Lords Sitting of 12 May 1998

Preamble
The House met at half-past two of the clock: The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Carlisle.

Textiles and EC Anti-Dumping Duties
Lord Pearson of Rannochasked Her Majesty's Government:
What steps they are taking to persuade the European Commission to lift its provisional anti-dumping duty on imports of cotton greycloth from countries outside the European Union.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, we agree with the opposition expressed by the British textile industry to the imposition by the European Commission of provisional anti-dumping duties in this case. Along with a majority of member states, we made it clear to the Commission that we opposed such duties. Despite this, the Commission proceeded with the imposition of provisional duties. Although legally entitled to do this, we regard the decision as unfortunate. The provisional duties will stand for no more than six months. If the Commission were to propose definitive duties, it would be for the Council of Ministers, acting by simple majority, to determine the issue. For our part, we shall continue to make every possible effort to ensure that definitive duties are not imposed.
Lord Pearson of Rannoch: My Lords, I am grateful to the Minister for that marginally encouraging reply when one considers that some 2.5 million European jobs depend in some way on these imports, perhaps 0.5 million of which are in the United Kingdom. Can the Minister confirm that the Council of Ministers had agreed with its advisory committee that these duties should not have been reimposed and that under EC law that should have been the end of the matter? Can he also confirm that even though no new circumstances had arisen, the Commission agreed to reimpose the duties last month but only after intense and improper pressure from M. Chirac?
Lord Simon of Highbury: My Lords, it is not correct to say that the Commission has no legal right to impose a provisional duty. That has been the position since anti-dumping legislation was first implemented in the European Community in 1968. The Commission has a right to impose provisional duties. The UK agreed to that on accession to the Community in 1973 and when the relevant Council regulation was revised in 1979, 1988, 1994 and 1996. The issue is that these are
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provisional duties. The legal position will be clarified during the investigations; it will then be for the Council of Ministers either to agree definitive duties or not.
The Earl of Onslow: My Lords, is it not the case that there are 5,000 French jobs involved in this matter which is why the French are particularly keen that the duties should be imposed? However, there are many more jobs which are adversely affected by those duties. Is it not true that the rest of Europe has caved in to the French position? I have no complaint about the French. They are only batting on their own wicket. But should we not try to play some decent cricket or even la boule instead of allowing the parlez-vous to get away with it?
Lord Simon of Highbury: My Lords, we could debate the numbers. The noble Earl refers to 5,000 French jobs. The noble Lord, Lord Pearson, says that there are 2.5 million jobs at risk. That means that there is even more gearing than the noble Earl thinks. This is a provisional position. Investigations are taking place. There will be a very good reason to turn over the provisional duties so that they are not made definitive if a majority of the Ministers believe that the French are behaving improperly. Let us wait until October, until the investigations are over. If it is improper, as the noble Earl suggests, the decision will be turned over.
Lord Stoddart of Swindon: My Lords, is my noble friend aware that unlike the noble Earl, Lord Onslow, I do have a quarrel with the French because they are not behaving in what is termed in polite circles a communautaire manner? I sincerely hope that my noble friend will take that into account. If it is shown that the European Commission has acted outwith its powers, will my noble friend promise me that the British Government, if nobody else, will take the Commission to court to clarify the position and to safeguard the many jobs, including British jobs, which are involved?
Lord Simon of Highbury: My Lords, I have made it clear already that this is not an illegal imposition of duties. The Commission is acting within its right to impose provisional duties if it has grounds to believe that pricing is illegal. I agree that if the French are found to be in a minority when the matter is put to the Council of Ministers in October, as it is obliged to be after the six months provisional duties period has run out, the decision will be turned over and not become definitive. I should say that on our unofficial current count, *-five countries are supporting the provisional duties.
Lord Razzall: My Lords, does the Minister agree that there is a danger that this sort of Question descends into Europhobia and that we should have a more serious look at the importance to the British textile industry of the issues raised? Does the Minister agree, first, that our textile industry is dependent on the added value of finished goods? It is extremely important therefore that the textile industry has a worldwide free market in greycloth, and that is the policy which the British Government have so far pursued. More particularly, will the Minister agree that there is a serious danger in this

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case? Jobs are being lost in the textile areas of the country. In addition, producers of greycloth, particularly in Turkey, are developing significant added value capability and are using the opportunity of the manufacture of greycloth and its high price to stop the textile added value which manufacturers in this country can obtain. Will the Minister agree that it is not a question of bashing the French or Europe but a question of confirming the Government's commitment on this issue?
Lord Simon of Highbury: My Lords, I can confirm to the noble Lord that we quite agree that value added on this imported material is extremely important to the British industry. We have that in mind in continuously expressing our opinion that this is an improper imposition. In October, when we come to vote, we shall say the same thing and hope to have a majority. We quite agree that our industry is very good at adding value.
Lord Pearson of Rannoch: My Lords, although the Minister is correct about the imposition of these duties, which would provisionally be for six months, does he accept that the problem here is their improper re-imposition for another six months?
Lord Simon of Highbury: My Lords, that may well be so, but we have not yet finished the first six months or had the Council's vote on the matter.
Lord Renton: My Lords, cannot the Council of Ministers deal with the matter before the present six-month period has expired?
Lord Simon of Highbury: My Lords, I do not think that the investigations will be completed before the six months have expired.

Palace of Westminster: Media Passes
2.44 p.m.
Lord Ewing of Kirkfordasked the Chairman of Committees:
How many passes are now issued to media representatives in the Palace of Westminster, and of the total how many are held by BBC staff.
The Chairman of Committees (Lord Boston of Faversham): My Lords, a total of 514 media passes are on issue; 125 of these are held by the BBC.
Lord Ewing of Kirkford: My Lords, will the noble Lord the Chairman of Committees accept my thanks for that reply? Is it not surprising that we are now moving rapidly towards a situation where there will be one media representative for each elected Member of the other House? Indeed, no other democratic institution in the free world has such a coverage as prevails here.
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In relation to the number of passes held by the BBC, does the noble Lord recall that in the 1960s and the early 1970s, before either this House or the other place was televised, David Holmes and Hardiman Scott, assisted from time to time by none other than Angela Rippon, were able to report the proceedings in both Houses with great expertise? In view of the noble Lord's own excellent experience in the media, can he explain why on earth the BBC needs 125 people to cover the proceedings in both Houses of Parliament when we seldom, if ever, see any of them at this end of the Palace?
The Chairman of Committees: My Lords, with reference to the noble Lord's middle question, I do indeed recall those days. That is certainly so for the 1960s but less so for the 1970s in the case of the BBC. Perhaps I should declare an interest in that I worked for the BBC during the 1950s and the 1960s. I am sure that the noble Lord, Lord Ewing, is right about the numbers who managed to report the proceedings then. However, we are now in a different situation. Whether we are moving to the situation that the noble Lord described, as regards the proportion of media representatives to the number of elected Members in another place, I do not know.
Indeed, comparisons are awkward. I do not know what is a proper number of media representatives. All I can say is that this number seems to be needed. Perhaps I should, therefore, draw upon Mozart's riposte to his royal critic when the latter said that he had used too many notes. Mozart replied:
"No more and no fewer, your Majesty, than are necessary".
The BBC does need quite a number of representatives. It should not be forgotten that, apart from its coverage of Parliament, which it is required by its Charter to provide on a daily basis—and we try to facilitate the BBC as far as we can—noble Lords will also be aware of the BBC's role in covering special events, such as the State Opening of Parliament, Addresses to Members of both Houses by foreign and Commonwealth leaders, and other such matters.
Lord Ironside: My Lords, in addition to the number of passes which have been issued to members of the Press Gallery, can the noble Lord now say whether there has been any change in the number of parking permits issued to named members of the Press Gallery, which stood at 18 in 1993?
The Chairman of Committees: My Lords, if the noble Lord will forgive me, I shall resist the temptation to enter the quagmire of the subject of parking in the vicinity of the Palace of Westminster. I am briefed on the number of passes, but I regret to say that I am not briefed on the matter the noble Lord has raised. If I can help him, I shall do so in writing.
Lord Borrie: My Lords, does the noble Lord the Chairman of Committees agree that the number of passes issued for people to cover the two Houses of Parliament seems to be in inverse proportion to the coverage that is provided? Does he agree that there may

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be a price to be paid by the media representatives in respect of the number of passes that are issued in terms of longer and better coverage of the two Houses?
The Chairman of Committees: My Lords, I am very much in favour of greater coverage of your Lordships' House, as it works hard. A great deal is done not only in your Lordships' Chamber but also in your Lordships' committees. That work is well worth publicising. I was heartened by the amount of coverage given recently in the press and by the broadcasting organisations to the report on antibiotics—that is not its full title—which was published fairly recently. The noble Lord is quite right about the difference between the number of passes issued by your Lordships' House and another place. Some 19 have been issued by your Lordships' House and 491 by another place.
Lord Elton: My Lords, given the large number of passes issued to reporters and the small amount of reporting that is carried out, and given the noble Lord's experience in the media, can he tell us what these people are doing?
The Chairman of Committees: My Lords, I am tempted to follow the remarks of the noble Lord, Lord Elton, as I have a modicum of sympathy with his question. However, the media representatives are doing a great deal. One has to bear in mind the coverage not only of the national television stations but also of the regional television stations, the national radio stations and the local, sometimes quite small, radio stations, and the agencies. In addition there is complete national and regional press coverage. A considerable amount of media coverage is needed. Therefore I think it is right that a sizeable number of media passes should be issued to permit media representatives to enter the Palace of Westminster.
Lord Mason of Barnsley: My Lords, does my noble friend have in his brief an estimated cost of this media coverage?
The Chairman of Committees: My Lords, I regret to say that I do not. I doubt that I shall be able to assist on that matter, but if I can I shall do so.

Post Office Review
2.54 p.m.
Lord Evans of Parksideasked Her Majesty's Government:
Whether they have any plans to give greater commercial freedom to the Post Office.
Lord Simon of Highbury: My Lords, my right honourable friend the President of the Board of Trade announced in the other place on Monday 6th April the second phase of the Post Office review. This will make recommendations on the Post Office's future structure, organisation and financing that will best deliver greater commercial freedom for the Post Office within the
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public sector. The Government intend to announce their proposals in the autumn. Further details are set out in the Government's observations to the Select Committee on Trade and Industry on the third report of the 1997–98 session of the Post Office, which was published by the committee on 14th April.
Lord Evans of Parkside: My Lords, I thank my noble friend for that helpful reply. Does he acknowledge that the previous Tory government rather cynically used the Post Office as a cash cow, stripping it of most of its profits and denying it the freedom to develop its profitable areas of business? Will my noble friend consider the proposition that the best way forward for the Post Office is not privatisation but for it to be converted into a publicly owned plc with an agreed limitation on what the Treasury would receive from the Post Office's annual profits?
Lord Simon of Highbury: My Lords, my noble friend tempts me rather too soon to describe the detail of the structure which we wish to put in place after this next stage of the review. It is quite right to assume that we expect the Post Office to remain in the public sector but with a greater independence to achieve the kind of flexibility in commercial terms that we have long wished to see for it. In terms of financing, I believe the Post Office is currently investing between £400 million and £450 million a year, so the capital investment flows are quite encouraging. However, a limitation on the rest of the flows which would pass to the Treasury is a matter that we shall review during this second stage.
Lord Ezra: My Lords, following the supplementary question of the noble Lord, Lord Evans of Parkside, does the Minister agree that there are enormous technological developments in post offices throughout the world, and that the British Post Office, in spite of its great expertise, has hitherto been held back in meeting that challenge? Will the noble Lord therefore confirm—arising out of his answer to the noble Lord, Lord Evans—that in the solution found by the Government later this year they will make sure that they will not denude the Post Office of such a large proportion of its post-tax profits as has hitherto been the case; namely, up to 90 per cent. compared with about 30 per cent. from a normal company, and that it will be given the freedom to go to the market to raise money for valid propositions?
Lord Simon of Highbury: My Lords, I agree with the noble Lord that there are enormous technological developments taking place in postal services around the world. We certainly want to ensure that our Post Office is competitive in international markets. We shall not have to wait until the end of the review to make some progress because my right honourable friend in the other House announced that, with immediate effect from her announcement, there would be limited freedoms for the Post Office to enter into joint ventures in the domestic market to enable it to take advantage of these developing technologies, as has occurred in other countries. We are well seized of that. I shall not be tempted into discussing the numbers which fall from the

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capital budget and the Treasury requirements. That is something that we have to look at extremely carefully. The purpose is to have an internationally competitive Post Office. We must take care as regards the balance between capital expenditure and dividend to the Treasury.
Baroness Nicol: My Lords, will my noble friend exercise some caution in allowing flexibility to the Post Office as regards the closure of village post offices? Is he aware that if solely commercial criteria were applied to many of these organisations they would have to close, but they provide a social service which is irreplaceable by any other means?
Lord Simon of Highbury: My Lords, my noble friend is absolutely right. During the consultation period, which was undertaken before the announcement in April, it was made absolutely clear that the users regarded that as a high priority. Most of the 20,000 outlets are in private hands. Rural post offices need to be effective and profitable for the people who want to run them. That, of course, rests on the quality and range of services that they can offer. We are trying to make sure that the Post Office modernises and offers a wide range of services so that we can keep as many outlets open as possible.
Lord Ewing of Kirkford: My Lords, will my noble friend the Minister give an absolute assurance that whatever the Government propose in the autumn of this year they will in no way interfere with the universal postage rates which prevail throughout the United Kingdom?
Lord Simon of Highbury: My Lords, I believe that that was one of the criteria which were attached to the Statement that my right honourable friend made in the other House in April when the second stage was launched.
Lord Mackie of Benshie: My Lords, the Minister's previous answer seemed to imply that the Post Office would offer so many services that any rural post office would be able to be profitable. That will not be the case. I should like to hear the noble Lord say that the Government will continue the subsidy to these post offices after all the services have been exhausted.
Lord Simon of Highbury: My Lords, I hope that the noble Lord slightly misheard me. I did not say that all rural post offices would be profitable. I said that the objective of the exercise was to develop services to make it as attractive as possible for private sector individuals still to maintain trade through a wide network across the country. Clearly if one seeks to offer a universal service with a universal pricing basis, there will be occasions when the arithmetic does not work. We shall cope with those problems when we come to them. How that situation will be coped with will be part of the inquiry.
Lord Strabolgi: My Lords, is my noble friend aware that it is not only the rural post offices which are under
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threat but also some in central London? For example, the very busy post office in Eccleston Street near Victoria is under threat of closure. I believe that there is some question of selling the building as a capital gain.
Lord Simon of Highbury: My Lords, I was not aware of the detail of the Eccleston Street Post Office. However, if there are any plans to change its status, I shall try to inform my noble friend accordingly. I am not aware of that amount of detail.

Guardsmen Fisher and Wright
3 p.m.
Lord Campbell of Allowayasked Her Majesty's Government:
When it is expected that Guardsmen Wright and Fisher will be released.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): My Lords, no decision has yet been taken regarding a release date for Guardsmen Wright and Fisher.
In October 1997 the Secretary of State decided that the cases of the two guardsmen should be considered by the Life Sentence Review Board in October this year. The timing of this review is currently the subject of a judicial review. Judgment is awaited.
Lord Campbell of Alloway: My Lords, I thank the Minister for his Answer. Do the Government acknowledge that the exercise of ministerial discretion to release those serving a mandatory life sentence for murder does not have to conform with advice from the judiciary or from a review board? If so, and it is so, why is that ministerial discretion—it is akin to the royal prerogative—not exercised to release those guardsmen now?
Lord Dubs: My Lords, I well understand the strong feelings held on this subject. However, the Government have made their position quite clear. The Life Sentence Review Board looked at the cases last October. It was agreed by the Secretary of State that the Life Sentence Review Board would again look at the cases this coming October. That seems to me a proper process free of political influence; and a process which has been accelerated. Normally that body would not consider cases until the 10-year period. It started looking at this case after five years, and will do so again after six years.
Lord Alderdice: My Lords, do the Government understand that such Questions are entirely natural after a weekend when convicted terrorists were released to attend a political meeting? Such concerns represented in this House are but a pale shadow of the wave of concern that is sweeping Northern Ireland because of a perception that the incessant and insatiable demands of paramilitary parties always seem to take precedence over the reasonable requirements of democratically rooted parties, law abiding citizens and sometimes

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justice itself. Do the Government understand that those so-called risks in aid of the settlement are beginning to become more of a risk to the settlement?
Lord Dubs: My Lords, I listen to the noble Lord because of the great knowledge he brings to bear from his experiences in Northern Ireland and his involvement with the talks process. The prisoners who were temporarily allowed out of prison to attend the conference last Sunday were allowed out only on a short-term basis. There are precedents for allowing prisoners out on a short-term basis—for example, for compassionate reasons. It was judged helpful to the peace process if the views of a limited number of prisoners could be heard. That was a decision made. The prisoners are now safely behind bars.
Lord Annan: My Lords, why must the noble Lord be so formalistic about this matter? If the Balcombe Street murderers have been released, why could not the guardsmen be released as part of the process?
Lord Dubs: My Lords, first, the Balcombe Street gang were released by the Dublin Government, not by the British Government. But using the word "release" is not accurate. I understand that they were let out for a couple of days. The two or three prisoners held in prison in Northern Ireland who were allowed to go to that conference were let out for a short period of a couple of days only. That is not the same as a release.
Lord Merlyn-Rees: My Lords, my noble friend will be aware that the Government are to legislate shortly to set up a sentence review board to facilitate the release of loyalist republican prisoners under a new scheme as part of the settlement. Will those two guardsmen be dealt with in the same way?
Lord Dubs: My Lords, my noble friend touches on an important point. Under the terms of the Good Friday agreement, subject to legislation going through Parliament, there will be established a sentence review body which will look at earlier releases of prisoners held in prisons in Northern Ireland.
The position as regards those two guardsmen is as follows. Clearly their case will still come before the Life Sentence Review Board this October. However, if the legislation goes through in time, and the new sentence review body is set up, it is possible that that body might decide in its scheme of priorities to consider the case of the guardsmen early on. So they will come for consideration under one body or the other.
Lord Burnham: My Lords, in reply to my noble friend Lord Campbell, the Minister said that last October the Life Sentence Review Board made a recommendation, and the Secretary of State decided not to let the men out. The two events had nothing whatever to do with one another. May we assume that the long delay in finding any answer to the review held on 25th March—we were promised it in about April—bodes well for a favourable decision both from the judge and the Secretary of State?
Lord Dubs: My Lords, I cannot comment on what the judge will be minded to decide when he announces his decision. That is for the judiciary. However, last October the Life Sentence Review Board made its confidential recommendations to the Secretary of State. I have no knowledge as to the contents of that recommendation. It may well have been to keep them inside; I simply do not know. But the Secretary of State decided that it would be proper in the circumstances to ask the Life Sentence Review Board to consider again the cases of the two guardsmen this coming October. That is the position.

European Communities (Amendment) Bill
3.8 p.m.
Report received.
Lord Stoddart of Swindonmoved Amendment No. 1.
After Clause 1, insert the following new clause—
DECLARATORY
(". Nothing in this Act affects the sovereignty of Parliament or the constitutional principle that one Parliament cannot bind its successor.").
The noble Lord said: My Lords, many noble Lords will know that I seldom move non-contentious amendments, but on this occasion I am sure that noble Lords will all agree that this amendment is very non-contentious. It deserves, and I hope will receive, the support of the whole House.
Having said that, I believe that there is a need to have the declaration in Amendment No. 1 as part of the European Communities (Amendment) Bill. I take that view because, first, we need to reassure those both inside and, more importantly, outside Parliament that their constitutional rights, privileges and ability to govern themselves are not being eroded step by step, with power being handed over to unelected bureaucrats or politicians who have not been elected by the British people and are not therefore under their control through the electoral process.
Secondly, we need to remind British Ministers that Parliament is supreme; and that, although it may go through a period of indolence or toadyism, it can still bite back and holds the ultimate sanction.
Thirdly, we need to educate the ignorant or arrogant in other countries that, however many deals they do with British Ministers, or whatever measures they force on Britain through qualified majority voting, in the last analysis Parliament is the ultimate authority and holds the eventual sanction of providing or withholding supply.
We also need to remind people that Parliament remains the ultimate highest court in the land and cannot be overruled by another sitting in a foreign city.

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It is timely to have a declaration of this sort at this stage, because it is now 25 years—a quarter of a century—since we joined the then common market, when we were assured by Mr. Heath in his 1971 White Paper that accession to the Rome Treaty would involve
"no loss of essential national sovereignty".
It is 23 years since we were told by a Labour Government in a booklet entitled, Britain's New Deal in Europe, issued during the 1975 referendum, that no important new policy could be decided in Brussels or elsewhere without the consent of a British Minister answerable to a British Government and a British Parliament. So I am restating what has already been said.
Since then, we have had the Single European Act 1985, which extended qualified majority voting to many other areas and made a start on police and judicial co-operation and foreign and defence matters. Then came the Maastricht Treaty, which only just scraped through the Commons on a guillotine, and which consolidated and extended the measures in the Single European Act and laid down the conditions and timetable for the completion of economic and monetary union and the introduction of a single currency.
Now we have the Bill that is before the House today—a Bill to put into the effect the Treaty of Amsterdam, which further extends Community competence, strengthens the foreign and security pillar, gives further powers in respect of police and judicial matters, and strengthens and extends the powers of the institutions. The president of the Commission is given new powers and an enhanced status. The European Parliament has had its powers increased through new areas of co-decision—34, I believe—and qualified majority voting has been extended.
The Government may very well say that all this is merely a case of sharing sovereignty. But that is simply not true. Sovereignty cannot be shared. You either have it, or you do not. So it really is time to have it on record that none of this affects the basic truth of parliamentary sovereignty and the principle that one Parliament cannot bind its successor.
Furthermore, this declaration would help to put some backbone into Parliament, when it is told, as it was over the Factortame case—the case concerning the Spanish fishermen—that legislation it passed to protect the interests and livelihoods of British fishermen had been declared illegal and that it was required to repeal it—backbone, that is, to tell government that no European court can tell Parliament what to do.
This declaration is meant to be helpful to Parliament, government and indeed the Official Opposition. This is not a wrecking amendment. If it were agreed, it would not affect the ratification of the Amsterdam Treaty. As I said, I wish to be helpful to the Government, as I always do—and on this occasion even to the Opposition—in that I want to strengthen their firm declaration that they are in favour of a Europe of nation states and against a federal or unitary union.
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On 31st January 1997, during the debate in which this House gave a Second Reading to the Bill introduced by the noble Lord, Lord Pearson, to repeal Sections 2 and 3 of the European Communities Act, the noble Lord, Lord Inglewood, speaking for the then Conservative Government, stated:
"So we must and shall continue to argue and work for the sort of European Union which we believe is right: a partnership between nation states, working together through agreed decisions of decision-making where that brings real advantage".—[Official Report, 31/1/97; col. 1421.]
So there is no question about the position of the then Conservative Government when this House passed that Bill to repeal Sections 2 and 3 of the European Communities Act.
The same is true of the present Government—that is, if the Prime Minister is to be believed. During and before the last election, Tony Blair wrapped himself in the Union Jack, and his famous and ringing declaration in his Sun article of 17th March that, "I'm a British patriot", gave reassurance to millions of voters that neither he nor a Labour Government would sell Britain out to a European superstate.
In order that people know what he said, I wish to quote from the article. He said:
"If there are those in Europe who want a federal superstate, we would refuse to go along. Furthermore, we would want to stop all of Europe moving in that direction. The people of Europe do not want such a superstate".
He went on to say:
"I am a British patriot. Anyone who believes I would sell my country short has not listened to a word I have said in the past three years. I didn't change the Labour Party into the party it is today to give it all away to Europe or anyone else.
But I look at the Tory record—on BSE for example, where nine months on from the 'beef war' John Major still hasn't got a bean out of Europe".
That is what my right honourable friend the Prime Minister was saying to voters before the election. I am not at all sure, however, that by—
3.15 p.m.
Lord Randall of St. Budeaux: My Lords, I am grateful to my noble friend for giving way and showing such courtesy. I wonder if he would be kind enough to tell the House exactly what are the differences between his definition of "superstate" and that of the Prime Minister.
Lord Stoddart of Swindon: My Lords, that is for the Prime Minister to say. My view of a European superstate is well-known, and my position on it is expressed very well in the amendment that is before the House and to which I am now speaking. I believe that a European superstate would undermine our nationality and our self-government. That is why I am against it. The Prime Minister must speak for himself. I hope that his views are in line with mine, as they appeared to be when he wrote that article on 17th March 1997. It is clear; and if my noble friend believes that I am not telling the truth, I will send him a copy of the article.
I am not at all sure that by signing the Amsterdam Treaty my right honourable friend the Prime Minister has kept the pledge about stopping all Europe moving

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towards a federal Euro-state. There are clauses which he ought to re-examine, after which he might agree that they allow other countries to go ahead towards federalism, although perhaps he does not wish to do so himself.
Nevertheless, the strong message from the Prime Minister to the electorate on 17th March 1997 was that Labour believed in Britain. So do I and so, I hope, do all other noble Lords in the House. There is no better way of confirming that policy and Mr. Blair's mantle of British patriotism than by accepting my amendment. It puts on record the final safeguard of Britain's constitution and its continuation as a marvellous country with a great history and an able and tolerant people who want nothing better than to govern themselves through their elected Parliament and Government. I beg to move.
Lord Pearson of Rannoch: My Lords, I rise to speak in favour of the amendment to which I have put my name and which was so magnificently moved by the noble Lord, Lord Stoddart of Swindon. The stark fact is that this proposed declaration—
"Nothing in this Act affects the sovereignty of Parliament or the constitutional principle that one Parliament cannot bind its successor"—
can only be true if one adds the words, "provided that Parliament retains the power to take the United Kingdom out of the Treaty of Rome". If that proviso does not apply, then the sovereignty of Parliament and the ancient principle that one Parliament cannot bind its successors have already been ceded to the treaty and there would be no point in the amendment.
That cession is not just inherent in this Bill which incorporates the amendments agreed at Amsterdam; it is also contained in the amendments agreed at Maastricht; in the Single European Act; and in the original Treaty of Rome itself.
The treaty uses three deadly weapons to remove national sovereignty in perpetuity. They are the qualified majority vote, the acquis communautaire and the fact that the treaty does not contain an exit clause. The treaty also contains a worthless pretence at safeguarding national independence, which is known as "subsidiarity". It is worthless because in areas covered by the treaty the Community decides the matters in which the nation states may remain independent. It also decides the matters in which they are to be subservient to the Community, as we saw in our debates at the Committee stage on 28th April (Hansard, cols. 170 to 191). We shall be returning to subsidiarity later in the Report stage and so I will not repeat any of the arguments now. Suffice it to say that the Amsterdam Treaty amendments on subsidiarity merely clarify and underline the supremacy of the Community over the nation state. So that is one area in the Bill which confirms that the sovereignty of Parliament has already passed to the treaty for as long as we remain a signatory.
Bereft thus of any protection from subsidiarity, we should look briefly at the treaty's three deadly weapons which are designed eventually to remove national sovereignty. The first is its system of qualified majority voting. As I never tire of reminding your Lordships, there are 87 such votes among the 15 member nations;
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62 votes are required to carry a motion and 26 votes are required to block one. The United Kingdom has only 10 votes. So clearly we can be, and indeed often are, outvoted on matters which, were it not for our adherence to the Treaty of Rome, would have remained under the sole authority of this Parliament.
The villain of the qualified majority voting piece has turned out to be the Single European Act of 1985 which brought in a substantial increase in QMV by subjecting all our industry and commerce to its control. I understand that the United Kingdom in good faith promoted that expansion of QMV in order to facilitate the single market. The trouble is that it has backfired on us because we can be outvoted on the vast quantity of harmonising single market legislation which often penalises our global trade.
Recent examples of this would be the proposed EC Chocolate Directive, which your Lordships debated on 30th April, or the EC's proposed tax increases on our international art market which your Lordships debated on 10th December last year. Many other British interests have been similarly affected, including the workings of the common agricultural and common fisheries policies. There are at least a dozen other industries which I could name to your Lordships, but I have done so before and will not weary the House with examples now.
Looking back on it, more areas which were previously under national control were ceded to QMV by the amendments agreed at Maastricht. Now, the Amsterdam Treaty proposes to claim another 34 areas. So qualified majority voting is alive and well and expanding aggressively as time goes on.
The second deadly weapon is the acquis communautaire which decrees that whenever an area passes from national control to Community control, it can never again be given back to the nation states. The Community may keep still for a moment or two, but it never retreats. The Treaty of Rome is therefore a one-way ticket to
"the ever closer union of the peoples of Europe"
which is required in Article A.
There was a moment when my right honourable friend Mr. John Major, when he was Prime Minister, thought that some 25 per cent. of all EU legislation could be repealed as a result of the subsidiarity clause which the UK had caused to be inserted in the treaty at Maastricht. But in fact, not one single piece of useless bureaucratic interference has been so repealed, let alone anything more useful. So, that is the acquis communautaire in action and this weapon is also confirmed and strengthened in the Amsterdam Treaty which we are now considering.
The last weapon is complementary to the acquis and it is the remarkable fact that the Treaty of Rome does not contain an exit clause. So if we want to leave it, we have to break it, unless all the other nations are prepared to sit down and renegotiate a new treaty which we find acceptable. The chances of that happening are so remote as to be unreal, unless, of course, they were all convinced that we really were prepared to leave if they did not give us what we wanted.

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I never cease to be amazed at how many people in this country regard the prospect of leaving the European Union as something negative or even frightening. They do not seem to appreciate that we give the EU much more than we get out of it, and so we could easily negotiate a bilateral trade agreement, as Switzerland has done. Indeed, we could negotiate a more favourable one than Switzerland has done.
We would then be free to follow our global trading interests comparatively unencumbered by the EU's stifling red tape and harmonisation. If we wanted to join another trading bloc, the Northern American Free Trade Area (NAFTA) makes a far better fit with our economy than does the European Community. Indeed, I was encouraged to see that Mr. Henry Kissinger last week floated the idea that NAFTA might be renamed the North Atlantic Free Trade Area, to include perhaps ourselves and maybe others.
Of course, like all other free trade areas in the world, it would not need a parliament or a commission or a council of ministers or a court of justice. That is because its aim would not be to create a corporatist superstate, designed to devour the sovereignty and independence of the nations which took part in it.
So it seems to me that the Minister who is to respond to this debate may be in a bit of a fix. Presumably she will not want to refuse to accept the amendment on the grounds that the Bill does affect the sovereignty of Parliament or the principle that one parliament cannot bind its successors. If so, I really hope that she will agree that the sovereignty we have already handed over could indeed be retrieved by a successor parliament, but only through substantial renegotiation of the Treaty of Rome or more likely by withdrawing from it altogether.
If the Minister comes to what I regard as that inescapable conclusion, I hope that she will not regard it as too terrifying or misguided an option. It is not. It is a perfectly simple policy option, like any other, which should be decided in the interests of the British people and not in the interests of the overweening political and bureaucratic machine in Whitehall and in Brussels which has come to so dominate and impoverish our lives.
3.30 p.m.
Lord Bruce of Donington: My Lords, I rise to support the amendment standing in the name of my noble friend and others. Political developments since we joined the then Common Market in 1972 have proceeded quickly, though in a series of small steps. So much so that perhaps it is necessary from time to time to go back to the beginning and find out just how much the situation in which we now find ourselves developed from the situation in which we were in 1972.
In common with your Lordships, I found some difficulty in going through the detailed provisions of the Treaty of Amsterdam as they affect the Treaty of Maastricht as amending the Treaty of Rome as amended by the Single European Act and so forth. To trace one's way through the intricate web of treaty legislation in which we have participated since that time is a
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considerable task. There is always a tendency barely to notice some of the smaller changes at the time they take place. It is only when one looks at the cumulative effect of those changes over a number of years that one begins to reflect on the enormity of what happened.
That was particularly brought home to me by paragraph 8 of the earlier substantive amendments to the European Union as set out in the Treaty of Amsterdam. I draw your Lordships' attention to that because it is unique. It says that paragraph 1 shall be replaced by the following:
"paragraph 1 [Article F in the old treaty] shall be replaced by the following: The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States".
It goes on to say that paragraph 3 shall become paragraph 4 and the new paragraph 3 shall be inserted as follows:
"The Union shall respect the national identities of its Member States".
I do not know whether or not your Lordships realise it, but that is the first time that the word "democracy" appeared in any of the treaties. It is useful to reflect that those who participated in the inter-governmental conference which led up to Amsterdam and the actual process of concluding the Treaty of Amsterdam should suddenly have realised that democracy is important.
Democracy is difficult to define. I suppose it can be said that we know when we have not got it, and we in this country, fortunately, have experienced a fairly advanced degree of democracy. We are accustomed—though not so much now as 20 years ago—to the power of Parliament. Such great leaders as the late Winston Churchill always profoundly respected the power of Parliament. Over the years I have found—others may yet have to tread, at any rate in length, the path that I have trodden—that the biggest menace to democracy is a power-seeking bureaucracy.
If we are going to follow the strict words in the treaty and uphold the principles of democracy and rule of law, one of the things we may have to decide, both domestically and in Europe, (though opinion may be divided as to whether it is necessary at all because it is so respectable to follow bureaucracy) is the deliberations and actions of the distinguished body of men and women who comprise the bureaucrats—they are enormously valuable and indispensable to the operation of modern society and indeed the enactment and enforcement of laws—and to what extent we can and should begin to limit the power of bureaucracy to dominate our lives.
At this stage of the debate, I do not wish to enter too intrusively or too embarrassingly into the events that attended the appointment of the chief of the European Central Bank, Mr. Duisenberg. That may be a little too embarrassing at the present stage. I should like the Government to accustom themselves to what happened before they embark on a definitive reply. But that is just one example.
The European Commission, right from the beginning, sought to take unto itself the greatest possible amount of power, not necessarily and exclusively for the

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carrying out of immediate tasks as it saw them, but for the purpose of increasing its own power and encroaching ever further upon the powers residing in member states.
With the permission of the House, I am constrained to give some examples of the steps we shall have to take if we are to follow the new provisions relating to democracy in Europe. They will be large in number and will take a number of years and several governments to accomplish. That is the fundamental reason why we insist on the confirmation of the edict that no government can bind their successors in what they do. Undoubtedly, over the next four or five years progressively, amendments will have to be made to the treaty and they will certainly lap over into the next Parliament after this. That is why we need a re-affirmation of the present constitutional position, as I understand it and as legally advised, that at present no parliament can bind its successors.
At the moment there are a whole series of fields which are not subject to any democratic control. I hasten to add that I shall quite understand those Members of your Lordships' House who would prefer things to be solved not democratically but by so-called and self-styled experts. I can understand that and I will make allowances for it. But talking, as I believe I may be, on behalf of large sections of the population not confined to the profession of banking, not confined to providing financial services, which of course are now called products, I think we are going to have to insist that the present series of bodies which are self-appointed should he subject to democratic control. By that I mean political control or governmental control and accountability.
Baroness Ludford: My Lords, I am grateful to the noble Lord for giving way. He has just referred to self-appointed bodies. I imagine that he does not mean that the Commission is self appointed. If he is citing the example of the appointment of the president of the European Central Bank, is it not fair to assume that the Commission wanted one person to be appointed for eight years and that it was national governments who were responsible for splitting that term? It is rather unfair to blame the Commission for the problems over the appointment of the president of the European Central Bank.
Lord Bruce of Donington: My Lords, owing to a personal affliction, I did not hear the majority of what the noble Baroness said. On the assumption that she wished to draw attention to the incongruity of a Member of the House of Lords who is not democratically elected referring to these problems, I would immediately agree with her. But that still does not diminish one's right to speak upon it.
Perhaps I may mention the organisations that are at the moment responsible to no one but themselves. They are, first, the administrators of the European Social Fund, established under Article 147 of the treaty. Then there are the members of the European Court of Justice, who are chosen from persons whose independence is beyond doubt. They are responsible to no one but themselves. Then there are the members of the Court of
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Auditors, who are chosen from persons who belong or have belonged in their respective countries to external audit bodies and who are specially qualified for this office. They are required in the general interests of the Community to be completely independent in the performance of their duties.
That is not always so. I can well recall an incident of four years ago when a member of the Court of Auditors felt it necessary to retire because he found that the Court of Auditors was under pressure from the Commission to alter a report which it proposed to submit.
There is also the Economic and Social Committee in Europe, which once again is responsible to no one and consists of representatives of various categories of economic and social activity. It is not bound by any mandatory instructions. All it is required to do is to consult with the Commission. Then there is the Committee of the Regions and the European Investment Bank. There is also the European Central Bank, on which I will not touch further at the moment.
There is a whole series of organisations. The European Monetary Institute, which will soon cease to exist, will have its functions taken over by the ECB. There are all these bodies which are accountable to no one. As I understand it—I may have to cite as an authority, although I hesitate to do so, the honourable Member for Hartlepool, Mr. Mandelson—something will have to be done. I am at one with him on that and I trust that those remarks, coming from the quarter that they did, will receive more general support.
The fact of the matter is that legislation, or proposed legislation, is a monopoly of the Commission, which is appointed by accord. Later amendments will deal with the president and members of the Commission. At the moment the Commission is responsible for all proposals. The Council of Ministers cannot act save on a proposal. Now there are proposals and there are proposals. Normally speaking, under the kind of leisurely society which is probably more conducive to a calm appraisal of a country's real problems, we used to have just about the amount of legislation with which we could cope in terms of its interpretation and in terms of its enforcement. Now we are bombarded with a whole series of proposals upon which explanatory memoranda have to be drawn up by the departments concerned in this country and in other countries. This has reached a point where the legislative machines in practically all the countries comprising the European Union are becoming so clogged that those politicians individually responsible for presenting legislation to their parliaments are unable to consider the proposals put forward by the European Commission.
It is of course the oldest dodge in the world. If you want to confuse your Ministers, you make quite sure that the volume of proposals you lay before them is such that they cannot physically deal with it. That state has already been reached in the United Kingdom and has probably echoes in other fields that are more topical at the moment.
Those are the things we have to moderate. I do not mean moderate by some kind of drastic action that will cause friction in every quarter affected. I mean moderate

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by that kind of action which is the result of mature reflection by legislating chambers such as the other place and ourselves, where we are able to consider matters calmly, where we are able to put forward proposals and where we are able to secure public discussion, calm discussion, of the matters involved. If we do that, it may well be that the constitutional dictum which stands at the head of the amendment will have relevance to our own future society. For the sake of my country and for all of us, I hope that that will be the case.
3.45 p.m.
Lord Willoughby de Broke: My Lords, I rise to speak briefly in support of the amendment, to which I have put my name. The arguments have been put very clearly and I do not propose to cover the same ground. What is plain is that some of the provisions of the Amsterdam Treaty as they now stand are in direct conflict with the constitutional tradition of our own—for example, that no parliament may bind its successor. Any treaty which contains words such as "irrevocable" or "irreversible" is sowing dragon's teeth for the future.
Although I was unable to be in the Chamber for the Committee stage of the Bill, I read the Hansard reports carefully. I was struck by how often Ministers answering in the debates would try to persuade themselves and the House that the treaty as it stands would not mean that any future British government would have to take action contrary to their own interests or with which they disagreed. For example, one has only to look at the articles dealing with common foreign and security policies. One example is Article 14.2 which reads:
"Member states will refrain from any action which is contrary to the interests of the Union".
The unwritten rider to that must be, even if it is contrary to the interests of a member state. Article 15 states:
"Member states shall ensure that national policies conform to common positions".
Is it not conceivable that a member state may disagree with that common position? We need look no further back than the Falklands war to find differences between the position of the United Kingdom and of other members of the Union at that time. More recently, there was the Gulf war. There was a chasm between our position and that of some of our partners in the European Union. I remind noble Lords that Belgium's contribution was to refuse to sell us ammunition for the guns it had previously sold us.
All this goes to show that the idea of the European Union that one size fits all is simply unrealistic and will not work. I support this amendment because it will ensure that final decisions which affect us and our interests will always be taken at Westminster and not in Brussels. Whichever way one looks at the treaties on European Union, whether it is the Single European Act, the Maastricht Treaty or the Amsterdam Treaty, the traffic is all one way. We are gradually but inexorably ceding powers away from Westminster to Brussels.
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When the noble Lord, Lord Stoddart of Swindon, introduced this amendment I believe he said—if I did not mishear him—that this was a contentious amendment. But I do not see how it can possibly be construed as contentious.
Lord Stoddart of Swindon: My Lords, I said quite the reverse. I said that noble Lords will be used to my moving only contentious amendments but that this amendment was uncontentious and that I believed that everyone could support it without any problem at all.
Lord Willoughby de Broke: My Lords, I am glad to hear that. This amendment is uncontentious and I apologise for mishearing what the noble Lord said. All it does is to enshrine in the Bill the unassailable fact of the supremacy of Parliament and to ensure that empty declarations relating to "irreversible" and "irrevocable" will be treated as the nonsense they are.
I do not believe that this or any government should be able to fetter their successors. I cannot believe that they would wish to do so. Therefore, I hope that the Government will be able to accept this modest and uncontentious amendment.
Lord Grenfell: My Lords, before the noble Lord sits down, can he tell us whether he is aware of the fact that the basic voting rule on common foreign and security policy is by unanimity? Where there are disagreements there has been introduced through the treaty the device of constructive abstention. Is the noble Lord aware of that?
Lord Willoughby de Broke: My Lords, I am indeed aware of that. But it does not alter the fact that in the past our position has been very different from that of some of our fellow members of the European Union.
Lord Moynihan: My Lords, I wish to say a few words on this new clause covering the subject of the sovereignty of Parliament and the constitutional principle that one Parliament cannot bind its successor.
As noble Lords are well aware, and as has been made clear during the exchanges we have had so far this afternoon, the notion of sovereignty, both political and legal, is one of the most complex and emotive of constitutional concepts. Given the unusual nature of our constitution, which is uncodified and which has evolved over a thousand years from Magna Carta to the Maastricht Treaty, this is particularly true within the context of our relationship with the European Union.
It is for that reason that I specifically wish to speak to this new clause. I want to clarify the Opposition's assessment of the effect that our membership of the European Union has had on the Diceyan tradition of parliamentary sovereignty, particularly since the legal relationship between the member states and the European Union is not simply one of conventional, international law between sovereign entities but instead it is unique in its supranational quality and its effect on the domestic law of those member states.

