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House of Lords

Monday, 20 December 2010.

2.15 pm

Prayers-read by the Lord Bishop of Blackburn.

Introduction: Lord Lingfield

2.24 pm

Sir Robert George Alexander Balchin, Knight, having been created Baron Lingfield, of Lingfield in the County of Surrey, was introduced and took the oath, supported by Lord Wakeham and Lord Boyce, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Feldman of Elstree

2.29 pm

Andrew Simon Feldman, Esquire, having been created Baron Feldman of Elstree, of Elstree in the County of Hertfordshire, was introduced and took the oath, supported by Lord Harris of Peckham and Lord Wolfson of Aspley Guise, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Dobbs

2.34 pm

Michael John Dobbs, Esquire, having been created Baron Dobbs, of Wylye in the County of Wiltshire, was introduced and took the oath, supported by Lord Tebbit and Lord Hunt of Wirral, and signed an undertaking to abide by the Code of Conduct.

Crime: Age of Responsibility


2.40 pm

Asked By The Earl of Listowel

The Minister of State, Ministry of Justice (Lord McNally): My Lords, the Government have no current plans to review the age of criminal responsibility.

The Earl of Listowel: My Lords, I thank the Minister for his reply. Does he recognise that the journey of many of the 10 to 13 year-olds entering the criminal justice system begins with alcoholic parents, continues with a disruptive mix of foster care, children's homes and different schools and concludes with entry into

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the criminal justice system and that the stamp of criminal conviction confirms their feelings of low self-esteem? Given the shortcomings in the care system recognised by the coalition Government, do they consider the low age of criminal responsibility in this country to be consistent internationally, when it is two years below the minimum age of 12 recommended by the committee on the United Nations Convention on the Rights of the Child?

Lord McNally: My Lords, I pay tribute to the noble Earl's continuing interest in these matters. I do not think that there is a conflict between the age of criminal responsibility and the kinds of concerns that he expresses. The whole thrust of our policy is to intervene as early and as positively as possible with young offenders. The factors that lead young people to offend are complex and can often include the circumstances that the noble Earl mentioned. That is why children who offend are referred to local multi-agency youth offending teams, which take a holistic approach to tackling the causes of offending, including housing, education, health and parenting issues.

Lord Dholakia: My Lords, the Minister and his department have taken some good initiatives in recent days on criminal justice matters, but does he not accept that the age of criminality is far too low for children and its impact on their rehabilitation is far too severe? Will he look at international practices in relation to children and consider what good practices could be adopted in this country, bearing in mind that we have probably one of the lowest ages of criminal responsibility?

Lord McNally: My Lords, I concede that we are at the lower end of the age of criminal responsibility. The department and all the authorities concerned look at international comparisons and practices. For the moment, we hold firm that, although the age of criminal responsibility is 10 years, the thrust of the policy when children come into the care of the authorities is not to feed them into the criminal justice system but to apply as vigorously and, as I mentioned in my previous answer, holistically as possible responses to their needs to try to avoid them reoffending.

Lord Corbett of Castle Vale: My Lords-

Lord Elystan-Morgan: My Lords-

Noble Lords: Order!

Lord Corbett of Castle Vale: My Lords, the Question started on the Cross Benches. Does the Minister recognise that, while fewer children enter the criminal justice system under the age of 14 than over the age of 14, the younger the child is the more likely that she or he will go on to become a prolific offender? Will the Minister look at what money could be saved by diverting these young people into the welfare system? Does he further recognise that, once a child is drawn into the criminal justice system, he or she is likely to be there for a long

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time? All this fits in exactly with the aims that the Minister said his department is interested in fostering. Why is he being so cautious about this one?

Lord McNally: My Lords, I do not think that the department is being cautious. The noble Lord's first point is true: the difference in costs between putting young people into custody and finding alternative treatments is out of all proportion-it is tenfold. Therefore, there are both financial and practical attractions in this. I go back to the point that, although the age is low, the thrust of policy is in the direction that the noble Lord is pointing. For example, the pilots on intensive fostering, which were started by the previous Administration, are well worth studying and are very encouraging. The cost of intensive fostering is about a tenth of that of keeping a young person in youth custody. I accept fully his point about the danger that, once children under the age of 14 are in the criminal justice system, they will stay in it and go up the escalator of offending. That danger is very real, which is why we are trying to address these problems.

Lord Elystan-Morgan: My Lords, I apologise to the noble Lord for my impetuosity. I accept that it is necessary to maintain a proper balance between the protection of society and the interests of a young person or child, in the context of acting humanely, but does not the Minister recognise that, whereas the average for the age of responsibility the world over is about 14, we are very much lower than that? In consequence, we incarcerate four times as many of these young people as Portugal and 25 times as many as Belgium.

Lord McNally: My Lords, our general record on incarceration has been questioned by my right honourable friend the Lord Chancellor and we have put forward proposals to try to address it. As for young people, I agree entirely. We are trying to make a system that diverts young people from criminal activity while understanding that the activities of young people can be disruptive and frightening to the general population. We have to keep that balance in addressing the issue but, as the noble Earl, Lord Listowel, said in his supplementary, every time one looks at offending, the same three, four or five issues keep coming through: disruptive families, poor education, drugs or whatever. That suggests that the sensible thing to do in order to attack crime rates is to address these underlying issues.

Lord Campbell of Alloway: My Lords, is not the root of this problem-and it is a serious problem-gang culture and not age? Something should be done about gang culture. I do not know how to do it, but somebody should know. To talk about age diminishes the real substance of this problem.

Lord McNally: My Lords, as so often, the noble Lord puts his finger on a very real problem. I assure him that my department is looking at the issue of gang culture with a number of associated organisations.

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2.48 pm

Asked By Lord German

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, the Government's reforms to the welfare-to-work system will make it more responsive to the needs of individuals. Jobcentre Plus advisers and providers of the work programme will have flexibility to tailor support to customers' needs, rather than having support prescribed by central government. Under our plans for a universal credit, individuals will keep more of their benefits when working and will see a clear gain in working compared to not working at all.

Lord German: I thank my noble friend for that Answer. The whole purpose of the benefit reforms that the Government are undertaking is to provide those who can with the dignity of work and those who need support with the knowledge that they have the full support of the state behind them. The experience of government so far has not been too good in some cases. The Harrington review found that the system was,

Will my noble friend tell us when the recommendations of the Harrington review will be implemented and when changes will be brought into effect that will give people that dignity and the support that the state can provide?

Lord Freud: My Lords, I thank my noble friend for that question. The work capability assessment has been looked at once internally and now by Professor Harrington. We are committed to bringing in those reforms as quickly as possible-ideally, all of them by the time we have all the existing IB claimants reassessed with a view to going over to ESA.

Baroness Pitkeathley: My Lords, is the Minister aware that, when it comes to assessing individual needs, the benefits received by carers are of extreme importance to families in need? Some weeks ago, the Minister said that no decision had yet been made about how to treat the carer's allowance in the benefit reforms. Has any further progress been made towards that decision?

Lord Freud: My Lords, we are working on fine-tuning the whole of the universal credit system. One of the key issues is the design of how carers' allowances go into that. We are still not in a position to say where we have got to precisely, but we will make it clear pretty soon.

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Lord McKenzie of Luton: My Lords, in what way does the Minister consider that docking 10 per cent off someone's housing benefit after they have been a year on JSA is meeting their individual needs?

Lord Freud: The purpose of our reforms is to make sure that there is a very strong incentive for people to find work and, once they find work, to work. That is the purpose of that reform.

The Lord Bishop of Blackburn: My Lords, I learnt last week of a severely disabled person in the Pendle area who had failed to receive their giro for incapacity benefit, which I think is now called ESA. They decided to telephone and tried several times a day for four consecutive days. Will the Minister kindly tell us what steps are being taken to ensure that Jobcentre Plus provides much needed help to those who really deserve it?

Lord Freud: My Lords, I am obviously disturbed to hear what the right reverend Prelate has told us about this case. When we find cases and I am alerted to them, we react rapidly to make sure that the individual case is sorted out. If he lets me have the details, I will deal with it.

Baroness Thomas of Winchester: My Lords, can my noble friend tell me whether Jobcentre Plus decision-makers in particular will have extra training following the Harrington review so that they can take into account what the review said about those with mental health problems and fluctuating conditions?

Lord Freud: Yes, my Lords. One of Professor Harrington's main recommendations is to put more power back in the hands of the decision-makers in Jobcentre Plus. Clearly, we will be looking to make sure that they exercise that power effectively, particularly because we need to reduce the number of appeals to tribunals. We need to get the decision right first time.

Lord Foulkes of Cumnock: My Lords, now that the Minister has seen the report, which shows that the number of children living in poverty will increase under the Government's proposals, and given the good work that he did in advising the Labour Government, under whom the number of children living in poverty went down year after year, does he not feel a wee bit embarrassed explaining away the policies of this awful Tory-led coalition Government?

Lord Freud: My Lords, the noble Lord will accept that I beg to differ on part of that question. The universal credit will have a powerful effect on poverty and will at least balance some of the other effects of the reforms. One needs to see all the reforms in their entirety.

Baroness Browning: Does my noble friend accept that people on the autistic spectrum and those with learning disabilities will find it very difficult to respond to a letter requiring them to attend an assessment or

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for somebody to visit their home without preparation being done, so that they are comfortable and supported and know exactly what to expect?

Lord Freud: My Lords, I thank my noble friend for that. One of Professor Harrington's recommendations was to make the whole process far more empathetic and to work with people rather than, if you like, doing things in a more hostile way. Looking after people who have autism is one thing that we want to make sure that we do. In my view, people who are autistic could benefit more than virtually anyone else from the package of measures in the work programme that we are introducing. These are people who can work if they are helped to do so.

