Lords Sitting of 28 April 1998

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lincoln.

Lord Sheppard of Liverpool
The Right Reverend David Stuart Sheppard, lately Bishop of Liverpool, having been created Baron Sheppard of Liverpool, of West Kirby in the County of Merseyside, for life—Was, in his robes, introduced between the Lord Runcie and the Lord Cowdrey of Tonbridge.
The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Irvine of Lairg): My Lords, before the commencement of business, I take the opportunity to inform the House that I am to make an official visit to the European Court of Justice in Luxembourg tomorrow, Wednesday 29th April. Accordingly, I trust that the House will grant me leave of absence.

Identity Cards
2.46 p.m.
Baroness Sharpies Baroness Sharpies asked Her Majesty's Government:
Whether they intend to introduce a national identity card.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, we have no current plans to introduce a national identity card in the United Kingdom.
Baroness Sharples: My Lords, I thank the Minister for his reply, though it was not entirely unexpected. Is he aware that a driving licence identity card is due to be introduced in July? That was proposed by the previous government and is very welcome. Following on from that, why cannot we introduce a national identity card to help prevent fraud within both the social security benefits system and in relation to prescription charges? Also, are we having discussions with our European colleagues? I understand that a number of countries in Europe already use national identity cards.
Lord Williams of Mostyn: My Lords, as the noble Baroness pointed out, I am aware that there will be a photocard driving licence introduced in July. Its primary purpose is to be used as a driving licence and not as an identity document. The cost of a compulsory scheme in the United Kingdom would be £600 million, which is a vast sum to contemplate. Talks are held regularly with
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our colleagues in the European Union. Six countries—Belgium, Germany, Greece, Luxembourg, Portugal and Spain—use compulsory card schemes; five countries use voluntary card schemes—Austria, Finland, France, the Netherlands and Italy—and four have nothing at all—Denmark, Ireland, Sweden and ourselves.
Lord Mason of Barnsley: My Lords, can my noble friend assure the House that the Government have not closed their minds on this issue? Is he aware that if such a scheme had been running it would have been helpful in Question Time yesterday, because identity cards would help in finding bogus asylum seekers? Further, is he aware that the Police Federation of Great Britain is in favour of the scheme, the Select Committee for Home Affairs in the House of Commons is in favour and every national opinion poll showed that there is a majority in favour of at least a voluntary ID scheme? What is the stumbling block?
Lord Williams of Mostyn: My Lords, I can assure the noble Lord that we have not closed our minds to the scheme. We have no bias either for or against ID cards. The Association of Chief Police Officers is against compulsory cards. I repeat that the cost is vast. There is no dispute about that between the former government and ourselves—in fact the figure of £600 million came from them. There are benefits and disadvantages in such a scheme. But I must say, perhaps disappointingly to some noble Lords, that an early decision on the possible introduction of a national identity card is not likely.
Lord Hooson: My Lords, can the noble Lord give us a breakdown of the estimated cost of £600 million of introducing identity cards?
Lord Williams of Mostyn: My Lords, I cannot give a detailed breakdown. I have taken the figure from paragraph 7.12 of the 1995 consultation document put out by our predecessors, which indicated that the cost of introducing and administering a separate compulsory identity card scheme to cover the whole of the adult population could be in the region of £600 million, excluding enforcement and ongoing administration.
Lord Marlesford: My Lords, I can understand that the Government have a hang-up about identity cards, as the previous government had. But does the Minister agree that the important prerequisite is a single identity number? At the moment we all have an enormous number of different numbers, which is most cost ineffective and ineffective in terms of fraud, immigration and all the other matters for which a single number would make life a great deal easier for everyone. Will the Government at least consider trying to move to a single identity number?
Lord Williams of Mostyn: My Lords, a single number would certainly be easy to administer. Whether or not it would be easy to bring into effect is another question. We all have a large number of different numbers relating to credit cards, national insurance and

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driving licences, to name but a few plucked at random. However, I take the noble Lord's point and shall transmit it to the Secretary of State.
Lord Taylor of Blackburn: My Lords, is the Minister aware that some of us on these Benches do not believe all the figures that were produced by the previous government?
Lord Williams of Mostyn: My Lords, that really is shocking!
Baroness Masham of Ilton: My Lords, does the Minister agree with me that having a national identity card would help in controlling under age-drinking?
Lord Williams of Mostyn: My Lords, that is one possible use to which it could be put. I think it is well known that the industry itself is considering an extension of voluntary schemes relating to under-age drinking. I pay tribute to the industry for the constructive talks it has had with my honourable friend Mr. George Howarth in another place.
Viscount Chelmsford: My Lords, yesterday the Government announced legislation to support digital signatures, which are a form of identity. The Government's policy is also to support London Transport's prestige smart card, which is another form of identity. It is not a pass; it is a form whereby one is checked against a central register on a computer. Surely technology is allowing the Government, if they choose to pick it up, enormous savings which will counterbalance the large amount of money which apparently will be required for an identity card scheme. Will the Government please take technology into account?
Lord Williams of Mostyn: My Lords, the noble Viscount makes a valid point. Technology is developing. We could consider linkage with smart card functions in this context. I repeat, however, because I do not want to be misleading, that an early decision is not likely and the present estimates of costs are vast.
Lord Monson: My Lords, does the noble Lord agree that to make the carrying of identity cards compulsory would in effect mean that people would have to have a passport to step outside their front door or garden gate to post a letter or nip down to the corner shop? Is this not totally alien to our British traditions?
Lord Williams of Mostyn: My Lords, I believe that the noble Lord's observation finds an echo with a large number of people. Fortunately, we have not had an authoritarian tradition in this country. We have not had the recent history of our colleagues on continental Europe. There are a large number of people who would share the unease which the noble Lord articulated.
Lord Marsh: My Lords, is the noble Lord aware that a number of us in this House spent six years carrying identity cards and did not find any problem at all?
Lord Williams of Mostyn: My Lords, I cannot myself remember that, but I am prepared to accept anecdotal and historical evidence.
Viscount Addison: My Lords, is it not the case that technology has moved very fast and that retina recognition is something that the banks in particular are very interested in? We all know that numbers and even signatures can be forged, so should not the Government be seriously looking at retina recognition and incorporating it into a whole host of different references?
Lord Williams of Mostyn: My Lords, we shall certainly look retina recognition firmly in the eye. However, I am not sure that it would work for the kind of short journey to which the noble Lord, Lord Monson, referred; namely, going down to the shop to buy a paper.
Lord Elton: My Lords, if it is proposed that we should all have one number, will the noble Lord bear in mind that we all have one national insurance number and that it would be a pity if we then had to have two?
Lord Williams of Mostyn: My Lords, I mentioned earlier that we all have a national insurance number and I think I said that all these ideas in vacuo sound quite good at the time. However, it is the kind of administrative difficulty that the noble Lord refers to that makes us pause and be cautious about introducing a national compulsory scheme.

Prime Minister's Office: Role of Press Secretary
2.55 p.m.
Lord Peyton of Yeovilasked Her Majesty's Government:
Whether they will define the role of the press secretary in the Prime Minister's office, and its relationship with Ministers.
Lord McIntosh of Haringey: My Lords, the Prime Minister's chief press secretary advises the Prime Minister on the effective presentation of government policy. He also leads the No. 10 press office and the strategic communications unit, ensuring that the essential messages and key themes which underpin the Government's strategy are sustained and co-ordinated across government liaising closely with departmental press offices. The relationship between the chief press secretary and the No. 10 press office and Ministers is set out in paragraph 88 of the ministerial code.
Lord Peyton of Yeovil: My Lords, does not a little confusion arise from the title of chief press secretary? Is it not a fact that if Mr. Campbell had done or said anything which he ought not to have done or said he

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would have been smacked down a long time ago? Is not his real role to save the Prime Minister from getting involved in the inevitable unpleasantness of keeping Ministers in order and in fact to play Mr. Hyde to the Prime Minister's Dr. Jekyll?
Lord McIntosh of Haringey: My Lords, the title of chief press secretary has, if not a venerable, certainly an honourable history. The press secretaries to Sir Edward Heath, to the noble Baroness, Lady Thatcher, and to John Major were all called chief press secretary. I do not know whether the same criticisms that the noble Lord makes of Mr. Alastair Campbell apply to those as well.
Lord Janner of Braunstone: My Lords, in those circumstances, would my noble friend consider having a word with Sir Bernard Ingham to see how the chief press secretary might run his office in a more reticent and self-effacing way, while at the same time helping to achieve for the Prime Minister the highest level of public acceptability of any Prime Minister since the war?
Lord McIntosh of Haringey: My Lords, Sir Bernard Ingham was a civil servant rather than a special adviser. It is well known that he refrained from any activities which could possibly be called party political and refrained from any activities which might lead him to make statements about the qualities, good or bad, of any Ministers in the Thatcher Government.
Lord Strathclyde: My Lords, the House will be indebted to my noble friend for raising what is an extremely important and serious subject. Will the Minister advise the House when the Civil Service rules were altered to enable Mr. Campbell to give instructions to civil servants? Did that include the power to instruct Ministers themselves? Furthermore, are faxes to Ministers, such as those to Mr. Field or Ms Harman, cleared in each case by the Prime Minister; and if not, will he explain the line of accountability to Parliament for such directions by Mr. Campbell to Ministers of the Crown'?
Lord McIntosh of Haringey: My Lords, I do not deny the importance of Mr. Alastair Campbell. It would he more than my job is worth to do so. However, the importance of this Question under the eye of the cosmos is greater for those who are more interested in process than in the product of government. As the noble Lord well knows, the conditions under which Mr. Campbell was appointed were determined by an Order in Council on 3rd May which provided for three special advisers, although only two are in post, who do have the power to give instructions to civil servants. As regards Mr. Campbell's faxes to Ministers, they were made with the full authority of the Prime Minister.
Lord Peyton of Yeovil: My Lords, may I express our congratulations to the noble Lord on his care this afternoon not to incur the wrath of Mr. Campbell? Has the noble Lord in his memory any incident when
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Sir Bernard Ingham actually took it upon himself, and in his own name, to advise Ministers "Go easy with the lunches"?
Lord McIntosh of Haringey: My Lords, again those who are interested in the process of government rather than its product certainly have a voice and it should be heard. I think of Sir Bernard Ingham as someone who put an end to the careers of some Ministers by such phrases as "semi-detached".

Local Government: Modernisation
3 p.m.
Lord Islwynasked Her Majesty's Government:
What plans they have for the modernisation of local government.
Baroness Farrington of Ribbleton: My Lords, over the past few months we have published a series of six consultation papers inviting comment and debate on our initial proposals for modernising local government in England. We are currently in the middle of that consultation exercise and intend to set out our firm proposals in a White Paper in the summer. I know that it will be of interest to my noble friend Lord Islwyn that the Secretary of State for Wales is conducting a similar consultation exercise, leading to a White Paper, on modernising local government in Wales. A parallel exercise is taking place in Scotland.
Lord Islwyn: My Lords, will the Minister accept that it is necessary to recruit into local government men and women of the highest calibre who will observe an appropriate code of conduct? Will she further accept that citizens are entitled to expect best value for money for the services provided? While I appreciate the Prime Minister's call for an ethical framework for local government, nevertheless will the Minister accept that over the generations Britain has been well served by its local government?
Baroness Farrington of Ribbleton: My Lords, I declare an interest before giving any bouquets. As a former serving local councillor, I agree with my noble friend that local government is well served in the overwhelming majority of cases both by elected representatives and officials of the highest standards. We maintain the importance of ensuring that the highest calibre of councillors are attracted into local government and believe that some of the proposals out for consultation in our paper Local Democracy and Community Leadership will help to establish that. My noble friend referred to the new ethical framework document. We believe that that, too, is important. I know that that has been welcomed by the Local Government Association.
Lord Beloff: My Lords, will the noble Baroness enlighten me as to the meaning of the word "modernisation" because most things that are said to be modernised are worse than they were before?
Baroness Farrington of Ribbleton: My Lords, I can well understand the concern of the noble Lord,

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Lord Beloff, after the experience of the past 18 years, that the process of change in local government has led to things being worse. That is why we are consulting widely and working together in a strong partnership with local government to ensure that this Government's modernisation proposals leave things better, not for local councillors and officials, important though that is, but for the people of the country.
Baroness Maddock: My Lords, can the Minister give some information about the consultation the Government propose with parish and town councils? I attended a national conference of the clerks of such councils 10 days ago. They were concerned to be involved and felt that they had not been involved enough so far. In her plans to modernise local democracy can the Minister assure us that the Government will not rule out having a fairer voting system for local elections with a more proportional system? The Government have put forward in their document a good case for it. However, they have not said that they will implement it despite supporting it for European elections, the Welsh assembly and the parliament in Scotland.
Baroness Farrington of Ribbleton: My Lords, perhaps I may first deal with the second point made by the noble Baroness. As the noble Baroness recognised in her question, she is aware that the Government acknowledge the importance of addressing constitutional change across many areas. We have made it quite clear that, given the wide range of proposed changes in the lifetime of this Government, we have no immediate plans to consider changing the electoral system for local government. However, we have not ruled out the possibility beyond the short term and we do not refuse to reconsider it. As regards local councils, we have had a wide range of responses to the consultation that has taken place from town and parish councils. Our assumptions have been circulated through the county networks and through their close relationship with county authorities. However, were there to be concerns should the National Association of Local Councils make direct representations we would view that very positively. We want the widest consultation and support for the proposals.
Lord Dean of Beswick: My Lords, as someone who served in local government for a long time with some distinction, can the Government give an undertaking that whatever format is produced from these discussions the top priority will be for probity and honesty in the staff who man local government in the future—whatever structure is created—because some of it has become rather tarnished lately?
Baroness Farrington of Ribbleton: My Lords, the Prime Minister personally expressed his view that there should be probity and the highest possible standards in local government and for local councillors, with "one strike and you are out". I pay tribute to the work done by my noble friend Lord Dean of Beswick during his time in local government. He was able to be involved
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because of the powers and abilities of local authorities to respond to the needs of the community. We wish to return to that following the consultation exercise.
Lord Bowness: My Lords, the forewords to the consultation papers, if not the contents of the papers themselves, suggest that the Government envisage a rosy future for local government under this administration. That being the case, perhaps the noble Baroness can tell us why the Government propose to keep their capping powers; and, further, why they propose establishing regional development agencies appointed by the Government to act for them and to interfere with, and to take powers away from, local authorities?
Baroness Farrington of Ribbleton: My Lords, as regards capping we have made it absolutely clear that we shall work in partnership with local government to ensure that the removal of the absolute and total capping system will occur when a system of best value is fully in place and working in partnership. We believe it is very important that this process takes place. The noble Lord referred to the consultation process and the importance of consideration being given to the way forward. As he is aware, consultation is necessary if we are to move forward. With the noble Lord's distinguished career in local government he will be aware that, under the partnership arrangements, this Government have a regular three-monthly series of meetings at the highest ministerial level with cross-party representation from local government.
Lord Islwyn: My Lords, can the Minister say whether a timetable has been laid down for the proposed reforms?
Baroness Farrington of Ribbleton: My Lords, there are proposals in a range of documents to which I referred earlier. They deal with the full spectrum of local democracy and community leadership, improving local services through best value, capital finance, business rates, improving local financial accountability and the new ethical framework. Following the responses to the consultation we hope to publish a White Paper in the summer to bring together the responses to the consultation.

Termite Infestation: Devon Outbreak
3.9 p.m.
Lord Methuenasked Her Majesty's Government:
What steps they are taking to control and eradicate the outbreak of termites in north Devon.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, my department is closely monitoring the situation with the Building Research Establishment which is also conducting research to determine if there is any risk of the problem spreading beyond the single property

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known to be affected at the present time. The first task for the Building Research Establishment is to research optimum means of eradicating the infestation, and it is seeking help from overseas in doing this. The report is being prepared as a matter of urgency in consultation with the industry. As soon as it is to hand, a decision will be made on what action is required.
Lord Methuen: My Lords, I thank the Minister for that information. Is she aware that the outbreak of termites in north Devon threatens a disaster comparable with that of Dutch Elm disease but is far more personal as it affects people's houses rather than just trees? It may interest the House to know that if only two of the insects—one of each sex—fly out of the existing colony they can establish further colonies. I understand that the site concerned is totally affected, including the whole of the garden and the greenhouse as well as the house and the retaining wall. If any of the colony remain after action has been taken, within only four to eight days the remaining inhabitants of the nest can produce a new king and queen further to propagate the colony. I wonder what the Minister cares to say about that.
Baroness Hayman: My Lords, I am well aware that concerns have been expressed about the extent of the problem that could be posed by termites becoming established in this country. That is why my honourable friend the Minister responsible for construction has asked for urgent advice from the Building Research Establishment on the scale of the problem, its likely impact and, most crucially, on what effective measures can be taken to eradicate the termites. I should make it clear that only one building is affected currently; that that building was affected in 1994; and that it is possible that the source of the infestation was 10 years prior to that. Therefore, I believe that the timescale involved allows us to look at the issues involved—we are doing so urgently—and take the appropriate action.
Baroness Gardner of Parkes: My Lords, does the Minister know that Australia has termites known as "white ants"? They are common—in fact, they are everywhere—but buildings are still standing. Is the Minister aware that the echidna, or anteater, is a natural predator of termites and thrives on them? If the worst comes to the worst, will the Minister consider introducing a few echidna from Australia to deal with the problem?
Baroness Hayman: My Lords, I am always grateful for the international comparisons which the noble Baroness is able to give us and for her lateral thinking on such issues. There will be a serious problem if we find that termites, inadvertently imported into this country, can survive in the British climate when we thought in the past that that was not possible. I understand what the noble Baroness says about some buildings remaining in Australia, but these pests cause great damage there and in southern Europe. If there is any danger of that happening here. we ought to take the appropriate action.
Baroness Nicol: My Lords, while the Building Research Establishment is looking into the problem, has any attempt been made under the pest control by-laws to deal with the matter at local authority level? There should be a great sense of urgency about this because, if we have a warm summer, it could become a real problem. Has the local authority been involved?
Baroness Hayman: My Lords, as I understand it, at the moment it is the Building Research Establishment which is very much involved. It is preparing a report on the building concerned. It would, of course, be willing to give advice on neighbouring buildings because it is important to know whether it is possible that the problem has spread. We are considering how to prevent similar importations in the future. Responsibility for that comes under the Plant Health (Forestry) (Great Britain) Order 1993. The Forestry Commission is at present carrying out a pest risk analysis of termites. If it indicates that certain measures are necessary, they will be taken forward.
Lord Mackie of Benshie: My Lords, is the Minister aware that Australians should not talk about the introduction of strange species into other countries given what the rabbit did to Australia? Will the noble Baroness ensure that no termites or "anti-termites" are imported from Australia?
Baroness Hayman: My Lords, these matters are covered in the Wildlife and Countryside Act, which very much takes into account the danger that the importation of species into other countries can have for the natural habitat and other species. I am sure that my colleagues will view any such proposals carefully.
Lord Campbell of Croy: My Lords, instead of eradicating this outbreak completely, will the Government consider transporting some of the termites to the government office building in Marsham Street where they could contribute to a popular demolition job?
Baroness Hayman: My Lords, I think there are other ways of dealing with Marsham Street.
The Earl of Halsbury: My Lords, do Her Majesty's Government recognise that in any occurrence or class of occurrences there is always one which, with the wisdom of hindsight, was historically the first and went unrecognised? Will Her Majesty's Government consider informing the local bug hunters in Devonshire, many of whom are amateur lepidopterists, of what to look for and who to report to if they find it?
Baroness Hayman: My Lords, hindsight is an interesting aspect of this. With hindsight, the measures that were taken in 1994, which were considered then to be substantial enough to deal with the outbreak, turned out not to be substantial enough because the problem has recurred. It is important that we recognise that and the potential of termites surviving in the more temperate parts of Great Britain. As I understand it. the Building Research Establishment is putting in monitoring stakes

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as they are the most effective way of monitoring any potential spread. I am sure that any amateur help that could be given would be much appreciated.

School Standards and Framework Bill
3.17 p.m.
Lord Whitty: My Lords, on behalf of my noble friend Lady Blackstone, I beg to move the Motion standing in her name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the School Standards and Framework Bill has been committed that they consider the Bill in the following order:

Clauses 1 to 11,

Schedule 1,

Clauses 12 to 20,

Schedule 2,

Clauses 21 and 22,

Schedule 3,

Clause 23,

Schedule 4,

Clause 24,

Schedule 5,

Clauses 25 to 30,

Schedule 6,

Clauses 31 to 33,

Schedule 7,

Clause 34,

Schedule 8,

Clause 35,

Schedules 9 to 11,

Clause 36,

Schedule 12,

Clauses 37 to 39,

Schedule 13,

Clauses 40 to 47,

Schedule 14,

Clauses 48 to 50,

Schedule 15,

Clauses 51 to 53,

Schedule 16,

Clause 54,

Schedule 17,

Clauses 55 to 65,

Schedule 18,

Clause 66,

Schedule 19,

Clause 67,

Schedule 20,

Clauses 68 to 71,

Schedule 21,

Clause 72,

Schedule 22,

Clauses 73 to 88,

Schedule 23,

Clause 89,

Schedule 24,

Clause 90,

Schedule 25,

Clauses 91 to 115,

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Schedule 26,

Clauses 116 and 117,

Schedule 27,

Clauses 118 to 125,

Schedule 28,

Clauses 126 to 133,

Schedules 29 to 31.—(Lord Whitty.)

On Question, Motion agreed to.

European Communities (Amendment) Bill
3.18 p.m.
Lord Whitty: 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.—(Lord Whitty.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Resumed debate on Clause 1.
Lord Moynihanmoved Amendment No. 23L:
Page 1, line 13. after ("2") insert ((except paragraph 57)").
The noble Lord said: This amendment concerns Article 1, paragraph 9 (Article F.1 of the TEU, new Article 7 in the consolidated version) of the treaty, and Article 2, paragraph 57 (Article 236 of the TEC, new Article 309 in the consolidated version)—in other words, the human rights article about which I have some reservations.
These articles empower the Council of Ministers to suspend the voting rights or, indeed, any other rights from the member state country which it claims is guilty of "serious and persistent" violations of the Union principles of liberty, democracy, respect for human rights and fundamental freedoms and for the rule of law. Such a decision, that a member was in serious and persistent breach of the Union principle, would be taken by unanimity, minus the member state in question—for the accused country is not allowed to vote. The other member states are required to consult the European Parliament and obtain its assent. Once a member state is found guilty by the Council meeting in the composition of heads of state or government and acting by unanimity any subsequent decision to suspend the voting rights of that country will be decided by qualified majority vote. There is no provision for an independent arbiter. That country would have no right of appeal and there would be no role for the European Court of Justice in this procedure.
Once found guilty, rather than be expelled from the Union the member state concerned would have all its rights suspended including its voting rights. However, it would continue to be bound by all of the obligations inherent in the treaties of the Union and any further obligations that the Council might decide to impose, although the suspension of its voting rights would preclude it from having a say in such future obligations.

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I have a few reservations about the article. First, how are the rights are to be defined? It goes without saying that in a democracy such as ours every Member of this House supports the principles of human rights, individual freedom and the rule of law. We on these Benches will do all that we can to safeguard and advance basic human rights, the need to protect individual liberty, free speech and the right to demonstrate, to have parliamentary democracy and to be governed by the rule of law. There is no division on these Benches as to those rights. But in the article that we are now considering the rights in question are vaguely defined. Does it refer to human rights as they are traditionally understood and as I have outlined—the right to free speech, to free assembly and habeas corpus—to which we all subscribe unreservedly, or does it include a wider and more controversial interpretation of human rights, such as a basic human right to a minimum wage or to abortion on demand?
In this country with our tradition of common law we would interpret "rights" as having the former meaning in reference to individual freedoms and liberties. The Bill of Rights of 1689 meant the protection of the individual from intrusion by other persons, groups of persons, the state itself or even the king. If that were the meaning here it is unlikely that the United Kingdom would ever fall foul of this article, but in Europe it could be interpreted in the latter way based on a looser definition that places an obligation on the state or on others to provide the right for the individual: for example, the right to work, the right to welfare, or the right to a pension. Therefore, in seeking to clarify exactly what the clause means it is most important to seek from the Government the definition of "rights" which will he used by the Union in the context of this article.
My second reservation is about the lack of judicial involvement. Under the Treaty of Amsterdam these questions will be dealt with not by a judicial body but by politicians sitting in the Council of Ministers; nor will there be an independent arbiter or right of appeal. Can the Minister inform the Committee whether there is a precedent in diplomacy or in law for the signatory to a treaty losing its rights but not its obligations at the behest of fellow signatories?
Thirdly, what is the true intention of this article? It will not do to claim that Article F.1 is simply a precaution against the sudden collapse of democracy in a member state. If one of our fellow members were to fall into dictatorship surely the logical response would be to end its membership of the European Union. Yet Article F.1 provides no mechanism for doing that. Instead, it specifies that the state in question would remain bound by all of the treaty obligations while losing its rights. I do not believe that that is the right way to deal with an undemocratic regime.
If the real intention of this article is to provide a remedy for really serious breaches of human rights, surely the logical remedy is expulsion or temporary suspension from the European Union of the country concerned. What justification is there for requiring such a country to be bound by decisions taken in its absence? Why were procedures to provide for expulsion not included in the
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treaty? It would be perfectly possible for other member states to give measured warnings to the offending state and to make clear that unless it mended its ways expulsion would follow. Can the Minister clarify exactly how this article will operate? I understand that it was intended as a safeguard against the possibility of one of the future member states of central and eastern Europe reneging on the fundamental principles of human rights, democracy and the rule of law.
I do not dispute that as we enlarge into central and eastern Europe where these traditions are relatively recently established and not yet entrenched some protection will be required for the integrity of the Union. As the Union is enlarged it is legitimate to consider what happens if any member state acquires a government that falls short of those fundamental standards. That involves not only new members. One of the reasons put forward for admitting Greece to the Community was to reinforce the changes that had taken place there with a return to parliamentary democracy and a proper standard of human rights. Within the European Union we have no experience of what would happen if hypothetically the Greek colonels returned to power or a military regime took over in the Iberian peninsula. I accept that these are very remote possibilities, but should that happen in any country of the European Union, or should a new member state with a short tradition of democracy fall into dictatorship and start persecuting its natural minorities, arbitrarily confiscating private property or suspending the due process of law, what would the European Union do? In those circumstances, would the other member states want that state to remain within the Union?
When one comes across serious and persistent abuses of human rights, as tragically one does in the former Yugoslavia, the response is not to invite the perpetrators of those abuses to join the European Union but without voting rights, but to apply a series of sanctions and to make clear that such behaviour is incompatible with an ambition to join the European Union. When the Commission delivered its opinions on the various pending applications for membership of the European Union a proven track record of respect for human rights was rightly one of the prerequisites. In that case, how will Article F.1 be of the slightest use? We are forced to the conclusion that Article F.1 could conceivably be used to disarm the national veto of any country that held up a measure that the other member states wanted. Can the Minister guarantee absolutely that this article will never be used or abused to deprive difficult countries of their vote on spurious human rights grounds? Further, can the Minister guarantee that the human rights clause will be invoked only if there were a massive change in one of the new or existing member states who posed a real threat to democracy? Is it not the case that the procedure can be used and abused to take away the voting rights of a recalcitrant government or member state who may have a perfectly satisfactory record on human rights but be responsible for some peculiar social provision that perhaps may be described as a breach of human rights depending on how "rights" is defined?

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The Minister may say that this is a very remote example, but if the Committee is to carry out its responsibilities in relation to the scrutiny of this treaty it is incumbent on Members to identify scenarios that may not be very likely but which may be turned to the disadvantage of this country. It is also our duty to point out the dangers. So will the Minister confirm that there is nothing in the treaty to allow that danger to be dismissed as legally impossible? Anything can happen in international relations. Even though the provisions of the treaty envisage the clause being invoked only by the unanimous vote of all the member states except the one whose conduct is under examination, ratified by two-thirds of the Members of the European Parliament, it is still not unprecedented for provisions in European treaties, to which we have signed up, to be used in a way that was never intended at the time.
I shall give one obvious example. It is the way in which QMV procedures in respect of health and safety were used to introduce the 48-hour working week. No one in the previous government who agreed to QMV for health and safety measures at the time of the Single European Act ever contemplated their use to introduce a maximum length of working week. As Opposition, it is our duty to examine the provisions of treaties such as this and to ensure that there is no scope for abuse or for their use in ways never intended at the time or which might be to the disadvantage of this country.
It is difficult to say with certainty whether those procedures will ever be invoked, because every relevant situation that arises would be a political crisis and would have to be responded to according to the facts of the case. In practice, if some military regime were to seize power and to start to abuse human rights, Article F.1 would, in my opinion, not be the end of the story. The EU could not tolerate the situation indefinitely.
Nevertheless, Article F.1 flies in the face of precedent and of our constitutional tradition. It is for those reasons that I have put the questions to the Minister in the context of the amendment, which I hope will lead to her providing clarification for the Committee as to the purpose and the definition of this important part of the treaty. I beg to move.
3.30 p.m.
Lord Wallace of Saltaire: I wish to speak also to Amendment No. 37. I do not share all the views that the noble Lord, Lord Moynihan, put forward. This is consolidation of a number of declarations previously made in the European Community. Indeed, it was originally a British proposal in the Copenhagen Declaration of 1978 by that great European Foreign Secretary, the noble Lord, Lord Owen, that we should include in a formal declaration of the European Council a number of provisions in case new members—we were then talking about Spain, Greece and Portugal—should move backwards from democracy. It was something to which the British Government attached a good deal of importance at the time as a backstop.
We have all seen the European Community as part of the process of consolidating democracy in Europe. It was, in the 1950s, part of the process of consolidating
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democracy in the western part of the continent. In the 1980s it became part of the process of consolidating democracy in a number of Mediterranean countries; and part of the process of enlargement to central and eastern Europe has the same function. It was felt by the then British Government, and by others, that a backstop was useful—now consolidated into the treaty—in case of,
"the existence of a serious and persistent breach by a Member State of principles mentioned in Article F(1)".
That is a useful backstop against that eventuality in a larger Community of countries which have not been consistently democratic over the past generation or more. We all hope that it will never be necessary but it is appropriate in a Community committed to the principles of democracy, political and civil liberties that the provision should be included.
We hope that on Report the Government will be able to give this place some assurance about the levels of information and reporting which they will give Parliament about purposes in the EU. Amendment No. 37 is one of a number of amendments which call upon the Government to report back to this place under certain circumstances. We on these Benches are concerned that the level of reporting and information provided to national parliaments should be as full as possible.
Lord Monson: It would be interesting to know whether the proposal put forward by Mr. David Owen, as he then was, referred to by the noble Lord, Lord Wallace of Saltaire, was as unbalanced and one-sided as this one. The noble Lord, Lord Moynihan, put the case for his amendment so well that there is little one can add. It is astonishing that the article gives the Council of Ministers, aided by the European Parliament, the sole power to decide upon expulsion without the intervention of any court of law. Is that not, in itself, a breach of the rule of law?
It is claimed by way of safeguard that the vote will be unanimous. Of course it will not be unanimous, because the accused state will not have a vote. Almost the worst aspect is that although the rights of the expelled nation may be withdrawn, the duties under the treaty will remain, and will have to be complied with.
The EU has always been compared by Euro-enthusiasts with a club. That is a spurious argument, as I cannot think of any club to which some members pay gigantic subscriptions, some pay very little, and others pay nothing at all but receive vast sums of money, given by the club, in order to join it.
For the sake of argument, let us suppose that one can compare the EU to a club. Is there any club which has the right to suspend members while obliging them to continue with their duties?
Lord Grenfell: Perhaps we should look more closely at Article 0, as amended, which states that,
"any European state which respects the principles set out in Article F(1) may apply to become a member of the Union. It shall address its application to the Council, which shall act unanimously after consulting the Commission and after receiving the assent of the European Parliament, which shall act by an absolute majority of its component members".

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Amended Article O appears to tell us that it allows an application to be rejected or shelved on the grounds of insufficient coherence to those principles. Using the example of a club, if a nation has joined the EU and has agreed to adhere to those principles as a condition of joining, surely it is those who have set those conditions who afterwards will be able to say that if those conditions are consistently violated, then they who set those conditions are those who will decide whether or not that particular state should have sanctions brought against it, including possible expulsion. There is no mention of expulsion here, but there is a general principle that those who impose the conditions are presumably those who will be the judges of whether or not, when those conditions are broken, an ultimate sanction of expulsion should be taken.
Lord Monson: Before the noble Lord sits down, does he agree that expulsion would be a better option for the accused state? Expulsion is surely better than having none of the rights but retaining all the obligations.
The Earl of Clanwilliam: Would it not be better if we were expelled, if we were to jolly well get out and stay out? That would be a simple answer. We have the ridiculous situation where the people of Great Britain will be denied the right, by QMV, to tell the Council and the Commission that we are not interested in their proposals; it removes our right to put the matter to our own Parliament for decision. In the meantime, we are required to remain true to the acquis communautaire.
There is a gracious caveat in respect of natural persons and legal persons. I have heard it said that lawyers are a race apart, but never that they are unnatural. This is just another example of how the European language is unnatural and foreign to us in this country. It is irrelevant to the system of parliamentary government that we treasure.
Furthermore, the suspension appears to be of schoolboy nature and immature. It is allied to the fatuous idea that the Council will be acting as a team— do not know whether in short pants or schoolboy caps. The reality is that each member is a national member of one of the states. They are each there batting for their side, promoting their national interests. The amendment brings before Parliament any case for suspension, for Parliament to decide how it should react. Any part of the treaty which is more likely to engender bad blood than this Bill is hard to imagine.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): Before addressing the specific impact of the amendments before us, I wish to set out clearly the Government's position on the new clause in the treaty—the so-called "sanction clause" to which the amendments refer. The new Article F.1 of the Union Treaty provides that in certain extraordinary circumstances, the Council can decide to impose sanctions on a member state which it believes to be in serious and persistent breach of the fundamental principles set out in the amended Article F, paragraph 1, of the Union Treaty.
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The Government believe that the sanctions clause gives an important signal of the Union's determination to ensure full respect for democracy and human rights, whatever its size or membership. We have every hope that these provisions will never be used. They are carefully framed for use in only the most exceptional circumstances, such as a military coup in a member state.
The safeguards are that: the clause can be used only in the event of a "serious and persistent" breach of the principles in Article F, paragraph 1; a proposal to invoke these provisions has to be made by one-third of the member states or the Commission, and needs the assent of the European Parliament by two-thirds of the votes cast and a majority of members; the determination of a "serious and persistent breach" of fundamental principles must be made by the Council acting by unanimity minus the member state concerned.
Several noble Lords implied that they believed that the sanction might be used against the UK. The Government are confident that these provisions would never be used against the UK. As the Foreign Secretary said in another place on 12th November last year:
"so long as the Labour Party is in power, it will not be possible to find 14 EU states that will agree that the Government are in serious and persistent violation of democracy or of human rights".—[Official Report, Commons, 12/11/97; col. 912.]
Against this background, the proposed new clause is both misconceived and redundant. It is misconceived because it is quite clear from the wording of the sanctions clause itself that it will be invoked only in the most extreme circumstances, as I have said, such as a putsch. It cannot, and will not be lightly used. It is inconceivable that it would be invoked simply as a result of a court judgment.
From time to time, member states of the Union are found to have offended against international human rights obligations in certain limited respects. But the Union will not be able, nor will it seek, to impose sanctions on them as a result of minor infringements. As I have made clear, and as the treaty clearly states, the sanctions clause can be applied only in response to a breach of fundamental rights which is both serious and persistent.
The noble Lord, Lord Moynihan, asked what are these fundamental rights. Fundamental rights for the purposes of the sanctions clause are not defined, nor will they be defined by measures proposed or adopted under Article 6.a which your Lordships debated yesterday. Article F.2 of the Treaty of the European Union, which is not amended by the Amsterdam Treaty, provides that fundamental rights are primarily those guaranteed by the European Convention on Human Rights. They could also include rights in other major human rights treaties or human rights generally accepted by all other member states. The UK has long been a party to the ECHR, which is now being incorporated into UK law.
We have nothing to fear from the sanctions clause, but the noble Lord went on to ask why, if a breach was so fundamental, should not the guilty state be stripped of EU membership. Participation in the European Union gives rise to a wide web of rights and obligations to citizens, companies and governments. To erase all those

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obligations at a stroke by expelling the member state would create huge confusion and penalise ordinary citizens, and ordinary businesses, who rely on their rights of residence and free movement, to name but two.
The noble Lord, Lord Wallace of Saltaire, asked about report-backs. We will be covering the question of parliamentary scrutiny when we deal with the scrutiny amendments at a later hour. Perhaps we may deal with the point then.
The noble Lord, Lord Monson, implied that the penalties exacted could include expulsion. That is not the case, as I hope I explained in answer to the noble Lord, Lord Moynihan.
The noble Earl, Lord Clanwilliam, expressed a number of fears about the way in which the clause might be used against the UK Government. In another place, the former Chancellor of the Exchequer dealt admirably with that point. He said that he understood the fears which some people have about the article, but he went on to say that such fears did not seem to him to be credible. I echo his words; the fears expressed in your Lordships' House on this point are not credible, given the sanctions which I have explained.
3.45 p.m.
Lord Monson: Before the Minister sits down, perhaps I may put one or two points to her. She claimed that sanctions would be applied only in extraordinary circumstances. The question is: who decides what constitutes extraordinary circumstances? The Minister went on to say that she was confident that the provisions would never be applied against the UK, certainly while a Labour Government was in power. I am sure that the previous Government was confident that a compulsory four-week annual holiday could never be introduced under the health and safety regulations, but that happened nevertheless. Is it not possible that if, for example, internment had to be reintroduced in Northern Ireland as a result of a massive terrorist campaign, Britain could find itself in the dock?
Baroness Symons of Vernham Dean: Not all of us would agree that a four-week annual holiday for the working people of this country is on the same scale of disaster as a military putsch.
The noble Lord asked who would determine a serious and persistent breach. I hoped I had explained that such a determination would have to be made by unanimity between the member states, excluding the member state concerned. All the other 14 member states would have to agree what amounted to a serious and persistent—those two words are important—breach.
Lord Stoddart of Swindon: I was most interested in what my noble friend said. I, too, am pleased to receive the assurance that under a Labour Government there would be no possibility that Britain could be caught under this article. However, I am concerned that the article states that the Union will be responsible for the protection of our freedoms, democracy and so forth. As the noble Lord, Lord Moynihan, pointed out, that seems
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to exclude national governments and national states. Is it not the national governments, the national states, the national ports and the national armies which safeguard the rights enshrined in the article? Therefore, should not the article ensure that the freedoms, democracies and so forth are to be safeguarded by the states and not by the Union?
My noble friend did not answer the question: what happens if a member state which is in continuous breach of the principles stated here, and which is told that it must forfeit all the benefits, then says "We are going to leave"? In those circumstances, under this article, as the noble Lord, Lord Monson, pointed out, it would in fact lose all the supposed benefits but would have to continue to take on the burden of the obligations.
Suppose the member state said it was not prepared to do this and was going to leave the Union, what then happens? How then does the Union, the member states, insist on and enforce what they have done? Will they then impose a whole range of sanctions or send in armies? What will they do? It has to be answered but my noble friend has not answered it, at least to my satisfaction. Could she now develop that point further?
Baroness Symons of Vernham Dean: As to my noble friend's first point, the position is safeguarded by the member states, all of which are democracies, 14 of which would have to be in agreement. It is not the Union acting independently of the member states; the member states have to be part of that decision.
As to my noble friend's second point in respect of a state being in that position. with loss of benefits but still having obligations—which I am sure we all agree is very unlikely—and deciding to suspend its membership, such a state would then have to negotiate its way out of the treaty that it had freely entered into, in the same way as it would any other international treaty. It would have to negotiate a way out or be in serious breach with the other parties to that treaty.
My noble friend is trying to complicate the situation rather more than is justified.
Lord Stoddart of Swindon: I am sorry to come back to my noble friend. I am not trying to complicate it; I am trying to understand it.
My noble friend has said that member states can negotiate their way out of the Union. There is no provision within the treaties for member states to negotiate their way out. If what my noble friend is now putting on record is confirmed and member states can negotiate their way out, that is very interesting. I am glad it is on record because it will certainly be referred to in the future, particularly in relation to economic and monetary union.
The clauses on economic and monetary union state that EMU and the single currency are irrevocable. In my dictionary "irrevocable" means that it cannot be altered, that it is for good. Is my noble friend now saying that a state which is found guilty under these clauses—or any other circumstances—can negotiate its way out, despite the Maastricht Treaty provisions on EMU and the absence of any mention in the treaties of negotiating a