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As noble Lords are well aware, it is our tradition that legal sovereignty rests with Parliament and that political sovereignty rests with the electorate. That means that every time we co-operate with Europe and sovereignty is affected, as in the Single European Act, the Maastricht process and now in the Amsterdam Treaty, it is incumbent on the government of the day to ensure that it is fully in the interests of the people of this country to do so. That is the point I wish to focus on because I believe it is particularly important since decisions taken in Europe are different in kind from those we take nationally.
The composition of national parliaments changes; national governments change and with them national policies. But in the European Union such changes do not take place every four to five years, giving the member states a chance to reconsider. Treaty change is permanent. If one member state changes its mind it cannot simply reverse policy; it needs the agreement of all other member states. Therefore, the issue of our sovereignty and decisions to transfer or share it within the European Union is one which rightly pierces to the very heart of the process of legislative scrutiny in which we have been engaged over the past few months. It is an issue which raises fundamental questions about the vision of Europe that the Government have for the future; about where the limits of European integration lie and where they should lie; and about the correct balance of powers between European institutions and nation states.
During the progress of this Bill it has sometimes seemed that in the Government's responses to our questions on this very issue they have managed to obfuscate their vision for the future of Europe rather than to clarify it. The progress of this Bill has demonstrated again that in your Lordships' House, across all political hues, voices can be heard championing their vision of the future of the European Union. This Bill has in particular raised questions concerning our constitutional principle that Parliament cannot bind its successors.
I wish to ask specifically about Article K.7 of the Amsterdam Treaty. That article explicitly involves the European Court of Justice in the home affairs pillar by giving it a degree of jurisdiction therein which has raised concerns about the continued supremacy of this key constitutional principle. At the very least this article encroaches on the intergovernmental structure agreed at Maastricht whereby the question of the jurisdiction of the European Court of Justice was to be left open. At the most it may have implications for the fundamental constitutional principle which the noble Lord, Lord Stoddart, has raised in introducing this new clause.
So can the Minister clarify whether a declaration, annexed to the treaty and giving notice to the other 14 member states of the UK's intention not to incorporate this article into law, was required before signing the treaty? If so, did the Government make such a declaration? Can the Minister confirm that, if such a declaration was not made and the Government adhered to their clearly stated commitment not to incorporate Article K.7 into UK law, that means that in the UK the
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treaty will be ratified in a form which is not the same as that ratified by the other 14 member states, which could render it invalid?
The issue of Article K.7 clearly illustrates that the provisions of the Amsterdam Treaty underlying this Bill have constitutional implications for this country. Any Bill which affects our constitution, the very guardian of our democracy, requires constructive, measured and adequate scrutiny in both Houses of Parliament.
That brings me to my second point. We have repeatedly heard from the Government that this measure is a modest treaty; an unexciting treaty; a treaty that is not radical; a workmanlike, pragmatic treaty; a compromise treaty; or in the favourite phrase of the noble Lord, Lord Whitty, a "consolidating treaty". The implication is clear: such a constitutionally timid treaty does not merit the forensic scrutiny to which it has been subjected. Indeed, the Bill's constitutional implications have been minimised so as to render it almost invisible by the Government. In our efforts to raise the profile of these issues during the Committee stage of the Bill, on occasions we have been accused of paranoia, demonology and fantastic constructions. Yet we have sought to explore the implications of the transfer of powers contained in the treaty. Such scrutiny is not paranoia; it is our essential duty, for every time that we co-operate with Europe and transfer or share sovereignty we must ensure that it is in the best interests of this country.
In this treaty there is an increase in the powers of European institutions at the expense of nation states. We do not say that such an increase is ideologically wrong, but we on these Benches strongly believe that each increase in the power of the European institutions, which necessarily involves a diminution of the powers of the nation state, must be judged against the key litmus test of the benefit that accrues to Britain. To be blunt, does such a transfer bring a quantifiable benefit to this country or represent an ever-finer shaving, chiselling, and gradual erosion of the powers of our national institutions? The Government plainly do not appreciate the point of this litmus test; or why would they seek to limit the scrutiny of this Bill as they did in another place?
It is tempting to take the view that this Bill cannot contain anything of very much import since one of the greatest sins of the Treaty of Amsterdam was its glaring omission of all those European Union problems which the IGC was intended to tackle and which the treaty left unresolved. It turned a blind eye to enlargement, quota-hopping and reform of the European Court of Justice. The sheer scale of its omissions does not justify relegating the treaty to the status of some kind of post-Maastricht MoT, overshadowed by the towering themes of the single market and economic and monetary union which underpinned the two previous European treaties, for this Bill (which incorporates into British law the treaty agreed at Amsterdam) has clear constitutional magnitude. That was why our procedure required it to be debated on the Floor of both another place and this House. One would expect disagreements over its constitutional magnitude and comparisons with the fundamental constitutional implications of the Treaty of

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Maastricht and the Single European Act, but that is not to deny that there are constitutional implications and a transfer of sovereignty contained in this Bill.
The Bill makes important changes to our relationship with the European Union. Those changes cannot easily be undone because the Bill gives effect to a major international treaty which cannot be set aside by a subsequent parliament but which provides for the transfer of substantial powers from the Parliament of the UK to sources of powers and authorities outside this kingdom. It provides for an extension of QMV and therefore the surrender of our veto. It will give more power to the European Parliament. It also includes the social chapter and a new employment chapter which will impose new regulations upon British people. It neuters any substance in the concept of subsidiarity. It also makes new arrangements for border controls and moves us closer to an integrated foreign and security policy. It changes the law on subsidiarity and gives more power to the President of the Commission.
These among others are important measures that need to be considered in the context of this new clause. They go to the very heart of the sovereignty of our institutions. Nor am I compelled by the Government's arguments on institutional change in this context. The changes made to the institutional arrangements of the Union are not merely technical, minor amendments but significant changes in the nature and powers of key European institutions.
I still fail to understand why the Government agreed to give more powers to the President of the Commission, which is a subject to which we shall return in a later amendment. Why should the President have the power to veto Commissioners recommended by member states? Why should all Commissioners now be required to work under the President's political guidance? These and many more points on institutional change demonstrate the constitutional significance of the Bill.
Yet in another place the Government ruthlessly moved to guillotine this Bill after only 12 hours in Committee. The remaining Committee, Report and Third Reading proceedings were crammed into just two days, thereby ensuring that a Bill with constitutional implications and involving potentially momentous decisions on QMV, the co-decision procedure, institutional change, flexibility, the free movement of people, discrimination, proportionality and subsidiarity, proceeded without full and proper debate. Parliament has not been given adequate opportunity to consider in detail the vitally important issue of sovereignty both here and in another place.
It is upon the management of the consideration of this Bill—it has been played down as a minor, amending, technical change to the existing treaties—that I have focused in the few words that I have uttered. That is why the new clause moved by the noble Lord and his colleagues is vitally important and that is why it is right and proper that this House should give it due consideration.
4 p.m.
Baroness Williams of Crosby: My Lords, I owe the noble Lord, Lord Moynihan, an apology. I indicated to him that I probably would not intervene in this debate. I shall do so only briefly, largely in the light of what he said. Perhaps just a couple of sentences should be added to the debate.
First, the Treaty of Amsterdam is a relatively modest treaty and a certain amount of it flows fairly directly from the implications of the Single European Act of long ago. I take one example. Because our citizens will be free to move around to seek work in other countries of the European Union, such matters as racial discrimination will no longer be issues for only one country but for all member states. That is just one obvious example. There are many other similar examples.
When one passes legislation, one must always consider that the consequences may be very far-reaching. It is quite clear that the consequences of the Single European Act—I make no criticism of the previous government for the passing of that Act—have been much greater than perhaps was imagined at the time. Like a stone falling into a pond, the repercussions continue today.
Secondly, so far we have looked almost entirely at just one side of the equation and not the other. Whether we like it or not, we live in a world in which the problems have moved on and have ceased to be contained within the borders of a single nation state. I give one or two examples of the way in which these problems have moved on which have absolutely no bearing on the European Union but a very close bearing on the sovereignty of the British Parliament. One example goes right back to the establishment of NATO in 1949. When in 1963 the then Prime Minister, Mr. Macmillan, accepted the deal under which this country received Polaris on strict conditions about the way in which it was used, we qualified our sovereignty in one essential respect; namely, national defence. From that day to this, at no time has the United Kingdom been free to use nuclear weapons supplied under agreement with the United States entirely according to its own sovereign wishes; for example, we could not have used nuclear weapons in the Falklands without the full agreement of the United States. I think that most of us know that.
A second example arose in the 1980s under the previous administration. That administration accepted the removal of controls over the movement of capital, as did many other advanced industrial countries including the United States. That had a tremendous consequence for our parliamentary sovereignty. It is true that today certain fiscal policies cannot possibly be pursued because the international bond markets respond in ways which make those policies too expensive to continue. That has grossly affected the ability of any British Government to do exactly what they please. The French Government, too, discovered that when, between 1981 and 1983, they attempted to buck the opinion of international markets. I do not say that that is either a good or bad thing; it is simply a very harsh fact of the world in which we live.

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A third and final example is the nature of some of the challenges that confront us today, ranging from organised crime to environmental challenges with regard to the pollution of seas, lakes and rivers. These matters cannot be handled by one nation alone; they require an international response. In some cases, they involve agreements that go beyond individual sovereignty to the pooling of sovereignty. I do not want to detain the House, but one could give very many more examples.
I have a great deal of sympathy with those who say that we should fully examine this Bill. I have no objection whatever to sitting here for many hours while that examination takes place. I respect noble Lords' persistence on the matter. That is what parliaments are for. Having said that, I think we have underplayed seriously the nature of the world into which we are moving.
I give one final example; the impact of information technology. Although we might like to control information on the internet that is virtually impossible—even with regard to information which many of us regard as highly dangerous in terms of encouraging criminal activity. I simply ask that we address that and accept that we will therefore have to move in directions that are new and constitutionally different from the ones in which we have moved in the past.
Within the scope of those challenges, I believe that time and again the Treaty of Amsterdam leans over backwards to accept the rights of member states. We have heard the example from the noble Lord, Lord Grenfell, of the common, foreign and security policy. We will be discussing that matter on a later amendment. If you read the whole of that section very carefully, every possible attempt is made to allow countries which do not wish to participate to stand aside and not to be involved. But it is not unreasonable to say that they should not actively seek to obstruct the action of other countries.
It is of vast importance that we retain democratic accountability. That is a central task for this Parliament and the parliaments of other democracies in Europe. In my view the crucial element of democratic accountability lies in ensuring that there is full parliamentary scrutiny of European legislation. We will come to that later in this debate; but I believe it to be absolutely central and crucial. Attempting to talk about parliamentary sovereignty, which is essentially theoretical, without noticing the problems which must be addressed, is not a helpful way of addressing the dilemmas that confront the Government.
4.15 p.m.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, perhaps I may begin by saying that I have more sympathy with the argument that the noble Baroness, Lady Williams of Crosby, put forward than with the argument that the noble Lord, Lord Moynihan, put forward in relation to the impact of this treaty.
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In the Government's view this is a relatively modest treaty or, as my noble friend Lord Whitty described it—the noble Lord acknowledged this description—it is a "consolidating" treaty. Nonetheless, it is a consolidating treaty which has made some extremely useful progress in some areas, notably on human rights, employment, equality, the social chapter, and parliamentary scrutiny. I accept that not all of the measures that the Government regard as "useful progress" may be regarded as such by others. Nonetheless, I do not think that we are dealing with anything more extraordinary here than a treaty which is essentially one of consolidation.
In your Lordships' House we enjoyed considerable scrutiny of the treaty after Second Reading: five Committee days, two now on Report and no doubt there will be a substantial commitment of time on Third Reading. So I hope that noble Lords will feel that in your Lordships' House we have given this a considerable amount of time and scrutiny.
This amendment, in the Government's view, is both unnecessary and undesirable. It is undesirable because if the new clause proposed in this amendment were to be inserted in the Bill, that would create doubts about other Acts of Parliament and other Bills. Similar clauses would have to be inserted into all Bills, especially those designed to enable the United Kingdom to comply with international treaties. That would clearly be unacceptable.
Nothing in the Amsterdam Treaty or in this Bill alters the right of this Parliament to amend or repeal any existing Act of Parliament. Nothing affects the ultimate ability of the United Kingdom to withdraw from the European Union, hypothetical and undesirable as that would be. But the amendment is also unnecessary because it merely restates the constitutional principle that no parliament can bind its successors.
The general position has already been explained, in Committee on 12th March, but I should like to restate it here. In our constitutional law, Parliament may amend or repeal any existing Act of Parliament. In that respect, this Bill is no different from any other. Of course, if a future parliament were to repeal the European Communities Act, that would put the UK in breach of its Community treaty obligations and the Government would have to negotiate the term of its departure from the European Union—something that this Government have no wish to contemplate.
Naturally, such negotiations would be extremely complicated. The United Kingdom has been a member for 25 years and UK and EU law are intricately interlocked. So although this Parliament ultimately retains the ability to repeal the 1972 Act and withdraw from the European Union, it would be by means of detailed and protracted negotiation. It is not a proposition to which I should like to give any currency in this House or elsewhere.
As regards the sovereignty of Parliament, the position is clear. Successive governments and parliaments have agreed that it is in the UK's best interests to work together with our partners within the Community framework. But should a future parliament decide that that was no longer appropriate and that we should no

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longer remain party to this treaty or to any of the others on which the European Union is based, then, as I have said, it remains open to us to negotiate our way out of them. That was the case before the Treaty of Amsterdam and it is unchanged by anything in that treaty.
Let us not beat about the bush. The amendment goes to the heart of the differences which have been aired in Britain and the European Union during our debates on this Bill. The noble Lord, Lord Pearson of Rannoch, went to the heart of the matter when he said that in his view the real villain of the piece was the 1985 Single European Act. As the noble Lord, Lord Stoddart, and indeed the noble Lord, Lord Pearson, and others have said on various occasions, what they really object to is our very membership of the Union. That is what this amendment is really about.
I respect the sincerity of the views held by those who support this amendment, but I disagree with them most profoundly. Withdrawal is not something which the present Government even begin to contemplate. On the contrary, the Government believe that our membership of the European Union is central to UK interests. This treaty is perhaps, as I have said, not as far reaching as the Single European Act—and certainly not as far reaching as the Maastricht Treaty—but it touches on the real concerns of ordinary people in areas like employment, the environment and the fight against crime. It contains many improvements of the kind that the Government declared they would seek in their pre-election manifesto. It provides the basis for a successful enlargement process. The Government believe that it is a treaty which is good for Britain and good for Europe.
The noble Lord, Lord Moynihan, argued about Article K.7 which he said could affect the sovereignty of this Parliament by giving the European Court of Justice jurisdiction to overrule national legislation. I believe that is wrong. The argument is based on a misunderstanding of Article K.7(6) There is no question that the article could be used to strike down legislation passed by Westminster. The references in Article K.7(6), which are often quoted, to the Court's jurisdiction over "framework decisions" or "decisions" do not refer to the decisions made by this Parliament. They refer back to the instruments which may be adopted by the Council under Article K.(6)(2)(b) and (c) respectively. As noble Lords will know, these are new types of instruments available to the Council under the Amsterdam Treaty specifically for co-operation in the field of police and judicial co-operation in criminal matters.
Article K.7(6) only allows the court jurisdiction over decisions of the Council and only in the field of police and judicial co-operation. That jurisdiction does not extend to measures taken by member states to give effect to their national law or resulting obligations. This article can have no effect on the sovereignty of this Parliament. It does not give the court the ability to override legislation by Westminster. On the specific point which the noble Lord made, Article K.7 will not be incorporated into UK domestic law.
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The noble Lord, Lord Bruce of Donington, spoke eloquently in favour of democracy. It is a sentiment which the Government fully share. But his attitude exactly defines the difficulty which he and those who agree with him have in this respect. One way in which democracy in the EU manifests itself is through the European Parliament. However, I have heard little from the noble Lord in support of extending the powers of the European Parliament so that it can be an effective watchdog on the Commission or even on the Council. Indeed, the European Parliament is in the process of delivering its view on the appointment of Mr. Duisenberg as president of the European Central Bank.
Much of what was said by the noble Lord, Lord Willoughby de Broke, can be regarded only as an attack not on the Treaty of Amsterdam but on the whole framework of this country's membership of the European Union. This is not a framework which the Labour Government invented after 1st May. The basic tenets of our membership of the European Community were drawn up in 1972 by the then Conservative government.
I turn to some of the issues which run through the whole of our discussions on the treaty in relation to parliamentary scrutiny and accountability to Parliament. That represents much of what has worried noble Lords who have addressed this amendment and much of what has worried noble Lords who dealt with amendments in Committee.
The Government are committed to a European Union that is more open and democratic. We want a Union whose activities are transparent and whose decisions are subject to proper public and parliamentary scrutiny, as the noble Lord, Lord Bruce, suggested. We made proposals in the IGC last year and our presidency this year will help to achieve more open decision-making; better public access to documents; closer oversight by the European Parliament of legislative decisions that are subject to majority vote in the Council; and there will be introduced in the treaty a legally-binding minimum period for national parliaments to scrutinise legislative proposals.
The measures involving national parliaments are the most important. We believe national parliaments remain the primary source of democratic legitimacy in the EU. I believe that the noble Lord, Lord Moynihan, agreed with that in Committee. We will therefore take action nationally to reinforce progress at the EU level.
The Government have recently made proposals to strengthen the scrutiny of European business by this Parliament. They will build on the very extensive arrangements already in place. Your Lordships are familiar with the formal parliamentary scrutiny process. Each year about a thousand pieces of draft legislation and other EU business are examined by the committee of the noble Lord, Lord Tordoff, and its counterparts in another place. Their recommendations lead to several dozen debates and many high quality reports. I pay tribute to their work.
The information that we give Parliament, and the scrutiny carried out by Parliament, range even more widely than this. Every six months we publish a White

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Paper on developments in the European Union. This describes progress made and new initiatives launched in all areas of EU business, including economic, budgetary and monetary matters; agriculture, fisheries and food; the single market; common foreign and security policy; and justice and home affairs. It also sets out, for example, major proposals adopted, major treaties and agreements concluded, and key European Court of Justice cases.
In this House and another place there are regular debates on European Union business. Ministers from the Foreign and Commonwealth Office and other departments regularly give evidence on EU matters to Select Committees, including that of the noble Lord, Lord Tordoff.
We make particular efforts to facilitate parliamentary discussion of business before the European Council. Before each meeting, the Foreign Secretary provides a memorandum and gives oral evidence to the Foreign Affairs Committee in another place. That is followed by a debate on the Floor. After the European Council has met an oral report is made to each House. A Foreign and Commonwealth Office Minister gives oral evidence about the meeting to the committee of the noble Lord, Lord Tordoff. We provide other information on a more frequent basis. As the noble Lord, Lord Wallace of Saltaire, pointed out in Committee, each month we announce by Written Answer the agendas for future meetings of the Council of Ministers and a forecast of other main events over the next six months. Every meeting of the Council of Ministers is followed by a written report to Parliament.
These channels of information are supplemented by the regular occasions to question Ministers and raise subjects for debate. Taken together, these represent a considerable commitment to keeping Parliament informed, and facilitating parliamentary scrutiny, of developments in the European Union. By tradition, these arrangements are laid down in convention and standing orders or resolutions. We believe this flexible approach remains more appropriate than primary legislation.
We are, however, committed to building on these arrangements, as part of our efforts to strengthen the scrutiny system and to reinforce the role of national parliaments in the EU. The President of the Council has published a memorandum setting out our proposals. The memorandum takes up several proposals made by the noble Lord's committee and other Select Committees. It has been sent to the Modernisation Committee in another place, as well as other interested Select Committees whose views on its contents we would welcome.
Our proposals include giving Parliament a strengthened, formal role in scrutiny of second and third pillar business. Detailed arrangements must reflect the specific character of the pillars. In the second pillar, for example, the nature of business means that confidentiality is vital and decisions are often needed at short notice. This may require explanatory memoranda to be submitted after adoption of a proposal.
We also propose to extend the scope of the scrutiny reserve to cover documents in the second and third pillars or on which political agreement may be sought
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at European Councils. And we propose to strengthen the arrangements for reporting to Parliament on Council meetings. As I have said, we already report on such meetings orally or in writing. We propose more detailed reports in future, by letters to Select Committee chairmen, to ensure that Parliament is better informed on the outcome of more important issues, particularly those which have been the subject of especial interest or debate in Parliament.
We should remember the strengths as well as the deficiencies in the scrutiny system. The 1996 report by the European Legislation Committee in another place noted that it "compares extremely well with others", and that the vast bulk of scrutiny cases are handled satisfactorily. The proposals I have described will build on and improve the existing system. They will add to the wider arrangements in place to report to Parliament and ensure proper scrutiny of European business.
I hope that the explanation I have given answers the specific points raised on sovereignty in your Lordships' House and has put them into the wider context of the scrutiny which we hope will be available through this treaty to your Lordships and to our colleagues in another place.
Lord Moynihan: My Lords, before the Minister sits down—and I am grateful to her for responding so fully to the points that were raised—perhaps I may clarify an important issue. She stated that the European Communities (Amendment) Bill, which we are considering today, will not incorporate Article K.7 into domestic UK law. Will she therefore clarify the procedure for enabling an individual member state to ratify the treaty in a form different from that which is ratified by the 14 other member states? Can the Minister say, for instance, how the Government intend to ensure that Article K.7(6) is not incorporated into our law? If the UK ratifies a treaty in a form which is not the same as that ratified by the other member states it could be rendered invalid. I should be grateful to the Minister if she could clarify the issue.
4.30 p.m.
Baroness Symons of Vernham Dean: My Lords, I can do so. Article K.7 gives member states the option, by declaration, to accept the ECJ's preliminary rulings jurisdiction in the third pillar. The UK will not make such a declaration. Therefore, we shall not accept that jurisdiction. When I said that Article K.7 will not be incorporated into domestic law, it is because we shall not take up that option. I hope that that clarifies that point.
Lord Pearson of Rannoch: My Lords, with the leave of the House, I wonder whether I could press the Minister on the three points I put to her. While, of course, the increased time for scrutiny is very welcome, and many of the other improvements which she mentioned for democratic accountability are very welcome, nevertheless would she not agree that, were a British House of Parliament not to lift the scrutiny reserve—in other words, that we were not to agree with a proposal from the European Union—and the proposal

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was subject to the qualified majority vote which I mentioned, all the scrutiny in the world would be of no use to us and we could be outvoted on the proposal in question? Furthermore, will she confirm that the acquis communautaire and the whole business of there not being an exit from the Treaty of Rome moves us inexorably in one direction only and not in the direction which some of us would prefer to go?
Baroness Symons of Vernham Dean: My Lords, this treaty provides what the Government said we should be doing in our manifesto; namely, it put us back into a leadership role in Europe. I recognise the point which the noble Lord has made about the possibility of being outvoted. On some issues there is the possibility of being outvoted. We shall deal with particular issues as we reach them in the course of our debate, as we did in Committee.
However, the safeguards which the Government have negotiated in the Amsterdam Treaty and the safeguards which this House and another place have in relation to scrutiny are very much better than they were before the negotiation of this treaty. The noble Lord nods. Therefore, I hope he will agree that this treaty improves the position over Maastricht rather than the reverse, which the noble Lord seemed to imply in his question to me.
Lord Stoddart of Swindon: My Lords, this has been a very interesting debate and longer than I thought it would be. Nevertheless, many important issues have been raised and I am obliged to all noble Lords who have taken part, including the Minister, who dealt extremely fully with the points raised and, indeed, has gone further in some cases.
As my noble friend said, the noble Lord, Lord Pearson, struck at the heart of the matter. Indeed, that follows his very successful operation on 31st January 1997 when he persuaded the House to pass a Bill which would have had the effect of repealing Sections 2 and 3 of the European Communities Act. Had he done that, and had we proceeded with it in both Houses of Parliament, we should not be discussing this matter today. Therefore, my noble friend is absolutely right that the noble Lord, Lord Pearson, got right down to fundamentals.
My noble friend Lord Bruce quite rightly mentioned the question of democracy. Because of the way the European Union works, democracy is undoubtedly a casualty. There can be no doubt about that, in spite of what the Minister said. Democracy is a casualty and ordinary people feel alienated by the whole issue. Indeed, my noble friend is right to warn against the creeping bureaucracy which, through the European Union and, indeed, through our own democracy, is increasingly dominating our lives.
The noble Lord, Lord Willoughby de Broke, referred to phrases in the treaties which refer to irrevocability and irreversibility. That is what worries so many people. If my noble friend would only say that in the last
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analysis they are reversible and not irrevocable, that would be extremely helpful. I am not at all sure that the Minister did that when she wound up.
The noble Lord, Lord Moynihan, made the very important point that we have a constitution which has not been imposed in writing on our nation. It has developed since the Magna Carta. It has developed in relation to the different needs of different ages. That is what is so good about the British constitution. It is a flexible constitution, and unlike many other constitutions, it has served this nation well. I accept that it might not serve other nations, but nevertheless it has served this nation very well indeed.
I am glad that the noble Lord raised also the question of Article K.7. While I was very interested in the Minister's reply, it may well be that we shall have to return to that matter. Indeed, an amendment has been tabled and we can explore the matter further when we reach that point.
Again, the noble Lord was quite right to say that this Bill is not a 3,000-mile service. It has constitutional magnitude. I believe that that was the phrase which he used. I wish that people would not say that this is only a small treaty. It is not. It has some extremely serious constitutional implications. That is what many of us are worried about. It is a pity that the House of Commons did not have a lot more time to debate the matter.
The noble Baroness, Lady Williams, said that the Amsterdam Treaty is modest. I do not agree with her. It extends the competence of the institutions of the European Union. I must disagree with her that it is something like, under NATO, Polaris being provided or sold to the British Government. That did not affect sovereignty at all. I must disagree with the noble Baroness about that. Polaris was a delivery system which was sold to the British Government. We had to buy it. As far as I understand it, there was no treaty. Polaris was sold to us on conditions. Indeed, if we did not comply with those conditions, we could not have used it. But that was not a question of undermining our sovereignty. That was a condition of sale. That is completely and utterly different. We needed the technology and, therefore, we agreed to that particular condition of sale.
The Minister gave a very long winding-up speech and we shall have to study it in Hansard closely because she said some important things. She emphasised the point—and this is important because some people take a contrary view—that Parliament could still repeal the European Communities Act 1972. If that were to happen, the Government would be obliged to denounce the treaties and to negotiate their way out of them. That is an important statement. Because of the words "irreversible" and "irrevocable", many people say that that cannot be done. However, my noble friend is saying that it can be done. That is a vital statement and one which we shall keep the Government to every time we discuss the matter. That being so, I really do not see why the proposed new clause should not be accepted. All my noble friend the Minister is doing is confirming what the proposed new clause actually says. The only difference is that my new clause would put it on the face of the Bill, and that would be entirely satisfactory.

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My noble friend also talked about measures in the treaty and the Government's determination to have better scrutiny. But scrutiny is not really what is important; what is important is accountability. That is what our own Parliament keeps on losing. Ministers can go abroad, meet with Ministers from other countries and, provided that they have the consent of the Commission, the European Parliament, and so on, and a vote by qualified majority—in other words, other countries qualifying our decisions—our Parliament has no accountability. They are not accountable to Parliament for that. It does not matter whether the committee of the noble Lord, Lord Tordoff, considers the matter for 4 weeks, 6 weeks or not at all. Once the decision has been taken in Europe by qualified majority, or any other method, Parliament then has no role. If my noble friend would only tell me that the Government really do want better accountability and that they would be prepared to be mandated by Parliament before they went and made their decisions, that would be something. Indeed, that really would be progress. However, I fear that she is not going to tell us that today.
We have had a good debate. I am much obliged to all those who have spoken, especially my noble friend, who dealt with the matter very seriously and at proper length. I regret that the Government will not accept my amendment. I shall not insist on voting on the amendment today because I and, I believe, other noble Lords will wish to scrutinise what my noble friend and other speakers have said. Nevertheless, I have to give notice that I may wish to return to the matter on Third Reading when we may well have to seek the decision of the House. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.45 p.m.
Lord Mackay of Ardbrecknishmoved Amendment No. 2.
After Clause I, insert the following new clause—
REPORT ON ECONOMIC AND MONETARY UNION
(". A Minister of the Crown shall, on 1st May 2003, lay before both Houses of Parliament a report containing details and an assessment of—

(a) the constitutional impact,

(b) the monetary and financial impact, and

(c) the impact on economic and social progress,

on and in the United Kingdom of any measure adopted or to be adopted, or decision taken or to be taken, by the Union pursuant to the objective set out in Article B of the Treaty on European Union of establishing economic and monetary union ultimately including a single currency.").
The noble Lord said: My Lords, we had an interesting debate on the issue of the euro during the Committee stage of the Bill. I am returning to the debate today as I am a good deal more certain of the importance of the need for a clear report in five years' time than I was even two or three weeks ago. The reason is that we have had the meetings of ECOFIN and the Council of Ministers to start off the euro. If anything, it illustrates the point that we have to be vigilant about what government Ministers say. We also have to ensure that
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all the facts are laid at the disposal of the British people in a proper manner, before this country makes a decision to join the euro.
In Committee, we had just received the excellent report of the Treasury Select Committee of the other place. Indeed, I quoted from it fairly frequently during the course of my speech. Understandably, I did not receive much of a response on these points from the Minister because there is a convention that Ministers do not respond to a report of the Treasury Select Committee until the Government have responded collectively. Indeed, I do not suppose that I shall make any more progress today and drag from the Minister any comments on the Select Committee's report.
However, that does not in any way mean that your Lordships should not consider carefully what the Treasury Select Committee said. Indeed, the theme of my argument this afternoon—its text—is encapsulated in paragraph 40 of that report. I should like to read it to noble Lords, just in case they have not brought their copies with them into the Chamber. Paragraph 40—in fact, so important is this that it is repeated in paragraph (0 of the committee's conclusions—says:
"We agree that if the Government decides to recommend that the UK should join it is imperative that a 'final report' be produced. We recommend that it should also contain a comparative assessment of the consequences of entry and of staying out in the long term. For the reasons we have outlined, it would not be desirable for the final report from the Government before any referendum simply to contain an updated assessment of the five tests"—
that is, the five tests outlined by the Chancellor of the Exchequer—
"However, we conclude that it will not be possible to judge 'clearly and unambiguously' either the 'success' of EMU or the answers to all of the Chancellor's five tests for at least five years. It will remain the case that the UK's decision will have to he made on a political and economic assessment of the balance of national advantage".
I believe that the proposed new clause before the House this afternoon expresses those views in a slightly different way, but, nonetheless, the conclusion is the same: the need for a report in five years' time. I should have thought that that will be so, give or take a year or so. The Treasury Select Committee has come to a conclusion regarding five years and I have come to a conclusion about 1st May 2003. That is about the right time to start contemplating such a report. My proposed new clause says that there "shall" be such a report at that time, while the Treasury Select Committee is a little more vague. Nevertheless, I believe that we have come to the same conclusion.
When we discussed the matter on the last occasion and considered the report of the Treasury Select Committee, we were looking forward to the vital weekend meetings of ECOFIN and the Heads of Government at the beginning of May when decisions would be made about who satisfied the convergence criteria and about the presidency of the European Central Bank. I pointed out then the need for an honest approach to the convergence criteria and referred to assurances from the party opposite that the criteria would be rigorously adhered to.
One has to look backwards before one looks forwards to the year 2003. My worry is even greater than it was before the meeting of ECOFIN. Despite all the pledges

