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The Chairman of Committees: My Lords, perhaps I may provide one or two additional pieces of information before I respond to the suggestions which have been most recently made. I am very grateful indeed to the noble Lord, Lord Strathclyde, the Leader of the Opposition, and to the noble Baroness, Lady Knight of Collingtree, for raising the points that they did. If I may say so, the noble Lord, Lord Strathclyde, made a very helpful point as a member of your Lordships' committee which considered these matters in some detail.

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It is proposed that Mr Michael Braithwaite will be helped by two Officers of your Lordships' House. They are the Yeoman Usher, Brigadier Hedley Duncan and the Establishment Officer, Dr R Walters. It has been suggested that Mr Michael Braithwaite will not be in a position, because of lack of knowledge, to assist your Lordships. I would suggest that is far from the case. He has already become very familiar indeed with the workings of Parliament through the examination which he made in another place. It is for that reason that if he undertakes this work it will be less costly than it otherwise would have been, and indeed he will not have to spend a great deal of time in finding out about the basic workings of the House.

In answer to the point made by the noble Lord, Lord Monson, no set number of days has been set aside: that has been left open depending upon how the work proceeds. Although I have attempted to indicate that some more detailed information is already available in the normal way to your Lordships through the Library, I am persuaded that it might be helpful for your Lordships to be presented with a further report, which will contain more information of the kind requested by your Lordships this afternoon.

In the circumstances, I shall not press this Motion this afternoon but return to your Lordships with a more detailed report which, so far as its basic elements are concerned, will be similar to this one but contain the additional information which your Lordships, quite understandably, require.

Lord Denham: My Lords, before the noble Lord sits down, he has said that he will produce further information. Does he mean that he will refer the matter back to the committee--I think that is what the House wants--rather than just produce more information? I think that we want this to be referred back to the committee before we reach a decision on it.

The Chairman of Committees: My Lords, my immediate answer to the point raised by the noble Lord, Lord Denham, which I well understand, is that I should like to consider that. Another meeting of the Administration and Works Sub-Committee is scheduled for early July. If I may reflect upon it, that may be the appropriate point at which to ask that sub-committee to take another look at this. I do not want now, on the spot, to commit myself to referring the matter back in that way. What I shall certainly do, as I have indicated, is come back with a new report which contains more information. If the noble Lord will allow me to reflect upon that I will do so and if, on reflection, it does seem to be a better way of proceeding I will of course do that.

I suspect that I have not, on this occasion, been able to satisfy many of your Lordships with this report. However, I hope that your Lordships feel that it is appropriate for me to take the course of action I have suggested. That being the case, I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.

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European Council, Feira

3.40 p.m.

The Lord Privy Seal (Baroness Jay of Paddington): My Lords, with the leave of the House, I should like to repeat a Statement on the Feira European Council which is being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

    "Together with my right honourable friends the Chancellor of the Exchequer and the Foreign Secretary, I attended a meeting of the European Council in Santa Maria da Feira, Portugal, on 19th and 20th June. A copy of the Council's conclusions is available in the Library of the House. I had a series of meetings in the margins with the Prime Minister of Belgium, Mr Verhofstadt, on illegal trafficking in people and football hooliganism; with the Prime Minister of Greece, Mr Simitis, in the wake of the appalling killing of Brigadier Saunders; with the Spanish Prime Minister, Mr Aznar, on economic reform; and with the French Prime Minister, Mr Jospin, on French plans for their presidency.

    "As regards savings tax, the most contentious issue at the Council itself was the question of how best to tackle the problem of cross-border tax evasion within the EU. For many years the Commission and, indeed, most member states, have argued that the best way to deal with this issue is through tax harmonisation by requiring all countries to introduce a withholding tax on savings income paid out to non-residents. We, for our part, have argued consistently that a EU-wide withholding tax would not only be seriously damaging for the City of London; it would also be completely ineffective in tackling tax evasion. But we have also made it clear through these long and complex negotiations that we do fully agree with the objective of fighting international tax abuse caused by banking secrecy.

    "The outcome my right honourable friend the Chancellor and I achieved at Feira was fully in line with the principles and objectives we set out. It was, as I said yesterday, a personal triumph for the Chancellor. This is a comprehensive agreement which fully protects the competitiveness of the City. All 15 countries have now agreed to accept exchange of information, not a withholding tax, as the way forward for the EU. Implementation of the European Union regime will depend on the progress made in agreeing similar measures with third countries and dependent territories. Even in the transitional period, only two of the 15 countries have said that they will definitely retain a withholding tax.