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way out? If she is saying that that is all wrong and that we can now negotiate our way out, I will be delighted. If she can confirm that I am quite prepared to sit down and be quiet for a very long time.
Baroness Symons of Vernham Dean: I am so tempted. Whenever anybody says that I have said something interesting, a cold hand clutches at my heart and I listen with perturbation as to what it was I said.
It is straightforward common sense. I have said no more in relation to this than we have said from the first day of debating all the motions put before the Committee. In the extraordinary, unlikely, hypothetical position we have just rehearsed, a country which declared it was going to move away, suspend, get out of its membership would have to then go ahead and tell the others to whom it was committed through treaties how it proposed to do that. What I have said amounts to no more and no less than that. I do not think it is ever going to happen.
Lord Moynihan: I thank the Minister for her reply and noble Lords for their participation in the debate.
I was a little disappointed with the Government response. I made it clear that we are not debating the Europe of today, the European Union as it currently stands. In Committee we have to search behind the meaning of the words and the articles and to look to the future. When applied to a future circumstance, however remote, the application of the treaty will have certain effects and we need to be clear what those effects may be as outlined by the Government.
These scenarios are, of course, remote, but I am sorry that they were dismissed so lightly by the Minister. There are unprecedented provisions in this treaty and, in recognising these provisions, it is important to understand exactly what they mean.
The first area was the question of rights. I sought a definition of rights from the Minister, and she rightly pointed out that there is no definition in the treaty at the present time. It is important to understand what category of rights the Government believe is covered by this article. I regret that we were not told the Government's view in answer to that question.
The second area, which is probably of greater concern, is the selected quotation of Kenneth Clarke in another place on this subject. I will enlighten the Committee as to what was debated in another place and what Kenneth Clarke had to say on the matter. He was speaking to the heart of this amendment and the important subjects and questions which have been raised by noble Lords, both behind me and on the Cross-Benches, namely the distinction between expulsion and suspension, the merits of having the opportunity to expel a member state in extreme circumstances and the effects of suspension.
In his Second Reading speech he considered Article F.1—and here the Minister was right—to be an acceptable part of the treaty. He saw no cause for alarm that the provisions would be used for anything other than the objectives which they were designed
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for—for example, if there was a massive change in one of the new or existing countries that posed a real threat to democracy, such as the establishment of an entrenched fascist government. He went on to say that he did not see why, if a military regime took over a country in central or eastern Europe, it should be released from its European treaty obligations or why the United Kingdom should sever our trading contracts and the policing of those contracts by the ECJ merely because we disapproved of that government. He said:
"I would strongly object to a Government who were not respecting human rights casting votes at the Council of Ministers, and perhaps blocking action, when vetoes were the order of the day, without effective action being taken to stop them".—[Official Report, Commons; 2/12/97; col. 195.]
Moreover, he added that should a military regime seize power and start abusing human rights in Europe he did not envisage that Article F.1 would be the only mechanism for the European Union's response.
That is an extremely important point. I am sorry that the Minister, in a very selective quotation, did not elaborate, as my right honourable friend did in another place, on the fact that if such an occasion took place, as must be envisaged and considered in the light of this amendment, suspension would be a preferable route. That is because ultimately, if it came to expulsion of a member state, there would he such a dramatic ramification and consequences, including the suspension of contracts, so great and so far-reaching, that the sanction in its own right would be a useless deterrent whereas suspension would provide a relatively effective redress.
With courtesy and respect to my right honourable friend in another place, it is important to place on record that his position, as exemplified in the Minister's answer, was not to be taken out of context but must properly come into the context of the question of expulsion versus suspension and why suspension has considerable merits over expulsion.
Many honourable Members in another place took the view that expulsion should be available and, in certain circumstances used. It was a fascinating and important debate. I hope that it is possible to engage in such a debate with the Government because it goes right to the heart of the reason why I tabled the amendment; namely, to elicit from the Government not only how they define "rights" but also what is the true intention of the article and why it was felt necessary to use the concept of expulsion. I wished to argue that case and to look in more detail at judicial involvement.
Having said that, I am grateful to the Minister and to Members of the Committee for participating in the debate. I shall return to the issue on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 23M and 23N not moved.]
4 p.m.
Lord Bruce of Doningtonmoved Amendment No. 24:
Page 1, line 13, at end insert ("other than the following paragraphs (which provide for the application of qualified majority voting in the areas cited)—

(A) Article 109q of the Treaty establishing the European Community set out in paragraph 19 of Article 2 (employment guidelines);

(B) Article 109r of the Treaty establishing the European Community set out in paragraph 19 of Article 2 (incentive measures for employment);

(C) Article 116 of the Treaty establishing the European Community set out in paragraph 21 of Article 2 (customs cooperation);

(D) Article 118(2) of the Treaty establishing the European Community set out in paragraph 22 of Article 2 (social exclusion);

(E) Article 119(3) of the Treaty establishing the European Community set out in paragraph 22 of Article 2 (equality provisions);

(F) Article 129(4) of the Treaty establishing the European Community set out in paragraph 26 of Article 2 (public health);

(G) Article 130i(1) of the Treaty establishing the European Community set out in paragraph 32 of Article 2 (framework programme for research);

(H) Article 130o of the Treaty establishing the European Community set out in paragraph 33 of Article 2 (joint undertakings for research, technological development and demonstration programmes);

(I) Article 191a(2) of the Treaty establishing the European Community set out in paragraph 45 of Article 2 (transparency);

(J) Article 209a(4) of the Treaty establishing the European Community set out in paragraph 52 of Article 2 (anti-fraud measures);

(K) Article 213a(1) of the Treaty establishing the European Community set out in paragraph 53 of Article 2 (statistics);

(L) Article 213b(2) of the Treaty establishing the European Community set out in paragraph 54 of Article 2 (independent advisory body on data protection);

(M) Article 227(2) of the Treaty establishing the European Community set out in paragraph 55 of Article 2 (measures for
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French overseas departments and the Azores, Madeira and the Canary Islands); and

(N) Article 45(2) of the Treaty establishing the European Community set out in paragraph 27 of Article 6 (compensatory aid for imports of raw materials),").

The noble Lord said: I wish to make particular reference to paragraph (J) which refers to,
"Article 209a(4) of the Treaty establishing the European Community set out in paragraph 52 of Article 2 (anti-fraud measures)".
That particular item is on page 41 of the document we are discussing. The Committee will see that it seeks to lay down, possibly with greater precision than before, the responsibility of the Community as a whole, the member states, the Commission and the Council in regard to the institution of effective anti-fraud measures.
I do not believe that anyone can query the necessity for such a clause being inserted into the treaty. Article 209a sets out the responsibilities which were seen at the time as being a desirable code and, indeed, desirable laws to which all parties should conform.
Members of the Committee will recall that in recent years there have been a number of inquiries in this House, headed by the distinguished chartered accountant Lord Benson, who spent years investigating the subject because he was convinced, as indeed was I, serving in a much more subordinate capacity, that fraud and irregularity were assuming such proportions in the Community as to imperil from time to time such reputation for integrity that it had.
For my part—and I believe that this was true also of the late Lord Benson—there could be little complaint about the way in which successive British governments tried genuinely to combat fraud against Community funds in this country. There were minor brushes from time to time in which I participated. It was pointed out to the government of the day that it was not exactly helpful, as regards checking on the absence of fraud and irregularity in relation to import duties, to cut the size of HM Customs and Excise whose responsibility it was to monitor the various transactions inside and outside the country.
Nevertheless, there can be little doubt, looking at the matter from the United Kingdom's standpoint, as one of the principal member states and, indeed, the third highest net contributor to the Community's funds, that on the whole the United Kingdom made some genuine effort. That could not be said of all member states. Without any hesitation or fear of contradiction, I mention in particular the case of Greece whose tobacco transactions and receipts from the Community, to which the noble Lord, Lord Boyd-Carpenter, referred from time to time, tended to be both fraudulent and irregular.
That left the responsibility of the institutions themselves; that is, the various agencies operating under the direct control of the Community or being part of it, the Commission and, indeed, the Council of Ministers. It is to those aspects of the matter that I now wish to turn.

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First, I deal with the question of fraud generally and irregularity in the handling of Community funds. Frauds against the Community and the irregularities associated with disbursements, receipts and accountability have been widely highlighted in the press over the years so as not to require repetition, although I shall venture to mention some cases. For that purpose, I prefer not to use my own words which may be rather more incisive than those of the academically qualified. I use those of our own Comptroller and Auditor General of the United Kingdom.
So acute was the problem of fraud that it was raised and highlighted within the negotiations on the Maastricht Treaty. Members of the Committee will remember our former Prime Minister, the right honourable gentleman the Member for Huntingdon, coming back from Maastricht claiming a very great triumph in that he had urged and had eventually obtained agreement to an amendment to what was Article 189, now Article 248, which is at page 210 of the document to which I referred. He secured the insertion in the obligations of the Court of Auditors of the following:
"The Court of Auditors shall examine whether all revenue has been received and all expenditure incurred in a lawful and regular manner and whether the financial management has been sound. In doing so it shall report in particular on any cases of irregularity. The Court of Auditors shall provide the European Parliament and the Council with a statement of assurance as to the reliability and legality and regularity of the underlying transactions, which shall he published in the official journal of the European Community."
That was claimed as a considerable victory. I am sure that the Committee will remember the claims made by John Major in that connection. It may surprise Members of the Committee to learn that little action has been taken.
Lord Wallace of Saltaire: I am sorry to interrupt the noble Lord but I thought that he was speaking to Amendment No. 24. The bulk of his argument seems to be concerned with Amendment No. 56, which comes later. Will the noble Lord confirm that he is speaking to Amendment No. 24, not Amendment No. 56?
Lord Bruce of Donington: I am referring to paragraph 52 of Article 209a(4) of the treaty.
I do not propose to give my account of what has happened but will report the considered verdict of the Comptroller and Auditor General on the annual report of the European Court of Auditors 1996—I shall refer to the date aspect later. The Comptroller's report was published four or five days ago and came into my possession last Friday morning. He stated that,
"it is a matter of serious concern that for the third year in succession the Court have declined to provide a positive assurance on the Community's payments because of the large number of errors identified".
He adds that,
"the number of exceptions to the Court's assurance on the reliability of the accounts is also a matter of concern, indicating that the Commission have some way to go before they attain the quality of financial reporting expected of public sector financial statements. such as government accounts in the United Kingdom: and the Commission should produce clear and simplified financial statements of the Community Budget with more accessible
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financial information, prepared in accordance with generally accepted principles in so far as appropriate. The Statement of Assurance could also be published with the financial statements of the Community Budget. Making these two changes would he in line with the recommendation in February 1996 of the Committee of Public Accounts."
Then, our own Comptroller and Auditor General continues—and I am not embellishing any of the errors that he reveals—with these words:
"In relation to the Common Agricultural Policy — the Council did not act on the Commission's proposals to eliminate the over-compensation of farmers arising from unexpected movements in world market prices."
He adds that,
"the high level of error found in payments from the Structural Funds was unacceptable. For instance, 31 out of 69 Social Fund Payments had errors with a measurable financial impact."
The Comptroller and Auditor General states at page 13 that,
"the Court estimated that farmers were overcompensated under the arable aid programme by some £2.2 billion … in 1995£96. and that producers had been overcompensated by at least £0.6 billion … under beef and veal premium schemes over a four year period …; the extensive use by the Community financial system of advances which were accounted for as actual expenditure."
I could go on about the number of fully grounded complaints. Members of the Committee can read the Comptroller and Auditor General's report any time you like. It continues that,
"cash at hank, recorded in the balance sheet as £8.6 billion … was not accurately reflected in the accounts".
For example, advances to non-European countries of £3.1 billion were omitted. The total value of advances and payments on account which were recorded as budgetary payments but which had not yet been definitely accounted for was at least £14 billion. I could go on but I do not intend to do so. Those observations are sufficiently grave to enable the Committee to form a judgment. The report sums up:
"The Court estimated that for some 4.3 per cent. of Community payments it was impossible to obtain sufficient evidence to reach a firm opinion as to the correct use of Community funds.
That is not good enough. I am confining my criticisms to the Council of Ministers for the time being—and to the extent that my own country is involved because it is a member of the Council of Ministers and in particular of ECOFIN.
4.15 p.m.
Lord Wallace of Saltaire: The noble Lord has been speaking for 15 minutes on the subject of Amendment No. 56, not Amendment No, 24. I have trouble following the relevance of his remarks to Amendment No. 24. The Committee will not make progress unless it sticks to the relevant amendment under discussion. Some of us will be here when Amendment No. 56 is reached—I trust that noble Lord will be here. We shall make much better progress if we deal with each amendment in turn.
Lord Bruce of Donington: It is always easy to make agreeable progress when the facts revealed are agreeable. I can understand the noble Lord's discomfiture on having these matters brought to his

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attention. That will not deflect me from my duty in these matters, to which I have devoted 25 years of my life. I owe it to the Committee to explain the position as I see it. Members of the Committee may disagree with me but I ask them to bear with me a little longer. After all, I did not spend one and a half hours yesterday discussing the completely irrelevant subject of the social chapter. The matters now before the Committee are of considerable importance and should be attended to.
Why is it that after three years the Council of Ministers—which normally operates, at ECOFIN level, in a responsible manner—has not able to allow the Court of Auditors to certify accounts in accordance with the requirements laid upon it by the treaty? If the Community's accounts and the auditor's report were furnished to member states and Governments immediately after they were submitted, the Council of Ministers would have an up-to-date picture. Instead, the following procedure is adopted in striving for financial regulation, to which I objected at the time in the European Parliament.
Before the report of the Court of Auditors is published it has to go back to the Commission for its replies. But by the time that the Commission has completed those replies another six months has elapsed, which means that when the Council receives the document it is already obsolete. At that point, the Council may be disposed to think, on the basis of the voluminous explanations provided six months later by the Commission, that some progress is being made and may, therefore, decide to "let it go".
It is almost the same as a public company in the United Kingdom withholding the circulation of its report to the public and its shareholders until after the directors have had an opportunity to comment on the auditors' report which accompanies the accounts. Everyone knows that that would be quite an impossible position. If a public company tried to hold up the publication of its accounts until after the directors have had an opportunity to comment on them, it would, however short the delay, probably lose its quote on the Stock Exchange. That is what is wrong and is what should be altered.
I am afraid that there will have to be an exercise of courage and determination by governments of member states. I expect and hope that, far from allowing this matter to slide year after year with millions of pounds being lost through fraud and irregularity, our own Government will in the current year at ECOFIN put their foot down and demand the necessary explanations and the necessary changes. I beg to move.
Lord Whitty: I believe it would be helpful if I were to intervene at this point. I share some of the concerns expressed by the noble Lord. Lord Wallace, but I thought that my noble friend was probably coming towards the end of his remarks at various points in his speech, especially when he started talking about the mechanism involved. I say that because this amendment deals with the mechanism and it was grouped with all the other amendments on QMV that we debated at
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length last night. I do not intend to go over that ground again—and I do not think that the Committee should—on the basis of this amendment.
In relation to fraud, as the noble Lord, Lord Wallace, pointed out, there will be a substantive debate in that connection when we discuss Amendment No. 56 later tonight. I do not suggest that the Committee has the substantive debate at this time. Therefore, unless other noble Lords persist in pursuing the debate now, I shall confine my response to saying that everything that my noble friend said about the necessity for tackling fraud is shared by the British Government. However, it is an overwhelming case for what this amendment actually deals with; namely, moving from a paralysis of unanimity required on anti-fraud measures to one of QMV. Indeed, the noble Lord made more eloquently than any of us could the case for not accepting this amendment and for accepting the change in the Treaty of Amsterdam to move to QMV for anti-fraud measures—and the quicker the better.
Lord Bruce of Donington: With the leave of the Committee, and with considerable thanks to my noble friend, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 25 not moved.]
Lord Stoddart of Swindonmoved Amendment No. 26:
Page 1, line 18, at end insert ("and the Protocol annexed to the Treaty establishing the European Community on the Application of the Principles of Subsidiarity and Proportionality"").
The noble Lord said: In moving this amendment, I believe that it will be convenient for me to speak also to Amendments Nos. 26A, 30 and 54C. The Maastricht Treaty was sold to Parliament—that is, to the House of Commons and to the House of Lords—on the whole question of subsidiarity. Far from being a centralising treaty, as many of us believed that it was, we were told that it would be a decentralising treaty and that in future, far from being more centralised and gathering more power to itself, the European Community would give back to member states powers which had been taken from them and that it would be very strict about not taking any further powers.
Indeed, the subsidiarity clause says that:
"The Community shall act within the limit of the powers conferred upon it by this treaty and of the objectives assigned to it therein".
Some of us expected that that would be taken seriously and that we would see a whole raft of measures, which had gone for decision by the Community, returned to national governments and national parliaments. However, so far as I know, no significant item has been returned to the jurisdiction of national governments and parliaments at all under the subsidiarity clause. So far as we can see, a number of inquiries carried out since then have elicited the following information: subsidiarity cannot apply to any measure to do with the single market; in other words, nothing to do with the single market can be returned. That means, in effect, any measure dealing with economic activity. Even if certain products are not sold on the Continent but either

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domestically or to third countries, they have to comply with single market regulations. Further, despite various promises, not one single piece of Community legislation has been withdrawn, as I have already mentioned, in accordance with the principles of subsidiarity, though there has been some vague talk about legislation not being presented because of it. But, once again, we cannot have a list of those particular measures.
The new definitions of subsidiarity make it clear that the concept cannot question the powers of the Community defined by the treaty, as interpreted by the Court of Justice. The criteria will not apply to any area where the Community has exclusive competence. These have always been defined by the Community itself; in other words, it remains true that the decision of what is and what is not subject to the concept of subsidiarity is decided at the centre—not at the periphery and not by the member states. It is decided by the centre. So decisions are to be taken from the top down rather than from the bottom up. I believe that even the Liberal Party will be concerned about that aspect. I say that because we all know—at least, I have always been taught so—that in a real democracy, such democracy grows from the grassroots upwards. It is not imposed from the top downwards, because that is not democracy at all.
The new clauses on subsidiarity concentrate on the form that Community action should take rather than its substance. The following paragraph is added, in case anyone should get any strange ideas:
"Member States are required to take all appropriate measures to fulfil their Treaty obligations and not to prevent the attainment of the Treaty objectives".
Paragraph 2 of the Protocol on Subsidiarity and Proportionality also adds that these principles,
"should take into account Article F(4) of the Treaty on European Union, according to which 'the Union shall provide itself with the means necessary to attain its objectives and carry through its policies"',
whatever they may be. The worries expressed about this particular article at the time of the Maastricht debates have been fully justified. It is incompatible with any serious application of the concept of subsidiarity, which we all believed in and which we all said we wanted; but in fact it is what we have not got.
The concept of proportionality is supposed to take over from subsidiarity to limit the scope of Community action and to ensure that this does not go beyond the terms of the treaty. Again, the definition is from above rather than from below. The whole system is self-referential and circular. It has not resulted in less or less detailed legislation, as we have seen by the rafts of directives and regulations that keep coming from the Community to be put into operation by national governments.
According to leading European jurists, subsidiarity is not a legal but a political term. In the last resort it is the European Council that decides on the criteria and their fulfilment.
On the subject of the extent of legislation, it is worth noting that even official European Union publications are not certain how many legal Acts are in force. It is
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almost inconceivable, if not laughable, that they do not know how many legal Acts are in force. If they do not know how many are in force, how can they enforce them and how can people obey them? If the European Union does not know what the law is, how on earth can everybody else know what the law is?
Since many of the directives are amendments of old ones and are not counted as separate pieces of legislation, though they clearly are that, the closest anyone has come to giving a figure is the Danish MEP, Jens-Peter Bonde, who calculated that by 1996 there were 23,027 pieces of EEC/EU legislation in force—23,027. I repeat that figure so that it should sink into people's minds. But even he admitted that that is not completely accurate because "there are no complete statistics of the EU Acts".
According to a recent reply in the House of Lords, there were 1,845 pieces of secondary legislation, mostly regulations, which do not go through national legislatures at all. In 1997, at the same time, 1,124 such pieces were repealed or expired. That left a net increase of 721. But that, of course, did not include directives. It is not clear, so far as I can see, whether decisions or Commission opinions are included in that figure, so the whole business of EEC legislation seems to be shrouded in doubt, if not secrecy.
This may be a convenient moment to raise the question of accountability. The main initiator of legislation in the EU is the Commission, as we all know, though most directives are passed by the Council of Ministers. Whether the Council of Ministers always know what they are talking about is another matter, but those who have attended Council meetings will know more about that than I do. Neither of those bodies is, strictly speaking, accountable to anybody—the Commission obviously so, while the Council of Ministers regularly flouts agreements of obeying the will of national legislatures. We, in this Parliament, cannot bind Ministers to do what we believe they should do. Of course, under QMV, it would not matter anyway as long as the decision was taken by QMV in Europe.
It is also important to remember that of all the EU legislation, only directives have to be approved by the national legislatures. Mostly, they go through this place, the House of Commons and ourselves, in the form of statutory instruments. In other words, they are not debated at all. Regulations and other pieces of legislation are, on the other hand, effective from the date of publication or the designated date directly on individuals.
It seems to me that we need some proper answers on subsidiarity: what it means, what it is going to mean in the future and when we can expect the subsidiarity proposals to be put into effect. It is about time our Government, perhaps together with other governments, reviewed all the directives, all the measures that have come from the EU and which are operated by them, to see, first, whether they are still necessary—and if they are not necessary they should be repealed—and whether the European Union is exercising powers which ought now, in the light of experience and further experience, to be exercised in the member states. Above all, we

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ought to know just how many laws are in operation. The European Union or the Commission should be told that that is essential information which people and governments want if they are to understand exactly what is happening within the Community itself.
So I hope that my noble friend does take this matter seriously, that he really does believe, and this Government believe, in subsidiarity, that decisions should be taken at the point nearest to the people that those decisions will affect. Increasingly those decisions are being taken away from those whom they affect. I hope that on this issue the whole House will be able to unite, including my noble friend, in getting the subsidiarity proposals in proper context and to make them work as they were meant to work and as we were assured they were going to work when we discussed the Maastricht Treaty. I beg to move.
4.30 p.m.
Lord Moynihan: All Conservative members welcomed the principle of subsidiarity in another place, and I believe noble Lords from all sides of this House would echo their support for this principle. Subsidiarity or decentralised decision making is at the very core of what should be the appropriate vision for Europe, a vision of partnership of nation states in a competitive, decentralised and efficient Europe. But Amendment No. 26A and the new Clause 54C that I have tabled are both designed to highlight the unsatisfactory nature of the wording of the new protocol on the applications of the principles of subsidiarity and proportionality contained in the treaty and, in particular, paragraph 2.
Despite the new protocol's length, far from strengthening that important principle I have reservations to the effect that it will weaken it. From these Benches our main concern is that the principle of subsidiarity will not be developed and enhanced by Protocol 7 but instead its purpose will become confused and its progress impeded.
The principle that action should be taken at European level in areas where objectives cannot be achieved by action at national level, leaving only those areas where solutions need to be found by international agreement to be taken at Community level, was advanced by the former Prime Minister, John Major, during the Maastricht negotiations. Its inclusion in the treaty was a major achievement with a capital M. Following Maastricht, the previous government sought to develop the principle of subsidiarity at subsequent European councils in order to achieve a careful balance. On the one hand, the principle ensured that action at the level of the nation state should be the rule and community action the exception, while on the other hand it was important to ensure that subsidiarity could not be used to avoid single market obligations or, indeed, to circumvent requirements for the proper management of funds from the European Community budget.
It was the initiative of the previous government that led to proposals being brought forward to entrench subsidiarity further into European decision making. It was decided to include in the Amsterdam Treaty
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elements of the detailed rules for the application of subsidiarity, which had been agreed at the 1992 Edinburgh European Council. Indeed in 1996 the Government's White Paper, The Partnership of Nations, which set out Britain's negotiating position before the IGC, stated,
"The Community should only act where it has been given express competence and where action at the European level will bring clear benefits which cannot be achieved by member states acting alone".
In other words Brussels should play no part in matters best left to nation states. The Opposition believe that this principle is an essential safeguard against remote, bureaucratic and unnecessary interference. But, equally, it allows matters that require common action to be handled at European level such as migration, environmental degradation, nuclear proliferation, political instability to the east and, especially, drugs. It is fair to say that once again people throughout Europe are benefiting from an idea that stems from the Conservative Party and the United Kingdom, formed by enshrining subsidiarity as an established principle of the European Union by which to determine European decision making. The treaty provided an important safeguard against over-centralisation and represented a major success for the British vision of a decentralised and deregulated Europe.
There are critics of subsidiarity and it is important that the Committee considers their views. They ask, for example, what regulations have been changed or what direct action has been taken as a result of subsidiarity. They complain that the Maastricht Treaty made few or no provisions for making the concept of subsidiarity a reality in the European Union. However, I think it is right and proper that I point out to those critics and to the Committee that the volume of new European Union legislative proposals being put forward has fallen rapidly with only 19 proposals for principal legislation in 1996 compared with 61 six years previously in 1990. I accept that this partly reflects the completion of the legislative programme which was required for the creation of the single market, but it also reflects the change in approach to Europe symbolised by the concept of subsidiarity.
Before Maastricht it should be remembered that there was no general presumption in favour of action at national level in any of the treaties, nor have we ever claimed that Article 3b of the Maastricht Treaty was perfectly applied and implemented. But the principle is an important one, as the noble Lord, Lord Stoddart, has mentioned. Article 3b represented a step in the right direction. We look forward to further steps as a result of the Amsterdam Treaty. But we have been gravely disappointed. The former Prime Minister, John Major, said,
"Take subsidiarity which I call national precedence. Subsidiarity enshrines in EC law the principle that the Community should not he permitted to do what member states can do themselves".
I believe this is a critical set of amendments. It focuses on subsidiarity which represents an honest attempt to assert the primacy of the nation state. In my view such a concept connects particularly favourably at this time with what most people in Europe want. An increasingly integrated Europe is out of step with the

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heartbeat of most of the people of Europe. A major factor in people's concerns about the European Union is the perception that Europe generates too much legislation which is intrusive, over-regulatory and unclear. People fear integration by the back door and subsidiarity is a welcome response to that fear—a measure to improve the quality of legislation and to resist integrationist developments.
Against that background I believe the Committee needs to go further and ensure that subsidiarity has indeed become, as I am sure the Government will claim, a more effective safeguard as a result of their negotiations. We certainly look to those negotiating to ensure that the Treaty of Amsterdam achieves that. The aim of reinforcing the principle of subsidiarity through a treaty protocol, particularly to ensure that the European Union makes laws only when individual member states are not better placed to do so, was chief among the previous government's objectives for Amsterdam. That is why it was such a grave disappointment that the Government's new protocol on subsidiarity failed to fulfil this objective and represented no improvement, as the noble Lord, Lord Stoddart, has pointed out. We should look at the relevant wording which is critical. Let us consider the relevant wording in the Maastricht Treaty. Article 3b states,
"the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot he sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community".
That is clear, but we must now consider what Protocol 7 in the Amsterdam Treaty achieved, especially key paragraph (2) which states,
"The application of the principles of subsidiarity and proportionality shall respect the general provisions and the objectives of the Treaty, particularly as regards the maintaining in full of the acquis communautaire and the institutional balance; it shall not affect the principles developed by the Court of Justice regarding the relationship between national and Community law, and it should take into account Article F(4) of the Treaty on European Union, according to which 'the Union shall provide itself with the means necessary to attain its objectives and carry through its policies'."
The noble Lord, Lord Stoddart, was right; this is greater centralisation. That paragraph shows that for the first time the principle of subsidiarity has been expressly subordinated to those very principles, pillars and institutions, that created the supra national activity in the first place.
It is clear that paragraph (2) of Protocol 7 makes the concept of subsidiarity subject to the acquis communautaire, the European Court of Justice and Article F(4). Far from being improved by Protocol 7, the principle of subsidiarity has to a great extent been neutered and emasculated. As a result I put it to the Committee that subsidiarity will not be more effective—as I hope everyone in the Committee would wish—but less. Is it not the case that rather than genuinely clarifying and tightening the application of subsidiarity, this key paragraph (2) ensures that the sum effect of the protocol is that the principle of subsidiarity will mean what the Council, Commission and Court of Justice intend it to mean at any one time?
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Under Maastricht the European Union unleashed a watchdog and they allowed it full licence to roam throughout the Community to restrict the extent to which the European Union sought to do those things that could be better done at national level. People may have reservations about the effectiveness of that watchdog, but at least there was such a sentinel. According to The Times the Government brought back from Amsterdam,
"a dog's dinner of a treaty".
In the case of this protocol it is truly a dog that is muzzled and cannot whimper, let alone bark. Protocol 7 is now long and complex. Instead of stating a simple principle which everyone understood, even if it was ineffectively implemented, we now have a lengthy and unwieldy protocol full of contradictory statements. This will prove fertile ground for the European Court of Justice which will be able to interpret the protocol according to its vision of and attitude towards European Union development. Does anyone believe that such an interpretation will enhance and support the principle of subsidiarity? I believe it risks giving free rein to dominance by the institutions of the European Union and it will serve to confuse and undermine the principle.
The Government have said that the protocol is an improvement because if we believe a matter should be dealt with under subsidiarity and the Commission does not deal with it in such a way, it will be open to any nation state, including ourselves, to go to the European Court of Justice to redress the matter, whereas such a course would have been difficult under the previous provisions. But surely now the Court of Justice in effect becomes the arbiter on what is, or is not, subsidiarity and proportionality. Therefore the benefit of this will be dependent on the way in which the court chooses to interpret the confused and contradictory provisions of the protocol.
I very much hope, and indeed believe, that it will be of considerable assistance to the Committee if the Minister can respond to the legal points that arise from these comments. Will he reassure the Committee that the application of the principle of subsidiarity has not taken a backward step thanks to the complex Protocol 7, which has indeed been improved and enhanced? I also hope that when the noble Lord responds he will clarify the apparently contradictory nature of some of the paragraphs of Protocol 7.
On his return from Amsterdam. the Prime Minister said:
"The treaty gives subsidiarity, ensuring that decisions are taken at the European level only if there is real added value in doing so—real teeth through a binding protocol".
On my interpretation, he was wrong. I believe that the protocol has in fact pulled the teeth of the principle. It seriously undermines it; and that seriously damages the national interest.
The basis of this country's approach to Europe has been one of balance—between the nation state and the European Union; between integration and intergovernmental action; between action at European level and decisions which are best left to individual

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nation states. From these Benches, we seek assurances from the Government that they will not act to disrupt the balance any further.
4.45 p.m.
Lord Renton: This group of amendments is very important. It could be thought by some to deal with a somewhat technical matter. But I am sure the Committee will agree, having heard the speeches of the noble Lord, Lord Stoddart, and my noble friend Lord Moynihan, that the amendments relate to a matter of fundamental importance—a complicated matter, unfortunately, but of great importance.
The European legislative process has become so difficult that at times it is almost unworkable. I mentioned earlier in this Committee stage, and perhaps I may remind noble Lords, that the principal lawyer who, a year or two ago, was responsible for supervising the negotiations on harmonisation among the 15 member states was almost in despair when he spoke at the European law conference in Rome which I attended. He said that we have to have fewer laws, and better laws. The problem is two-fold. It is partly due to the fact that there are now 15 member states with 11 different languages and at least half-a-dozen different types of legal systems. That makes harmonisation, which is an obligation under the Treaty of Rome, almost impossible and a very dilatory process—one which, frankly, is being achieved (a point that he made quite clearly) by a lot of fudging and proposed compromises which may be acceptable to some countries and not to others.
The principle of subsidiarity to some extent, though not so great an extent as we might wish, mitigates the problem. There is no doubt that our then Prime Minister, Mr. John Major, and our then Foreign Secretary, my noble friend Lord Hurd, did a great thing in persuading the representatives of the other European countries to agree to the principle of subsidiarity. There was one unfortunate result. Some members of the Commission produced a memorandum in an attempt to explain the application of subsidiarity, and did so in such a lengthy and complicated a way that the British representative on the European Court of Justice at that time (three or four years ago) described the memorandum as gobbledegook.
With that background, surely it is right that we should have some provision on the lines of Amendment No. 30, and go a little further, with a provision along the lines of Amendment No. 54C, in order that our own Parliament and people can be kept informed as to the effect of the attempt at harmonisation, modified by subsidiarity, upon our own laws, most of which have been established for years. Of course, we have to keep on legislating to keep up with modernity, but fundamentally our basic laws, and the principles that apply to them, have been with us for generations.
We must be very careful, however earnest some of us may be about wanting the European Community to succeed, to ensure that it does not merely create a new superstate which ignores the liberties, and the laws on which those liberties are founded, of the various member states. That is why this group of amendments
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deserves application by the Government. We are not pressing for amendments at this stage. However, I should very much like to see this group of amendments, and some other groups, passed by this place in order to give the Government and Members of the other place the opportunity to think again for the benefit of our people.
The Earl of Onslow: When we came to the Maastricht Treaty all those years ago, subsidiarity was extraordinarily difficult to define. The only then known definition was the subsidiarity as run by the Vicar of Christ in Rome, who allowed his subsidiary bishops sufficient leeway over matters in which he was not interested. That seems to be exactly what has happened in relation to subsidiarity within the European Community.
My noble friend Lord Moynihan says that there has been a watchdog about the place, looking to make sure that subsidiarity has actually been present. The watchdog strikes me as being a rather neutered chihuahua compared with the amount of subsidiarity that has actually been brought about.
I merely wish to ask what subjects have been declared subsidiary; how much subsidiarity there has been; and whether any matters have been repealed. In other words, has any acquis communautaire been "de-acquis communautaired"—if that is the right term? That is what we were promised in the Maastricht Treaty, and it appears there is an attempt to promise it in the Amsterdam Treaty. To someone like myself, who is becoming more and more doubtful, it seems to have some good provisions. However, if it goes on as it is, it will make the European Community quintessentially unpopular. There will be a terrific row and it will break up, unless we get the legislation more in tune with the wishes and desires of our people. I wish to know what has been declared subsidiary since 1992 and what action has been taken on it.
5 p.m.
Lord Grenfell: We need constantly to remind ourselves that the subsidiarity principle relates to areas where the Community does not have exclusive competence. I am therefore rather puzzled by the fear in the heart of the noble Lord, Lord Moynihan, when he considers paragraph (2) because he obviously has considerable difficulties with it.
It would be sensible to read paragraph (2) in conjunction with paragraph (4). In effect, paragraph (2) simply reflects the principle—particularly the part in the paragraph which says:
"it should take into account Article F(4) of the Treaty on European Union, according to which 'the Union shall provide itself with the means necessary to attain its objectives and carry through its policies'".
That reflects the principle that subsidiarity must be related to what is exclusively in the competence of the Community and what is not.