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that we had received, I believe that "fudge" was the order of the day. For example, on 4th June 1997 in the other place, the Prime Minister said:
"I have also made it clear, as we have always said, that the criteria for monetary union should not be fiddled, fudged or botched in any way. If they are, the answer is not to delay—the answer is not to proceed".—[Official Report, Commons, 4/6/97; col. 386.]
Moreover, as recently as 25th March of this year, the Prime Minister said:
"I also agree that it is our duty as president of the European Union to ensure that the criteria are properly obeyed. We shall do so".— [Official Report, Commons, 25/3/98; col. 492.]
I am not entirely sure that the Prime Minister obeyed his own words and that the criteria were not indeed fudged, and fudged again. We have gone over the matter, and I shall not do so again in any detail, but, however one looks at the criteria, they were certainly fudged in a very big way.
The Treasury Select Committee warned us of the fudge. At paragraph 12, the report says:
"Substantial concerns remain with regard to the state of the public finances. Although deficit levels have fallen and it appears that 14 of the 15 potential members had deficits below the 3 per cent reference value, a number of these countries benefited from one-off measures which reduced the deficit for a temporary period only. Progress on reducing debt levels has been far from convincing. The average debt level across the EU area stands at over 70 per cent of GDP and 11 of the 15 potential EMU members currently have debt levels of over 60 per cent. of GDP … In particular the very slow progress on fiscal consolidation made by Belgium and Italy provoked the EMI to comment that 'there is an evident ongoing concern as to whether the ratio of government debt to GDP will be sufficiently diminishing and approaching the reference value at a satisfactory pace and whether sustainability of the fiscal position has been achieved'. The general assessment from both the EMI and Bundesbank reports, which was further expounded by the Governor, was that there is still a very long way to go before fiscal positions are sufficiently robust to ensure that the majority of member states will achieve the aims of the Stability and Growth Pact in the medium term".
Yet, despite that, they all signed up. The criteria were not met. Everyone knows that they were not met. This is simply an arithmetic version of what I believe—if my memory serves me rightly—the queen in Alice in Wonderland said, "Words mean what I say they mean". In this case, the arithmetic means what I say it means.
When we consider the position of the United Kingdom in relation to the euro in the future, we cannot lose sight of the way the heads of government clearly decided that the end justifies the means. We heard that phrase just the other day in connection with another part of the world. But if the end justifies the means, I believe that we have to put some kind of stumbling block, test or whatever it may be, into the legislation on this treaty to make sure that before the United Kingdom makes any decisions a clear, concise report is available on all the various issues which are set out in my amendment. I shall discuss them in detail shortly.
It was not just the arithmetic that was fudged. The other fudge concerned the presidency of the European Central Bank. I think that Wim Duisenberg is a pretty good choice. He has made some robust comments since he was appointed president. I am not entirely sure whether that will endear him to some of the people who agreed to the fudge. It was quite clear that every member
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state bar one had decided that Wim Duisenberg should be president of the new central bank. That one state was, of course, France which dug its heels in. It is amazing that when any country, with the exception of Britain, digs in its heels, no one says, "Oh, they are not being communautaire". Yet the moment we dig our heels in about anything we are accused of being anti-Union, anti-communautaire and all kinds of other things. Yet France dug its heels in pretty effectively. France did not give way—as we used to be told good Europeans should give way—and it forced a compromise which was clearly in breach of the Maastricht Treaty.
The Prime Minister described the situation in his Statement to the House of Commons, which the noble Lord the Lord Privy Seal repeated in this House. The Prime Minister almost denied that there had been a compromise. The noble Lord the Lord Privy Seal repeated the Prime Minister's words in this House, saying,
"Much of the subsequent press reporting has rested on this simple factual inaccuracy: that Mr. Duisenberg intended and wished to serve for a full eight years, as opposed to being nominated for that time, which is the time stipulated under the treaty … Mr. Duisenberg very properly made it clear that he would not want to serve a full eight years … he should at least stay until the euro was launched and all transitional arrangements, particularly the introduction of the notes and coins, were in place. This accorded with Mr. Duisenberg's own wishes that he oversee this process and step down shortly after".—[Official Report, 5/5/98; cols. 508–9.]
The Statement continues at col. 509,
"At my suggestion"—
that is the Prime Minister's—
"he stated his position personally, in his own words, to the Council. He explained that, because he would be 67 in 2002, he did not wish to serve the full term, but that it was his intention to see through the transitional arrangements for the introduction of euro notes and coins, including the withdrawal of national notes and coins".
The amazing thing is that Mr. Duisenberg then went to see the European Parliament and was refreshingly honest with it. According to a report in The Times of last Friday, he dissociated himself with the,
"British brokered compromise at last Saturday's summit which effectively ended his tenure in 2002. He said. 'I have never stated that I will serve only four or five years. What I have done is indicated that I regard it not likely that I will serve the full term of eight years'".
When asked if he might stay for the full term, he drew applause when he replied,
"Given good health, then yes".
That is in fair contrast to what your Lordships and the other place heard last week. All he had promised the summit was that he would stay at least until the deadline for the changeover to euro notes and coins in July 2002. He said,
"I do not know how long beyond that I will serve. I do not intend to stand down at a specific moment in time which I would have in my mind now".
He went on to say,
"There were efforts to convince me that I should announce a day to stand down. That is why it took so long last Saturday. I refused to do so. In that case I would not have accepted the job".
That contrasts quite markedly with what we heard in your Lordships' House last week. I do not wish to embarrass the noble Lord the Lord Privy Seal in his

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absence, but I cannot resist one further quotation. The noble Lord said in replying to questions on the Statement,
"But there is no question about Mr. Duisenberg wishing to serve the eight years, as I understand it".—[Official Report, 5/5/98; col. 516.]
That was not what Mr. Duisenberg understood when he went to see the European Parliament. He said,
"Given good health, then yes".
What is clear about the events of the past two weeks—whether they concern the convergence criteria or the presidency of the European Central Bank—is that we cannot leave the decisions on whether Britain should join, or when we should join, if that is the decision that has to be made, just to the Government and to the heads of state. We need some clear, legal obligation that a proper report will be produced. That is what this amendment calls for. I refer not just to the Chancellor's five tests. I make no apology for repeating my next point. The Chancellor's five tests are the Chancellor's selected five tests. Many more tests could be applied, and perhaps they should be applied. At paragraph 25 of the report from the Select Committee on the Treasury, Christopher Johnson is quoted as having argued that,
"'The Chancellor's tests are so loosely defined that anyone will be able to say that they have been either passed or failed, according to the dictates of political expediency'".
Mr. John Arrowsmith suggested that,
"if no commitment is given as to when a further assessment will be made, 'there will be a lot of guessing going on and a lot of uncertainty generated in financial markets that could actually prove to be destabilising and, if you like, upset the apple care"'.
At the end of that paragraph, the Select Committee concluded,
"We believe that the Treasury response to this Report should set out more precisely the ways in which the tests will be assessed, particularly to avoid uncertainty in the financial markets".
My proposed new clause sets out in some detail the issues which the tests ought to address in order not just to prevent uncertainty in the financial markets, but also—dare I say it?—to prevent uncertainty in the political climate in this country. That is why I ask for a report which would examine a number of specific issues. It would, for example, examine the constitutional aspects not just of "going in" but also of "staying out". We are talking of whether we go in or stay out. That is an option which the British people and the British Parliament will have to decide.
The constitutional position will be important. However, given the public opinion polls in Scotland, one is a little fearful for the constitutional position of the United Kingdom in five years' time. However, that is another issue. As I said, the constitutional position is important. I do not normally share some of the more fevered suggestions—I describe them kindly—of my noble friend Lord Pearson of Rannoch or of some noble Lords opposite as regards the European Union. However, I am in some danger of being smitten by their fears when I read, for example, what Chancellor Kohl said to the Bundesrat just recently. I have taken to reading The European. In The European of 27th April
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my attention was drawn to evidence given to a Bundesrat committee by the German chancellor. The article states:
"He made it clear that monetary union is a process which will make European unification irreversible. He sees EMU as the single most significant step on the road to a federal Europe. He even regretted that the Amsterdam Treaty did not take integration further … Mr. Kohl's vision of a united Europe is based on the German model of a decentralised federal state: `What has been achieved over 40 years in terms of arrangements between the German federation and its constituent Länder—and it was no simple process—can nonetheless happen in the development of the EU.' There will be substantial devolution of power, as there is to the German Länder, but Europe is to have a federal government more powerful than anything admitted to in London".
Those noble Lords who have heard me debate European issues know that I am a supporter of the European Union. But I am not a supporter of the kind of federal Europe that some noble Lords seem to think will be inflicted upon us. When I read Chancellor Kohl's views I become a little worried that someone in such an important position believes in going a good deal further than I, and I think the majority of your Lordships, would be happy to go. Perhaps the Minister can give me a flavour of what the Government feel on the constitutional aspects of moving ahead in the way Chancellor Kohl describes.
The next part on which we would like a report is the monetary and financial impact. By 2003 we shall be in a better position than today to judge how the monetary and financial aspect is working. I need say no more on that; it is self evident. We all hope that the Euro will work. If it does not work, the consequences for all the economies in Europe will be very serious indeed. But we wish to see how the monetary and financial systems are working together before we in this country decide to go in.
The third aspect is the impact on economic and social progress. That is very important indeed. I wish to draw your Lordships' attention to two points of view. They are not the only two, but I give them as examples. One is unemployment. I noted that in the Treasury Select Committee report at paragraph 32 it says:
"The Governor of the Bank of England argued that, 'wide divergences in unemployment rates pose a real question as to the sustainability of that situation in the absence of much more flexibility in labour markets in Europe' … if structural differences persisted, 'you could have difficulty in getting a single monetary policy which is appropriate for the area', giving rise to `high unemployment persisting in some parts of the area with potentially inflationary pressures persisting in others'".
I could continue at some length about the difficulty of one interest rate throughout all the 11 member states; and how for some of those member states that interest rate will be too low, and for others too high. However, we know that for the past five years under the previous government, we successfully pursued labour market monetary policies which enabled our unemployment to come down month by month on whichever count one takes, whereas our friends on the continent saw their unemployment rise month after month. It gives me no pleasure to say that, but that is a simple fact. Therefore employment is an important aspect.
The other aspect that I believe important—I know a little about it from my experiences in the past government—is pensions. By 2003 we shall be in a

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better position to see how the social policy—for example, pensions provision—is panning out in Europe. The impact of the ageing population in all our countries will be considerable. Some of our European friends have huge unfunded pension promises for the future. We are fortunate in that we have considerable funded pension provision in place—although, frankly, not nearly enough, and not covering nearly enough of our population. But at least it is a good deal better than that of our European friends. We shall want to be sure that no effort is being made by 2003 to translate those unfunded obligations from the individual member states to the union.
I believe that the new clause accords with what the Treasury Select Committee asks the Government to do: to produce in five years' time a balance sheet of the economic, social and constitutional advantages and disadvantages of joining up to the single currency. Given the events of two weekends ago, it seems sensible to tie this down in a legislative framework in case after the five years the Government treat the whole issue in the same fudging way as it was treated two weekends ago. I believe that that would be to the detriment of this country.
5 p.m.
Lord Renton: My Lords, before my noble friend concludes, will he bear in mind that the various matters set out in the amendment, with which I fully agree and which he has stressed as being important, will start revealing themselves within 12 months? I should have thought that within three years conclusions could be reached upon each of them. Five years in politics and economics is an eternity. If we wait until 1st May 2003, it means that this Government will be under no obligation to submit a report on these matters until after the next general election. Surely on further reflection my noble friend may at a later stage accept an amendment to make the period three years instead of five.
Lord Mackay of Ardbrecknish: My Lords, I am not often accused of being more generous than I should be. My noble friend makes the point that the date I have chosen would take us beyond the next election. But I am more interested in pinning down whoever will be the government then—I hope that it will be this side and not the other side—to an obligation to produce a report about the position of the euro. I am not sure that I agree with my noble friend that the position will be clear within three years. Much of the business as regards euro coins, notes and so on, will not come fully into play until, I think, 2002. Therefore while I understand my noble friend's point—I should look sympathetically at any further amendment he wished to put to my new clause—2003 seems about the right time. It accords with the Select Committee report. I commend this new clause to the House. More importantly, I commend it to the Government.
Lord Hughes: My Lords, before the noble Lords concludes, perhaps I may ask a question. The noble Lord, Lord Renton, pointed out that there must be a
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general election before the year 2003. If I heard the noble Lord, Lord Mackay, aright, he based his date on a speech made by the Chancellor when he said that it would be at least five years before this issue would have to be decided. "At least five years" does not necessarily imply that the report would be made by 1st May 2003. I do not assume that the noble Lord means that the Chancellor in 2003 will be Gordon Brown. But will whoever is Chancellor in 2003 be obliged to pay attention to this provision? We spent an hour and a half discussing the previous amendment during which debate it was emphasised that no Parliament can commit its successor. Would whoever was Chancellor on 1st May 2003 ignore the provision on the principle that he was not committed by what was done by the previous Parliament?
Lord Mackay of Ardbrecknish: My Lords, if we passed this new clause, and the government in 2003 decided that they did not wish to implement it, they would have to come forward to both Houses of Parliament with fresh legislation to rescind the legislation that we had placed on the statute book. The same argument could be made for every piece of legislation that we pass. I suspect that it would be a pretty brave government who would say, "We are not going to bother with a report". It might be clear by that time that there was no point in our joining the euro and we could not possibly join it, and therefore from that point of view a report was unnecessary. But in those circumstances a government would have to come before the House and bring forward new primary legislation to repeal any legislation passed in this Bill. I hope that answers the noble Lord's question. I shall not be drawn into whether or not the Chancellor will be Gordon Brown. Indeed, if the Labour Party cannot do better than the Scottish Nationalists in Scotland in the polls, shortly, Chancellor Brown may not even be a Member of Parliament for the United Kingdom.
5.15 p.m.
Lord Howell of Guildford: My Lords, I support this amendment tabled by my noble friend, in spirit at least, if not in its detail. I shall shortly explain to your Lordships why I have some reservation on the detail.
It is extremely timely that we should debate this matter again, although we debated it in great detail in Committee. A great deal has happened since then to affect the evolution of the whole gigantic euro project. Therefore it is right to return to the matter again, as we shall have to do many times in the future.
The spectacular part of the weekend meeting which reached certain decisions on the launching of the euro and the participation of member states was the argument referred to by my noble friend as to who should he chairman of the ECB and for how long. Whether that means that there will be a soft or a hard euro is not very significant. Both the candidates, Mr. Duisenberg and Jean-Claude Trichet, are extremely hard-line, tough, experienced, sound money-men. Whoever is actually at the helm of the ECB, it means that the euro will be administered and underpinned by a very strong

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monetary policy, whether the French Government or other governments like it or not. So, from the point of view of the euro itself, the issue does not really matter.
The more worrying aspect is the way in which the matter reflects a much deeper flaw and fault-line in the entire system. What it indicates should chill us all. It has been very well and successfully hidden for many years. I refer to the continuing underlying irritation, if not worse, between the French outlook upon European development and integration and the German outlook. That is a matter that we should all pause to consider. In the past, that irritation has grown to more than irritation and turned into some of the most ghastly consequences of the 20th century. That the French and the Germans should not irritate each other, and that they should work together, is a fundamental requirement for making the euro a successful currency in due course. If there is indeed a flaw in the system and that irritation is allowed to grow into a real division, then the euro is in trouble and the whole of Europe is in trouble. This country will be in trouble too. So the real worry is that it reflects a deeper difference of perspective as to what the whole euro project is about.
Is it about the French gaining control of their monetary destiny, as they always say in Paris, or is it about Germany finally submerging itself in a greater Europe and cutting itself off, or purging itself, of its past historical guilt, as is the basic story put forward by Chancellor Kohl—and very understandably? He wants never again the experiences of his youth. We do not know the answer to that question. It is not resolved. The events of the weekend before last proved that the matter is certainly not resolved but will continue, and will return to haunt the euro system in the future.
The second development since then—although it has in fact been going on all the time—is one that leads to my having doubts as to the precise wording of my noble friend's excellent amendment. I rather agreed with the intervention of my noble friend Lord Renton. Not only is 2003 a very long way away, but I would go further than my noble friend: it seems that the whole issue is knocking at our door, and coming in through the back-door of the British economy at a rate which many people did not foresee. It is already becoming daily more visible.
The truth is that already more and more countries are moving over to managing their entire debt in euro-denominated bond issues. The old currency-denominated issues of Europe will probably have disappeared altogether by this time next year, and the entire business will be conducted in euro-denominated issues. I am not talking about euro bonds; I am talking about euro-denominated bond issues, which are quite different. Luckily, the City of London appears to have the major role in managing those issues. I declare an interest: I work for an organisation involved in these matters. That is coming at a pace—it means that a great deal of the debt market will be denominated in euros, not in five years' or three years' time, and not when the currency finally appears and the individual denominations disappear, but long before then, almost before the official fixed date for the currencies of 1st January next year.
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Secondly, it can only be a matter of time before our financial system and our bank statements all come, as they already do in France, in euros as well as in the local currency. Thirdly, a great many corporations will move over to parallel accounting in the local currency, the pound, and the euro currency. Fourthly, let us wait for the first take-over bid by a big European euroland corporation of a corporation or company on UK soil outside the euro zone. That will almost certainly be couched and put forward in terms of euros. There is no way in which we can pass a law saying, "No, that's a terrible thing. We can't have a take-over bid made in euros for a corporation in the sterling zone". We cannot stop that. It will happen; and the entire debate and bid process will have to be conducted in euros. Therefore I suspect, far from having to wait five years, we shall find, probably by this time next year, May 1999, that the pound has already become a parallel currency, and will continue to circulate but that the euro will circulate as well—albeit not as legal tender or underpinned by any law of this House or another place; nevertheless it will be there. The euro will have come in by the back-door.
That does not mean to say that there are not tremendous difficulties ahead for the euro system. I for one have grave doubts about what we—that is, we, the Europeans—have committed ourselves to in moving at this political speed into the euro project. But that is quite different from the point I am making; namely, that the euro has arrived, and has already arrived in the UK, and it will therefore be necessary for the two Houses of Parliament to have very detailed reports before them as from possibly this time next year about the impact on our own affairs, which will be very considerable indeed, and very massive, and will lead to all sorts of consequences for our own monetary system and our own economic and social progress, to use the words of the amendment.
Nobody, of course, knows how all this is going to work out. I said a moment ago that Mr. Duisenberg and Mr. Jean-Claude Trichet between them, if Mr. Duisenberg does move aside—which he does not look like doing before eight years—will run a very tight ship and a very hard currency. But other political and market forces may undermine their ranks. However much the ECB continues to raise interest rates, this is a system, an animal, as it were, the like of which has never walked the earth before. It is a single currency which cannot be compared to the Maria Theresa dollar or the gold standard; it has a single monetary authority but 11 budgetary authorities—allegedly bound together, as it were, bound round their legs by the stability pact, but no one knows exactly how that will work. Never before in history has such a system been attempted. It is a colossal experiment and, ironically, at just about the time when the present Government may be talking about Britain wanting to join, there could possibly be the most colossal crisis. My guess is that everything will happen very much faster than anyone realises, and long before we reach the next general election, the end of this Parliament or other matters, we shall find the maintenance of this position, of hoping one

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day that synchronisation will somehow come—frankly, I have never understood how, if we are "out of sync" now, we shall magically get "into sync" later. The whole of that position will be swept away by events of which neither this Government nor the governments of the other European countries are fully in control.
My regret is not only that it is a huge and dangerous experiment—and one that we could have managed without; although there are those who have said that the European Union could not go forward without a single currency, which I have never fully understood. My greater regret is that it has taken energies away from the real project of Europe. That project is the one for which our forebears and many in this House fought in a world war. It was to unite the whole of Europe in free republics and monarchies from Lisbon to the River Bug and from Calabria to the Orkneys. That was the dream of the united Europe. It was all destroyed after 1945 by the Soviet occupation. We had to wait 45 years, then the Berlin Wall came down and everyone thought, "That's fine, now we'll get on with the real project of Europe, embracing the new democracies of east and central Europe". But we did not. Seven years have gone by and we are still waiting.
Desultory negotiations have begun. We shall come to that at a later point in the debate, I know. It will probably be 15 years before any of those countries joins the Community. That was the main purpose; that was the dream. Instead, all energies have gone into the alternative project of EMU. It is interesting. No doubt many people will get rich and many new and fascinating economic developments will occur, but to my mind it is not in the main stream of what being a true European is about. It is, of course, irrevocable and irreversible, as noble Lords have pointed out. It is underpinned by a law which is superior to British law, so that we cannot go back.
I have enormous respect for the noble Baroness, Lady Williams, but she said something with which I am afraid on this occasion I disagreed most profoundly. She said that EMU was not very different from NATO or global capitalism. In other words, interdependence and trans-governmentalism are not different from the supra-governmental nature of the whole undertaking. It has a system of superior laws; superior to the laws of this House and the House of Commons and superior even to the judgments of the British courts which can be overturned.
With great respect to the noble Baroness, Lady Williams, it is not intergovernmentalism; it is not interdependence; it is a supra-national project. It is irrevocable and irreversible—or so the great leaders of the European Union say. Of course, when the irrevocable and the irreversible meet the contrary irresistible forces of market intentions—as will happen one day—we shall be in for the most almighty bust up. That is why we shall be swept in early; but later, perhaps by 2003, we shall just about be in the middle of the first tremendous crisis.
Lord Beloff: My Lords, unlike most contributors to the debates on the Treaty of Amsterdam, I am free of
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the necessity to say that I am, of course, in favour of the European Union. I am not. I believe that it was a mistake for Britain to sign the Treaty of Rome and I think we are now seeing many of the consequences which were bound to follow, although I admit that I did not see them at the time.
The speech which has just been made by the noble Lord, Lord Howell, who has great knowledge of these matters, is one with which I could not possibly bring myself to disagree—that is, in the sense that he is probably right that the tempo is being accelerated. But there are other things happening to which I called your Lordships' attention at an earlier stage of the Bill which one must look at again. They are political developments on the continent of Europe.
When the treaty was first signed, it appeared almost unthinkable that Chancellor Kohl would not be in power when the provisions about a single currency came into effect. It now looks not only likely, but very probable, that Chancellor Kohl is on his way out and that the kind of statement which he made about Europe becoming a single government, not merely having a single currency, will begin to look very dated. If Chancellor Kohl does not succeed in winning the next election, the well known German antipathy to the sacrifice of the mark will begin to make itself felt, even with the clumsy German political system. Therefore, we are not in a position to know, even within the next 12 months, who our interlocutors will be in Europe.
There is also the important point that, after all, when we come to discuss the important questions of the impact on employment, we have had one experience within the past decade of monetary union—the monetary union between western and eastern Germany. What has been the result of that monetary union? The relative economic positions of the two parts of Germany have not converged but have gone farther apart. As I pointed out to your Lordships a week or two ago, the result is the recrudescence of extremist right-wing and left-wing political parties in what was the German Democratic Republic. The idea that somehow or other those political and constitutional issues are secondary to the insights of multinational firms—often blinkered as to their own real interests—is something which this House should deplore.
Therefore, we come to what I think is the central point of the new clause proposed by my noble friend and with which, despite those reservations, I have no quarrel. The central point is the constitutional one. We have constantly been given to understand by the Chancellor of the Exchequer and by the noble Baroness, Lady Williams, that this is not a constitutional issue of central importance; namely, the final transfer of power from the British electorate to put in power or to chase out of power a government with which it is not in accord. That is, after all, ultimately what the constitution is about. To suggest that a government would be worth electing which would have no power over currency, which was a symbol of government not merely for decades but for centuries—or, as archaeology tells us, for millennia—is to embark on an enterprise which can surely only end in disillusion and disaster.

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It is therefore absolutely essential that constant pressure is brought to bear on the Government to make clear whether there is anything in the idea that some kind of political influence could still have an impact on those splendid hard money characters whom everyone unites to praise. Hard money may be a good thing in some circumstances. It may be counter-productive in others. The assessment must be the assessment of the prosperity of the peoples involved.
Whatever one may think about French negotiating tactics, President Chirac has a point. The French people will not accept indefinitely having their economic fortunes dictated by the will of a country, their neighbour, twice their size and much more powerful industrially. There are bound to be frictions. They may have as many pâté de foie gras dinners in Avignon as they like, but in the end the French economy and the German economy are different. If one brings in the economies of southern Europe, the differences are even more marked. I find it difficult to understand how anyone can even flirt with the idea of Britain being part of that kind of enterprise, doomed, as it is, I fear, to failure.
5.30 p.m.
Lord Stoddart of Swindon: My Lords, I listened with great interest to the noble Lord, Lord Mackay of Ardbrecknish. Over the years he and I have been somewhat opposed over the issues of the Central Bank and our membership of the European Union. I understand his position and I am sure that he understands mine. I found his quotation from The European of 27th April to 3rd May interesting. It was a reference by Herr Kohl to EMU and the relationship of Germany to Europe through EMU.
For a long time many of us have been quoting Herr Kohl and others as saying that it is German policy to have a united federal Europe under the suzerainty of Germany. I have been criticised for saying that. I have been called a xenophobe and told that I am anti-German simply for quoting what Herr Kohl says. It seems to me that what I and others have been saying has now been made respectable by the noble Lord, Lord Mackay of Ardbrecknish. He too realises what the German agenda is and he is no more anti-German or xenophobic than I am. However, we need to understand the reality of the position and, in understanding it, be careful of what we do.
The noble Lord, Lord Howell, quite rightly cautioned against being pushed into this venture without knowing where we were going and what the results would be. He is quite right. It is absurd for this Gadarene gallop into the unknown to be taking place at this point in time, or for that matter at any point in time. We must recognise that going in will involve major risks. It has never before in history been tried. That does not appear to be borne in mind by all those who are enthusiastic about it. It is like saying, "It will be all right on the night". But, as the Conservatives found at the last general election, it was not all right on the night. We cannot exist simply on hope; we must grapple with reality. The reality is
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that there is no precedent to which we can refer and therefore it is dangerous to gallop in before we know what is involved.
Again, I do not believe that there has ever before in history been a single currency without first there being in place the political structures to manage it. Yet we are going into the single currency without the political structures which will make it viable. That is a recipe for disaster, and everybody knows that. We must understand what those political structures are. That is why we need a proper report. It will be no use the Government replying to the House of Commons' excellent report in the way that they so often reply to those of us who ask for a cost-benefit analysis of our membership of the European Union. From their reply, the benefits would appear to be self-evident. But they are not; and they are certainly not self-evident when we look to future economic and monetary union together with a single currency. We must be careful therefore what we do.
We must remember ERM. Can anybody forget it? I cannot, but some people can. What was the reason for the ERM disaster? It was because we rushed into it without knowing or contemplating the consequences. We were bounced into it at much too high a rate. We were probably bounced into it by the other countries of the European Union. I hope that I shall not be accused of being a xenophobe for saying that. It was in their interests that we should go in at too high a rate. It was a disaster, and we should remember that.
We should also bear in mind that if we go in, we shall lose control of our monetary policy and to a degree our fiscal policy also. How then will we deal with a possible slump? Bankruptcies and ruin will be inflicted on many industries, as happened when we came out of the ERM. Unemployment will rise to 3 million or 4 million. How will we deal with it if we are irrevocably linked into the European system and a single currency?
We discuss issues in this Chamber, but others discuss them as well. I was struck, on reading the Daily Telegraph of Monday 11th May, to see a letter from Mr. Rodney Leach. He is not a politician; he is not a Member of the House of Lords; he has never been a Member of the House of Commons, but he is a sensible and extremely experienced man. He is second-in-command at Jardine Matheson and a director of many other companies. He wrote an excellent letter under the heading,
"The euro is a leap in the dark".
I cannot quote the whole letter, but if noble Lords will bear with me I should like to read the final two paragraphs. He said:
"The greatest problem of the euro is the democratic deficit. Whether it is to be the exclusive property of central bankers or part of the struggle for European political supremacy matters less than the fact that Britain's interests, if we were to sign up, would count for little. When unemployment again approaches three million here, as some day sadly it will, there would no longer be the democratic option of changing the team in charge of economic policy. Popular diction might then find its outlet in extremist reactions, as we have seen recently in Saxony-Anhalt and in France, where neo-fascist or neo-communist parties are now strong enough to qualify as coalition partners.

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There is a quiet campaign—unique to this country—to make an orthodoxy of the Clarke/Brown line that the single currency raises no significant constitutional issues, with the implication that to believe otherwise is the mark of an ideologue. When this is eventually put to the test of hard times, it will prove to be a dangerous fallacy".
I sit down and let Rodney Leach's letter speak for me.
Baroness Williams of Crosby: My Lords, I am sure that the House is indebted particularly to the remarks of the noble Lords, Lord Renton and Lord Howell of Guildford—I shall come back to that in a moment. In the remarks of the noble Lord, Lord Renton, taken together with the noble Lord, Lord Howell, we see the difficulty of trying to put a date into an amendment of this kind.
The noble Lord, Lord Howell, pointed out that matters were moving much faster than may be implied by a date of this sort, and the noble Lord, Lord Renton, said that we had no way of knowing exactly when the next election will be; we can make an assumption about it but we may get it wrong. Clearly the Government are committed to a referendum in any event and in my view therefore the amendment is probably otiose.
In fighting a referendum, whatever view the Government take at that time, they will have to set out their case to the British people in great detail, as will those who take differing views on the matter. The crucial issue is to ensure that the British people are as fully informed as possible.
In that context one matter that I profoundly regret is that the previous government did not make available information about the European Monetary Union, which I believe they should have done, because we now have to look at a country which is less well informed than most of its neighbours in respect of the implications, or possible implications, of European Monetary Union.
The noble Lord, Lord Howell, pointed out that euro-denominated bonds are growing very fast, and perhaps I might add to that a more pedestrian thought. Last weekend I took part in a business forum in Ipswich for East Anglian business people in the presence of both a German businessman of some standing, whose company has a number of subsidiaries in this country, and a Dutch financial expert. Both of them pointed out that in their view the companies in East Anglia should move as quickly as possible to denominating prices in euros, and this is years before there is any possibility of this country joining the euro system. They felt that British companies would lose out very badly in their export markets unless they began to move very quickly in that direction.
The noble Lord, Lord Howell, did not express a particular view about when there should be a decision with regard to the European Central Bank and the single currency, but what he did do, and was absolutely right to do, was warn the House, and he gave us a very strong sense of the urgency of this issue, whether or not Britain becomes a full member. I ask that we meet at some time to discuss the point that he raised with regard to what I had to say, but in the meantime perhaps I may say this. Of course, he is absolutely correct on the legal and
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constitutional aspect, but I was not making that point; I was making a point about the de facto issue of sovereignty. The noble Lord will understand that I was a member of a government which had to accept quite specific intervention by an international monetary fund in existing government policies as a condition of receiving a loan to enable them to sustain sterling through a difficult period. Therefore, I am much scarred by an awareness that all the sovereignty that may exist in constitutional terms can be very much qualified by the harsh facts of economic and financial life.
I now turn very briefly to the clause moved by the noble Lord, Lord Mackay of Ardbrecknish.
Lord Beloff: My Lords, I am sorry to intervene, but the noble Baroness is again making a fundamental error of definition. Nobody would deny, for instance, that in 1939 the country—I will say Estonia in the presence of the noble Earl, Lord Carlisle—was a sovereign independent state. That status did not help that country when the Soviet armies approached. There is interdependence, and there are different degrees of dependence: political, military, economic. However, these are totally distinct from constitutional sovereignty, which is the right of people, unless they are impacted upon from outside, to settle their own fortunes.
So long as the noble Baroness persists in confusing interdependence—a characteristic of all forms of society—with legal constitutional independence, her argument can make no impact.
Baroness Williams of Crosby: My Lords, I appreciate the remark made by the noble Lord. I thought that it was almost exactly the point that I had made a moment or two before. I was indeed indicating that there is constitutional sovereignty. I was accepting the argument of the noble Lord, Lord Howell, on that issue and I was pointing out that in the hard world of power constitutional sovereignty does not necessarily mean that one is able to pursue the policies one believes to be right for one's own country.
I return for a moment to the argument I was making about the moving of the new clause by the noble Lord, Lord Mackay of Ardbrecknish. I did feel that he was, to say the least of it, rather ungenerous in his estimate of what has actually happened over the past two years. The truth of the matter is that if one looks back at the remarks that were made in this House, in another place, in the Financial Times and in other serious newspapers in this country, almost nobody expected the European monetary process to start on time; almost nobody expected 11 countries to be members of it and almost nobody expected the date of the European Central Bank's launching to be on exactly the date that was first opined as the earliest possible date. We did what so often in this country we have done. We underestimated the other countries of the European Union in their capacity to meet the timetable that they had set themselves. We have done that ever since the Messina Conference of 1950; we did it over the Treaty of Rome; we did it over the European defence community, and we have done it time and time again.

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I would plead with Members of this House and, indeed, with our own Government to recognise that we have to look at the actual timetable of events and not at what we might wish to be the timetable of events. That means that, inevitably, we have to deal with the reality and not with what we might wish to be so.
5.45 p.m.
Lord Stoddart of Swindon: My Lords, will the noble Baroness give way?
Baroness Williams of Crosby: My Lords, I will not give way for a moment. Allow me to complete my argument and then I will give way. The reality is that 11 countries have made an immense effort in terms of approaching and in most cases meeting the convergence criteria. That is something nobody imagined that they would do. The crucial outcome of that great effort is that they have now accepted a philosophy of stable pricing and there is acceptance of a resistance to inflation, which is something totally new, especially for some of the countries of southern Europe. I feel that it would be less than gracious of us in this House not to recognise the scale of that achievement. We may indeed wish to criticise certain elements of it. We may wish to make the point that Belgium or Italy, for example, have not wholly met the debt criteria, but we should at least recognise, whether or not we decide at the end of the day to join the European Central Bank and to accept the single currency, that this has been an astonishing and major achievement, and one about which there are almost no predictions in this House or in another place that would suggest we might actually meet it. I give way to the noble Lord.
Lord Stoddart of Swindon: My Lords, to some degree the noble Baroness has answered the point that I wish to make to her. She said that this country underestimated the commitment of other countries. I do not believe that is so at all. What we overestimated was their ability to hold to agreements that they had made through treaties, such as the Maastricht Treaty. It has actually been crucial, or it was crucial, we thought, that all countries should meet the Maastricht criteria in every sense. They have not met the Maastricht criteria in every sense—and some of them have missed it by a very long way and by creative accounting—so perhaps the British people or the British Government were a little too trusting of the other countries, rather than underestimating their commitment.
Baroness Williams of Crosby: My Lords, I merely say that creative accounting is not unknown in this country, too.
In conclusion, I turn to the situation as regards enlargement that was raised by the noble Lord, Lord Howell of Guildford. I believe him to be absolutely tight. The crucial historical goal for this century and the beginning of the next century is the enlargement of Europe. I agree fully with the concern of the noble Lord. Lord Howell, as regards the possible divergence of energy. However, I must say, and say clearly, that if the United Kingdom had consistently given the lead it
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should have given in Europe and had consistently attempted to shape European goals and European policies, enlargement would, in my view, have been able to be that central priority.
I conclude with a quotation from one of the closest friends of the United Kingdom—Holland—and in particular the chairman of the Netherlands International Institute of Relations, which is the equivalent of Chatham House. It is a very recent quotation made at a special session that was held to recognise the launching of the UK presidency of the European Union. This is what Mr. Alfred Pijpers, who is not a politician, but a very distinguished expert on international affairs, said:
"It was widely felt in the Netherlands and the rest of continental Europe that during the long period of Conservative government, Britain developed an increasingly sceptical and even negative attitude towards the European Union".
That is not a position from which it is easy to commend the central importance of enlargement. I believe it is important to say that we could have gone much closer to achieving that goal much more quickly had the United Kingdom recognised the speed at which the rest of the European Union was actually moving.
Baroness Knight of Collingtree: My Lords, I rise briefly to give warm support to the amendment because I feel that we do not know anything like enough about a matter which will not only affect this country for many years to come but change our country totally and completely. I must say to the noble Baroness, Lady Williams, with whom I sat for many years in another place, that it is not something to marvel at that a group of countries gets to the starting post; what is to marvel at is if they succeed in the race that is to follow.
I have heard little about the concerns expressed by economists. What about the letter which went out from 153 leading economists in Germany some three months ago saying that they were very worried indeed about how economic and monetary union would be brought about? Economists in other countries have expressed their concern. They have said that it is rather as if the leaders of great countries are saying that such and such a thing must happen, without recognising that there are enormous problems in making it happen.
We have to recognise that there are many problems on the monetary front. Our unemployment figures and cost of living figures are totally different from those of other EU countries. Furthermore, we are the only country in the whole of Europe that is a net exporter of gas and oil. Therefore, changes in the prices of petrol, gas and oil will affect us in a completely different way. It is all very well to say that we will join when economies converge, but how do we know that they will lock? I cannot see that they will.
It is important to know about the constitutional impact of what is proposed, but I am also worried about what the effect will be on our foreign policy. I think back to a recent occasion when we supported America over the difficulties with Saddam Hussein. We were the ones who did. France was very much against us. What rows there would be if we joined in a European currency.