NHS: Targets


2.55 pm

Asked By Lord Wills

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, from 2012-13 the NHS commissioning board will be responsible for the delivery of NHS services, based on the NHS outcomes framework. The operating framework for the NHS published last week sets out the priorities for the NHS for the transition year of 2011-12 and details how the NHS will move to a health economy driven by outcomes for 2012-13.

Lord Wills: I am grateful to the Minister for that Answer. He will recall that, in October, the Health Secretary said that the coalition never committed to a one-week target for cancer patients to get their test results

However, in November, the noble Earl the Minister told this House that a

Why exactly did the Government scrap the target? Was it the cost, or was there a clinical justification? If it was both, which justification was the most important? If the clinical evidence played any part in this decision, could he please place the evidence in the Library of the House?

Earl Howe: My Lords, the announcement made by the previous Government for the one-week target was an unfunded, as well as very expensive, commitment. At the moment, the median wait for the 15 key diagnostic tests is 1.8 weeks-it fluctuates between 1.5 weeks and thereabouts. To bring that down to a maximum of one week would have cost many hundreds of millions of pounds. We judged that there are better ways in which to speed up access to diagnostic tests for a lot less

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money. That is why we recently announced that £25 million will be made available next year to help GPs to get direct access to tests for cancer without first having to make an appointment with a specialist. That money will buy up to 150,000 extra tests. We have thought round this problem-if I may put it that way-and thought around the conventional referral pathways. I believe that we will arrive at a very satisfactory result.

Baroness Gardner of Parkes: Can the Minister tell me his view as to how exactly things will work? Although some targets were considered bad, unnecessary and unproductive, others produced some good results. Will the targets be replaced by a code of practice or guidance, or will people simply be left to manage as best they can?

Earl Howe: My noble friend is right. Of course the waiting time target achieved a great deal in bringing down waits for elective procedures, but the target had some unwanted effects in that it distorted clinical priorities and, many people felt, took the focus away from many areas of care that deserved greater focus. We need to focus on outcomes for patients. Therefore, instead of setting process-based targets, our aim will be to ensure that, wherever possible, the NHS uses the measures that clinicians themselves use as a basis for improving their services-in other words, measures that are clinically credible and evidence based. That is how we have tried to frame the outcomes framework.

Lord Davies of Coity: Does not the Minister agree that the Secretary of State's proposals for competitiveness within the health service will in effect privatise the NHS?

Earl Howe: My Lords, I do not accept that. The previous Government recognised that contestability in the provision of care was a very powerful driver to improve quality of services. I do not think that privatisation of the health service will result from the proposals. We will reach a better stage of quality in provision of care only if we allow the best providers out there to compete for services. As long as the principles of the NHS remain-which they will do under this Government-for a service free at the point of need without being based on ability to pay, we will have the NHS that we all know and love.

Lord Alderdice: My Lords-

Lord Patel: My Lords-

Noble Lords: Cross Benches!

Lord Alderdice: My Lords, given that the Government have committed themselves to clinical outcomes and measurable improvements in patient well-being, how will the Government ensure that managerial demands for the kind of target culture that we experienced previously will not overwhelm any attempts to measure clinical outcome or patient well-being?

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Earl Howe: My Lords, many of the data that will underpin the monitoring of the outcomes framework are already collected as a matter of routine but are just not used. In the outcomes framework, we shall reduce the number of outcomes to many fewer than have been in play under the previous Government's process-based targets. We do not see our proposals as imposing unnecessary or impossible extra burdens on the NHS.

Lord Patel: I need to cultivate a louder voice, obviously. Can the Minister give an example of where competition in healthcare delivery has improved outcomes?

Earl Howe: I am sorry that the noble Lord is a sceptic on these matters. In the field of mental health care, for example, where there is a long-standing position of private sector contestability, we have seen that standards have been driven up. There is no doubt that the foundation trust model has also paved the way for higher quality in healthcare.

Baroness Thornton: My Lords, turning to waiting lists for accident and emergency services, which we obviously want to provide the highest possible care, I want to ask how the newly proposed scheme will improve the quality of care. For example, how will the abolition of the 19-minute response time to a 999 call that is not life threatening affect the health outcome for an elderly lady who has slipped and broken her wrist on the ice? Such a slip may not be life threatening, but the elderly lady may wait for quite some time for an ambulance and then wait considerably longer than four hours in accident and emergency. Is the waiting time not an outcome here? If the Government do not intend to introduce a new outcomes framework for two years, would the Government not be better to leave the current guarantees in place because we know that they ensure patient safety?

Earl Howe: My Lords, on ambulance response times, the existing eight-minute target will remain in place for category A calls. For category B calls, which are serious but not immediately life threatening, Peter Bradley, who is the national ambulance director, has been working with Professor Cooke to develop a set of 11 clinical quality indicators for the ambulance service. We are clear that those indicators will provide a much better and more rounded set of objectives than a mere 19-minute response time. Of course response times are important, but there are other things that should be focused on as well. We hope to improve standards in this way as from April next year.

Individual Savings Accounts


3.03 pm

Asked By Lord Lee of Trafford

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Lord Lee of Trafford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as owning an ISA and a number of shares in AIM-quoted companies.

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, individual savings accounts are the Government's main non-pensions savings incentive and are held by 20 million adults. The Government believe that ISAs should be mainstream savings products and therefore do not intend to allow shares on the Alternative Investment Market, which can be riskier and less liquid, to be qualifying investments for ISAs. Companies listed on AIM may already benefit from other incentive schemes, such as the enterprise investment scheme and venture capital trusts.

Lord Lee of Trafford: My Lords, I thank my noble friend for his Answer but I find it very thin and disappointing. The arguments for allowing AIM shares to be eligible for ISAs are, frankly, overwhelming. They are supported by the Stock Exchange and the Quoted Companies Alliance. Eligibility would widen the shareholder base, improve liquidity and facilitate fundraising. It would also be tax neutral from the Treasury's point of view. What is the logic in allowing AIM shares to be eligible for SIPPs but not for ISAs? I thought that the policy of this coalition Government was to encourage personal choice and indeed investment in our smaller growing companies.

Lord Sassoon: My Lords, I am sorry to disappoint my noble friend, who has been assiduous over the months in asking questions about AIM shares and ISAs. Within the range of products available, there are distinct differences between the aims of ISAs and those of other savings channels. When the ISA was introduced in 1999-and it has been an enormously successful investment channel-it was intended to be a mainstream product with easy access and liquidity. A line therefore has to be drawn between the sort of investments that are thought suitable to qualify and those that are not. AIM shares were kept out in 1999 and I believe that it is still appropriate, taking into account principally the nature of the product and the ease of access to liquidity investment, that they should be. SIPPs, which are a more sophisticated, tailored pension product with a different time horizon-for example, they do not require 30-day withdrawal-can rightly benefit from having a much wider range of investments held within them.

Lord Barnett: My Lords, I declare an interest as chairman of an AIM-listed company that may not benefit from the method that the noble Lord, Lord Lee, recommends. I recognise that the response that the Minister has given is based on the best possible advice available to him, but I am not sure that he is right in the general sense. Would he be prepared to go back to his advisers and ask them at least to reconsider his answer, as the noble Lord, Lord Lee, makes a reasonable case?

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Lord Sassoon: I am sorry to shut the door on this one, but the Government have considered this issue since we came into office, just as no doubt the previous Government had plenty of advice since they introduced ISAs in 1999. We have looked at it again and I am sorry to say to both the noble Lord, Lord Barnett, and my noble friend Lord Lee that I cannot hold out any other prospect. The AIM market continues to thrive. At the moment, almost 1,200 companies are quoted on it, 974 of which are UK companies, and the market is quoted at £67.6 billion, so it continues to be in good health in what I recognise are challenging investment conditions.

Lord Carlile of Berriew: My Lords, I, too, declare an interest as a director of an AIM-listed company. What tests are not applied to AIM-listed companies that are applied to full exchange-listed companies? Does the Minister accept that the boards of AIM-listed companies feel that they are subject-indeed, they are subject-to the same accounting rigour as FTSE-listed companies and that it is therefore now completely illogical to maintain this distinction?

Lord Sassoon: My Lords, without wishing at all to cast aspersions on the quality of AIM companies, it is nevertheless the fact that you can come to the AIM market without a trading record and with no minimum number of shares in public hands. Also, the UK Listing Authority does not usually vet the prospectus of AIM-listed companies and there is no minimum capitalisation requirement. Therefore, there are different requirements and obligations on AIM companies from those that apply to listed companies.

Lord Davies of Oldham: My Lords, will the Minister recognise that, with his reply, he has disappointed a wide range of opinion in the House, including- to complete the position-Her Majesty's Official Opposition? He will know that earlier this year we were looking positively towards this issue. We would have thought that the present Government would adopt something more than just a straightforward negative stance on a situation where it is quite clear that, with SIPPs being able to invest in these companies, there is a good case that ISA investors should be able to as well.

Lord Sassoon: I did not want to be controversial in the week running up to the holidays. I pointed out that ISAs were introduced by the last Government and that they have been a successful channel for savings. I gently point out, however, that the last Government had from 1999 to May 2010 if they had wanted to make AIM shares eligible for ISAs, but they chose-rightly, I think-not to do so. We have not taken a decade to mull over this, but we have thought about it carefully in the last few months.

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Arrangement of Business


3.10 pm

Baroness Anelay of St Johns: My Lords, at a convenient point after 4.30 pm, my noble friend Lord Strathclyde will repeat a Statement on the European Council, followed immediately by my noble friend Baroness Neville-Jones, who will repeat an Urgent Question as a Statement on the temporary immigration cap. At the conclusion of the Statement on the immigration cap, the House will then return to the proceedings on the Parliamentary Voting System and Constituencies Bill. At a convenient point after 6.45 pm, my noble friend Earl Attlee will repeat a Statement on the severe winter weather.