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I notice that the noble Lord was rather shy about referring to paragraph (4). I am not sure I heard him spell the words out. Paragraph (4) states clearly that:
"For any proposed Community legislation, the reasons on which it is based shall be stated with a view to justifying its compliance with the principles of subsidiarity and proportionality; the reasons for concluding that a Community objective can he better achieved by the Community must be substantiated by qualitative or, wherever possible, quantitative indicators".
That seems to me to be an extremely sensible and hard test. If one reads paragraph (2) in conjunction with paragraph (4), I do not think the two are contradictory. Paragraph (2) sets the scene in which the subsidiarity principle might or might not apply. Paragraph (4) spells out clearly the hard test that the Community must go through in order to prove that it has the prior right to legislation.
The Earl of Clanwilliam: Before the noble Lord sits down, I should point out that paragraph (1) states:
"In exercising the powers conferred on it, each institution shall ensure",
compliance with the principle of proportionality. Here we have proportionality raising its ugly face in competition with subsidiarity. As proportionality is the responsibility of the Commission and subsidiarity is the responsibility of ourselves, it is the Commission and the Council which exercise proportionality. That is in paragraph (1), so it totally negates paragraph (4) which the noble Lord dealt with.
Lord Wallace of Saltaire: The subsidiarity principle is extremely important and I have much sympathy with what was said by the noble Lord, Lord Stoddart, at the start of his speech. We see government as most effective when it is as close to the people as possible.
I also believe that from the outset the European Commission had certain centralising tendencies, a natural belief by the French fonctionnaires who established it that whatever was done in Brussels was done better. It has been important to establish with the principle of subsidiarity that we need to change the basis of a much larger and more diverse Community.
We must distinguish between politics and law here. A number of the arguments we have heard this afternoon suggested that unless absolutely everything is written into the treaty, they will not be contained. It was suggested at one point that if it were not in the treaty that a member state could leave, then it would not be possible. It was not in the Act of Union with Ireland of 1801 that Ireland could leave the United Kingdom, but it did. One cannot write absolutely everything into law.
The subsidiarity principle was written into Maastricht. I agree with many of those who have spoken so far that it has not yet been used as effectively as it should. The last Conservative Government must share part of the blame for that. They failed to build coalitions with like-minded governments—and there are some—in order to push the principle through. The British and the French
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Governments produced lists of items which they would like to be returned to national sovereignty; they were rather different. It was a standing joke in Brussels two or three years ago that the British Government were arguing at the same time that all animal welfare issues were better dealt with at Brussels than at national level, but that no human welfare issues, social welfare, should be better dealt with at Community level. We must be rather more consistent in arguing for subsidiarity.
However, the principle is now there to be used. The European Union is a process of continuing negotiation. I hope that the strengthened protocol within the treaty will be more effectively used by the British Government than the weaker version in the Maastricht Treaty which was used by the previous government.
Lord Beloff: I wish to dissociate myself from something which the noble Lord, Lord Stoddart, said. It was that when subsidiarity was brought back as part of the Maastricht Treaty, everyone applauded. I thought it was nonsense then; I think it is nonsense now.
There are two forms of recognised government in a civilised world: unitary governments and federal governments. Having spent most of my life studying the latter, it seems to me a perfectly valid form of government which, in a proper federal constitution such as that of the United States or Australia, can last for a long time. It does not give rise to endless tensions and is something to which the ordinary citizen can refer, to ascertain whether a particular exercise of governmental authority is federal or for the state and the province.
The European Union is neither a centralised government—if it admitted to that there would be universal expansion, not just in this country—nor, alas, is it a federal government because there is no clear division of powers to which the ordinary citizen can refer and upon which, as in the United States, Australia or Canada, a court can ultimately judge whether the boundaries have been correctly set.
For once, I agree with the noble Lord, Lord Wallace of Saltaire. The Union is in a constant process of negotiation and renegotiation. I believe that it takes up the energies of this Government and other governments which could be much better spent in measures to improve the lot of their own populations. Subsidiarity is a word which when I started teaching government, no one had ever heard except, as has been pointed out by the noble Earl, Lord Onslow, a few theologians. The introduction of the word has simply been a camouflage for the attempts of particular parts of the European institutions to acquire power under the cover of distributing it. We can get nowhere with this system. I can only tell the Committee that its time in dealing with the treaty is largely wasted because it will not survive.
Lord Renton: Before my noble friend sits down, may I ask him whether he agrees that, bearing in mind that all the European countries in the European

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Union are committed to subsidiarity, each of them should have the right to be told how it is working, if at all?
Lord Beloff: They may be committed to subsidiarity, as someone may be committed to a belief in astrology. It does not get us any further.
Baroness Park of Monmouth: I do not believe that I shall get the matter much further either. I wish to ask the Minister a question. If we consider paragraphs (4) and (5) of the protocol, and we recognise that the Community will act on its own only if there is no national way of doing something, what have we managed to establish formally as the time for scrutiny which we are to be given? That is one of the major problems. Matters are decided but because they come to both Houses so late it is virtually impossible to consider what the outcome will be. Whatever we think about subsidiarity, it is vital to establish an effective mechanism for keeping track and being given an opportunity to express a view. The protocol states on page 86, in paragraph (9):
"Without prejudice to its right of initiative, the Commission should: … except in cases of particular urgency or confidentiality, consult widely before proposing legislation".
Who will decide whether it is so urgent that they do not have to consult? Also, I should also like to know more about the actual control of scrutiny within the mechanism of the Community. The representative states in paragraphs 129 and 130 of House of Lords Paper 25 on advancing parliamentary scrutiny of the third pillar:
"We looked at what was done in the Irish Presidency and something like 31 measures went through … but only seven of those measures actually went through the Council of Justice and Home Affairs Ministers".
The committee asked,
"Do you mean that they went through other Councils?"
The answer was:
"They went through other Councils. I think five measures were adopted without debate by other Councils which never went to the Council of Justice".
He went on to say that those Councils, as far as the representative knew, had no particular competence to make a specific decision. I am anxious to hear from the Minister therefore what we have done to ensure that we have effective, reasonable time for scrutiny.
Lord Pearson of Rannoch: I hesitate to embarrass my noble friend on the Front Bench who has done his best to defend the previous government's position on the introduction of subsidiarity. Indeed, I have just noticed a noble Lord leaving the Chamber. I am not surprised. He was a member of that Front Bench at the time when we spent many hours locked in combat over the Maastricht Treaty in 1993. I must point out to my noble friend that in his quote of Article 3b, as it was, of the original Maastricht Treaty, he missed out the vital 10 words which start the subsidiarity clause and which give the game away as to the whole intention of the clause. That is not in the least bit contradicted by the amendment we
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now see before us on the protocol on the subsidiarity provisions of the Amsterdam Treaty. The intention is merely confirmed.
To explain this point fully and to put it yet again on the record in your Lordships' Chamber I shall read the start of Article 3b, as it was. The vital 10 words are,
"In areas which do not fall within its exclusive competence".
It then continues:
"the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community".
A question which I first asked in a debate in your Lordships' Chamber on the Maastricht Treaty before it arrived here, in February 1993—many other noble Lords who have doubts about the entire European exercise have been asking the question steadily ever since—was: who decides which areas fall within the "exclusive competence" of the Community?
The answer is, and always has been, "the Community". That is merely confirmed with knobs on by Protocol 30, the protocol on subsidiarity in the Amsterdam amendments to the Treaty of Rome. I will not weary your Lordships by reading them out again. They have been fairly quoted today. However, I say to the noble Lord, Lord Grenfell, who prayed in aid paragraph 4 of the protocol, that the extract he quoted from that paragraph confirms my point exactly. When I ask who decides what is and what is not within the exclusive competence of the Community, the answer has always been the Community, not the nation states. From paragraph 4 the noble Lord quoted as follows:
"the reasons for concluding that a Community objective can he better achieved by the Community must be substantiated by qualitative or, wherever possible. quantitative indicators".
But in the charge of whom? Who decides? The answer remains "the Community".
It is perfectly simple; the whole business of subsidiarity has always been a fraud. It is a fraud now. It is confirmed as a fraud in the Amsterdam Treaty and we should not look for any form of succour or defence for our national sovereignty from it.
5.15 p.m.
Lord Simon of Glaisdale: It is with great trepidation that I intervene in a debate on the various treaties which is being carried on by acknowledged experts who have been assiduous in their attendance in the debates. I do so because I saluted with enthusiasm the inclusion in the Maastricht Treaty of the word "subsidiarity".
The noble Lord, Lord Beloff, said that that word is new. It may be. If it was not in the vocabulary when he was teaching, it is undoubtedly new. But the idea behind it is not in the least new. It has been a matter of consideration by everybody who has been concerned with the science of government since the days of the ancient Greeks.
Subsidiarity is a perfectly simple idea. It means that no decision should be taken by any decision-making body which cannot reasonably be taken by a decision-making body which is closer to the person who

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is affected by the decision. For example, that principle was argued over between the confederationists and the federalists at the time of the American revolution.
I may say that I speak with diffidence in the presence of the noble Lord, Lord Beloff, since his preface and explanation in his edition of the federalist papers where it is a locus classicus. But it is not only concerned with federalism and confederation. Where shall the power lie? We have had to consider it in connection with our own local government from the days when local government stood up against central government—or perhaps it would be fairer historically to put it the other way round.
The question must be asked: who then decides? It seems to me that there is no alternative except to say that it is a court of the institution which decides how the principle will affect in any specific situation. In saying that, we must bear in mind that any institutional court is a centralising body. We must be on our guard against that. The European Court, like all similar courts, is a centralising body and so of course is the Commission. Like any body exercising power, the Commission has the greater power. That is why power corrupts. It corrupts, first, by creating a desire for greater power.
So we have two bodies—a court and the Commission—which will be trying to reverse and hold back the principle of subsidiarity. We saw it immediately after the Maastricht Treaty. It had been referred to in the memorandum which was designed to try and mitigate the inclusion of the principle which I venture to submit to the Committee.
What then should our Government be doing? They should be using all their powers to insist that the principle of subsidiarity is observed not in general but from case to case. In doing so they will be up against the two centralising bodies which I have mentioned, but they can still have an effect. I hope we shall hear from the Minister that that is what will happen.
Lord Pearson of Rannoch: Before the noble and learned Lord sits down, can he tell the Committee how he thinks that the British Government, with the best will in the world, can overcome a qualified majority vote which goes against them in this matter, as such votes usually do?
Lord Whitty: This has been a quite fascinating debate. It has been almost a consensual debate in certain respects in that everyone in the Chamber reflects what their view of subsidiarity is and thinks that we should have more of it.
The general difficulty that we have had with the concept since it was first introduced at Maastricht is that everyone has some concerns about the way in which European law is being made. They are not quite clear who ultimately is responsible for it and they had hoped that the words in the Maastricht Treaty would help to sort out more clearly and mechanistically how subsidiarity applied. I think it is true to say that everyone feels some disappointment that that clarity has not yet emerged.
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Part of the reason is that we are not dealing with either a centralised state or a federal state, as the noble Lord, Lord Beloff, said; we are dealing with something that is organically changing in the light of negotiations between a number of independent member states, as the noble Lord, Lord Beloff, and the noble Lord, Lord Wallace, in unusual accord, seemed able to describe the European Union. In those circumstances we have to accept that an old medieval philosophical concept is a little bit of a jelly and quite difficult to apply in specific circumstances. Nevertheless, lying behind that is a very firm political intent by those who negotiated the Maastricht Treaty and by those who negotiated the Amsterdam Treaty.
Unfortunately, it is also true to say that some of the aspects of subsidiarity referred to here, particularly by my noble friend Lord Stoddart, with whom I have some sympathy, are somewhat broader than those which were incorporated in the Maastricht Treaty and which have been built on by the Amsterdam Treaty. At the end of the day, interesting discussion though this is, we are here at the Committee stage of the Bill and we have to look at the words that are changing as a result of the changes negotiated at Amsterdam. It is therefore important that we go back to those words.
The subsidiarity principle introduced at Maastricht states, as other noble Lords have said:
"In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community".
The third paragraph of Article 3b goes on to say:
"Any action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty".
That is the proportionality principle. So Maastricht had set out those general principles of subsidiarity and proportionality but it was felt that it did not deal adequately with their application and that detailed guidelines were necessary. That is why we got the Edinburgh guidelines, put forward by the previous administration and supported by the then Opposition. Those guidelines set out detailed procedures for the institutions to follow to ensure that subsidiarity was properly adhered to.
At the intergovernmental conference prior to the election the previous government had argued that it was important to write the details set out at Edinburgh on the substance and the application of subsidiarity into the treaty itself in a legally binding and detailed form. We, as the Opposition and subsequently as the Government, agreed with that. When we entered the IGC negotiations last May a draft of the subsidiarity protocol was already in the treaty text which had been reached in draft by that stage. I must pay tribute to the Opposition for their part when in government in achieving that text. I therefore hope that they will welcome the outcome.
What I cannot quite understand is how the noble Lord, Lord Moynihan, can say today that that text is weakening the previous application of subsidiarity which was written into the Maastricht Treaty. I can see,

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as many noble Lords have indicated, that they may well wish that the words were stronger in the Amsterdam Treaty but I cannot understand the concept that they have weakened the position. They are based on the initiative at Maastricht but they are explicitly taking into that what was previously regarded as a negotiating triumph by the previous government at Edinburgh.
Lord Pearson of Rannoch: Perhaps I may help the noble Lord as one who did not regard the negotiation at Maastricht as a triumph. The new protocol on subsidiarity specifically removes any possibility that the acquis communautaire could be weakened or diluted by the subsidiarity clause introduced at Maastricht, which is what many people hoped it would do. The specific words are perfectly clear and have been quoted before. They say that
" the application of the principles of subsidiarity and proportionality shall respect the general provisions and objectives of the treaty"—
fair enough—
"particularly as regards maintaining in full the acquis communautaire and the institutional balance."
They give greater power to the court, which we all know is the engine of the treaty. This is knobs on. Subsidiarity means what we said it meant at the Maastricht negotiations of 1993, not what the Conservative Government said or those who thought it might be of any use to us said.
Lord Whitty: The point I am making is that the changes between Maastricht and Amsterdam do not weaken the position. The reference to the acquis communautaire was present to start with in Article B of the treaty on the European Union negotiated at Maastricht but then it was specifically reinforced in the Edinburgh guidelines. Those references to the preservation of the acquis communautaire were there already. We have not gone backwards. We may not have done what the noble Lord wanted but we have not introduced something which is less pro-subsidiarity than the previous text, which is what I thought the noble Lord, Lord Moynihan, and several other noble Lords were arguing.
The Earl of Onslow: Perhaps I may ask the noble Lord what to me is an important question. Can he please give me and the Committee an example of where subsidiarity has actually kicked in and where the European Commission or the court has said, "That is nothing to do with us. It is only to do with you?"
Lord Whitty: There are two categories of that. One is where, explicitly, proposals that the Commission was bringing forward before the Maastricht protocol and the Edinburgh guidelines existed were abandoned on grounds of subsidiarity, of which there are between 15 and 18 examples, which is perhaps not the long list which the noble Earl would have wished. Those would otherwise have come forward had they not been rejected on grounds of subsidiarity. Those are matters that were in the pipeline prior to Maastricht and Edinburgh. Secondly, as the noble Lord, Lord Moynihan, said, the
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totality of primary legislation coming forward has greatly reduced, in part because proposals which would go counter to the principle of subsidiarity have not been put forward by the Commission.
So there is a dog that did not bark in the night dimension to that argument. Nevertheless, the reality is that every proposition within the Commission now has to be subject to the subsidiarity test. No doubt there are people in the Commission who, for whatever motive, are attempting to get round the proposal, but measures are pushed through. This measure has led to fewer and fewer new propositions of competence and law. I believe that that will be a cumulative process. The provision with the acquis communautaire rolls it back in a significant way. Nevertheless, it is true that the acquis communautaire is not a fixed body of law. It can expand and contract. There are no great examples of it contracting at this point. Nevertheless, the acquis communautaire is not a fixed or constantly expanding body of law. Decisions can be made in the Community to reduce the acquis communautaire.
Lord Pearson of Rannoch: The noble Lord said that the acquis communautaire can expand and contract. Can he give any examples of where it has contracted or it is planned to do so?
5.30 p.m.
Lord Whitty: A significant number of transitional arrangements have been deleted from Community law over the years. I am sure that there will be greater ones. Nevertheless, the noble Lord is broadly correct: the total scope of the acquis communautaire has not retreated, but many regulations have been removed from Community law. The new atmosphere arising from the Maastricht and Edinburgh guidelines being applied within the Commission and Parliament, has led to situations which have not materialised which would have done otherwise. I can see that the noble Lord. Lord Pearson, is not totally convinced of this argument, but it is the best that he is going to get at the moment!
The new subsidiary protocol, which includes the Edinburgh guidelines, contains the following. It requires the Community to consider whether an issue under consideration has transnational aspects which cannot satisfactorily be regulated by individual member states; whether action by member states alone would conflict with the requirements of the treaty; and whether action at Community level would produce clear benefits by reason of its scale or effects compared with action at the level of member states.
Moreover, the Commission has to consult widely and, whenever appropriate, publish consultation documents before proposing legislation. All those feeding into that consultation process have in mind the issue of subsidiarity. These principles are gradually bringing about—I agree that it is gradual and not comprehensive—better, more appropriate and effective law-making regulations at European level. Those changes resulting from subsidiarity should not be seen in isolation. They go hand in hand with other efforts that the Community is making in that direction. I refer to the Amsterdam guidelines for improving the quality of

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legislation. I am sure that Members of the Committee will welcome that. There is also the campaign for simpler legislation in the internal market, which I am sure that the business sector will welcome greatly.
So there has been some progress as a result of the subsidiarity principle being written into the process. But it is not a mechanical application and in the present circumstances it cannot be so. The Commission has withdrawn some legislative proposals and it has not come forward with others. I cannot see that the protocol we have adopted as a result of the Amsterdam Treaty in any sense weakens the influence exerted at Maastricht. Since then it has extended gradually through the institutions in order to establish that what is done at nation state or lower levels should be done at those levels and not automatically assume a European involvement in such legislation or other action.
There is a slight tone in some of the debate that because the subsidiarity principle has not worked perfectly we should not pursue it but reject this protocol and therefore the treaty. That is what we would be doing. But this is an important part of the future atmosphere of law-making for the Community. This protocol will help the law-making to work better.
We have to accept that there has been some achievement so far. Those who work in and out of Brussels will have seen that in drafting legislation the Commission has taken a different and often more sensitive approach to national circumstances. The result has been that the amount of primary legislation we have had to consider has gradually fallen. Although that may not have happened in the past year, the amount of primary legislation has certainly dramatically fallen from the years in which concerns about subsidiarity were particularly strong.
The Earl of Onslow: I know that the amount of primary legislation has fallen, but the amount of regulation arising from the primary legislation has increased. So it has just been a different shape rather than a different volume of legislation.
Lord Whitty: That is not the easiest thing to measure. But clearly, once one has primary legislation then regulations flow from it, as with national legislation. The point about the acquis communautaire is that the scope of what should be done at European level as against national level has not increased; the rate of new primary legislation has not increased. In order to carry out that primary legislation there may have been some increase in the level of regulation.
The whole question of law-making in the European Union is extremely complex. But I believe that towards the end of the debate Members of the Committee were addressing the issue that although subsidiarity is not perfect, at the end of the day the question is who decides what is appropriate. It is clear that there is no satisfactory answer for those who regard anything that the Community does with deep suspicion.
Naturally, at the end of the day, the Community will decide what it does within its own area of exclusive competence. But as regards subsidiarity, ultimately there
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must be a role for the Court of Justice but it will be a longstop role. The decisions on subsidiarity will reflect the Commission taking into account the requirements of subsidiarity as regards the proposals for legislation. The Council of Ministers will take account of subsidiarity when it comes to consider those proposals.
The protocol has set out what subsidiarity means for all the institutions and the procedures the institutions must follow during the legislative process. It is true that, in the last resort, the court will be better able to ensure that the subsidiarity principle is properly applied on the firm legal basis of the explicit protocol written into the treaty. In our view that is a power for the court. But it is an advance on the general language of Article 3b of Maastricht and the Edinburgh guidelines which were not themselves justiciable. The Government are confident that the European Court of Justice will implement this protocol effectively in line with the general view across the European Union that the principle of subsidiarity has to be enforced.
The Earl of Clanwilliam: Is it not the duty and the responsibility of the Court of Justice to ensure the ever deepening and widening of the Community, and that therefore its card is already marked in advance against the use of subsidiarity?
Lord Whitty: The role of the Court in this respect is to ensure that the terms of the treaty are applied and to resolve disputes over the application of those terms. Therefore, the Court will be acting as would any court in deciding what those terms mean.
Lord Pearson of Rannoch: If there were to be a dilemma in the mind of the Court—I agree with my noble friend Lord Clanwilliam that that is extremely unlikely—surely the Court would have to find in furtherance of the
"ever closer union of the peoples of Europe",
which is in Article A of the treaty. The Court is the engine of the treaty. Why would it wish to go in any other direction?
Lord Whitty: The Court is the arbiter of the treaty; it is not the engine of the treaty. The Court acts as would any national court in interpreting the legislation which is applied in the institutions which it governs. That is the role of the Court. That is the only way in which the Community can operate on any effective constitutional and legal basis. I appreciate the fact that the noble Lord does not want any of those institutions, but if we have any of the institutions, we have to have a court to ensure that the rules apply. That applies in the area of subsidiarity just as elsewhere.
The noble Baroness, Lady Park of Monmouth, referred to the question of scrutiny. That matter is probably best taken in the next debate, which will relate to the national parliaments.
As I have said, this is a bit of a jelly of a topic. However, it is a very important principle. We need to find new ways to ensure that what we all mean by "subsidiarity" is effectively followed by the institutions

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of the Community. We believe that the Treaty of Amsterdam improves on what was there before, but it is not perfect. None the less, I think that we all agree that the principle should be supported. Therefore, I ask the noble Lord to recognise that the wording of this protocol reflects that principle at least in part, even if not sufficiently for his purposes. Therefore, I hope that he will be prepared to withdraw his amendment at this stage.
Lord Renton: The noble Lord has not yet mentioned the Government's attitude with regard to Amendments Nos. 30 and 54C which are grouped with this amendment. Whether or not the principal amendment is accepted, I should have thought that either of those two amendments, which enable our Parliament to be kept informed, should be welcome to the Government. The noble Lord's views on these two amendments would be helpful.
Lord Whitty: Amendment No. 30, which deals with reporting to Parliament on the principle of subsidiarity, is couched in such terms that it requires reports on the application of the principle of subsidiarity throughout the Union. It would not be possible for the Government to produce that report. The institutions of the European Union could produce such a report which would then be subject to scrutiny by this House. Indeed, the Commission has already undertaken work on its current annual review which is, I believe, entitled Better Law Making. It provides documentation which is subject to the scrutiny processes of this House. It includes the Commission's report on the application of subsidiarity within its processes and will, in the normal way, include the British Government's comments on the Commission's report.
Lord Renton: That answer does not apply to Amendment No. 54C which stands entirely on its own. The Minister has not considered that.
Lord Whitty: I am not sure of the distinction which the noble Lord is making. However, perhaps the question of reporting should be dealt with in the whole context of scrutiny because subsidiarity is only one aspect of the way in which we consider Community legislation in this House and in another place. It would probably be better to deal with those amendments in that context. The Government are in no way reticent in allowing in this House and in its committees debates on proposed European legislation and on the Commission's reports on such legislation.
5.45 p.m.
Lord Stoddart of Swindon: This has been a long and fascinating debate in which we have had many sensible contributions. I do not want to spend too much time replying, but there is a dispute about exactly what "subsidiarity" means and about its effects. It is absolutely true that those who expressed doubts about the principle during our Maastricht debates have been proved right, as the noble Lord, Lord Pearson, said,
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because neither my noble friend nor anybody else has been able to show that subsidiarity has worked in any tangible way. My noble friend said that some legislation that might have been introduced was not introduced, but, unfortunately, we shall never be able to judge whether or not that is so. There are no tangible examples of how subsidiarity has helped to slow down or to prevent the centralising tendencies of the European Union. That is what this debate has been about.
As the noble Lord, Lord Moynihan, said, the debate is also about whether the protocol helps or hinders the position of subsidiarity. I do not know how we can reach a decision on that, but what worries me is that a simple statement of principle has now been cluttered up by 13 paragraphs, of which I believe 10 are additional. Once the Commission and the Court get their fingers, eyes and minds on that, there is no knowing what they might do. As the tendency is to centralise, they are almost bound to try to undermine the principle of subsidiarity. I am afraid that my noble friend has not reassured me on that point.
As the noble Lord, Lord Renton, said, one unfortunate result of the provisions on subsidiarity has been that the Commission produced a memorandum on the matter which was so gobbledegookish that apparently nobody understood what it was talking about. If no one knew what the Commission was talking about, can we be sure that the Commission itself knew what it was talking about? We must bear such points in mind and take into account the strictures of the noble Lord, Lord Renton, in saying that we must ensure—apparently, we all believe this—that the European Union does not become a European superstate by ignoring the laws and traditions of member states which have been operating not just for a few years, but for many generations. I believe that we should heed that.
The noble Lord, Lord Wallace, said that we cannot write everything into law. That is true. But the problem is that in matters European, the Commission wants to write everything into law. It wants to put everything down on paper in order to bind the member states to its policy and its direction. Our own law gives a certain flexibility for interpretation by the courts. As far as I can see, it is the European Union and the Commission which want to tie everything into words so that there can be no doubt and no escape for member states.
The noble Lord, Lord Beloff, said that he did not agree with me that everybody applauded the subsidiarity clauses in the Maastricht Treaty. He is absolutely right. I did not applaud them myself. As usual, the noble Lord goes right to the heart of the matter in saying that they do not matter and we are wasting our time discussing this particular clause. It is the job of this House and another place to scrutinise legislation. Even though we may believe that we are wasting our time we should nevertheless scrutinise it.
The noble and learned Lord, Lord Simon of Glaisdale, saluted the insertion of the word "subsidiarity" into the Treaty of Maastricht. He told us that it was a very good thing. He said that subsidiarity was all about the science of government. Who could quarrel with that? Unfortunately, he went on to say that the Commission

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and the European Court would make decisions towards centralisation because that was what they were all about. Perhaps I more than anyone else respect the noble and learned Lord for his legal knowledge but, most unusually, he appeared to contradict himself. Although he applauded the system of subsidiarity nevertheless he believed that the people who would implement and interpret the provisions would do their best to undermine them. I hope that I do not misrepresent the noble and learned Lord.
Lord Simon of Glaisdale: Perhaps the noble Lord will allow me to intervene. The difficulty that arises is that these institutions are manned by human beings. The principle of subsidiarity is well established. But I ventured to say that the Court would try to centralise because that was in the nature of a constitutional court. Similarly, the Commission will try to mitigate the principle, as it did immediately after it was enunciated with a powerful memorandum at the Edinburgh Conference. One must accept that, but it does not mean that the principle itself is not one that is well worth laying down and that the Government should not do all that they can to vindicate that principle whenever it arises. I speak as a strong pro-European.
Lord Stoddart of Swindon: I thank the noble and learned Lord for underlining the whole principle and explaining that subsidiarity can operate only as long as it is worked at and we can undermine the baleful centralising influence of the Commission and the European Court.
My noble friend Lord Whitty did his best to provide the Committee with some reassurance about subsidiarity. I am not sure that he succeeded. However, it is not his fault. It is very difficult to give an assurance about subsidiarity. The problem is that there are no examples. I felt rather sorry for my noble friend. He sought to reply to a debate that was highly critical of what had happened on subsidiarity without being able to refute what had been said. But I am quite sure that my noble friend is a strong supporter of subsidiarity and wants more devolved power from the European Union. He does not want to push power up; he wants some power to come back down. If I understand my noble friend correctly, he and his colleagues will do their best to ensure that the principle of subsidiarity really works this time and will take forward the matter. Because I believe that he will do that, I seek leave to withdraw the amendment.
Amendment by leave, withdrawn.
[Amendments Nos. 26A and 26B not moved.]
Lord Moynihanmoved Amendment No. 26C:
Page 1 line 18, at end insert ("and the Protocol on the Role of National Parliaments in the European Union"").
The noble Lord said: I beg to move Amendment No. 26C. In introducing this amendment, I am grateful to my noble friend Lady Park for her insight into the matters that I am about to raise. She would have introduced this amendment far better than I am capable of doing. I believe it is important that the issues she raises are considered in detail by the Committee. It is
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with some pleasure that I move this probing amendment. This is not a matter in respect of which there is any difference of principle with the Government. I believe that there is a good deal of common ground between us on this matter. The purpose of the amendment is to give the Committee an opportunity to debate the role of national parliaments within the European Union.
The amendment deals with the provisions of the treaty contained within the protocols to allow a minimum six-week period for scrutiny of Community and third pillar proposals by national parliaments. The protocol also provides a new consultative role for COSAC (the Committee of National Parliamentary Scrutiny Committees). It will come as no surprise to the Committee to hear that these Benches welcome the fact that the treaty includes measures to permit better scrutiny of Community legislation by national parliaments.
The previous government led the way in Europe to ensure that the Treaty of Amsterdam contained such a measure and that national parliaments were given a greater role in scrutinising European legislation. The requirement for a six-week notice period before the Council decided on legislative proposals had its origin in important work carried out by the Select Committee on European Legislation. Declaration 13 of the Treaty of Maastricht on the role of national parliaments in the European Union stated the importance of encouraging greater involvement of national parliaments in the activities of the European Union. It called for the exchange of information between national parliaments and the European Parliament to be stepped up and for national parliaments to receive Commission proposals for legislation in good time for information or possible examination.
But the previous government were keen to make the main elements of Declaration 13 of the Treaty of Maastricht legally binding by entrenching them in the treaty, for it was clear that a legally enforceable provision was sorely needed. In 1994, in the first of its reports on the 1996 Intergovernmental Conference, the Select Committee on European Legislation was scathing about the lack of openness and accessibility of the process. According to the report, not only was the principle of making information available to national parliaments in good time before a Council decision routinely ignored, but the unpredictability and lack of notice led that committee to conclude that laws for European citizens were "to be made in a private club".
I quote from paragraph 61 of the 24th Report of the Select Committee:
"The process of legislation in a democratic society always contains the elements of proposal, consideration, amendment if necessary, and approval. This process works only if what is proposed is clear, if it is widely available, if there is publicity and public consultation, and if there is time to consider the proposal before decisions are taken".
European law accounts for a large and growing proportion of the law of each member state, as we have learned again in these Committee proceedings, yet increasingly it appears "to be made in a private club".

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The committee listed a selection of 42 documents which in the previous 14 months had been found to be of legal or political importance but which it had had to consider without an official text. The committee singled out for criticism the use of unofficial texts and the absence of a minimum period of notice for legislation to be considered in the Council. The Committee will be aware that that was compounded by difficulties in obtaining documents attributed to translation, transmission and organisational delays.
Such difficulties have long been a problem for national parliaments, and particularly for those like the Westminster parliament with a demanding and extensive European scrutiny system. Other problems arose from unpredictable Council agendas, late Commission proposals, and the bunching of business towards the end of a presidency notice. As a result, in its report, the Select Committee recommended a 4-week period of notice to protect the interests of national parliaments and the citizens they represent. It stated:
"It seems to us that the minimum period of notice should be four weeks",
that is, four clear weeks between the official text of a document being available in the appropriate language in every national capital and a decision on the document being taken in Council.
However, on the publication of the Select Committee's 27th report on 18th July 1996—a year and a day after that recommendation had been made—the situation worsened. That report listed a selection of 75 documents of legal or political importance which the committee was forced to consider without an official text. It excluded documents where the committee had an unofficial text, or the Commission document and no expectation that there would be a change. But, as the Committee is aware, an unofficial text is not a depositible document available to this place and to the public more widely—not least to those who may be affected by the legislative proposal contained within it.
The Select Committee again attributed that "lamentable state of affairs" to four main causes: the unpredictability of Council agendas; late production of proposals and other documents by the Commission; the preparedness of the Council to take items at short notice; and the slow transmission of documents. The Select Committee acknowledged also the previous government's role in working to resolve that unacceptable situation. It stated:
"No blame attaches to the Government for the situation. Following our report last summer, Foreign and Commonwealth Office Ministers and officials have kept up pressure on the Commission and the Council Secretariat for quicker production of documents and more orderly organisation of business, and have raised with them the particular difficulties which we have encountered".
The committee reiterated its recommendation of the previous year:
"In our view the difficulties will only be solved by the introduction of the binding four-week period of notice which we recommended last summer".
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On the recommendation of that Select Committee, which was endorsed unanimously by all the European affairs committees of parliaments of member states' at the COSAC meeting in October 1996, the British Government tabled a treaty amendment which formed the basis of a draft protocol. That appeared in the treaty text presented to the Dublin European Council in December 1996. As a result, the period of notice now enshrined in the protocol is legally enforceable. That is the good news.
Now for some perceived problems associated with the protocol. In the preamble to the protocol that appeared at Amsterdam, the desire to enhance the ability of national parliaments to express their views on matters which may be of particular interest to them is indeed expressed, but is it not the case that national parliaments have to have an interest in everything the Union does and legislates for, for it is binding on all their people? Will the Minister confirm when the starting point for the six-week period of notice between the depositing of Commission consultation documents before the European Parliament and the Council of Ministers and the date when they are to be discussed within the Council will be? I believe that my noble friend Lady Park is interested in that point. We need to know the starting point for that six weeks, and I should welcome the Government's clear answer to that question.
Will the Government give an assurance that the six weeks will start from the date that the relevant documents are delivered to national governments over whom national parliaments have control rather than the date the documents are made available to the European Parliament and the Council as a whole over whom national parliaments do not have control, in order to avoid the possibility of a delay in transmission? Will the Minister confirm that it can take up to six weeks for documents to be sent on from Brussels? So unless the six weeks start when Westminster receives its copy, it would seem that the time allowed would frequently still be insufficient to permit parliamentary scrutiny.
There is of course an exception to the six-week rule on the grounds of urgency. I would be grateful if the Minister could assist me by defining what is an exception on the grounds of urgency. What type of legislation does the Minister envisage that that exception would cover? Does the Minister agree that it is essential to ensure that that provision is defined tightly to avoid the exception becoming the norm, and that the Council should be required to state formally the grounds of urgency?
Those are specific, detailed questions on an important part of the work done by the Government in negotiation. I am sure that the Minister will have no difficulty in clarifying the two points that I have raised. I underpin a broader more general important point; that on these Benches we believe that national parliaments remain the primary focus of democratic legitimacy within the EU, for it is they who hold national Ministers to account.
Will the Minister confirm—this is no light question in the context of a further shift in powers towards the EU institutions—that the Government concur that

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national parliaments remain the primary focus of democratic legitimacy within the EU? In a Europe which is to flourish as a partnership of nations, national parliaments must remain the bedrock of democratic legitimacy and accountability. They represent the primary forum for the exercise and application of democracy, and for the expression of the will of the people in elections.
Far from acting as the guardians of democratic accountability of our national Parliament, at Amsterdam the Government allowed many powers to be diminished and undermined, and transferred to the European Parliament, and into the hands of unelected officials, as we debated at length last night with regard to the presidency of the Commission. I have asked specific questions, and I shall be grateful if the Minister could reply to the wider and critically important issue of national parliaments remaining the focus for our democratic legitimacy? I beg to move.
Lord Bruce of Donington: I am happy to endorse and agree with practically everything that the noble Lord, Lord Moynihan, has put forward on behalf of himself and the Opposition. There can be no doubt as to the accuracy with which he has presented the whole question to the Committee. I support him warmly.
I shall refer briefly to the protocol itself. One notes a slight tendency to indulgence in the national parliaments. The second paragraph of the protocol states:
"Desiring, however, to encourage the greater involvement of national parliaments in the activities of the European Union and to enhance their ability to express their views".
That is a tepid expression of the real position in this matter of national parliaments. Members of the Council of Ministers are responsible to their respective parliaments and to the members of parliaments. It is not merely in order that members of parliaments may express their views, but in order that they may be able to exercise such powers as they may have over their own Ministers before their Ministers, in the Council of Ministers, come to decisions on proposals put forward by the Commission. It is a vital part of British national life that Members of Parliament should be informed fully of Commission proposals and other important documents in good time for them to be able to consider them.
I hope that your Lordships will forgive me when I say that I have studied European bureaucracy for a long time. In general terms, I know how it works. It is not unique to Europe; it applies to all bureaucracies. Bureaucracies can easily establish their ascendancy over politicians by flooding them with paper so that they have no real chance to read through documents in detail, and still less time to present them to their Ministers. It must be said immediately that we have had a surfeit of paper flooding in from Brussels and elsewhere. Sooner or later, that must give rise to the corresponding ways in which the British Parliament, through its Ministers, makes its ideas known to its public when, as a specific condition of the Commission's proposals, a directive, draft regulation or whatever is required.
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We must face the fact that our own bureaucracy, to whom I offer my warmest support, finds it difficult to deal with the flood of paper. The Council of Ministers, whether at Ecofin or wherever, is fully sensible of the position. That is why COREPER reveals most matters which go before the Council of Ministers. It has before it proposals, decisions, draft regulations and so forth. COREPER, which members of the Commission attend, arrives at its own decisions—presumably after consultation, if necessary, with London in the case of the United Kingdom—as to what needs to be considered and decided upon by the Council of Ministers. It decides and puts on List A what can be signed and agreed by the Council of Ministers without any particular discussion or deliberation at Council level. That makes it more practical to deal with the flood of paper, and I have no objection to that.
However, it must be admitted that even after that, and even on the assumption that the document is delivered in the United Kingdom giving six weeks' notice under the protocol, it takes some time to go before the various Select Committees. In the House of Lords, there is the Select Committee on European legislation or one of its sub-committees, and there is a Standing Committee and a Select Committee in the other place. It is clear that some documents do not go through the committees because only the most important of those which arrive—or what the civil servants of the House decide are the most important—are considered by the Committees. That does not apply only to unimportant documents, or to items which are deemed to be unimportant.
However, the fact must be faced that some legislation which is prepared at Commission level, the importance of which is a matter of opinion—it is not always universally agreed—can go on to the statute book without it having official governmental approval purely because at some level it has been decided that there are not the facilities or the time to deal with it. We must face that fact.
I wish to touch on one of the most important documents. One of the most important proposals which comes from the European Commission is the Community budget. It is an important proposal. As your Lordships are fully aware, and as I have previously indicated, we are the third largest net contributor. In the current year, we will contribute more than £1.5 billion net out of the Consolidated Fund and therefore we have an interest in such matters. I was perturbed, therefore, to read in confirmation of a matter that has long been conveyed to me unofficially and verbally, the observations of our own Comptroller and Auditor General in his report published last Friday. At paragraph 2.18, he states:
"In their 1995 Statement of Assurance, the Court noted that the Community's financial statements were internal documents, had never been published, and were presented to the Council and Parliament only in French. The Court concluded that it would be better if the accounts of the European Community could be published, preferably with the Statement of Assurance, but that the Commission would need to make the decision".
At paragraph 2.19, he states:
"In February 1996 the Committee of Public Accounts noted that the full accounts of the Community Budget were produced as an internal Commission document and were not available in English.