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I cannot see that happening unless we have a federated United States of Europe and I am quite certain that most people in this country do not want that.
Finally, I am certain that all of us and many thousands outside the House will want to know a great deal more about how it is proposed to bring economic and monetary union about.
Lord Bruce of Donington: My Lords, in the few remarks I was able to make some half an hour or so ago I mentioned the importance given in the Treaty of Amsterdam to democracy and the rule of law. I wish to concentrate on the rule of law in addressing myself to the subject matter of this amendment.
Your Lordships will recall that a Statement was made in the House on 5th May concerning the deliberations of the Council of Ministers, the heads of state, the European Council, or whatever it may be, on 2nd May. Your Lordships will recall that at the conclusion of the exchanges on the Statement I mentioned the fact that the appointment of Herr Duisenberg was, strictly speaking, unlawful because the provisions of the treaty, in particular those of Protocol 18 to the Maastricht Treaty and of Chapter III, Article 11, were not adhered to.
I do not think that we can be picky and choosy about this. If we believe in the rule of law—we apparently believe in the rule of law when it suits us—what was decided on 2nd May does not seem to have been an admirable way in which to approach the treaty. Your Lordships will recall that I drew the attention of my noble friend the Lord Privy Seal to this matter. He ventured to suggest that my interpretation of the article concerned was wrong. He said:
"I shall consider Chapter III, Article 11.2 of Protocol 18 of the Maastricht Treaty. I do not know what opinion I shall arrive at, but I suspect that my opinion will probably be on the side of the Council".—[Official Report, 5/5/98; col. 521.]
I do not see how that can be because the terms of the protocol and, indeed, of Article 112 of the amended treaty are quite specific. They do not mention, as Herr Duisenberg himself pointed out, any designation of a person by nationality as probably going to be the next holder of the post. Nothing in the protocol or the treaty refers to the nationality of the person to be appointed or the person next to be appointed. The text is quite clear:
"Their term of office shall be eight years and shall not be renewable".
Either the text of the treaty is right or it is wrong. There is no question of fudging this in the same way as various other issues were fudged.
The noble Baroness, Lady Williams, mentioned some points which she thought to be of general interest in determining our attitude towards monetary union. I would have expected her above all people to have been mindful of the law, particularly in the light of the matters that I ventured to raise and which are incorporated in the treaty. But she did not. She confined herself to, if I may say so with respect, the usual generalities, with which we are familiar, about the broad arguments for monetary union. She did not mention that there are 20 million unemployed people in Europe at the present time and she did not mention, when assessing
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her own country's contributions to the Community, that we subscribe £2.5 billion annually out of taxpayers' funds. That did not seem to attract her attention in the slightest.
I hope that we are able finally to lay to rest the question of the legality of the appointment of Herr Duisenberg. Quite clearly, I am right and the treaty is right. It would at least ease the position if we could have a complete admission of that, bearing in mind, as I ventured to mention at the time, that the Government have had the opportunity to amend the clauses at a number of stages ever since Maastricht and right up to the intergovernmental conferences which led to the new Amsterdam treaty, but they did not. Protocol 18 remains and Article 11.2 remains. I invite the Government to confirm that in presenting those facts to the House I was absolutely correct.
The Earl of Clanwilliam: My Lords, so 11 nations have signed a piece of paper and the booming baby euro has suddenly been born and is expanding at a vast rate. However, many dissensions belie the sense of unity. Much has been said already on this issue, so I shall proceed straight away to the point that we should remember, which is that the bank has no political input or agreed basis of operation except the authority of its own expertise. There is no effective parliament to which the central bank has to report. Therein lies the heart of the democratic deficit that is bugging the whole prospect.
One is tempted to fantasise on the contents of the reports that are called for by this amendment. Certainly, they will not contain any information from the European Central Bank because Mr. Duisenberg has said that it will not publish any reports for probably 16 years. We do not want to have any part of such a bank.
A country that has a new interest rate imposed on it without any definition as to why it is being done may become out of line with the bank's requirements. The Commission will then impose the rigours of the stability pact, which will further weaken the ability of the country in its efforts to repair its economy. In the meantime, unemployment and rising inflation will cause unrest, as has already been mentioned, and the government will probably fall—not the euro—followed by an administration cobbled together by a group of warring politicians. We will have Italy all over again. What a happy scenario!
There will be no effective mobility of labour through lack of a common language, and the prospect of the transfer of manufacturing facilities, prompted by cheap labour in the failing country, is a delusion, as firms will not transfer their plants to unstable economies. At the same time the minimum wage will be a further disincentive to the transfer of manufacturing facilities.
We should instead enlarge the single market, as has been said, and create a stable industrial base in line with the World Trade Organisation agreements by reorganising the common agricultural policy and the common fisheries policy. We should allow the single currency to develop alongside national currencies. We could all use the euro. It could be a universal currency

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that we can put in our pockets. Any firm could have it and put it in the bank against its use in trading facilities with Europe. We should allow the currency to develop alongside our own national currency in the manner of the hard ecu which was originally suggested by Mr. John Major. We would then be in a position where everyone could use the ecu without any problems.
6 p.m.
Lord Grenfell: My Lords, I shall be brief because I know that the debate on this amendment has gone on for a long time. I wish to make a few points directed to one or two statements that have been made.
The first relates to what the noble Lord, Lord Beloff, said. He said that the French people will not long tolerate having a powerful neighbour dictating economic policy to them. Precisely—but that is exactly what EMU will remove. The noble Lord smiles, but that is the case. Economic and monetary union will remove the kinds of influences that he was so concerned about, such as Germany having power over economic decision-making in France.
Lord Beloff: My Lords, I am grateful to the noble Lord for giving way. I believe that he misunderstood me. My view is that it is not so much that the bank will he an instrument of German control over France, but that unelected bankers, with the kind of philosophy which Mr. Duisenberg has already revealed of keeping everything to himself, will create the kind of social discontent in France which is evident daily for anyone to see who goes to that country. There are strikes, demonstrations and other movements. I sometimes wonder whether noble Lords ever read the newspapers.
Lord Grenfell: My Lords, noble Lords do read newspapers, but not necessarily the same ones as those read by the noble Lord. That may be the difference. I come back to the point. The noble Lord said that Mr. Duisenberg and the bank would be keeping everything to themselves. I am not clear what he means by that. The people running the European Central Bank may not be elected officials, but they have been chosen because they are very good central bankers.
I believe that the result achieved in Brussels—although it was an extremely messy process, which I deplore—is a good one. The noble Lord, Lord Howell, pointed out that now we have the prospect of maybe 12, if not 16, years in which the European Central Bank will be run by two men who are both hard money-men. That is absolutely correct. So although I deplore the manner in which it was achieved, I am quite comforted by the result. If anything, France shot herself in the foot. One thing is certain in that as a result of the events in Brussels, the European Central Bank is going to be even more cautious about political interference than it was before. That is quite right because we need an independent central bank.
As regards Mr. Duisenberg, the 16 years referred to by the noble Earl, Lord Clanwilliam, and the fact that there will be no reports for 16 years, perhaps I may point out to him that that is simply not the case. Mr. Duisenberg said that he did not believe it was a
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good idea to publish reports which tracked the course of discussions and named the names of the people who were parties to them. I believe that he is absolutely right. Serious consequences can flow from a report of that kind being made immediately, or even a short time after, the governing body, which is the board, has met.
The Earl of Clanwilliam: My Lords, will the noble Lord reflect on the arrangements made by his party for the management of the Bank of England? It reports immediately each month.
Lord Grenfell: My Lords, I know that it does, but I am talking about the European Central Bank. There are different considerations here. Let us suppose that there is a recession in France. The vice-president of the European Central Bank, who is a French national, will not find it easy if the course of the arguments that he follows in that body are immediately published. If he makes one recommendation he will be accused of favouring his own country, but if he makes another he will be accused of the opposite. There does not seem to be very much point—and Dr. Tietmeyer agreed—about publishing in detail.
The point I am making is that it is wrong to say that no reports will be coming from the European Central Bank for 16 years. Of course there will be reports. The bank is going to explain why it has arrived at certain decisions without laying out at the time all the arguments in great detail as though it were the transcript of a meeting. Every quarter the president of the European Central Bank will be going before the European Parliament to explain what the bank has been doing and why it has done it. That is the kind of accountability and transparency that we are looking for. It is a great mistake to pretend that if the reports made are not in extensor they are not proper reports. That is wrong.
I come briefly to the question raised by my noble friend Lord Bruce. He mentioned the 20 million unemployed, as though the introduction of a single currency were bound to have a negative effect on that. If one cares to read what Dr. Otmar Issing, currently of the Bundesbank and now of the executive board—and most probably the chief economist of the European Central Bank—has said, he has encapsulated the situation very well in the following words. In Brussels he referred to the fact that price stability was the primary objective of the Central Bank, while taking into account what it was that the member governments saw as being the essential economic policies that they wanted pursued in Europe. He said:
"Price stability, and the resulting low interest rates, will he instrumental in securing higher levels of investment, increased growth and new jobs".
It is not the responsibility of the European Central Bank directly to be creating jobs. But by pursuing price stability and being very firm on that, in the end, as Otmar Issing said, that should lead eventually to an increase in jobs.
The final point I wish to make is this. I hear voices in your Lordships' House suggesting that if there is no precedent for something, then it is too risky to take on.

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I do not remember the Wright brothers having any real precedent for getting an aeroplane off the ground when they went about their particular enterprise. But I find it distressing that we live in a time when people believe that where there are no precedents no risks should be taken.
Of course EMU is a gamble, but it can be made to work provided that there is a good independent central bank and that the governments who are members make their views heard. They will do so through informal discussions in the Euro 11. They will all make their views known through ECOFIN which will have primacy over Euro 11. They will also be heard in the governing council and general council of the European Central Bank.
It is not as if EMU has been introduced with no clear ideas as to whether or not there are structures in place to make it work. The structures are in place. If they are used properly, there is a very good chance that EMU will prove to be the success that many believe it will be and that it will become a major reserve currency in the world and serve the single market in the way intended.
It would be a pity to take the view that just because we are uncertain that it will work, we should shy away from it. If that had been the policy all the way through, the European Union would never have got off the ground in the first place. I know that that would have given great pleasure to a number of noble Lords, but the truth of the matter is that we should give this a try. There are so many signals to suggest that it is a good move to make. We should have the courage to set aside some of our fears about what may happen if it goes wrong and make a determined effort to ensure that it goes right.
Baroness Oppenheim-Barnes: My Lords, before the noble Lord sits down, perhaps he will clarify the point that he has just made. If as he says we should give it a try and it does not work, is he saying that the consequences will be so insignificant that we should just get out of it and give something else a try?
Lord Grenfell: My Lords, I withdraw the words "give it a try". I meant that we had to try very hard to make it work. We are not certain that it will work, but we have to try.
Lord Belhaven and Stenton: My Lords, before the noble Lord sits down, I should like to return to some recent remarks. I believe that my noble friend Lord Beloff meant that not many noble Lords read French newspapers. It is not a matter of what newspapers noble Lords read. If any noble Lords read French newspapers they may come to the conclusion that France is in turmoil, with strikes and every kind of disorder.
Lord Grenfell: My Lords, perhaps I may inform the noble Lord who has just sat down that I left my home in the centre of Paris this morning and that neither when I read my newspaper which I picked up along the way, nor when I travelled to the Gare du Nord did I become aware that France was in turmoil. I assure the noble Lord that I read the French newspapers every day and I
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have seen no recent signs of that. I believe that the last manifestation that I saw occurred some distance away and that on that occasion some shopkeepers were complaining about working hours.
Lord Hughes: My Lords, apart from anything that my noble friend the Minister may say about the desirability of inserting an amendment of this kind into the Bill, it is obvious to me that if the point arrives when the Government of the day know exactly where they stand in relation to the currency, they must make a report of some kind to Parliament. I would be surprised if it did not include the three points contained in the amendment of the noble Lord, Lord Mackay.
I do not support this amendment in its present form because I believe that it would be unworkable. I can envisage two sets of circumstances. Before 1st May 2003 there may well be a situation in which the Government of the day are in possession of all the facts to enable them to make a decision on which they wish to report to Parliament. If before 1st May a Minister rose to say that he wished to make a report to Parliament on the position and asked to be absolved from the necessity to make it a year or 18 months hence as provided for in the 1998 Act, I do not suppose that there would be any difficulty in obtaining consent to that.
But there is another possibility. It may be that some time at the beginning of 2003 the Minister responsible may know that he will not be in a position to make a statement on 1st May 2003. If the noble Lord, Lord Mackay, is right, according to the answer provided to me the Minister would have to ask Parliament to pass another Act enabling the Minister to say that he would not be in a position to make the statement on 1st May 2003 and asking Parliament to remove that provision from the legislation. That would be absolute nonsense.
It is obvious that whatever the merits of this amendment it is defective in that it refers to a specific date. If it had said "at the earliest possible moment" or words to that effect, it would have been appropriate to whenever it was suitable to make the statement, but including the date 1st May 2003 makes the amendment unworkable. Quite apart from the merit of inserting this into the Bill at all, I believe that if we are to have such an amendment, it should be one that works.
6.15 p.m.
Lord Pearson of Rannoch: My Lords, I was not going to intervene in this debate but I feel that I must do so very briefly given the unbounded optimism and enthusiasm of the noble Lord, Lord Grenfell, for this project. There was discussion earlier in the debate about the timescale which is in the amendment. I am sure that the noble Lord and the Minister on the Front Bench will be aware that there is a well informed view in the City of London that it may take as long as two years after 1st January 1999—in other words, up to about 1st January 2001, more or less—for the inherent stresses in the economic and monetary union project to become irresistible. I have referred to those stresses before. Essentially, they are that the single interest rate and the single exchange rate, which the project forces on

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disparate and diverging economies, will not be able to hold their people together for much more than two years. On the one hand, we must be looking at much increased tax from the countries which are doing better and/or civil unrest in the countries which are in decline and which will not be getting the tax from the donor countries.
I do not know whether it is appropriate to put that question to the noble Lord, Lord Grenfell, at Report stage. I am sure that I can look to the noble Lord the Minister to reply in a way that perhaps his noble friend the Lord Privy Seal did not reply in the debate on the EMU Statement the other day; nor did the noble Lord himself reply when I put that question as clearly as I could in the debate on 28th April.
Finally, I cannot sit down without taking issue on two points raised by the noble Baroness, Lady Williams. Referring to sovereignty, she touched on the well-worn analogy to NATO. The slogan runs that we gave up our sovereignty to join NATO, so what do we have to worry about if we give up any sovereignty over the powers to tax and spend which go with EMU?
Lord Grenfell: My Lords, perhaps the noble Lord will allow me to intervene. We are not giving up powers to tax. Under EMU every government has the right to tax high if they wish to spend high or to tax low if they wish to spend low. We are not surrendering the power to tax.
Lord Pearson of Rannoch: My Lords, I accept the point raised by the noble Lord, except that those of us who know how the European Union proceeds are well aware of the discussions now in Brussels about the necessity for a unified tax system under EMU. They are very much more confident and advanced than they were even before the absurd events of a fortnight ago. The particular machinery to which I should have referred—and to which I did refer earlier—is the single interest rate and the single foreign exchange rate for disparate and diverging economies.
I come back to the point made by the noble Baroness, Lady Williams, that we gave up our sovereignty, or some of it, or much of it, to join NATO and therefore what is the problem now with the EMU project or, indeed, with the whole European project. The answer of course is that we can leave NATO when we want, but we cannot get out of the quagmire, the quicksand, the quaking bog of the Treaty of Rome into which we have so foolishly strayed already.
Finally, the noble Baroness, Lady Williams, said that those of us who doubted that EMU would start on time have been proved wrong. That is not quite right. We said that we did not think that the proposed countries of the Economic and Monetary Union project would meet the requirements. In that we were quite right. We did not foresee with complete clarity that the European enthusiasts would go ahead and fudge the issue and carry on, whatever the treaty said, in any case.
Then the noble Baroness said that she wanted to congratulate the participating nations which are joining EMU on having got to the station and got to the train
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on time. The trouble is that we have not the faintest idea where the train is going, but there are some very dangerous signals ahead.
Lord McIntosh of Haringey: My Lords, perhaps I may start by saying how much I agree with the noble Lord, Lord Howell of Guildford, when he said that it was necessary and appropriate that we should debate this matter again after the weekend of 1st to 3rd May. As he rightly said, our debate on the previous occasion was in anticipation of the great events that then took place. We are now not only past that date, but I would have hoped, and I still do hope, that we are past some of the more hysterical reactions which took place immediately after that weekend on the decisions that were then taken.
There is no doubt that they were important decisions. Since our previous debate heads of state or government have agreed that 11 member states: Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Spain and Finland, will participate in EMU on 1st January 1999.
In line with the information that we gave to Parliament before the Special Council, the United Kingdom voted in favour of the participation of each of those 11. Some noble Lords before and since have expressed concern about the participation of some of those countries. In particular, I recall a debate initiated by the noble Lord, Lord Chesham, about the participation of Italy.
But we supported the Commission recommendation. We did so because all of the 11 countries joining the euro have been confirmed by the Commission and by the European Monetary Institute reports as having made substantial progress towards economic convergence on the basis of the treaty criteria.
I repeat the point that I made before that what they and we were looking for was not spot convergence at any single date but convergence over a period of time. Of course, there were elements in which spot convergence did not occur. There were examples in Italy, Belgium and other countries in which the formal requirement at a particular point in time, if you stopped the clock at that time, would not have been compliant. But the important point has always been, and was recognised by the Commission and the European Monetary Institute to be, that the direction of progress in all cases was the right direction. That is confirmed by the framework for fiscal discipline which is provided by the stability and growth pact.
The high debt countries—and of course there have been high debt countries—have been reducing their debt to GDP ratios in recent years and are committed to reducing them in the future.
The declaration agreed on 1st May reaffirmed the commitment to fiscal discipline, economic reform and job creation—vital ingredients to the success of Economic and Monetary Union.
The decision on 2nd May on participation in the single currency was a historic decision carefully prepared and in line with market expectations. It removed any remaining uncertainty as to the start date of, or participation in, the single currency.

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I said that it was appropriate that we should be having this debate at an interval after those decisions took place because what was conspicuous about the immediate reaction was how wrong it was in emphasis and, indeed, in the conclusions reached. In particular I want to refer to the excessive emphasis which was given to the issue of the presidency of the European Central Bank. The heads of state or government reached agreement on the appointment of Wim Duisenberg as the first President of the European Central Bank. He indicated that he would not wish to serve a full term. The heads of state or government agreed that he would be succeeded by a Frenchman. M. Chirac indicated that his nomination would be M. Trichet, Governor of the Banque de France and no head of state or government found any difficulty with that suggestion.
It has been suggested in debate this afternoon that because Mr. Duisenberg has not been precise about the day that he will wish to retire—indeed, he has indicated that there may be considerations affecting his retirement date which are not yet known—somehow that is a breach of the Maastricht Treaty. It is now being suggested that he is likely to stay on for the full eight years. Noble Lords cannot have it both ways. Either they are making the swingeing attack on the breach of the Maastricht Treaty which my noble friend Lord Bruce of Donington made or they are saying that the Maastricht Treaty is going to be observed and somehow that is a terrible thing as well. I do not know which side noble Lords will take when they come down on this interesting but not fundamental issue. All I can say is that they cannot have it both ways.
I shall not go into the other, perhaps much more important, decisions that were taken about the membership of the executive board, the vice-presidency and the varying terms of office of the remaining members of the board. But all I can say is that it is going ahead entirely as planned. When the European Parliament gives its decision tomorrow—because it held its hearings up to the end of last week and will vote on its opinion tomorrow—heads of state or government will agree the formal appointments by written procedure and the European Central Bank will be formally constituted and able to proceed with its preparations for 1st January 1999.
Anybody reading the press coverage, particularly on the Sunday and Monday of the first weekend in May, would think that a disaster had happened. Because a debate took 12 hours longer to conclude than was intended, it was the process that commentators in the press appeared to think to be important. They seemed to ignore the fact that agreement was reached, a strong executive board will be in place and that the European Central Bank will proceed as planned. The judgment of the press at that time, and particularly of opposition politicians at that time, was shown to be faulty by the reaction of the markets.
It was anticipated from the outset by all of these people in their immediate reactions, including the Leader of the Opposition, that when the markets opened on the Monday they would show their disapproval of the whole procedure and their belief that the Economic
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and Monetary Union had somehow been stillborn or born in some deformed way. The markets totally disproved that. The reaction of the markets shows that the decision was the right one. Their reaction shows that there is a strong executive board at the start of the single currency and it increases the likelihood that EMU will succeed. And we want it to succeed. We have always made clear that we want it to succeed. If the economic benefits of membership are clear and unambiguous, we want Britain to participate in it and to participate therefore in that success.
There are many potential benefits: for instance, an improved single market; greater transparency; greater competitiveness; reduced transaction costs; greater opportunities for trade and investment; and many advantages which we will see only when we do not have them and the other 11 countries do.
Noble Lords, as is their right, have highlighted uncertainties. The Government have always said that for the full benefits of EMU to be realised, the economic reform of labour, transport and capital markets must continue. That is why we are pursuing our agenda of economic reform at home and during our presidency of the European Union.
A consensus behind the need for economic reform is building. I refer noble Lords to the declaration agreed by the Council of Economic and Finance Ministers (ECOFIN) on 1st May. That declaration goes well beyond re-emphasising the importance of sound public finances. It reaffirms the commitment of member states to economic reform and job creation. Member states committed themselves to producing reports on their products and capital markets as well as their labour markets. That pushes economic reform up the EU agenda. It increases the likelihood that the full benefit of EMU will be realised. This Government will be seeking further progress before the Cardiff European Council.
Many of the issues we are discussing will come into effect before or after—whether or not—Britain joins the economic and monetary union. The noble Lord, Lord Howell of Guildford, in what I dare to say was an extremely thoughtful and impressive speech, spoke of the existence of a parallel currency. It is called by the nastier term "Eurocreep", and I am glad that he avoided using it. Of course, that will come into effect in the period before we join. When the Chancellor made his speech on European monetary union at the end of last year, we were right to emphasise the preparations that we are making for the single currency. We are making them because they have to be made, irrespective of whether and when we join.
I turn to the amendment. I have no objection to the noble Lord, Lord Mackay of Ardbrecknish, leaping on to paragraph 40 of the 5th Report of the House of Commons Select Committee on the Treasury. It is entirely legitimate to do so. He was too kind to me when in the previous debate he said that I did not respond to the report because the Government had not made their formal response. I did not respond because he had read the report and I had not. I had been on the Bench the whole time the Treasury report had been available and no one had given me an advance copy.

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Perhaps I may remind the noble Lord about the status of the report and the committee. The committee includes as its chairman Giles Radice, who is high up in the European movement. It also includes Sir Teddy Taylor, whose views are pretty well known and who left the official Parliamentary Conservative Party for some time. Therefore, it is hardly likely that the committee will go out on a limb. Indeed, it states explicitly in paragraph 6 of its report that members of the committee have differing views as to the intrinsic merits of EMU and that it therefore decided it would be unproductive to attempt to reach a view as to whether the UK should or should not participate in stage 3.
Indeed, the committee scrutinised the framework for making the decision which the Chancellor set out. In paragraph 40, which the noble Lord, Lord Mackay, quoted, it stated that it would not be possible for there to be a final report giving all the answers to all the problems. The committee acknowledged that history would not stop at the date of some "final report".
The noble Lord, Lord Mackay, fell into that trap. He is proposing that history should stop on 1st May 2003. I looked up 1st May 2003 in the hope that it would be a Sunday. Unfortunately, it is a Thursday, so he gets away with that on a technicality. But the idea of a single date five years away is a total nonsense. That is revealed by the fact that until yesterday the noble Lord's amendment related only to measures to be adopted or decisions to be taken. It was only yesterday that he and his colleagues woke up to the fact that some measures might already have been adopted and decisions taken. They wrote that into the amendment.
We do not need reports of that kind, not because the date is silly—although it is—but because it is inconceivable that the issues set out in the amendment will not have been reported to Parliament on many occasions between now and 1st May 2003. I do not know what measures and decisions might be on the table at that date, but I know that any there are will have been subject to the normal scrutiny procedures of this Parliament. Those procedures were repeated for the record by my noble friend Lady Symons only two hours ago.
We are committed much further than that. When the Government decide that we have the measure of stable convergence that is necessary to begin the process of entry to the European economic and monetary union, at that stage we will be committed to the triple lock; the Cabinet will make a decision; Parliament will make a decision and the people of this country will make a decision in a referendum. Even if EMU were not to be debated between now and then at a fundamental as well as at an occasional level, it is inconceivable that we would go to the people of this country without a full report covering at least all the points set out in the amendment.
6.30 p.m.
Baroness Nicholson of Winterbourne: My Lords, before the Minister sits down, will he assure the House that despite its insistence on regular reporting to your
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Lordships' Chamber this amendment will not be brought out again on Thursday and an unlimited tranche of time given to this debate once more?
Lord McIntosh of Haringey: My Lords, in Committee, I was accused of being tetchy for pointing out that procedures in this House allow matters to be debated at unlimited length and as often as any noble Lord likes. I can give no assurance that the noble Lord, Lord Mackay of Ardbrecknish, will not bring forward a similar amendment if he needs or wishes to on Third Reading.
I believe that my noble friend Lord Hughes was right when he made it clear that the amendment is unnecessary. It is also patently apparent to all of us who have an open mind on these matters that it will be damaging. I urge the House to reject it.
Lord Renton: My Lords, before the Minister sits down, perhaps I may presume to correct him. It is a fixed rule of this House that we cannot raise matters on Third Reading which have been fully debated either in Committee or on Report.
Lord McIntosh of Haringey: My Lords, I have found ways of getting round that, as the noble Lord, Lord Renton, knows, and I do not doubt the ability of the noble Lord, Lord Mackay, to do the same.
Lord Mackay of Ardbrecknish: My Lords, the noble Lord, Lord McIntosh of Haringey, was rightly cautious. He did not fall into the trap of trying to give me a lecture from a newcomer as to what we can and cannot do in this House. I shall decide in a few minutes whether to take the step necessary to prevent me bringing this matter back on Third Reading.
We have had an interesting debate. I listened with interest to the noble Lord, Lord McIntosh, and I am glad that he thanked me for my kindness on the day the report was published. However, I know the convention is that Ministers do not respond to Select Committee reports in detail. I appreciate some of the points made about the report and I understand that the Government will present to the House of Commons their own fuller report in response to the Select Committee.
I thought that the noble Lord was on slightly weak ground when he said that the Select Committee's report was a sort of compromise between the Europhiles like Giles Radice and the Europhobes like Teddy Taylor. I should have thought that that was the strength of paragraph 40: that despite the wide range of opinions in the Select Committee, it was able to reach that conclusion. It is now two or three weeks since I read the report, but if my recollection is right, in the proceedings of the committee where it decides to agree or disagree with amendments tabled by various members, no amendments were tabled to paragraph 40. It was agreed and nobody attempted to vote against it. That is my memory. I do not have the report at the moment and I cannot check that. However, if I am wrong, I am sure that the noble Lord will correct me.
Lord McIntosh of Haringey: My Lords, an amendment was proposed to paragraph 40 which was carried.
Lord Mackay of Ardbrecknish: My Lords, therefore, the paragraph is indeed the majority wish of the committee.
Lord McIntosh of Haringey: My Lords, six to five.
Lord Mackay of Ardbrecknish: My Lords, I shall not ask the noble Lord to go further and tell me what the amendment was. However, I do not believe that it was to strike out the whole paragraph or to strike out particularly pro or anti-European sentiments.
The noble Lord, Lord McIntosh, and the Chancellor of the Exchequer extol the virtues of the euro. Therefore, I am slightly puzzled as to why they, as a government, are not beginning the steps to enter it. After all, we meet more of the convergence criteria than most of the 11 who have been allowed to join. It seems to me that if the Government really believe what they keep on telling us, they should be prepared to put it to the test. The fact that they do not makes me wonder whether they are as confident about the advantages of the euro or about their ability to sell it either to Parliament or to the British people. But that is another issue.
This amendment refers to the year 2003. I explained why I chose that date. It has to do with the five years mentioned in the Treasury Select Committee report. By that time, we should have a fairly clear view of how the project is working out and whether it is succeeding. The noble Lord, Lord Grenfell, hopes it will succeed but he indicated just a slight tremor of doubt when he spoke. That is quite legitimate. He feels that we should put our minds to making a success of it. I have made clear on a number of occasions that it would seem to me not in Britain's interests, now that it has started, that it should fail because we should be caught up in the resulting economic disturbance, which would not be good for our economy.
The point about 2003 is that it accords with what the Select Committee said. I have put down a proper date. If I had known that that would be the sticking point for many noble Lords, I may have made it slightly vaguer and suggested that it should be within five years, or something like that. That tempts me to bring back the matter at the next stage with that as the change which would be well within the rules of order.
In an intervention, my noble friends Lord Howell and Lord Renton thought that we should be able to tell long before 2003 how successful the project was. They may or may not be right. However, as I explained, the year 2003 was chosen by myself and my noble friends on the basis of the five-year period suggested by the Treasury Select Committee.
The choice of Mr. Duisenberg and the subsequent choice, if that is what it is to be, of Jean-Claude Trichet is an indication that perhaps the euro will be a firm currency. Indeed, Mr. Duisenberg's evidence to the European Parliamentary Committee last week would certainly encourage one to think that it will be a strong currency.
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However, I must say to my noble friend Lord Howell that there is no guarantee that Mr. Trichet will be the next president of the European Central Bank. The Statement, which was given by the Prime Minister and repeated here, said:
"Secondly, that we expected his successor to be French".
Indeed, the noble Lord, Lord Tordoff, picked that up. The Statement goes on to say:
"President Chirac made clear his nomination would he Jean-Claude Trichet".—[Official Report, 5/5/98; col. 508.]
But in an intervening exchange, when the noble Lord, Lord Tordoff, asked whether he had heard correctly that the Statement said that the next president would be French, the noble Lord, Lord Richard, said:
"It was M. Trichet—not just a Frenchman—who was nominated".
On re-reading the Statement, I do not believe that to be correct. It is quite clear that a Frenchman is to be nominated. If something happens to Mr. Trichet, if he falls under the proverbial bus, it will be another Frenchman.
Indeed, Mr. Duisenberg said in his evidence last week that he found slightly absurd the leader's promise to guarantee his vacant job to France. He said that the summit deal to hold his job for a French national amounted to a breach of the Maastricht Treaty because it contained no references to specific nationality as a credential for the post. Therefore my noble friend Lord Howell should not be so reliant on those two gentlemen holding those posts for the next 12 or 16 years because the Statement does not exactly say that. There is certainly a way out on the part of the French Government.
The noble Baroness, Lady Williams, talked about enlargement. Just to show that I listen and agree with her occasionally, I agreed absolutely with what she said about enlargement. Indeed, it is rather a pity that as much energy has not been put into enlargement as has been put into the creation of the euro. In the long march of history, it may have served Europe better had more energy been put into enlargement rather than the creation of the euro.
Therefore, I still believe that this is a difficult issue for us. I do not wish to delay the House further on this matter. As I have suggested, the amendment accords clearly with the Select Committee's findings. The House of Commons should be allowed to discuss those findings before the Bill becomes law. If this amendment were passed, then the House of Commons would be able to consider the issue in the light of the report by the Treasury Select Committee.
I was undecided, but having been given a lecture from the Liberal Democrat Benches that I should not bring this matter back at the next stage, I shall make sure that I cannot do so by asking the opinion of the House.
6.46 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 76: Not-Contents, 138.

Division No. 1

CONTENTS

Annaly, L.

Marlborough, D.

Astor, V.

Marlesford, L.

Astor of Hever, L.

Massereene and Ferrard, V.

Baker of Dorking, L.

Molyneaux of Killead, L.

Balfour. E.

Monson, L.

Belhaven and Stenton, L.

Montagu of Beaulieu, L.

Beloff, L.

Moran, L.

Berners, B.

Moynihan, L.

Biddulph, L.

Munster, E.

Blatch, B.

Northesk, E.

Boardman, L.

Norton, L.

Bridgeman, V.

Onslow of Woking, L.

Bruce of Donington, L.

Oppenheim-Bames, B.

Cadman, L.

Palmer, L.

Carnck, L.

Park of Monmouth, B.

Clanwilliam, E.

Pearson of Rannoch, L.

Coleraine, L.

Pilkington of Oxenford, L.

Crickhowell, L.

Plummer of St. Marylebone, L.

Cross, V.

Rankeillour, L.

Dartmouth, E.

Rawlings, B. [Teller.]

Dean of Harptree, L.

Rennell, L.

Exmouth, V.

Rodney, L.

Gage, V.

Seccombe, B.

Gray of Contin, L.

Shaw of Northstead,L.

Grimston of Westbury, L.

Skelmersdale, L.

Hemphill, L.

Stockton, E.

Henley, L.

Stodart of Leaston, L.

Home, E.

Stoddart of Swindon, L.

Howell of Guildford, L.

Strathclyde, L. [Teller.]

Jeger, B.

Strathcona and Mount Royal, L

Jenkin of Roding, L.

Sudeley, L.

Kimball, L.

Thomas of Gwydir, L.

Kintore, E.

Tryon, L.

Knight of Collingtree, B.

Ullswater, V.

Liverpool, E.

Wakeham, L.

Lucas, L.

Wharton,B.

Lyell, L.

Willoughby de Broke, L.

Mackay of Ardbrecknish, L.

Wise, L.

NOT-CONTENTS

Acton, L.

Dubs, L.

Addington, L.

Eatwell, L.

Alderdice, L.

Evans of Parkside, L.

Allenby of Megiddo, V.

Ewing of Kirkford, L.

Amos, B.

Ezra,L.

Archer of Sandwell, L.

Falconer of Thoroton, L.

Beaumont of Whitley, L.

Farrington of Ribbleton, B.

Berkeley, L.

Gallacher, L.

Bethell, L.

Gilbert, L.

Blackstone, B.

Gladwin of Clee, L.

Bledisloe, V.

Goodhart, L.

Blyth, L.

Gordon of Strathblane, L.

Borrie, L.

Gould of Potternewton, B.

Brooke of Alverthorpe, L.

Graham of Edmonton, L.

Brooks of Tremorfa, L.

Grantchester, L.

Burlison, L.

Gregson, L.

Carlisle, E.

Grenfell, L.

Carter, L. [Teller.]

Grey, E.

Chandos, V.

Hacking, L.

Cledwyn of Penrhos, L.

Hampton, L.

Cocks of Hartcliffe,L.

Hamwee, B.

Crook, L.

Hanworth, V.

Currie of Marylebone, L.

Hardie,L.

Dahrendorf, L.

Hardy of Wath, L.

Davies of Coity, L.

Harris of Greenwich, L.

Davies of Oldham, L.

Haskel, L.

Dean of Thornton-le-Fylde, B.

Hayman, B.

Desai, L.

Hilton of Eggardon, B.

Dholakia, L.

Hollis of Heigham, B.

Donoughue, L.

Holme of Cheltenham, L.

Dormand of Easington, L.

Howie of Troon, L.

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Hughes, L.

Prys-Davies, L.

Hughes of Woodside, L.

Puttnam,L.

Hunt of Kings Heath, L.

Ramsay of Cartvale, B.

Hylton,L.

Randall of St. Budeaux, L.

Islwyn, L.

Razzall, L.

Janner of Braunstone, L.

Rea, L.

Jay of Paddington, B.

Redesdale, L.

Jenkins of Putney, L.

Rendell of Babergh, B.

Judd, L.

Richard, L. [Lord Privy Seal.]

Kennedy of The Shaws, B.

Rochester, L.

Kennet, L.

Rodgers of Quarry Bank, L.

Kirkhill, L.

Russell, E.

Levy, L.

Sainsbury of Turville, L.

Linklater of Butterstone, B.

St. John of Bletso, L.

Lockwood, B.

Sandberg, L.

Lofthouse of Pontefract, L.

Scotland of Asthal, B.

Lovell-Davis, L.

Sefton of Garston, L.

Ludford, B.

Sewel, L.

Mclntosh of Haringey, L. [Teller.]

Shepherd, L.

Simon, V.

Mackie of Benshie, L.

Simon of Glaisdale, L.

Maddock, B.

Simon of Highbury, L.

Mallalieu, B.

Smith of Gilmorehill, B.

Mar and Kellie,E.

Steel of Aikwood, L.

Mason of Barnsley, L.

Symons of Vernham Dean. B

Merlyn-Rees, L.

Taylor of Blackburn, L.

Meston, L.

Thomas of Macclesfield, L.

Mishcon, L.

Thomas of Swynncrton, L.

Molloy, L.

Thomson of Monifieth, L.

Monkswell, L.

Thurso, V.

Montague of Oxford, L.

Tordoff, L.

Newby, L.

Turner of Camden, B.

Nicholson of Winterboume, B.

Walker of Doncaster, L.

Nicol, B.

Walpole, L.

Ogmore, L.

Whitty, L.

Orme, L.

Williams of Crosby, B.

Peston, L.

Williams of Elvel, L.

Ponsonby of Shulbrede, L.

Williams of Mostyn, L.

Winston, L.