    "This is an excellent agreement for Britain and for Europe. It shows once again how the Government's strategy of positive engagement in Europe both protects and indeed enhances the country's national economic interest.

    "As regards economic reform, that was also demonstrated at the last European Council at Lisbon where we agreed a radical 10-year

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    programme of economic reform for Europe. Since Lisbon we have made progress in taking this agenda forward, including directives on e-commerce and e-money, agreement in respect of copyright and new proposals on public procurement. At Feira we agreed a charter for small enterprises, a new strategy on scientific and technological research and a hugely ambitious action plan on e-Europe, which will underpin efforts to create a dynamic knowledge economy in Europe. At the same time we invited the Commission to accelerate work on the single market in financial services, energy liberalisation and aviation.

    "Heads of Government discussed the proposed charter of rights. I made clear my view that the charter should pull together in a single document the rights European citizens enjoy, that it should be political in nature, not legally binding, and that it should not impose new legal obligations on the member states. The House will welcome the fact that there was a good deal of support for this approach from other Heads of Government. The charter will be one of the main issues for discussion at the Biarritz European Council in October.

    "On enlargement, we agreed on the need to keep up the momentum in the negotiations with the candidate countries.

    "On the European Union's own preparations in the inter-governmental conference, we heard a progress report from the Portuguese presidency setting out the options for re-weighting votes in the Council of Ministers in favour of the larger member states like the UK, for reforming the size and structure of the Commission and for looking again at what issues should be decided by qualified majority voting.

    "We also discussed the arrangements agreed at Amsterdam to allow closer co-operation among a group of member states. Such arrangements already exist, for example in Schengen. And we will need more such flexible co-operation in an enlarged EU. But in this context, the Council reaffirmed in its conclusions the need for coherence and solidarity in an enlarged European Union.

    "We made further progress on European defence. Close working links between the European Union and NATO are being put in place, together with special consultation arrangements with those European allies who are not in the EU. The priority now is on how Europe will deliver on the headline goal we set ourselves at Helsinki, and this will be the focus of work in the next six months. We also adopted targets for the civilian aspects of crisis management, such as the provision of police officers.

    "Finally, we discussed a range of international issues: Russia, the Balkans, the Middle East peace process, and Africa on which President Mbeki of South Africa addressed the Council.

    "This was, again, a successful summit for Europe and the United Kingdom. I have no doubt at all that it is vital for British ideas, British industry and

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    British influence that we continue with the policy of constructive partnership with the EU and under this Government that is what we shall do."

My Lords, that concludes the Statement.

3.45 p.m.

Lord Strathclyde: My Lords, I am grateful to the noble Baroness for repeating the Statement. I understand that she has taken time off from the "Body Image Summit" being held by the Prime Minister at No. 10. I thank her for putting the interests of the House first.

In the past I have often been accused of being churlish in response to EU summits in this House. Perhaps I may say at once that I welcome the commitment to the completion of the internal market, the overdue emphasis placed on small businesses and the action plan on drugs. I also welcome the success achieved in resisting the threat of a withholding tax which would have done much damage to the City of London. Let us hear no more about unfair tax competition. Does the noble Baroness agree that that owes much to the Chancellor of the Exchequer, Mr Brown? Can she confirm the Treasury briefing to today's Financial Times that Downing Street urged Mr Brown to give way on this issue at the Helsinki summit but that the Chancellor refused to do so? Did the Chancellor, not for the first time, show better judgment than the Prime Minister? Can she confirm, however, that this agreement will not be put into effect unless the European Union can achieve exactly the same agreement of the Swiss and the US authorities to exchange information on savings? I wonder how the Government assess that particular prospect.

Can the noble Baroness assure the House that the Government will not try to prove its euro credentials by harassing the authorities in the Isle of Man or the Channel Islands in pursuit of an agreement that may never come into force if the Swiss Government will not lift their secrecy laws?

I wonder whether the noble Baroness has had the opportunity to see the comment of the Swiss Finance Minister, Kaspar Villiger, in today's Corriere della Sera that Swiss banking secrecy is "non-negotiable"? Is that very same newspaper not right in saying that the English may be speaking of a very important result but that the Feira agreement has already received a cold shower in the shape of a "No" from the Swiss?