Business of the House

Motion on Standing Orders

3.11 pm

Moved By Lord Strathclyde

Motion agreed.

HIV and AIDS in the United Kingdom Committee

Membership Motion

Moved By The Chairman of Committees

Motion agreed.

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Parliamentary Voting System and Constituencies Bill

Bill Main Page
Copy of the Bill
Explanatory Notes

Committee (6th Day)

3.12 pm

Clause 8 : Commencement or repeal of amending provisions

Amendment 43A not moved.

Amendment 44

Moved by Baroness Hayter of Kentish Town

44: Clause 8, page 6, line 6, after ""No"" insert "in England, Wales, Scotland and Northern Ireland"

Baroness Hayter of Kentish Town: My Lords, before I address Amendment 44, as the Leader of the House responded earlier in this Committee to the question of thresholds when a convincing case against a threshold was given, I would like to leave him with one thought. I understand that the Government, or another part of them, are considering thresholds for trade union ballots. It might be useful, by the time we get to a response, to see whether that is the case and whether, if it is fit for a goose at this time of year, it may also be fit for a gander.

Amendment 44, which stands in my name, would ensure that there was a majority in favour of AV in all four countries of the United Kingdom in order for the new voting system to be automatically triggered. Having heard from my noble friend Lord Lipsey at an earlier stage in this Committee, I am confident that there is no difference between the four countries on AV, so I anticipate no problems in this regard. However, it seems a sensible safeguard against the possibility, for example, of Scotland voting yes to AV by a large majority, given that Scottish Parliament elections are taking place at the same time, England then voting no but by a small margin and the Scots then holding sway over England, and not simply on the football pitch.

Of course, the other might happen; Wales emphatically votes no along with Scotland but England and Northern Ireland then combine to impose their yes preference on the other two countries. It is difficult to judge whether any such outcome will arise. Perhaps the Scots and the Welsh, having used variants of electoral systems over the years, will now be much more relaxed about further changes, and will understand how a more proportional and fairer system can better reflect their choices at the ballot box. On the other hand, they may feel that they have enough systems and simply do not want another. I do not claim to be an expert on this. Nor do I have any evidence of the likelihood of different turnouts or preferences across the four countries. What I do know is that there could be discontent should one of our four nations feel, having heard and seen the outcome of the four separate counts, that its will is trumped by the votes of the other nations.

3.15 pm

As with the issue of low turnout and the absence of a threshold requirement, I am uncertain how we, as a UK Parliament, would deal with such eventualities. However, I am certain that any such discrepancy should come back to the Government and, indeed, to Parliament

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to consider before that automatic trigger, following the referendum, is set on course. It may be, as happened in France, Denmark and Ireland with their European referendums at different times, that the question is adjusted in some way or is retabled, with more time for debate and persuasion: or we could consider having different election systems in the four countries-I do not know.

However, I am clear that, given our devolved nations, it would be right to pause and consider should the results be greatly different in the four countries. As I have indicated, it is not an outcome that I foresee but it is always so much better, with good risk management, to anticipate, assess and mitigate any risk beforehand, rather than have to scrabble around afterwards making hasty corrections. It is not an impossible outcome, but it is an unlikely one, so let us give it some thought before it happens by removing the automaticity of triggering the new system should one country's voice be at variance with those of the other three. I beg to move.

Lord Lipsey: My Lords, I rise briefly to speak to this amendment. I am particularly pleased to respond to my noble friend Lady Hayter. It is a little known fact that explains much; we started work together in the research department of the General and Municipal Workers' Union, then under the plebeian leadership of the noble Lord, Lord Radice, around 1970. We have been arguing ever since but have remained the closest of friends, and I will argue briefly with her tonight.

I am always surprised when keen first past the posters argue for thresholds and various other forms of fiddling the rules. Under the first past the post system, however few votes the person who gets more votes than anyone else gets, they win. I thought that was what attracted people to that system. Nevertheless, the noble Baroness has tabled this amendment and I can see why she has done so. However, it would lead to some extraordinarily paradoxical conclusions. Let us say that the election result went as follows in an AV referendum. In England, 7 million people voted yes and 3 million people voted no-a huge victory for AV. Let us suppose that corresponding margins occurred in Northern Ireland or Scotland, but the Welsh in their wisdom-as an adopted Welshman, I think there is much wisdom in Wales-voted, on roughly the same turnout, with 251,000 against AV and 249,000 for AV. In that case the 251,000 would trump the majority of 4 million-plus in the rest of the United Kingdom, and AV would not go ahead.

I can quite understand those who say that this should be an advisory referendum-we moved an earlier amendment to this Bill to that effect and that has good scope-but simply to do it on the basis that one country has voted yes and one country has voted no is not good cause for a review.

We are a united kingdom. Our national elections have to be run as though they were national elections for the Government of the United Kingdom, and to seek to set one nation within that kingdom against another kingdom is neither desirable nor wise. I therefore very much hope that my noble friend will not press her amendment tonight because for once in our long life I would not be able to support her in the Lobbies.

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Lord Roberts of Llandudno: My Lords, I find it very strange that the party that seems to be supporting first past the post is the one that is refusing first past the post in a referendum. If you win by one in a constituency at the moment, you have won. However, if you win by one without a threshold, you have lost. I really cannot make much sense out of that argument.

Lord Lamont of Lerwick:What about the party that says that everyone should have 50 per cent of the vote and is now advocating that that should not apply in a referendum?

Lord Roberts of Llandudno: That is not, of course, what we say. It is the argument of a coalition of dinosaurs who say that in the old days you could have just two parties in a constituency. As I have argued before, one is bound to get 50 per cent. If you have 6.3 parties, which was the average in last May's election, it does not work in the same way. Nearly every member will be elected on a minority vote. We must accept that.

The first referendum I remember was on the Sunday opening of pubs in Wales. No one mentioned a threshold-no one was going to risk doing that-so it was carried in some counties and not in others. There was no threshold. Then we came to the European Union and whether we stayed in or stayed out. There was no talk of a threshold there. The only talk of a threshold was in the first referendum on devolution. Then you had a threshold, and both Scotland and Wales failed to reach it. Then came the next referendum on devolution, and there was no threshold. I am told that when Northern Ireland had its Good Friday referendum, there was no threshold.

Why are we making this exception now? We are doing so purely to try to destroy this AV proposal, and nothing else. I can see the argument going thus-let us delay the Bill and talk at length so we miss that May deadline. That would mean that the turnout would be down, perhaps in October, and it would be said that not enough people voted this time; perhaps only 20 per cent voted.

Lord Grocott: My Lords, I greatly respect the noble Lord, Lord Roberts, on these subjects. He has been telling me in public and in private for many years that there is enormous enthusiasm for getting rid of this dreadful-as he would say-first past the post system. I really cannot believe that he is beginning to doubt now that the public will not queue up to vote when the day comes.

Lord Roberts of Llandudno: My experience in Wales is that, as we have argued time after time, a referendum held on the day of local elections in England and elections for the Assembly in Wales, for Parliament in Scotland or for the Assembly in Northern Ireland would naturally have a greater turnout. Therefore you would not need a threshold. In the autumn, however, you might say that only 25 per cent have voted, as they might, and then we need a threshold. This seems to me

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to be just an argument to try by any means whatever to destroy any hope of a change in our electoral system in the United Kingdom.

Lord Campbell-Savours: My Lords, I see that a number of new Members are attending our debate today, and I draw attention in particular to the noble Lord, Lord Tebbit, being in his place. While he has been away-no doubt he has been in the House, but has not been attending our debates-statements have been made that should be drawn to his attention, because they might make him as angry as they made me. A statement made last week in the Housewas the subject of much discussion but the newspapers and media outside the House have not picked up on it. I refer to my intervention to the noble Lord, Lord Strathclyde, which has caused a lot of concern, certainly among those who heard it. I asked him:

"What happens if only 13 per cent of the registered electorate vote in favour of the change in the referendum question? Will that 13 per cent, which is one in eight people in the country, be taken as the basis on which we can make this huge constitutional change?".

He replied:

"My Lords, under the terms of the Bill, yes".-[Official Report, 15/12/10; col. 717.]

I do not believe that Conservative Members of this House realise what is going on. They are not attending this debate and they very rarely speak, apart from two former Lord Chancellors. I do not believe that Conservative Members really know what is happening.

Lord Falconer of Thoroton: Although my noble friend may not realise it, I was, in fact, a Labour Lord Chancellor, not a Conservative one.

Lord Campbell-Savours: My Lords, forgive me; I did not mean that. I meant two former Chancellors of the Exchequer and the noble Lord, Lord Hamilton. The reality is that people do not know what is going on.

Lord Roberts of Llandudno: The noble Lord speaks of massive constitutional changes. Was not the decision to remain in Europe a massive constitutional change? There was no threshold.

Lord Campbell-Savours: We provided a referendum on that and the public took a decision. What I am basically saying is that we need far more-

Lord Foulkes of Cumnock: Is it not ironic that we joined the European Union without a referendum, but that the referendum was on whether we should stay in? The major change took place without a referendum, but the referendum actually backed the status quo.

Lord Rooker: Perhaps I may remind my noble friend that the then Government had the courage to hold a referendum on a separate day-on 5 June.

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Lord Campbell-Savours: Those were two very useful interventions and I agree with them both. The reality is that this is an extraordinary Bill. It is the first time in my 30 years in Westminster that we are considering a Bill when we know that the Government-the Conservative element in the Government-are by an overwhelming majority opposed to the provisions in the Bill. I bet that if we were to have a free vote in the House of Lords, no more than a dozen Conservative Members would vote in favour of the referendum provision. In other words, this is a totally artificial debate. The Liberals are opposed because they have always been opposed. The Conservatives are opposed because they do not like AV at all and do not want any change from first past the post. To be frank, those on my own Benches are relatively divided on the issue.