Resoled in the negative, and amendment disagreed to accordingly.
6.55 p.m.
Lord Moynihanmoved Amendment No. 3:
After Clause I, insert the following new clause—
COMMON FOREIGN AND SECURITY POLICY
(". Her Majesty's Government shall not take any steps to participate in the decision-making arrangements for the common foreign and security policy (CFSP) applicable under Article J.13 of the Treaty on European Union (as set out in paragraph 10 of Article 1 of the Treaty signed at Amsterdam on 2nd October 1997 amending the Treaty on European Union, the Treaties establishing the European Communities and certain related Acts) until each House of Parliament has come to a Resolution on a motion relating to the CFSP tabled by a Minister of the Crown.").
The noble Lord said: My Lords, I indicated in Committee that I intended to return on Report to the issue of the new decision-making procedures applicable under Article J.13 of the Treaty on European Union, as set out in paragraph 10 of Article 1 of the Treaty of Amsterdam. We had a valuable and comprehensive debate on foreign policy in Committee in which we appreciated the Minister's detailed responses to a wide range of arduous and probing questions, which demonstrated the high level of interest and concern over matters relating to the common foreign and security policy in your Lordships' House. We were grateful that the Minister dismissed the fear that the Amsterdam Treaty could be a Trojan horse for a supranational

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foreign policy, and for her confirmation that the Government intend to ensure that the CFSP remains intergovernmental, with overall strategy on foreign policy issues and the most important decisions of principle taken by unanimity in the European Council, as indeed they should be.
Likewise, we appreciated the explicit recognition that qualified majority voting is not appropriate for foreign policy decisions and that it is essential for us to retain our national veto in that area. A member state vetoes a common foreign policy proposal when it considers that its national interests would be damaged by such a proposal. Under majority voting, it would have to accept that damage. But if a country felt strongly enough to veto a proposal in the first place, it is likely to feel strongly enough to complain loudly about being over-ruled. The result would be a member state resentful at seeing its national interests overridden and an artificial European common foreign policy discredited before it had even begun, as the rest of the world would know that it was contested even within Europe.
However, although we have retained our national veto, the Amsterdam Treaty nevertheless makes significant changes to the CFSP decision-making process. The case for those changes was not made satisfactorily in Committee. The argument that the introduction of automatic qualified majority voting for the implementation of decisions will make the CFSP more effective has not been proved. It still remains for the Government to explain what benefit would be gained from the provisions in paragraph 2 of Article J.13; for the treaty continues the distinction between decision making on principles of policy, which will still be unanimous, and on the implementation of those decisions, which will now generally be by QMV. The fact that qualified majority voting will now automatically apply to the implementation of many decisions leaves open many questions about the feasibility of maintaining that distinction; for example, could not an implementing decision for one country touch on points of policy for others? When this happens who will determine what is implementation and what is policy? I am not convinced that the line between principle and action is sufficiently clear-cut to merit the automatic introduction of QMV.
In the Minister's opinion what is a trade sanction? Is it a principle or is it an action? I take the example of the United Nations resolutions to criticise human rights in China. The present Government, despite their ethical foreign policy—increasingly tattered and careworn though it is—and to the jaw dropping amazement of human rights campaigners the world over, took the extraordinary decision not to support a UN resolution on human rights in China, apparently solely in the interests of maintaining a common foreign policy in Europe. In the eyes of the previous government such a resolution represented a straightforward matter of implementing agreed policy in a timely way, while for other member states it appeared to be an error of judgment. How would the automatic procedures for QMV have worked in that case? I should like the
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Minister to clarify how this change to allow automatic QMV for implementation of decisions on the basis of common strategies will,
"allow Europe's voice in the world to be heard more clearly and will improve the effectiveness of CFSP co-operation when the line between principle and action is not always black and white so that we risk the creation of an artificial forced common foreign policy supported by most, instead of a true common foreign policy agreed by all".
Nevertheless I am grateful for the Minister's definition of a new CFSP instrument—the common strategy—which she envisaged would not be very different from existing joint actions but which somehow would give the European Union's common policies more weight on the world stage. When they are genuinely common policies agreed by all this is a worthy and desirable objective. However, I should be grateful if the Minister could provide us with a little more detail on this point. The treaty provides for common strategies in important areas of foreign policy where member states have interests in common and where they agree there will be advantage in working together. To what extent does the Minister envisage that this new instrument will be used? Can she give examples of current important areas of foreign policy where member states have interests in common to which she anticipates the common strategy would be applied? To what extent does she anticipate decisions of the Council on CFSP will be made using common strategies and therefore decided by QMV? What decisions concerning important areas of foreign policy is it likely to result in which we would then have no power to prevent? Given that the number of decisions taken by QMV in the Council of Ministers will ultimately be determined by the number of common strategies decided upon by consensus in the European Council and by the political will of a particular presidency to try the QMV procedures on decisions of a secondary nature, what vision do the Government have for the practical operation of qualified majority voting?
I return to some questions on the national veto mechanism or "emergency brake" and the provision for constructive abstention. In Committee I said that if past experience has taught us anything it is that constructive abstention is a tool best used in a "can't", not "won't", situation when a country agrees with a decision but for domestic reasons is not able to participate in its adoption, particularly in the light of paragraph 1 of Article J.13 which requires abstainers to accept in a spirit of mutual solidarity that the decision commits the Union as a whole and they cannot undermine or seek to thwart it subsequently. Can the Minister confirm that, given paragraph 1 of Article J.13, constructive abstention is not an adequate and appropriate mechanism to deal with real disagreements between countries over foreign policy decisions to implement common strategies—and therefore taken by QMV—and that the only recourse for a country in this position would be the emergency brake mechanism? As the House is aware, the emergency brake can be pulled by a country when it has important and stated reasons of national policy which cause it to oppose a decision, thereby preventing a vote being taken. I should be grateful if the Minister could confirm that it is the

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individual member state activating the emergency brake that will determine what is an important and stated reason of its own national policy, and that no one else will arbitrate on what constitutes this.
Furthermore, if a number of other states can achieve a qualified majority on the decision, is it not the case that the adoption of the decision would be regarded as postponed, for the matter could then be referred to the European Council for a decision to be taken by unanimity which the country in question would have to veto? As the Minister pointed out to the Chamber in Committee, I am aware that referral to the European Council reflects the current reality that if Foreign Ministers cannot agree, they pass an issue to heads of government or state in the European Council to attempt to resolve the issue by unanimity. But what guarantees can the Minister give that a country in this position would not be under pressure to accede to the implementation of a forced common foreign policy decision?
I wish to ask the Minister about the operation of CFSP as a whole. To help clarify the points I wish to raise, I have focused on a case study in foreign policy; namely, recent events in Sierra Leone. How can the Government justify the changes to the CFSP decision-making procedures which bring us a step closer to an integrated foreign policy when the Foreign Secretary purports not to know the policies being undertaken by his own officials in the name of the British Government? When he finally finds out about these policies, he actively disagrees with them, professing deep concern and promising an inquiry and that appropriate action will be taken against anyone found to have transgressed. How on earth will the Foreign Secretary ensure that Britain plays a leading role in devising and co-ordinating common foreign policies in Europe when he does not even know what his own department is doing? How will he work to mould key common foreign policies in Europe in the image of British Government policy when the case of Sierra Leone has proved that he cannot be relied upon to know what British Government policy is in the first place? How will he have any credibility to ensure Britain's voice is heard when he was unaware of British Government involvement in a situation where arms were supplied in breach of a UN embargo?
This is not the first time the Foreign Secretary has been caught on the hop. Speaking on the situation in Kosovo only the week before, he was unaware that British troops were on exercise in Macedonia. Just how credible does the Foreign Secretary's promotion of an EU ethical arms code appear in the wake of the Prime Minister's extraordinary new foreign policy doctrine of the ends justifying the means, even to the extent of breaching UN arms embargoes? That is the scenario for this country, with the Foreign Secretary responsible for our input into CFSP, where ignorance is used as an excuse for negligence and where innocence of the facts is prayed in aid of incompetence. But what sort of CFSP would the Prime Minister advocate given that he is now praising the very same Foreign Office officials whom the Foreign Secretary only six days ago roundly disowned?
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The Prime Minister would presumably support a CFSP in which the ends justified the means, in which it is permissible to condone breaches of international law and to undermine the credibility of the United Nations if it means the right results, and then to massage the terms of any awkward arms embargoes to claim that they were not breached deliberately. Does the Minister agree with the Foreign Secretary, who has said,
"The Government have consistently supported the legitimacy of the United Nations. This Government abide by the resolutions of the Security Council and are committed to the rule of international law. We have not and we will not condone any breach of international law"?
Or does she agree with the Prime Minister, who has said it was the right thing to do, thereby somehow managing to distinguish between deliberately breaking international law, which he deems to be wrong, and inadvertently doing so, which he condones as long as it results in a democratic regime being restored to power after any illegal military coup? That is a distinction which the Foreign Secretary clearly does not make for he has said that no one, presumably including the Prime Minister, should understate the gravity of a breach of a Security Council resolution. From her statement yesterday, when the noble Baroness told this House that the Prime Minister's assessment of the arms to Africa affair as a "hoo-ha" constituted an admirable summary which we would all do well to remember, I must conclude that the Minister agrees with the Prime Minister and not the Foreign Secretary.
Yesterday the noble Lord, Lord Avebury, raised questions about the alleged human rights violation in Sierra Leone since the restoration of President Kabbah. He asked whether,
"contrary to the impression given by the Prime Minister … one of the legacies of the counter coup is that they have been left with an ethnic militia known as the Kamajors which is hostile to other groups within the territory and that far from promoting reconciliation, the restored government have charged 59 people with treason and locked up 2,000 others without charge, most of whom are northeners or ethnic Krios and that this is hardly a recipe for the national reconciliation of which both Resolutions 1132 and 1162 have spoken".— [Official Report, 11/5/98; col. 823.]
Lord Grenfell: My Lords, perhaps I may ask what this has to do with Article J.13 of the treaty?
Lord Moynihan: My Lords, absolutely everything. I can fully understand why the Government Benches do not want to hear this as a case study. This is a severe and lasting embarrassment to the performance of the ministerial team at the Foreign Office. But the real relevance is this. It goes to the heart of the CFSP. How on earth will the British Government manage a common position on a foreign policy issue if one week they take position X and the following week they completely change their position? Will they exercise the emergency brake because the Prime Minister has determined that the foreign policy as determined by the Foreign Secretary a week before was wrong? No, my Lords. I believe it vitally important to look at case studies. In Committee we looked at the French position as opposed to the British with regard to Iraq—another good case study. I note that the Government Benches did not jump

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up at that time and object to the fact that a useful case study, pointing out the weaknesses inherent in the CFSP, was not brought to the Committee's attention.
To reinforce the point, it would be important for the British Government, sitting with our European colleagues, to know what British foreign policy is.
Lord Taylor of Blackburn: My Lords, perhaps I may draw to the noble Lord's attention that we are at Report stage rather than in Committee. There is a big difference between the two.
7.15 p.m.
Lord Moynihan: My Lords, I am totally aware of the difference between Committee and Report stages. If the noble Lord intervenes to state that this new example also causes him discomfort, no doubt he will be able to listen carefully to the implications for his Government's policy with regard to the CFSP.
I wish to go into areas which were not covered in sufficient detail in Committee, where specific answers were not given to questions I raised. I used as an example the question raised yesterday by the noble Lord, Lord Avebury. It is relevant to note that the Foreign Office position, given by the Minister, was,
"I do riot have information on what is happening at this moment in Sierra Leone".—[Official Report, 11/5/98; col. 824.]
Does the noble Baroness have the information today? The 2,000 locked up without charge are in gaols in Freetown. There are thousands more detained in the principal cities of Bo, Kenema and Makeni. It was reported to me earlier today that fighting continues in many areas outside the capital. Mèdecins sans Frontiéres have reports of mutilations occurring now. Are any of those at the hands of the Kamajors in our Prime Minister's newly-embraced favourite African country?
How great has been the collaboration between the tens of thousands of well-armed Kamajors and their Nigerian supporters? For the Nigerians are also subject to European Union and Commonwealth embargoes on arms. In the context of this debate, will our European colleagues turn a blind eye to the arms flow from Nigeria if the ends of the Prime Minster's new foreign policy justify the means?
Yesterday the noble Lord, Lord Avebury, the noble Baroness, Lady Williams, the noble Lord, Lord Tordoff, my noble friend Lady Young and I raised important questions regarding the humanitarian aspects of the issue. What evidence is there of the British Government actively pursuing national reconciliation, to which both Resolutions 1132 and 1162 refer? Or will the answer once again be, "I do not have information on what is happening at this moment in Sierra Leone"? If that is the answer, what hope do we have of seeing the creation of a consistent set of common foreign policy and defence initiatives in Europe? What implications does the Minister think the British Government's doctrine of the ends justifying the means would have for the common foreign and security policy in Europe? We now have a Government who when they so choose are above
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the law, and an Administration authorised by the Prime Minister to cherry pick those laws it chooses to obey and those it chooses to flout.
It would be hypocritical to criticise our European partners, or any other country in the world for that matter, for pursuing a similar policy. This is the road to unravelling and ultimately demolishing the edifice of international law and the legitimacy of international organisations to uphold that law in the name of the values upon which our society is based: peace, security, democracy and human rights. This is an architecture which the mature democracies of the European Union helped to design; and those same democracies willingly agreed to be bound by its terms. If it is undermined by the very states which built it, who or what will be the arbiter of what is or is not internationally acceptable?
A country's foreign policy is a mirror reflecting its national interests and its values and principles. It is for that reason that our foreign policy should be decided here with the Foreign Secretary answerable to the House. At least Foreign Office Ministers will be ultimately answerable to this House for their conduct in the arms to Africa affair. In Committee I emphasised our belief in the potential of the CFSP. Where it acts with the grain of our national traditions and represents the coincidence of our national interests with those of our European partners, it will succeed. But where the CFSP is forced into the rhetoric of solidarity and unity, when whether for geographical, political or historic reasons that does not reflect reality, it will surely fail. And it will surely fail if there is not consistency in policy coming from the government of the day.
The purpose therefore of the new clause is to enable the Minister to reassure the House that the new decision-making procedures for the CFSP do not represent a forced march down the road to an artificial common foreign policy which is against those very national interests the Government purport to promote. I beg to move.
Baroness Ludford: My Lords, I do not dispute that the noble Lord raises some important points on Sierra Leone. He referred to the role of my noble friend Lord Avebury in raising those concerns. However, perhaps we should concentrate on the amendment. I intend to speak more directly to it than has the noble Lord.
The amendment relates to the procedures of the common foreign and security policy. First, I believe that the amendment is unworkable and unnecessary. It is unworkable because it would prevent the speedy reaction that the European Union needs to be able to adopt in crisis situations. The noble Lord referred to the potential of the common foreign and security policy. I submit that that potential will not be realised if the decision making is slow and cumbersome.
Secondly, the amendment is unnecessary because there are sufficient safeguards. Indeed, those safeguards to protect member states' interests have been referred to by the noble Lord. Perhaps I may enumerate them.
Article J.13 starts from the premise that decisions are normally taken unanimously, both in the European Council and in the Council of Ministers. The article goes

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on to outline the procedure of constructive abstention while allowing, as the noble Lord mentioned, for respect of the principle of mutual solidarity. That is another safeguard for a national government.
The article then states that, by way of derogation from the normal rule of unanimity in implementing measures of joint actions and common positions, there could be qualified majority voting. Joint actions are defined as specific situations where operational action by the union is deemed to be required. That is the point on which we need to focus: specific situations requiring operational action.
Were the amendment to be accepted, it would introduce another hurdle of bureaucratic delay in trying to arrive at that operational action. But even the procedure of QMV is subject to the emergency brake to which the noble Lord also referred, whereby member states can oppose a majority vote. So there are a series of layers of safeguards for member states' interests.
My worry about the common foreign and security policy is that it is not sufficiently fast and effective in its response. The decision-making has been described by one commentator as "heavy and ornate". This amendment would introduce another element of heaviness and ornament.
The European Union is currently faced with challenges in Kosovo, Algeria, the Middle East and the Gulf—conflict in areas close to us, affecting our security in all kinds of ways. It is such considerations which have no doubt led the Foreign Secretary and the Prime Minister to try to make the European Union more of a player in the Middle East peace process, somewhat matching the role of the United States.
The European Union seeks to guarantee peace, prosperity and democracy for its citizens. One of the ways it can do that is to have an effective voice in world affairs. This amendment would make that more difficult. It would be an unnecessary and unworkable impediment to British participation in the common foreign and security policy.
It may well be that Europe needs to streamline its activities, respecting the principle of subsidiarity in some domestic areas where it could be deemed to be fussy and bossy. I feel rather strongly about some of the rules on food safety, local cheeses being banned, and so on. But the quid pro quo is that we must use political capital to increase the arguments for Europe to have a common voice in the world. That is one of the essential things that the European Union must do. That is what it can uniquely do for the citizens of Europe: act jointly to preserve that peace and security. We must transfer this energy, perhaps from some of the streamlined activities, to the international arena. If we believe in Europe acting effectively on the international stage for the security of our own citizens, this amendment should be strongly resisted.
Lord Howell of Guildford: My Lords, I support this amendment tabled by my noble friend. I realise that it affords this House an opportunity to survey further the common foreign security policy scene, although we
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covered a great deal of the ground in considerable detail in Committee. I welcome this further opportunity since here, as elsewhere, matters are changing all the time.
It might be worth commenting in passing that, nowadays, in the modern state about 70 per cent. of all external affairs—what used to be called foreign affairs—are to do with trade and investment. We have of course handed over responsibility lock, stock and barrel to the institutions of the European Union for trade and investment. So it is inevitable, whether we like it or not, that very large sections of what might appear to be foreign policy—to do with sanctions, trade and the promotion of commercial interests around the world—are not in our hands any more. They are guided by men of considerable ability and world prominence such as Sir Leon Brittan, and Karel van Miert, the competition commissioner. That explains why on the world scene we hear a good deal more about those two gentlemen than we do about many a Foreign Minister, or indeed the other external commissioner, Mr. Marin, or the high representative who emerges from the Amsterdam Treaty. So one needs to start from the fact that a large chunk of the external affairs of this country operates under a completely different system which will not be very much affected by the machinery or intricacies of joint actions and qualified majority voting in the narrow foreign policy area. Nevertheless, it is the narrower area of various issues of more traditional foreign policy, which do not include trade, on which we must concentrate; and presumably they are in the minds of those who want Europe to speak—as we just heard from the noble Baroness—with a common voice.
There is a good deal of nonsense talked about the apparently desperate need for the European Union to reach a common view, and have a common or even single (a terrifying prospect) foreign policy. It is one of those needs that is alleged to exist, and a lot of rhetoric surrounds it as to how Europe cannot be itself and find its destiny unless that is done. I believe that we need to be fairly cautious in assessing these fine speeches.
My noble friend Lord Moynihan is absolutely right to warn us, as he did very clearly in his excellent speech, about the dangers of trying to search for a common foreign policy for its own sake and then creating an artificial foreign policy where it would have been rather wiser to have allowed the normal bilateral allowances and associations to form—or possibly even a common position to come together, but not driven by some imperative that there has to be a foreign policy. I am worried for the future that the alleged imperative—that somehow a common strategy and common positions must be established in this issue or that—will lead to more divisions and difficulties in the handling of those sensitive world issues. I am worried not merely for vague reasons but because the record tells me that that is likely to happen, and has happened in the past.
The history of the past 10 years of European searches for foreign policy has not been a happy one. I know it has led some people to conclude, "There you are. We told you so. Why did we not have a more effective machinery and we could all sing from the same hymn

1011
sheet?" That is one reaction. The alternative reaction is that it might have been better to be a little more cautious in rushing for a single policy.
The most recent event where there was an attempt to have a common foreign policy, which fell to bits in some disarray, and where it might have been more dignified not to have attempted it in the first place, was the handling of the latest Iraq crisis. I wish to turn in a moment to a further serious crisis, the handling of which we need to think about extremely carefully. However, further back, before Iraq, there was the Bosnia tragedy, where there was great difficulty on the part of EU members in getting together a common position. Again, some said that we should have had better machinery and others asked: why did we try?
Before that, as noble Lords with longer memories will recall, there was the absolutely disastrous example of an attempt at a common policy leading to the worst outcome. I refer to the German-driven insistence that there should be recognition of Croatia, despite statements in the Badinter Report that the independence of Croatia and its recognition failed on every legal principle. Nevertheless, it was so deemed by the Germans. Because the pressure was on for a common policy and for all EU members to fall into line, and it was believed at the time that by agreeing with the German insistence there would be some trade-off and benefits elsewhere, the independence of Croatia was prematurely recognised, with catastrophic and bloody results. So one has to be very careful indeed about pushing ahead on these fronts.
The more serious issue now developing is one which your Lordships may wish to discuss more fully when we come to the subject of enlargement. It is partly an enlargement issue and partly a foreign policy issue. I refer to what is now happening in Turkey and Cyprus. There we have the makings of a first-class crisis emerging which demands foreign policy handling of the utmost sensitivity by all EU members as well as by the EU collectively. It has a role because the matter of Turkey has been raised by enlargement.
I was interested in the quotation which my noble friend Lord Moynihan produced yesterday at Question Time in your Lordships' House. It was by Mr. Richard Holbrook, who is a somewhat disappointed man after his visit to Cyprus. He found great difficulty in getting any agreement off the ground. He found no movement in Cyprus between parties. Indeed, he found movement backwards towards dangerous tensions which may lead heaven knows where.
Yesterday my noble friend quoted Richard Holbrook as saying:
"[The] EU's decision to open membership talks with Cyprus in March was a correct one, but the failure to put Turkey on the same basis as the other 11 countries that began the accession process was a mistake".—[Official Commons, Report, Commons 11/5/98; col. 813.]
Mr. Holbrook is not everyone's friend, I know, but he knows what he is talking about. The mistake is one for which we will pay dearly, in its effect of embittering Turkey and exposing it to all the turbulence of the growing Moslem minority, soon to be majority. There
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are also the difficulties with the Kurds and the central Asian powers. Although far to the north of both the Gulf and the Arab/Israeli situation, they have an influence and an input into those. There is also the question of their neighbouring position to Saddam who is still in Baghdad. All those are terrifying potential crisis areas where the European powers need to proceed with the greatest delicacy and the utmost co-operation with each other, shoulder to shoulder, but without trying to rush into common positions where someone is left behind and told, "You can constructively abstain", and others are told this, that and the other.
It is a dangerous position, a dangerous moment, when European Union foreign policy needs to be handled not by automatic machinery but by the most sensitive and careful discussion between foreign ministers. Hitherto they have not handled it well and that has created the situation which Mr. Holbrook rightly says is a mistake. I believe it will be an extremely violent and hot crisis before long.
I have nothing against the sensible idea of our European neighbours and ourselves in the European Union seeking to establish in certain situations common positions vis-à-vis Chechnya, aspects of central Asia and the handling of China in some matters. Common positions are sensible enough. It is when we are told that there must be elaborate machinery to press us on towards common strategies, a much bigger matter, and common policies, which are bigger still, that I become alarmed.
In my experience, when we were dealing with foreign policy issues in another place whenever we discussed common foreign and security policy with our European neighbours, they were tremendously in favour in general of the machinery doing it all. However, when it came to specific items, it was hard to find one on which they were prepared to go along with their own recommendations. Practically every serious issue had a rider attached to it, namely, that it was a vital interest and therefore could not be subjected to the machinery of joint action, as with a common foreign and security policy. Alternatively, if it involved the military, the Germans fought strongly on it. They said, "We could never contemplate exposing any policy which involves our military to a CFSP machinery. The issue of using our military is so sensitive, so central and difficult to handle inside German politics that it would have to be under our complete control".
I complete a brief intervention by saying: let us have sensible allowances and co-operation among the European powers and work with the troika system that we had in the past. Let us have common positions, but beware of creating useless machinery, which like the sorcerer's apprentice, would develop its own momentum and press us towards common and, as my noble friend rightly says, artificial positions.
We can and do work effectively with our European neighbours, with France on certain matters, with Germany on certain matters and with Italy on certain matters. We can somehow manage to square the circle between the WEU concept and the NATO concept, both of which are important to us.

1013
I believe that too much searching for too much machinery for a common foreign and security policy will, as with EMU, which we were discussing earlier, start by being an alleged instrument for unity and end by being a violent instrument for division.
7.30 p.m.
Lord Pearson of Rannoch: My Lords, before my noble friend sits down, I congratulate him on his thoughtful and probing analysis. However, does he agree that a large part of the problem is that foreign policy is an essential attribute of a state? It is in the European Union's quest for statehood that we see its desire to meddle and interfere all over the world. Does my noble friend agree with that? It is an important part of the analysis. I agree with him; I do not think that bad workmen should be given newer and sharper tools until they have proved that they can use the ones they had before.
Lord Howell of Guildford: My Lords, I wish to qualify what my noble friend said—and he is perceptive on such matters—by repeating what I said at the beginning. In trade matters, the pass is already sold and external trade issues which are foreign policy are handled by the European institutions. But on the rest, I agree that when we hear the rhetoric—perhaps we should not take it too seriously—about the need for a European destiny, it is time for some of us to button up our coats. We know about people seeking European destinies. They have done it in the past; we have spilt a lot of blood and made great efforts to stop them, and we do not wish it to start again.
Lord Haskel: My Lords, I beg to move that the debate on Amendment No. 3 be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
Lord Haskel: My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, I should indicate that the Report stage will be resumed not before 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Leaded Petrol: Abolition
7.36 p.m.
Lord Montagu of Beaulieurose to ask Her Majesty's Government whether they are aware of the damage which could be caused to the engines of a great number of older vehicles, some of historic importance, as a result of the abolition of leaded petrol on 1st January 2000 and what steps they can take to alleviate the problem in the short and long term.
The noble Lord said: My Lords, I suspect noble Lords may be rather puzzled as to the motives that lie behind this Question, because there is no doubt that the world at large has welcomed the intentions of governments to phase out lead in petrol as soon as practical, in view of
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the proven health hazards that exhaust fumes from leaded petrol are known to create. There is, unfortunately, a down side for millions of vehicle owners around the world. I would briefly like to explain the situation by a short history lesson.
In the early days of motoring, petrol was sold in two-gallon cans from chemists' shops and the many manufacturers produced their own fomulas. It was not until the 1920s that the first filling stations were set up. As car engines improved in the mid-1920s and were designed for higher compression, it was necessary to improve the quality of existing petrol as it produced poor combustion in such engines, which led to a condition known to drivers as engine knock.
So how did lead get into petrol? Seventy years ago, British motorists, having been beguiled by a teaser advertising campaign featuring a '20s flapper girl over the headline, "Ethyl is coming to give you a thrill", were first able to fill their cars with the new type of petrol—leaded. The search for a miracle ingredient had been instigated by Charles Kettering, the engineering genius of General Motors.
Lord Berkeley: My Lords, will the noble Lord explain to the House what is a '20s flapper?
Lord Montagu of Beaulieu: My Lords, I will tell the noble Lord later. The search for a miracle ingredient had been instigated 15 years earlier by Charles Kettering, the engineering genius of General Motors and a research chemist named Midgley, after reputedly trying 33,000 different chemical compounds. The result was tetra-ethyl lead. It was first brought to Britain in 1928 under the trade name "Ethyl" by Pratts Petroleum, the ancestor of modern Esso. Ethyl also enabled the development of the new generation of aero engines which gave this country the Schneider Trophy victory and the Battle of Britain. For decades it was the essential diet of all good car engines.
However, the rise of the green movement has seen poor old Ethyl branded a scarlet woman for containing the dreaded poison—lead, albeit in minute quantities, forcing the gradual compulsory withdrawal of leaded petrol in favour of lead-free.
In the early days there was no knowledge that lead would cause any damage. It is only in the past 20 years or so that the realisation of the harmful effects of leaded petrol has led governments to resolve that it should be phased out as soon as possible. In fact, on 19th June last year the European Union Environment Council, of which, of course, Great Britain is a member, decided that leaded petrol should be banned as from 1st January 2000. From that date leaded petrol would only be made available to specialist interest groups such as classic car clubs—it must account for no more than 0.5 per cent. of total petrol sales—and petrol companies would not be allowed to sell such leaded fuel on their forecourts.
While the demand for leaded petrol is naturally declining as the number of vehicles that need it decreases, current calculations show that unless drivers change their fuel-buying habits, some 4 million motorists will still be using leaded petrol by the year

1015
2000. Of those however, only 1.5 million would actually need the engine protection the lead in 4-star provides, as ignition adjustments and other alterations can be made to alleviate the situation.
For those 1.5 million cars, lead in petrol acts as a protective barrier between the exhaust valve and the valve seat into which it fits. Without lead or an alternative valve seat protector, "soft" valve seats can wear away, causing stalling, loss of power and, in some cases, the eventual breakdown of the car.
Naturally, as the news came out of the impending ban on lead in petrol, there was widespread concern—a concern which I am representing tonight. So this is a good moment to declare my well-known interest in historic vehicles, both as president of the Federation of British Historic Vehicle Clubs which represents 293 clubs, with nearly 300,000 members and as chairman of the National Motor Museum.
So how many vehicles are owned by members attached to special interest groups? The Federation of British Historic Vehicle Clubs reckons that there are 300,000 collectors' vehicles out of a total of 789,000 at the moment registered by DVLA, all built before 1980. Many are still used as family cars, owned by people with modest resources who will be least able to afford the costs of modifications.
So what can be done about it? First of all, derogation can be sought in Brussels, but I am sure that most people understand, albeit reluctantly, that this country's green credentials would be very much damaged if Her Majesty's Government sought to go down that path, particularly as the phasing out of lead in petrol has been decided by the Council of Ministers. I am also aware of today's announcement from the Expert Panel of Air Quality Standards that it wants to reduce further the amount of lead in the atmosphere.
I have two questions to ask: first, in deciding not to apply for derogation, have Her Majesty's Government considered that one or two years' delay into the next century would give vehicle owners a little more time to test the additives and the lead replacement petrol which will be on the market? Secondly, could Her Majesty's Government inform the House which other members of the Community intend to apply for derogation? Rumours persist that most of southern Europe—France, Italy, Spain, Portugal and Greece—are all unhappy with the year 2000 and intend to delay until 2005.
There will of course be new additives to join those which have been on the market for many years and are most likely to come from small suppliers. We just have to wait to see how good they are. While carrying out some research for tonight's debate I consulted the oil companies concerned and the future is not quite as bleak as many people fear. I can report that the chairman of Shell confirmed to me that Shell has been aware of the situation for some time and has been working on the development of an additive effectively to replace lead and that the formulation has been finalised following extensive laboratory testing. It will be available and sold in due course as lead replacement petrol, either to be pre-blended into unleaded petrol or distributed in
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concentrate form for self-dosage by the customer. I understand that initial market research indicated that customers would prefer to buy pre-blended fuel out of a pump.
It is claimed that the use of lead replacement petrols over the past five years in some parts of Europe has demonstrated that they provide adequate protection for vehicles with soft valve seats in normal everyday use, so it is fervently hoped that there will be an acceptable replacement for 4-star in the UK when the lead ban takes effect in the year 2000.
Naturally, car owners are somewhat suspicious and distrustful and are taking pounds of salt with the claims of success in finding a real replacement for lead. They will be convinced only when they can use and assess the lead replacement petrol and the additives over a period of time.
Oil companies have the technical ability to sell lead replacement petrol in the UK now, but market research shows that the time is not yet right to introduce it into the UK market since customers have insufficient understanding or knowledge of the issues surrounding the phasing out of lead in petrol. They believe that there must be a British standard for lead replacement petrol before it is sold widely in the UK. That would guard against unregulated "wonder additives" which could have undesired side-effects, guarantee a minimum level of valve seat protection and reassure customers that adequate engine protection is being provided when they buy lead replacement petrol.
However, it is some comfort to know that lead replacement petrols containing alternative additives in place of lead are currently being used in 12 countries in Europe, as well as some countries in central Europe and in other parts of the world; for example, New Zealand. Austria has the most market-place experience of using lead replacement petrol, with more than five years' continuous use. That has shown satisfactory results, with no substantiated reports of engine damage in vehicles in normal every-day use.
Since the average mileage and speed are relevant, one would expect many classic cars to be less susceptible to valve seat recession than some more modern vehicles as most classic cars on the road tend to have lower annual mileages, less high-speed motorway use and engines which operate at lower engine revs.
Although one hopes that lead replacement petrol gives protection under all normal driving conditions, it must be recognised that some older vehicles—for instance, historic racing and sports cars—are run under much more severe conditions. Fortunately, the draft EU fuel directive allows for up to 0.5 per cent. of total petrol sold in each member state to be leaded, as long as it is distributed through "special interests groups". There is no doubt that such vehicles run under sporting conditions will require the full protection offered by leaded fuel and will require that fuel at club race meetings and so forth. I should like an assurance that that 0.5 per cent. allowance of leaded fuel will, indeed, remain available and conveniently available for those who require it. The great problem is how it will be distributed and at what price.

1017
Thus I specifically ask Her Majesty's Government to initiate urgent discussions with the major oil companies to try to resolve the distribution problem, bearing in mind that already aerodromes will have to stock leaded petrol and there are many motor racing tracks in the country which could have leaded petrol outlets especially available for historic vehicles attending race meetings. There is, of course, the question of private storage but that will naturally be bound by storage regulations.
I cannot stress too strongly that the motorists with older vehicles including classic cars are deeply concerned and desperate to be fully informed about the issues and plans surrounding lead phase-out, to ensure use of the correct grades and to avoid confusion about future changes. I understand that Shell is actively talking to motoring groups in that regard, but I see the need for a wider approach. I have no doubt that there is a role for the Government to play in publicising lead phase-out plans and thus giving confidence to motorists that oil companies will provide a replacement petrol, which will give the required protection.
Owners' concern and fear about the future is partly due to lack of information and partly due to ignorance. So it is very important that a comprehensive leaflet is introduced as soon as possible to be distributed to those concerned. I should like to see the Government place advertisements in newspapers, motoring journals and club newsletters to explain the situation. There must also be a much fuller information pack to go to garages and so forth; nor must we forget the problems of garden machinery, outboard motors and chainsaws.
To conclude, this question tonight is designed to give the Government an opportunity to inform all those interested of how they intend to deal with this situation in the years to come. What we urgently need now is more open government on this subject, a practice to which "New Labour" promised to subscribe. The noble Baroness can be assured that there are many thousands of somewhat distrustful and suspicious car owners in the country who fear that their cars will be made redundant through no fault of their own and who are urgently awaiting her reply.
7.50 p.m.
Lord Berkeley: My Lords, I congratulate the noble Lord, Lord Montagu of Beaulieu, for bringing this subject to our attention tonight. It is a matter of serious concern. I congratulate him on giving us a unique history of the problem and the possible solutions to it. In fact, it was so good that I should perhaps suggest to my chairman of Sub-Committee B that the noble Lord should be invited to attend as a specialist adviser, because he has given us some unique information. I am certainly looking forward to the next instalment on Ethyl, the 1920s flapper, outside this Chamber later this evening.
I declare an interest in that I have two cars which are particularly affected by this situation, one built in 1931 and the other built in 1970. I am not sure whether they can run on unleaded fuel. That is the problem; there is uncertainty about it. The matter was brought to my
1018
attention when Sub-Committee B started to look at this problem, and I am looking forward to seeing its resolution.
I strongly support the elimination of lead from petrol. It has to happen, and it has to happen quickly for the sake of everyone's health, but I believe that the Government have a duty to tell us who is affected, how serious the problem is for motorists and what can be done to mitigate the effects of not having lead in petrol.
I received a very interesting briefing from the AA, which is one of the few briefings that seem to be around. It is not quite as good as that of the noble Lord, Lord Montagu of Beaulieu, but it is not a bad start. I will not go through all the numbers again, but what it does mention is that there are 250,000 vehicles with soft valve seats which could be affected by prolonged hard driving. The noble Lord, Lord Montagu, mentioned racing, but the AA also mentions towing a caravan on the motorway. One would not want them to lose all their valves on a motorway.
Whether the solution is fitting hardened valve seat inserts or new cylinder heads is a matter for concern, but it is all going to cost money. I suggest that there are several choices open to the Government before they allow this decision to go ahead. The first is not a good one, and that is to keep leaded petrol. In some communication from my noble friend Lady Hayman it was suggested that this leaded petrol could only be sold through specialist interest groups and classic car clubs. In my limited experience, most of these clubs are run from people's front rooms, and the thought of handing out the two-gallon tins of petrol mentioned by the noble Lord, Lord Montagu, in people's front rooms has safety problems which would surely rule it out. It should not even be suggested. I am sure that my noble friend the Minister will say that I have it completely wrong—I hope she does—but I hope that was not a serious suggestion.
There is a second alternative, which is to ensure the provision of an alternative fuel, if it works. Again, the noble Lord, Lord Montagu, has said that the oil companies are working on it. If it is going to be introduced in less than two years should there not by now be standards? Should there not be agreements with the oil companies that this alternative is available? Should not the public be told that it will work and that their valves and their cylinder heads will work correctly?
There is a third suggestion, which is to provide some support for the capital cost of changing cars, possibly by reducing the age at which the vehicle excise duty is no longer paid. I do not pay VED on my two cars. It could be reduced from 25 years to, say, 15 or 10 years. It is an alternative way to mitigate the effect of spending £1,000 on a new cylinder head.
There are various different suggestions. I do not say that I approve of them all or support them, but it is very important that the motoring public, the millions of motorists who are concerned about this, are informed about what is going to happen in good time so that they can make their decisions about what should happen. Unless satisfactory replacement fuel which can be

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recommended with confidence is available, there will be confusion and alarm among motorists, and that would be very unsatisfactory. I look forward to hearing what my noble friend the Minister says in response.
7.53 p.m.
Lord Blyth: My Lords, I have an interest in this inasmuch as I have a classic car of 1963. It is a comparatively high performance V8 engine and I am worried about this. I do not use the car very much. Although I am a member of the Daimler and Lanchester Owners Club, I, along with many other people, am simply ignorant of what is going to happen to us.
I started my working life being an apprentice for the Daimler Motor Company shortly after the war. In the service department we had models coming in which had monobloc. In other words, the heads were not detachable so that one had the cylinder head and block combined. These were desperately difficult things to have anything to do with, and I would hate to think that people will put new valve seat inserts in them.
I am worried about my car, which is at the moment being rebuilt and will, I hope, grace your Lordships' car park before the Summer Recess starts. I do not use it terribly much, but I would like the Government to provide us with a guide to the change, exactly as has been suggested by noble Lords who have preceded me. There are a lot additives which one can buy which are totally valueless. That has been the case over the years. Having said that, another noble Lord may use the rest of my five minutes.
7.55 p.m.
Lord Geddes: My Lords, the noble Lord is to be congratulated on his brevity, which I shall try to follow. Our thanks are indeed due to my noble friend Lord Montagu of Beaulieu, not least because this fits almost exactly into a short inquiry being conducted by Sub-Committee B of the European Communities Committee, to which the noble Lord, Lord Berkeley, has already alluded.
The directive which we are looking at in Sub-Committee B is known as the auto oil programme, and the papers deal with pollution and leaded petrol. I am paraphrasing. These matters have been the subject of considerable correspondence between the Minister and myself during February and March of this year. Unleaded petrol, or the manufacture of cars suitable for using unleaded petrol, has been mandatory since April 1991. However, in that correspondence the noble Baroness, on behalf of the Government, has said that lead replacement additives are "expected" to be available by 1st January 2000, and that the cost implications are "not expected to be substantial".
This was the area which really concerned the sub-committee, which I have the honour to chair. We have gleaned in the space of our short inquiry that 57 per cent. of the cars currently on the road within the European Union were built before April 1991. Interestingly, that is very close to the UK figure of 55 per cent. Of course, it is acknowledged that not all
1020
those cars are dependent upon leaded fuel. Indeed, probably the vast majority of them are not so dependent upon leaded fuel. Nevertheless, there will be a substantial number that are dependent on leaded fuel. The answer is either lead replacement additives and, I repeat, they are only "expected" to be available within the timescale, or conversion, which my noble friend Lord Montagu said cost £1,000; the information I have averages at about £600, but it is a significant sum of money.
My noble friend Lord Montagu also alluded to garden equipment, lawn mowers, outboard motors and such things. There is a whole host of machinery, if I may use that expression, which will be affected by this ban. Sadly, the statistics on the number of vehicles, ignoring garden equipment for the moment, which may well be affected on 1st January 2000 varies, as far as I am aware, between 300,000 and 3.5 million. I believe that my noble friend gave a slightly larger figure. Whatever it is, it is going to be substantial, and I cannot understand—indeed, the sub-committee cannot understand—how the Government can say that the cost implications are "not expected to be substantial". They will be very substantial to the owners of such cars.
In the most recent correspondence, and I do not believe that I am divulging any secrets in this respect, the noble Baroness, who is always extremely courteous—I do mean that and I made that point in our debate last week on drink driving regulations—referred in her letter to the fact that we had queried in a number of instances the points about the withdrawal of leaded petrol, and she says in the letter dated 19th March:
"I am considering the points raised by the Committee concerning the withdrawal of leaded petrol and will let you have a detailed reply as soon as possible".
Perhaps during this debate we shall get that detailed reply. I do hope so.
Interestingly, we asked officials from the Minister's department whether they would be kind enough to give us a briefing on this subject before the debate this evening and, albeit very politely, that was declined. We will have the benefit of that briefing—it will be a benefit: I am not being facetious in that respect—in two days' time, on Thursday, two days after this Unstarred Question. Question-marks keeping coming into our mind.
The individuals in this country on whom the ban will bite are, I imagine—we do not have full evidence on this—principally from rural areas. There are some rather important votes for the Government in rural areas, and I say that standing firmly on these Benches. I urge the Minister most strongly, particularly following what my noble friend Lord Montagu said, to consider the derogation to 2005 if indeed the southern Europeans members of the European Union exercise their prerogative in that respect.
8 p.m.
Lord McNair: My Lords, I thank the noble Lord, Lord Montagu, for asking this Unstarred Question and apologise to him and to the House for missing the first couple of minutes of his speech.