We, on this side of the House, do not favour EU intervention in pursuit of tax harmonisation. The Chancellor may have held a threat at bay, but is it not a threat that should never have been made in the first place? Does not this episode show once again the utter futility of the schoolboy boycott of the democratically elected government of Austria? Is not the noble Baroness ashamed of the admission by her noble friend Lady Scotland that Austria is the only member of the United Nations with whom we have a policy of refusing bilateral ministerial talks?

What do we do if an Austrian Minister comes up to a member of this Government at one of these summits? Do we shuffle away, muttering, "Not today, thank you

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very much?" Is it not high time that this farcical and offensive policy was brought to an end? Can the noble Baroness take that message with her when she meets with the rest of the Cabinet tomorrow morning?

At least the Chancellor could say that he was at centre stage in Feira. The Prime Minister can say no such thing. During the summit the Prime Minister hovered on the fringe, unable to say with which of his Minister's views on the euro he agreed; he was left in the wings while Herr Schroeder and President Chirac set out their plans for what they called "reinforced co-operation". If any of the Prime Minister's diminishing legion of spin doctors had bothered to mention that in yesterday's briefing, the translation into English is a "two-speed Europe".

That "two-speed Europe" will now officially be on the agenda in Nice. So too will the charter of fundamental rights. Can the noble Baroness tell the House this afternoon whether the Government are in favour of "reinforced co-operation" or against it? Are they ready to agree to a charter of fundamental rights, or will they oppose that concept? There are clear choices to be made. Parliament needs to be told and so too do the British public.

Is not the brutal truth that the Prime Minister was an increasingly forlorn figure as he boasted of his euro leadership, but then had to listen to the blunt words of the German chancellor that,


    "A two-speed Europe already exists. You should know because you are not a member of the euro"?

Does the noble Baroness agree with the noble Lords, Lord Owen and Lord Healey, that any further major concessions of power should be made only after they have been endorsed by the British people in a referendum? Was there any discussion of the United Kingdom's entry into the euro at the summit, given that the entry of the Greek drachma was endorsed? Did the summit agree with the words of Mr Duisenberg that there was a "psycho-political" problem in the United Kingdom Government as to the euro? I do not know who inside the Government is a psycho, but it is a serious point.

Everyone in this country and across Europe knows from whispers and spin that the Prime Minister wants to enter the euro soon, and that he does not believe that there are any constitutional implications of this matter at all. We differ with him on that. But is not the stark truth that he could carry more respect at these summits if he came out for what he believed instead of dithering and simpering on the fringe?

That is the "psycho-political" problem accurately identified by Mr Duisenberg. It goes right to the top of this increasingly incoherent and indecisive Government. On the biggest issues facing the EU in Nice and after, the Prime Minister is not offering the leadership that the country expects. As President Chirac bluntly put it, in Europe,


    "there will be leaders and followers".

Increasingly we can see that, in today's Europe, the Prime Minister is not one of its leaders.

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3.54 p.m.

Lord Rodgers of Quarry Bank: My Lords, on behalf of these Benches, I too thank the Leader of the House for repeating today the Statement made by the Prime Minister elsewhere.

I too welcome the outcome on what we call "tax evasion". I agree that it is an excellent agreement both for the United Kingdom and for the European Union. I find no embarrassment on this occasion in congratulating the Chancellor on his achievement. Unlike the noble Lord, Lord Strathclyde, I am not too bothered about trivial newspaper stories, whether or not they are accurate. I feel that they are irrelevant to the outcome, which was a good one. It shows what can be done in the European Union through persuasion, given a good case. For that reason it is strengthening both of the Union, as well as of those who believe that Britain's full membership, in every respect, at all times, is to the United Kingdom's advantage.

I ask the noble Baroness only one question in that regard. The Statement refers to the need to make progress with the agreement after negotiations with third countries and dependent territories. Can she say how those negotiations will be started? Will they be carried out by the Europe Union or through bilateral exchanges? Is there any timetable by which implementation of that important agreement will take place?