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The Committee were concerned that improvements should be made to the Community's financial statements, in order to provide more usable information and enhance the accountability of the Commission for the use of the Community Budget. The Committee recommended that the United Kingdom Government press for the publication of audited accounts in a clear format accompanied by the Statement of Assurance. In their response the Government promised to raise the matter with the Commission".
Those are not my words; those are the words presented in a cool and factual form by our own Comptroller and Auditor General.
It is the case that there are delays. I will not say that they are deliberate—far be it for me to impute motives in these matters, save where they are obvious on the face of it. It is remarkable, for example, that Sub-committee A of the House of Lords' Select Committee on European legislation was unable to obtain a copy of the 1998 budget in time for it to be given consideration. Therefore, there is no examination this year of that very important document, the Community budget. It shows not only the total income and expenditure, the proportionment, the abatements and so forth, but it shows the individual items of expense all through the titles. It also enables detailed questions to be asked and enables English Members of Parliament to become aware of exactly what is happening in Europe.
I do not need to tell businessmen and companies that life is about money and that money makes the whole thing run. Therefore, I hope and assume that the Government will be forthright about the issue. During years in opposition one cannot have the resources to enable even a large and well financed party to study all such questions in detail. I know that as a result of personal experience, cost and time during the past 25 years. It is not possible for any government to do everything at once and I am satisfied that the Government will do their best. Perhaps I might respectfully suggest that they must not only do their very best, but that they must stick their neck out and insist that we receive the documents to which we are entitled. I am sure that even those most preferred supporters of a federal state in Europe will agree with that. I sincerely trust that I shall receive support from the Liberal Democrat Benches for such a mild proposition.
In the belief that they will do something about this, I ask Her Majesty's Government to insist on our proper rights. There is no reason why, in this respect, we should lag behind Germany and France who have their own special arrangements under the Elysee Treaty of 1963. It is time that we asserted ourselves. The House may feel constrained to agree that something has to be done.
Lord Wallace of Saltaire: I shall be brief. I welcome the protocol that strengthens the role of national parliaments. It is clear that national parliaments need to have greater and more rapid access to Community documents and more time to consider them. We have to make it work.
Last Thursday evening, when I took part in a debate on the report on the convergence criteria which joined the ratification of the Maastricht Treaty, I noted that there had been carried in the Commons an amendment
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insisting that the Government should report each year to Parliament. While I had the pleasure of listening to the noble Lord, Lord Mackay of Ardbrecknish, giving a very detailed exposition of how this year's financial projections fitted in with that criteria, the House was extraordinarily empty. If we are to carry these amendments through and insist on greater parliamentary scrutiny, we have to make it work.
With the greatest of respect to some of my colleagues, there is a Gresham's Law of parliamentary scrutiny, that Euroscepticism drives out reasoned criticism. That is one of the reasons why on those occasions the Benches of the House are so often very thinly occupied.
The Government already provide agendas for future council meetings and reports them in Written Answers in Hansard. I hope noble Lords are aware of that. I tear them out each month. I sometimes even look at them.
Lord Stoddart of Swindon: I have just listened to the extraordinary statement that Euroscepticism drives out reason. That presumably means that any scepticism drives out reason. I have always believed that it was scepticism which brought reason, not drove it out. If parliamentarians, whether they are Eurosceptical or Eurofanatical, cease to be sceptical and to discuss all these matters, I do not know where we are going and what our purpose is.
Lord Wallace of Saltaire: I think the noble Lord nevertheless took my meaning and I am sure he understands what I intended to say.
I have been serving on the European Communities Committee for a short time. I note that the Government do not always very quickly manage to get documents received from the Commission through to the National Committee for scrutiny. That is something on which we would like some assurance from the Minister, either now or at Report stage.
I welcome the developing co-operation between National Parliament Scrutiny Committee, which is fostered by COSAC although it does not only come through COSAC. We have begun to exchange information about how much each national committee has got out of its government and what documents have been provided. That is a welcome step forward. The next meeting of COSAC, which will be in London in a month's time, will enable us to talk about how we may improve parliamentary scrutiny of the third pillar. We intend to do that now with the British presidency.
It is important that this protocol is not only carried into effect in the treaty but that we have every possible assurance from Her Majesty's Government that they will make it work in practice as well as they can.
Baroness Symons of Vernham Dean: We have had a remarkable and unusual degree of agreement in Committee this afternoon on these amendments. In speaking to Amendment No. 26C I will speak also to Amendments Nos. 36 and 38 which are grouped with it.

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The Government are determined to build a European Union that is more open and more democratic. The Council of Ministers, the European Parliament and, in particular, national parliaments all have a part to play in this effort.
We argued successfully in the IGC for more openness: a treaty-based public right of access to documents, including in the second and third pillars; publication of Council votes on legislation; and publication of new third pillar proposals. As presidency, we have now tabled further, follow-up proposals.
The requirement for greater democratic oversight is very strong. It is a requirement that has been espoused by all sides of the Committee this afternoon. Again we made some progress in the IGC by providing for co-decision with the European Parliament in legislative areas that are subject to majority vote in the Council.
As the noble Lord, Lord Moynihan, said, the principal source of democratic legitimacy in the European Union is national parliaments. It is to national parliaments that governments are answerable; it is to national parliaments that people most readily identify. That is true in all member states. We must therefore reinforce the role of national parliaments too.
I am pleased to say that here too the IGC recorded real progress, including on proposals made by the Government, which are reflected in the treaty we are discussing today. For the first time the role of national parliaments is now recognised in proper, legally-binding form in the treaty.
Before Amsterdam the treaty said nothing about national parliaments. Maastricht achieved no more than a declaration on the need to send documents to national parliaments in good time. A Conference of European Affairs Committees was set up in 1989 to bring together national parliamentarians. The noble Lord, Lord Tordoff, is one of its most distinguished contributors. Yet COSAC has gone unmentioned in the treaties.
The protocol agreed at Amsterdam changes that. The protocol's main feature is to create a legally-binding minimum period of six weeks between the circulation of a proposal and a Council decision on it, except in genuinely urgent cases. This will greatly facilitate scrutiny by national parliaments.
The protocol also provides for an enhanced role for COSAC. The role will be non-binding and consultative. That is sensible because, as COSAC has recognised, COSAC cannot formally represent the views of national parliaments but it is the best specialist source of a collective view. It is right that the treaty should acknowledge this expertise.
The Government strongly supported the protocol. We pay tribute to those in this House and another place, including the noble Lord, Lord Tordoff, and his committee, whose thinking and reports first inspired the protocol.
We successfully proposed extending the protocol. First, at our suggestion, its provisions apply to third as well as first pillar documents. We recognise the great interest of this House in justice and home affairs issues. The protocol will help this House to pursue those issues.
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Secondly, we proposed, and partners agreed, that the minimum notice period should be extended from four to six weeks.
We sought this extension because of the time it takes from a proposal being sent to the Council Secretariat for it to reach member states in Brussels and then arrive in capitals. Two years ago it took an average of 40 days. That period is now much reduced but it can still take up to a fortnight. The effect of our proposal is to ensure that national parliaments will still have four clear weeks to study draft legislation. We hope that an electronic transmission pilot project now under way will help further in that respect.
I wish to be clear on this point because the noble Lord, Lord Moynihan, asked me to be specific. The six-week scrutiny period begins when the document is received by the Council Secretariat. It is then translated and distributed to member states. It is exactly because of that provision that member states decided to extend the period in the national parliaments' protocol from the four weeks proposed by the committee of the noble Lord, Lord Tordoff, to the six weeks that now appears in the protocol. I remind the Committee that the Government are already committed not to agree proposals until they clear national scrutiny, however long that takes. That commitment will remain.
But existing parliamentary rules rightly allow the Government to agree urgent confidential or trivial proposals before they clear scrutiny. That reflects the fact that business can arise at short notice and may, on occasions, require urgent attention.
6.30 p.m.
The Earl of Onslow: Will the noble Baroness give an example of something which will be so urgent that it need not come back to Parliament? That would help everybody. It is easy to use words like "urgent" and "trivial", and examples would help.
Baroness Symons of Vernham Dean: For example, it may be that urgent sanction measures were needed in respect of a particular country, or that there had been an ecological disaster which needed urgent action. There may be an outbreak of an epidemic on which nations in the EU feel that there should be urgent action. I hope that provides a flavour. I do not wish to go too far into the matter, but I hope that I have provided examples where urgency may require that clause to be invoked.
The point is that the provisions of the new protocol will strengthen national parliaments' role in ensuring democratic legitimacy. They will help to rectify weaknesses in our national scrutiny system and we shall build on the new provisions in our separate proposals to update and strengthen our national arrangements.
My right honourable friend the President of the Council published a memorandum in January setting out our broad proposals. The memorandum takes account of proposals made by the relevant committee of this House and another place. It has been sent to the committee of the noble Lord, Lord Tordoff, whose views on its contents we very much look forward to receiving.

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Our plans include giving Parliament a strengthened formal role in the scrutiny of second and third pillar business. Detailed arrangements must reflect the specific characters of those pillars. For example, in the second pillar, the nature of business means that confidentiality is vital and decisions are often needed at short notice. That may require explanatory memoranda to be submitted after adoption of a proposal.
Our plans include also extending the scope of the scrutiny reserve to cover documents subject to scrutiny under the inter-governmental pillars and to cover legislative proposals on which agreement is reached at the European Council. We propose also to strengthen arrangements for reporting to Parliament on meetings of the Council of Ministers.
As the noble Lord, Lord Wallace of Saltaire, said, we already report on all such meetings orally or in writing. We consider that more detailed reports in the form of letters to Select Committee chairmen will ensure that Parliament is better informed on the detailed outcome of more important issues, particularly those which have been the subject of special interest and debate in Parliament.
The national proposals that I have outlined will reinforce the EU-wide provisions laid down in the Treaty of Amsterdam. The treaty rightly provides for a stronger role and a clearer voice for national parliaments. I believe that those provisions should be welcomed and I commend them to the Committee, particularly as reinforced by the additional provisions which I have been able to outline to the Committee.
My noble friend raised a number of questions in relation to the Comptroller and Auditor General and his reports. We certainly agree that there should be as much transparency as possible in the European Community's financial affairs. We agree also that the British Parliament must be entitled to as much information as can be made available. I shall certainly draw the detailed comments of my noble friend to the attention of my colleagues who are responsible for Community finance.
I indicated that I should like to address also the specific concerns raised on Amendments Nos. 36 and 38. Before each meeting of the European Council, the Foreign Secretary sends to the Foreign Affairs Committee of another place a memorandum detailing subjects for discussion and listing the main documents to be discussed. That memorandum is made available to both Houses. Each month, the Government give details, by means of Written Parliamentary Questions, of the agenda of the following month's councils. All proposals for legislation and other important documents are submitted for formal parliamentary scrutiny within two days of their receipt in London. They are then the subject of detailed explanatory memoranda provided by the Government.
By tradition, those matters have always been dealt with by resolutions or Standing Orders both in this House and another place. The Government believe that
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that remains the more appropriate route, rather than that of primary legislation. I hope that, on that basis, the noble Lord will feel able to withdraw his amendment.
Lord Moynihan: I hope that I can do so but I am sure that the Minister will allow me to make one or two comments on her useful reply and on the contributions made by other Members of the Committee.
I asked the noble Baroness two specific questions. I am not as happy as she would like me to be on either of the two answers which she gave. First, my noble friend Lord Onslow raised the definition of "urgency". The Minister answered that to the best of her ability, and I understand that it must be very difficult to give precise hypothetical examples for the future.
However, the thrust behind the question was not so much a request for a detailed list of exceptions on the grounds of urgency but rather to seek an assurance that this Parliament will know the moment the Council has determined that a subject is an exception on the grounds of urgency so that it can be aware that the procedure of the six-week rule, which has been outlined, will be waived. When the noble Baroness takes into account the representations of the noble Lord, Lord Tordoff, I ask her to give due account also to the arguments put forward during this debate and in particular the importance which the Opposition attach to the need for the Council to be required to state formally and immediately when it decides that there will be an exception on grounds of urgency.
Equally, the Minister will no doubt be aware that I am rather disappointed in relation to my hope that the six weeks would start when the documents arrived in Westminster. I appreciate the argument that she put forward so clearly and I recognise that the period was extended from four weeks to six weeks to enable those additional two weeks to be used for the delivery of such documentation. If we knew that that would work, we should be a lot more confident. The critical issue to take into account is not so much the date on which the documents are received by the Council Secretariat but rather the date on which Westminster receives its copy. The Minister recognised that that is an important issue. I understand that some experiments are under way to address that subject.
Once again, I urge the Minister to consider the comments that have been made about the importance of time for due consideration of documents and whether or not we can find a mechanism to ensure that Westminster receives the paperwork well in advance and preferably on a specific date in advance of consideration by the Council.
In conclusion, I thank the Minister and other Members of the Committee for their contributions. I welcome the Government's commitment to the role of national parliaments. There have been occasions during the proceedings when some of us have had cause to doubt the Government's position, not least in our lengthy debates last night in regard to qualified majority voting. As it is so important that national parliaments must remain the primary focus of democratic legitimacy in the European Union, I ask the noble Baroness to

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consider my two questions and the important intervention of my noble friend Lady Park of Monmouth.
Baroness Park of Monmouth: I want to make one additional point about the need for scrutiny as long as possible. In my limited experience in one committee, things usually arrive from the Commission necessarily with no cost benefit analysis or one that is not real or relevant. To achieve one requires consultation and various agencies must be asked to give evidence. That is not easy to do in a hurry. It is difficult to make a serious recommendation to the Government on scrutiny if one is not able to deal with that dimension. I urge that in any representations that are made, that issue is taken into consideration. I thank my noble friend for his kind remarks.
Lord Moynihan: My noble friend reinforces the sentiments of the Committee and adds considerable weight, from her great experience, to the points made to the Government for their consideration. I thank my noble friend and others who have participated in this debate and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
6.45 p.m.
Lord Pearson of Rannochmoved Amendment No. 27:
After Clause 1, insert the following new clause—
REPORT ON ECONOMIC AND MONETARY UNION
(". A Minister of the Crown shall lay before both Houses of Parliament a report containing details and an assessment of—

(a) the constitutional impact,

(b) the monetary and financial impact, and

(c) the impact on economic and social progress,

on and in the United Kingdom of any measure adopted, or decision taken, by the Union pursuant to the objective set out in Article B of the Treaty on European Union of establishing economic and monetary union ultimately including a single currency.").
The noble Lord said: This has been billed as a tidying-up debate on European economic and monetary union after our lengthy debate on 12th March, which we did not conclude then because the noble Lord, Lord Bruce of Donington, was unable to move Amendment No. 27—which remains on the Marshalled List.
I propose to deal with just one of the loose ends left from that debate but an important one. Those of us who believe that European monetary union is a most unfortunate project sometimes point out that among its many weaknesses is that the proposed euro area is not an optimum currency area. We mean that the separate national economies that are to form the area are not and will not be genuinely convergent, even if there has been a good deal of fudge to meet the Maastricht Treaty's criteria for the countries concerned to qualify for EMU.
When one economy will be in boom, another will be in decline. The most important weapon normally available to an independent economy in those circumstances is to be able to raise or lower interest rates. The foreign
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exchange rate will also fluctuate in line with the judgment of foreign exchange markets. The instrument of taxation is also available to a national government.
Those of us who criticise EMU point out also that a third solution to ease economic shocks in an optimum currency area occurs if its labour is comparatively mobile and can move from depressed areas to prosperous areas and vice versa. Mobility of labour in the United States of America is much greater than in Europe.
Those who support EMU often reply to those fears by pointing out that the USA is not an optimum currency area and nor is the United Kingdom, so what are we fussing about? It may be that there is no single optimum currency area. Certainly the English have only just discovered that they in effect pay a lot of money every year to support public services and so on in Scotland. The northern Italians are steadily growing less happy with the substantial support that they give every year to the Mezzo Giorno.
In our debate on 12th March at col. 347, the distinguished economist, the noble Lord, Lord Peston, took that line rather strongly and emphasised why the USA is not an optimum currency area. He told the Committee that one of the favourite exam questions that he used to set when teaching in that country is whether it would have been advantageous for West Virginia, which at the time had serious economic problems, to have its own currency so that it could devalue. Thus the noble Lord explained why the incredibly successful United States of America, as he called it, is not an optimum currency area.
On 12th March, I failed to put an obvious point to the noble Lord, Lord Peston, but will put it now to the Government. I am sure that we all much regret the absence of the noble Lord, Lord Peston, who would otherwise join in. It may be true that the USA is not an optimum currency area, but it is true that that country's people accept interstate transfers, which can amount to as much as 12 per cent. of a state's gross domestic product. The American Embassy informed me that in 1995, the average per capita contribution from the federal budget throughout the United States was about $863. Moreover, the inhabitants of Virginia—which has presumably recovered economically since the time that the noble Lord taught there—accepted in 1995 that they received only $535 each from the federal budget, in the knowledge that each inhabitant of the State of Columbia received no less than $3,926 or a difference of $3,391 per person.
The inhabitants of Europe are not at all used to paying each other such subsidies—certainly not to nationals in other countries of Europe. The European Union's present budget amounts to little more than 1.67 per cent. of national GDP. European countries do not need to make those transfers because their economies can respond individually to economic shocks through the adjustment of interest rates, tax rates and fluctuations of their separate exchange rates on the foreign exchange markets.
What will happen in the EMU zone when there is only one interest rate and one foreign exchange rate? When the Minister answers, he will no doubt agree that for the foreseeable future labour will be less mobile in Europe than in the United States of America. A clause

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in the Treaty of Rome says that one state should not bail out another, although Mr. Delors did not appear to agree. Indeed, EMU's birth certificate—or the Delors report of 1991—ominously foretold:
"EMU will necessitate greater fiscal disbursements at EU level."
How do the Government foresee the situation developing under EMU, whether or not we are in it? If there are not to be massive interstate transfers to countries whose economies are in decline from countries that are more happily placed, what will happen to countries in recession? If there are to be such transfers, how will the inhabitants of the donor countries react? That question goes to the heart of the EMU debate and I look forward with interest to the Minister's reply.
Lord Stoddart of Swindon: Amendment No. 27 asks for a report on economic and monetary union that will take into account the constitutional impact, monetary and financial impact, and the impact on economic and social progress. These are important matters. While it is true that we discussed the wide implications on a previous occasion, nevertheless, we have not discussed this particular amendment. It asks first: what is the constitutional impact? The Chancellor of the Exchequer told us that there is no constitutional bar to our joining the third stage of EMU and a single currency. He may very well be right to say that there is no constitutional bar; but, let us make no mistake about it, there are constitutional implications.
As the noble Lord, Lord Pearson, just explained, this is a political project. Indeed, if it goes forward it is almost certain that it will have taxation implications for the British people and the ability of the British Parliament to decide the levels and forms of taxation that may be applied. So there are indeed constitutional issues involved, and I believe that we should know what they are and how the Government feel about them. We are not just talking about an economic project. Indeed, the European countries—certainly Germany, France and Italy—see economic and monetary union as the biggest and, perhaps, the final step towards complete political union. We are therefore entitled to know the constitutional impacts and to have a report.
What about the monetary and financial impact? It appears that the House of Commons is today publishing a report. According to an article in the Sunday Telegraph it will make some very serious statements. Indeed, the article says:
"The credibility of the Government's strategy on the single currency will be dealt a serious blow by an influential committee of MPs this week, on the eve of next weekend's landmark European summit to agree the launch of the euro … [the] pro-European [committee] will warn the Government that its current timetable for deciding whether to join a single currency will mean taking a decision before the full economic facts are known. Their warning challenges the wisdom of the Government's intention to decide whether to join monetary union early in the next parliament".
Indeed, the article continues to say that both Tony Blair and Gordon Brown,
"will this week restate their view that, in principle, membership of the single currency would be of benefit to Britain, and that the determining factor will be whether it is in Britain's economic interest".
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It is quite clear that the Select Committee believes that it is not in the best interests of this country to join such a union, certainly for the next five years and until we know just exactly what the effects will be. Therefore, it is very reasonable for this Chamber—and, indeed, for Parliament as a whole—to ask what the monetary and financial impacts will be.
We should certainly know what the impact will be on economic and social progress. That is vital. I say that because all attempts at monetary union in the past have ended in disaster. For example, let us think about the Werner Report, which introduced the economic and monetary system in the 1970s. What happened to it? We found that it did not serve its purpose of giving us stable money and low inflation. Moreover, during the whole period industrial growth in Europe actually fell by 5.9 per cent. Of course, that had very bad implications for unemployment and for the progress of people's standard of living. So the Werner Report and the "snake" ended in disaster. They then progressed to ERM, and we all know what happened to that. We all know that that ended not only in disaster for the country—high unemployment and a slump—but also in total disaster for the Tory Government at the last election. It is no wonder that they are a little worried about imposing the single currency too soon, or perhaps at all.
Those are very good reasons as to why we should have a report. Another reason is the manner in which things are done in Europe. I believe that I described what has happened over economic and monetary union when I last spoke. Germany. France, Italy, as well as the Belgians and the Dutch—the British Government are not of this view—want economic and monetary union at any price. Of course, the prime movers are Germany and France. They will do virtually anything and make any deal as long as they get what they want. However, France and Germany do not always agree. At the Dublin Summit, when they were agreeing the stability pact, it appears that they were at severe loggerheads about how the pact should work. Indeed. Jacques Chirac took the view that the stability pact, which the Germans feel is absolutely vital for the sake of EMU, was,
"an invention of German technocrats".
He went on to say that he believed that that was against the national interest of France. The quarrel spilled over into the main session and at one stage, according to the BBC television programme screened last Sunday night, it appears that Chancellor Kohl and Jacques Chirac got up, went into a corner and started quarrelling and arguing between themselves. All the other delegates eventually gathered around to watch what was going on as if it were a prize fight.
It seems that that is the way that things are done in Europe. I do not want them done that way here. In this country we do things in a rather different way—at least I hope that we do. I also hope that my noble friend can assure me that we do, that we have a decent, well thought-out and considered position and that we take time to ensure that we get the right answers. I therefore make no apology for saying these things at this stage of the proceedings. I recommend to my noble friend that he writes to the BBC—and, indeed, this applies to the whole of the Cabinet—and asks for the videotapes of those three

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programmes on how the EMU programme has been formed. I am sure that the BBC will be only too pleased to send the videotapes; indeed. I believe that it will be an eye-opener. Any other Member of this Chamber who takes an interest in such matters—and, by God, they are interesting programmes—should also send for the tapes.
Therefore, I hope that my noble friend will give some replies to the matters that have been raised and that he will indeed consider accepting the amendment. It would certainly do no harm and, indeed, it might do a lot of good.
7 p.m.
Lord Bruce of Donington: Perhaps I may ask my noble friend to give serious consideration to the proposal contained in Amendment No. 27. I am sure he will agree from his own long experience of politics in many fields—as other Members of the Government will realise also—that in political action timing is everything. When considering the steps that may or may not be taken by the European Union which affect ourselves—and in particular with regard to economic and monetary union—one has to make sure that, subject to whatever considerations may arise later, the date fixed for a specific action which has an effect on our constitutional, financial and economic and social progress, is sufficiently far ahead for us to be able to take into account the events that are likely to take place in the interim—that is to say before the proposed Union action is taken. One has to take particular account of steps that are already in the pipeline of which we may not become aware until the action takes place.
Perhaps I may give a specific example. Because the sum involved is billions of pounds, we shall have to consider the impact, for example, of the abolition of duty free. That will have considerable effects on the financial fortunes of the country. It may, therefore, have some indirect effect one way or the other in due course on our fiscal policy. One has to bear in mind also that there are proposals in the pipeline—I have seen them—which are not due to come into operation for another couple of years in regard to Commission proposals for the standardisation of VAT throughout Europe. These are important matters that we have to consider at the same time that we deliberate upon proposals emanating from the European Commission and from the Community.
If there is one thing that all of us may have learned—on the assumption that all of us can do with a bit of extra learning—it is that we are living in a state of flux. Things do not stand still for us to consider them, they progress the whole time. It has been stated very authoritatively this afternoon, and I think very temperately, that the constitution of Europe, if there is to be any kind of constitution, is a varying, developing quantity. We have to fix a point in time which enables us adequately to be able to assess the position, without wishful thinking, to make quite sure that what is to be done has definite effects on the way in which we conduct our affairs here. That is what I conceive to be underlying Amendment No. 27. There should be a straightforward appraisal in the Government's view of exactly how this will affect us, within certain fluid
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limits, obviously, because the whole thing is flexible. In that spirit, I venture to commend the amendment to the House and to the Government.
Lord Mackay of Ardbrecknish: It is particularly appropriate that we should be discussing these important matters today. After all, this weekend the Council of Ministers will have to meet under the British presidency in order to decide the states which will join the first stage of the monetary union; the rates between the currencies; and the interesting question of who should be the candidate for the president of the European Central Bank. All those questions may take a little time, and I suspect the president of the European Bank may take perhaps a little more time than just the weekend.
It is also appropriate because today the Treasury Select Committee in another place has produced an interesting report which the noble Lord, Lord Stoddart, has already mentioned. It is not often that I am ahead of the noble Lord but I have had a quick read of the report. I did not have to read the press speculation of the weekend. The noble Lord was busily engaged in the Chamber while I was happily sitting in my office reading through this most interesting report.
It starts off by simply reminding us that this weekend has a significant importance as regards the economic and monetary union. Some serious decisions will be made over this coming weekend. It is interesting that some of the decisions relate back to the last time that the noble Lord, Lord McIntosh, and I faced each other across the Dispatch Box; namely on the Bill regarding the independence of the Bank of England. I mentioned the matter in my speeches on the Bank of England Bill but the noble Lord brushed it aside. It is interesting that it is underlined in the Treasury Select Committee report from the other place. It is this. The legislation this House has just spent many happy hours passing about the Bank of England is not nearly sufficient for a single currency. Indeed, the Government will have to bring forward another Bill on the Bank of England if the Prime Minister ever gets the courage of the Chancellor's convictions and decides to join the single currency, or to apply for membership of the single currency. The Government will have to remove its powers to set an inflation target, for example. The Monetary Policy Committee will just become an advisory body rather than a decision-making body; and the Treasury will have to give up its right to override the Bank in exceptional circumstances. I recall that the noble Lord, Lord Peston, in an intervention at Report stage in the Bank of England Bill, said that he felt that the European Central Bank legislation would be deficient if it did not have some power within it to allow the politicians—the Commission, I suppose it would have to be—to override the decisions of the Bank in exceptional circumstances. So it will be interesting to see this Bill at some stage when the Government make up their minds on the subject.
Perhaps more interestingly from my point of view, the term of office of the members of the Monetary Policy Committee will have to be increased to five years. The noble Lord, Lord McIntosh, will have to eat some pretty strenuous words of his own. When I suggested that three

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years was far too short a period, he told me that I was absolutely wrong. He said that it would be wrong to contemplate five or seven years, or whatever, and that three years was the right period. So the poor noble Lord who will reply will have to eat his words if we ever start to go through another Bill on the Bank of England in order to allow us to join the single currency.
I return to the important decisions to be made this week and to the amendment before us which asks for a report. It is interesting to note that the Treasury Select Committee's report published today states clearly one of its serious conclusions on the whole survey. The Treasury Select Committee of the other place is composed of members of all parties: the Conservative Party, the governing party, and even the Liberal Democrat party. They all seem to have managed to agree on these conclusions. Perhaps I may read out paragraph 40 because it underlines the need for a report containing details of the monetary and financial impact, and the impact on economic and social progress. Paragraph 40 states:
"We agree that if the Government decides to recommend that the UK should join it is imperative that a 'final report' be produced. We recommend that it should also contain a comparative assessment of the consequences of entry and of staying out in the long term. For the reasons we have outlined, it would not be desirable for the final report from the Government before any referendum simply to contain an updated assessment of the five tests".
Those are the five tests that the Chancellor has drawn up. I shall say a few words about them later. The report continues,
"However, we conclude that it will not be possible to judge 'clearly and unambiguously' either the 'success' of EMU or the answers to all of the Chancellor's five tests for at least five years".
According to anyone's calculations, that means a date well into the next parliament. The report continues,
"It will remain the case that the UK's decision will have to be made on a political and economic assessment of the balance of national advantage".
If I may say so, that paragraph sounds extraordinarily similar to my party's policy on these matters, which was from time to time derided by the governing party. I am delighted to note that the noble Lord, Lord Barnett, is present as he also took part in the debate on the Bank of England Bill. He will no doubt wish to take part in the next Bank of England Bill when these provisions will have to be changed.
What will the report that we are discussing have to contain? The report is called for not only by the noble Lords, Lord Shore of Stepney, Lord Stoddart of Swindon and Lord Pearson of Rannoch, but is now also quite clearly called for by the Treasury Select Committee in another place. The report will have to contain a number of measures. But before we reach that stage, the all-important weekend will take place when the tests will be discussed. I believe that ECOFIN has already stated that 11 out of the 15 members have passed. I speak as a former schoolteacher when I say that if I was told that some of them had passed, I would think that arithmetic had been stood on its head because by no stretch of the imagination can it be said that all 11 countries have passed the Maastricht criteria which were established some years ago.
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As I said last Thursday evening in this Chamber, the European countries have made strenuous efforts to meet the criteria and they have done extremely well. However, they have not all succeeded in meeting the criteria and, more importantly, some of them have attempted to meet the criteria in ways which cast doubt on whether they can meet the stability pact subsequent to meeting the criteria. When I spoke on these matters from the Treasury Bench I used to tell the Chamber that it is not just a case of getting under the wire of meeting the criteria that is important, but rather it is important to meet the criteria in the long run. That is where the stability pact is hugely important.
It is because the markets do not believe that the euro will be a hard currency and that the convergence criteria will lead to a rigorously obeyed stability pact, that we have the problem of sterling being set at such a high value. Manufacturing industry is suffering considerably as a result. Some people point to the high interest rates imposed by the Monetary Policy Committee because it has only one weapon in its armoury and one objective and, naturally, it must use that one weapon to achieve that one objective. I believe that the members of the Monetary Policy Committee have increased interest rates in this country five times since the general election in May of last year. That, of course, attracts money into this country but it is not the whole reason for the increase in the value of sterling. Part of that increase in the value of sterling is due to the fact that the markets do not believe from what they see and read that the euro will be a strong currency. On the contrary they believe that it will be weak.
Deficit levels have fallen. As I used to say, the convergence criteria are worth following regardless of the euro because they make for sensible economic policies. We followed those sensible economic policies. That is why we have left this Government with a golden economic legacy which, frankly, they are frittering away. As regards the convergence criteria, 14 out of 15 potential members now have deficits below the 3 per cent. reference value. It must be recalled that some of them have taken one-off measures to get below the deficit level. I hear someone say, "Of course they have'', as if that is fine. But how do they keep below that level and obey the stability pact that arises later if their measures are only one-off measures?
The Italians have done extraordinarily well, and one has to admire them. They have achieved that reduction partly through the sale of state owned agencies. It is interesting to note that the Government now approve of the sale of state owned agencies, but that is another story. The Italians have also achieved that reduction by means of a one-off tax. But how will they manage to keep below these reference values next year when they no longer have the one-off tax? That is not a question for me to answer; that is a question for—
7.15 p.m.
Lord Pearson of Rannoch: I am anxious that my noble friend should not miss the best part of the story about the Italians' one-off tax which is, of course, that the Italian Prime Minister, Sig. Prodi, has just appeared

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on Italian television to assure the Italian people that once they have got under this hoop he will give the money back.
Lord Mackay of Ardbrecknish: My noble friend illustrates the point I am trying to make. They will get under the wire on a one-off basis. I think that the Commission and the European Central Bank will find it extremely hard to keep the stability pact in order. I have some confidence that the Bundesbank will at least try to keep it in order but I think it will have some difficulty in doing so. As I said, we can pay tribute to all the member states of the European Community for having met the deficit reference value. However, as regards the average debt level, the story is slightly different. According to the Treasury Select Committee, 11 of the 15 potential EMU members currently have debt levels over 60 per cent. of GDP. The Netherlands at 70 per cent.—10 percentage points above that figure—is not doing too badly. Sweden has a figure of 74.1, but it does not want to join EMU and so I suppose we can set it aside. Italy has a figure of 118.1 per cent., which is 58.1 percentage points out. I am told that the Italians are reducing that figure. They are indeed doing so. However, I saw some figures the other day which suggest that two years ago the figure was about 122, and about 120 to 121 the year before last. Now it is 118.1. I hope my memory has served me correctly as regards those figures, but if it has not I am sure that someone can correct me. That is not exactly a Christopher Chataway sprint—perhaps that shows my age!—towards 60 per cent. Speaking as a simple mathematician rather than an economist I would not consider that to be a fast rate of approach towards 60 per cent. The figure for Belgium is 118.1 per cent. despite the fact that vast amounts of European money are spent in that country to support the people who run the European Community. Its rate of approach to the 60 per cent. level would not fill me with much fear if I were running away from it, if the Committee understands what I mean.
We have an interesting situation where suddenly the rules can be fudged for those two countries and indeed for the others as regards the 60 per cent. of GDP rule. The Treasury Select Committee points out that the European Monetary Institute commented that,
"there is an evident ongoing concern as to whether the ratio of government debt to GDP will be 'sufficiently diminishing and approaching the reference value at a satisfactory pace' and whether sustainability of the fiscal position has been achieved".
It is interesting to note that by the time the report that is called for in this amendment and in the Treasury Select Committee's report is published, we shall know whether continuing progress has been made to achieve these targets. I have my doubts, because of the undeniable pressures that will build up when the single currency comes into being and, with it, a single interest rate. That is extremely important. I might say in passing that, thanks to the sensible economic policies of the previous government, interestingly enough the UK satisfies the debt, the deficit and the long-term interest rate and inflation criteria. So this country fulfils all the criteria. But of course, thanks to the opt-out negotiated by my right honourable friend John Major at Maastricht,
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we are able to decide for ourselves whether or not to enter. I cannot remember that opt-out being cheered by the Opposition—but then, the world changes; not only do they cheer it in retrospect, but they are prepared to take advantage of it.
The Treasury Select Committee goes on to state an important matter that would have to be included in any report; namely,
"The sustainability of the EMU project depends not only on debt ratios and deficits but on high levels of employment, employability and social cohesion".
I recall, again when I was speaking from the Treasury Bench, that the then Opposition kept telling me that those other criteria, in addition to the three laid down at Maastricht, were every bit as important and we ought to be demanding that they be met. Is it the Government's intention to address the high level of employability, employment and social cohesion? After all, despite the fact that we have unemployment problems in this country, they are nothing as compared to those of many of our colleagues in the European Union. It is interesting that, after having denied that the Conservative Government's labour market policies were having an impact on employment, the party opposite is lecturing other countries in Europe to take up the same kind of employment policies that this party pursued and they opposed. I just hope that European politicians do not have a long memory. Otherwise, they might have fun at the expense of whichever government Minister will try to persuade them that the policies pursued by the United Kingdom are the right ones, when just over a year ago in opposition they were saying that those policies were wrong.
As I said, the economic and social progress report will include the five criteria laid down by the Chancellor in his interesting document. The Select Committee draws attention to a comment by Christopher Johnson, who is UK adviser to the Association for the Monetary Union of Europe. Writing in a personal capacity, he said:
"The Chancellor's tests arc so loosely defined that anyone will he able to say that they have been either passed or failed according to the dictates of political expediency".
That is a exactly the position that we face in relation to the tests. We need more rigorous tests than those applied by the Chancellor. We need not only the three tests that I have already mentioned; we need tests in relation to employment. I am amazed that the Labour Party is prepared merely to brush aside such important matters.
For example, paragraph 32 states that the Governor of the Bank of England argued that,
"wide divergences in unemployment rates pose a real question as to the sustainability of that situation in the absence of much more flexibility in labour markets in Europe"—
"that situation" being the rising unemployment on the Continent in contrast to falling unemployment here. He referred to:
"high unemployment persisting in some parts of the area with potentially inflationary pressure persisting in others".
That is one of the matters that the report will have to address in whatever number of years to come. Having one interest rate for the 11 member countries which, it appears, will join the currency will cause very

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considerable pressures in two directions. The first will be that of the "over-heaters"—Spain, Portugal, the Netherlands, Ireland, and eventually Italy. In economic terms the conditions in those counties will be too loose. They will have high growth but, with it, the danger of inflation returning to haunt them. On the other hand, because of the single interest rate, Germany and France are likely to be the stagnators. Their monetary policy will be too tight, and they will see GDP growth accelerate only modestly. As a result, it will be doubtful whether they are able to do much, if anything, in relation to their high unemployment rate.
We do not have to gaze into a crystal ball. We have only to look back at 1992 and compare Italy with France. As noble Lords will remember, that was rather a traumatic year. The noble Lord, Lord Stoddart, referred to it. There is an element of truth in the idea that the ERM and the problems of our exit from it caused the Conservative Government's troubles which haunted us all the way to the general election.
To compare Italy and France, the interesting point is that Italy also left the ERM in 1992. Thereafter, monetary conditions in Italy were considerably loosened in comparison with those in France. The net result was that Italy's exports overtook those of France in terms of percentage growth year on year. The Italian position has improved greatly, as I acknowledged earlier, and as almost everyone who studies these matters knows.
The question is this. Had the Italians not been able to leave the ERM and devalue their currency, what would the picture be for Italy? It would certainly not be the picture that allows even a generous interpretation of the Maastricht criteria. The Italians would have been in a very sorry economic state had they not been able to do that and had their interest rates been fixed by some central organisation.
I make no secret of the fact, and noble Lords who heard me speak before Easter will know, that I understand and appreciate the arguments that can be made in favour of a single currency. However, I believe that the dangers of a single currency can equally be argued. The dangers have always been that the imposition of a single interest rate over economies at different stages in economic cycles could be such as to blow the whole European experiment apart. As a supporter of the European Union as it is at present, I should certainly not welcome that.
Some noble Lords will recall listening to one or two interesting speeches from the noble Lord, Lord Dahrendorf, from the Liberal Democrat Benches. The noble Lord is not in his place today. In a much more knowledgeable way than I could, the noble Lord underlined that point. I hope that he has not changed his view; I see no reason why he should have done. The noble Lord's view is simply that his idea of Europe—which is the Europe that we see now—could be hugely damaged by a single currency that failed to work.
It is therefore important that we examine very seriously all the issues outlined in this amendment. It is important that there should be a report. I do not know what the Government intend in relation to the Treasury Select
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Committee report. Clearly, if they reject this amendment, they will have to reject the proposal of the Treasury Select Committee; namely, that a final report should be produced. In conclusion, I underline this point. The Select Committee believes that it will take at least five years before this country can be in any position to decide whether or not the single currency experiment has worked and whether or not it is in our interest to enter into the currency. That makes a lot of sense; it is the policy of my party as expounded by Mr. Hague that it will be at least well into the next Parliament, and even the Parliament after that, that we can arrive at a conclusion on behalf of the United Kingdom.
7.30 p.m.
Lord McIntosh of Haringey: It falls to my lot as Deputy Chief Whip to address the induction courses which this House holds for new Peers. I tell them, as I have to, that particularly in legislation we have no time limits; particularly in Committee we have no restriction on the number of times that Members of this House may speak. Because we have no Speaker, there is no control over the relevance or length of the speeches in this House. Those who come to the induction courses hear me with incredulity and disbelief, especially those who come from the House of Commons, where they are used to somewhat more disciplined procedures.
There is another induction course next Tuesday. I shall cut short my speech and just say: "Please read Hansard for 28th April. Please read the debate on Amendment No. 27 and pay attention not only to what was said but also to where the speakers came from". It is noticeable that those speakers who were Members of the House of Commons feel their freedom most keenly and use it most liberally.
I remind the Committee of the status of the amendment. On 12th March we had a four-and-a-half hour debate on economic and monetary union. After four hours, when I had finished my wind up speech from the Government Front Bench, my noble friend Lord Stoddart—as is his right—asked whether it was possible to decouple Amendment No. 27 from Amendment No. 2, which had been the subject of debate for four hours. After another half hour—because my noble friend Lord Shore of Stepney took half an hour to wind up, as is his right—my noble friend Lord Bruce of Donington said, "But I wanted to speak to Amendment No. 27." So in acknowledgement of the undoubted right of my noble friend Lord Stoddart to ungroup Amendment No. 27, I said: "We haven't reached it yet". That was pretty foolish of me.
We had four-and-a-half hours' debate, in which we covered all aspects of European and monetary union except perhaps the question which is raised by Amendment No. 27—that is, whether there should be a report containing details and an assessment of:

"(a) the constitutional impact,

"(b) the monetary and financial impact,

"(c) the impact on economic and social progress",

of decisions taken by the Union,
"pursuant to the objective set out … of establishing economic and monetary union".

