great detail. It is clear that under CFSP the Western European Union, and not the 12, will be responsible for elaborating and implementing the decisions with defence implications. Our Government and this country have long accepted that the Western European Union should be the defence component of the union and the key is that WEU is free to take its own decisions with defence implications. The treaty also clearly states that the union security policy should be fully compatible with NATO security and defence policy.

One specific question asked by my noble friend Lord Beloff was in regard to the German constitutional position. The German constitution must be a matter for Germany and not for us. However, I should note that the whole question of Germany being able to deploy troops outside the NATO area is currently before its constitutional court. Germany's current position will not prevent the Germans playing a full role in CFSP, just as they have done in EPC. Any common defence policy is for the future, as the treaty makes quite clear in Article J.4.1.

My noble friend Lord Beloff indicated that he felt that the treaty was damaging to NATO. That is not so. NATO remains fundamental to European security, and relates quite clearly to the WEU, as I have just outlined.

My noble friends Lord Reay and Lord Tebbit, along with other noble Lords, including the noble Lord, Lord Parry, talked of Yugoslavia. I do not believe that tonight is the time to go into a long debate on Yugoslavia. I simply say that it was under the British presidency of the Community that we brought together the London conference. It has been a great help to be able to work with our partners in the Community to try to solve the problem, but the problem in the former Yugoslavia is frankly only soluble when the parties to the conflict decide that they, perhaps with help from outside, will stop fighting and start rebuilding that poor, poor land.

We have had a long debate. I am conscious of the time. All that comes under the CFSP pillar is what we sought to achieve; it is what my right honourable friend the Prime Minister, before he went to Maastricht, put to the House of Commons. It is what he put to its Members when he came back, and it was approved. Your Lordships' House had a similar debate and also approved what we had done in that respect. Should the amendment be pressed, I urge the Committee to reject it.

The Earl of Onslow

The noble Lord, Lord Richard, got it absolutely right. He said, "I see no rocks; I see no storms; I see nothing but peace, quiet and co-operation ahead of us". By implication he is accusing those of us who have doubts of imagining hobgoblins and elves all over Brussels and Luxembourg. I remind him of a small town not far from the Hellespont, where, 2,000-odd years ago a war was fought. Cassandra warned: nobody took a blind bit of notice of what she said and Troy fell.

Those of us who are worried about the issue have no objection and would actively encourage the sort of diplomatic effort that the noble Lord, Lord Richard, was making in the United Nations. He was co-operating; he was talking to his European counterparts and producing a common policy. That does not need a written set of rules on how to do it. That is what we are complaining of and what we are worried about. It is the need to have a written set of rules which lays out something which, as my noble friend Lord Tebbit said, when it is found not to work, will be replaced by something else.

Two minutes is all that I can allow myself. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Hayter)

I have been asked to refer to the rest of the group of amendments linked with Amendment No. 248, which has been withdrawn. I take it that the following amendments will not be moved: Amendments Nos. 249 to 279 en bloc; Amendments Nos. 280 to 292 en bloc; Amendments Nos. 293 to 303 en bloc, and Amendments Nos. 304 and 305.

[Amendment Nos. 249 and 250 had been withdrawn from the Marshalled List.]

[Amendment No. 251 not moved.]

[Amendments Nos. 252 to 279 had been withdrawn from the Marshalled List.]

[Amendments Nos. 280 to 293 not moved.]

[Amendment No. 294 had been withdrawn from the Marshalled List.]

[Amendments Nos. 295 to 304 not moved.]

[Amendment No. 305 had been withdrawn from the Marshalled List.]

Baroness Trumpington

I beg to move that the House do now resume. In moving this Motion, perhaps I may suggest that the Committee stage begin again at 9.10 p.m. and not before.

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

House resumed.