European Communities (Amendment) Bill

HL Deb 28 April 1998 vol 589 cc233-84

House again in Committee.

Lord Moynihan

moved 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.

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. 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.

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 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 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.

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.

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 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 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 Moynihan

moved 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 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, 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 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 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 Moynihan

moved 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.

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 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?

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 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 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 Moynihan

moved 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 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 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"?

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 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 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.

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 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 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.

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 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 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.

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.

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.

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 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 Moynihan

moved 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 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 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 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 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 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 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.

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.

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 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 Rannoch

moved Amendment No. 56: After Clause 2, insert the following new clause— COMMUNITY FINANCES AND FRAUD: REPORT (" . This Act shall not come into force until—

1. (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
2. (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 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.

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". 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— 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. 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: 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 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 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 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.