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I am grateful to both noble Lords who paid some marginal lip service to the wording of the amendment and the subject under debate. Other noble Lords did not even try. I shall answer the debate about the amendment. I shall respond as best I can and then make such observations as are possible. Given that I had no notice whatever of the wide range of irrelevant matters which were raised, I shall make such response as I can to the other parts of the debate.
Lord Pearson of Rannoch: With leave, we are in Committee at the moment. The Minister is free to answer any parts of the debate that he wishes. Nevertheless, I thought I detected a slight imputation that perhaps my remarks were not earthed in the amendment. Nevertheless, when the Minister comes to read Hansard tomorrow, if he allows me to take the amendment as read because it will be printed in Hansard, he will find that my remarks were targeted entirely on those aspects. The remarks were repeated by my noble friend Lord Mackay on the Front Bench. If the noble Lord answers nothing else, he should at least try to tell the Committee what will be the result of a single interest rate in an EMU of disparate and diverging economies.
Lord McIntosh of Haringey: That question does not arise in the amendment. As I have said, I shall do my best to answer points which noble Lords have made, however irrelevant they are to the amendment.
Amendment No. 27 would require a report on all EMU measures and decisions. The first category of the report would be the constitutional impact—that is, decisions over the participation of a member state in EMU. At least, that is what I take it to mean. Of course, the Act will not be enforced within the next seven days. But I remind the Committee that tomorrow and on Thursday the European Parliament will adopt an Opinion on the Commission and EMI reports on monetary union.
The Earl of Onslow: The impact of disparate interest rates all over Europe is certainly covered by:
"the impact on economic and social progress".
Therefore, it is slap bang in the middle of the amendment.
Lord McIntosh of Haringey: If the noble Earl is dissatisfied with my answer when I have completed it, he will have an opportunity to say so at such length as he chooses. Such are the procedures of the House.
Tomorrow and on Thursday the European Parliament will express its opinion on the Commission and the European Monetary Institute reports. On Friday, ECOFIN will make a recommendation on which states can be taken to have fulfilled the criteria. On the morning of Saturday, the European Parliament will adopt an opinion on the ECOFIN recommendation which will have been made on Friday. On Saturday afternoon, the heads of states and the governments will confirm the member states who are to join European
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monetary union on 1st January 1999. Over the weekend, on Saturday and Sunday, ECOFIN will announce the bilateral conversion rates which will come into force.
Those decisions are not subject to amendments in this Bill, which will not have completed its passage through Parliament. So what constitutional matters referred to in the amendment will arise after next weekend? Of course, the important matter to which I am sure Members of the Committee who dealt with the amendment were referring was the question of UK participation. I remind the Committee that the Government have already made it absolutely clear that if they decide in favour of participation, they will not seek entry without the agreement of Parliament and of the people in a referendum. The European Communities (Amendment) Act 1993 requires an Act of Parliament before the UK can move to Stage III of EMU. So there can be no doubt that the object of:
"(a) the constitutional impact",
in Amendment No. 27 will be achieved. It must be achieved by law and the Government have no intention whatever of skimping on reporting to Parliament or on the other measures which have been promised.
The second and third categories of decision referred to in the amendment are:
"the monetary and financial impact, and … the impact on economic and social progress".
I acknowledge what was said by the noble Earl, Lord Onslow: it covers anything. It is legitimate, within the scope of the procedures of the House, for noble Lords to speak about any subject, however remotely related to economic and monetary union, in the course of the debate on the basis of those words. That is what Members of the Committee have done. The noble Lord, Lord Pearson, made a most interesting analysis of optimum currency areas. He drew comparisons with the United States and asked me a number of specific questions about the future of economic conditions in the 11 member states which we expect to join after EMU has started. The noble Lords, Lord Pearson and Lord Mackay of Ardbrecknish, recognised the degree to which convergence has been achieved. The latter paid tribute to Italy no fewer than five times, I counted, in the course of his entertaining speech.
It is common ground that the fears which existed a year or two ago that there was no hope of convergence on the monetary criteria laid down at Maastricht have now been largely laid to rest. Of course, there will be accusations of fudge, accusations that many of the monetary measures which were laid down at Maastricht have been achieved on a point basis rather than on a sustainable basis. We shall see what results from that. We do not believe that achieving convergence on a point basis is satisfactory. Our whole approach to economic and monetary union has been the need for sustainable convergence over a period of time. That is why, in addition to the monetary criteria, the Chancellor laid down the economic criteria to which reference has already been made.
The Chancellor set out five tests which will indicate whether our joining economic and monetary union is in the national economic interest. Those tests are, first,

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achieving macro economic stability through sound fiscal and monetary policies; secondly, setting the right framework for low inflation through our reforms to the Bank of England and our commitments to monitor the inflation target in the light of the practices of the European Central Bank; thirdly, ensuring that our fiscal rules and deficit reduction plan continue to be consistent with the terms of the stability pact underlining our commitment to avoid an excessive deficit; fourthly, promoting greater flexibility in the UK economy and in Europe; fifthly, negotiating to secure the best interests of our financial sectors and to open up the single market in financial services.
The noble Lord, Lord Mackay, reading from the Treasury Select Committee report produced this afternoon, quoted an extract from my old and dear friend Christopher Johnson. As the noble Lord knows, he is a lifelong and devoted Euro enthusiast; some would even say—I do not believe he would mind—he is a Euro fanatic. Of course, for somebody who is a total Euro enthusiast some of the wording in the criteria is bound to be a little loose.
I must say to the Committee that I am no more bound by the quoted words of Christopher Johnson than by the quoted words of the Sunday Telegraph, anticipating a report which only came out this afternoon, or by the quoted sight—I saw them as well—of the three Channel 4 programmes on economic and monetary union showing a huddle around President Chirac and Chancellor Kohl. We do not make policies in this country on the basis of press reports of that kind. They were wonderful programmes. I pay tribute to them. They were enormously helpful, but we will not make policy on who huddles around whom at an international conference.
My noble friend Lord Stoddart at least made an attempt to relate the matters of which he spoke—on more than one occasion—to the amendment before us. The noble Lord, Lord Pearson, thinks that he has done so. If, when I read Hansard as he suggests, I find that he has done so and that his most interesting academic disposition on optimal currency areas relates to the amendment, I shall gladly send him a handwritten note to acknowledge that he was right.
The noble Lord, Lord Mackay, simply made fun. He knew perfectly well that his speech on 12th March was a Euro enthusiastic speech from which he had to recover at the last minute. The Leader of the Opposition was sitting beside him so he leapt free and expressed his scepticism about economic and monetary union in order to maintain his well-deserved place on the Opposition Front Bench. He got his own back this afternoon; he quoted at length from a report which he knows—because I have been here on the Front Bench—that I have not seen. He knows that I am not in any position to reply to his detailed criticisms.
My understanding from the chairman of the Select Committee is that it is a much more balanced report than Members of the Committee suggest. It pays some attention to the dangers of staying out of economic and monetary union as well as to the undoubted risks of
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going in and the undoubted requirements there will be for detailed consideration by the Government, by Parliament and by the people.
To return, as I must, to the amendment, I suggest to the Committee that the amendment would not serve any useful purpose which is not already served by the Government's intentions. I therefore invite the noble Lord, Lord Pearson, to withdraw it.
7.45 p.m.
Lord Pearson of Rannoch: I will not press the Minister on the point made by my noble friend that, if the Government reject this amendment, they are rejecting the Treasury Select Committee's report which asked for a similar amendment. That would be unfair until the Minister has had the opportunity to read the report in question. The Government can then come to their own conclusions.
I am not an economist, but even I understand the relationship between a single interest rate and an optimal currency area. A single interest rate is only safe in a currency area if the economies within it are not widely divergent. If we do not have that, then we will have massive transfers of resources within the area or unrest within the area.
In that sense, my remarks and the remarks of all Members of the Committee who spoke—to whom I am extremely grateful—were targeted on Amendment No. 27, particularly paragraphs (b) and (c). Even if the United Kingdom does not join EMU, as I sincerely hope it will not, the effect of the others joining will be great indeed on monetary and financial affairs, economic and social progress and on employment. I am a little surprised that the Minister cannot grasp that fact and accept the amendment. But, in view of the hour, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 28 to 43 not moved.]
Lord McIntosh of Haringey: My Lords, I beg to move that the House be now resumed. In moving this Motion, I suggest that the Committee should not start before 10 minutes before nine o'clock.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Badgers and Tuberculosis
7.48 p.m.
Lord Lukerose to ask Her Majesty's Government what assistance they will give to those farmers whose farms are outside the badger culling study areas proposed by Professor Krebs and whose herds are affected by outbreaks of tuberculosis.
The noble Lord said: My Lords, the Question I am asking this evening concerns an issue that has been exercising the minds of scientists and politicians for a considerable number of years and is, of course, a highly emotive subject.

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It was first recognised well before the turn of the century that milk infected with the bovine strain of tuberculosis could infect human beings, particularly infants, though at that time far more cases of TB in humans were caused by the human strain of the disease which was, and still is, highly infective.
Attestation of herds as being free of the disease did not really start until after the war. It was highly successful. In 1961 only some 15,000 out of over 9 million cattle in the national herd of dairy cattle reacted positively and were slaughtered. In other words, the prevalence of TB in dairy cattle had fallen to less than one-fifth of 1 per cent. compared with approximately 40 per cent. 30 years early.
But that improvement was not uniform and in some areas the incidence of reactors was far higher than the national average. Those areas were the south west and particularly Cornwall. A MAFF team of vets in 1972 found no answer to that but, at the same time, a farmer in Gloucestershire, whose farm had suffered from repeated infections of TB, found a dead badger. A post mortem showed that the badger had suffered from an extensive infection of bovine tuberculosis.
Tests on badgers then took place widely and many badgers were found to have the disease, probably forming a reservoir for the disease in certain areas of the south west from which reinfection took place. Further experiments and trials took place based on this through the years, but with little tangible effect. Several inquiries have also been instituted; notably that of the distinguished zoologist Lord Zuckerman in 1980. None of those solved the problem, and the Conservative Government asked Professor Krebs to set up a committee to look into the matter again in as scientific a way as possible. His main suggestion is to set up trial areas in the south west to try to establish once and for all how much badgers contribute to the spread of bovine TB. One of his other suggestions is that there should be a complete ban on the culling of badgers outside the trial areas. Hence my Question—and I must apologise for its long time in coming.
Compensation for slaughtered cattle, and more particularly to farmers hit by subsequent movement controls and the inability to carry on a viable business, has never been considered by farmers to have been either fair or adequate. It is for this main reason that experiments in the past have not worked, as the farmer has carried on illegally slaughtering what he considers to be his main antagonist, the badger. For the recommendations of Professor Krebs to work at all, it is essential for compensation to be paid to farmers to persuade them to co-operate totally with the trials, or these will be worse than useless and lose all scientific credibility.
The Krebs report proposes a five-year study of the effects of badger culling in 30 sites, each 10 kilometres by 10 kilometres, in the south west of England, chosen as the areas which have suffered the most repeat breakdowns, or next door to them, over the four years to 1996. Of those, 10 sites will have a proactive culling strategy; 10 sites a reactive strategy; and 10 sites no culling whatever. It is estimated that in these squares
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some 67 per cent. of total breakdowns will be covered. That leaves approximately some 33 per cent. of breakdowns which will occur, or are likely to occur, in areas where there will be no study work at all. If one then adds in the 10 squares where there will be no culling, it follows that a total of some 55 per cent. of all breakdowns will be occurring in areas where there will be no assistance to farmers to deal with the problem. The sites for the trials are all in the hot-spots of the south west, which means that the areas where breakdowns are occurring now, such as the Welsh borders, Shropshire and Staffordshire, will he untouched by the trials.
Farmers' compensation payments are based on the average market price for the two months previous to the month in question. This means that on a falling market payments have dropped from a maximum of £666 last summer to a maximum of £537 in April this year. What are the Government planning to do to help these farmers outside the area where the cull will take place? Are they aware that many farmers are threatening to take the law into their own hands and start destroying badgers, which, although it cannot be condoned, is surely understandable in the circumstances in which they find themselves? Will the Government consider creating some sort of cordon sanitaire round those areas where breakdown numbers are increasing to stop the spread of the disease further into the north west of the country and the Midlands? Might the Government consider increasing the percentage paid, especially to those farmers outside the control areas, or possibly freezing the compensation so that it does not fall any further?
A major problem for farmers affected by breakdowns is the imposition of movement restrictions, which mean that cattle can leave an infected farm only to go direct to slaughter. This means that many dairy farmers who sell calves or young store cattle cannot do so other than through the calf processing scheme, under which they are slaughtered immediately. This obviously means, in turn, that once the scheme ends, as it is expected to do shortly, farmers with herd breakdowns will not be able to sell any calves. The result of these restrictions is that farmers often face serious accommodation problems in keeping all their stock until the time for slaughter. Yet there is no assistance for all those extra costs incurred. This aspect is often the one that causes farmers more problems than the issue of compensation. So will the Government urgently review the present movement restrictions with a view to easing the problems caused to farmers who are suffering from continued breakdowns in areas where badgers are not being controlled?
The Government have not yet made any announcement about the costs of implementing the research proposed by Professor Krebs. What estimates have they made of the cost of fully carrying out the work, and will they undertake to ensure that the validity of the trials is not jeopardised by a shortage of funding? Can the Government ensure that when cattle have tested positive they will be removed from a farm within 48 hours?

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I look forward to noble Lords' speeches and in particular to that of the noble Lord the Chief Whip. I believe that an opportunity has come to settle this matter once and for all if—and it is a big "if'—the Government deal with it in the right way. I think they have made a good start in announcing that MAFF will conduct research into finding a vaccine for cattle. Can the Government confirm that work on the development of a vaccine to prevent bovine TB in badgers began under the Conservative government in 1994 and that some £1.5 million has been spent to date? Will this continue while the new work is begun on seeking an effective vaccine for cattle? What do the Government believe to be the major obstacles to the efficient application of vaccines to both cattle and badgers?
The badger is an attractive animal which does not deserve to be, as I fear it undoubtedly is, the villain of the piece.
7.57 p.m.
Lord Hardy of Wath: My Lords, the House should be grateful to the noble Lord, Lord Luke, for giving us the opportunity to discuss a serious matter. I hope that my noble friend, in replying, will be able to respond particularly in regard to the question of vaccines, to which the noble Lord referred a moment ago.
Perhaps I should first explain that I have a longstanding interest in this species, which I was able to watch and study for a long time before I became a Member of the other place in 1970. I always took the view when I became a Member of the other place that my interest in nature conservation should remain a matter for private relaxation. But, unfortunately, in the early 1970s a gang of badger diggers in south Yorkshire attacked virtually every sett and behaved with the utmost brutality. The last straw came when one of them placed a gin trap by the side of a badger sett and also at the side of a nature trail set out for schoolchildren, including some of those whom I had previously taught.
I thought it appropriate to present a Private Member's Bill in the other place and one was also started in this House. Those initiatives resulted in the Badgers Act 1973. It was not a particularly extensive Act—a modest Private Member's Bill rarely is if it is to be successful, as that one was. But shortly afterwards I was fortunate in securing first place in the Private Members' ballot, and I presented the Bill which became the Conservation of Wild Creatures and Wild Plants Act 1975. We touched on badgers' interests in that Act. However, by that time, the Ministry of Agriculture had developed suspicions about the relationship between badgers and bovine TB, and we could have nothing in those Bills which in any way prevented the Ministry of Agriculture from taking appropriate and sometimes hard action. That was understandable. But it is over a quarter of a century since the first of the badger Bills was presented. I had hoped that by now the problem would not have persisted, but it has.
There are causes for anxiety. The noble Lord has touched on a very serious one. How can Professor Krebs' research be truly scientific if people are going to
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destroy badgers in areas where the scientific research requires them to be unmolested? We have to ensure that farmers are not allowed to disregard the need for an adequate scientific base in the research.
There is another anxiety. There is a very serious reason why I was eager and willing to accept that we should not seek to interfere with the Ministry's control of this disease or problem. I was fearful that the popular press might seize on the issue in the 1970s and indulge in the most astonishing and sensational treatment of the matter, which might well have encouraged all sorts of people to feel that badgers should be destroyed, even though there was not a problem and is not a problem in much of England. Fortunately, such sensational treatment did not develop and the Ministry acted properly.
The Ministry accepted the view that I then expressed that if any control of badgers was to take place, the responsibility should be the Ministry's alone. For example, it should not harness the efforts of the badger diggers, who would have been delighted to receive an invitation from the Ministry of Agriculture to control the badger population. They would have done so with the appalling brutality which has disgusted many of us in those areas of England where such gangs operate.
So we sought protection, but not complete protection. The Ministry had a virtually free hand. It continued to have a free hand when badger protection was further developed under the Wildlife and Countryside Act 1981, which strengthened matters a little further. There have been successive private Member's initiatives such as that of my noble friend Lord Islwyn in the late 1980s. Indeed, as far as I can see, the framework of protection is now complete, and yet we still have this problem.
My hope is that, whatever the Ministry does now, it will seek to ensure that there is no feeding of rumour and suspicion which might extend the persecution of badgers in areas where this problem does not arise. I hope that my noble friend is also going to ensure that steps are taken to validate the research that is proceeding. That may well mean that the question of compensation arrangements, to which the noble Lord referred, should be considered.
There has to be another step taken as well. It may be that there are some cases of bad husbandry. If a farmer is to behave in a way which is scarcely responsible, it is hardly reasonable for the taxpayer to pay out on an unlimited basis, or for the badgers to be destroyed simply because of someone else's carelessness. I am not making a general accusation, but it is touched on in the views expressed by the RSPCA. It makes the point in its representations that the scientific validity has to be considered and the question of bad husbandry should not be ignored.
There is another possibility. It was almost by accident that the badger was found to be infected with bovine TB. It is at least a possibility that there are other creatures that can also be infected which may well be playing a part in the change and development of this dreadful condition.

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I hope that the Government will also consider that the badger is a popular animal. The noble Lord said that it had become a villain. It remains a very popular animal indeed. It is the subject of countless successful television programmes. I saw one such programme on television the other day. It is the emblem of the County Naturalists Trust. It is certainly highly favoured in the Yorkshire Wild Life Trust area. I am a patron of that trust and have been a member for many decades.
To put it mildly, it would be injudicious if the Government were to make decisions which inflamed the anger of the conservationists; offended the people who care for the badger; and irritated those on the badger groups who have done so much to ensure the survival of the species. They ought to be a little more careful than they have been in suggesting that the badger population is substantial and robust. It is not as strong and robust as many believe. The sett may be formidable and the excavation may appear to be substantial, but there may be very few badgers in the sett. We lose a lot on the roads and we have lost a lot because of the destruction of the habitat. We have seen large numbers of badgers destroyed by the cruelty of diggers. I hope that we shall not see any unnecessarily destroyed by the Ministry.
8.5 p.m.
Lord Soulsby of Swaffham Prior: My Lords, the House will be grateful to the noble Lord, Lord Luke, for introducing this debate. I have every expectation that the farming community, especially dairy farmers, will look to the reply of the noble Lord, Lord Carter, with great interest because this matter is of great interest and concern to livestock farmers in this country.
My noble friend Lord Luke provided an interesting and comprehensive account of bovine tuberculosis and the wild badger. At one time bovine TB was the scourge of the national dairy herd, with 40 per cent. of all dairy cattle affected by tuberculosis and an estimated 0.5 per cent. of all milk containing the tubercle bacillus. Before eradication that was responsible for 2,500 human deaths from bovine TB, particularly of children, with the untold misery associated with that.
The eradication programme was commenced in 1935, and it took 30 or more years to reach the level that my noble friend indicated. By 1965 the reactor incidence in the national herd was 0.06 per cent., representing 1 per cent. of the national herd. That was achieved by routine tuberculin testing, the clinical examination of cattle, the slaughter of the reactors and the introduction of the pasteurisation of milk.
Bovine TB in humans is now virtually non-existent: it is a rarity. It is about 1 per cent. of all the tuberculous cases in the human population. By any measure, that has been a splendid effort on the part of farmers, who have co-operated with the eradication programme over 30 years, of veterinary surgeons, and of the then Ministry of Agriculture and now MAFF, which continues with the eradication programme.
However, as we have heard, progress towards eradication has slowed down. That has been associated with a spill-over of bovine TB into the wild badger
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population. Now 20 per cent. to 30 per cent. of badgers are infected. Many have severe infection and open lesions, which leads to the contamination of grass and pasture. The weight of epidemiological evidence implicating the infected badger as the principal source of bovine infection now is beyond controversy.
Tuberculosis is endemic in certain badger setts in certain areas of the country. It has been shown that badgers are an ideal host for TB. They can survive for long periods while infected and infectious. They can produce viable young, and the disease does not seem to affect numbers or the structure of the badger population. Indeed, the Krebs report states that the evidence is "compelling" that badgers are implicated in the transmission of TB to cattle. As has been mentioned by my noble friend Lord Luke, in response to that finding the Krebs report proposes the setting up of 30 experimental areas in hot spots, each being 10 kilometres in size, to compare proactive culling, reactive culling and no culling at all over a period of five years to obtain firm scientific evidence on the role and mode of transfer of TB from badgers to cattle, and whether culling has any effect, temporary or permanent.
It is recommended that there should be no culling outside those areas. It is that aspect of the report which causes particular concern and disappointment that a more robust approach to the problem has not been proposed. Bearing in mind that fanners and vets worked hard and willingly to eradicate TB over a period of 30 years, many now feel that they deserve more sympathetic consideration and that firmer action is warranted.
Many questions arise. What will happen if new hot-spot areas develop outside the three control areas? Will badgers in those areas remain untreated and unculled as TB infection spreads? What compensation will be offered to farmers with TB-positive cattle in the non-culling areas? Will the so-called simple husbandry techniques contained in the Krebs report to be applied outside the hot-spot areas receive financial assistance?
A simple husbandry technique would be to fence off badger setts, but those who work on farms know that fencing to prevent badgers moving outside an area and to prevent cattle entering it costs money. Farmers who have experienced TB in their herds know well about the loss of income and the expense arising from movement restrictions, as was mentioned by my noble friend Lord Luke; the increased stocking rates when that occurs; the secondary diseases that may occur because of overcrowded farms and the increased veterinary bills that result.
Wider concerns relate to human health. Such concerns have not yet been mentioned, but raw milk is sold and used in this country. The original danger to humans from bovine tuberculosis came through milk. Should we be concerned about that? I believe that we should be. Much raw milk is drunk on dairy farms and it may well be that cows are secreting infected milk before the infection can be detected by the tuberculin test.
Another area that has not been taken into account is that badgers infected with TB often carry enormous burdens of the bacterium and spread it through urine and

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open lesions on to the grass and herbage. There is a fear that they will contaminate suburban areas, including vegetable gardens and leisure areas for the human population. There is a danger that humans, and particularly children, will become infected from using play areas or eating contaminated vegetables.
There are many areas on which the expert group to be set up to consider vaccination and other matters will need much guidance. It will need much guidance from Her Majesty's Government. I hope that they have it in mind.
Finally, I would not suggest for a minute that there should be any persecution of badgers, but I believe that the human health implications of the dangers of badgers and dairy cows with tuberculosis must also be considered.
8.14 p.m.
Lord Islwyn: My Lords, I endorse the thanks that have already been expressed to the noble Lord, Lord Luke, for initiating this short but useful debate. I am afraid that my approach to the subject will be a little different from his and more in line with the words of my noble friend Lord Hardy of Wath who spoke so eloquently earlier.
First, I must declare a certain interest, although not a financial one. As a Member of another place, I was responsible for a private Member's Bill which became the Badgers Act 1991. It sought to protect badgers from cruel persecution by evil people. It laid particular emphasis on protecting badger setts. There is still a need for that Act. About a week ago, on 22nd April, a report on the front page of the South Wales Argus gave details of a party with dogs and spades, digging out a sett on the outskirts of Newport. The men were digging up the sett to capture the cubs born this year so that they could train their dogs on them. Apparently, the same sett was dug up 12 months previously when the cubs were ready to be weaned.
On 16th December last year, Mr Jeff Rooker, MP, the Minister responsible for food safety, announced in the other place that the Government had accepted the Krebs report. The report, by Professor John Krebs, recommended a four-point strategy for dealing with TB in cattle and badgers. It called for the ending of the current policy of limited culling of badgers and suggested that that should be replaced by a policy of no culling in most parts of the country.
There has been much conjecture about the link between badgers and TB. As I understand it, the jury is still out. Indeed, it is suggested in some quarters that TB is given to badgers by cows in the first place.
My first question is: how many badgers will be culled under the new policy? Krebs estimated that 10,000 badgers would be culled over three years, but I understand that the figure could turn out to be almost 20,000 because it is suggested that Krebs underestimated the number of badgers in certain areas. We must recognise that many of those badgers will not be infected with TB. It is reckoned that between
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1,000 and 2,000 badgers are killed annually. Therefore, the new policy will mean a huge increase in culling. Can that be justified? I very much doubt it.
I understand that 703 herds are affected out of a total of 119,000 in the country as a whole. Over the past 23 years, more than 25,000 badgers have been officially culled in an attempt to eradicate TB, but the disease is still increasing in cattle herds. Despite what the noble Lord, Lord Soulsby of Swaffham Prior, said, it is now widely believed that culling badgers is not an effective solution to the problem of TB in cattle and badgers. What we need is an integrated approach involving better cattle husbandry, the use of vaccines and more focused research into the transmission of TB, as well as improved detection in cattle. Yet under the so-called five-year trial period many thousands of badgers over large areas of Wales, the South West and the West Midlands will be killed. Such an onslaught on this lovely wild animal can never be justified. It is suggested that farmers are taking the law into their own hands and killing badgers. I believe that they should be given an official warning and if they refuse to accept it they should be prosecuted.
Finally, I tend to disagree with the noble Lord who presupposes that badgers are solely responsible for TB in cattle. There is insufficient evidence to justify such a conclusion. Other wildlife may be involved. Studies in Ireland have indicated that even the weather may be a factor. Should cattle be kept in for a longer period during a rainy spring? These kinds of considerations lead me to believe that Professor Krebs may have got it wrong. I hope that there will be a rethink on the part of the Government.
8.21 p.m.
Lord Beaumont of Whitley: My Lords, as has been said, this Question is a timely one. The noble Lord, Lord Luke, is to be congratulated on having brought this matter before the House. It places before us the multifarious difficulties associated with the problem that has been raised by noble Lords. Some noble Lords have a great deal more expertise than I having introduced Bills and other measures into Parliament on this subject. My only connection is that my great-uncle and the great-uncle of the noble Lord, Lord Gainford, wrote an early book on badgers entitled The Life and Habits of the Badger—I regret to say that it is not in your Lordships' Library—but that does not make me an expert.
It is quite clear that in the immediate past too little urgency has been applied to this problem. The one matter on which everyone I have spoken to is united—I have spoken to quite a number of people—is that the previous administration whiffled about and got nowhere. I am delighted to hear this evening that they did put money into research into vaccination. I believe that to be a very important part of what needs to be done. I shall return to that in a moment.
The Krebs study will extend knowledge, but in my view it does not get to the heart of the problem. I do not follow the previous speaker in believing that it has not got its facts and deductions right. On the whole I believe

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that it has. But the heart of the problem is to assume what most people are sure about; namely, that badgers and cattle infect each other. What we must do as a matter of urgency is find a vaccine with which we can immunise both. I am not a great defender of the scientific establishment, but I know from experience that if it is given a problem with a high priority and is given the resources it will come up with solutions.
I do not advocate that we throw money at the problem but that we move it sharply up the pecking order of priorities. Until we come up with the answers farmers outside the study areas must be given permission to cull or be fully compensated for what happens as a result of their inability to cull. That is the hard choice that the Government must face. But much more important than any of those matters is the need to begin looking for a vaccine. The Krebs study will produce very interesting information which may have a considerable bearing on what we do in future. But we need a vaccine quickly to inoculate both badgers and cattle. I think it is now accepted that they infect each other.
8.24 p.m.
Baroness Anelay of St Johns: My Lords, I too thank my noble friend for giving the House the opportunity to discuss the consequences of the implementation of the Krebs report for those farmers who will not be allowed to cull badgers even though their cattle suffer breakdowns. As my noble friend has pointed out, 55 per cent. of breakdowns will occur outside the cull areas.
I welcome the response of the Government to the Krebs report. Bovine TB has posed problems for a very long time. I recognise that it raises very sensitive issues of animal welfare. It is a matter of animal welfare between species— badgers and cattle—and between animals and humans. There are threats to the farming economy and potentially to human health. Those sensitive issues are not easily resolved. I listened with great interest and humility to the experiences of some noble Lords who have had the interests of badgers at heart for even longer than I am able to remember, if I may dare say so.
During the experimental period it is vital to maintain the confidence of farmers and conservationists alike. We are looking forward to a period of five years. Even if it is possible to develop a vaccine for cattle—I hope that it is—the report itself says that it may take 15 years. Therefore, we are in for a very long haul while farmers suffer a threat to their livelihood. That is not a matter of criticism of anybody but simply a practical point.
The questions that I put to the Government this evening concentrate on the issues involved in maintaining the confidence of both farmers and conservationists during the coming years. The Krebs report makes recommendations as to study areas and timescales. Will the Government consider adopting the CLA's recommendation that the experimental areas should be doubled on the basis that to increase the sample size can reduce the time taken to obtain conclusive results? That would make it three and not five years.
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My noble friend has already referred to the costs of the experiment and the need for the Government to guarantee that the costs will be met. Do the Government agree with the National Farmers Union that direct financial contributions by the farming industry to control a disease of national interest is not an option? What will the Government do to meet the Krebs recommendation that the role of the MAFF should be to provide incentives to the industry to participate, or do the Government intend to follow the New Zealand example quoted in the Krebs report where the farming community contributes to the costs of both bovine TB research and bovine TB control?
As other noble Lords have explained this evening, it is vital that the research is successful, and for that to happen it is essential that it is not disrupted. What steps will the Government take to ensure that the trials are not disrupted by those farmers who are outside the culling area and feel aggrieved that they cannot safeguard their herds? Will the Government need to put in place new statutory or regulatory powers to take all badgers in control areas perhaps regardless of the views of landowners and animal welfare organisations? If new legislation is not required, which existing procedures and powers can the Government use to guarantee the integrity of the culling procedure?
I also have particular concerns as a result of paragraph 31 of the Government's response to the Krebs report. Do the Government recognise that they have a special duty in respect of compensation to farmers in relation to culling in response to Krebs? As I understand the legal position, it is not possible for an individual to sue for damages for negligence in respect of pure economic loss. Is that a correct interpretation of the law of tort? Even if farmers outside the culling areas suffered loss because the Government had forbidden them to mitigate their losses by culling, they would have no legal recourse via the courts. Surely, that places the Government under a greater duty of care to those who suffer loss as a result of being excluded from experimental culling areas. I believe that that may put us in a new situation that is not covered by the existing principles that govern compensation.
Finally, I turn to the question asked by noble Lords about the potential impact of good husbandry upon bovine TB outbreaks. The Krebs Report states:
"We suggest that areas outside the experiment would be suitable for an experimental comparison of proactive husbandry methods … As part of its role in encouraging a more proactive and constructive approach to husbandry, we recommend that the government should also give further consideration to whether incentives might be offered".
Have the Government done so, and. if so, what incentives are planned? What discussions have the Government had with farmers' representatives about the recommendations in the Krebs Report with regard to husbandry practices? Do the Government recognise that at times special local circumstances can frustrate the best attempts to separate badgers and cattle? For example, it may not just be the cost of fencing that could be a problem for the farmer. Secondary fencing is not allowed in certain parts of the south west, particularly in national parks. I understand that there could be difficulties with regard to rights of way.

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I return to paragraph 31 of the Government's response—do the Government intend merely to impose sanctions of lower compensation upon those who do not adopt good husbandry practices, bearing in mind that Krebs talks about incentives and not penalties? I look forward to hearing the Government's response.
8.31 p.m.
Lord Carter: My Lords, like all other noble Lords, I thank the noble Lord, Lord Luke, for raising the issue of bovine TB and the culling of badgers. All noble Lords' contributions have been valuable. Bovine TB is, thankfully, a relatively uncommon disease in Great Britain as a whole. New confirmed TB infections were detected in 471 cattle herds in 1996. The provisional figure for 1997 is 515 herds.
The disease is concentrated in certain parts of the country. There are some areas—for example, that of the noble Lord, Lord Luke, in Bedfordshire—which experience little or no TB infection in cattle. In other areas the disease is more common. In parts of south west England, new confirmed cases occurred in over 1 per cent. of herds in 1996. Where the disease occurs, it is potentially a serious problem for the affected farmers. Despite the limited badger culling policy of the "interim" strategy, the annual incidence of bovine TB has been increasing in south west England since the late 1980s.
In 1990 the figure for south west England was 104 new confirmed breakdowns. By 1997 that had risen to 414. That is a provisional figure. It has also been occurring in areas with no recent history of infection in the West Midlands and South Wales. As we have heard, there has been considerable debate about the role of the badger in the spread of bovine TB, particularly in the light of increasing badger populations.
As has been said, in November 1996 Professor John Krebs and a team of leading scientists began an independent scientific review on behalf of the then government into the links between bovine TB and badgers. Their report was published in December 1997.
The Krebs Report concludes that the sum of evidence strongly supports the view that badgers are a significant source of TB infection in cattle. However, it points out that it is not possible to state how large a contribution badgers make to cattle infection as the relevant data have not been collected and analysed. Moreover, the report makes clear that there has been no proper experimental study to enable firm conclusions to be drawn about the effectiveness of culling as a means of controlling bovine TB.
The report concludes that control of TB in cattle is a complex problem for which there is no single, simple solution. It therefore recommends a combination of approaches on different timescales. We view the bovine TB problem very seriously and are determined to tackle this issue in a rigorous and scientific way. That is why we welcomed the report by Professor Krebs and his team. We believe that that represents the best available scientific advice across this area and the Government are, therefore, disposed to accept the report's
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recommendations in principle, subject to further consideration of the public expenditure, legal and practical implications.
The report recommends a proper experimental trial of the effectiveness of badger culling in areas at highest risk of TB infection in cattle. Professor Krebs concludes that such a study is the only way to test rigorously the effect of different strategies: it would provide unambiguous evidence on the role of badgers in cattle TB. Most importantly, it would also yield quantitative data for a cost-benefit analysis of different strategies, including the absence of culling.
The Government therefore plan to carry out the culling experiment recommended by Krebs. That is worth doing only if it is robust and gives a sound basis for long-term policy. We have appointed an independent expert group to advise on the experiment design and implementation and are seeking everyone's co-operation. The first task of the expert group is to advise on the design of a trial which will produce scientifically robust conclusions. To do so it will assess the implications of the various practical, welfare and other problems which have been raised.
Outside the trial areas, Krebs recommends that no culling should take place and we have therefore ended the "interim" strategy. Even if culling were effective in reducing breakdowns (and that remains to be tested by the experiment), extending it into areas of lower breakdown rates would provide diminishing returns in terms of the number of breakdowns prevented. The expert group will, however, monitor the TB situation closely, and it will be open to it to recommend new areas be recruited to the experiment at any stage. I shall return later to the point about the West Midlands.
Farmers affected by bovine TB continue to be compensated under the current rules, which are long established. Most importantly, however, it is essential that money spent in this area is directed at finding answers to the key questions underlying the problems we face with cattle TB.
A small proportion of farmers will experience TB breakdowns. That may affect farmers in areas where pro-active and re-active culling is being tested as well as those in areas where there is no culling. The Government realise that the effect of breakdowns on farmers can be serious. Except for cows for slaughter, movements in and out of the herd are restricted until all the animals in it have been tested with negative results.
In order to help contain the outbreak, the cattle which react to the TB test, and animals which have been in close contact with them, are compulsorily slaughtered. There is, of course, compensation for those animals which are compulsorily slaughtered. It has been pointed out that compensation is 75 per cent. of the value of animals slaughtered, subject to a limit linked to a proportion of the average value of dairy cattle. Compensation is 75 per cent. of 125 per cent. of the average market price for two months before valuation. If my arithmetic is correct, that is effectively 95 per cent. of the average market price. There is 100 per cent. compensation of the value of animals slaughtered because they have been in close contact. There is also payment of the costs incurred in

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valuation of the animals. Those arrangements are long established and were introduced, as we all know, after discussion with the farming industry.
In the light of Krebs, the Government have considered requests to increase compensation to recognise the disruption and economic loss that TB breakdowns can cause, but we do not see grounds for distinguishing TB from other diseases which cause disruption and loss, and for asking taxpayers to meet a larger share of farmers' losses from TB. As Krebs pointed out, there are other measures in place to ensure that TB in cattle does not pose a threat to public health. There is also the possibility of insurance, although I am aware of the expense and of the limited coverage of insurance in areas of infection. It has been argued tonight that farmers deserve additional compensation because they are prevented by law from taking action to protect their herds by culling badgers. However there is little evidence that the interim culling strategy was working effectively to control the spread of TB. I have already referred to the increase in incidence.
More fundamentally, Krebs has argued that neither the precise role of badgers nor the impact of the culling strategy has been properly evaluated. That is why he recommends the experiment and the various pieces of research to improve our understanding of the causes of herd breakdowns and the effects of the currently available strategies to reduce breakdowns.
We believe that farmers' interests are best served by the full implementation of the report and the development of the scientifically based control strategies which are sustainable in the long term. We understand that the NFU is preparing a case for additional compensation. When we receive it, we shall certainly study it carefully, but we can offer no assurances beyond that. We need to be satisfied that the money that is spent in this area is best directed at finding answers to the key questions underlying the problems we face with cattle TB. That is a key point when we are talking about taxpayers' money. That aim is essential if we are to achieve our objective of controlling and ultimately reducing the incidence of TB.
Professor Krebs recommends a refocusing of research priorities for bovine TB. These are reflected in the research requirements document which was issued on 20th April.
A key recommendation concerns the gathering of improved data on herd breakdowns so that we can better analyse and understand factors contributing to local variations in the risk of herd breakdown.
The Krebs Report further concludes that improved husbandry methods by cattle farmers may play an important role in reducing bovine TB outbreaks in the longer term.
We will be pursuing discussions with the farming industry on establishing an experimental comparison of different husbandry methods in areas outside the culling trial. We agree with Professor Krebs that it is important that the farming industry itself takes a clear lead in this area.
Perhaps I may respond to some of the points that were made in the debate. Due to pressure of time tonight, and for reasons that we all understand, I will undertake to
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write to all noble Lords whose questions I do not have time to answer. A large number of important questions were asked.
The noble Lords, Lord Luke and Lord Beaumont, asked about the possibility of a vaccine. We can confirm that work on the development of the badger vaccine began in 1994 and that £1.5 million has been spent on that work to date. The Krebs Report recommends that the best prospect for the control of TB in British cattle is to develop a cattle vaccine and that this should have a high priority. However, it also makes clear that a cattle vaccine is a long term policy and that it will be 10 years or more before a vaccine is likely to be available even for field trials. Its success cannot be guaranteed. The report also recommends that the option under the badger vaccine should be retained as a fallback position in case the more stringent requirements of a cattle vaccine cannot be met. Much of the work done in the early years of developing a cattle vaccine will be applicable to the badger vaccine.
As regards a cattle vaccine, I highlight two crucial aspects which are relevant to application. First, any vaccine will need to be complemented by a diagnostic test which would enable the naturally infected animals to be distinguished from the vaccinated animals. The diagnostic test which is currently used does not allow that. Secondly, there will be a need to amend the current European legislation which governs TB testing so that properly vaccinated cattle will not be subject to trade restrictions.
A badger vaccine will clearly present problems in terms of development and delivery. Moreover, we do not yet have an experimental system enabling the development and testing of a badger vaccine. Section 6.4 of the Krebs Report sets out in some detail the key issues surrounding the development and application of both the cattle and the badger vaccines and I commend that to your Lordships.
I turn to the inclusion of the West Midlands area. Determination of criteria and the selection of areas to be included in the experiment is a matter for the independent expert group which has been set up to advise on the design and implementation of the experiment. It clearly seeks to ensure that the areas selected will best meet the needs of the experiment. Selection for inclusion in the experiment does not mean that a culling regime will be applied in that area. Krebs recommends that one-third of the trial area should allocated to a no culling policy.
The noble Baroness, Lady Anelay, asked what the Government will do to meet the Krebs recommendation that the MAFF role should be to provide incentives to the industry to participate and discussions with farmers' representatives. Professor Krebs recommended that the Government should consider whether incentives might be provided to farmers in the context of an experimental evaluation of husbandry practices. The Government agreed that it is important that industry should take ownership of this issue and take a lead role because that will ensure an evaluation that is best able to deliver results. As with the culling trial, the benefits of any results will accrue to the industry.
We are currently considering responses to the consultation on this and other recommendations in the report. Ministers will make a further announcement as

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soon as possible. In the meantime, preliminary discussions have been held by officials with all the key interest groups and Ministers have made clear their intentions to ensure that close contact is maintained with all the relevant interest groups as we move forward with implementing the report.
The noble Baroness asked whether the Government will need to put in place new statutory regulatory powers and which existing powers the Government can use to guarantee the integrity of the culling experiment if new legislation is not required. Those are important issues. A number of important practical issues must be addressed before we can move forward with the current trial. The first task of the expert group is to advise on the design of a trial which will produce scientifically robust conclusions. The Government expect to receive advice from the group in June.
It is in the interests of farmers and landowners, conservationists and all who care about our countryside that the trials should work and achieve valuable results to help us combat TB.
I am running out of time, but I will ensure that all noble Lords receive a written answer to all the questions that were asked. I repeat my thanks to the noble Lord, Lord Luke, for tabling the Question. It is an important matter which involves human and animal health. Noble Lords can be assured that the Government are fully aware of the problem and consult extremely widely as further recommendations and suggestions come forward.
Lord Hoyle: My Lords, I beg to move that the House do now adjourn during pleasure until 8.50 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.46 to 8.50 p.m.]