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I have briefly to declare three interests in speaking in the debate. First, I have an interest in transport matters in general as parliamentary adviser to the Parkman Group, a civil engineering and transportation consultancy. Secondly, I am chairman of a company called Emission Control Systems International. It markets equipment which reduces pollution and increases mpg through promoting greater combustion of the fuel and also enables, I am assured, one to drive a car on unleaded fuel that is not designed to do so. My third interest is that I am the proud owner of a Morris Minor. Now, the Morris Minor is in a quite favoured position in this. As there are around 120,000 Morris Minors on the road and as they have what one might call a cult following, there is available an almost off-the-shelf, modified cylinder head. So this will not be too much of a problem unless people want to keep their Morris Minors in completely standard condition.
Various speakers in the debate have come up with figures. I shall add some more, which were provided to me by Charles Ware, who is the guru of the Morris Minor restoration fraternity. He has gone to the lengths of having parts made for his Morris Minors in a third world country using traditional labour-intensive means and, incidentally, paying people more than the going rate. He tells me that the AA has underestimated the problem. In round figures, in the UK alone, there are 24 million cars on the road. Unleaded facilities have been available for about eight years. If we say that 1.8 million cars a year have been sold in this period, the total number of cars using unleaded fuel comes to about 14.5 million. That means that approximately 9.5 million cars on the road cannot run on unleaded fuel. Many of those cars are otherwise perfectly sound and they would have tens of thousands of miles of useful life left in them. It is therefore essential that viable solutions, by way of additives or by way of equipment such as I have mentioned, are tested in time for their implementation and take-up before 1st January 2000. If that is not done, and if my figures are accurate, I can see considerable disruption to both the motoring industry and the motoring public.
There is a wider issue here which is highlighted by the noble Lord's Question. It concerns the way we produce vehicles and the way we view consumer durables, including cars. Mr. Ware, whom I mentioned earlier, has written an excellent book called Durable Motoring. Taking the Morris Minor as an example, he compares the overall cost of buying a renovated Morris Minor and keeping it in good condition for 25 years with the overall cost of buying a series of equivalent new cars over the same period. The Morris Minor, which lends itself by virtue of its design and construction to such a programme of planned maintenance, proves conclusively to be the more economical proposition. Of course, not everyone wants to drive a Morris Minor!
I mention this because most people who own cars are already caught on something of a treadmill. They have to overcome the financial inevitability of capital depreciation and the mechanical inevitability of the physical deterioration of their cars—the result of planned obsolescence which is built into the production
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process. If we impose a further burden requiring people to scrap their cars before the end of their usable life, it would be very unfair and quite unnecessary.
8.5 p.m.
Lord Monro of Langholm: My Lords, I thank my noble friend Lord Montagu for initiating this debate. We all know the debt we owe him for what he has done for motoring. I declare an interest as an enthusiastic driver of classic and vintage cars. The magazines Classic and Sports Car and Classic Car, the car club magazines and the Federation of British Historic Vehicle Clubs have all been doing their best to give publicity to this problem. We must try to get some answers from the Government tonight.
Why are the Government so anti-motoring, with a whacking great increase in the fuel tax and the registration fee for new cars? In particular, why are they so anti-vintage and classic motoring? Why have they stopped the rolling road fund exemption of 25 years? I understand from the press that the department is talking about the whole exemption system being scrapped as well. I find it inconceivable that the Government should go ahead and be so against what is, after all, a very attractive hobby carried out by many thousands of people who try to perpetuate the golden age of engineering in this country.
The problem before us tonight is one of lead petrol. My noble friends have given a clear indication of what the problem is. I hope the Minister will bear in mind that the cars we are talking about are, in the main, classic and vintage cars, although many cars made in the 1980s and even the 1990s will run into trouble. They are carefully driven, covering 1,000 or perhaps 2,000 miles a year, the engines are in top condition, there are minimum emissions and they are mostly used in the countryside environment where they do not add to the urban problem of pollution.
Is the Minister absolutely clear about fuel? Does four star red cause the amount of damage the Government say it does? After all, four star red accounts for a very small percentage of the overall amount of fuel used. Has she read—I suppose that everything in her Red Box is read these days—the report in the Sunday newspapers about the research of the United States Environment Protection Agency into diesel fuel which refers not only to the problem of global warming but to the possibility of cancer as well? Is she certain that her department appreciates the problems of global warming as between red and green petrol, bearing in mind the number of cars which use green or red? I believe that the department overestimates the damage that may be done by the relatively small number of classic and vintage cars which want to continue using leaded fuel.
What is to be done? My noble friends have indicated various possibilities. First, the derogation on red petrol could be extended, as the Minister is quite entitled to do within the European Union. Secondly, is she taking any steps to involve her department in scientific research into a possible additive? Is there to be more help on work on LRP, the lead replacement petrol? All this needs to be done urgently if she is not to remove the ban in the year 2000.

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Over the years many additives have been produced. How many have proved to be beneficial in this case? I would like to believe that there was some active scientific research being carried out by the Minister's department to help the thousands of people, particularly those with cars built in the 1970s and 1980s, when we come to the inevitable problem.
Noble Lords on all sides of the House have raised the problem of the great expense of grinding out the valve seats and inserting new, hardened seats and guides. That is not always possible with large, four-cylinder engines because the cylinders are so close together and there is not room to bore out valve seats and insert new ones. As the noble Lord opposite said, if one has a fixed-head engine—quite a number of cars had them in the 1920s because of the difficulty of getting a tight seal with a gasket—it is very expensive and difficult to achieve.
From what noble Lords have said on all sides of the House, I hope the Minister realises that we have to find answers quickly, unless the Government are going to give a derogation, which is the obvious thing to do. We should be given two to three years more in order to help to resolve this problem. As a noble Lord said not long ago at a public meeting, the Minister has to stop the relentless pressure to make motoring with classic and historic cars impossible. I hope that she will do something about this.
8.10 p.m.
Lord Steel of Aikwood: My Lords, it is a particular delight to follow the noble Lord, Lord Monro of Langholm, in this debate. He and I were constituency neighbours for three decades in the south of Scotland and we shared many harmless enthusiasms along with political differences. One of them was indeed the driving of classic cars. I agree entirely with everything that he said. I also thank the noble Lord, Lord Montagu of Beaulieu for introducing this debate. I noticed that one Sunday paper said that I was going to be bracketed with him in this debate, to which someone unkindly said that they could think of a no more appropriate place than the House of Lords to be debating old crocks. I thought that that was not a very complimentary observation. He has, of course, a much larger collection of old crocks than I have. I have only two and I declare that interest.
One of the functions of Parliament is to stand up for minorities. There are two quite distinct minorities affected by the proposed withdrawal of leaded petrol in, let us face it, only 18 months' time. The first has already been mentioned by other noble Lords. They are the hard pressed people in rural areas such as the noble Lord, Lord Monro, and I have represented over the years. They live in areas with no public transport and no alternative. They are often on low wages and therefore drive to work in what are politely called "old bangers". I remember on one occasion having to tell a Minister of Transport that I had come across many constituents of mine who drove vehicles whose value was less than the vehicle excise duty charged each year. That is a particular minority who will be severely affected. I am not making it up. I remember one particular case in the
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Ettrick valley where the collapse of the family vehicle meant the dole queue. There was no question about it. The Government should be conscious of that particular minority.
If my noble friend Lord McNair is right as regards the figures, it will be interesting to have the Government's reaction. The AA claims that by the start of the year 2000 around 2 million vehicles will be using four star leaded fuel. My noble friend has said that the figure is much higher, but whatever it is there is a substantial minority interest in the matter.
The second minority has already been referred to and that is the owners and drivers of classic cars. Here the responsibility of the Government is to provide clearer information as to what is happening. I find that that is what people complain about most. They say to me, "You are a Member of Parliament and surely you know what is going on". I have to reply, "Frankly, I don't". I believe that we are all in that position.
Perhaps I may quote from an interesting article in the Jaguar Driver magazine. The author of the article about unleaded fuel writes,
"I wrote to one of the retailing chains who sell unleaded 4-star petrol seeking assurance that their product can he used in Jaguar engines which are designed for 4-star leaded fuel. The reply stated that they could not guarantee that this fuel was suitable for a particular model of car!".
That is passing the buck. The answer is that the people who own these cars have no idea what petrol is safe in what particular cars and for what engines. As regards this whole issue one finds a certain washing of hands. The United Kingdom Petrol Industry Association, for example, in a letter to Sub-Committee B on Energy Industry and Transport, says as regards the reduction of emissions from passenger cars,
"This is primarily a question for the Motor Industry".
So they are out of the picture. Then one turns to the memorandum to the European Communities Committee from the Society of Motor Manufacturers and Traders, which states,
"With respect to the proposed banning of lead in petrol. we must point out that SMMT members have not built vehicles for the United Kingdom market which also have to use leaded petrol, for many years, over a decade in many cases. The issue of an unleaded petrol ban is, therefore, in some senses, academic".
It is not in the least academic for those who are directly affected by it.
There is the question of future standards. We are told by the Automobile Association that,
"The British Standards Technical Committee are very close to a specification for an additised fuel".
But the Institution of Mechanical Engineers points out that that has not yet been achieved and that there is considerable doubt about the effectiveness of these fuels. The AA has also said that,
"it would be in the interest of the consumer if there were an agreed method to test for valve seat recession in vulnerable engines".
It also points out that if the market proves to be,
"too small to provide [continued leaded petrol] at the pump".
after 2000, it is likely that motorists will be dosing fuel themselves using proprietary additive products.

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As regards these, it is interesting to note in the memo from The Society of Motor Manufacturers and Traders that,
"'after-market' fuel additives [are] notoriously prone to exaggerated claims, and little real evidence of satisfactory performance exists".
So we have only 18 months to go in which to find more satisfactory evidence that these alternatives are effective.
Finally, in the same memo there is reference to the use of 95 octane unleaded petrol in lieu of the 97 octane leaded petrol, which will cause,
"deleterious effects [which] will be worsened by increased speed, possibly causing terminal damage in … extreme case[s]".
My final plea to the Government is that we need more information. Whatever decisions they are making, the matter cannot be left to the petrol industry, the British Standards Institution or the motor industry. The buck stops at the Department of Transport and we really need to know what is happening.
8.16 p.m.
Lord Luke: My Lords, it is a great privilege to follow two such distinguished and erudite graduates from another place. We are all most grateful to my noble friend Lord Montagu for asking this Question. He made an excellent and most interesting speech. However, that was to be expected as there is no one better qualified to speak on the subject of vintage and veteran cars than he.
I also state a small interest. Many years ago I had one well known classic car, the Aston Martin Atom, which was a unique prototype. So I can confirm the strong feelings with which many people tend to regard their valued, and often valuable, old cars. I look forward very much to seeing the car of the noble Lord, Lord Blyth, in the car park. I have been trying to work out what sort it is, but no doubt he will tell me afterwards.
There is no real argument about the detrimental effect of lead in petrol, with the greatest respect to my noble friend Lord Monro. I believe that it has been proven that it is very unhealthy. It is also true that unleaded petrol is proven to be as satisfactory as leaded as long as it is used in a vehicle with the right engine specifications.
It seems to me that the Government have to deal with three separate but interlinked problems. One is very easy, and that is what happens to several million car users who could now, without great cost or inconvenience, switch from leaded to unleaded fuel in their cars. All that is required is some effective government publicity.
The second problem concerns an estimated 1–5 million cars in the year 2000 which will not run on anything but leaded fuel without the likelihood of serious damage to their cylinder heads. Clearly, the solution lies in an additive being found which will do the same job as lead. I understand that research has taken place and a product has even been on the market. It appears that the only delay in progressing to a solution is the fact that the British Standards Institute is going slow on its job of establishing precise standards for fuels containing lead substitutes. It appears that a legal Gordian knot needs to be cut quickly. I urge the
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Government either to do so or possibly to find some means other than the BSI whereby a standard can he reached for satisfactory additives.
The third problem is the one that prompted the Unstarred Question tabled by my noble friend Lord Montagu: historic cars. I am sure that the Government are aware of the strong and growing sport of racing some of these old cars. This has been going on for about 30 years. That is why some of the additives will not do because those cars are not able to withstand racing. Are the Government aware that already some people are having expensive engine rebuilds carried out to try to eliminate the soft valve seats, because there is considerable scepticism about the proposed 0·5 per cent. of leaded fuel being available only for classic cars after the year 2000? How does one define a classic car? Is it not possible that some of the 0·5 per cent. may be converted to old bangers? How will the fuel be distributed? Will it carry petroleum tax? If so, will it not be beyond the range of all except the rich? Is it not likely that a black market in this fuel will develop? Have the Government contacted the appropriate authorities in Austria and New Zealand, where I understand that leaded fuel has been off the market for some time and adequate substitutes have been tried, tested and proven?
The question of a possible derogation for Portugal, France and Greece has been mentioned. I do not know whether that would apply to Britain even if the Government wished to pursue the ploy of social hardship. But I do not believe that it would be a very long delay even if it was done. There must be some rapid and decisive action soon; otherwise, there will be a lot of confused and angry motorists. It is important to me and to a great number of others because some great old cars will be unable to be used except with inordinate cost and trouble. They are part of our heritage and a great many people care about them. The Government must prove that they care for that part of our heritage as much as they profess to care about other parts of our heritage.
8.22 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, I am extremely grateful to the noble Lord, Lord Montagu of Beaulieu, for giving me the opportunity this evening to make clear the Government's position on this important issue, and one that we recognise is of great concern to many. That has been apparent from the contributions made to the debate. I am also grateful to the noble Lord for the recognition that the future is not as bleak as some people may fear. It may be that I should also declare an interest in that I am the only speaker in this debate who does not own a classic or historic car.
The noble Lord, Lord Steel, said that the buck stopped at the Department of Transport. Of course, it is now the Department of the Environment, Transport and the Regions and that is where the buck properly stops because we must look at this issue in the round. One must acknowledge, as did the noble Lord, Lord Luke, and other noble Lords, the context in which one is considering this matter; namely, the detrimental effects

1027
of lead in the atmosphere which are well known and the reason behind the unanimous support of all member states for the banning of leaded petrol from the year 2000. I say to the noble Lord, Lord Monro, that I do not believe that that support should be characterised as a crusade against the motorist. That is absolutely not the case. This is a crusade in favour of air quality and children's health.
I also understand the concerns about US research into diesel. We have a substantial research programme into the effect of air pollutants, including investigation of the health effects of fine particulates. I do not believe that we are neglecting that area. Nor do I believe the Government are neglecting the cause with which the noble Lord, Lord Montagu, has been associated for so long; that is, to ensure that the rich heritage of vehicles that the country enjoys is protected. The reasoning behind the negotiation of a derogation for a small ongoing supply of leaded petrol was primarily to protect the needs of classic car racing. Perhaps I may return to the categories of cars that will be affected in a moment.
Since recognition in the 1960s and 1970s in medical circles of the particular risks of exposure to lead pollution, mainly from emissions from petrol-engined vehicles, lead in petrol has been progressively reduced. Sales of unleaded petrol have been encouraged and today account for three-quarters of the market. These policies resulted in a fall in lead in UK air of some 70 per cent. in that time. This is not something that has gone on only in this country. A number of countries are ahead of Great Britain in this area. Austria, Sweden, Finland, Denmark, Norway, Germany, the Netherlands, Canada, the USA and New Zealand have already banned or reduced to extremely low levels sales of leaded petrol. We are not operating completely in the dark. There is experience from other countries. It has been made possible by the development of alternative additives to lead which have been introduced on a widespread basis without any major problems for owners of older vehicles. It was against this background that member states unanimously adopted a ban from 2000 which has been endorsed by the European Parliament.
The Government supported the ban in line with their policy of taking action wherever practicable to reduce exposure from all sources of lead and to ensure that the general decline in UK blood lead levels continues. In areas where there is a concentration of industrial and vehicle lead emissions the ban will make a significant contribution to meeting the kind of levels recommended in the report of the Expert Panel on Air Quality Standards which was published yesterday.
Tonight much has been made of the figures. For example, the noble Lord, Lord McNair, provided some details. It may assist if I give the Government's understanding of the problem and the action that they can take to deal with various aspects. The use of leaded petrol has been steadily declining and now accounts for about 23 per cent. of total petrol sales. We predict that by January 2000 this will have fallen to about 18 per cent. There will however still be a large, though declining, number of older vehicles that will be affected by the
1028
withdrawal of leaded petrol. Estimates suggest that the total number of cars using leaded petrol may be as high as 5–3 million on 1st January 2000. However, the same estimates suggest that as many as 3 million of these vehicles could use unleaded petrol either directly, with absolutely no change, or with very simple engine adjustments. Here, we are not talking about expensive engineering tasks but perhaps the changing of the timing of engines at a cost of between £15 and £50.
Of the remaining 2·3 million vehicles, leaded petrol currently performs the important function of providing lubricant protection from wear of soft valve seats in the engine. I am very nervous about lecturing noble Lords on these details. I suspect that the engineers far outnumber me. It also provides a higher octane, which many of these vehicles require. However, both of these functions can be fulfilled by practical and proven alternatives that we believe will be available. Octane needs can be met simply by owners switching to high octane fuels such as super unleaded petrol or the new lead replacement petrol. Alternatively, minor adjustments can be made to engines to compensate for the lower octane value of unleaded petrol. These are all practical and proven alternatives for vehicles that need a high octane fuel.
Alternatives also exist for those vehicles which will continue to require lubricant protection. In those countries where leaded petrol is already banned, the oil companies have provided alternatives either in the form of lead replacement petrol, containing suitable substitute additives, or by such additives being sold separately for motorists' use—and also for gardeners' use. What will deal with car engines will also deal with lawn mowers in particular.
The substitutes have, we understand, resulted in few, if any, reported problems arising from valve seat wear for vehicles operating under average, mixed day-to-day driving conditions. Where problems have occurred these have been associated with continuous high speed or high temperature operations such as may be found under high engine load conditions. Those have been referred to either in terms of where vehicles are used in a very aggressive fashion—not, as has been pointed out by noble Lords, the usual use of classic cars—or where they are towing heavy trailers or caravans for sustained periods. It is a question of avoiding prolonged use at high engine speeds or high engine loads, as these may result in very high engine temperatures. Motorists must take care to maintain the engines properly if we are to reduce the risk of valve seat recession. For most vehicles preventive measures by way of inserting hard valve seats—in those cases where we are talking about hard wear—should cost no more than £200 to £400, although I recognise that for more sophisticated and specialist vehicles the cost may be higher. It will depend largely upon the nature of the vehicle. The market experience—
Lord Steel of Aikwood: My Lords, is there any chance that the department might be able to give authoritative advice as to which engines require which treatment?
Baroness Hayman: My Lords, I hope that I can deal with the question of advice in a moment. The key—and

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the noble Lord himself referred to it, as other speakers did—is to have good information in this area. I want to put on the record some of the more technical aspects, but I think it is important that we then look at how we address the concerns of individuals.
The oil companies are well placed, we believe, to cater for that part of the UK market which will continue to require protection against valve seat wear. As to concerns about the availability of lead replacement petrol, supply will remain a matter for commercial decision but there is clearly going to be a strong demand for such a product. We are confident that the oil companies will respond as they have done in other countries. We understand that they are making plans to have lead replacement petrol introduced in the UK from about the middle of 1999. But we are in something of a chicken-and-egg situation. We will not get the lead replacement petrol being introduced until there is a firm date for the ban on leaded petrol. It is in the interests of certainty to get on with the task of meeting the needs of the cars and the car-owners for this sort of petrol.
The noble Lord, Lord Montagu, and others mentioned the need for a British standard for lead replacement petrol. I think that would help to reassure motorists. But I can reassure the noble Lord, Lord Monro, that officials from my department have participated in the British Standards Technical Committee meetings in order to help progress development of the new standard. The work was virtually complete when the BSI announced earlier this year that it was to halt further progress pending the resolution of a legal dispute involving a member of the technical committee. There are problems from that delay for all those involved, especially in the short term, but we are confident that the problem will be resolved in good time for the standard to be finalised and for the fuel to be widely available for the year 2000.
Turning to the position of historic and classic vehicles, which is of particular concern, the alternatives of lead replacement petrol or bottled additives will of course be suitable for use by the vast majority of these vehicles, especially bearing in mind the type of use to which they are generally put. Where these vehicles are used for such activities as classic car racing, however—circumstances in which considerable load is demanded on the engine—it is recognised that substitutes for lead are unlikely to be sufficient to meet their needs. That is why under the terms of the directive the UK has negotiated a special provision to ensure that a supply of leaded petrol is available to cater for such needs. The allowance is indefinite. It is limited to 0·5 per cent. of total sales. We would have liked more but we did not win that argument. I have noted the concerns that the noble Lord, Lord Geddes, raised. I am sorry about the officials not coming before the meeting. That was not a conspiracy; it was a matter of timing. I hope that by what I have said tonight, and the detailed information that they will be able to give the committee, we can reassure people.
I do not have time to deal with matters in great detail. The point I should like to make, very clearly, is that the key here is good communication. It is absolutely essential—and I take the responsibility of the department here—to work with all those involved—the
1030
AA, the RAC, the historical and classic car clubs and the industry—to ensure that the information is available, is in a form which people can understand and is accessible to them. I would not in any way shirk from the department's role in that responsibility. We also have a responsibility to work with classic car organisations over the distribution mechanism for that 0–5 per cent. derogation to ensure that it is available for the classic car racing fraternity and to negotiate the way in which it can safely be distributed under the terms of the derogation.
I am aware of the time constraints. I hope that we will be able, in the evidence to Sub-Committee B, to reassure noble Lords further. But I say once again that the steps being taken by industry, government and other organisations and the experience in other countries lead us to believe that we can address the concerns expressed today and ensure the continued operation of older vehicles following the general withdrawal of leaded petrol in the year 2000.

European Communities (Amendment) Bill
8.36 p.m.
Consideration of amendments on Report resumed on Amendment No. 3.
Baroness Symons of Vernham Dean: My Lords, I think in truth that what the noble Lord has presented us with is a wrecking amendment. If passed, it would prevent the United Kingdom from taking part in any decision under the common foreign and security policy until both Houses of Parliament have passed a resolution on the CFSP. That would mean that, once the Amsterdam Treaty was enforced, we would, under domestic UK law, be prohibited from participating in the CFSP, which would then be virtually inoperable. We could not in good faith ratify the treaty subject to that constraint. So it will not come as a very great surprise that the Government cannot accept this amendment.
However, as the noble Lord, Lord Moynihan, acknowledged in Committee, in an interdependent world it is important that we co-operate with our EC partners on foreign policy when we have common interests. That means pooling EU efforts where sensible and in line with United Kingdom national interests. Collectively we can exercise more weight on the world stage.
However, a single supra-national CFSP would not be more effective. CFSP is based on the will of member states to act together. That will cannot be artificially created through institutional mechanisms such as QMV. If member states do not hold convergent positions, we should not try to create a false consensus. Such a hollow common foreign policy would weaken, not strengthen, the weight of the EU on the world stage, since member states would be quick to undermine that policy behind the scenes. I believe that there is a large measure of agreement on that point between the noble Lord, Lord Moynihan, and Her Majesty's Government.

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That is why the Government ensured, as we committed ourselves to do in our manifesto, that under Article J.13 no member state can be forced to act, or not to act, against its will. Member states in the Council remain in firm control of CFSP and the presidency remains in the lead in managing it.
The CFSP provisions of the treaty introduce practical steps to streamline decision-making and financing arrangements, to improve the quality of Council Secretariat advice, to improve external representation of the EU, and to enhance the armoury of instruments for action at member states' disposal. It is a good result for Britain and for the European Union.
I wish to cover each of these improvements in a little more detail. I turn first to decision making. In line with their negotiating aims, the Government preserved at Amsterdam the UK's ability to require unanimity in CFSP decision-making. Article J.13 preserves unanimity for all decisions on common foreign policy in the form of common strategies, or of joint actions and common positions not agreed on the basis of common strategies; and for any decision with military or defence implications.
Maastricht allowed for QMV for implementation of agreed foreign policy. Amsterdam makes that automatic. Further, and usefully, it adds the ability constructively to abstain when a member state does not want to be forced to act, but does not want to stop others from doing so. The decision on whether to abstain or not is for the individual member state, and that state alone. So constructive abstention cannot be used to make a member state act against its national interests if it is in a minority.
These two measures usefully streamline decision-making. The UK has for many years played a leading role in CFSP and will continue to do so. So QMV and constructive abstention are to our advantage. They allow more effective implementation arrangements for what we want. EU election monitoring, for example, could not be held up by bickering over precisely how many monitors to send. Less active member states could stand aside without blocking action by others.
However, if there is a real difference, the noble Lord, Lord Moynihan, is right: the so-called "emergency brake" provision in Article J.13(2) is an important safeguard which recognises the potential sensitivity for all member states of any such decisions by QMV. It allows any member state to require that any decision be taken by unanimity. The individual member State has independent control over whether and when to pull the emergency brake. The noble Lord asked for an assurance about whether anyone else would arbitrate. The answer to that is no.
The noble Lord invited me to say which current issues in foreign policy will be the subject of common strategies. As the noble Lord knows, the treaty does not define when a common strategy must or must not be used. Common strategies will come into being when heads of state and government recognise that there is enough common ground in their approach to a foreign policy issue to warrant agreeing a framework which can
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be the basis of future action. But the noble Lord went on to imply that the member state would have no power to block subsequent joint action or common policies agreed by qualified majority. The answer to that is the emergency brake mechanism, which can be applied so the national veto is retained.
If such an issue were referred back to the European Council, the member state which had pulled the emergency brake might well feel itself under some political pressure, but it will have used the emergency brake only to protect a key national interest. Therefore, it will no doubt stick to its position. It is for the member state alone to decide what is a key national interest.
The noble Lord invited us to consider what he referred to as a case study—that of Sierra Leone. Perhaps I may remind the noble Lord that a Customs investigation is under way into alleged breaches of UNSCR 1132. The Foreign and Commonwealth Office is co-operating fully and openly. There was no ministerial prior knowledge or approval of any breach of the arms embargo. It has not been established whether UNSCR 1132 has been breached or whether the Government were in any way involved in such a breach.
I do not wish to dwell on the matter in quite the excitable way the noble Lord seemed inclined to do, but the Foreign Secretary did not disown officials. The Foreign Secretary went out of his way to make it clear, as I did yesterday in your Lordships' House, that no one should rush to judgment. I said to the noble Lord, Lord Avebury, yesterday that I would write to him about the serious matters he raised in relation to Sierra Leone. It will be a sensible and considered reply. If the noble Lord, Lord Moynihan, would like a copy, I shall of course be happy to send one to him. But I urge the noble Lord to be sensible and calm about this. We have to wait for the facts. Rushing to judgment, as it seemed the noble Lord was a little inclined to do, is not the sensible course of action at the moment. We know the key facts on Iraq; we do not know the key facts on Sierra Leone. If we are looking at case studies, I say to the noble Lord that a case study needs facts and I suggest that he, like the rest of us, should have the patience to wait for those facts.
Looking at one of the examples which the noble Lord wanted us to consider, the EU agreed a joint action on how to handle the transition to democracy in South Africa. Subsequently, the Council decided on the resources which should go to that end. It is quite possible that, if common strategies had existed, heads of state and government might have chosen a particular route because of all kinds of decisions likely to be taken under it, if they were relatively uncontentious.
I hope that I have managed to answer the sensible points which the noble Lord raised and that I have encouraged him to be a little more sensible about some of the other points which he seemed inclined to draw us into.
Baroness Williams of Crosby: My Lords, I wish to make only one point.
Lord McIntosh of Haringey: My Lords, we are at the Report stage. Only the mover of the amendment can speak after the Minister.
Lord Moynihan: My Lords, I am grateful to noble Lords who have contributed to the debate. I am particularly grateful to the noble Baroness, Lady Ludford, for her initial remarks. I have never been paid so great a compliment by a colleague from another party. I am concerned that my example was not as apposite as she might have liked. She went on to develop it in some detail, picking up six threads of the argument that I developed during my speech and making interesting observations on them. Clearly, she felt it important to consider those points and I am grateful to the Minister for responding to them.
My noble friend Lord Howell, was right in airing and echoing the reservations that I made in my opening remarks, particularly the point that it was fine to adopt common positions but that there was real concern about the move from common positions to common strategies and, ultimately, the more important move from common strategies to common policies. That point and the contribution which was made by my noble friend at this stage was extremely important.
I note and appreciate, although I am somewhat surprised, that the Minister came back on the example that I used of Sierra Leone. I simply state to the House that the fundamental point that I was making in the context of this amendment is that if the Government do not know their own policy, how can they possibly influence foreign policy in Europe? There is no better contemporary example of the importance of that point than Sierra Leone and thus my detailed analysis this evening.
I agree totally that case studies require facts. It appears that government Ministers do not have them. I was putting a number of important points to this House in the context of what we have been informed by Ministers in order to develop the point that it is clear that the fast-moving, fast-shifting sands of explanation which we are having on an almost daily basis on a foreign policy issue would cause very real difficulties for Ministers going to Europe and trying to establish a common policy position on what might be an extremely important issue. Certainly Sierra Leone is an important issue and there are implications within Europe which may well lead it to become an important issue for Europe, not least in relation to European Union arms embargoes with regard to Nigeria.
That is the reason that I raise the issue. I am pleased that I gave that example. I am grateful to the Minister for placing on record yet more reflections from the Foreign Office on the important questions that I raised.
Finally, in no way was my amendment intended to be a wrecking amendment, and I would happily debate that issue. However, we have had a useful debate on this matter and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Moynihanmoved Amendment No. 4:
After Clause I, insert the following new clause—
BORDER CONTROLS: IMPLICATIONS FOR GIBRALTAR
(". Her Majesty's Government shall not exercise the opt-in to border controls set out in Protocol 4 to the Treaty signed at Amsterdam on 2nd October 1997 amending the Treaty on European Union, the Treaties establishing the European Communities and certain related Acts until each House of Parliament has cone to a Resolution on a motion tabled by a Minister of the Crown relating to the implications for the people of Gibraltar of the voting arrangements for such an opt-in.").
The noble Lord said: My Lords, this amendment relates to the position in Gibraltar at present. I say straightaway that I particularly regret the fact that it is necessary to return to the issue of Gibraltar and Britain's opt-in to the Schengen acquis. In Committee, I went into some detail on my amendment as to the implications for the people of Gibraltar of the voting arrangements for the opt-in to border controls. I did not do that because I sought to analyse policy differences between the Opposition and the Government. Indeed, as I have made clear repeatedly, this is an area of the treaty as regards which we wholeheartedly support the Government for maintaining the previous government's policy in retaining sovereignty over Britain's border controls. It was not because I sought to explore the nature of the provisions. No, indeed. In Committee, I went into detail because I sought an explanation and perhaps even an apology to the people of Gibraltar for the Government's apparent utter ineptitude and negligence in handling those negotiations. Nowhere in the treaty is ministerial incompetence more obvious than in respect of the issue of our opt-in to border controls.
As noble Lords will recall, I set out the catalogue of incompetence, conflicting views and contradictory statements from the Government regarding Gibraltar. I had hoped that in Committee, the facts would be presented to us frankly and openly so that once we were in possession of all the facts, we should be able to determine whether it was most appropriate to accept the Government's explanation or to demand an apology. But my hopes were severely disappointed. I am now in a position of having to press the Minister on this matter.
First, I sought clarification on the precise areas of the treaty to which the Prime Minister referred in his Statement of 18th June 1997. He told another place that
"what we have secured, which is important and is a better way of going about things, is what I call an opt-in. We have the power within the treaty to go into any of these areas if we want to. If we do not want to, we need not, but if we do, no other country can block us going in".—[Official Report, Commons, 18/6/97; col. 319.]
I should be grateful if the Minister would clarify whether that statement referred only to the new Title IIIa on asylum, immigration and visas or whether it referred also to the Schengen acquis. If it referred only to the new Title Ina, why did the Prime Minister use the Schengen acquis to illustrate his point? Clearly, if the Prime Minister's statement did refer to the Schengen acquis, then it has subsequently been shown to be incorrect and the Foreign Secretary misled those in another place.