Lord Grocott: Just for statistical reference, my estimate is that 70 per cent of those on the Labour Benches are in favour of first past the post.

Lord Campbell-Savours: I would call that relatively divided. The point is that this is a totally artificial debate. It would be really worrying if the turnout were to be only 13 per cent of the electorate. That was the figure that I picked, but if the overall turnout were to be as low as 18 or 19 per cent-as it was in some wards in Manchester that I checked on last week-you could find that approval in some parts of the country was as low as 10 per cent, representing only one in 10 voters.

My noble friend has come forward with the politically reasonable suggestion that there will obviously be varying decisions in the various parts of the country. She is saying that there must be a majority in every part of the kingdom, but I would add the requirement for a threshold set on approval of the question, which we shall no doubt come to on Report.

3.30 pm

Lord Campbell of Alloway: My Lords, I was not intending to speak but, having listened to this debate, I want to say that this is not an artificial exercise. It appears to be artificial to the noble Lord only because he gives an example of where something went adrift, but I can certainly give an example of where things went adrift with first past the post, which I support. I refer to the UKIP vote, which would have gone to the Conservatives and put them in power. It did not happen, but these things do occur. There is no perfect system, and the argument of the noble Lord, whom I usually greatly respect, seems to have gone adrift.

Lord Wills: My Lords, I share the concerns that have been raised about the thresholds but with this amendment my noble friend has raised some very important underlying concerns about the nature of the union which have not been fully explored. These are not simple issues; they are complex and they take in the changing shape of devolution in our country. These are very important issues for all of us who care about the maintenance of the union in this country. With this amendment, my noble friend has isolated the folly of rushing ahead with a referendum in this way. These complex issues relating to the nature of our union should be debated and decided by Parliament on the basis of the results of the referendum. It is folly

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to have a post-legislative referendum. I know that we have debated these matters already but I very much hope that the Government will consider them again. They are profoundly important and they should be debated by Parliament after the referendum-that is inherent in the nature of our representative democracy. I very much hope that the Government will think again and this House will be able to return to the matter on Report.

Lord Williamson of Horton: My Lords, it was very late when we last discussed this matter in Committee and some people were wilting. In reality, the amendment relating to a threshold of those eligible to vote, as featured in the amendment put forward by the noble Baroness, Lady Hayter of Kentish Town, which I supported, and the remaining amendments in the same vein were discussed and are no longer on the Marshalled List. They all appear on the groupings list as having been already debated, and therefore there is no amendment before us today relating to a threshold of those eligible to vote. Perhaps there will be later, but certainly not today, and that will be very helpful in reducing the length of our discussions-something that I am sure will be welcome to all.

As to the separate issue currently being put forward by the noble Baroness, Lady Hayter, concerning whether there should be a required majority in each of the countries of the union, I am sorry to tell her that, having supported her earlier, on this occasion I support the view taken by the noble Lord, Lord Lipsey, that we should not differentiate in that way.

Lord Tebbit: My Lords, first, I should express my gratitude to the noble Lord, Lord Campbell-Savours. I am quite touched at the thought that he noticed that I had not been present in your Lordships' House very much recently. I am not sure whether he is pleased or less pleased about that but it was very nice of him to have noticed.

Turning to the amendment, I confess that, as an integrationist rather than a devolutionist, I rather take the view that this is not the best way to go about tipping out of its dish this rather unpleasant dog's dinner of a proposal. I should prefer to do it cleanly, neatly and properly by imposing a 40 per cent turnout requirement. Therefore, I am afraid that I cannot support the noble Baroness on this, much though I have been tempted to do so.

We have heard, of course, that there was no threshold requirement on the referendum on our continuing membership of the European Union. If I may say so, having voted yes in that referendum, I did not realise how wrong I was until some years later. What a pity there was no requirement for a higher turnout.

I really regret I cannot support the noble Baroness but certainly, if and when we come to vote on a proposal to put in a 40 per cent floor requirement, then I will, indeed, be in favour of tipping the dinner out of the dog's bowl.

Lord Campbell-Savours: Would the noble Lord consider an approval threshold whereby a certain proportion of the registered national electorate should vote in favour of this huge constitutional change?

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Lord Tebbit: I do not rule that out entirely but most helpful and obvious probably would be to have a requirement for a minimum turnout in order to be at all effective. I wait to listen, however. I should assure the noble Lord, by the way, that not being present in this House does not preclude one entirely from knowing what goes on. There is not only the printed word but the electronic media these days.

Lord Anderson of Swansea: My Lords, the noble Lord, Lord Tebbit, appeared to be savouring the thought, albeit a little after the event, of a threshold in the referendum in relation to staying in the European Union or, as it was then called, the Common Market. In the event, however, that threshold would have been reached. My memory is there was a 2:1 majority in 1975 for staying in the Union, so even if his most fervent wish had been realised we would still be members of the European Union.

Lord Tebbit: I did not specify what the threshold should have been.

Lord Anderson of Swansea: Touché. I can only respond by saying that most reasonable people, if they wish to have a threshold, would look to a reasonable threshold. I suspect that the threshold of the noble Lord would be something like 90 per cent or so in favour. Let us at least apply the test of reasonability.

My noble friend Lord Campbell-Savours mentioned the actual turnout and I would ask noble Lords to look at the likely turnout in this referendum. My experience, among others, is that of the Welsh referendum in 1997 where, although there was a massive media campaign in Wales-it was the big issue-by all parties urging their supporters to vote in favour, the turnout was only 50 per cent of the electorate of Wales, and of that 50 per cent, 25 per cent plus one, or whatever, voted for, and 25 per cent voted against. If, therefore, one seeks to transpose that result of 1997 to today, amid the welter of concerns about cuts to housing benefit, the welfare state and so on, I cannot imagine, save for a small beltway or M25 elite, that there will be much interest in a referendum, and certainly very little interest in Scotland and Wales. I stand to be corrected by my noble friend Lord Foulkes, who feels the pulse of Scotland rather better than I do, but we have to look at this reasonably.

Whatever the attempts by the enthusiasts to drum up interest it will genuinely be very small, so we are in serious danger of effecting a major change in our constitution as a result of a very small turnout indeed.

I want mostly to talk about thresholds in a later amendment, so I shall make just one or two comments on what was said by my noble friend Lord Lipsey and the noble Lord, Lord Roberts. My noble friend Lord Lipsey began by setting out his past with my noble friend Lady Hayter. I was trying to work out where my past with her began, and I think we go back a very long way. There was, alas, a hiatus for some time, but I recall with great affection the times we have worked together on a number of rather important issues. She sided with my noble friend Lord Lipsey and effectively said that it would be wrong in principle for one part of

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the United Kingdom to prevent the rest of the United Kingdom going forward. I do not intend to bore your Lordships with a long discussion of what has happened in other jurisdictions, but it is certainly not unknown in federal or quasi-federal systems for one component part of that federal or quasi-federal system effectively to have a veto over important issues going forward. That would be the case here because, like it or not, we are perhaps sleepwalking into a quasi-federal system.

We have not yet got a fully fledged written constitution or a constitutional court, but the fact of devolution is making life in Wales and Scotland different. I left a very snowy Wales this morning-and Wales is different because even the snow I saw there this morning was whiter than the snow I can see here. I think it would be impertinent of us simply to say that we are integrationists and that we believe in the union, and not recognise that much has happened over the past 10 years or so. There is a distinct identity, which is why I am just a little puzzled-indeed, shocked-by what the noble Lord, Lord Roberts, had to say. Normally, he is desperately keen to find any difference between Wales and the rest of the United Kingdom-what in France they would call l'exception française. There is always something that one needs to find in respect of Wales being different from the rest of the United Kingdom. Now, with his zeal for constitutional reform, he is prepared to forget all that and go forwards juggernaut-like, forgetting that the interests of Wales, which may be very different, could well be trampled upon in this case. I said I would be brief and shall stop at this point. I simply say that I am mildly shocked at the unwillingness of my compatriot to look, as he does normally, at the Welsh exception.

Lord Elystan-Morgan: The point has been made that the amendment does not refer to any particular threshold, but Amendment 44, moved so lucidly by the noble Baroness, has no meaning, save in relation to the amendment that she moved last Wednesday night in this House and which she eventually, quite properly, withdrew. So there are two issues before the House: one is a threshold and the other is whether that threshold should apply individually in the different constituent parts of the United Kingdom.

On the threshold, I spoke at some length on Wednesday, and I shall not repeat what I said, even for the benefit of those who did not have the joy of listening to me on that occasion. I would for once, and for perhaps the first time over many years, seek to cross swords with the noble Lord, Lord Roberts of Llandudno. As far as I am concerned, this is one of the most important constitutional issues imaginable. The Deputy Prime Minister and leader of the Liberal Democrats is absolutely correct in saying that it is the greatest constitutional issue since 1832. Therefore, accepting that, as I do with total sincerity, I am sure that the noble Lord will accept the sincerity of those of us who believe that it has to be dealt with in a very careful and special way. There is the remote possibility that only a very low percentage of the total electorate will turn out to vote. It could be on account of general apathy or it could possibly be on account of vicissitudes of weather. Just imagine if four inches of rain fell in two or three

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hours, which is the sort of situation we have seen in Devon, Cornwall and the West Country within the past few months. Worse still, there could be an outbreak of foot and mouth disease in rural areas, paralysing all movement there. That has happened twice in the past 43 years. These are possibilities.