European Communities (Amendment) Bill
House again in Committee.
Lord Moynihanmoved Amendment No. 43A:
After Clause 1, insert the following new clause—
DECLARATION ON OVERSEAS COUNTRIES AND TERRITORIES
(" . Within six months of the passing of this Act a Minister of the Crown shall lay before both Houses of Parliament a report on the budgetary implications for the United Kingdom of Declaration 36 (on the Overseas Countries and Territories) appended to the Treaty of Amsterdam.").
The noble Lord said: I beg leave to move the amendment standing in my name and, with the agreement of the Committee. I shall refer also to Amendment No. 43B. I accept that that amendment is separately listed, but it will assist the Committee. I know that the Government Benches are content with that. I shall not be moving Amendment No. 43B because I shall be covering the points that I wish to make under Amendment No. 43A, which relates to the Declaration on Overseas Countries and Territories.
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The proposed new Clause that I have tabled requires a report to both Houses of Parliament on the budgetary implications for the United Kingdom of Declaration 36 on Overseas Countries and Territories which is appended to the Treaty of Amsterdam. This declaration recognises the need for special arrangements for Overseas Countries and Territories. It notes that the number of OCTs has declined significantly since the existing arrangements were first established in 1957. The declaration points out that these arrangements for association of OCTs were designed for countries and territories which were numerous, covered vast areas and had large populations. Today, however, there are only 20 OCTs and they are extremely scattered island territories with a total population of approximately 900,000.
This reduction in numbers of OCTs came about because member states no longer have empires and many of the territories referred to have since become welcome independent countries. The special association arrangements in place have hardly changed for decades and the Council has therefore been invited to review the association agreements between the Community and the OCTs and to come forward with proposals on how to assist the remaining 20 or so more effectively.
The review has a four-fold objective. Promoting the economic and social development of the OCTs more effectively; developing economic relations between the OCTs and the European Union; taking greater account of the diversity and specific characteristics of the individual OCTs, including aspects relating to freedom of establishment; and ensuring that the effectiveness of the financial instrument is improved. The review will be concluded before February 2000, at which point the old arrangement runs out. Decisions on the review in the council will be taken by unanimity.
Did the Prime Minister or Foreign Secretary, during the negotiations at Amsterdam which led to the inclusion of this declaration, raise the possibility that Spain might veto a future deal on the Community's association arrangements for OCTs because of the status of Gibraltar?
The Committee will have noticed that my brief consultation on Gibraltar in this context is very different to my earlier, somewhat forensic, assessment of the Government's hole-in-the-wall debacle and the secret Amsterdam tapes. This is a very different issue. Up against the threat of a Spanish veto, the Government would be faced with a choice between resisting such a threat and potentially allowing the OCT agreement to fold without a replacement, or giving in to Spanish demands. In such circumstances I am keen to elicit a response from the Government.
This is far from a fanciful scenario. Certainly the Chief Minister of Gibraltar, Peter Caruana, has no doubt that Spain would have no hesitation in deploying its veto. The Chief Minister said:
"We in Gibraltar have no doubt whatsoever that Spain will deploy her veto unless the UK agree to exclude Gibraltar from the application of the Schengen arrangements.

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"Our fears and concerns of the existence of the Spanish veto on a future British entry into the Schengen arrangements are not imaginary. Spain will exercise the veto, just as she did in relation to the application of air liberalisation to Gibraltar, from which we are still excluded, and just as she vetoed the External Frontiers Convention unless Gibraltar was excluded from it."
He continued:
"As far as Spain is concerned the very same issues arise in respect of Schengen."
Mr. Peter Caruana also commented that:
"A future British government would be placed in the invidious position of having to choose between advancing the UK's greater interests at Gibraltar's substantial expense or sacrificing the UK's greater interest for the benefit of Gibraltar. The last time the UK found itself in this position related to the air liberalisation directives and Gibraltar was indeed excluded."
What guarantees did the Government seek in order to avoid potentially placing the United Kingdom in such an invidious position? What guarantees did the Government get that Spain will not use its veto again in respect of the Overseas Countries and Territories review? What assurances can the Minister give to the people of Gibraltar in this context?
The Committee will agree that this assurance is vitally important because, as it knows well, the status of Gibraltar has been a matter of disagreement between the United Kingdom and Spain for nearly 300 years, ever since the rocky promontory at the foot of the Iberian Peninsula was ceded to the United Kingdom in perpetuity under the terms of the Treaty of Utrecht.
Spain has always laid claim to Gibraltar and has sometimes used its notoriously hostile strong-arm tactics in staking its assertion of sovereignty to the Rock, culminating in General Franco's unilateral decision to close the border between Spain and Gibraltar in 1969, effectively severing links between the Rock and the mainland for over 13 years.
Despite the Brussels process established in 1984 to discuss a range of Gibraltar-related issues, including sovereignty, the people of Gibraltar are still beset by an unsubtle blend of harassment, threats and restrictions contrived by Spain. Spain continues to create practical difficulties for Gibraltar, and Spanish tactics include unacceptable delays at the Spain-Gibraltar frontier and discrimination between European Union nationalities; incursion into Gibraltar's waters and air space, obstacles to cross-border development; effective prohibition of transport links between two territories of the European Union, since there are no ferry services between Gibraltar and Algeciras and no direct flights between Gibraltar and Madrid; exclusion from the European Union open-skies policy; refusal to recognise Gibraltar's international direct-dial code; impediments to the expansion of Gibraltar's telephone system; refusal to recognise Gibraltar's identity cards, which have been accepted by the European Commission; insistence that Gibraltar should be excluded from the European Union Convention on External Frontiers and insistence that Gibraltar should be excluded from certain European Union directives.
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Those are critically important points in the context of the overseas countries and territories. I have focused on one example this evening and I shall now make a few comments on the island regions and turn to my amendment on that subject.
The Amsterdam Treaty amends Article 227 of the TEC, Article 299 of the consolidated version. Paragraph 2 now provides for the phasing in of the application of the provisions of the TEC in French overseas departments. The new article recognises the particular social and economic situation of the French departments—the Azores, Madeira and the Canary Islands—and provides for specific conditions in applying provisions of the treaty. For example, it instructs the Council to take into account areas such as customs and trade policies, fiscal policies, free zones, agricultural and fisheries policies, conditions for supply of raw materials and essential consumer goods, state aid and conditions of access to structural funds and to horizontal Community projects.
Just as the declaration on OCTs states that the purpose of association is to promote the economic and social development of the countries and territories, it recognises also that as a result of their severe geographical and economic handicaps, most OCTs lag far behind in structural terms. Article 227 acknowledges that factors of remoteness, insularity, small size, difficult topography and dependence on a few products can adversely affect the structural, social and economic situation of the island regions. The permanence and combination of those factors can severely constrain their development.
Moreover, the declaration on island regions acknowledges that Community legislation should take into account the specific structural handicaps faced by island regions and provides for specific measures to be taken in favour of those regions. The declaration states:
"The Conference recognises that island regions suffer from structural handicaps linked to their status, the permanence of which impairs their economic and social development. The Conference accordingly acknowledges that Community legislation must take account of these handicaps and that specific measures may be taken where justified in favour of these regions in order to integrate them better into the internal market on fair conditions".
Most importantly, and again in the context of Gibraltar, paragraph 3 of Article 227 refers to the list of overseas countries and territories with special arrangements for association set out in Annex 2 to which Part IV of the TEC applies. Members of the Committee can read that list and it will be immediately clear that the lengthy list leaves out some of Britain dependent territories. That is because the treaty does not apply to those overseas countries and territories having special relations with the United Kingdom of Great Britain and Northern Ireland which are not included in the aforementioned list.
As Members of the Committee will know, Gibraltar's omission from that list is a serious bone of contention. I should very much like to see a clarification of the Government's policy on that issue. Do the Government consider that Gibraltar has structural handicaps and that therefore specific measures should be taken in favour of Gibraltar to integrate it better into the internal market

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on fair conditions in accordance with that declaration? What response did the Government make to the Chief Minister of Gibraltar when we asked whether that treaty provision, giving special attention to the outermost island regions, could be extended to include Gibraltar? Does the Minister agree with Mr. Caruana that Gibraltar shares with many of the named places the same structural, social and economic situation, and that the situation is likewise compounded by remoteness, virtual insularity, small size and economic dependence on a few products, all of which serve to hamper Gibraltar's development? Does the Minister agree further that Spanish actions have adversely affected Gibraltar's development, that Spain's tactics have had serious practical consequences for the people of Gibraltar, and that as a result, many people have regarded Gibraltar as existing in a state of relative economic siege—with its development impeded and its potential unfulfilled?
What is the Minister's response to the Chief Minister's assertion that Gibraltar is likewise a small territory severely burdened and constrained by the need to apply certain Community obligations? Although those burdens have now been recognised in respect of the above-mentioned European Union territories, that excludes Gibraltar. Did the Government negotiate to extend that new regime to Gibraltar? If not, why not? Does the Minister agree with the Chief Minister of Gibraltar that that represents a missed opportunity to benefit Gibraltar in a way which recognises that it too suffers many of the disadvantages mentioned in Article 227 and in Declaration 30? I should be very grateful for any assistance which the Minister can give me on government policy in relation to those points, believing, as I do, that the two amendments calling for reports on the budgetary implications will provide both Houses with the necessary opportunity to consider the important position of Gibraltar, on a regular basis.
9 p.m.
Lord Whitty: I propose to comment on the amendments as they stand. The noble Lord has, by concentrating on Gibraltar, mixed up three rather than two separate areas. First, we are talking about the overseas territories of member states which are those islands dotted all around the world; secondly, the island regions, which are regions of the EU like the Azores, and so on; and, thirdly, the outermost regions which include some of the same but also some continental areas of Europe.
The second amendment relates to island regions. However, the first amendment relates to overseas countries and territories. It requires that we give a report on the budgetary implications of the declaration on overseas countries and territories. I argue that that is an otiose amendment because there will not be any budgetary implications arising from that declaration. As the noble Lord said, the association agreement has existed since 1957 and the EU has provided funds for those countries from the European Development Fund. It includes generous trade provisions and Community grants similar to those of other groups of developing countries, duty-free tariffs and so on. In the course of
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the Amsterdam negotiations, France put forward a draft declaration that simply reaffirmed the objectives of the OCT Association. That was prompted by the need to renegotiate the association decision in 1999, partly for the reasons that the noble Lord described—the great reduction in the populations of those territories. The French were anxious that we should reaffirm the position that had existed since the 1950s, whereby the European Union would take special responsibility for the territories of colonial powers that are members of the EU.
The declaration on the Final Act, which is an annex to the treaty, was based on that draft and is a useful agreed political statement of the continuing commitment. It commits us to review the association agreements by February 2000. It should be useful in helping us to preserve the benefits that our overseas territories enjoy. The amendment does not in any sense change the force of the declaration. It will oblige us to provide a report. As I said, there are no direct budgetary consequences because we are already meeting the financial costs.
We debated the Gibraltar issue at great length the other night. Gibraltar is not one of the OCTs because it is part of the European Union and is treated for most purposes as part of the European Union, despite the difficult circumstances that exist in respect of Spain. The provisions of the declaration do not apply to Gibraltar, so it is difficult to see that Spain would veto or attempt to veto any OCT agreement.
Baroness Park of Monmouth: If Gibraltar is a member of the European Union, why does it not have a vote?
Lord Whitty: My noble friend Lord McIntosh explained that matter in detail the other night but, if the Committee wishes, I will refer to it later. From 1976 onwards, under the European Parliamentary Elections Act, Gibraltar was excluded from representation in the European Parliament. That immediately followed British accession and predated the creation of a directly elected European Parliament. Unscrambling that would require unanimity, which would need the agreement of Spain. We accept absolutely in principle and in all morality that Gibraltarians ought to have a vote and be represented in some way in the European Parliament. However, it is not possible for us to negotiate that, so it is not sensible to proceed on those lines. We discussed ways of ensuring that Gibraltar can make its views more directly known to the European Parliament, but direct involvement in elections is not feasible. I regret that situation, but that is the reality of the matter. It means that Gibraltar is not affected by the OCT agreement. Therefore, any threat of a veto is at best extremely remote.
It means also that under the second amendment, with its reference to the island regions and therefore to internal economic assistance under structural or regional funds, Gibraltar already qualifies. Gibraltar already has objective 2 status under the structural funds and benefits substantially—I would argue, to a greater extent than do other overseas territories under the OCT agreement.

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Under the Amsterdam negotiations, a declaration was agreed that the particular problems of island regions should be recognised. The amendment would require us to report again on the budgetary consequences. There are no direct budgetary consequences. Any such assessment would take place within the overall assessment of structural and other funds. The relative pressures in the complex negotiations on Agenda 2000 that are continuing now on the future of the structural funds and on urban and less-developed areas and areas of industrial decline obviously involve some consideration of the island regions. They will involve consideration of Gibraltar's status, as they will the status of every territory currently receiving structural funds within the mainland of the United Kingdom.
The Commission's current proposals are not acceptable in their present form to the British Government. As it happens, they would not adversely affect Gibraltar. They will be subject to a lengthy period of negotiation. I do not believe that it is necessary for us to agree in this context to producing a report on the consequences of the declaration that island regions have particular problems. Clearly they do, but so do other regions. The financial consequences involved in terms of structural funds will be subject to a much more detailed, wide ranging and difficult negotiation at a later stage, which will no doubt be reported and discussed at length in this Chamber, but not in the context of this treaty. In the light of that explanation, I hope that the noble Lord will feel able to withdraw his amendment.
9.15 p.m.
Lord Stoddart of Swindon: I do not want to detain Members of the Committee for long, but I should like to say a few words on the subject, especially in regard to Gibraltar. I am sure that my noble friend knows that not only myself but also many others on this side of the Chamber are very sympathetic towards the problems that Gibraltar experiences and would like to see them solved. As regards the treatment of Gibraltarians—and, indeed, of others—wishing to travel to and from the Rock, we believe that Spain interferes unduly with such movements. That causes people living in Gibraltar a great deal of trouble and heartache. I understand the difficulties that we may have with Spain but, nevertheless, we ought to tell the Spanish that both they and Gibraltar are part of the European Union. They should know that Gibraltar, as such, is entitled to the full consideration and the full protection that the European Union is supposed to give. If it does not do so, then the European Union is failing in its duty. I believe, therefore, that our Government should be pressing for action through the European Union to bring Spain to book.
There is another solution with which Spain ought to be faced. I feel quite sure that this country—certainly the people of this country—would give a sympathetic hearing to Gibraltar if it applied to become part of the United Kingdom. Of course, if it became part of the UK it would be eligible for representation in the European Parliament. So there are one or two things that we can say to Spain to get that country to treat Gibraltar in a better way.
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I understand that we are also dealing with the island regions. I should like my noble friend to comment on the question of the Channel Islands and the proposal to extend tax harmonisation to them. My noble friend will be aware that the Channel Islands are not part of the European Union, but it would be useful to know that the Government, of which my noble friend is a member, will resist any attempt by the French through the European Union to impose taxes on the Channel Islands, which the latter do not wish to impose.
The other matter in relation to the Channel Islands that I should like to raise relates to the French and their demands to depredate the fishing areas of the Channel Islands and to go in without let or hindrance, without being stopped by the British Navy. There is also their claim to overflight without proper consent. It should be remembered that the Channel Islands are under the suzerainty of the British Crown. Therefore, I hope that my noble friend will take those matters on board and perhaps give a short reply in that respect.
Lord Whitty: Even after five days in Committee, I have to say that the course of this debate has stretched a little too wide of the original amendment. My noble friend and I, the Foreign Secretary, and others, have expressed concern about the position in Gibraltar. We are in constant discussion with the Gibraltar authorities about its future both directly and in the context of the review of all our overseas territories, on which an announcement is likely to be made at about the end of June.
I do not believe that it is appropriate for such an amendment to be used to produce a debate within this Chamber on what are very delicate constitutional future arrangements for Gibraltar and on the manoeuvres and the negotiations that will be required in that connection. It would be far better if we were to await the outcome of the review on the future of the overseas territories and then dealt with it in that context. It is certainly not appropriate for us to take the matter further tonight.
Lord Stoddart of Swindon: If my noble friend is unable to reply to me tonight, perhaps he will be good enough to write to me about the position of the Channel Islands.
Lord Whitty: If my noble friend really wants me to send him a postcard from Jersey I shall be quite happy to do so. But the Channel Islands, likewise, are not covered by any of the designated territories for OCTs, island regions or outermost regions; indeed, they are not part of the EU. Therefore, they are not actually relevant to any debate on the Amsterdam Treaty even within the wildest stretches of imagination that we have so far managed to reach. Nevertheless, I shall try to keep my noble friend informed of developments regarding the Channel Islands.
Baroness O'Cathain: May I just mention the point made by the noble Lord, Lord Stoddart, to the effect that the French were to impose some sort of jurisdiction over the Channel Islands in terms of tax. Do I take it from

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the reply of the noble Lord the Minister that the French will have absolutely no locus whatever in the Channel Islands?
Lord Whitty: Absolutely.
Lord Moynihan: I thank the Minister for his comments although I have to say that I am surprised that he was unaware of the potential, when tabling amendments such as this, to enable specific cases to be brought before this Chamber for detailed consideration. It is a perfectly proper procedure, and a great advantage of tabling amendments calling for a report on budgetary implications, that it does allow the Committee to explore specific points. There is no doubt at all that in the context of overseas countries and territories there was a very real concern, as expressed by the Gibraltarians, about the implications of a potential Spanish veto. So to say that this is not a matter for discussion tonight and should not be touched on in this context I think is totally wrong. I was using a form of words which would allow us this evening to look very carefully at an important case.
I have to say that there was a clear difference in tone between the last comments that the Minister made and his earlier comments. In his earlier comments he went quite a long way on the subject of the voting rights of Gibraltarians. Having discussed at such length this afternoon the basic human rights of European Union members to vote, it appears that he is not now prepared to negotiate on that. I believe I heard him correctly. I would very much hope that he would be prepared to negotiate on that. When he sees the record and sees the way in which the example of Gibraltar was brought into the context of this debate, quite legitimately, and the extent to which exchanges took place on both sides of this Committee, I hope that he will reflect that it should be central to the Government's ethical or foreign policy to place the interests of the Gibraltarians at the very top of the agenda and to ensure that a right to vote was examined and developed and brought forward as an essential and important principle of the Government's foreign policy. I shall give way to the Minister.
Lord Whitty: I have never said that we do not have sympathy with the people of Gibraltar in their aspirations for a vote for the European Parliament. What I have said is that the negotiating situation looks impossible. I should like to ask the noble Lord why, if he is now so concerned about this issue, since this has been the case since European elections first started in 1979, did the previous government not ever take this up with our partners within the European Union. I assume it was for the very same reason, that they knew that Spain would veto it. I am just stating the reality. It is unfortunate, but that is where we are.
Lord Moynihan: I have never heard a government Minister, on either side of this House, say that they regard it as impossible to make progress on this issue. We have a very clear statement from the Government. It makes this particular set of amendments even more
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important for the people of Gibraltar that it was debated this evening. We shall be able to reflect on it and certainly we will be coming back to the Minister. I do not see it as impossible; I see it as a vitally important issue for government, a vitally important policy issue. I regret the position that the Foreign Office now take.
Against that background and against the exchanges this evening, I am grateful to the Minister for the other comments he made and to the noble Lords who participated, and I beg leave t withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 43B not moved.]
Lord Moynihanmoved Amendment No. 43C:
After Clause 1, insert the following new clause—
AMATEUR SPORT
(" . Within six months of the passing of this Act a Minister of the Crown shall lay before both Houses of Parliament a report on the particular characteristics of amateur sport mentioned in Declaration 29 (on Sport) appended to the Treaty of Amsterdam.").
The noble Lord said: At this point I have pleasure in moving the amendment standing in my name. I understand that there will be a change in the ministerial team at this point. It is always welcome to come back into the world of sport with the noble Lord and to debate issues of importance in that context. I do so because this is the first time that the European Community has formed a declaration regarding sport. I simply rise to welcome the interest expressed by the Community in sport, to raise one or two potential concerns but specifically to encourage the Minister to give the House a clear indication of how he sees the interpretation of the declaration which states:
"The conference emphasises the social significance of sport, in particular its role in forging identity and bringing people together. The Conference therefore calls on the bodies of the European Union to listen to sports associations when important questions affecting sport are at issue. In this connection, special consideration should be given to the particular characteristics of amateur sport".
The sports sector has operated for a long time within Directorate General X of the European Commission and it has been responsible for much good work ensuring intra-Commission and inter-institutional co-operation on sports issues and facilitating co-operation with the sports world. It manages two major programmes for the funding of sports activities and has launched an information service called Sport Info Europe.
The sports sector organises the annual meeting of the European Sports Forum and the annual meeting of international sports federations with the Commission. What it has done, which I believe will be important for the future, is to recognise the importance and indeed the pre-eminence of national governing bodies in various countries and the international sporting federations without at any stage intending to become a government of sport in its own right. I urge the Minister to underpin the importance that must be attached to the role of the European Union in supporting national governing bodies and international federations and in recognising their pre-eminence.
I speak with an element of trepidation as when I was a junior Minister in another place I entered this Chamber for the first time to hear the Minister and others express

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a less than favourable view on the important work I was attempting to do with regard to the football spectators' Bill. Unbeknown to the Minister I was standing at the Bar listening to the most damning indictment that I had heard in my career of any House of Commons Minister. That must have occurred well over 11 years ago. This is the first occasion since then that the Minister will respond to my comments on a sporting matter on a face to face basis. I know that the comments he made 11 years ago were deeply felt. Lord Howell sparred with me on this subject on many occasions. I deeply regret his passing, as does the Committee. I hope that the Minister will examine this subject which is close to my heart and that he will bear in mind that the European Commission has started to take an active interest in football and motor sport.
I refer to the European Court of Justice ruling—after a case brought by Jean Marc Bosman—that clubs have no right to buy and sell players at the expiry of their contracts. The law now demands that in both the United Kingdom and Europe no transfer fees should be paid for that kind of deal. The Bosman ruling dates back to December 1995. For some time there was confusion as to whether or not it applied to the United Kingdom. I am sure the Minister will accept that it led to something of a legal farce because it was possible to buy and sell a player within the United Kingdom by transferring him to a European team for 24 hours in between in order to avoid paying the UK transfer fee.
As I say, the Commission is studying this issue. However, I am anxious about the position of the smaller clubs in this regard. Although the larger clubs maintain that the new system has brought down barriers and provided more freedom for players, they are likely to say that because they can afford to buy expensive foreign players and are now doing so for far less money than used to be the case. People criticise some clubs for being swamped by foreign talent. That does not encourage British clubs to bring on promising young UK players when an unproven talent in a lower division can be bought from abroad at a much cheaper price. As I said, that does not encourage domestic players. Smaller clubs are missing out on the transfer fees which once helped them to survive. I regret to say that some of them, although not all, are becoming less keen to take on youth players who are expensive to train and who might leave them.
As regards motor sport, the main issue is whether or not the European Parliament can, as it intends, legally ban tobacco advertising for sport. It would be inappropriate to go into detail on that extremely complex and emotive case. Suffice it to say that I am trying to make a point about the importance of the European Commission seeking an accord with the governing bodies, looking to the international federations which set the rules and regulations for those sports and working with them in a supporting role, rather than trying to dictate to the world of sport how best to operate.
It is against that background that I look forward to hearing from the Minister—as I said, with a great deal of trepidation after what I went through 11 years ago. At least I have not done myself the discourtesy,
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especially if he believes that those words were accurate, of introducing the personal references which are on the record of my contribution at that time on what was an extremely difficult measure. At least in this debate we are celebrating what should be an important step forward in sport rather than the somewhat more difficult job of introducing a football spectators' Bill, which I recall well, and for one particular reason.
Perhaps I might briefly remind the Committee that I had the difficult job of introducing that Bill. Nicholas Ridley took an intervention during the Second Reading debate, and was asked pointedly, before a full House, when he had last attended a football match—to which he replied, without a moment's hesitation, "At Eton, under duress". My christening was worse. I rose to wind up the debate, totally terrified. There was that moment's pause, as ever. The House of Commons was full to overflowing when it came to matters of sport. During that moment's pause before I started speaking, the noise from the Front Bench opposite came from Dennis Skinner, who said: "It's all right for 'im, 'e can get in under the turnstiles". With those memories fresh in my mind, I am grateful to give way to the noble Lord the Minister to hear his comments on matters sporting.
9.30 p.m.
Lord Renton: We have all enjoyed my noble friend's remarks. They are based on valuable personal experience. I find this a rather vague declaration. Perhaps it is just as well that it is vague. I should not think it right for one of the "bodies", whatever a body may be in this context, of the European Union to start organising international sport. What are the bodies going to do, having listened to a sports association, when important questions affecting sport are at issue? It is all very vague. Nevertheless, we might as well support the proposal.
The most important matter in relation to sport is that it should be part of education. It should be taught in schools to make young people fit, to give them the right sort of instincts and to give them some pleasure and provide relief from their devoted studies. But there is no mention of that. I do not think that the European Union should exist for that sort of provision; however, I hope that member states will encourage each other to encourage sport in schools to the greatest possible extent.
My only reminiscence that might interest your Lordships is this. When I was at school, I was very keen on cricket but not very good at football. Once, when I became frightfully bored while watching a school football match, instead of standing at the front and cheering our side on, I went to the back of the other boys and started reading a newspaper. For that, as happened in those days, I received corporal punishment.
Lord McIntosh of Haringey: First, I congratulate the noble Lord, Lord Moynihan, on his incredible powers of endurance. As he rightly pointed out, there are three of us on the Government Front Bench, while he has taken the lead on every single amendment today, apart from the one spoken to by the noble Lord, Lord Mackay of Ardbrecknish. Three to one does not

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seem to me the right way to play a four-person game, but I admire him for it. He reminds me of the football spectators Bill 11 years ago, which I had forgotten. I shall have to go back to Hansard and read how rude I was. Since I never raise my voice in anger in this Chamber, I am a little astonished at what the noble Lord says, but if he says it, he must be right.
I took part in a debate on listed events last week in which I confessed my lack of interest in sport, so it is no good my pretending a personal concern about sporting matters. It is on the record that at school I used to escape from sport as much as I possibly could, notably by going to the movies in the afternoons.
I hope I can reassure the noble Lord, however, by saying something about the Government's attitude to sport in general. We intend to take the lead in extending opportunities for participation in sport which will embrace all sections of the community, regardless of where they live, social background, age or ability. Our aim is to ensure sporting enjoyment and opportunity for the public. We recognise the need for developing sporting talent and investing in the future by supporting sport at grassroots level.
Sports opportunities and success create a sense of community. Young people in particular—and the noble Lord referred to this—gain confidence and self-discipline and are introduced to good habits which set patterns for a lifetime.
Our starting point is much the same as that of the noble Lord, Lord Moynihan. He rightly reminded the Committee that the impetus for the declaration came from the Bosman decision in December 1995 which found that the European Community Treaty rules on free movement of workers applied to rules laid down by sporting bodies such as the Belgian Football Association and UEFA. It decided that the transfer fee system and the three foreign player rule breached Article 48 of the treaty. That meant that no transfer fee could be charged for out-of-contract players. It has also contributed since then to an influx of foreign players to the United Kingdom. I suppose not surprisingly, a number of sporting bodies felt that their powers of self-regulation were being undermined. They wanted to ensure that Community competence did not develop over sport and that European Community law did not impede their freedom to regulate and organise sports activities. So they lobbied for a binding protocol. They did not succeed with the lobbying. What they got instead was the legally non-binding declaration to which the amendment refers.
It may not be legally binding, but it is an important statement which we expect the European Union to uphold. The declaration requires the Community to consult sporting bodies more in the future when their interests are directly at stake. It underlines the importance that sport, not merely professional sport, has in our national life. As the last sentence says:
"special consideration should be given to the particular characteristics of amateur sport".
I agree with the noble Lord, Lord Renton, that the declaration is mildly expressed; some would use the insulting phrase "warm words" for it. If we were
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drafting the declaration from scratch, we would not seek to highlight professional sport apart from amateur sport because both are important. But the significant aspect of the declaration is that Community institutions should keep the interests of sport—professional and amateur—in mind when important questions affecting sport are at issue. We welcome that and the perhaps limited protection which the declaration gives.
Lord Moynihan: How the passage of time heals! I am most grateful to the Minister for his generous opening remarks. I am also grateful to him for his observations on sport which I endorse. The intervention from my noble friend Lord Renton was apposite. It is an important start for the European Union to recognise the importance of sport and recreation for all those who live in member countries. In the context of the comments made by the Minister and in the spirit of the words of the declaration, I am most grateful to the Committee for listening to this exchange. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 43D not moved.]
Lord Moynihanmoved Amendment No. 43E:
After Clause 1, insert the following new clause—
WELFARE OF ANIMALS
(" . Within six months of the passing of this Act a Minister of the Crown shall lay before both Houses of Parliament a report on the interpretation of the welfare of animals "as sentient beings" and the corresponding rights set out in the Protocol on the Protection and Welfare of Animals annexed to the Treaty of Amsterdam.").
The noble Lord said: From these Benches in principle we support Protocol 10. It requires animal welfare to be properly taken into account in the development of Community policies on agriculture, transport, the internal market and research. Our support is unsurprising given that the provision was inspired by the previous government's recognition of the high level of public concern in relation to animal welfare. It was thanks to the persistence of the then Prime Minister—John Major—that a declaration on the protection of animals was appended to the Maastricht Treaty. Likewise, it was the previous government which, at the IGC in 1996, sought agreement to have that declaration converted into a legally binding protocol which would place a formal obligation on the European Council to take animal welfare into account when formulating policies.
Britain has a tradition of high standards in the protection and welfare of animals. We have long been at the forefront of the drive to change attitudes in Europe. The previous government were committed to the highest possible standards of animal welfare both at home and abroad. Indeed, after the 1979 election we set up a new, powerful welfare body to monitor the humane treatment of animals. With scientists, livestock farmers and veterinary surgeons, the Farm Animal Welfare Council carried out a range of studies over the past 17 years on animal welfare, many of which were incorporated into new legislation and welfare codes.

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I am sure that the Minister will give assurances that the Government will continue to work for higher standards across Europe and the rest of the world and, equally, will also ensure that UK standards should never be compromised by being levelled down anywhere in the world or, indeed, in Europe.
But against that background, the protocol before the Committee today raises a number of interesting points, one of which may not help to secure the level playing field that we seek. First, the text refers to respect for the welfare of animals as "sentient beings"; secondly, it provides that the Community shall have full regard to the welfare of animals while at the same time respecting the legislative or administrative provisions and customs of the member states relating in particular to religious rites, cultural traditions and regional heritage.
On the first point, will the Minister give the Committee a definition of the phrase "sentient being"? It may be of assistance for me to say that the Oxford English Dictionary defines "sentient" as follows:
"[First,] That [which] feels or is capable of feeling; having the power or function of sensation. [Secondly,] Of organs or tissues; responsive to sensory stimuli. [Thirdly,] Characterised by the exercise of the senses".
While the noun "being" can be used to refer to existence and the state or fact of existing, it can also be used to refer to the self or something that is thought to exist, especially something that cannot be easily assigned to a category; for example, a being from outer space. It can of course even refer to a human being. Does the Minister agree that the meaning of the phrase "sentient being" may be construed as obscure even in one language, let alone in the languages of all the European Union members?
This is important. I should like the Minister to consider how the European Court of Justice might interpret the phrase "sentient being". The ECJ played a large role in determining the scope of application of animal welfare measures. For example, it has always been the case that under the Treaty of Rome the member states could not ban the export of live animals on animal welfare grounds because of the general provisions; namely, those contained in Article 36 which strictly limit the circumstances in which freedom of trade within the Union can be curtailed. That has meant that a unilateral ban on the export of live animals from the UK would not be effective. Not only would it be illegal under the single market, but it would also put British farmers at a disadvantage while doing nothing to help improve animal welfare on the Continent.
The recent ruling of the European Court of Justice has served only to confirm this interpretation; for last month the court ruled that European free trade laws meant that the United Kingdom was not legally entitled to ban the live export of calves to be reared in veal crates on the Continent. Even though the present Government have pledged to stop such exports resuming once the BSE ban was lifted and even though the Advocate General had advised the court that a country in which the health of animals was a matter of public morality could impose a ban, the High Court of the European
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Court of Justice still ruled that a ban under Article 36 was not permissible and that the practice of rearing young calves in crates complied with European Union minimum standards of animal welfare. So the fact that Britain chooses to adopt stricter standards than those required by the directive does not entitle it to ban live exports to other member states whose farms comply with the EU directive on minimum standards for animal welfare.
Therefore, can the Minister explain how the inclusion of the phrase "sentient being" is likely to sway the European Court of Justice in its consideration of whether member states are allowed to restrict the export of live animals? By introducing a potential element of ambiguity in a court of law, how does this contribute to strengthening European law or animal welfare? For surely this is the way forward. Just as it did under the previous government, the UK must continue to lead the way by example and by lobbying for better European laws on animal welfare so that, where necessary, we are satisfied that it is being levelled up to the standard of our law. I could give a number of examples but I think it would be valuable to hear first from the Government as to their views on this extremely important and detailed point.
I want to turn to a second very interesting point raised by the protocol which, as I said, is the requirement for member states to pay full regard to the welfare requirements of animals while respecting the legislative or administrative provisions and customs of the member states, relating in particular to religious rites, cultural traditions and regional heritage.
I interpret this to mean that the Community must have full regard to the welfare of animals and at the same time must respect the religious customs, cultural traditions and the heritage of individual member states and that the member states themselves must also have full regard for animal welfare with the same provision on regarding customs, traditions and so on.
Can the Minister clarify whether under this protocol a member state may not take action on what it considers to be animal welfare if such action is deemed to conflict with the customs, religious rites, cultural traditions and regional heritage of this country? Clearly this protects against action which would affect religious slaughter—for example, for kosher and halal meats—on the grounds that this is a religious rite. Likewise, neither Spain nor the Community will be able to ban bull fighting, so both matadors and the treatment of animals in Spanish festivals would not be affected by this protocol on the grounds that they represent a cultural tradition and part of Spain's regional heritage.
I am sure it was the intention of this passage to provide such exemptions. But where does this leave certain country sports in the United Kingdom? Whatever views an individual holds on the rights and wrongs of fox hunting, it is certainly a cultural tradition and part of the United Kingdom's regional heritage. Upon signing this protocol, therefore, does this mean that the United Kingdom could not take measures to prevent fox hunting within its own boundaries without breaking the terms of the protocol?