Compared with the outcome on tax evasion, other matters were, perhaps not subsidiary, but less striking. I should like to ask questions on two or three of those topics. A reference was made to something which is not unfamiliar to us; that is, closer co-operation among groups of member states. It may be my shortcoming, but I do not fully understand what that means. That is an area in which there could be a danger of two-tier membership or of unravelling. I am sure that that is not the intention and it should be possible to welcome the progress that has been made. However, could the House be told a little more as to precisely what that involves?

A vague statement was made on European defence, with no indication of exactly what has been agreed. Perhaps the noble Baroness could tell us explicitly what was new on the whole question of the emergency unit being able to take express action. Also, we know that there has been a real problem--Kosovo among others--of obtaining the target of police officers which had been set. Can the Minister say what the new target is and what is the likelihood of it being achieved?

I referred earlier to rapid response. I am afraid I was tumbling over my words. I was asking explicitly what progress had been made on rapid response.

As often happens, the Statement began with reference to other meetings that the Prime Minister had on the margins of the Council, including the meeting with the French Prime Minister, Mr Jospin. In that respect, can the Minister say a word or two about the agendas for Nice and, before that, Biarritz? She referred to progress on the charter in Biarritz. It would be helpful to have an indication, not necessarily of the agenda, which presumably will be for the French

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presidency to arrange, but of the United Kingdom's objectives, both at Biarritz and the Nice Council meeting in December.

It is clear that there was no substantive discussion of the euro at the summit meeting, and no explicit statement of the United Kingdom's intentions. In that respect the Chancellor likes to make extramural statements of one kind or another. I should like to believe that his success with the withholding tax has given him some confidence and courage to think rather differently about the whole question of entering the eurozone. I agree with Mr Duisenberg that it is not only a matter of convergence; it is not only a matter of five conditions, of which three have probably already been met; it is a political decision. I am not expecting the noble Baroness to give us a great deal of hope today, but perhaps she can confirm that that political decision will be made sooner rather than later and that the Chancellor is in high spirits and open to persuasion.

3.58 p.m.

Baroness Jay of Paddington: My Lords, as always I am grateful to the noble Lords, Lord Strathclyde and Lord Rodgers, for their overall welcome of this report on the summit and, indeed, as the noble Lord, Lord Strathclyde, said, for his enthusiasm for certain parts of it.

As the noble Lord, Lord Strathclyde, is concerned about the issue of interpretation of various events as he has read them in what one might call secondary sources, I can assure him--I should not like this to go unchallenged or unassailed--that the Prime Minister was certainly not involved in the "Body Image Summit"; that that summit was not held at No. 10 Downing Street; and that it finished at 10.15 this morning. There was therefore no challenge to my responsibilities towards your Lordships' House in that regard.

I refer the noble Lord, Lord Strathclyde, to those matters which are on record in relation to this conference to assist him in obtaining the correct position of Her Majesty's Government. For example, I refer him to the press conference which my right honourable friends the Prime Minister, the Chancellor of the Exchequer and the Foreign Secretary gave yesterday and, on the issue of the convergence criteria and whether or not convergence is closer or further away, to the speech made by my right honourable friend the Chancellor of the Exchequer at the Mansion House last week. Those may be more instructive and more authoritative than some of the second-hand sources on which he commented this afternoon.

With regard to the general point made by the noble Lord, Lord Strathclyde, about the sense in which Britain was lagging behind the leaders at this conference, a reading of the conclusions of the presidency will again lead him from the primary sources to a rather different view from that which he took this afternoon.

If we leave aside the welcome that he rightly gave to the points made by my right honourable friend the Chancellor of the Exchequer as regards the

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withholding tax, of which he was able to convince the rest of his colleagues, he will see that, in relation to the charter of rights, the question of the post-Lisbon agreements, the economic agreements which were set out at that previous summit on, for example, a more subsidiary but, none the less, very important issue of the drugs trade, not to mention the question of trafficking in people, the British Government took a very important leading position in the discussion and, as is often the case, those positions which we espoused were ones which resulted in considerable agreement from our colleagues.

The noble Lord raised the question of what he described as the "two-speed Europe", and thought that somehow the Prime Minister had been disadvantaged by the fact that some of the issues which could fall into this category would be put on the agenda at the Nice summit. Again, I refer to the Prime Minister's reported statements in the past 24 hours on this matter. He said very clearly that he realised that these issues would be on the agenda of the Nice summit; that this was not something into which we were suddenly being bounced by the French government; and that, as was referred to in the Statement which I repeated, on certain issues--for example, the question of Schengen--there were different kinds of co-operation at different periods and in different ways between different countries.