The case I put on Wednesday I shall repeat in a few sentences. It is insurance against something that is only remotely possible, but if it did happen, it would be utterly disastrous. When we insure our houses against fire, we do not do so because there is a certainty that fire will occur, unless of course there is some sort of criminal intent. We do so not because we believe there is an even chance that fire will break out, or even that there is a remote chance of it. We do so because of the fraction of 1 per cent of a chance that it will happen, and in the main we pay a small and reasonable premium to guard against such a cataclysm. That is the basis on which these amendments should be considered in relation to thresholds.

Secondly, this is not something that has been thought up out of the blue. Practically every country in the developed world has a threshold in respect of constitutional change. It is we who would be out of kilter if we reject this proposal, not the other way around. Indeed, it would be not only imprudent but arrogant of us to dismiss completely the prudent and responsible attitude of other countries in this matter. The noble Lord, Lord Lamont, in a most persuasive speech last Wednesday, pointed out exactly how other countries in the developed world look at this matter.

On whether the threshold should apply to the four constituent parts of the United Kingdom, the argument I would put forward briefly is this. We are a United Kingdom, but we are not a dull, grey, homogenous mass. In other words, the constituent parts have their splendidly different and wonderfully distinctive characteristics that make up the real wealth and attractiveness of the United Kingdom. While it may not be perfect, this sort of amendment endorses that very principle. In that situation, therefore, I believe that it would be chivalrous, just and proper for thought to be given to an amendment of this nature.

3.45 pm

Lord Lamont of Lerwick: My Lords, I had not intended to speak on this because, as the noble Lord, Lord Williamson, said, it appeared on the face of it that this was not about thresholds precisely, but a different issue. But the noble Lord, Lord Elystan-Morgan, has demonstrated the connection between the amendment moved by the noble Baroness and the issue of thresholds. Because I spoke last week, I certainly will not go over the arguments, but I want to comment on two points made by my noble friend Lord Strathclyde in reply to that debate. He argued that if you have a threshold relating to turnout, that just encourages people to abstain. He repeated the argument several times, saying that people will think that all they need to do is to abstain and the referendum will be rejected, but my noble friend Lord Lawson pointed out that that is not necessarily how it would go. It might well go in the other direction. He pointed out that, for example, there would be people who were against change but

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who believed that the threshold will be met and therefore will have an added inducement to vote. That is one category of people who would have an inducement to vote. Secondly, there could be a group of people who are in favour but know that if they do not vote, they may lose the issue. So it can work in several ways.

I made the point that in 1979, when we did have a threshold, the turnout then was 63 per cent-very high, even though there was a threshold-and that when the subsequent referendum was held without a threshold, the turnout was actually lower at 60 per cent. So in the particular case of the referendums in Scotland, when we did have thresholds, the turnout was higher. The noble Lord may say that that was an outcome threshold not a turnout threshold-and that is true-but I would argue that the effects of the threshold there are also ambiguous. If the noble Lord thinks that an outcome threshold that is something like the Cunningham amendment, with 40 per cent of the electorate required to vote yes, would encourage a high turnout, why do we not have that kind of threshold rather than a turnout threshold? The argument that a threshold encourages abstention is not very persuasive.

The second point made by the noble Lord in reply to the noble and learned Lord, Lord Falconer, was that the Labour Government had been elected by only 21.6 per cent in 2005. If that did for them and the noble and learned Lord was happy with that, why was he not happy with 21.5 per cent in a referendum?

A referendum is different from a general election. In a general election, Members of Parliament are up for election and may be up for re-election; a constitutional change is likely to be permanent and difficult to reverse. Secondly, even with 21.6 per cent in 2005, the turnout threshold put forward in the amendments would have been met anyway. There is obviously a difference between 21.6 per cent when at least three parties, and possibly four or five, are standing, and 21.6 per cent in relation to a yes/no proposition. Neither of the arguments the noble Lord puts forward against thresholds is persuasive.

I do not know whether or not we will have to vote on this but, on the point made by the noble Lord, Lord Elystan-Morgan, to the noble Lord, Lord Roberts, that we did not have thresholds in previous referenda, although we did have one in relation to the Scottish referendum, one cannot think of a country in Europe that does not have a qualified majority provision for changes in the constitution. I shall be interested in what my noble friend says in reply to these points.

Lord Howarth of Newport: My Lords, in tabling her amendment, my noble friend Lady Hayter has done two useful things. First, she has reminded us that in legislating, particularly on constitutional matters, we should be sensitive to sentiment in the different nations of the United Kingdom. We needed to be sensitive to that sentiment 10 years ago, which is why we brought in devolution; and, in the context of devolution, and after 10 years' experience of it, it is all the more important that we should be so. However, the legislation proposed by the Government fails to be sensitive in that important regard. Under their model, a majority in the United Kingdom as a whole would trump a no

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vote within one of its constituent countries. In that way we risk alienating national opinion and national sentiment in whatever part of the country it was-it might be Wales or Scotland-that found its wishes thus crudely overruled.

The second important thing that my noble friend's amendment does is to underline that whatever the result of the referendum and however the procedures might be amended in this legislation, if we then went on to have a referendum under whatever set of rules, the result is liable to be divisive. It would be divisive in the case of a particular country of the United Kingdom having its wishes on the electoral system overruled; and, equally, under my noble friend's amendment, it would be divisive because what she proposes would mean that where there was a no vote in any individual part of the United Kingdom, that would trump the yes vote across the wider United Kingdom and invalidate yes votes in other parts of the United Kingdom. That cannot be a happy outcome either.

A third way in which it would be possible to go, although it is not proposed in the amendment, is for each of the constituent countries of the United Kingdom to determine its own electoral system. In those parts of the kingdom that voted for AV, general elections would in future be conducted on the basis of AV; in those parts which preferred first past the post, they would continue to elect their Members of Parliament on the basis of first past the post. The noble Lord, Lord Strathclyde, smiles at the evident fatuity of such a scheme, yet I do not know whether he entirely rules out the possibility of two classes of Member coming to this House of Parliament, some elected, some appointed, because he very wisely does not show his hand and delays doing so for as long as he can.

The only circumstance in which a referendum on the voting system would not be divisive and set parts of the United Kingdom at odds with each other would be the eventuality of every part of the United Kingdom voting the same way, either for AV or first past the post. It is reasonable to think that that is rather an unlikely outcome.

Lord Wills: I am very interested in the case that my noble friend is making, but is he not worried that his third-way proposal might undermine the integrity of the Parliament of the United Kingdom?

Lord Howarth of Newport: I am worried precisely about that. That is why I set it up as an Aunt Sally, because it would be an alternative. It would have at least the virtue of being respectful of political sentiment, public opinion and the way people had voted in the individual parts of the United Kingdom. But it would be an absurd arrangement for us to alight upon.

Baroness Liddell of Coatdyke: My noble friend makes a serious and important point, but he, like me, will be aware that in the second part of this legislation we will be considering a system of parliamentary inquiries that will mean that, in different parts of the country, the setting of parliamentary constituencies will be different. Parliamentary constituencies for the Scottish Parliament will still have access to the

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inquiry system, whereas parliamentary constituencies for Westminster, if the legislation is carried, will not. Random mixtures of parliamentary rules for election to the other place are therefore not inconceivable.

Lord Howarth of Newport: My noble friend is absolutely right. This legislation is fraught with potential to divide and disintegrate the United Kingdom. I am conscious of that particularly as someone who had the honour of representing a Welsh constituency, because the proposals in Part 2 as they would affect Wales are particularly traumatic.

Lord Tebbit: While the noble Lord is going through his catalogue of anomalies, I am sure that he will not have forgotten that there have been occasions when the voters of Wales and of Scotland have imposed a Labour Government on England, which has voted Conservative. I am not sure whether he is agitated about that, wants to change it or just regards it as another of the glorious anomalies of our constitution.

Lord Howarth of Newport: I am a believer in the United Kingdom and I think that the noble Lord is also. I am sure that he will be generous enough to acknowledge that the results of elections in which that has occurred have been beneficent for the country as a whole.

The amendment of my noble friend Lady Hayter is an ingenious way to introduce another version of a threshold, which is that there would have to be a majority in each constituent part of the United Kingdom. I would like there to be a threshold, but I do not think that this is the right way to introduce it.

Lord McAvoy: I, too, am grateful to my noble friend Lady Hayter for moving the amendment, because it raises as a serious issue-I hope that it is treated by the House accordingly-the cohesiveness of the United Kingdom. Speaking as a former Member of Parliament representing a Scottish constituency, I would not claim any great authority but I was representative for the area that I came from and embody in this place a particular opinion about Scotland's place in the United Kingdom, which we value a lot. To move to a semi-federal system where one nation imposed its will on another on a constitutional matter would raise issues and give manna from heaven to the nationalists and separatists who would divide up the United Kingdom.

Naturally, there have been a lot of contributions about referenda and thresholds. The noble Lord, Lord Tebbit, mentioned the 1975 referendum and how he voted one way and then changed his mind some years later. He voted yes in 1975, he tells us, and says that he has changed his mind since. I voted no in 1975 and I am still not yet totally convinced that I was wrong, so there is a twist in that as well.

4 pm

This is about safeguarding and about cohesiveness. I regret that the noble Lord, Lord Roberts of Llandudno, has left the Chamber because I think that we witnessed a vindictive, vicious attack by the noble Lord on his

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own government Front Bench when he said that any parties that supported first past the post were dinosaurs. To my comrades on the government Front Bench, the first past the post supporters say "Welcome aboard". The charge from the Liberal Benches that those of us who support first past the post are dinosaurs is becoming a bit boring.