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I look forward with interest to the Minister's reply to that specific question. From these Benches we fully support the Government in taking steps at European level to achieve a real and lasting improvement in animal welfare standards. My amendment is intended to clarify some of the ambiguities of language as well as the meaning contained within this protocol.
Lord Wallace of Saltaire: I intervene briefly to say that I am a little puzzled by the approach of the noble Lord, Lord Moynihan. My understanding of the intergovernmental conference was that this protocol was mainly pushed forward by the last British Conservative Government. Its exact phraseology stems from that government. The Minister might care to suggest to the noble Lord, Lord Moynihan, that he asks his friends and colleagues what they intended it to mean.
Earlier today the noble Lord made an extremely strong speech on the importance of the principle of subsidiarity. He has just urged that the Community should now add a whole host of new regulations raising animal welfare standards across the Community as a form of vast centralisation. We have to be consistent here. On grounds of subsidiarity, we should resist pushing too many animal welfare matters to the top. It is one of the areas in which the British Government have been a centraliser in the European Union. Therefore, I hope that the Government will interpret this protocol in as strong a subsidiarity fashion as possible.
The Earl of Clanwilliam: A great deal of subsidiarity will be required across the borders of Europe as regards the description of sentient animals. Every country except our own seems to have a much more overt approach to animal welfare. As a result of the health and safety rules exercised by the European Union, half the abattoirs in this country have been removed with the result that animals are suffering enormously from having to travel vast distances in order to get to the only available abattoir left. I do not believe that that has been an advantage.
We might be able to introduce mobile abattoirs to the Europeans. But whether they will accept anything that we like, I do not know. If one is to talk about sentient animals we must talk about chicken farms. These involve the most ridiculous and appalling activities that have been invented, but perhaps that is not relevant to this debate.
Baroness Ludford: Perhaps I may ask the noble Earl about abattoirs. As I understand it as a result of consistent listening to "Farming Today", the question of abattoir regulation is very much an example of mass gold plating of EU directives. The Ministry of Agriculture lay a regulation. As I understand it, it was more to do with Whitehall than with Brussels that we have lost some of the smaller abattoirs. It is not entirely fair to say that it was due to EU regulations.
The Earl of Clanwilliam: If this is another attack on the wretched Ministry of Agriculture, Fisheries and Food, then so be it. We should have regard to welfare
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which is contrary to the natural nature and traditions of ideas of animal welfare across Europe. There will be a great deal of difficulty in procuring an agreeable degree of consent throughout Europe on this subject.
Baroness Symons of Vernham Dean: The Government are very happy to recognise the role that the previous government played in the efforts to secure the protocol that we are discussing in this amendment. We welcome it. But it might be as well for me to remind the Committee that the protocol recognises that animals are sentient beings and requires that their welfare needs are properly taken into account in the development of Community policies on, specifically, agriculture, transport, the internal market and research. I can see that the noble Lord, Lord Moynihan, has this off by heart. It is important that the protocol focuses on those four areas.
I do not suppose that the noble Lord will be surprised to learn that the Government cannot accept his new clause. The animal welfare protocol is legally binding. Failure to abide by it can be challenged in the courts. In the end, it is for the courts to interpret its provisions. It is important to note that the protocol has been welcomed by the RSPCA which, after all, has a record second to none in this country on matters relating to animal welfare and rights. I hope that I can explain the Government's thinking on the term "sentient being" and deal with the other questions raised. A number of noble Lords have asked what the word "sentient" means. The Oxford Dictionary is good enough for us. "Sentient" means capable of sensation or feeling. It is the acknowledgement that animals are sentient that is the additional justification for the Community's protection of animal welfare, so that animals are no longer regarded solely as "goods". I am sure that there are many arguments about what adds up to a degree of feeling or sensation. I suspect that it is the degree of development of the central nervous system of the animal concerned, but the basic point is that animals have a central nervous system and feel sensation and pain.
The noble Lord raised a number of points, including religious rites, cultural traditions and regional heritages. We believe that the effect of the provisions will be very limited. We expect it to be interpreted narrowly and not to reduce dramatically the effect of the new protocol. However, the noble Lord is right that it does not involve matters such as religious slaughter and bull-fighting. I am sure that the noble Lord will be pleased that it will not restrict fox-hunting because the protocol is restricted to agriculture, transport, the internal market and research. That means that it does not include fox-hunting. There may be many strong feelings about fox-hunting in this House, as elsewhere, but that matter is not affected by the introduction of the protocol.
The noble Lord also asked about the role of the ECJ. Its role will be to ensure that the Council has, as the protocol requirements set out, paid full regard to the welfare requirements of animals. It will not be for the ECJ to reach a judgment on what the welfare requirements are; that is for the Council. I hope that

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I have dealt with the noble Lord's specific points to his satisfaction and that he will now feel able to withdraw his amendment.
Lord Renton: Before my noble friend replies, although I was very interested in what he said, he has had a most effective answer from the Minister and I very much hope that he will therefore withdraw his amendment.
Lord Wallace of Saltaire: There is a question over whether foxes which are being hunted in Northern Ireland and then cross the border do not fall within the scope of the provisions, but I do not want to press that matter at this stage.
Lord Moynihan: I am somewhat reeling from those comments from both sides of the Committee. I refer first to the intervention of the noble Lord, Lord Wallace of Saltaire. I never believed that I would stand before your Lordships' Committee in this European debate and hear that we were being more communautaire than the noble Lord would like us to be on any subject. However, that will not sway me from supporting Protocol 10 for the many reasons that I outlined in my opening remarks, but it will provide a cause for reflection in the future. Equally, I did not expect to hear such eloquent and fulsome praise for the Minister's reply to the amendment that I moved and the urging of my noble friend Lord Renton that I should not press my amendment to a vote this evening. Suffice it to say that on this occasion I am in agreement with him, although I do not believe that I would have put it quite so fulsomely.
I believe that the answer provided by the Minister was admirable. I tried to lead her down a logical road to be trapped by fox hunting, but I did not succeed. Obviously, she was aware that that argument might be deployed this evening before the Committee. I am grateful to her for the important and serious points that she raised in the context of animal welfare within the European Union. Against that background I am happy to seek leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Lord Moynihanmoved Amendment No. 43F:
After Clause 1, insert the following new clause—
BROADCASTING
(" . Within six months of the passing of this Act a Minister of the Crown shall lay before both Houses of Parliament a report on the meaning of "public service broadcasting" set out in the Protocol on the System of Public Broadcasting in the Member States annexed to the Treaty of Amsterdam.").
The noble Lord said: Amendment No. 43F concentrates on broadcasting. I am aware that a number of my noble friends will intervene in this debate. The new clause on public broadcasting relates to Protocol 9 which deals with the system of public broadcasting in the member states. Protocol 9 permits member states to finance public service broadcasting in individual countries on two conditions: first, that the funding to broadcasting organisations is for the fulfilment of public
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service broadcasting; and, secondly, that it does not affect trading conditions and competition within the European Union to an extent that would be contrary to the common interest. In the words of the protocol broadcasting
"is directly related to the democratic, social and cultural needs of each society".
I have tabled the new clause for one specific reason. Nothing can be more central in demonstrating that public broadcasting is directly related to the democratic, social and cultural needs of each society than the work of the BBC World Service. The term "public broadcasting" is not adequate to express both the critical importance and the deep social and democratic significance that the work of the World Service holds for many people in the world. I crave the indulgence of the Committee if I focus on this point for three or four minutes.
In this Committee there is overwhelming consensus that the BBC World Service sets accepted standards of excellence. By providing an objective and accurate source of information, it is internationally acclaimed—most rightly so—as an upholder and promoter of democracy. For millions, including world leaders in the fight for democracy, such as Aung San Suu Kyi, the pro-democracy leader in Burma, and Nelson Mandela, now President of South Africa, the World Service has provided a beacon of fair, trusted and respected news coverage—more so than any of its free world rivals. This is a broadcasting service with over 138 million listeners worldwide. Listeners in Europe value and appreciate the news bulletins and other business, sport, music and arts programmes which it broadcasts in English round the clock. Further, 17·5 million people listen in Europe in any language. For a total of 104 hours a week Germans, Greeks, Poles, Slovenians, Czechs and Hungarians can all listen in their own languages. Right now a special service is also being provided for Europe. To coincide with the UK presidency of the European Union, a tailored series of programmes linked to the issue of enlargement is being broadcast in English and other European languages. These programmes will include in-depth analysis of issues related to the accession process as it affects individual applicant countries, as well as focusing on the themes of education, agriculture, harmonisation of legislation and economic convergence. In reaching an audience of millions of central and eastern Europeans and helping them to understand and be fully aware of the historic process of enlargement of the European Union, these programmes are invaluable.
As the protocol permits funding of public service broadcasting, insofar as that funding is granted to broadcasting organisations for the fulfilment of the public service remit as conferred, defined and organised by each member state, and that in funding such broadcasting the realisation of that remit should be taken into account, I should like to ask the Minister for an update on the work of the joint FCO/BBC World Service working group which reconvened last autumn.
As the Committee will be aware, the working group, with access to independent advice, was set up in 1996 to ensure that concerns over financial arrangements and

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fears of a sacrifice in the quality raised by the BBC Director-General's restructuring proposals were addressed as well as the requirement to maintain editorial independence. What action have the Government taken to implement the 20 measures to safeguard the World Service agreed by the FCO/BBC World Service working group in October 1996, and what further suggestions have been proposed since it reconvened?
It is clear that the World Service is a source of great pride to this country. It requires and deserves our fulsome and vigorous support. It is incumbent upon us to provide such support, particularly when we consider that the World Service is a uniquely powerful asset on the world stage. It projects those critical and fundamentally important values of democracy, objectivity and fairness, which are then identified by opinion formers as British values. Its voice helps shape this country's reputation and image.
I look forward to any assurances that the Minister can give, in the belief, on this occasion at least, that I have moved an uncontroversial amendment which has allowed me to focus upon the important work of the BBC World Service which comes so neatly into the work expected of those who broadcast under Protocol 9. I hope that the Minister will comment briefly on that. I do not expect a long answer. I gave her no notice of the questions that I was going to raise. I shall stop at that point, because I know that my noble friend Lord Inglewood wishes to intervene in this debate on some of the issues raised in Protocol 9. I beg to move.
Lord Inglewood: I hope that it is in order to raise three points of a technical nature. I appreciate that the Minister may not be able to respond instantly. The first point relates to the wording of the protocol itself. It is somewhat strangely worded, and I do not know whether there is any significance in that.
The protocol is entitled:
"Protocol on the System of Public Broadcasting in the Member States".
In the first considérant reference is made to the system of public broadcasting as opposed to public service broadcasting. In the main paragraph reference is made to the funding of public service broadcasting. I do not know whether that is a deliberate differentiation in the use of words, but it is worth recalling that in this country the Channel 3 ITV companies and Channel 5 are private broadcasting entities which execute a public service remit.
Secondly, in the main body of the text there is reference to "public service remit" which is circumscribed by the words:
"as conferred, defined and organised by each Member State".
Nevertheless, is it the case—I shall be interested to hear the Government's view on this—that despite the general wide effect of the words, "conferred, defined and organised" whatever any particular member state may care to use as its definition for the purposes of this protocol, it must fall within the general ambit of the generally understood meaning of the words "public service broadcasting"?
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Finally, can the Minister explain to us how, in the event of funding being given to a broadcaster which is in breach of the protocol, the matter will be dealt with? Should the affected party go to the Commission, using the provisions available for problems caused by unfair state aid, or will the matter be directly justiciable under the protocol itself?
Lord Renton: The amendment moved by my noble friend Lord Moynihan is narrower than I would prefer to see. I would like the Government to be required to lay before both Houses of Parliament a report not merely on the meaning of "public service broadcasting" but on the extent to which the protocol to which we are a party has been observed by our own broadcasting authorities.
My point will be familiar to my noble friend Lord Inglewood because in the previous Parliament he, as Parliamentary Under-Secretary of State in the Department of National Heritage, had to reply to debates supported by Members on all sides of the House complaining about the amount of violence and sex in television programmes. Too much of the so called "entertainment programmes" was not entertainment but a mere portrayal of unpleasant people being unpleasant to each other. There was too much of that and there still is.
I hope that on Report my noble friend Lord Moynihan will table a wider amendment than that calling merely for the meaning of "public service broadcasting". I realise that the Government Front Bench does not have a responsibility for broadcasting—far be it that it should have—but I hope that the Government will invite the attention of the broadcasting authorities in this country to what is stated in the protocol about public broadcasting being democratic, social and relative to the cultural needs of society. I am afraid that our broadcasting goes far beyond that, but I believe that our World Service is splendid and needs no criticism in that respect.
Lord McIntosh of Haringey: I am grateful to Members of the Committee who have taken part in this short debate. I strongly agree with most of their comments. Perhaps I might first explain the background to the protocol and then comment on what it achieves. As the noble Lord, Lord Moynihan, will know, the pressure for the protocol came originally from public service broadcasters. They in turn were afraid of pressure from commercial operators who were claiming that state funding of public service broadcasting contravened state aid rules; that is, Article 92(3)(d) of the competition law. During the discussions on the Amsterdam Treaty, some member states seemed to be pushing for their own public service broadcasters from those rules. We argued—and I hope that it will be agreed that it was right—that we wanted clarity of purpose rather than exemptions for particular forms of public service broadcasting. I will expand on that in a moment.
The protocol seeks to protect the public funding of public service broadcasters for the fulfilment of a public service remit. In response to the first point made by the noble Lord, Lord Inglewood, I do not know why

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the first text paragraph of the protocol refers to "public broadcasting". I suspect that he has found the deliberate mistake. If so, he should be awarded the Schuman or Monnet medal for finding a mistake in a European document. I can see no conceivable reason why the protocol should move from the phrase "public service broadcasting" to "public broadcasting" and back again.
The protocol does not exempt broadcasters from state aid rules as such, but it gives a strong interpretative steer to all parties, including the Commission and the European Court of Justice. In particular, it should ensure that the BBC's funding arrangements are not challenged for the foreseeable future. It should also ensure that the Commission continues to monitor any abuse of state aid within the broadcasting sector.
The noble Lord, Lord Renton, thought that the amendment was too narrow in seeking principally a definition of public service broadcasting. I have to take the amendment as it is, and—I may be foolhardy—I shall attempt a definition of public service broadcasting. There is no single definition that covers public sector broadcasters across the European Union but perhaps we could agree that they share certain characteristics.
First, they focus on the audience—in other words, public sector broadcasting should be for the benefit of viewers and listeners. Secondly, there is a commitment to quality programming; thirdly, a commitment to diversity and choice. That includes programmes for entertainment, information and education and programmes for minority audiences. All those are familiar to the noble Lord, Lord Inglewood, who had responsibility in this House for the last Broadcasting Act. Fourthly, there is accessibility—that is, geographical coverage of services and broadcasting programmes which many people find enjoyable and interesting. Those are two definitions of accessibility. Fifthly, we come to editorial independence—decisions about programmes being taken by broadcasters or broadcasting authorities and not by government or other interest groups. Also, and perhaps this is risky, there is national identity, reflecting the national interest and cultural traditions of the audiences.
The reason for not seeking to be too precise about the type of public service broadcasting is that there are a number of different types, as the noble Lord, Lord Inglewood, said. In the UK alone there are three public corporations: the licence fee-funded BBC, which operates under a Royal charter; Channel 4, which is advertising funded; and S4C, the Welsh fourth channel authority, which receives an annual grant from the Department for Culture, Media and Sport. In addition, the advertising-funded Channel 3 broadcasters have similar public service organisations.
The regulatory framework is not the same in each case. The BBC is self-regulating, as is S4C, although it is required to adhere to ITC codes on consumer protection and impartiality. Channel 4 and Channel 3 companies are regulated by the ITC. That is the diversity in this country.
The diversity across the member states of the European Union is much greater. Any definition of a public service broadcaster would have to recognise the
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diversity across Europe. Public service broadcasting cannot be equated with the output of particular organisations; it cannot be equated with the output of publicly funded bodies; and it is not confined to or defined by particular strands of broadcasting. That is why, in answer to the second question of the noble Lord, Lord Inglewood, the fulfilment of the public service remit has to be conferred, defined and organised by each member state.
I do not know the answer to the noble Lord's third question about how infringements of the protocol would be dealt with and whether they would go to the European Court of Justice or be tackled directly. I shall write to him on that point.
The noble Lord, Lord Moynihan, made proper reference to the relationship between the Foreign and Commonwealth Office and the BBC World Service. He paid a well deserved tribute to the BBC World Service. I am answering this amendment because of my responsibility at the Department for Culture, Media and Sport. My noble friend Lady Symons is the Minister within the Foreign Office responsible for relationships with the BBC World Service. She tells me that she meets Sam Younger of the World Service at least once a month and that there are continuing discussions on the 20 points to which the noble Lord referred. It is expected that the growing coverage of the World Service will continue to increase. The Government have a continuing commitment to the World Service, but that has to be seen in the context of the comprehensive spending review. That is not a particular threat. It applies to all aspects of government expenditure. The noble Lord may be encouraged to know that the World Service web site is already achieving 5 million visits every month. I hope that that is evidence that the World Service is in good shape and flourishing.
I am grateful to the noble Lord for enabling us to have this short discussion. It has shown support for public service broadcasting and for the independence of public service broadcasting in this country and throughout Europe. For that, the Government are grateful.
Lord Moynihan: First, I thank the Minister for a comprehensive reply to the points that were raised. He made detailed reference to the speech of my noble friend Lord Inglewood, and he was right to do so. My noble friend's expertise in that area is second to none. His questions this evening were pertinent and deserved the fulsome response that they received from the Minister.
My noble friend Lord Renton said that there was a need for a wider amendment than that which I drafted. That will give me considerable food for thought in the next few days as to whether that is an appropriate issue to revisit on Report, when there may well be merit in analysing some of the important points made by the Minister in that context. I cannot say to my noble friend at this stage that I shall return with a wider amendment but a compelling case has been made for a further review of the important issue which has been debated this evening.

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I praise the Minister on the specific answers which he gave and in particular, the definitions. I wanted to achieve a clearer understanding of the definitions and the Minister made a brave attempt to do that and it will lead to much further consideration.
Finally, perhaps I may pass a message through the Minister to his colleague in the Foreign Office. In the context of the discussions with Sam Younger, perhaps through agreement with the usual channels, it may be appropriate to have a regular update made to the House on those monthly meetings. The future of the BBC World Service receives support on all sides of the House. There is a significant degree of cross-party interest in the matter. As a result of either myself tabling a Question on a regular basis or some other mechanism of parliamentary procedure, the House would benefit greatly by a regular update on what I hope are successful monthly discussions, moving towards a strong and well-supported BBC World Service in the future.
Against the background of those reflections, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Rawlings: moved Amendment No. 43G:
After Clause 1, insert the following new clause—
REPORTS ON APPLICANT COUNTRIES
(" No later than one year after the passing of this Act, and at annual intervals thereafter, a Minister of the Crown shall lay before both Houses of Parliament a report of any assessment made by the European Commission of the applicant countries to the European Union who have not been accepted into the first wave of applicants, of their progress and of any possible changed status.").
The noble Baroness said: We had an exceptionally wide ranging debate on this matter on Second Reading and earlier in Committee. Inasmuch as it has related to the substance of the Amsterdam Treaty, it focused primarily on what the treaty does and the consequences of its provisions. In my first and only intervention in Committee, I want to focus—as did my noble friends Lord Moynihan and Lord Garrel-Jones—on what Amsterdam failed to do, which was to prepare the European Union and its institutions for enlargement.
On Second Reading, my noble friend Lord Moynihan called enlargement the historic challenge of our generation, and both Euro realists and Eurosceptics appear to agree at least on that. Enlargement is desirable and important for strategic, political, economic and moral reasons. We hope that enlargement will promote the stability and prosperity of a large region that historically, culturally and politically is clearly part of Europe—no longer the forgotten Europe. That should in no way detract from our continuing relationship and friendship with the United States and the Atlantic Alliance.
On the first day in Committee, the Minister said that the Amsterdam Treaty was,
"the essential precursor to the start of our enlargement process".— [Official Report, 12/3/98; col. 316.]
The debate in Committee, fuelled by a record number of amendments, explored most other aspects of the treaty and reflected a crucial shortcoming. Amsterdam
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failed to address enlargement, which needs to be brought back to centre stage. The amendments to which I am speaking give me the opportunity to do so, at least in this forum. It may be helpful to debate also Amendments Nos. 46 and 47.
Further enlargement will fundamentally change the nature and functioning of the European Union. Enlargement to the 10 central and east European countries will add 28 per cent. to the EU's population but only 4 per cent. to its gross domestic product. It is expected to require about 75 billion ecu from the Union's budget between 2000 and 2006. That amount represents just over 10 per cent. of the European Union's budget and only one thousandth of its GDP.
According to the Commission, enlargement with Poland, Hungary, Czech Republic, Slovenia and Estonia may occur in three and a half years. The countries that need to make up the most ground are Bulgaria, Latvia, Lithuania, Romania and Slovakia. They do not expect to follow for some time. Judging by the length of the negotiations for the accession of Greece, Spain and Portugal, that enlargement may take more time than expected—especially considering that, in the present climate, it is highly unlikely that extra funding will be available for those nations. Enlargement, I fear, will take much longer because neither the east nor the west are ready for it.
Several applicant countries are simply not ready for accession. That is particularly evident after skimming the opinions of the Commission on Bulgaria, Latvia, Lithuania, Romania and Slovakia in Agenda 2000. We have reason to be concerned on two fronts. Between 2000 and 2006, those countries are expected to receive less money from the European Union than the five front runners— 400 ecu and 900 ecu per head respectively. As a consequence, adjustment may be hindered and a feeling of exclusion engendered among the second-wave applicants.
Will the Government put forward proposals to redistribute financial assistance among applicants? The European Union, in order to fulfil its pledge to adopt an inclusive approach to enlargement, may opt for premature accession. That would be disastrous for the more fragile five and disruptive to a number of sectors in the European Union.
Those concerns form the background to Amendment No. 43G, which requires that one year after the passing of the Bill, a Minister shall lay before Parliament the further assessments made by the Commission on the progress of the fragile five. It is right that national parliaments should have the opportunity to be informed and to debate such matters.
At the same time, the European Union is not ready for enlargement— neither its institutions nor its policies. When the 1996/97 Intergovernmental Conference began its work, the preparation of European institutions for enlargement was clearly on the agenda. The issues comprised a reweighting of the voting within the Council of Ministers away from over-represented small countries, reforming the Council presidency, reducing the number of Commissioners and capping the size of

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the European Parliament. Perhaps I may quote my noble friend Lord Cockfield on Second Reading, when he said:
"The issue was dodged in the run-up to the previous enlargement; it was dodged again in Maastricht; and it has been dodged once more at Amsterdam. We simply cannot go on dodging it".—[Official Report, 16/2/98; col. 56.]
As Members of the Committee know, the only progress achieved was on the last of those four issues. The size of the European Parliament was capped to 700. However, no progress was achieved on the first three: the re-weighting of voting within the Council of Ministers and the reduction of the number of Commissioners were postponed to a year before the next enlargement. That will take place at the earliest in the year 2001; hut, realistically, we may well be looking at a much later date. Finally, the reform of the presidency just fell off the agenda.
The purpose of Amendment No. 46 is to put pressure on the European Union not to dodge the issue any longer. It makes the entry into effect of the Amsterdam Treaty conditional on the reduction of the Commission which, in turn, is conditional on the re-weighting of the votes. The purpose of the latter part of Amendment No. 47 is the same. We are not alone in upping the pressure. Some member states—notably, France, Spain and Germany—want re-weighting of votes as a pre-condition of enlargement. I should like to take this opportunity to thank the noble Lord, Lord Whitty, for the assurances that he gave us on Second Reading that,
"we give up our second commissioner only if we are satisfied on the far more important issue of the re-weighting of votes in the Council of Ministers". —[Official Report, 16/2/98: col. 1111.]
What criteria must a re-weighting of votes fulfil to be satisfactory? What is the Government's view on the suggestion of my noble friend Lord Garel-Jones that, in a smaller Commission, the five main portfolios should he allocated as a rule to the five larger member states; and that the presidency of the Commission should be entrusted to a small or medium-sized member state? What are the Government's proposals for the reform of the Council presidency? Would they support a year-long presidency provided by a troika of one large, one medium and one small member state? These are weighty enough matters, without going into the conundrum—indeed, the nightmare—of 22 official languages in a European Union of 26 member states.
The European Union's lack of readiness is equally alarming in relation to its policies. That brings me to the first part of Amendment No. 47. It would make entry into force of the Act conditional on the reforms of the common agricultural policy and the regional funds. Those issues do not strictly pertain to the treaty, but they are an integral part of the process of enlargement. Moreover, they are being discussed in great detail elsewhere. I shall, therefore, make only a few remarks of a general nature about them. Last July, Agenda 2000 was launched mapping out the work that has to be done in order to reform the European Union's policies. That work was embodied last month in a package of Commission proposals, including a new instrument to strengthen the pre-accession strategy, the Partnership Agreements.
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The European Union has been slow in developing those proposals and it is doubtful whether they amount to a coherent strategy. In some fields, notably structural fund reform, we are only at the beginning of a long negotiation process. However, I am pleased to say that I shall not take up the time of the Committee by going into its details at this point. In other fields, especially CAP reform, it is clear that the Commission proposals are fraught with problems and that they are probably inadequate to fulfil the objectives set out in Agenda 2000. Overall, it is clear that the Commission has opted for an incrementalist approach of "business as usual".
When considering these matters, I am led to ask: why is no one ready for enlargement, almost nine years after the fall of the Berlin wall? Is it perhaps for a lack of leadership and political will? The UK Government would argue that, during their EU presidency, they are providing the necessary leadership. They made enlargement one of their main priorities and they claim that, with the London European Conference on 12th March, they gave enlargement a flying start. A flying start to where, I ask?
The adoption of accession partnerships and the opening of negotiations with the five plus Cyprus does not represent a change of gear with the past. The same can be said about the reform of the European Union policies. The Government's work programme says that it will "take forward" Agenda 2000, "make a start" on negotiations for reform of the structural and regional funds, and "expects to start detailed work" on post-1999 financing arrangements. I cannot detect the dynamism of a new Britain in this carefully couched bureaucratic language. What substantial proposals are the Government proposing to transform this plodding start to the enlargement process into a truly flying start? I beg to move.
10.30 p.m.
Lord Taverne: This is my first intervention in tonight's debate at Committee stage and it will be brief. I agree with a very large proportion of what the noble Baroness said. It makes sense to have annual reports on the applicant countries, including those who are not part of the first wave; it makes sense that we should make progress on the re-weighting of votes in council; and nearly all the points she made under Amendment No. 47 also make sense, so I shall not repeat them. I agree with much of what she said, subject to an important reservation.
I mention in passing that there will also have to be considerable changes on the part of the applicant countries. In the case of Poland there will have to be changes in their agricultural system. In the case of the Czech Republic there will have to be major improvements in their capital markets, which are extremely weak. There has been a great deal of corruption and one would wish to see more progress made, for example in strengthening the powers of the Securities Exchange Commission.
I do not want to repeat, therefore, what the noble Baroness said, except for this. It does not make sense to make the coming into effect of the Amsterdam Treaty

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conditional on these developments. These are matters for negotiations. They should be actively pursued. But the Amsterdam Treaty is a perfectly sensible treaty which should be supported and we cannot delay it any further.
Lord Grenfell: I should like to echo the words spoken by the noble Lord, Lord Taverne. It does not make any sense. I would say not conditional. I would go further and say, "held hostage to", because that, in effect, would be the result of this particular amendment. Clearly, for some time to come, it would exclude an enormous number of the provisions in the Amsterdam Treaty which could be brought into effect right away, to the great benefit of the Community.
I should like to return, for a moment, to the issue of Amendment No. 43G in the reports. The Community will be awash with reports on the progress of the applicant countries towards meeting the acquis communautaire and their readiness to enter into the European Union. I was, therefore, somewhat surprised by the query posed by the noble Baroness, Lady Rawlings, who asked why, nine years after the fall of the Wall, there were not applicant countries already in a position to come into the European Union. I should have thought that was really rather obvious. As the noble Lord, Lord Taverne, has already suggested, there are serious problems still faced by many of these countries. In the discussions that we had in Select Committee A on the cost of enlargement of the European Union, in our discussions with the representatives of applicant countries, they themselves, although they were enthusiastic about getting in as soon as possible—
Baroness Rawlings: I think the noble Lord misunderstood me. I meant that the European Union itself was not ready, not the applicant countries.
Lord Grenfell: I thank the noble Baroness for that correction. I think the same can be said in that respect. I do not think that the European Union could have been ready to receive them nine years afterwards. The European Union cannot be in a position to welcome countries into the European Union that are not ready. One has only to look at some of the work that still has to be done in those countries. Even if allowances are made in some cases and some countries do not have to fulfil all the conditions of the acquis communautaire for entry—it is perfectly realistic to say that they cannot overnight suddenly meet all of the provisions of the single market—there is nevertheless a huge amount of work still to be done. Nine years after the fall of the Wall, the European Union could not possibly consider that it was appropriate at this stage to accept them into the European Union.
Poland, for example, will have to spend about 3 per cent. of its GDP simply on cleaning up the environment. It cannot do that overnight. A long period of time will need to be spent in preparing for entry. I am afraid that a number of the governments of applicant countries will be disappointed. Poland speaks
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of coming in in 2003 or 2004 but it will probably be much later, and others will probably take even longer. Poland is expected to be the first to come in. The amendment asks for,
"a report of any assessment made by the European Commission of the applicant countries to the European Union who have not been accepted into the first wave of applicants".
In this regard we are looking at a time far into the future.
I believe it would be a tremendous mistake to accept Amendment No. 47. That would hold the whole Amsterdam Treaty hostage. That would be a grave mistake.
The Earl of Clanwilliam: I agree that the treaty would be held up, but it seems to me that we are rushing headlong into the lions' den in a totally unprepared way. No matter how much re-weighting of votes occurs and no matter how many reports are issued, the fact remains that the applicant countries and the European Union—as has been said by those on all sides of the Chamber—are totally unprepared. I support what my noble friend Lady Rawlings said about the common agricultural policy. Unless that is reformed before any enlargement takes place, there will be total disaster. As the French or the Germans are determined that the CAP will not be reformed, it seems to me quite nonsensical to attempt further enlargement until those matters have been properly resolved.
Lord Grenfell: It is not true to say that the French and the Germans do not want the common agricultural policy reformed. They know that it will have to be reformed; the question is on what terms it will be reformed. On that point they have differences with some other countries.
Lord Pearson of Rannoch: It is not only a question of upon what terms it will be reformed; surely it is a question of whether the votes will be available to reform it. That looks extremely likely. That, in turn, makes European enlargement quite possibly a pipe dream.
Lord Stoddart of Swindon: I agree with all speakers who have said that if enlargement is to proceed there will have to be institutional reform, and indeed a radical reform of the common agricultural policy. Unless the agricultural policy can be reformed, and fairly quickly, I do not believe there is any prospect that other countries can join in the foreseeable future. At present 51 per cent. of the European Union's population enjoy either agricultural subsidies or regional aid. That simply cannot be right. Before these other countries can be admitted there will have to be reforms.
I should also draw the attention of your Lordships to the fact that there is grave reluctance on the part of existing member states to increase the financing of the European Union any further. The Germans in particular are not only refusing to increase their net contribution; they want it reduced. So there are very severe difficulties before the applicant countries can be admitted.

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My central point is this. Is enlargement desirable? I do not know about my own party, but noble Lords in the party opposite always saw enlargement as being a check to the centralisation of the European Union and its institutions. In fact, that is not proving to be the case. As Mr. Santer has already said, widening is not an alternative to deepening; if you widen, you have to deepen—and by deepening, you centralise. So what appeared to be the objective of the previous government—to prevent deepening through widening—is simply not going to happen, because if you widen, the Commission itself will demand more powers in order that it can control more people.
I therefore believe that we should examine the whole concept of widening. If this goes wrong, if the proper reforms have not been made, if we have not made it clear that there will be no further centralisation, then it will be a disaster not only for the European Union but for all those applicant countries which wish to join. They could be pauperised even more than they are already by some of the restrictive practices, particularly in relation to trade, imposed upon them by the European Union.
I could talk for a long time on this matter, but I know that your Lordships want to go home—perhaps unexpectedly. I shall therefore merely ask my noble friend to make some short comments on the points I have made.
10.45 p.m.
Lord Whitty: Perhaps I may begin by concentrating on the effect of the amendments, and then respond to the general points. I think that at this hour noble Lords will not want a response that is too wide-ranging on the whole strategy for enlargement.
Amendment No. 43G, although superficially sensible and attractive, is unnecessary. There is adequate reporting from the Commission on a regular basis on all of the central European applicants. Those reports will be accompanied by recommendations from the Commission to the Council, which could include a recommendation that they came in to the formal negotiations. Those reports, like other Commission opinions, will be depositable documents and will therefore be submitted to Parliament for scrutiny in the usual way.
I take the point lying behind the noble Baroness's advocacy of this amendment that the position of the second wave five, if I may so call them, needs considerable attention. It is certainly not the intention of the Council or the Commission that the resources going into those countries should be detrimentally affected by the fact that they are not immediately in formal negotiations; indeed, rather the opposite ought to be the effect. The allocation within Agenda 2000 represents the amount of money, the transfer of Community funds into those countries, that is assessed as being absorbable by them. There is a slight differential in favour of the first six, but it is not as substantial as the figures given by the noble Baroness. In any case, there is a need to ensure that those countries keep up and are in a position to take part in formal negotiations as rapidly as possible.
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Amendment No. 46 is a bit of a wrecking amendment. It trades off the advantages which we debated last night in terms of the extended powers of the European Parliament against the overall institutional agreements which the noble Baroness rightly says we failed to achieve at Amsterdam. However, we made rather more progress at Amsterdam than she suggested. We regard the advance in the powers of the European Parliament in co-decision as an important gain in its own right and would not wish to see those two traded off against each other.
As to the final amendment, as my noble friend Lord Grenfell implied, it is a wrecking amendment on a pretty grand scale. It makes ratification of the treaty subject not only to the institutional changes wanted by the noble Baroness but also to the reform of the common agricultural policy and the structural cohesion funds. That is a pretty tall order and I am afraid the Government must reject it.
I wish to make a few remarks tonight about the whole strategy on enlargement. I share the disappointment expressed by the noble Baroness, Lady Rawlings, that Amsterdam did not fully resolve the institutional reform. When we came to the negotiating table on 1st May there was already deadlock on the linked questions on the size of the Commission and the weighting of votes on the Council. We did our best to broker a deal in six weeks. At Amsterdam, if we had had a little more time we might have reached agreement, but ultimately there was no consensus. There was some progress: we agreed a protocol which represents a step forward. It sets out the mechanisms by which the outstanding issues will be resolved in advance of the next enlargement process. Explicitly, Article 1 of the protocol states that when the next enlargement of the Union takes place the Commission will comprise one national per member state, provided that the weighting of votes in the Council has been modified to increase the relative clout of the large members. In other words, we commit ourselves to reform of the Commission, but only provided it is subject to the more important issue of giving greater weight to Britain in the Council of Ministers' weighted voting.
The noble Baroness asked about the criteria for re-weighting. We argued for a system which went one way to rectify the gradual erosion of the representativeness of citizens from larger states. I was perhaps putting it too crudely—I have been in this debate for too long—by saying we wanted more votes for Britain. I should have expressed in a slightly more communautaire way what I said just now about rectifying the erosion in the representation of citizens from larger member states. I do not think it sensible at this hour to present the Committee with mathematics as to how we achieve that. Nevertheless the issues are eminently able to be resolved and must be resolved before we move to the first stage of enlargement. However, I do not believe that it is such a colossal problem for the existing members of the European Union to achieve agreement. I certainly do not think that it is something which should hold up the tremendous task of enlargement on which we are now embarked.