I refer again to the terms of the conclusion. If I can find the exact words for your Lordships, I will quote them precisely. The conclusion was that, where it was thought possible to look at enhanced co-operation, it would be--and I quote directly from the conclusion--


    "in the context of cohesion and solidarity within the European Union".

That could not be much clearer.

The noble Lord, Lord Rodgers, raised whether there were specific issues which might fall into this basket of concerns which might be discussed during the IGC. The Government's position is that they are willing to consider those issues, in the spirit in which they are seen in the context of cohesion and solidarity. However, at present the Government are not convinced that the existing treaty provisions are sufficient in terms of making allowance for those different forms of progress in the specific areas of which I have given examples.

With regard to the question of the development of the very important and successful agreement that we achieved in relation to the exchange of information, as opposed to the withholding tax, I remind the House--and in this respect I concur with the point made by the noble Lord, Lord Rodgers, that, given a good case, this is an example of achieving much through persuasion--that six months ago the UK Government were in a position of 1:14 on this particular issue. We have now resolved it in the way in which the Government and particularly the City of London were concerned to resolve it. We have done that through persuasion, on the basis of a good argument, and I entirely accept that description by the noble Lord, Lord Rodgers.

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With regard to the question of how we go forward, particularly on the attitude of the Swiss and indeed the relationship and negotiations which will need to take place with the dependent territories and others, I am sure that noble Lords are aware that the question of the OECD discussions has already thrown up a more optimistic overall view of what the position may be vis-a-vis the Swiss government and specifically the United States government than was perhaps indicated from, yet again, the second-hand source of the noble Lord, Lord Strathclyde, in quoting a particular Minister today.

On the negotiations with the independent territories, we shall be working with our own independent territories on a bilateral basis, as I understand it, to fulfil our commitment set out in the conclusions. However, on the question of Switzerland--and this relates to the general point made by the noble Lord, Lord Strathclyde--this is precisely the reason that the UK has retained its right to veto the directive on the entire package, if these kind of agreements are not met within two years. I hope that that meets the point made by the noble Lord, Lord Rodgers. I cannot today give him a precise indication of exactly how discussions will proceed between the EU and other governments with which we are not as involved in terms of our bilateral arrangements as we obviously are with dependent territories. If I have further information, I shall, of course, write to the noble Lord.

I think I have covered most of the major points that were raised, except for the specific one which was raised by the noble Lord, Lord Rodgers, in relation to what practical progress has been achieved on the defence and security agreement. The wording of the presidency conclusions, which allows a very positive engagement between non-European NATO countries and other NATO countries, underlies what one might describe as the spirit of this development. The specific points are that the permanent political and military structures should be put in place in early 2001, and that the practical ways forward will be those which have previously been outlined. The proposals are a development of the mechanisms which have previously been agreed at other summits, and various benchmarks have been agreed. If the noble Lord requests it, I shall be happy to write to him with the precise details.

With regard to the European police force, I can reassure the noble Lord, Lord Rodgers, that the target for civilian police capabilities is to be met by voluntary contributions from the national police forces of member states. These contributions will be available for operations carried out by any international organisation, including, for example, the UN or the OSCE.

I believe that I have covered most of the main points made by noble Lords. In conclusion, I say to the noble Lord, Lord Strathclyde, that, although he perceives the British Government to be on the margins of the summit, if he looks at the conclusions and at the agreements which have been made on the basic

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principles, as well as the practical development of some of the earlier summits, he will discover that much was achieved on the basis of our leadership. I again commend to him the phrase of the noble Lord, Lord Rodgers--that much is achieved through persuasion, given a good case.

4.7 p.m.

Lord Renton: My Lords, I welcome the agreement that the proposed charter will not be legally enforceable. Perhaps I can ask the noble Baroness whether she is aware that that would be a very useful precedent for future agreements. That arises because the Treaty of Rome and its enactments have, to a great extent, not been legally enforceable. The economies, constitutions and climates of the European countries differ so greatly that it is difficult to expect them to be legally enforceable. Will the Government do all that they can to ensure, especially if the Community is to be enlarged, that future agreements will not be legally enforceable, but merely good aims?


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