As for charges of filibustering, I will spend my statutory one minute on the Liberals and no more. We get these continual charges of filibustering-that all we are doing is following a master plan to delay the Bill and kill it. I am in two minds about changing the date of the referendum. I am in two or three minds, because one part of me thinks that if the referendum were to be held on 5 May, it would be thrashed. So there is some temptation there, but I keep coming up against what I believe is a constitutional outrage, which is to try to impose that referendum on the same day as elections in the devolved countries.

I wish the Liberals would stop talking about filibustering; this is a party that wants PR. It dismissed AV in contemptuous tones before the election-now, all of a sudden, it is the holy grail. I wish that the Liberals would be politically honest and admit that they do not have much time for AV; they regard it as delivering a battering ram against the system of elections in this country and believe that it will be a magnificent stepping stone to the Valhalla of proportional representation. They are living in cloud-cuckoo-land and should stop wasting people's time.

I believe that the amendment is worth supporting because it emphasises that we should be careful. We have something precious here in the United Kingdom-I believe that strongly-and we should be very careful about tipping the dish out, in the memorable phrase of the noble Lord, Lord Tebbit. We should handle this carefully so that we can keep all the constituent parts of this United Kingdom. Any major constitutional change, which everybody says this is, should be handled very carefully. Balance, cohesiveness and the safeguarding of this special thing we have, called the United Kingdom, should be at the forefront of people's minds.

Lord Grocott: My Lords, I am not able to support my noble friend Lady Hayter's amendment simply because my approach throughout, as on other constitutional issues, is that the House of Commons is the House of Commons, it consists of single-Member constituencies and every Member of Parliament elected to sit in the House of Commons is there with the same rights and the same duties and with the same authority which derives from their election on the basis of first past the post. To the extent that the amendment detracts from that, it is not one that I can support. However, my noble friend has done the House a very good service in that she has reminded the Government, who do not seem to be in the mood to listen, that time and again, in responding to amendments, the Government have walked up one of two blind alleys.

One blind alley is their absolute commitment to a referendum next May, which is presenting them with difficulty after difficulty; not silly difficulties, not trivial difficulties, but very substantial difficulties indeed. If they decided now not to reverse the amendment in the

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name of my noble friend Lord Rooker that was carried, they would save themselves an awful lot of problems. It is not my job to be a consultant to the Government and should they think of asking me I am afraid the answer would be no, but they made a huge mistake by putting themselves in that time lock.

The second blind alley is best illustrated by my noble friend's amendment. The Government are committed to this being a legislative referendum, not an indicative referendum. If this were an indicative referendum where the results were sensibly considered and analysed by Parliament and the Government after the figures had come in, there would be absolutely no need for my noble friend's amendment even to be considered. Precisely those types of arguments would come up in the post-referendum debate that should be held about the significance of the public's decision. Clearly, it would be a matter of concern to almost anyone if strong votes against changing the voting system from the electors of Scotland, Wales and Northern Ireland were trumped by a strong vote in favour from the electorate in England. Whatever were the numbers when you added them all up, I should have thought that that would be a matter of real concern and something that any prudent Government would want to take into account in deciding what to do next.

Am I the only one who so dislikes Clause 8(1)? That this is not an indicative referendum is encapsulated in this one line:

"The Minister must make an order bringing into force".

Why bother the Minister? Why not press a button? There is no decision to make. The Minister presumably just stamps whatever referendum result comes for him or her to consider. He should not draw much of a salary for that part of his activities when he is told by an Act of Parliament what he must decide to do. I appreciate why my noble friend has tabled the amendment, but it is not one that I can support.

I say to those of us who were here sleepless the other night that it is not my intention to press my Amendment 44B on a 50 per cent threshold, but as thresholds have been mentioned I want to make one point very briefly. The noble Lord, Lord Tyler, who has been assiduous in attendance here is not with us today, but he made a point that was worthy of consideration in opposing a 50 per cent threshold. He simply asked the House whether it would not be very unjust if, with a turnout threshold, 49 per cent of the electorate voted in favour of a constitutional change. That would mean that 98 per cent of those who voted were in favour of constitutional change. I wish a bookie would let me have a bet on that not happening. The noble Lord was proposing that 49 per cent might vote yes, and if no one voted no-or 0.5 per cent voted no-that would not carry.

Of course the answer to that has already been given in an exchange between the noble Lord, Lord Lamont, and the Leader of the House. If we had an outcome threshold and the outcome was 25 per cent, surely even the most fervent supporter of changing the electoral system could not object to such a threshold. All we would be asking is for one in four of the public to be in favour of change. That would also deal with the point about abstentions. Deliberate abstentions would not

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matter provided that the 25 per cent of the electorate who we keep being told are enthusiastic for change turned up and voted. The decision would carry.

Obviously we will need to come back to the threshold argument on Report, but I would be very happy with that. That might be a first for me, but I am a moderniser. The noble Lord, Lord Tyler, and I could have a discussion about whether the sensible thing to do would be to table an amendment for an outcome threshold of 25 per cent. That would solve his sleepless nights worrying about what would happen if there were 49 per cent of the electorate voting for a change in the voting system which could not carry because of a turnout threshold. We would both be happy and my aim in life is to make people happy.

Lord Rooker: There is a snag there. One of the reasons why I did not move Amendment 43A is that there is a legal contractual arrangement between the Conservative Party and the Liberal Democrats not to do that. Even before they introduced the Bill, they had a contractual arrangement that they would not consider that kind of threshold. So we are stuffed before we start. If that is not the case, we will receive advice on it, but, as far as I know, the so-called coalition agreement rules that out.

Lord Grocott: If my noble friend is right-and he has been right on far more things over the years than he has been wrong-we really are wasting our time on this Committee stage. It has felt like that from this side of the Chamber throughout. It is unlike pretty well any other Committee stage I can think of, when the normal response from a Minister to anything other than a completely ludicrous amendment would be to say, "Well, we don't really like this amendment much, but there is something in it worth considering, so I am quite happy to discuss it".

Lord Campbell-Savours: Is not one advantage of the threshold to which my noble friend Lord Rooker refers the fact that you could then permit a very low turnout? You do not need a high turnout if you set an approval turnout, as my noble friend's amendment would have provided for. I cannot understand why the Government agreed this between the two parties. It would have been far easier to secure a low turnout with a 20 per cent approval threshold, for example, which would have pleased us all. Why did they not agree that?

Lord Grocott: There are fruitful lines of discussion here for Report stage, and if they can lead to unanimity across the Chamber-which is what I sense we are moving towards-let us look forward to that day.

Lord Foulkes of Cumnock: My Lords, I struggled through the snow from Scotland on the encouragement -indeed, almost the insistence-of the noble Lord, Lord McNally. He is not here now, in fact, but he would not have managed to sit through much of this Committee without my presence, so I thought I had better be here. I thought I would just say a few words now, having made it. However, I hesitated to stand

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because so many Members opposite, particularly on the Conservative Benches, must have things to say on this. I shall sit down now if they want to get up, because I am sure that they are not the greatest enthusiasts for the system of voting that we are considering in this Bill and discussing, to some extent, in this amendment.

I am not sure which is the best description of the Bill. I think it was my noble friend Lord Rooker who described it as a Faustian pact. I thought at the time that he said that it was a Foulkesian pact, and I was going to deny that I had anything to do with it.

Lord Anderson of Swansea: It was me.

Lord Foulkes of Cumnock: Oh, it was my noble friend from Swansea who called it a Faustian pact. I do not know whether that is the best description of it, although it is certainly a true description. The noble Lord, Lord Tebbit, has a better description of it as a dog's breakfast. The more one looks at the Bill and the more anomalies one finds in it, the more one thinks that the noble Lord, Lord Tebbit, has the right description. It is a dog's breakfast-and it is a very dangerous dog's breakfast. I would not like to feed it to my dog. There are a lot of unexpected consequences to this Bill. The law of unexpected consequences is bad enough with a small Bill, but with this Bill of 301 pages there will be many unexpected consequences.

I have been listening to the debate on this important amendment, which was proposed by my noble friend Lady Hayter of Kentish Town. That is a lovely part of London, incidentally. When I was at school in London I used to wander around Kentish Town from time to time. The noble Lord, Lord Wills, made a very important point. The nature of the union has changed dramatically over the past 12 years. We certainly need to take account of it. Most of the referenda we were talking about related to devolution or preceded the changes that have taken place. We are now talking about a very important thing. I very seldom disagree with my noble friend Lord Grocott, but I ask him and others to consider the sensitivity of the particular parts of the union-of Wales, Scotland and Northern Ireland. Let us imagine that this referendum takes place. There could be a low turnout or there might be a bigger turnout if there is voting on other things and if it is on the same day. I hope fervently, like so many noble Lords, that it is not on the same day, but if it does take place on the same day, there might be a differential turnout-perhaps a substantially differential turnout. Imagine the situation where Scotland voted to keep first past the post, Wales voted to keep first past the post, Northern Ireland voted to keep first past the post, but AV-I was going to say this bastard of a system, but I must not say that-this awful system that we have been discussing at length, was imposed on the whole of the United Kingdom by a vote in England that would-

Lord St John of Fawsley: My Lords, is the noble Lord aware that in the West Country the word "bastard" is a term of endearment?

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4.15 pm

Lord Foulkes of Cumnock: In the West Country, that may be rightly so, but where I come from the term is not thought of in quite that manner. I am very glad to see the noble Lord here. Having served with him in the House of Commons, I have great respect for him, especially as so many of the reforms in the House of Commons came from him. However, my recollection is that the reforms that he introduced in the House of Commons were brought in after careful thought, after much discussion and after cross-party deliberation-unlike those in the Bill. No doubt whoever is replying to the debate on the amendment will bear that point in mind.