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Secondly, I sought clarification from the Minister on the issue of Article 4, the protocol, integrating the Schengen acquis into the framework of the European Union. I sought to understand how the Foreign Secretary allowed a late amendment from the Spanish Prime Minister to be accepted into the treaty by default in the early hours of the morning on 18th June, meaning that any member state, including Spain, will have a veto over future opt-ins to the Schengen acquis which will be decided by unanimity rather than by QMV.
That blunder by the Foreign Secretary potentially hands the Spanish a powerful bargaining chip with which to exact concessions over Gibraltar. I welcomed the assurance of the noble Lord, Lord McIntosh, in Committee that the Government would:
"continue to defend vigorously the position of Gibraltar in the European Union and the Community law rights of Gibraltarians".— [Official Report, 27/4/98; col. 105.]
That answered one half of the question to the Foreign Secretary from the noble Lord's colleague in another place, the honourable Member for Wrexham, which I repeated in Committee. Like me, he wanted to know whether that had happened simply because,
"Her Majesty's Government do not care about Gibraltar and give it a low priority, or was it just a Government cock-up?"
I had hoped that the noble Lord would take the opportunity to answer the other half of the question and would cut cleanly through the morass of negligence and blunder and the catalogue of confused and contradictory explanations which followed to produce a clear, consistent and coherent explanation of what happened.
However, an embarrassing multitude of questions remain unanswered. All we know for sure is that the Foreign Secretary thought he had agreed to one arrangement—opt-in by QMV—only to discover that he had agreed to something completely different; that is, opt-in by unanimity. After that, the version of events twists, turns and spins out of control, depending on who is doing the explaining.
I shall ask those specific questions to which I did not receive a reply and perhaps this evening we shall be given some conclusive answers. Did the Foreign Secretary actually challenge the Spanish Prime Minister's late amendment, causing it to be withdrawn as he says he did? If so, why was the Dutch presidency unaware of such a challenge?
The Government have called this a "difference of historic interpretation". What is a difference of "historic interpretation" in plain English? Is it not the case that one party is telling the truth and the other party is not? In that case, who is telling the truth—the Foreign Secretary or the Dutch presidency? Either answer would have very serious consequences. It is not even clear whether the Foreign Secretary challenged the proposal for an amendment itself. The Foreign Secretary has told us that the amendment was withdrawn when he challenged it, while the noble Lord, Lord McIntosh, told us in Committee that no amendment was submitted. He told us that:
"During the course of the debate at the European Council, Spain proposed an amendment to the Schengen Protocol to bring in unanimity for UK and Irish participation in the Schengen
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acquis … At the insistence of the Foreign Secretary, there was agreement that any such amendment should be submitted in writing by Spain".—[Official Report, 27/4/98; col. 105.]
He went on to say that no such amendment was submitted.
Never mind that relatively minor disparity. So far, so good in the Government's negotiations. The Foreign Secretary challenged either a Spanish amendment or a Spanish proposal. The Spanish backed down and either withdrew the amendment or decided not to submit it formally. But if, thanks to the Foreign Secretary's insistence, the amendment was not formally submitted or if it was withdrawn, why did it mysteriously reappear in the text of the treaty when the Foreign Secretary received it after the summit? Again, in Committee, we received no answer. Was it really the result of a deal done between the Spanish Government and the Dutch presidency which was kept secret from the other member states and incorporated into the treaty after the negotiations had finished, as the Foreign Secretary has claimed? Will the Minister today give the House consistent details of the secret deal? We do not even know for sure when it was concluded. Was it during the summit on the nights of 16th and 17th June, before the negotiations had finished, as the Minister of State thinks? Surely that cannot be correct since the Foreign Secretary has told us that at that very same time, the Spanish amendment was in its death throes thanks to his bold, on-the-ball challenge?
The Foreign Secretary said that this hole-in-the-corner deal between Spain and the Netherlands was concluded after the conclusion of the summit and that he found out about it a week later when he received the text of the treaty. But it seems that his Minister of State knew the day after the summit was concluded when he received a copy of the revised treaty on 19th June and not like the Foreign Secretary, after a whole week.
How come the Minister of State failed to inform the Foreign Secretary of what has happened? Perhaps that lapse is not surprising, as we have come to appreciate more recently that communication among Ministers, the Foreign Office and its officials is clearly at a low. At one point the Minister of State tried to combine both explanations when he said that the deal was done between the Dutch presidency and the Spanish Government in the margins of the summit and then discussed afterwards.
I had hoped that the noble Lord, Lord McIntosh, would throw some light on the matter; but, sadly, he failed to shed any light on the point when he told us in Committee:
"When the revised text was circulated after the Summit, we subsequently learnt that the unanimity requirement had been introduced into the text".—[Official Report, 27/4/98: col. 105.]
Can the Minister clarify this evening once and for all when the Government first learned that the unanimity requirement had been introduced into the text of the treaty?
In alleging that the text of the treaty was changed to the detriment of the UK, are the Government in fact saying that they were effectively cuckolded by the Dutch presidency and the Spanish Government as a

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result of a private deal between the two member states, which was not communicated to the rest of the Council? The Government's explanations for the whole of this affair have ranged from a genuine misunderstanding between member states—largely caused by the Dutch presidency's inefficient note-keeping which meant that the Foreign Secretary's successful challenge could not be proved—through to conspiracy theories of two member states—one of which held the presidency at the time—knowingly conniving to dupe a third member state against its clearly declared wishes.
If the Foreign Secretary was so forceful in making his views known, as he says he was, it follows that Spain and the Netherlands must have deliberately fiddled the text of the treaty without the full consultation of all member states. Both explanations put the Government's negotiating ability in an incompetent bungling light. But the latter allegation of hole-in-the-corner deals between member states, following the conclusion of an intergovernmental summit, is most serious and has ramifications for the transparency of the European decision-making process, and I emphasise that point. This case is important in its own right, but it is vital in the context of its ramifications for the transparency of the overall European decision-making process.
Yet while these serious allegations were being bandied about, the Government made no representations at all to the presidency of the EU about the bilateral agreement between Spain and the Dutch presidency. I see that the Minister, from a sedentary position, is saying, "Yes, we did". That is extremely helpful. I hope that the noble Lord will clarify when he did that—if he indeed did—and why the matter was not raised as a priority at the Luxembourg summit last September. I am grateful to him for his clarification. Perhaps he can answer my question about the Luxembourg summit. If it was a misunderstanding because the note-keeping of the Dutch presidency was at fault, as the Foreign Secretary first told us, and as the noble Lord, Lord McIntosh, confirmed when he said in Committee on 27th April (Hansard, col. 105) that,
"It emerged that there was a misunderstanding about what had been agreed at Amsterdam",
can the Minister now tell us how that misunderstanding came about? Was it because there were absolutely no provisions for minutes or a record of the meeting in question to be taken, as the Minister of State has claimed?
The Foreign Secretary has made very strong criticisms of the Dutch presidency. He has effectively accused the Dutch Government of inefficiency by criticising their note-keeping. He has effectively accused the same member state of not telling the truth about whether a challenge to the amendment was made. Moreover, he has effectively accused them of cheating by colluding in a secret deal. Not surprisingly, the Dutch Government have clearly been concerned by these extraordinary allegations and they subsequently wrote to the British Government as long ago as 16th July last year.
Despite the Government's commitment to open government and transparency, they have refused to publish that letter on the grounds that it is not normal
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practice for intergovernmental correspondence of that kind to be published. Similarly, it is not normal practice for one member state to accuse two others of cheating at intergovernmental summits; nor should it be normal practice for that member state to prove unable to provide a coherent and consistent explanation for a provision contained in a treaty to which it has agreed, which could have serious implications for the citizens of a dependent territory. The only consistency that the Government have demonstrated in this sorry saga is their repeated failure to provide a clear explanation for what happened.
The noble Lord, Lord McIntosh, said in Committee that,
"the important thing is not the process of what happened on a particular night, however late, in June, but the result".—[Official Report, 27/4/98; col. 106.]
I do not agree that in this case what happened on a particular night has no importance, given the Government's prevarication. However, I do agree that the result of this confusion and its implications for the people of Gibraltar are of paramount importance. It seems that the result referred to by the noble Lord, which is supposed to rectify the whole situation, is the fact that the Government secured Declaration 45 which is attached to the final Act of the treaty. It sets out that the UK's admission to existing provisions of the Schengen acquis will be on the same basis as an Opinion of the Commission, which calls upon other member states to use their best efforts to enable the UK to participate.
However, the Minister omitted to mention that, had the Government done their job properly in the first place, Declaration 45 would never have been necessary. Similarly, the Minister did not answer the question of whether the declaration is legally binding in the same way as an amendment to the treaty. I invite him to do so now, especially in the light of the opinion of Mr. Peter Caruana, the Chief Minister of Gibraltar:
"we in Gibraltar have no doubt whatsoever that Spain will deploy her veto unless the UK agreed to exclude Gibraltar from the application of the Schengen arrangements".
Our fears and concerns about the use of the Spanish veto on a future British entry into the Schengen arrangements are not imaginary. Spain will exercise the veto, just as it did in relation to the application for air liberalisation to Gibraltar, from which we are still excluded; just as it threatened to veto the external frontiers convention unless Gibraltar was excluded from it. As far as concerns Spain, the very same issues arise in respect of Schengen.
Finally, the noble Lord, Lord McIntosh, reiterated that, in practice, the Government have no intention of signing up to the Schengen acquis in full on the grounds that that would be inconsistent with our determination to maintain frontier controls. From these Benches, it will come as no surprise to the Minister that we welcome that assurance and support this seamless transition of policy.
In Committee I sincerely hoped that we would not receive yet another unsatisfactory explanation from the Government and that the questions that I put would be answered at that time. But an unsatisfactory explanation from the Government is precisely what, regrettably, we

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were given. The latest interpretation of events, apparently compiled from a mishmash of the different strands of the conflicting statements of the Foreign Secretary and his Minister of State, did nothing to refute in a satisfactory way the accusation that the Foreign Secretary's negotiation was negligent. It cleared up none of the lingering doubts about the Foreign Office's competence or its ability to protect and enhance British interests in all future negotiations, and it failed to sweep away the suspicion of gross dereliction of its duty. In this context when I refer to the Foreign Office, I refer to Foreign Office Ministers; I do not refer to the officials.
This has simply added to the confusion of an already messy situation which has made a mockery of the Government's claim to be respected as a constructive partner with which the other countries of Europe can do business. It has made a mockery of the Government's claim to have got a better deal for Britain as a result of their new, co-operative approach. This is an example which totally undermines the claims that their approach to negotiation in Europe is successful and brings benefits to both the people of this country and to the people of Gibraltar. I beg to move.
Lord Hardy of Wath: My Lords, I shall speak briefly. First, I should declare an interest in that I returned from a visit to Gibraltar this afternoon. A number of other noble Lords accompanied me on that visit. I feel that this should be a relatively short debate and that it should deal with some of the questions which the noble Lord, Lord Moynihan, has posed. However, I was worried by his speech as he seemed to be firing widely directed broadsides at the Government. I minded less his criticism of other member states. I believe that my noble friend and his colleagues in the Government have been striving mightily to assist Gibraltar. It ill becomes someone who was connected with the government who were responsible for international matters and for matters connected with Gibraltar for almost two decades to be so extravagant in his criticism of the present Administration. Indeed I believe the noble Lord mentioned a date that was only a matter of a few days after the present Government took office.
Nevertheless the questions posed by the noble Lord are serious. I am confident that my noble friend will respond to them adequately. I believe that in this debate we should concentrate on the Schengen Agreement. However, during the discussions that I and other noble Lords had with our hosts in Gibraltar over the past 48 hours, little was said about Schengen but much was said about the wider anxiety that exists. I believe the House will have to consider that. I would deeply regret it if the noble Lord's extravagant attacks on my noble friend led the House to consider this debate as a platform for the wider debate which will have to take place soon; namely, as regards the dominant, overwhelming interests of the people of Gibraltar who believe that they ought not to be the only part of the European Union which is not democratically represented within that body.
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My noble friend should not forget that there is widespread appreciation of the efforts of the previous Labour government which provided Gibraltar with the constitution which it enjoys today. I look forward to hearing my noble friend's response to the noble Lord. I certainly hope that this debate will not become a substitute for the debate that must take place before long.
Lord Monson: My Lords, the noble Lord, Lord Moynihan, has made some serious allegations of incompetence and of possible bad faith on the part of the Dutch presidency. It will be interesting to hear how the Government respond to that. I, too, declare an interest in that like the noble Lord, Lord Hardy, I returned from Gibraltar this afternoon having spent 48 hours as a guest of the Gibraltar Government.
I wish to move slightly away from Schengen while sticking closely to the ideal of freedom of movement. The Gibraltarians have been members of the EEC—as it then was—since 1973. The Spanish are relative newcomers; they have been members only since 1986. Yet despite their seniority in terms of length of membership, the Gibraltarians are treated as second class, or indeed third class, EU citizens by the Spanish. As I have said on other occasions, time and time again the Spanish behave in a totally non-communautaire manner, not only in regard to Gibraltar but, for example, as regards vetoing the admission of Austria, Sweden and Finland to the Community until the Spanish receive extra money from some source or other, or additional fishing rights—I cannot quite remember which. Anyway it was a blatant act of blackmail. For some reason they are never criticised for their behaviour.
The specific aspect of freedom of movement that I wish to raise relates to identity cards. The European Commission has accepted the Gibraltar identity card as a document valid for both travel and residence purposes under the terms of EU law. It has written to all member states seeking confirmation that the respective authorities will accept the Gibraltar identity card. Yet not only does Spain not recognise the card, it is also putting pressure by the back-door on other EU countries to refuse Gibraltarians entry if they carry merely a Gibraltar identity card. Some—commendably for example Finland—have refused such pressure and allow Gibraltarians in. Others, unfortunately, have succumbed. It will be good to hear what the Government intend to do.
9.15 p.m.
Baroness Park of Monmouth: My Lords, I strongly support what the last two speakers said. I recognise that we cannot widen the debate. I welcome the idea that there should be an early debate on Gibraltar. However, perhaps now is the moment to ask what the Government are doing inside the EU to make clear their strong disapproval of the pressures which Spain is bringing to bear on a fellow member. It is a fellow member for whom we are responsible and which has no vote of its own and cannot speak for itself. Whatever the explanation as regards what happened in June last year, it is necessary for Gibraltar to see that we are using our position in the EU actively to protect her interests.

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I realise that a great deal of the best negotiation goes on behind the scenes. Nevertheless, it is well known publicly that the Spanish have proposed a joint sovereignty package. That must have greatly alarmed the Gibraltarians. I do not know the Government's position on that. When I last asked, I was told that the matter was under consideration, or that discussion was taking place. I accept that. But from Gibraltar's point of view it becomes increasingly important that we are seen to take a position of concern publicly in the EU for a member of the Community which is being harassed by another member.
Baroness Williams of Crosby: My Lords, the noble Lord, Lord Moynihan, raised some important issues which no doubt the Government will address. I do not wish to pursue them. They relate to what has happened, and are correctly on the record. They are serious allegations which need to be cleared up. However, I wish to address the issues referred to by the noble Lord, Lord Hardy, and referred to in Committee by the noble Baroness, Lady Park.
A critical issue is that Gibraltarians feel that their point of view is not taken fully into account. The problem does not lie solely with the Spaniards. It lies in part with the previous government of the United Kingdom. One could forecast the impact of the Schengen agreement on the borders between Spain and Gibraltar—a country of 30,000 adults, which has therefore a great degree of dependence upon free movement rules within the EU agreement.
One of the great problems—it is a fair point about which Gibraltarians feel sour—is that effectively they were not consulted in the run-up to the IGC. Nor have they been adequately consulted over many recent years regarding European legislation which directly affects them. If Gibraltarians are concerned about European legislation, it has been left for them to raise the issue. It has been left for them to pursue the matter through all the highways and byways of Whitehall. There has been no clear channel by which they can make their feelings known. The point is not addressed to the present Government but to the previous government. Therefore the previous government are not in the strongest position to criticise the present Government about what happened in June. That does not mean that the present Government should not respond to those criticisms.
A serious issue relates to the future position with regard to Gibraltar, a country which has no representation in an EU of which it is part and which is not part of any Euro-constituency, despite the fact that everyone else in the United Kingdom and in other member states has some form of representation through the European Parliament which they can use.
During Committee stage, in response to representations by the noble Baroness, Lady Park, and others, understandably the noble Lord, Lord Whitty, pointed out the extreme difficulties of trying to amend European election law. Perhaps it is a pity that no one thought about Gibraltar at the time that that law was drawn up. That is not the responsibility of the present Government. But it leaves Gibraltar in an anomalous
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situation: an area—a "statelet", if you like—which is bound by the laws of the European Union yet can in no way influence them through any democratic process.
I therefore have a suggestion for the Government, if they are temporarily blocked—as they are—by the difficulties of amending European election law. If I am correctly informed—and as was pointed out by the noble Lord, Lord Whitty—it would require every single member state of the European Union to ratify an amendment, and that is unlikely to happen for reasons that are well known to the House. So what other steps might be taken to enable the people of Gibraltar to he heard?
There are obvious ways in which the Foreign Office and other government departments could make themselves open to representations by Gibraltar. However, I suggest that the Government should examine closely the possibility of using the existing, extremely good, process of the Select Committees. The noble Lord, Lord Bruce of Donington, has often pointed out how effective they are. That could enable the Prime Minister of Gibraltar and his government to indicate their belief that a particular piece of European legislation might have substantial consequences for the people of Gibraltar. Such a matter could then be brought to the attention of the Select Committee on European Legislation. The committee would then consider whether the matter was in its view of sufficient importance to be referred to one of the sub-committees for further investigation, including the hearing of evidence and the acceptance of papers—which same evidence might include representatives of Gibraltar's Executive. In that way, at least the people of Gibraltar could feel that their representations were taken very seriously.
I share the view of the noble Lord, Lord Bruce of Donington, who continually reminds us of the importance of democracy. It puts us in an extremely vulnerable position to argue that Spain has no rights in Gibraltar, when we ourselves recognise no democratic rights for the people of Gibraltar in this House and the other place, on which they are solely dependent for making representations at a European level.
That may not be the right approach; it is simply one thought among others that has occurred to me. There may be other ways in which we could give the people of Gibraltar a voice in this House and through parliamentary procedures. But that we need to move—and to move recognising that we have effectively ignored the concerns of the people of Gibraltar to give them a feeling that there is a democratic channel—is of the greatest importance.
My party and I believe that, in the long run, it is worth exploring the issue of some form of dual sovereignty. The Northern Ireland treaty has clearly indicated that the bedrock of any form of acceptance that Spain has the right to be heard on certain issues must be the self-determination of the people of Gibraltar. That self-determination means, for as far ahead as one can see, that the people of Gibraltar will opt by any democratic method to remain within the orbit of the United Kingdom. So be it. I believe that

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self-determination is a profound rock upon which democracy rests. I see no great fear in relation to listening to Spain on such issues as border controls, epidemics and so forth. I do not see that there is any great objection to that, provided—and I underline this point—that the self-determination of the people of Gibraltar is the central base on which we approach this question. It might actually help to ease our relations with Spain.
Having said that, let me return to the suggestion I made. Perhaps at some stage the noble Lord or the noble Baroness the Minister will write to me. I believe that there is a way forward, and that it should be taken. I recognise that it is not the best way forward; however, since the best way forward is blocked—namely, European elections including the people of Gibraltar—it is incumbent upon the Government and those of us who serve in this House and another place to find some legitimate channel by which the views and opinions of the people of Gibraltar might be heard.
Lord Stoddart of Swindon: My Lords, I, too, was invited to visit Gibraltar last weekend. However, knowing that this item of business would arise, I was unable to accept the very kind offer of the Gibraltar Government. However, I am pleased to support the views expressed in the debate so far in relation to Gibraltar's problems and rights and its right to be considered.
The noble Baroness will be pleased to know that I agree with much of what she said. However, before I develop that point I wish to say this. My right honourable friend the Foreign Secretary has enough on his plate at present and I shall not go along the lines of criticising or questioning what he has done. Indeed, I wish to express some sympathy for him. The way in which matters are arrived at within the European Community and within the discussions seems to me, quite frankly, to be chaotic. That was revealed by the BBC2 programme called, I believe, "The Money Changers". It was about EMU and so on. It showed just how chaotic the decision-making process appeared to be. I can quite understand why Ministers cannot always be on the ball about every single item and every single detail.
I believe that in one way or another we must arrange that the decision-making process is open and is slowed down so that Ministers, and not merely their officials, know what is happening, it is Ministers who take the decisions and it is known what decisions are being taken by all the member states, not just a few. That needs to be done.
As regards Gibraltar, it has the sympathy of the whole House. There is no question about it, that has been shown in the debate tonight. That is why I am on my feet to bolster that support and to say to the Gibraltar people that we understand their difficulties. We believe that their interests have not been properly looked after, whether or not in the European Union. It is about time that their loyalty to this country was recognised and rewarded.
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One of the ways in which it can be recognised and rewarded has been mentioned by the noble Baroness and other noble Lords: we should ensure that they have some representation in the European Union. It ought not to be beyond the wit of our Government, our Parliament and the European Union to ensure that that happens. I hope that it will be so.
The noble Baroness raised the question of dual sovereignty. A whisper from my noble friend Lord Hardy of Wath leads me to ask a question about it. I understand that, unless Britain retains full sovereignty, the Treaty of Utrecht becomes null and void and sovereignty passes to Spain. That is important, bearing in mind the discussions we had about sovereignty earlier this afternoon. I hope my noble friend will be able to give an answer to that and tell us that we are safe and we retain full sovereignty over Gibraltar. If we do not, it would be a serious matter.
In conclusion, I reiterate my support for the Gibraltar people. They are being treated badly by Spain in particular and we have a duty to protect their interests.
Lord Islwyn: My Lords, I associate myself with the observations made by the noble Baroness, Lady Williams. The point I wish to make is that Gibraltar has always indicated that it wishes to be associated with this country.
I have been a member of the Transport and General Workers' Union for over 40 years. It is interesting that the Transport and General Workers' Union has organised, and organises, the workers on the Rock at the present time. Recently, it produced the Prime Minister for Gibraltar. In the case of Spain, in some senses it is a question of the pot calling the kettle black. Spain has two enclaves—two colonies it could be said—in Morocco. We do not hear much about that from Spain or about any possibility of withdrawal.
I have always felt that Gibraltar should decide its own destiny by democratic means. As I said earlier, it has so far indicated that it wants to be linked to this country. We should certainly give it a voice in the European Union. As the noble Baroness, Lady Williams, said, there should be a democratic channel and it is up to us in this House to speak up for Gibraltar.
9.30 p.m.
Lord McIntosh of Haringey: My Lords, there can be no doubt about the universal concern and sympathy expressed in the House this evening for the people of Gibraltar—a sympathy and concern which the Government share, as I hope to show in responding to the debate.
Let me put the issue in context before I come to the specific questions raised. It must be said from the outset—it was said in the context of a wider debate on freedom of movement at Committee stage—that there is nothing in the provisions of the Amsterdam Treaty which erodes the Community law rights of Gibraltarians, in particular existing rights of free movement in the European Union. Nor is there anything which gives Spain any additional rights over its border with Gibraltar. We will continue to defend the position

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of Gibraltar in the European Union. Where a measure that the United Kingdom would like to opt into is particularly relevant to Gibraltar, our approach will be to give due weight to the interests of the United Kingdom and to the interests of Gibraltar as to any other European measures. Where the UK opts in, it will negotiate in good faith, taking into account the interests of Gibraltar.
The noble Lord, Lord Moynihan, in what I recognise was a deeply-felt speech, criticised the alleged failure of the Government in their negotiation of the provisions for UK participation in existing Schengen agreements. I hope to show, without making the assertion myself, that my noble friend Lord Hardy was right in describing the speech of the noble Lord as "extravagant". However, the record is rather different from that which he implied.
First, the noble Lord made explicit allegations of prevarication. That is nonsense. The subject has been raked over in the greatest detail in another place, in addition to exhaustive discussion in Committee and at other stages of the Bill both in another place and here. Ministers have answered over 40 parliamentary questions on every aspect of the issue. All of those questions have been fully answered.
The Opposition appear to be trying to weave a great mystery by selecting different words from different places to try to cover up our efforts to explain the events with the greatest clarity possible. It is necessary therefore for me to repeat the statement of the sequence of events which I set out in Committee, and if there are any gaps in it—the noble Lord, Lord Moynihan, asked specific questions—I shall try to deal with those gaps as well as with the fundamental facts.
During the course of the debate at the European Council in Amsterdam, Spain proposed an amendment to the Schengen protocol to bring in unanimity for UK and Irish participation in the existing Schengen acquis. At the insistence of our Foreign Secretary, there was agreement that any such amendment would be submitted in writing by Spain. No such amendment was submitted.
The noble Lord, Lord Moynihan, asked whether an amendment was withdrawn, but there was no amendment on the table to be withdrawn. All we know is that at the end of that session, no amendment had been submitted in writing as had been agreed. When the revised treaty text was circulated after the summit, we subsequently learned that the unanimity requirement had been introduced into the text.
The noble Lord asked me to be more precise about when we knew of that additional unanimity requirement. The answer is that we knew when we received the text on the 19th. The noble Lord has invited me to make all sorts of speculations about what happened between the end of the debate and the time when we received the revised text and the unanimity requirement. We do not know. We cannot know. These matters had been put forward by the Spanish Government and were considered by the Dutch presidency. It does not lie in my mouth to accuse either the Dutch presidency or the Spanish Government of bad faith, and I have not done so. We could not know other people's motivations when we were not involved in the process that took place.
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What we could do—and what we did do—was to take the matter up with the presidency and with a number of member states. It emerged that there had been a misunderstanding about what had been agreed in Amsterdam. If that is not clear enough, "misunderstanding" means that some people understood one thing and some people understood another thing. Again, I cannot impute motivations to those who understood something different.
We not only took the matter up with the presidency and with other member states, but we obtained a declaration. That was Declaration 45, which provides protection for the interests of the UK in this area. The noble Lord, Lord Moynihan, asked whether that declaration had legal effect. It is a declaration of the intergovernmental conference. It is politically binding on member states. It invites the Council to seek the opinion of the Commission before it decides on a request by the United Kingdom to participate in any measure in the existing acquis. Moreover, under the declaration member states undertake to use their best efforts to enable the UK to participate.
The noble Lord asked me what parts of the opt-in to the Schengen acquis are involved. Clearly, the Schengen acquis is involved because that is what the declaration is about. Clearly, also, provisions under the new Title IIIa are also involved, but they do not require the declaration because they are not affected by the unanimity provisions.
The second question of the noble Lord, Lord Moynihan, began by being about Article 4, but it was also about the process which I have now described. I forget the exact words he used, but he described it with an embarrassing multitude of different descriptions. If he will look back at the record, I believe that he will find that we have never done anything other than set out the situation as far as we know it and as far as we understand it. There are gaps in our knowledge. Those are gaps which took place in a period when we were not involved. The noble Lord asked me what is meant by a difference of historic interpretation; what I mean is that what came out in the text of the debate was different from what we understood would go into the text of the debate. It is as simple as that.
The noble Lord asked me again about the Dutch presidency letter of 16th July. I can only repeat what is commonplace and, indeed, normal in diplomacy. Letters of this kind between sovereign states are not part of political debate and we do not release such letters for political debate. I did not, as the noble Lord, Lord Moynihan, appears to think I did, accuse the Dutch presidency of cheating. I must repeat that I do not impute motives to other member states. I simply describe the discrepancies which took place.
In all of this I do not doubt the sincerity and seriousness of the noble Lord, Lord Moynihan, on these issues. But his concern is with a process of what happened in a very by short period of time and for which the remedy has been achieved by the addition of Declaration 45 at the end of the process. I suggest that we should now turn from the history of those few days to the wider issues which were properly raised by other noble Lords in debate.

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Both in Committee and in debate today noble Lords have addressed the nature of the relationship between the UK and Gibraltar more generally. We work together on all issues which affect Gibraltar. We attach particular importance to ensuring that the Government of Gibraltar are consulted on and kept fully informed about all relevant developments. Gibraltar is consulted extensively, if I may say this to the noble Baroness, Lady Williams, on European Community legislation because we have made great efforts to make that so. We have very close links with both policy makers and legal draftsmen in Gibraltar responsible for European Community legislation. Mr Caruana was in Brussels only a few days ago for talks with the Commission and the UK representation. He also led discussions on EU matters in London immediately afterwards. A Foreign and Commonwealth Office official dealing with EU matters was in Gibraltar in the past fortnight. We expect shortly to have another visit by Gibraltar officials dealing with EC matters. That is typical of what goes on under this Government. It is a process of careful consultation on EU issues which affect Gibraltar.
Baroness Williams of Crosby: My Lords, I thank the noble Lord for giving way. Is there any consonant parliamentary structure which would enable the actions of the Executive to be considered in Gibraltar as they are in this country?
Lord McIntosh of Haringey: Yes, my Lords, I was about to refer to that point. I have more to say about our relationship with Gibraltar, but I may as well say now that we find the noble Baroness's suggestions very interesting. I do not think I can reply off-the-cuff. But if she will allow me, I shall write to her on the subject.
I wish to pay tribute to the Gibraltar Government for their newly opened office in Brussels and the links which have been established between that office and our own permanent representation in Brussels.
Gibraltar is unique not only because of its historical links with the United Kingdom—it was correct to refer back to the Treaty of Utrecht—but also because it is the only UK overseas territory within the European Union, as part of UK membership by virtue of Article 227(4) of the Treaty of Rome. Gibraltarians are rightly proud of the European identity. They are committed to being part of the European Union in the future, and we welcome that. Last year the Government of Gibraltar—representing 30,000 people—spent £1 million on bringing up to date implementation of European Community legislation in Gibraltar. They put into place effective regulatory mechanisms, which met UK and EU standards, to join in the international fight against money laundering.
Being part of the EU brings rights as well as responsibilities. As I have already said, we will continue to defend the position of Gibraltar in the EU as well as the Community law rights of Gibraltarians. A fundamental right which Gibraltarians enjoy within the EU is that of freedom of movement. The Spanish Foreign Minister has given an assurance that Spain has
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never questioned the right of Gibraltarians to freedom of movement in the European Union; nor will Spain do so in the future. We shall hold Spain to that assurance.
The noble Baroness, Lady Park, asked me about Spanish proposals for joint sovereignty, as indeed did the noble Baroness, Lady Williams, who made a similar point. We have agreed to study those proposals carefully. But the Foreign Secretary made clear to the Spanish Foreign Minister at their meeting on 10th December that there can be no compromise on sovereignty against the wishes of the people of Gibraltar. So it follows that any Spanish proposal would have to win the approval of the Gilbraltarians in order to prosper.
The noble Lord, Lord Monson, asked me about Spain's refusal to accept Gibraltar-issued identity cards. The Government notified the Commission in October 1995 about Spain's refusal to accept them as valid travel documents. In July 1996 the Commission accepted the cards as valid. The matter of whether or not formally to initiate infraction proceedings against Spain remains under consideration by the Commission. Commission infraction proceedings are confidential. However, contrary to press reports that appeared last August, Spain has not succeeded in closing the case and the Government continue to stand up for Gibraltar's rights in this matter. We wrote to the Commission in March and underlined that we looked to it to ensure compliance with EC law, and we remain in touch with it on that issue.
The final issue to which I have to refer was raised in particular by my noble friend Lord Hardy of Wath—voting in European parliamentary elections. Concern has been expressed both here and in another place. It has been suggested that the Government are ignoring the wishes of the people of Gibraltar. We understand the strong feelings and that this is an important and sensitive issue. The Foreign Secretary has been in touch with the Chief Minister on this issue and has requested a thorough legal review of the situation. That legal advice is consistent and clear: to extend the European parliamentary franchise to Gibraltar by changing UK law alone, as has been suggested by some Members in another place, would put the UK in breach of European Community law; namely, the European Community Act 1976 on direct elections which has treaty status.
I can spell all that out in detail, but I believe that your Lordships will really want to hear only the conclusion. The only legally secure way to extend the EP franchise to Gibraltar is to amend the 1976 Act. That would involve the agreement of all member states. I do not want to speculate on the likely views of other member states, but at the same time I would not underestimate the difficulties, which my noble friend Lord Whitty spelt out in Committee, of a process which requires treaty amendment. The prospect of securing that is uncertain, to say the least. It is not clear to us that risking the possibility of a veto on Gibraltar's inclusion in the European Parliament franchise would benefit the people of Gibraltar or further the wider and long-term interests that the UK is pursuing on Gibraltar's behalf.

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As I said at the beginning, I recognise the genuine and deeply felt concerns which noble Lords have expressed and I share them. I believe that we are doing the right thing, and have been doing so, to protect the people of Gibraltar. I invite the House to reject the amendment.
Lord Stoddart of Swindon: My Lords, before my noble friend sits down, I did ask him a question about the Treaty of Utrecht. I understand that he may not be able to answer it off the cuff, but I shall be most obliged if he will write to me.
Lord McIntosh of Haringey: My Lords, my understanding is that the Treaty of Utrecht is as my noble friend described it. It is dependent on UK sovereignty. That is the reason why there has been no move towards independence for Gibraltar.
Lord Moynihan: My Lords, I tabled a very tight amendment concerning the implications for the people of Gibraltar of the voting arrangements for an opt-in. In the light of earlier interventions this evening, not least about my use of the important example in the context of common foreign and security policy as regards Sierra Leone, I was interested to note the exchange on the Labour Benches on the much wider issue of voting in European elections. That is not covered in my amendment and it will be the subject of much more detailed debate at a later stage in another Bill coming before this House.
That said, I am grateful to the Minister for answering some of the questions that I have posed. He referred to "embarrassing multitude". For the record, an embarrassing multitude of questions remained unanswered. This evening many questions remain unanswered. The purpose of this specific amendment was not to cover the wider issues affecting the people of Gibraltar. The fact that I have not tabled an amendment to do that does not mean that I dissociate myself from the extremely important points made by the noble Lord, Lord Hardy, the noble Baroness, Lady Williams, and others, about the importance of having a wider debate in future—indeed, the sooner the better—the vital necessity of ensuring that the views of Gibraltarians are taken into account and the degree of cross-support for the many concerns expressed very clearly in correspondence to your Lordships by the people of Gibraltar.
I should like to pick up one or two points for the record. The noble Lord, Lord Monson, said that I had made some important allegations about the Dutch presidency. The noble Lord, Lord McIntosh, believed that I had laid those allegations at his door. I did neither. The important points that I sought to make related to the Foreign Secretary's strong criticisms of the Dutch presidency and his accusations that the Dutch government had been inefficient in its note-keeping, not to mention the accusation that the same state had effectively not told the truth about whether or not a challenge to the amendment had been made and also that it had colluded in a secret deal. Those were three very important allegations, all of which are clearly on
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the record, not least in the evidence of the Foreign Secretary to the Foreign Affairs Select Committee on 4th November last year and in other places.
I sought to highlight those points for one extremely important reason. In the context of this Bill the House has been allowed to look closely at the serious process of how decisions are made within the European context, particularly in the negotiations over this treaty. It is because of the ramifications for the transparency of the European decision-making process and the need to focus upon that that I have tabled this new clause.
I am grateful to the noble Lord, Lord McIntosh, for recognising that the comments that I made were deeply felt. They were as deeply felt as the comments that I made earlier this evening on the common foreign and security policy. I believe that his choice of words was more accurate in reflecting the tone of my delivery than that of his noble friend the Minister earlier this evening. But in the light of his answers and genuine desire to answer a number of questions—he has answered a considerable number of additional questions, but not all, the answers to which I should like to study in further detail—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Inglewoodmoved Amendment No. 5
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 Service Broadcasting in the Member States annexed to the Treaty of Amsterdam.").
The noble Lord said: My Lords, as a preface to moving this amendment, I thank the noble Lord, Lord McIntosh of Haringey, for his letter to me of 5th May, which answered one of the questions that I raised when this matter was considered at Committee stage. He pointed out that the primary principles guiding the legality of the public funding of public service broadcasters remained the existing treaty state aid rules.
The protocol on the system of public service broadcasting in member states which is annexed to the treaty is drafted on the basis that broadcasting will continue in the future in very much the same form as today. However, to put it no higher—I do not want to overstate my case—there is a real possibility that this will not necessarily be so in the future. The traditional distinction in this area is between broadcasting—which is the transmission of material over the radio spectrum on a point-to-multi-point basis—and telecommunications—which is the transmission of a similar type on a point-to-point basis. This is a simple and clear distinction.
However, in the era of digitisation, convergence, digital compression, the interleaving of programme material and spectrum abundance, as opposed to spectrum scarcity, the concept of a broadcast channel is rapidly becoming redundant. Instead, with the development of video on demand and near-video on demand, the viewer or listener is able to view or listen at the time of his choice rather than that of the

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programmers. When at the same time we are seeing a number of cable companies, which were originally conceived as broadcasters, increasingly carrying on a business which is telecoms and, in particular, telephony-based, which incidentally carries some television material, which in turn itself may be linked to interactive services, the distinction between telecommunications and broadcasting starts to look very blurred.
What this protocol spells out is that state aids to public service broadcasters for the purpose of public service broadcasting will not be considered unfair state aids. This, in itself, is an uncontentious principle. However, what we are concerned about is the reality in the commercial world of contemporary Europe of the distinction upon which it is based. Can it truly be said that public service broadcasting will stand apart, separate and distinct from commercial broadcasting, commercial telecommunications or commerce conducted interactively via a return path?
There are two particular aspects of that which I should like to draw to the attention of the House. First, public service broadcasting, not least if it is also funded by advertising—that is sometimes the case on the Continent and, as your Lordships will know, with Channel 3, Channel 4 and Channel 5 in this country—may be linked to interactive services and can be a commercial rival to commercial broadcasters for viewers and for advertising.
Given that the acceptability of public money or subsidy of some kind or another going to a particular broadcaster is that the service it provides is defined as being public service, can the Minister confirm that the particular remit that a member state may give to its own public service broadcaster must fall within a wide European Community definition? I should like to invite the Minister to confirm that is the case, not least because it would appear to be in accord with the teleological approach to the interpretation of Community law. Can he also give us any indication of the definitions of public service broadcasting which are employed in each of the member states and confirm that the Government are happy that they are acceptable within their view of what constitutes public service broadcasting?
The risk here is that if we are not careful it is possible that this protocol can very easily become a device for unscrupulous member states to protect their own broadcasters through the mechanism of attaching the words "public service broadcasting" to a hidden or open subsidy that they may be inclined to give. Can the Minister therefore confirm that the European Commission intends to look behind whatever words may be employed in these circumstances to examine the underlying reality of what is involved and that it is prepared to act, where appropriate, if abuse can be established on the facts?
The second point I should like to draw to the attention of the House is that because public service broadcasters, commercial broadcasters and telecommunications frequently employ the same networks, would he therefore not agree that the presence of a particular
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public service broadcaster on any particular network will be a significant commercial advantage to the owner of that network?
That, in turn, could be a very easily disguised means of subsidising one network at the expense of another and/or favouring the users of one particular network at the expense of the users of another network. Again, can the Minister confirm that the Commission recognises that possibility and thereby the means that could exist of conferring unfair advantage in the single market; that it will be on its guard for that kind of abuse and that it will act where on the facts of any particular case, it will be appropriate to do so? I beg to move.
10 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for setting out the reason for the amendment. Perhaps the House will forgive me if I rapidly recapitulate on how we have reached this position and on the debate on broadcasting in Committee.
The debate in Committee was based on the attempt principally by the Competition Directorate to restrict subsidy by member states of public service broadcasting on the ground that it would be in commercial competition with unsubsidised broadcasting. The thrust of the debate from the Opposition Front Bench was to see what was meant by Protocol 4 and the concept of public service broadcasting.
In response to the debate, I attempted perhaps in a foolhardy fashion to set out what we meant by "public service broadcasting". It is relevant because it affects my answers to the noble Lord's question about whether the definition is too wide and whether risks were involved. I suggested that public service broadcasting could be defined not in a single definition but by a number of shared characteristics. First, focus on the audience—in other words, for the benefit of viewers and listeners. Secondly, quality programming. Thirdly, diversity and choice, including programmes for entertainment, information, education and programmes for minority audiences. Fourthly, accessibility; that is, the geographical coverage of services and broadcast programmes which many people find enjoyable and interesting. Fifthly, editorial independence; that is, decisions about programmes being taken by broadcasters or broadcasting authorities, not by government or other interest groups. Finally, the concept of national identity—public service broadcasting reflecting the national interests and cultural traditions of the audiences.
I did not attempt a definition in terms of the way in which public service broadcasting operates. As I explained, public service broadcasting in this country operates under a number of different regimes; the BBC with its charter, Channel 4 and S4C in a different way and the regulatory role of the ITC having a different effect.
I understand the noble Lord to be asking me in what way the protocol will work. It might be useful if I put on the record the fact that I wrote to him—unfortunately, the letter reached him only today—setting

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out the Government's view of that. I am happy to repeat it on the record tonight. The primary principles guiding the legality of public funding of public service broadcasters remain the existing treaty state aid rules, in particular set out in Article 92.3(d).
Any company claiming that a public service broadcaster was receiving funding that contravened state aid rules would take its complaint to the Commission as guarantors of those rules. The Commission would then investigate whether the complaint did indeed amount to a breach of state aid rules, as it is doing now with the complaint by the Portuguese commercial company, SIC, against the public service broadcaster, RTP.
Once the treaty is in force, the Commission will take the protocol into account in its investigations. The aim of the protocol is to give a strong indication to all interested parties—the Commission, member states, public and private broadcasters—that a public service remit can carry onerous and possibly unprofitable obligations which are in the public interest and therefore require public moneys in one form or another.
That final sentence enables me to respond to the specific questions of the noble Lord, Lord Inglewood. I do not believe that the definition is too wide. In Committee, the general tone was one of welcome for the fact that our existing way of subsidising the BBC is not under challenge from the European Commission or under competition rules. I thought it was agreed generally that the protocol was helpful in relation to protecting those benefits of public service broadcasting which I have set out and which clearly involve obligations which can justify the use of state money.
I do not know how other member states will define "public service broadcasting" but I know that the protocol will make it easier for the Commission to make a proper balance between competition rules and the protection of public sector broadcasting.
DG.IV of the Commission is extremely experienced in state-aid cases. It will no doubt apply the protocol carefully so that where there could be unfair competition, the new provision will be applied.
The Government see this provision and the protocol as a protection for quality broadcasting and for the whole ethos of public sector broadcasting in this country and in Europe as a whole. We are not afraid of the implications of the protocol for this country and we believe that they will stand up to scrutiny both in Brussels and throughout the member states. I invite the House to reject the amendment.
Lord Inglewood: My Lords, I am most grateful to the Minister for his remarks. One of the difficulties that we have in considering public service broadcasting is that, rather like the elephant, it is very difficult to define it in words but we all know it when we see it.
I wish to make two points arising from the Minister's response. First, many of the characteristics which he ascribes to public sector broadcasting are, if not the characteristics, then frequently the aspirations, of those in the commercial broadcasting world.
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Secondly, I return to the comments I made at the beginning of my remarks. The form which public service broadcasting is now taking may well change, and change quite rapidly and significantly—I do not say it will, but it might—in the very near future with the changes arising from the digital television systems which we shall see.
Against that background, we need to be on our guard against the possibilities of abuse—and, of course, alert to the possibilities of good features which may arise from those changes. I am merely anxious to be sure that the European Commission shares the Government's present view as to what that particular protocol means.
The crucial factor in all this will not be what the Government of the United Kingdom or any other member state believes is the appropriate interpretation, but what the Commission believes is the appropriate interpretation. In theory, the matter may then go to the European Court. However, clearly we cannot have a determination in advance of an actual case.
However, I wish to reflect on the helpful remarks of the Minister and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Rawlingsmoved Amendment No. 6:
After Clause 1, insert the following new clause—
CONDITIONS FOR ENLARGEMENT OF THE UNION
(". This Act shall not enter into force until a Minister of the Crown has laid before both Houses of Parliament reports on the measures agreed between the Member States of the Union to—

(a) reform the Common Agricultural Policy;

(b) reform the structural and regional funds; and

(c) streamline the institutions of the European Union, including the re-weighting of votes in the Council,

and such reports have been approved by resolution of each House.").
The noble Baroness said: My Lords, I strongly believe—it is a belief which I have held for some time—that enlargement and the institutional changes of the European Union must go hand in hand if we want the Union to succeed.
We have just witnessed the official birth of the euro. That is an historic step whether or not we become part of it. Without counting the euro forerunners of the snake and the EMS, the birth of the euro took seven long years. Yet nine years after the fall of the Berlin Wall, the European Union is still not ready for enlargement which the Amsterdam Treaty failed to address.
Enlargement is the present historic challenge. It is a real dream, as my noble friend Lord Howell of Guildford expressed it so eloquently earlier this evening. It is desirable not only for strategic, political and economic reasons but also for moral reasons. Based on the principle of democracy, fraternity and the need to heal the deep scars left by the Communist era, it will unite a continent that historically and culturally should be one. It will add 28 per cent. to the Union's population and 34 per cent. to its area. As a consequence, it will fundamentally change the nature and functioning of the Union.