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The noble Lord, Lord Stoddart, asked me whether enlargement was desirable. It is eminently desirable. It is probably the most important task facing the current political leadership of Europe. It is desirable because it will finally bring an end to the divisions of the Cold War; it will bring democracy and prosperity to 100 million people and will re-unify this continent in a way that will give security, peace and prosperity to us for many generations. That is a prize worth working for.
It is, however, not an easy task. I was rather sad that the noble Baroness slightly denigrated the flying start to the enlargement process that we achieved during March. We had a very successful European conference. We have started enormously detailed negotiations with six countries and an almost equally detailed process of review for the other five countries. That is a quite important diplomatic achievement and it will show progress even in time for the Cardiff summit. Certainly, the process will take years in total before we achieve the final outcome. There will be setbacks, problems, trade-offs, difficulties and enormous diplomatic rows. But the prize is there and it is one which we have started to achieve in the months of the British presidency.
Changes are needed within the European Union itself. The institutional changes of which we have just spoken are actually the least difficult, particularly if people do not start re-opening the whole range of institutional change that was originally on the table in Amsterdam and confine themselves to resolving those issues which are covered by the protocol referred to in Amendment No. 43G. If those issues are resolved, we can move to the first stages of enlargement. If people start saying that major fundamental institutional reform is needed before enlargement can take place, they are really arguing against enlargement. I do not believe that that is in the interests of the peoples of Europe—east or west.
There are some much more difficult problems which the existing members of the European Union have to face—the reform of the CAP, the restructuring of the budget, the whole question of structural fund reform and the way in which the budget will be controlled and reorganised over the period 2000 to 2006, with some markers as to where we go beyond that. In my view, those budgetary issues are at least as important as, and much more difficult than, the institutional issues referred to in the amendments. But the task of enlargement ahead of us is a great task. It will be a huge political achievement if we make it. The Treaty of Amsterdam, while it may not have facilitated that process as much as some may at one stage have wished, it certainly does not inhibit it and has cleared the way for us to start on that road. The British presidency followed that up over the past few months in the way I described. I hope therefore that the noble Baroness can withdraw her amendment.
Baroness Rawlings: I thank the Minister for his clear answers. I was most interested in the points raised by the noble Lord, Lord Grenfell. But the noble Lord, Lord Stoddart, will not be surprised to hear that I cannot
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agree with him. I hate to disillusion him, but widening and deepening will have to go hand in hand if we want the European Union to continue to exist and succeed.
Lord Stoddart of Swindon: I do not see how the noble Baroness can make that assertion. The European Union consisting of 15 members does not depend for its continuation on the extension to six, nine, 10 or other countries to the east. It will continue. And if the noble Baroness asks Mr. Heath, he will agree with me.
Baroness Rawlings: Perhaps the noble Lord will accept that on every enlargement process we had to have institutional changes to cope with the enlargement. I am sure, therefore, that we will have to have institutional changes if we want to enlarge into further areas.
Lord Stoddart of Swindon: That was not the issue. The noble Baroness said that the European Union would collapse unless it was enlarged. That simply is not true. The continuation of the European Union as an entity does not depend on enlargement. If we do not enlarge it will continue, presumably, though I should like to see it not continue.
Baroness Rawlings: Perhaps we should leave that point until a later date. Enlargement is obviously one of the most important parts of the Bill, and we will have to come back to it at Report. However, at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
[Amendments Nos. 44 to 54 not moved.]
11 p.m.
Lord Moynihanmoved Amendment No. 54A:
After Clause 2, insert the following new clause—
QUOTA-HOPPING
(" . This Act shall come into force only when each House of Parliament has come to a Resolution on a motion tabled by a Minister of the Crown considering the legal protection for British fishermen afforded by the Treaty of Amsterdam on the issue of quota-hopping.").
The noble Lord said: We now move on to the important issue of the need for reform of the common fisheries policy and the problem of quota-hopping, which is an area where, when measured against the tangible benefits secured for the British people, the Government's negotiation at Amsterdam is found wanting.
There is consensus in the Committee that the conservation of fish stocks depends vitally on international co-operation. Europe must have a joint policy in this area. Hence the need for a common fisheries policy. There is consensus, too, that we must improve the operation of the present policy, which has been unevenly enforced, which has failed to overcome the central problem of overfishing in Europe's waters and which has proved inequitable in practice. The

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previous Minister of Agriculture, Fisheries and Food made that clear with the following quotation:
"what Europe has to face is that the Common Fisheries Policy as now constituted is not working. It is over-bureaucratic, it is open to abuse and above all it is not fair to the British fishing fleet".
There is further consensus that the practice of "quota hopping"—that is, foreign owned and foreign crewed ships landing their catches abroad—is a particular problem, not least because it prevents fishing communities from enjoying a secure benefit from national quotas, thereby undermining the whole intention of the quotas. The CFP was expressly designed to ensure that national fishing fleets would be given fair access to Europe's fish stocks. But quota-hopping, which now accounts for about 20 per cent. of the tonnage of Britain's offshore fleet, is frustrating that very purpose.
The previous government were committed to a successful future for the British fishing fleet and were determined to address this and other problems in the CFP, and to leave no avenue unexplored in that quest. The stage was set at the IGC for the fulfilment of this promise, even though the issue of quota-hopping was not officially on the agenda. That is why, in July 1996, the previous government tabled a protocol at the IGC to ensure that the British fishing quota went to British fishermen.
It was a key priority, and the former Prime Minister made that clear before the general election, when he said:
"The IGC won't come to a successful conclusion until we are satisfied that among our other objectives the problem of quota-hopping is resolved satisfactorily".
Despite an election manifesto which contained just one sentence on fishing, the then opposition's policy appeared to be equally robust in refusing to tolerate the continuation of quota-hopping. The current fisheries Minister, Elliot Morley, stated in March:
"The Minister"
—that is, Tony Baldry—
"said that it [quota hopping] will he pursued vigorously at the IGC and we support that approach".
Likewise, Tony Blair, then the Leader of the Opposition, promised our fishermen a firm line. On the BBC "World at One", he told the country:
"we certainly have not ruled out holding up IGC business in order to get the right changes to fishing policy in the British interest … where Britain's interests are at stake, we are perfectly prepared to he isolated. Of course we are".
But when it came to the summit itself, the Prime Minister lacked the stomach for a fight. Something clearly caused him to change his mind and to decide that the interests of British fishermen were subordinate to the prospect of being isolated in Europe. If that is not the case, we have the opportunity to hear from the Minister why the Government did not back the protocol for treaty change tabled by their predecessor.
The reason the Government have given is that there was no support for the protocol among our European partners; not that it was a bad or unfair protocol, but that it had no support. Why did the Prime Minister
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change his mind about holding up IGC business to get a deal? Perhaps he took advice from the noble Lord, Lord Whitty, who said that the last government's,
"threat … to sabotage the whole IGC process if we did not get agreement to a protocol, for which we had no support whatsoever in any single European state",
was "foolish" and "counterproductive". So much for being prepared to hold up IGC business; so much for being prepared to be isolated in Europe; so much for the interests of British fishermen. Instead, when he announced the deal the Prime Minister said that the Government had made,
"real progress in Amsterdam on the problem of quota hoppers—fishermen from other Member States who fish against British quotas".
If the Government have got such a good deal on quota-hopping for Britain's fishermen, why did the chief executive of the National Federation of Fishermen's Organisations describe it as "a hopelessly inadequate fudge"? What very tough line did the Prime Minister take to defend the interests of British fishermen? Is it not the case that the Government lacked Conservative resolve to restore 20 per cent. of our national fishing capacity at the IGC? In its place followed empty rhetoric.
We have been told about the Prime Minister's exchange of correspondence with the president of the Commission, but in actual fact the Prime Minister won a meaningless letter of condolence from the president which does no more than re-state the existing situation, confirming Britain's rights to issue licences requiring 50 per cent. of fish caught against the UK quota to be landed in British ports. Can the Minister tell the House this evening whether the letter from the president of the Commission has any legal authority and exactly how the provisions set out in that letter differ from the previous arrangements on quota-hopping?
British fishermen already know their rights, but they need help from the Government to enforce them; help that was promised. That promise appears to have been broken unless the Minister can guarantee that in a legal challenge from Spain which has won four European court rulings defending its rights to buy access to British quotas, the Commission will unequivocally support Britain. After all, it is the same Commission that agreed to Spain's demands that quota-hopping should not form any part of the negotiations on the treaty.
Will the Minister confirm that the Prime Minister's deal actually depends entirely on the Commission's good will; a Commission which will seek to look after the interests of not just this country, but the Dutch, the Spanish and other interests as well?
So we are left with the cold conclusion that the Government U-turned on the pre-election consensus that quota-hopping could only be effectively dealt with by treaty changes. The Spaniards have since poured scorn on the Prime Minister's claim to have solved quota-hopping. British fishermen have poured scorn on it and it is likely that the courts will pour scorn on it. Perhaps I may read to the Committee the comments of the "Save Britain's Fish" campaign, which identifies the strengthening of the discrimination laws and the Prime

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Minister's precious letter from Jacques Santer as the main issue of concern for British industry arising from the Amsterdam negotiations. They state:
"Tony Blair came away with nothing new, and clutched a worthless piece of paper. His Government has shown that they do not understand the Common Fisheries Policy, the importance of the discriminatory laws and are charging up the wrong track".
Indeed, even the Prime Minister has admitted that he perhaps overstated the progress made when he said,
"I in no way pretend that the agreement solves the whole problem—that would be a foolish illusion and it would be wrong to suggest it".
His definition of real progress certainly owes more to the fantasy league of European Summit triumphs than to reality.
But what does all this say for the Government's claim for leadership in Europe and to standing up for Britain's interests in Europe? Clearly, the Prime Minister was serious when he said that he would never be isolated in Europe even if it meant sacrificing the interest of Britain. With that approach such a Government could never be able to emulate the success of the previous government in negotiating key concessions to our national interest such as our rebate and our opt-out of monetary and economic union. That is why this evening I have tabled this amendment to consider the legal protection for British fishermen afforded by the Treaty of Amsterdam, for the truth is that it affords no legal protection. The Government's guarantees have come to nothing; their promises to fishermen are broken; their deal is worthless and they clearly do not regard the fishing industry as key to British interests.
So in the light of that and in the light of the amendment I have tabled, I look forward to the Minister's reply regarding how Amsterdam has given our fishermen anything besides zero guarantees and zero prospects. I beg to move.
Lord Pearson of Rannoch: I rise briefly to return to a question that I raised with the Minister, the noble Baroness, Lady Symons of Vernham Dean, in our debate last night. She anticipated that we would return to it briefly this evening. The question was: what is the legal basis of the common fisheries policy? My curiosity was aroused by a Written Answer from the noble Lord, Lord Donoughue, dated 24th April but which is printed in Hansard today. In that Answer the noble Lord said that the legal basis for the common fisheries policy is Article 3 of the EC Treaty and Articles 39 to 47 of the treaty. I thought that I had better go through it again, so I went to Article 3 of the EC Treaty, which says that the activities of the Community shall include, among other things, a common policy in the sphere of agriculture and fisheries. To me, that means—the Minister may not agree—a common policy for agriculture and a common policy for fisheries.
Turning to the other articles which the noble Lord mentioned in his Written Answer, Articles 39 to 47 of the treaty—that is, as they were numbered, although they are now numbered Articles 33 to 38, the former Article 47 having been repealed—and there is no mention of fishing. The words "fish", "fisheries" or
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anything to do with "fishing" do not appear in those articles. It is true that the earlier article, Article 32, says that the Common Market shall extend to agriculture and trade in agricultural products and that "agricultural products" means the products of the soil, of stock farming and of fisheries and products of first-stage processing directly related to those products. If that is all there is as a legal basis—
Lord Randall of St. Budeaux: I am grateful to the noble Lord for giving way, but will he tell us what all this has to do with the amendment?
Lord Pearson of Rannoch: We are discussing the question of quota-hopping, which, like it or not, is an evil which is visited upon us by the common fisheries policy. I am merely asking whether or not the common fisheries policy has a legal basis.
Lord Thomas of Macclesfield: Am I to understand that the Opposition oppose competition? Did not British fishermen sell their licences to other European countries? Is it not open to our fishermen to buy licences from other European countries? Are the Opposition saying that they oppose competition?
Lord Pearson of Rannoch: The noble Lord will appreciate that, as usual in matters European, I do not speak for the Opposition. The question he addresses to me is concerned with the specific aspect of quota-hopping.
Lord Thomas of Macclesfield: I know that the noble Lord has a different point of view from his Front Bench, so I shall address the Front Bench. Are the Opposition opposed to competition? Is the Conservative Party opposed to fair competition? British fishermen sold their licences to the Spaniards and others. Is it not open to us to buy—
Lord Pearson of Rannoch: With the greatest respect, the noble Lord is now out of order because I think it would be normal practice for him to allow me to finish my intervention and he will then be free to address any queries that he may have to the Opposition Front Bench or to his own Front Bench on the matter of quota-hopping.
To return to where I was, as a result of a brief exchange with the Minister last night and as a result of putting on a wet towel and examining the Treaty of Rome again—
Lord Stoddart of Swindon: The noble Lord is being challenged as to whether he approves of competition, whether in relation to fish or anything else. Is it not a fact that quotas are not about competition but about conservation and are anti-competitive? That is probably the answer that the noble Lord should have given to my noble friend.
11.15 p.m.
Lord Pearson of Rannoch: I would be especially grateful if the noble Lord's noble friend accepted that

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answer. But we would be here for a very long time if we discussed the many aspects of the common fisheries policy; for example, whether it encompassed competition. Another aspect is discards, whereby 4·7 million tonnes of fish annually are thrown back into the sea dead, in the name of conservation. That is a silly policy even by the standards of the European Union. It is also a fact that my right honourable friend Sir Edward Heath gave 80 per cent. of the fish in European waters away as the price of entry into the absurd construction that the Committee is now discussing.
I should like to return to the simple question that I wish to put to the Minister. What is the legal basis for the common fisheries policy? I cannot find it in the articles enumerated by his noble friend Lord Donoughue. If there is no legal basis perhaps it will be a great relief to everyone.
Lord Thomas of Macclesfield: Perhaps I may now address a question to the Opposition Front Bench. Is the Opposition opposed to competition? The issue of conservation is a non-argument because it is a matter for the whole of Europe. It does not matter who catches the fish; what matters is the total amount. In terms of competition, one can buy or sell in the market place. Is the Opposition saying that there is no secondary market to compete on a national basis in fisheries?
Lord Whitty: This has developed into an interesting debate on the common fisheries policy, but I do not believe that that is relevant this evening. I have some further advice on the basis of the common fisheries policy. However, I believe that I should put it in writing to the noble Lord. I need to check that I do not inadvertently contradict my noble friend Lord Donoughue, which I do not wish to do. We should compare notes before communicating with the noble Lord, Lord Pearson.
The common fisheries policy is clearly unsatisfactory and has serious problems. I had hoped—I apologise if I give signs of slight irritation at this time of night—that one year after the election and nearly a year after the signing of the Treaty of Amsterdam we would have left behind such pre-election posturing. This is a re-run of pre-election posturing that has done absolutely nothing to benefit the fishing communities of this country. What we achieved in Amsterdam—small though it was in face of the problem—was of benefit to the fishing communities. We never said that we could achieve that by means of a treaty but that we would insist on achieving something in Amsterdam. We did so.
What happened before Amsterdam when the noble Lord's government presented their protocol in the negotiations is a mystery. I have it on the good authority of my right honourable friend the Foreign Secretary that when he first met the German Foreign Secretary, Herr Kinkel, prior to the Amsterdam negotiations and raised the issue of the previous British government's draft protocol on quota-hopping his counterpart looked totally blank. It was quite clear that the previous government's negotiators had not impressed our partners one jot on the importance of this issue to the
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fishing communities and the people of this country that they were proclaiming domestically. I regard that as posturing.
As to the letters exchanged between the Prime Minister and President of the Commission, as a result of the Amsterdam negotiations conducted in parallel with the treaty negotiations, that is an important step forward. It records explicitly the Commission's interpretation of how a member state may within the rules of the single market establish an economic link between the fishing activity and fishing communities and make that a condition of a licence or access to quotas. That means that we should now be able to specify and enforce economic links and establish rules which will ensure that the benefits flow to our fishing communities.
We expect that the Commission will respond shortly to the proposals that we are now making to implement the economic-link licence conditions, and Ministers will make an announcement at the appropriate time. The fishing industry has not been, and I doubt whether it will be, entirely satisfied with that, as Members of the Committee have said. I have to ask, as I have before, where the blame for that rests. We made some progress at Amsterdam and we are following that through.
The previous government tabled a protocol which would not, incidentally, have secured the removal of one quota hopper from the UK register. They said that they would block the Amsterdam Treaty if that protocol were not agreed. The protocol was not supported by one other member state, and they would have left Amsterdam empty-handed.
The noble Lord, Lord Moynihan, referred to the previous government leaving no avenue unexplored. The previous government had 18 years during which to address the problem which we inherited six weeks before the IGC at Amsterdam. Those 18 years were marked by a succession of failures on the CFP.
Baroness Nicholson of Winterbourne: Would the noble Lord like to remind the Committee that Ministers of the previous government refused to meet Emma Bonino the Fisheries Commissioner? She waited eight months for a meeting and eventually had to come to Britain to meet the fishermen, without meeting one Minister, because the previous government would not meet her.
Lord Whitty: That is correct. That was indicative of how, throughout those years, the previous government approached fishing policy. They failed at the beginning of the CFP; they failed to modify it satisfactorily at the time the Spanish and the Portuguese acceded; they failed to ensure that the economic conditions of the UK fishing industry made it profitable and to secure for our fishermen such an income as to enable them to hold on to their quota, which caused the problem in the first place; they failed to pick up the money which the Commission at one point put on the table to subsidise decommissioning; and they failed to recognise that the UK regulation which they put down would be challenged on the basic and fundamental issues of the right of establishment and would be overturned by the ECJ.

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That is a catalogue of failures and a complete let down for Britain's fishing communities. The Opposition are not in a position to criticise the Government's conduct at Amsterdam or since. Much remains to be done for the fishing community. I draw attention to the recent successful prosecution of Anglo-Spanish vessels for over-fishing. Those responsible have been ordered by British courts to pay more than £1 million in fines and costs. The process to which I have just referred in terms of our proposals to the Commission involved a long period of consultation with the British fishing industry. There are difficulties in different sections of the industry, and different views on how we should proceed. So it took several months to complete the consultation process.
Lord Pearson of Rannoch: There is, however, one matter which the new Government could do in that respect, which is to stop the £12 million per annum that this country pays to Spain to repair boats and build new boats to come to steal our fish. That is £12 million more than they give to our fishermen to destroy their boats and their livelihoods.
Lord Whitty: I am not sure on what basis the noble Lord claims that we pay £12 million. Perhaps he will explain that to me in writing.
That slow and difficult process to put the bones on the exchange of letters between ourselves and the Commission and to turn them into regulations here will shortly bear fruit. We are still awaiting the Commission's final opinion on those proposals which were put to it at the end of January. We hope to give the British industry some better news for a change. I have nothing to apologise for in terms of the Government's conduct. The Opposition should be shame-faced about pushing this amendment when they let the fishing industry down for the past 18 years.
Lord Moynihan: I am grateful to your Lordships for contributing to the debate. It is only appropriate to make a few concluding observations on some of the comments made, not least by the Minister. He seemed to rely exclusively on the performance of the previous government as he saw it. He paid no attention to the fact that, whatever may have happened in the election campaign and whatever exchange of views may have taken place over the inheritance of this Government, that is no excuse for the Government.
They said that they would hold up the IGC business if they did not obtain a deal on fishing. They obtained no deal. Their Prime Minister, Tony Blair, told the country, "We certainly have not ruled out holding up IGC business in order to get the right changes to fishing policy in the British interests. Where Britain's interests are at stake, we are perfectly prepared to be isolated". But, oh no, despite the importance he attached to the matter, and despite all the difficulties which the Minister believed that the Government had inherited, they washed their hands of it. By doing so they washed their hands of the interests of British fishermen.
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That is the truth. It is no use the Minister talking about his interpretation of the past. The reality is that at the IGC the Prime Minister failed to obtain a deal. He said that he would be prepared to be isolated in Europe, but he did not support the former government's protocol because no other member state supported it. That was not because it was important for British interests, not because it was important for British fishermen, but because both of those interests could be binned in the greater interest of not upsetting any other member state.
It is no good saying that he did not go to the IGC with a clear mandate and a clear picture of what the Conservative Party would have done in the same circumstances. A clear 10-point package set out the way forward for the British fishing industry in the run up to the general review. The package aimed to insist that the six- and 12-mile limits were not negotiable; to give fishermen more say in policy; to give a further £12 million to decommissioning; to exempt small vessels from regulations; to press the technical conservation measures; to give agency status to MAFF fisheries laboratories; to give the best value from UK quotas by working with the industry; to reject the idea of a single European fleet managed and policed from Brussels; and to invest in fisheries dependent areas.
Crucially—dealing with the point about competition and the relevance of quotas in the context of the policy—the package sought, I thought with unanimous all-party agreement, to ensure that the quota-hopper problem was dealt with once and for all at the IGC. The problem was not to be buried in rhetoric about what had happened during the election campaign, but we were to ensure that the IGC would allow UK quotas to provide an economic benefit to UK fishing communities and not to fishing interests in other member states. That is what the Government went to Amsterdam to achieve and that potentially included pressure to amend the Treaty of Rome to stop the practice of quota-hopping if the problem could not be resolved within the framework of the existing treaty and the CFP. If treaty changes proved to be necessary, the previous government alleged that they would seek them. The current Government ditched them. That is not posturing; that is an accurate reflection of exactly what happened and I have gone into that in detail.
Lord Thomas of Macclesfield: Surely, that is posturing. The noble Lord read out a long list of aspirations. What did his party achieve when it was in government?
Lord Moynihan: We achieved a tough and consistent line by government to ensure that the necessary changes—
Lord Thomas of Macclesfield: But—
Lord Moynihan: No, I have not finished. Will the noble Lord please do me the courtesy of hearing me out? We achieved a tough and consistent line that built up to a package which was widely publicised as our agenda for Amsterdam. I have outlined that package to the House tonight. It was made clear by the former

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Prime Minister, John Major, and his Cabinet and it was on the basis on which we were going not only to the IGC—
Lord Whitty: Will the noble Lord—
Lord Moynihan: In a moment. I can answer only one question at a time. We were going to carry that through from the IGC to the Treaty of Amsterdam. Tonight's amendment does not focus on what happened in the previous government. If the noble Lord, Lord Thomas, is unhappy about the performance of his Government and would like to see us cross sides we would happily take over the reins again. Sadly, I have not had the privilege of debating with the noble Lord during 18 hours of Committee in the past two days. What he will have seen is that we have consistently and without hesitation questioned the Government on a whole range of issues, put to them what have been their failures and commended them where they have succeeded.
The reason why I proposed the insertion of the new clause under Amendment No. 54A is because at Amsterdam this was an area of clear failure. It is for that reason that tonight we are questioning the Government. I have summarised the points I have made and outlined the strongly-held views that we have on this issue. Despite being very strongly pressurised by my noble friends to push a vote on this issue, I shall refrain from so doing.
I thank the Minister for his comments and other members of the Committee for their interventions. We shall reflect on the points that were raised and consider whether this is an appropriate issue to bring back at Report stage and, possibly under strong pressure, move a vote on that occasion. I again thank the Minister for his comments and beg leave to withdraw the amendment standing in my name.
Amendment, by leave, withdrawn.
11.30 p.m.
[Amendments Nos. 54B and 54C not moved.]
[Amendment No. 55 had been withdrawn from the Marshalled List.]
Lord Pearson of Rannochmoved Amendment No. 56:
After Clause 2, insert the following new clause—
COMMUNITY FINANCES AND FRAUD: REPORT
(" . This Act shall not come into force until—

(a) a Minister of the Crown has laid before both Houses of Parliament a report setting out the implications of the Treaty for the sound management of Community finances and the prevention of fraud in relation to Community expenditure; and

(b) the report has been approved by resolution of each House.").

The noble Lord said: I apologise if the wording of Amendment No. 56 appears somewhat weak to some of your Lordships who may feel that the British Houses of Parliament should not merely have to approve a report saying what the Amsterdam Treaty might do to
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prevent fraud and financial mismanagement in the Community. They might feel that we should be free to withhold the vast amount of money that we send annually to the European Union until we are satisfied that its finances are run as honestly and as competently as our own. That is a very distant prospect indeed, and one which may never be achieved if the EU continues on anything like its present path.
I suggest that that is because the scale of fraud and mismanagement in the Community is simply too large, its perpetration too endemic and profitable for too many recipients and the will to do anything about it too weak. Indeed, the scale of such fraud and negligence is now admitted by the EU's own court of auditors to be around 5 per cent. of its budget, or some £4,000 million per annum.
When I had the honour to sit on your Lordships' European Select Committee a couple of years ago, we feared the figure might have been more like double that. Indeed, there have been no less than four reports on fraud in the Community compiled by your Lordships' Select Committee over the 10 years from 1984 to 1994. I understand that these reports are still regarded as the most authoritative analyses of this vast scandal, however uncomfortable their conclusions.
Perhaps these reports' most depressing finding was the lack of will in the Community to stop the rot. So the reform of fraud is like reform of the common agricultural policy and, indeed the common fisheries policy. It has been talked about for many years but no progress has been made, and one is forced to the conclusion that these problems may never be solved because too many votes in the Council come from people who are doing too well out of them.
The recent annual report from the EU's own Court of Auditors confirms this unhappy position. Amongst other things, it finds that the agriculture compensation scheme regulations have failed to take account of changes in world market prices. This has resulted in unnecessary expenditure; for example, £2·2 billion paid out to arable farmers.
It finds that advances to member and non-member states were accounted for as actual expenditure and substantial funds have remained for long periods in the hands of intermediary authorities.
Then it reveals that the structural funds are riddled with errors which make it impossible to give any kind of sensible evaluation, even of their effectiveness. Finally, it finds quite simply that the member states and the Commission have failed to develop appropriate systems of accounting.
The report makes depressing reading. It carries many examples of lack of supervision and accountability, overpayments, unnecessary subsidies and all the lack of care and responsibility which inevitably occurs when human beings are at two removes from the source of the money they are frittering away, which is, of course, the taxpayer.

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And we should not forget that these criticisms come from the EU's internal Court of Auditors. Six days ago, our own Treasury, notwithstanding its presumable allegiance to the Government's charm offensive in Brussels, had this to say about the court's report:
"The European Court of Auditors makes few observations about the motivation behind the 'errors"',
and the word "errors" is in inverted commas,
"in legality and regularity which it identifies".
Another little vignette which helps us to understand the attitude to money of the European Commission—that guardian of the Treaty of Rome—came recently when a Member of the European Parliament, Caroline Jackson, had the audacity to ask the Commission to reveal the net contributions from each member state to the Community budget, a perfectly fair question, one would have thought, and one which the Commission should be proud to answer accurately, especially as it has just been exhorted by the Court of Auditors to produce,
"clear and simplified financial statements of the Community budget with more accessible financial information".
But the Commission refused to answer the question, saying that the actual amount of money which each member state pays to keep the Community's employees in the style to which they have, alas, become accustomed is really not the point. The point, in the view of the European Commission, is instead all those wonderful, if intangible, benefits which membership of the European Union bestows on its fortunate paymasters, benefits which so far outweigh the mere vulgar money which they contribute as to make those contributions unworthy of analysis or, indeed, disclosure.
It is with this sort of attitude in mind that one has to doubt whether the proposed Amsterdam amendments to Article 209a, now Article 280, will make the slightest difference. One only has to glance at the new bits to see that it is just so much waffle. The new paragraph 1 of Article 280 reads:
"The Community and the Member States shall counter fraud and any other illegal activities affecting the financial interests of the Community through measures to be taken in accordance with this Article, which shall act as a deterrent and be such as to afford effective protection in the Member States".
The best one can say about that is that it is a pious hope, is it not?
We then come to a couple of the original clauses, with which I need not trouble the Committee, one of which exhorts member states to counter fraud affecting the financial interests of the Community in the same way that they counter fraud affecting their own financial interests; and that does not give much comfort.
Clauses 4 and 5 of the new article are equally ineffective, I fear. They state:
"The Council, acting in accordance with the procedure referred to in Article 251, after consulting the Court of Auditors, shall adopt the necessary measures in the fields of prevention of and tight against fraud affecting the financial interests of the Community with a view to affording effective and equivalent protection in the Member States. These measures shall not concern the application of national criminal law and the national administration of justice".
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That is just as well.
Clause 5 states:
"The Commission, in cooperation with Member States, shall each year, submit to the European Parliament and to the Council a report on the measures taken for the implementation of this Article".
So the good news is that we are to have annual reports, which will no doubt be just as anodyne as these clauses which will have inspired them.
At this stage in the debate, European integrationalists usually advance the theory that the only way to cut out fraud against the Community is to give the Commission power to root it out in all member states. Bad workmen must be given newer and sharper tools. That plan would mean such a massive extension of what is known in the jargon as Community competence, which actually usually means incompetence, that it is luckily unacceptable to our own Government and other Governments.
A solution could be at hand—a solution that has always been the only sure way of avoiding fraud. That is, to remove the money from the reach of the fraudsters. I make that suggestion because some of us have come to see that there really are not any benefits at all from our membership of the European Union. The widespread pretence that there are any such benefits is perhaps the biggest fraud of all. That discovery is not just the product of a rabid Euro sceptic mind. It is shared by a growing number of British people and has been well articulated by my right honourable friend Mr. Norman Lamont, who had the educating experience of being our Chancellor of the Exchequer when the foreign exchange markets were good enough to eject the United Kingdom from the exchange rate mechanism in 1992.
All frauds depend on two things—access to the cash and sleight of hand. One of the smoothest sleights of hand, through which many of our people have not yet seen, is the pretence that we get any money at all from the European Union. We do not. We are net contributors. So all the talk about our poorer regions, research budget, farmers or any other British interest being blessed by European Union munificence is, in fact, so inaccurate as to be dishonest.
Despite the Commission's refusal to give us the figures, I understand that our contribution to the budget amounts to some £11,000 million per annum. Of that, the Community gives us back some £7,000 million per annum, provided of course that it is spent on projects which are designed to enhance the Community's own image—thus helping to propagate the fraudulent claim that it is the EU's money, for which our people should be grateful, when it is not. It is our money, spent through the Community's profligate and corrupt filter. If we spent it all ourselves, we could make far better use of it—not only the £4,000 million a year that we give the EU, when no doubt it is largely wasted, but our £7,000 million which it gives back to us.
As I have indicated, this is the sort of story which makes some of us see that there is really no longer any point in our staying in the European Union; or that there really is not any point in the European Union continuing at all. There are other problems which contribute to that view. The common fisheries policy, for instance—

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which we have just debated—is one of them. But perhaps this is not the moment to rehearse those problems.
I come back to where I started, to say that the only way sure way to stamp out fraud and maladministration in the Community is to withhold our contribution until we are satisfied that the disease is indeed cured. I fear that the Government are unlikely to take that obvious course, so I hope that they will see the amendment as a useful step in the right direction.
Lord Wallace of Saltaire: I do not entirely follow the noble Lord, Lord Pearson of Rannoch, in his wider speculations. I do, however, agree that fraud continues to be a major problem for the European Union. I share also the noble Lord's view, as do many others on these Benches, that the balance of the budget is still perverse and that reform of the common agricultural policy is an important part of reducing levels of fraud and the perverse flows that adversely affect the United Kingdom.
I disagree with the noble Lord that we do not have allies from other countries. Commissioner Likkonen, the Finnish Commissioner, is doing extremely good work at present in beginning to put into effect reforms of some of the more inefficient sections of the Commission from which we have suffered far too long.
As this is the last amendment of the evening, rather earlier than I had expected, I take the opportunity to congratulate the noble Lord, Lord Moynihan, on his remarkable stamina over the past two days. I think that he may well have been on his feet for more or less five hours during that time. That is, indeed, quite a remarkable achievement. I rather hope that the noble Lord will not have to he on his feet for very much longer.
11.45 p.m.
Lord Moynihan: I am grateful to the noble Lord. It is important for the sake of the record for me to point out that I was not on my feet for five hours at a stretch. At every stage of the detailed consideration of this Committee work I did attempt to keep my remarks as brief and concise as I could. Nevertheless, as I am sure the noble Lord accepts, there was much detail to be covered in some of the groupings of amendments. I apologise if, on occasion, I had to speak for 15 or so minutes in order to cover those details. However, I shall not do so on this last amendment, although I welcome the fact that we appear to have a quorum in the Chamber for the first time. That is probably because of the fascinating and detailed intellectual argument that I am about to rehearse in the context of Amendment No. 56. Indeed, I cannot think why else it should be so.
I shall simply make one important point; namely, that in the context of the fight against fraud there is the question about the use of QMV. In the Amsterdam Treaty, the Government agreed to give the Community enhanced powers to combat waste and fraud by creating a specific legal basis for measures to combat fraud against the Community budget to be adopted by QMV.
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Article 209a of the TEC, at paragraph 4, provides for the Council to act according to the co-decision procedure of Article 189b, to adopt,
"necessary measures in the fields of the prevention of and fight against fraud affecting the financial interests of the Community".
The Government have frequently used fraud to justify the massive extension of QMV. On his return from Amsterdam the Prime Minister told another place:
"It is important for this country that we have QMV in certain areas … Fraud is one such area".
As I understand it—although I would like confirmation from the Government Front Bench—the argument runs that, if we are to have an effective provision to tackle fraud, it has to be decided by QMV. Otherwise, if a country were accused and redress demanded because of the misdemeanours and mismanagement of funds by that country's officials or institutions, without QMV it is very unlikely that the EU would be able to ensure that any country used the money that it was allocated for that intended purpose. If there were no QMV and if unanimity was required, that country could veto any measures proposed.
As I understand it, the argument continues that, if one believes in an effective European Union, any objective examination of the issues leads one to conclude that QMV must be extended. I have just heard a call from behind me asking what QMV may be: it is qualified majority voting. Perhaps that noble Lord was fortunate enough to have escaped some of the detailed deliberations of this Committee; indeed, we went into that question at great length. So the argument goes that this is a positive example of where it is essential to extend QMV. That is why powers to combat fraud and waste were increased at Amsterdam by allowing the Council to take action by QMV to prevent and combat fraud against the Community budget and by strengthening the powers of the Court of Auditors to investigate the use of Community funds.
However, there is a counter argument upon which I would appreciate the Government's comments. As with many of the Government's arguments, we believe that this fails to take into account how, on occasion, Europe would work in practice. As has long been agreed, one of the fundamental reasons for retaining the veto is to enable better negotiations to take place than would otherwise be the case. The fact that Conservative proposals on fraud at the IGC did not attract full support one, two and three months before the summit does not, in my contention, mean that they would not have been agreed at the weekend of the summit itself.
As the Opposition is only too well aware, things are often agreed at the very last minute at European summits. Countries who preserve their veto and who are prepared to use it are those who can bring others to the negotiating table. In our view, that is how the law on fraud should be made—by unanimity. Then the enforcement measures of that law can be made by QMV in the ordinary course of events.
I should like to ask the Minister specifically about the requirement in amended Article 209a, paragraph 2 (Article 2, paragraph 52 of the Amsterdam Treaty) which states that:

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"Member states shall take the same measures to counter fraud affecting the financial interests of the Community as they take to counter fraud affecting their own financial interests".
what effect does the Minister really believe that that requirement will have in the fight against fraud?
There are a number of other points I wanted to raise in the context of fraud but I think they were admirably covered on two other occasions during our proceedings. A speech at an earlier stage this afternoon by the noble Lord, Lord Bruce of Donington, referred to the issues of fraud, and there was a more comprehensive speech in the context of QMV yesterday. A series of speeches was given by noble Lords on this subject, so I shall not delay the Committee any longer by developing some of those themes. But I have to put on record that a number of them were worth going into in much greater detail than we had the opportunity to do at the time.
In conclusion, I thank the Minister and his colleagues for the courteous way in which they have responded throughout Committee proceedings to many detailed questions that have come from these Benches. I personally believe that in comparison with similar Committee stages that I have either attended in another place or read about on European matters, this was conducted in a very constructive spirit, one which analysed questions about what was best for Britain, and also how Britain could best contribute in Europe. Where noble Lords felt that we should not be contributing, strong arguments were made by them and listened to and respected. For those reasons, and from the Opposition Benches, I thank the Government Benches for the work that they have done to ensure the success of that, and particularly the Whips.
I conclude by asking the noble Lord whether he would answer the point that I have raised and to thank noble Lords on all sides of the Committee for their much appreciated constructive approach to this very complex subject, to which we will return at Report stage.
Lord McIntosh of Haringey: I am delighted to see that the noble Lord, Lord Pearson of Rannoch, is determined to go out of this Committee stage with a bang rather than a whimper. He has always been a fundamentalist; he has always taken the view that Britain should withdraw from the European Union. He has now gone further in saying that the whole project should be abandoned. We have to admire the consistency and the stringency of his point of view, whether or not we agree with it. It is quite clear that this Government, like the last Government, do not agree with that point of view.
On the issue of fraud, of course he is right in pointing out the seriousness of the problem. The National Audit Office published, only last week, an assessment of the report of the 1996 account which was prepared by the European Court of Auditors. The National Audit Office takes the view, as do the Government, that the accounts reveal unacceptable levels of fraud. We are talking about an amount of £3 billion, which is 5.4 per cent of the European budget. Having said that, this figure includes not only fraud but also errors in implementation. many of which reflect genuine
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differences of opinion between the European Court of Auditors and the Commission about the interpretation of the rules on eligibility. That figure is not an estimate of wastage because it includes a number of technical infringements; for example, about the timing of payments. But of course the noble Lord is right, as are other noble Lords who have taken part in this debate, including the noble Lord, Lord Wallace of Saltaire, that this level of errors is a cause for serious concern.
When the European Court of Auditors' report was published last November, Ministers made it clear that much work remains to be done before Community finances are as well managed as our national Budget. This is a priority during our presidency. Before I leave that point, I express my regret that my noble friend Lord Bruce of Donington is not with us at this late hour. He has pursued the issue of fraud with indomitable application. He probably knows more about it than any other Member of this Chamber. His contribution, even at this late hour, would have been valuable.
I have said that we believe this matter should be a priority during our presidency. I shall return to that point in a moment. I ought to respond to the noble Lord, Lord Moynihan, and mention ways in which the Amsterdam Treaty has the potential to reduce fraud and to improve financial management. There will be three main changes. First, the role of the European Court of Auditors in detecting fraud and mismanagement is strengthened. The treaty gives the Court of Auditors recourse to the European Court of Justice to protect its right to audit Community funds. This means that if the Court of Auditors is blocked by another institution from properly carrying out its duties it can take that institution to the Court of Justice. The Court of Auditors' right to audit those in receipt of Community expenditure right down the line to end users is clearly set out. That removes any past ambiguity. The Court of Auditors' right to audit Community funds managed by the European Investment Bank will be protected even if the agreement under which the audit is carried out breaks down. The Court of Auditors is now doing very useful work, and member states and the Commission are taking its reports more seriously. Further increases in the European Court of Auditors' powers under the Amsterdam Treaty should ensure that this continues.
The second main change concerns the Community's ability to take action against fraud, which is enhanced. That relates to the points made by the noble Lord, Lord Moynihan. Under the revised Article 209a, a specific legal base is created for adopting measures against fraud. Previously these had to be adopted under the cover-all provisions of Article 235, which requires unanimity and results in delay and less efficient legislation. In future—as the noble Lord has said, and as the article states—measures will be adopted by majority voting. Apart from anything else, this will permit quicker action to be taken. The use of qualified majority voting should not be seen as a threat; it is a tool to be used, and in this case it will be possible to take decisions unencumbered by the threat of veto from an offending member state. In that regard I confirm what the noble Lord, Lord Moynihan, said. That does not mean that there is not still a role for negotiations. I think it would

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be perverse if we were to object to this extension of QMV when it is so clearly in everyone's interest that there should be the power to take this action to prevent fraud.
The noble Lord asked me about the significance of paragraph 2, which states that member states shall take the same measures to counter fraud affecting the financial interests of the Community as they take to counter fraud affecting their own financial interests. I should have thought it was rather obvious that if we believe—as we do—that our own public accounts are conducted effectively, we should try to bring the Community accounts up to the same standard. I hope that applies to all other member states, but it is certainly a valuable criterion for this country.
The third major way in which the Amsterdam Treaty will reduce fraud is through a requirement placed on member states to co-operate with the Commission to ensure sound financial management of Community funds. That is what the Amsterdam Treaty does. It is not as dramatic as some people would like. It is not as dramatic as the Government would like, but these are significant changes. What will we do during our presidency in this regard? A lot of work on financial management and the fight against fraud is already under way.
During the presidency we are concentrating on taking forward existing initiatives, rather than distracting attention by launching new ones. The Commission's SEM 2000 initiative—sound and efficient management—is the focus of work on financial management. It has already made considerable progress, particularly in improving co-operation between the Commission and the member states. For example, the Commission's financial controller has signed bilateral co-operation agreements with the financial controllers in many of the member states. There have also been improvements in budget forecasting and execution, and we are pushing forward with SEM 2000 work during our presidency. We hope to get agreement to amendments to the financial regulation which sets out detailed rules for drawing up, implementing and auditing the EU budget.
In addition, under our presidency we are using the budget discharge procedure to highlight key financial management issues such as the need to set clear aims for expenditure and evaluate results against these; to better
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define eligibility criteria; and to ensure proper follow-up to previous Court of Auditor reports. We are working to pass on good practice in financial management to central European applicants for membership so that they develop effective financial systems before they join the European Union. They have been invited to a financial control conference in London in June.
Following the European Parliament's report of last year on transit fraud, which highlighted the vulnerability of the Community transit system to fraud and suggested that co-operation between European Union Customs authorities should be strengthened, we are encouraging that as well. We are also pursuing work on criminal fraud in the Justice and Home Affairs Council as part of the recent action plan on organised crime. We plan to use the 19th May ECOFIN to focus further on financial management and fraud issues, including a further report on SEM 2000, the annual fight against fraud reports, and member states' responses to the ECA report.
The amendment would require us to make an annual report on fraud issues. Let me make it clear that we are already doing so and that this amendment is therefore unnecessary. I hope that the noble Lord, Lord Pearson of Rannoch, will withdraw it.
Finally, since this is the last amendment in our extended Committee stage, although it is customary in this Chamber to confine pleasantries and congratulations to the end of a Bill, I certainly echo the thanks of the Government Front Bench to all who have made constructive contributions to our Committee stage.
Midnight
Lord Pearson of Rannoch: I do not know whether it is in order for me to echo from the Back Benches the sentiments of gratitude which have been offered to the Government Front Bench for the patience and detail with which they have answered our queries. I am especially grateful to the noble Lord, Lord McIntosh, for the generosity of his comments about this particular amendment, which, in those circumstances I have much pleasure in withdrawing.
Amendment, by leave, withdrawn.
Remaining clause agreed to.
House resumed: Bill reported without amendment.
House adjourned at four minutes past midnight.