My noble friend Lady Hayter of Kentish Town has raised a very important point. Incidentally, I thought that it was with great ingenuity that the noble Lord, Lord Elystan-Morgan, brought in the whole question of thresholds, which we have previously debated. I hope that at some point-I do not know whether that will be now or later this evening or on Report-we will be permitted to vote on the matter in Amendment 44A, because it is important that we should consider the question of thresholds. However, on the more important issue today concerning the result in the four countries that comprise the United Kingdom, I think that my noble friend Lady Hayter has done this House a great service in moving Amendment 44.

Lord Falconer of Thoroton: My Lords, I welcome the noble Lords, Lord St John, Lord Tebbit and Lord Roberts to this debate, which has, as ever, been a riveting discussion. I note two points in particular: first, that the noble Lords, Lord Tebbit and Lord McAvoy, appeared to agree on practically everything, excepting a marginal disagreement on the vote on joining the European Union; and, secondly, that the noble Lord, Lord Grocott, with a straight face described himself as a moderniser.

In Amendment 44, my noble friend Lady Hayter proposes that, in order for the referendum vote to effect a change in the voting system, there must be a yes vote in all four countries of the United Kingdom. As such, this is another debate on whether special barriers should need to be overcome before the voting system can be changed. In looking at the Bill, one of the roles of the House of Lords must be to ensure the correct constitutional proprieties. Whether one looks at the proposals in the Bill that was introduced before the general election or the proposals in this Bill, there is a constitutional piece of trickiness going on. Neither House of Parliament has said that it wants AV, so the proposal has not been endorsed by Parliament, in contradistinction to the proposal on membership of the European Union, which was endorsed by Parliament, and the devolution changes, which were endorsed by Parliament in 1999.

Lord Anderson of Swansea: Does my noble friend also accept that no party wants AV? Given that the Conservative Party does not want AV, the AV proposal of the then Labour Government was rejected in the general election and the Liberal party wants another form of representation, no party is in favour of AV either.

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Lord Falconer of Thoroton: That appears to be the position. The proposal does not have the support of Parliament and, as my noble friend Lord Anderson has pointed out, does not have the support of any individual party.

Suppose that, in a referendum with no threshold where implementation was compulsory, the turnout was 40 per cent. In that case, a result could be reached in which only 20 per cent of the country had voted in favour of AV. When we debated-last Wednesday, I think-my noble friend Lady Hayter's Amendment 43, we heard how that proposal for a 25 per cent threshold could have produced a situation in which the change was effected if only 13 per cent of the population voted in favour of the proposition. Most countries in the world-sensibly, in my view-make it harder to change the constitution than to make other sorts of legislative change. The Government's extraordinary proposal could lead to a change following a tiny proportion voting yes. The noble Lord, Lord Strathclyde, with characteristic robustness and honesty, took pleasure in the fact that, if 13 per cent voted in favour of the change in the voting system, the result could indeed be that the voting system should change. The only occasion when any sort of threshold has been required for a referendum that would have changed our constitution was on the only previous occasion on which implementation of the referendum decision was compulsory rather than indicative. I was not in the House of Commons in 1978 or 1979 but many who are here were, and all of them who have spoken have said that the Member for Islington South, Mr George Cunningham, persuaded people on a free vote that, when changing the constitution under such a proposal-which people thought might lead to the break-up of the United Kingdom-there has to be legitimacy. On the face of it, the effect of the Government's proposal is a manoeuvre that could lead to a change in our constitution.

However, there is no point in debating whether Mr Nick Clegg is correct in saying that the proposal is the most important change since 1832. I do not think that anyone doubts that the proposal is an important change, but if the public think that it is the wrong change, they will not like it and their distrust of Parliament will increase. Our role in the Lords is to make the Commons think again, particularly in relation to the constitution, if we think that they have got it wrong. Our debate on the issue last Wednesday-I single out in particular the speech by the noble Lord, Lord Lamont-demonstrated the constitutional trickiness of the proposal. The fact that we could end up with Parliament not approving-and, indeed, probably being against-the proposed system but a tiny amount of the population being persuaded to vote for it shows that something has gone wrong in the way that we are dealing with the issue.

The proposal of my noble friend Lady Hayter is that, for the referendum to have effect, every country in the United Kingdom must vote yes. I tend towards the view that that is not the right answer because, in my view, we should do everything to promote coherence in the United Kingdom. That means that, where we are voting on a national voting system, implementation of any referendum should be guided by what the

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national vote is. Therefore, I would reject that approach. However, I am extremely keen that whoever replies from the Front Bench on behalf of the coalition should deal with the points that I have made. As the noble Lord, Lord Williamson, said, we debated the issue late at night last Wednesday and this is a point of real importance in relation to the constitution.

Finally, I want to pick up on what my noble friend Lord Rooker said about there being a legal and binding agreement between the members of the coalition not to agree to any outcome threshold. Of course, he is wrong about there being a legal agreement, because we are talking about politics here. I am glad to see the noble Lord, Lord Roberts, has returned for the end of the debate. It may be that, having heard the debate, the noble Lord, Lord Strathclyde, or the noble and learned Lord, Lord Wallace of Tankerness-whichever of them is answering the debate-will think that there are things more important than simply the terms of an agreement that was reached over a few days. I have in mind in particular a change to our constitution, which people of this country respect.

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, we have certainly had a longer debate than I had imagined when I first saw this amendment, but it has been useful and I am grateful to the noble Baroness for having introduced it. When I first saw it, I thought it was possibly imaginative, possibly a little bizarre. I am not sure that I came to a conclusion as to which it was during the course of the debate but I became convinced it was flawed. The noble and learned Lord, Lord Falconer of Thoroton, agreed with me on that, as did other notable noble Lords from the other side, including the noble Lords, Lord Lipsey and Lord Grocott, and, I think, the noble Lord, Lord Howarth of Newport, as well. I therefore very much hope that, when it comes to deciding what to do with it, the noble Baroness will withdraw her amendment.

I was not planning on being drawn into a larger debate on thresholds. We discussed it well the other night. It is, however, worth making one or two points. The best suggestion to come out of this debate was that the noble Lord, Lord Grocott, and my noble friend Lord Tyler should get together over the Christmas period and discuss whether there could be some areas of agreement between them. If I may speak for my noble friend Lord Tyler in his absence, I am sure he will wish to take up the noble Lord's invitation, and I hope to hear the good results from that discussion.

I hope the House, including my noble friend Lord Lamont and others, do not think that I do not understand why imposing a threshold might appear initially attractive. On the surface, it may seem to offer an extra layer of reassurance, particularly if the change that is being put to the vote is one that you personally do not favour. However, it is the Government's firm view that if people want change-if a simple majority of those who turn out to vote want change-we should not deny them this by imposing artificial barriers. We have not specified a voter turnout threshold because we want to respect the will of the people who do vote in the referendum without conditions or qualifications.

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Lord Howarth of Newport: Since we debated thresholds last Wednesday, I have had the opportunity to read the Government's Localism Bill, which they have just published. I was interested to see there evidence that might indicate the beginning of some flexibility in the Government's view on thresholds in referendums. Perhaps it is just a case of double standards, I do not know. Clause 41 of the Localism Bill is entitled "The required percentage". It requires that, for a petition for a local referendum to be valid, no less than 5 per cent of registered electors must vote for it. The noble Lord would be entitled to say that a petition is quite a different thing from a referendum, but then we go on to Clause 51, "Voting in and conduct of local referendums". Here we find that:

"The Secretary of State may by regulations make provision as to the conduct of local referendums".

The clause goes on to say in subsection (5):

"Regulations under this section may apply or incorporate, with or without modifications or exceptions, any provision of any enactment (whenever passed or made) relating to elections or referendums".

Do I see in that the kernel of some rethinking on the part of the Government about the possibility of thresholds making sense in referendums? Of course, the Localism Bill deals only with local referendums. If the Government do not believe in thresholds, presumably they ought to be consistent. Will the noble Lord say categorically that, whatever powers the Secretary of State might use-the powers given to him in the Bill are almost universal-to alter the rules on referendums in the local context, the Government will never in any circumstances institute a threshold?

4.30 pm

Lord Strathclyde: We will have plenty of time to discuss the Localism Bill when it arrives here. It has yet even to be debated in the House of Commons; it has just been published. However, I can confirm that we have no intention of introducing thresholds. That reminds me of a question asked by the noble Baroness about whether we had any plans vis-à-vis trade unions. Again, I confirm that we have no plans to introduce thresholds for trade union ballots. However, so many noble Lords on the other side have spoken in favour of thresholds that if they were to make a proposal to me about thresholds for trade union ballots, I would very much like to read it.

Lord Anderson of Swansea: On consistency, I was one of those in the other place who voted for the Cunningham amendment in 1978. In the Lobby with me and certain dissident Labour Members was almost 100 per cent of the Conservative Party at that time. What has changed since 1978, when the Conservative Party was clearly in favour of a threshold?

Lord Strathclyde: My Lords, as I hinted, I am at a disadvantage compared with many noble Lords because I was not in the House in 1978. In 1978 there was the prospect of the collapse of the Labour Government, which is exactly what happened. On 1 March 1979 the threshold was not reached, and the nationalists changed

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their minds and did not support Jim Callaghan in his vote of no confidence. It was rather an admirable tactic.

Lord Anderson of Swansea: Essentially, the Minister is saying that it was no more than opportunistic. It was a matter of tactics at the time and there was no point of principle.

Lord Strathclyde: I have no idea whether there was a great point of principle at stake in 1978. I am simply explaining its effect. The Labour Government might well have continued for another six months in 1979 if they had not lost that vote of no confidence. I am sorry that my noble friend Lord Lawson is not here. He told the House some interesting anecdotes from 1978, but I am sure we will return to that on Report.