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Major institutional changes and enlargement will have significant geopolitical consequences. I am not a great one for sketching scenarios for some 10 years hence. As was said in your Lordships' House only recently, it is dangerous to make predictions, especially about the future. However, it is obvious that relations between the European Union and its neighbours, both to the east and to the west, will be affected. These historical developments should, in no way, detract from our continuing relationship with the United States and the Atlantic alliance. It is for that reason that I would support the proposals of Sir Leon Brittan for a new transatlantic market place. These are not just proposals for a far-reaching trade and service liberalisation; they are intended to give a new political momentum to US-EU relations.
Sir Leon's proposals represent a further step in adapting that relationship to the post-Cold War period, building on the 1995 new transatlantic agenda. Our close ties with Europe should not preclude our relationship with our natural ally, the largest democracy in the western world; namely, the United States of America. I have always felt this, so much so that the purpose of my last report in the European Parliament was to further EU and US cultural relations.
Both Euro realists and those who would like to see the European Union's demise, agree that enlargement is desirable, and they say so; as, indeed, we heard from my noble friend Lord Beloff. I greatly respect him, but cannot agree with him on this matter. Enlargement is the acceptable—dare I say it? —politically correct stance on the European Union, yet rhetoric alone will not make enlargement happen. If it is not followed by consistent action, it will fail. At worst, enlargement could stagnate and degenerate into hollow talk. For example, the President of the European Parliament, José Maria Gil-Robles, said to the Romanian Parliament:
"Enlargement must be carried out smoothly, without creating new divisions or blocs in our continent".
It seems unreasonable in these circumstances that the Commission is still insisting that Hungary should impose visa requirements on Romania. What would any noble Lord say if he were the man on the proverbial down-town Bucharest bus?
Much as we may say we want enlargement, it cannot happen without reforming the European Union and, in particular, its institutions. That is the main reason behind the amendment that I am introducing this evening. It is not a wrecking amendment; it is intended to raise the pressure to bring about reform. By and large, Amsterdam failed to prepare the institutions for enlargement. The Government acknowledge that fact. However, I differ with them on two grounds: first, the institutional issue is more important and more difficult to resolve than I believe the Government are prepared to admit. Unless the institutions are right, the policies that the Minister considers of the uppermost importance never will be right. Moreover, would it not be fairer to settle the institutions first so that the applicant countries knew what the club rules were before they joined?
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From my experience as an MEP, I learned what a cumbersome, rough beast the institution of the European Union and its procedures can be. I have also learned that trying to solve institutional and procedural issues can be wildly frustrating, time-consuming and complex. I remind the Minister of the interminable, on-going discussions on the site of the European Parliament, which I believe we shall discuss later.
I am not reassured by Article 1 of Protocol 11, even though it puts into place a specific mechanism. At the date of entry into force of the first enlargement, each member country will have only one commissioner, provided that the reweighting of the votes has been satisfactorily solved. As the accession of the first wave is likely to take much longer than the Commission predicts, the article in effect just delays reform. Reform is clearly necessary now and by the completion of the first wave accessions will be well overdue.
Secondly, I beg to differ on the degree of progress achieved at Amsterdam. I accept that capping the European Parliament's size and transferring most policy areas, subject to co-operation procedure, to the co-decision one is a significant change. In Committee the Minister gave the impression that the only outstanding issues of those originally on the table were the size of the Commission and the reweighting of the votes in the Council of Ministers. That simply is not the case.
There is also the reform of the Council presidency which appears to have dropped off the agenda. Even though I know that the discussion on the institutional matters dealt with by the Amsterdam Treaty cannot be reopened, there are, however, other institutional issues which need to be addressed quite urgently. I shall mention just two problem areas. Ten days ago the appointment of the president of the European Central Bank degenerated into a disgraceful squabble. This is the most recent of the melodramatic rows over top appointments to a European Union institution. It is imperative that the European Union looks at how the top posts are filled. This is presently done by unanimous decision by the heads of government. Surely some solution could be found and surely there is a more effective way to do this while still representing the rights of the member states.
There are now 15 members and 11 official languages. In a European Union of 26 there are likely to be 22 official languages. Can you imagine the nightmare: stacks of paper, armies of translators, interpreters and legal advisers? Can you imagine the dreary delays and the monster misunderstandings that could occur? It would be the ultimate babel. The number of official languages has to be drastically reduced. I anticipate the Minister's answer; namely, that these matters will be taken care of by Article 2 of Protocol 11. The article requires that the comprehensive review of the institutions is carried out at least a year before the Union exceeds 20. However, I have the impression that this is just another ruse further to postpone the necessary reforms because it is clear that enlargement must take longer than is officially claimed.

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In Committee I asked the Minister a series of specific questions which I am afraid he did not answer. I do not, of course, expect him to disclose any details which would undermine his negotiating hand. The extent of his silence, however, perturbed me. Could it be that the Government are not particularly focused on the institutional issues? Will the Government give their full backing to the committee proposed by the president of the European Parliament, Gil-Robles, to make proposals for the reform of the European Union's decision-making system? Will the Government make an announcement about the next IGC to resolve the institutional issues in Cardiff?
The purpose of the latter part of Amendment No. 6 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's size, which in turn is conditional on the reweighting of the votes. The Minister stressed the importance of getting our policies right. I agree entirely with that. We cannot admit more members without reforming the European Union's main policies as well as its institutions. Otherwise, as the Financial Times concisely put it,
"Enlargement would bust the Union's budget".
That brings me to the first part of Amendment No. 6. It would make entry into force of the Act conditional upon reforms of the CAP and of the structural fund. Last month the proposals were outlined in Agenda 2000 embodied in a Commission package. The European Union has been slow in developing these proposals and it is doubtful whether they amount to a coherent strategy.
Some 75 billion ecu are expected to be transferred to the applicants between the year 2000 and 2006. These are not spread evenly. The second wave of countries, by and large the poorer countries, is expected to receive from the EU less money than the five front runners—400 ecu and 900 ecu per head each year respectively. The Minister disputed those figures. They have been taken by the Royal Institute for International Affairs from the agenda and confirmed by the Commission. Why is there that discrepancy between the first and second wave of applicants? I am not persuaded by the argument that the applicant countries cannot absorb more money.
Our response, however, appears to be inadequate, in particular towards the poorer countries. I have just been in Bulgaria and have seen the amazing recent improvements in a relatively small town, Blagoevgrad, outside Sofia, the site of the American University of Bulgaria, which is housed in the old Communist party headquarters. It is quite remarkable.
I fear that enlargement will require more money than the Commission estimates. However, it is imperative that the European Union stays within the own resource ceiling of 1–27 per cent. of the European Union GDP. That leaves us to square the circle. The Commission believes that a sustained rate of growth between the European Union and the applicant countries will solve the problem. I feel it may be over optimistic. If it is over
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optimistic, as I believe, it will only increase the pressure to find additional funds by reforming the existing policies.
If we wish to provide the applicants with the necessary funds, we shall have to face very tough decisions. This is particularly the case for the CAP. Far from reducing the CAP budgetary expenditure, the Commission proposals increase it. That is totally unacceptable. As regards the appropriateness of the proposals towards enlargement, I wish to refer to the damning opinion of the Agriculture Committee of another place on the outline proposals of Agenda 2000. The committee believes that the proposals are fraught with problems and therefore unacceptable. The proposals for the structural and cohesion fund also appear unsatisfactory. The criteria for distributing the overall allocations appear to be fundamentally flawed. They lead to an unfair distribution across the existing Union members and between those and the new applicants.
The decision to limit funding to 4 per cent of GDP has a perverse effect. En short, the richer you are the more you get. Yet the main purpose of the fund is to reduce the disparities with the Union. Furthermore, in all the applicant countries, the GDP per head is below that of Greece and Portugal. It is estimated that in 1999 Greece and Portugal, the poorest Union countries, will receive from the structural funds 400 ecu per head. It is also estimated that between 2002 and 2006, according to the Commission's proposals, the first wave applicants will receive 120 ecu per head, and a second wave group only 23 ecu per head. Moreover, the decision to maintain the cohesion fund in the present form, albeit with minor changes, flies in the face of fairness. It helps the relatively less poor countries and leaves the poorer ones out in the cold.
Perhaps we are not talking about the same Community or the same Union. We are not. It is increasingly clear that several countries are queuing outside the door. Some people ask, "What are the applicants joining?" Some people say, "A Community or a caste system?" Enlargement rightly developed almost as a natural response to the end of the Cold War. I hope that under the UK presidency the Government will make some real progress towards what has been described many times today as the central point of the Amsterdam Treaty; namely, enlargement. I beg to move.
Lord Grenfell: My Lords, the noble Baroness has spoken eloquently of the vast complexities of reforming the CAP, the structural funds and the institutional arrangements in the European Union. In doing so, she has revealed the true intent of this clause. That is simply that it would be far better to use this argument as an argument for delaying the ratification of the Amsterdam Treaty on the grounds that clearly these reforms will not be completed very fast. So the cat is rather out of the bag on this one. To put it charitably, the framers of this clause may have been seduced by the wishful timetable that one reads about, which basically states that the CAP reforms should be in place before the world trade negotiations start next year; that the reform of the structural funds must inevitably be completed before

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they in effect run out in 1999; and that the institutional reforms must be in place before the enlargement actually happens.
I certainly agree that the institutional reforms, CAP reforms and reforms of the structural funds need to be in place before the enlargement can take place. That is perfectly clear. However, let us not underestimate the amount of time that it will take, first, to get the reforms through, and, secondly, to complete the enlargement process.
Agenda 2000 sensibly stated that it did not want to use the enlargement as the vehicle for driving through these reforms. It was smart enough to realise that these are complex reforms and that they need to be made in any case, whether or not enlargement takes place. The overhauling is absolutely necessary. Whether the enlargement is to 20, 25 or whatever the number may be, the reforms must take place.
It would be a tremendous pity if we were now to say in accepting this amendment that the very sensible measures proposed in the Amsterdam Treaty should be held hostage to a dual process of agreed reform to the CAP, the structural funds and institutional reforms, and the extremely complex negotiations on enlargement. They will simply not come about that quickly. If for a moment we could divorce in our minds the reforms that we want to see achieved from the process of the actual enlargement of the European Union, and concentrate on the reforms, get them through and then move on to the enlargement process, that would be the sensible approach. The reforms have to come about before the enlargement.
As I said in Committee, we should remember that the reforms that we want to see put through are necessary to the enlargement. But they cannot be hurried. We have waited a long time for them; however, their complexity is such that they must be handled properly. Many of the applicant countries that want to enter the European Union—both those that are on the accession list and those that are not—are in my view gravely underestimating the amount of time that it will take for their negotiations with the European Union to be completed—we have only to read in today's Financial Times the reports of the tremendous difficulties that Poland is having with the European Union over the use of aid funds made available to that country so far. If that is any indication of what the problems are to be in the negotiations, the process will be much more drawn out than those countries unfortunately believe.
However, it gives us time to get proper reforms through. What one must not do is to hold up the ratification of the Amsterdam Treaty until the reforms have been agreed. There is no reason to do so. As we have said so many times on this side of the House, the Amsterdam Treaty is not highly controversial. There are sensible measures in it to try to get the European Union to work more efficiently. Many of the measures put forward are those which meet many of the interests and requirements of this country. So let us not try to hold up the Amsterdam Treaty and simply wait until the long drawn out and complex series of negotiations on reform have been completed.
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As the noble Baroness rightly said, there are very tough decisions, fraught with problems. That is absolutely right. So let us take the time to get them right and get the solutions through and not hold up the Amsterdam Treaty.
10.30 p.m.
Lord Howell of Guildford: My Lords, since the Committee stage, events have marched on on this front as well as the others we have discussed today. I am grateful to my noble friend Lady Rawlings for the amendment which gives us the opportunity to review the situation again. It is changing fast.
Enough has been said by the noble Lord. Lord Grenfell, by my noble friend Lady Rawlings and by others in earlier speeches this afternoon to remind us what an appallingly drawn out process this has been, is being and will be. It is amazing to reflect that it will probably be 15 or 16 years after the fall of the Berlin Wall before the new democracies, who thought they were rejoining Europe when they got rid of the Soviets, come to be likely to get into the European Union. That is assuming that no new obstacles are raised against them, which is quite a tricky assumption. That is for the fast track, whereas the prospects of the other five of the 11— the five plus one plus five—those who are considered not yet properly prepared, are disappearing into the blue yonder of the never-never land. I can see no hope for them at all at the moment and it seems to be getting less all the time.
We have not discussed this evening—and I do not want to give any time to it because the hour is late—the question of the handling of Turkey. It was mentioned earlier, I know it is difficult: many people in Europe do not want Turkey in the European Union. They talk of involving millions of Moslem people in the Union. So their feelings were expressed in, I thought, an extremely clumsy exclusion of Turkey from the whole process. I know Turkey was supposed to come to Lancaster House and did not turn up, but the country was more or less told that it was not on the list. That has caused great ill feeling in Turkey, there are very dangerous undercurrents and we shall all pay a frightful price for it in due course.
As we know, the official position on enlargement is set out in Agenda 2000, to which the noble Lord, Lord Grenfell, referred. I think on the surface it sounds reasonable. The five plus Cyprus will be negotiated with: negotiations are already supposed to have started. The other five will be left on the slower track. But if one wants to understand the real approach, the real philosophy driving enlargement, it is better to look at the pre-accession strategy rather than the Agenda 2000 document, which contains some high flown aims for reforms. None of them has got under way. But the pre-accession strategy was clear in numerous councils and European summits. The new applicants were told two things precisely. One was: "Marketise your economies, turn them into free market economies. Get rid of the remaining barriers and create the conditions in which you can trade fairly with the existing European Union". The second was to accept the acquis, lock, stock and barrel. The difficulty which many of the east

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and central European governments have been pointing out ever since, rather mournfully, is that those two diktats, or requirements—perhaps "diktats" is too crude a word—are contradictory.
It so happens that the eastern European economies are rapidly emerging as the most dynamic, free-market economies on the European continent. They are moving ahead of many parts of western Europe. They have liberalised at a fantastic rate. Perhaps it is because they started under Soviet authoritarianism. But they have now leap-frogged to the point where a country like Estonia has no tariffs at all—none—with anybody in the external world.
They are highly liberalised countries. Poland is racing ahead; Hungary has done brilliantly; the Czechs have had a hiccup over some of their privatisation difficulties; but those are already market economies. Yet now they are being told to adopt the acquis and the acquis is not by any means totally informed by market economics. It has got all sorts of requirements for new regulations and new standards said to be part of the necessary arrangements for trading with the existing European Union but which in effect raise barriers, raise costs and remove the very advantages which those countries have exploited so well so far—being highly skilled countries, with low labour costs, and having considerable dynamism and the ability to attract enormous outside investment, which they are rapidly doing, both portfolio and direct investment.
One can therefore see that from the western European point of view it is essential to make sure that the acquis is accepted, though the price that will otherwise be paid by the interests and lobbies of western Europe will be extremely high and that is a price that they do not want to pay. I find all that understandable. As the amendment says, it is a question of structural and regional funds. But if one is in the existing Union enjoying those benefits, one does not want to see them go east. If one is in the existing Union, one does not want to see direct foreign investment—private investment which is poured into the Iberian Peninsula and into some of the Mediterranean countries—diverted, as it is being diverted, into the gigantic new motor manufacturing electronic works in Poland, Prague, the Czech Republic and Hungary.
One can see what the real forces in this game are. Many people in western Europe are anxious that enlargement will take away the enormous benefits that have been enjoyed. And that is not all. Western Europe is reeling under the impact of Asian competition, which is about to get much worse, of course, as much lower cost, devalued currency imports pour into Europe. As the Berliners rather sadly say, "We are threatened with Asia only 40 kilometres away, behind our backs". At the Polish border we are going to be dealing with Asian levels of competition; labour costs one-tenth of those in western Germany, or indeed in Germany as a whole, because of the unification procedure, and very high quality goods as well, all of which are a direct threat to western Europe.
One must therefore be realistic in recognising that the motivations for pushing for enlargement are extremely limited and not at all at the root of popular opinion in
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western Europe. On top of that, we have the problem of the common agricultural policy. Eastern and central Europe are dominated by agriculture, much of it extremely competitive. Hungary alone could probably feed the whole of western Europe; certainly Poland could. That creates the ultimate impossible dilemma, as was outlined brilliantly in a House of Lords European Select Committee report two years ago. The dilemma is perfectly simple: if the present levels of subsidy are to be maintained and applied to eastern Europe, then the entire budget will blow up. We are talking about trebling or quadrupling the budget, or more.
If the subsidy levels for the new entrants are reduced, then we are creating a two-tier system, with the poorer farmers of eastern and central Europe having to compete with the richer farmers of western Europe who will be receiving larger subsidies. It is hard to think of a more divisive formula for undermining the sense of European unity, which many of us thought we were supporting.
Finally, there is the question put so eloquently by my noble friend Lady Rawlings that if one is sitting in eastern Europe wondering what they are doing in the treaty reforms to accommodate and prepare, and we look at the Amsterdam Treaty—I am not arguing with the noble Lord, Lord Grenfell, about delaying the treaty—we find it is, in the words of my noble friend Lord Moynihan earlier this afternoon, blind. It has nothing to say at all in the way of institutional preparation for enlargement. That is not very encouraging if we look at it from Warsaw or Prague.
No changes in procedure therefore are contemplated, and there are no changes in the law-making procedures, which my noble friend Lord Renton, in a brilliantly perceptive article in the Statute Law Review two years ago, said were absolutely essential before we could begin on the serious and bona fide process of enlargement.
One is therefore left feeling a little downcast about the whole enlargement story, and I fear grave disillusion ahead on this entire matter. These are small nations. They say yes to being in Europe of course; that is perfectly understandable. They want to be reassured by being part of the European family. But they are not so keen on losing their national identity, which they have only just got back after a hideous 40-year struggle. They are clearly not going to qualify for EMU because their economies are not convergent. There is, therefore, a real set of difficulties ahead, on top of the fact that there does not seem, under the surface of rhetoric, to be very much enthusiasm in western Europe for enlargement at all.
We have much in common in this country with these small countries, and they look to us with great respect. We helped bring some of them into being. We brought Estonian independence into being through the Royal Navy in the 1920s; Hungary sought British leadership between the wars; we went to war for Poland in 1939. We were seen as the champion of these countries and, in my view, we should resume that championship, and it is not a moment too soon to do so.
Baroness Williams of Crosby: My Lords, I listened with great attention to both the noble Baroness,

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Lady Rawlings and the noble Lord, Lord Howell. I do not want to detain the House for more than a few moments, but I do believe that the interpretation of the noble Lord, Lord Howell was somewhat too pessimistic. Also, while I accept many of the comments made by the noble Baroness, Lady Rawlings, I do not believe that the amendment would be helpful in bringing about enlargement at the earliest possible date.
Perhaps I may say a few words about each of those matters. The process of enlargement is a process of iteration between the existing members and the would-be new members, and it is a process which is continuous and ongoing. It does not have to be wholly sequential; it can be conducted at the current time. Obviously, there are elements in the Treaty of Amsterdam that become part of the acquis once the treaty is ratified by all member states. That, in turn, becomes one of the preconditions of membership. Therefore, with respect to the noble Baroness, Lady Rawlings, I agree here very much with the noble Lord, Lord Grenfell, that it would only delay the process of enlargement if the acquis in concluding the Treaty of Amsterdam were to be delayed, as the amendment suggests, until a resolution had been passed on each of these complex areas of reform, probably for a number of years. It would simply mean that the negotiation of the new member countries in accepting the acquis was put off until such time as all those reforms were completed. I do not believe that that would be helpful to the potential new members.
Secondly, among the list of issues that the resolution of the noble Baroness raises, at least one of the proposed changes is already being initiated—I refer by that to the reform of the regional and structural funds. It is my impression that the reform involved in extending these to the new members and in passing through the political difficulties associated with reducing the present scope of the structural funds has already been embarked upon with considerable political courage.
The appropriate director-general of the Commission responsible for regional policy has already indicated that regional assistance must be more concentrated on the poorer parts of the European Union, and has indicated that there should be a reduction in the recipients from about 49 per cent. of the population of the existing European Union to about 31 per cent. in order to reduce the claims on the funds sufficiently to allow a substantial sum to be targeted towards the new would-be candidate countries.
That involves painful political choices because, as the noble Baroness implied—and she was right to so imply—nobody is suggesting a substantial increase in the proportion of the gross national product that is to be spent on the European budget, which continues at the relatively modest sum of 1·27 per cent. of GNP. Incidentally, in my view, that is a figure that is not consonant with some of the wilder charges about moving towards federalism and may be compared to something like a 30 per cent. figure for the US federal budget in comparison to the budgets of the states. This 1·27 per cent. is not going to allow huge generosity with
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regional funds. Therefore, it does involve a redirection of regional funds and it is quite clear that this process is being embarked upon.
It is understandable that countries that will lose as a result are fighting very hard against that, including, incidentally, our own Government—that is what one would expect and in no way would I criticise or censure them. But it is worth saying that this process has been embarked on and that the Commission has been clear about the change in targeting involved. It will he of great benefit to the new members to receive the approximately 19 billion ecus a year which will emerge should these proceedings continue and succeed.
Secondly, in the area of institutional change, we all recognise that there was a deep reluctance at the Amsterdam Treaty negotiations to address this issue. That deep reluctance—I in no sense try to defend it—was not assisted by the fact that the United Kingdom herself was going through a difficult period of change, from one government to the other. Neither the government who were leaving, nor the government who were coming, were particularly anxious to grapple with this extremely difficult issue. We all understand that the issue has to be addressed before enlargement can take place because we simply could not run the Union on the basis of the present institutional structures. That has to come. But there is no need to delay the rest of the process until the institutional changes have been completed. Indeed, in many ways, continuing the process will speed up the pressures for institutional change.
I turn to the common agricultural policy. This is where I found the remarks of the noble Lord. Lord Howell, to which I always listen with great care and attention—it is always worth doing so—to be more pessimistic than they needed to be. Surely we already know that the common agricultural policy, for good or for ill, will not be extended to the new candidate countries. That has been made plain. It is also clear that in consequence of that there have to be substantial changes in the common agricultural policy, moving towards systems of rural management rather than systems for protecting prices. I would suggest to the House—and here I may differ from other noble Lords—that the pressure on the common agricultural policy to change arises precisely out of enlargement. Enlargement has actually spearheaded the difficult process of reform of the common agricultural policy and that process would not have gone so far unless enlargement had been embarked upon. It is an instance of what one might call constructive synergy, which I believe has occurred as a result of enlargement.
Finally, with regard to that, perhaps I may turn to one aspect of the acquis that is not in the field of economics, which the noble Lord, Lord Howell, so clearly described, but rather is in the sphere of politics. It seems to me that the central achievement of the Amsterdam Treaty, which was to put respect for human rights hack at the centre of the whole of the unrolling European Union development, is of crucial importance to the new countries. The single most important political contribution we can make to them is to put this at the core of their constitutions as much as at the core of the

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European Union's own structures. In that respect I believe that the extension of the acquis to these areas of human rights, including Article F.1, which says that a country that does not accept fully human rights cannot continue to be a full member of the Community, is a wholly constructive development.
Perhaps I may say a few words about Turkey. I happen broadly to share the views of the noble Lord, Lord Howell, on the issue of the importance of Turkey, which plays an increasingly significant part in central Asia, in the former republics of the Soviet Union and well beyond. Turkey is a key player in a very unstable part of the world. She has been consistently friendly towards Europe, towards the West and towards the United States, and she is a member of NATO. We have to consider carefully not to alienate her. However, it is not unreasonable that one might expect and hope that Turkey could evolve somewhat further in respect of her attitude towards human rights and her attitude towards constitutional and democratic practices. That, to my mind, although certainly not to all members of the Union, is the major difficulty and one we would be more than ready to see overcome. We would do everything we could to encourage Turkey were she to address those issues.
Baroness Park of Monmouth: My Lords, I would like to add my support to the amendment for rather different reasons. I am concerned about two things. The first is that it seems to me that the priorities have gone wrong. An organisation which is working out a common defence policy and planning to have an operational one, as well as contemplating administrative costs in that regard, and also intending to work with and through the WEU, will cause great confusion to the unfortunate people who are to join under enlargement.
They are already dealing with the question of joining NATO, and that is well worked out: everybody knows where they stand. If they are also to find themselves members, without quite knowing where they stand, of a new defence organisation (for lack of a better phrase) which is going to be responsible for peace-making and humanitarian tasks, essentially that is going to require a military organisation and troops. I cannot see where they are coining from at the moment except from us.
It is unfortunate. There should be a sense of priorities. It is important to get the institutions clear first. Until it is quite clear what the relationships are going to be in the end between NATO the WEU and the new defence organisation and how that will affect the new entrants to the Union, there is everything to be said for reforming the institutions first and getting that aspect of it quite clear before enlargement can proceed.
I support enlargement and believe that it is one of the most important things that we are considering. It is even more important that there should be a new set of priorities in the European Union. It should begin by sorting out exactly how everything is going to work before plans are made for "adventures"—I can only call them—in the military sphere.
Lord Whitty: My Lords, a wide range of interesting points has been made in the course of this debate on enlargement, many of which are apposite to the subject. But I am not entirely clear that they are apposite to the amendment. I shall pick up points which noble Lords have made, but I believe that I should address the amendment.
It is slightly bemusing. Possibly it has been overbilled: the slightly ambiguous title calls it "Conditions for enlargement of the Union". As I recall, a similar amendment at Committee stage did indeed refer to preconditions for enlargement, but this amendment does not deal with that but with preconditions for the ratification of the Amsterdam Treaty on the CAP. As my noble friend Lord Grenfell pointed out, we should not ratify the treaty until we have resolved the problems on the CAP, the structural funds and the institutions.
It would have been strange if this House, of all places, had tried to put preconditions on enlargement in order to slow down the process. I believe that we were all moved by the first intervention this evening by the noble Lord, Lord Howell of Guildford, in particular in describing the challenges of enlargement. The whole process of the reunification of Europe is the most important political challenge and difficult project for this generation of politicians. It would have been wrong to put a brake on the progress of enlargement as a result of consideration of this treaty. Therefore, I am grateful that, by and large, noble Lords have not quite said that.
Nevertheless, the almost retrospective preconditions for ratification of the treaty which this amendment raises are unacceptable. This new clause would prevent the United Kingdom from ratifying the treaty for some years. Surprisingly, the new clause has been tabled by the noble Baroness speaking for the official Opposition. I confess that I find it highly disingenuous coming from the party which was in government for the vast majority of the time we were approaching the intergovernmental conference.
I accept that there is genuine disappointment for noble Lords of all parties as regards subsection (c) of the amendment; namely, the failure to secure full agreement on the question of institutional reform, specifically on the reform of the Commission and on the re-weighting of votes in the Council. The House will address those issues on Thursday when it turns its attention to Amendment No. 12.
The Government believe that these issues can be resolved in a relatively simple IGC process, not one that re-opens the whole range of institutional questions as the noble Baroness appeared to imply or involves a changed relationship between the EU and NATO, as the noble Baroness, Lady Park, suggested. We have made quite clear—it is reflected in the treaty—that NATO remains the bedrock of the security of Europe. That will not change in the period that we are considering before enlargement.

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We do not believe that a whole range of institutional rearrangements must be faced, but obviously the issues left over from Amsterdam about the Commission and the reweighting of votes in Council must be addressed. I was slightly bemused by some of the implications raised by the noble Baroness. For example, she referred to the appointment of the president of the central bank. She appeared to advocate by implication a significant extension of QMV. I recall that that was not exactly the position of the previous government about senior appointments. They caused a degree of discomfort among our partner member states when as a minority of one they vetoed the appointment of a widely supported candidate for the presidency of the Commission. I was interested and slightly bemused by the change of tack of the Conservative Party on this matter. However, I welcome its openness to the extension of QMV, if that is what it represents.
It is breathtaking for the Opposition to suggest that we should not ratify the treaty until we have delivered reform of the agricultural policy and structural funds. At this time of night it is probably not sensible to go into great detail on the problems that face us on both fronts. In responding to this point I simply ask the noble Baroness to set out for the information of the House the detailed steps that her party took when in power to secure policy reform of this kind in the context of the Intergovernmental Conference which ended in Amsterdam.
The reality is that in the run-up to the election last year the Conservative Party made all kinds of conditions on the signing of the Treaty of Amsterdam. They threatened to veto the treaty in a number of areas ranging from reform of the European Court of Justice to resolution of the issue of BSE, quota-hopping, which the House will again debate on Thursday, amendment of Article 118a in relation to working time and opposition to any extension of qualified majority voting or the powers of the European Parliament. Those threats were made all the way through the approach to the Intergovernmental Conference and we deplored most of them. But at no time was any mention made by the previous government of a condition to secure reform of the CAP and the structural funds before the treaty could be agreed. As the noble Baroness and her colleagues in government at that time are aware, that was never part of the run-up to the Intergovernmental Conference.
In the context of enlargement and the problems faced by the European Union in the coming years, the House will be aware that the Government are fully committed to reform of the key policies that have been mentioned. This is imperative if enlargement is to be successful. But that process must proceed in parallel with the negotiations for enlargement, as the noble Baroness, Lady has said. It cannot proceed retrospectively in parallel with the negotiations on the Treaty of Amsterdam. The United Kingdom Government favour radical reform of the CAP, in particular the reduction of supports. That will need to
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be done not only in preparation for enlargement but also as a result of the WTO negotiations in the year 2000. We are also in favour of some of the proposals which the Commission has already tabled, but they do not resolve the problem of the full reform of the common agricultural policy. We are in favour of reform of structural and cohesion funds which are fair both to existing EU states and to future EU states and are affordable and durable.
As the noble Baroness, Lady Williams, has already pointed out, the Commission has made proposals some aspects of which are acceptable to us, but we have severe reservations about others. We are also in favour of providing help during the Agenda 2000 rejigging of the budget in order to provide for applicant countries. The noble Baroness, Lady Rawlings, raised the question of whether we were damagingly differential in our support for potential applicant countries. The disparity between payments to those who are in the first wave and those who are in the second wave is relatively small when measured in terms of the relative wealth of the two waves of applicants, and that is logical. There are real limits to the ability of relatively poor economies to absorb large sums of assistance. But the big disparities which I think she was calculating only arise when you take into account post-accession transfers to the first wave. We are continuing to meet the continuing problem of all the applicants—the first wave and the second wave—through the transfer of funds which the Commission includes within the Agenda 2000 programme.
We too are in favour of tight control on total EU spending in the coming period 2000–2006. We will also attempt, as I have said, to make progress on as many as possible of these issues, including institutional reform, in the coming year. We hope to make some progress on budgetary changes by the Cardiff Council. But the reality is that no significant improvement in these budgetary areas will take place at least until we are into the Germany presidency next year. Some of the fundamental issues, particularly relating to the CAP, will go well beyond that.
We are therefore, as noble Lords have said from various points of view, engaged in a quite lengthy process. We are engaged in a process which runs in parallel: improving the situation on institutions, on the budget and on the way the budget is allocated by the existing members of the EU, while at the same time helping the applicant members to meet the acquis, to improve their economies and, in some cases, as the noble Baroness indicated, to enhance the democracies of those applicant countries over that period.
I shall not, tonight, put a timescale on these negotiations. My noble friend Lord Grenfell was right in saying that some of those negotations will take considerably longer than has perhaps been suggested by the rather heightened expectations in some of the applicant countries. Nevertheless, we are committed to an intensive period of negotiation over that time.

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We have already started that during the British presidency. We held the successful European Conference on 12th March of all the applicant countries; we have secured agreement to the accession partnerships; we have launched the accession process and we have launched the formal accession negotiations with the six first wave countries on 31st March.
The noble Lord, Lord Howell of Guildford and others referred to Turkey. It is our intention that as far as possible Turkey, through all diplomatic efforts, should be persuaded to rejoin the European Conference process as early as possible, recognising all the difficulties. However, I have to say, in agreement with the noble Baroness, Lady Williams of Crosby, that before Turkey becomes a serious candidate for formal negotiations to join the EU, there are certain severe human rights problems which have to be addressed within that country. Turkey is not being judged by different criteria from the other applicants but the human rights problems are more deep seated in that country than they are with any of the other 11 countries.
The launch of the enlargement process has represented real progress. Those negotiations will take some years. So will the negotiations on the CAP, although there may be some decisions in time for the year 1999 or 2000. The full reform of the allocation of the budget will also take some years to negotiate.
The amendment, if it were passed, would set back the process not only of enlargement but also of budgetary and institutional reform. If we were at this point required before we ratified the treaty to achieve significant progress on CAP reform, on the structural funds and on the institutional areas which were not dealt with by Amsterdam, we would be setting back all these ambitions considerably.
The Treaty of Amsterdam made a number of institutional reforms which help the enlargement process. We should not dismiss the Treaty of Amsterdam as failing to provide for enlargement, as I think was the implication of some of the comments from the noble Lord, Lord Howell of Guildford. It did not make sufficient institutional changes, but, as I have said, believe those institutional changes can be made relatively easily and certainly in time for the medium-term period of negotiations over enlargement.
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Given our commitment to enlargement and to a positive future for the European Union, I hope that the noble Baroness recognises the problems which her amendment raises and will feel able to withdraw it.
Lord Pearson of Rannoch: My Lords, before my noble friend rises, I appreciate the—
Lord McIntosh of Haringey: My Lords, we are at Report stage. After the Minister has spoken there should be no intervention other than by the mover of the amendment.
Lord Pearson of Rannoch: My Lords. I ask for the forgiveness of the House.
Baroness Rawlings: My Lords, this has rightly been an interesting debate and I thank noble Lords who have participated. The noble Baroness, Lady Williams of Crosby, made two good points which need stressing. She pointed out that enlargement has superseded the necessary change to the CAP, which has been worrying us all for a long time. Secondly, she made a valid point relating to Turkey, about which we do not usually hear, and I fully support that.
The comments of my noble friend Lady Park about enlargement with regard to NATO were most important. My noble friend Lord Howell of Guildford was right in saying that applicant countries are moving rapidly from command to market economies. However, they still have serious structural problems and the change will take a long time. I am not sure that the picture is as rosy as he depicted.
I am most grateful to the noble Lord, Lord Grenfell, for stressing the reasons for the reforms. The amendment was an exploratory amendment and I agree with the noble Lord that there are not sufficient reasons for delaying the final ratification of the treaty. Enlargement is one of the most important issues. I beg leave to withdraw the amendment, but I may return to it on Third Reading.
Amendment, by leave, withdrawn.
[Amendment No. 7 not moved.]
Baroness Ramsay of Cartvale: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly and, on Question, Motion agreed to.
House adjourned at seven minutes past eleven o'clock.