Lord Beecham: My Lords, is the position today not a mirror image of that? If the noble Lord is right, the position was taken in 1978 to avoid a Government falling; the position this time is to create a situation in which a Government can be formed. It seems that the same motive in effect applies.

Lord Strathclyde: My Lords, if the noble Lord is saying that this is a matter of tactics by Labour Party Back-Benchers, many of us on this side of the House would agree that noble Lords opposite are operating tactically on this, particularly when we compare what they have been saying about thresholds in debates in this House with what has been said in another place. When the House of Commons was asked to vote, it voted by 549 to 31 against having a threshold. The Labour Party followed those on the government and Liberal Democrat Benches to vote against a threshold.

Lord Touhig: A moment ago the noble Lord talked of thresholds as being artificial barriers. What is AV if it is not a threshold?

Lord Strathclyde: My Lords, we are talking about a referendum on whether people wish to have AV. During the course of the campaigns people will no doubt make that point-as the noble Lord will and perhaps even as I will-but that is not what we are discussing today. We are discussing today whether there should be a referendum and whether it should be done by clean majority. I support the idea of a referendum; I am happy to trust the people on this. The noble Lord, Lord Wills, talked about this earlier. Was he not the architect of the CRaG Bill before the last election, which proposed an AV referendum with no thresholds anywhere across the United Kingdom-no voter thresholds, turnout thresholds, outcome thresholds or any kind of threshold you could possibly imagine. There has been a change of mind.

Lord Mawhinney: I am extremely grateful to my noble friend. He just said that we are talking today about a clean referendum with a clean majority at the end. Does it remain the Government's view that any size of majority, no matter how small, would be legitimate, given that this a constitutional measure?

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Lord Strathclyde: My Lords, it does. One vote would be enough under the terms of this legislation.

Lord Wills: Before the noble Lord moves from my comments on this, I refer him to tomorrow's Hansard so that he may see exactly what I said about thresholds. I also expressed very clearly my worry about the effect of the way in which the Government are proceeding on the state of the union. I would be very grateful if he could address those concerns, which have been raised not only by me but by very many noble Lords this afternoon.

Lord Strathclyde: I very much agree with what the noble Lord said about the union, and with other noble Lords from all sides of the House who made exactly the same point. That is why we would not want to encourage this amendment in any way at all.

We will come back to thresholds on Report; this is an important debate to have. There was no threshold in 1975 in the only national referendum that we have held. The Opposition's ardour for thresholds did not apply in 1997 and 1998 in their four referendums in Scotland, Wales, Northern Ireland and London. There has been no proposal from any major political party for a threshold in the referendum in Wales next March that would extend the powers of the National Assembly. Most tellingly, when AV was proposed in the Bill before Parliament, there was no threshold in that either.

Lord Falconer of Thoroton: I think it is right that the only time there was a threshold was in the compulsory referendum in 1978, which meant that Parliament would have no opportunity to consider whether there was a very low turnout.

Lord Strathclyde: The noble and learned Lord makes a good point, but the referendum that we are dealing with today is very simple; it is yes and no on changing the electoral system. The referendum that the people of Scotland and Wales faced in 1978 was entirely different and raised much more fundamental issues of constitutional propriety and the setting up of different Parliaments and Assemblies in both those countries.

Baroness Liddell of Coatdyke: I am very grateful to the noble Lord for giving way. Does he not acknowledge, as the Deputy Prime Minister has done, that this is the greatest reforming measure since 1832? Since the 1970s it has become a convention, when major constitutional matters are being considered, that there be consultation and pre-legislative scrutiny. There has been neither consultation on, nor pre-legislative scrutiny of, this legislation.

Lord Strathclyde: I really do not agree. There has been much discussion on changing the electoral system for as long as I have been of voting age. It has been discussed many times in and outside Parliament. People are very well versed on this. As for this new convention that the noble Baroness has introduced, when the role of Lord Chancellor was scrapped, it was done on the back of an envelope-in a press release. There was no

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consultation or discussion whatever, even with the judiciary. It led to the resignation of the then Lord Chancellor, to be succeeded by the noble and learned Lord, so this is an entirely new convention. It may be very desirable, but it is new.

Lord Falconer of Thoroton: The noble Lord is so right; and the consequence was that the House, unprecedentedly and contrary to convention, referred that Bill to a Select Committee instead of granting it a Second Reading. We spent 18 months considering it, and although I kicked and screamed at the beginning, I said at the very end that the 18 months had been really worth it to make it a much better Bill. Please learn from that experience.

Lord Strathclyde: My Lords, I am glad that if the noble and learned Lord ever finds himself in government again he will not make the same mistakes.

Lord Lamont of Lerwick: My noble friend has tried to merge the motives of people in voting for thresholds with the arguments for and against thresholds. He says that voting for the Cunningham amendment was motivated just by opportunism. He has, not I am sure with any malicious or impolite intention, also implied that those who have argued for a threshold in these debates have done so because they are against AV. However, will he not address some of the arguments on their own merits? For example, does not the fact that almost every European country has a qualified majority for constitutional change show that there is something in this argument?

Lord Strathclyde: My Lords, I certainly agree with my noble friend that no impoliteness is intended in any shape or form. However, I largely stand by the fact that most of those who speak in favour of a threshold tend to be those who are most opposed to the policy of having a referendum or who are against AV, which is why they want a qualification.

My noble friend asked an interesting question about what happens in other European countries. The answer is that different countries do different things. Let us take just one example. I think I am right in thinking that France requires a majority in Parliament for making constitutional change, but does not require a threshold when there is a national referendum. I am sure that we could trade statistics from around the world about different countries doing different things, but France is an example of it being done in that way.

Lord Lipsey: My Lords, I am not sure that the noble Lord has chosen the best possible example for his case. In France, changes in the electoral system have become a plaything of whichever Government are in power, partly because there are not the constitutional barriers to mucking about with voting that have always existed in this country.

Lord Strathclyde: My Lords, that may well be an argument in a campaign either for or against AV. It is not an argument that can be used to decide whether

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there should be a referendum on that issue or whether there should be any limits or artificial barriers, as I call them, on this.

I think that everyone now knows what the amendment would do. It would require a majority vote in favour in each of England, Scotland, Wales and Northern Ireland, rather than a simple majority. We cannot contemplate a system whereby 100 per cent of voters in England, Scotland and Northern Ireland vote in favour of a proposal, only for it to be rejected because only 49 per cent of voters in Wales agree with them. I know that that is an extreme example, but it could be the effect of the amendment and it none the less highlights the fundamentally undemocratic consequences of this proposal. That is why the coalition agreement commits us to providing for a simple-majority referendum on the alternative vote, without qualification.

Lord Wills: The noble Lord is being very generous in giving way. However, does he not accept that whatever the view about a threshold, a differential result in each of the constituent nations of the union could have profound implications for our United Kingdom-for the union? He must accept that. It is a logical assumption to make. If he accepts that, why does he reject the proposition? Is it not more reasonable for Parliament, the acme of our representative democracy, to assess those results, know what they are and then judge how to proceed? Is that not the most sensible way forward?

4.45 pm

Lord Strathclyde: My Lords, I do not agree with that; this is a United Kingdom vote on an electoral system for the United Kingdom Parliament. If the majority of those taking part in a referendum vote "yes", is it not right that Parliament accepts that result and carries on? That seems to be the fundamental position and it is why we resist the amendment, as we have resisted other amendments made here and in another place. We think that if we introduced these thresholds, they would have undesirable consequences, compromising public confidence in the legitimacy of the outcome. We want to respect, without conditions or qualifications, the will of the people who vote in the referendum, and I believe that a simple majority is the fairest way of doing so. I therefore urge the noble Baroness to withdraw her amendment.

Baroness Hayter of Kentish Town: My Lords, I thank noble Lords for all their interventions, which have given me an interesting history lesson-particularly for 1978. Earlier, the other Cunningham-my noble friend Lord Cunningham-was here, although I do not think that he is in his seat at the moment. Of course, the noble Lord, Lord McNally, played a different role in 1978, and each will have their memories of that referendum. We have also heard the history of my noble friend Lord Lipsey and me. He recalled that we met in 1970 but the date was actually 4 August 1970. We have heard stories of the misspent youth of my noble friend Lord Foulkes in Kentish Town, and even West Country lingo, which I shall not repeat in this House.

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The essence of the debate has clearly been far more important than those personal recollections. One of the interesting questions was put by the noble Lord, Lord Mawhinney, who asked whether one vote was enough, to which the answer is clearly "yes". Perhaps that is why Members of your Lordships' House will have a vote in the referendum-because the Government may be dependent on every last vote. I always wondered why we suddenly got into that.

It has been said by my noble and learned friend Lord Falconer that neither House has come out in favour of AV. Indeed, as I think my noble friend Lord Howarth added, nor has any party come out in favour of it. The Labour Party never even discussed it. I was chair of the Labour Party at that time and it was the party in Parliament that first decided to have a referendum. However, the party as such has not taken a view on it. That is quite correct; it does not have to do so. Individual members' views will be known but it will certainly not be a collective view.

I think my noble friend Lord Lipsey suggested that I was a dyed-in-the-wool supporter of first past the post due to having tabled this amendment. However, that is not the case. I marginally favour first past the post over AV but I can live with AV. I am a passionate supporter of the constituency link but of course that matter will not be in front of us today. However, I do not accept the allegation that I am doing this because I have a particular view on that. I do not think that this is a bizarre amendment, as the Leader of the House referred to it. Rather, as my noble friend Lord Howarth of Newport said, we should be sensitive to the sentiments of each of the four countries, especially if, in the voting, one of them is out of line with the others. We should respect the results in each of the four countries for this outcome to have legitimacy. That does not mean that we necessarily stop the train; it means that we have time to pause and consider, and really all that the amendment asks is for the Government and Parliament to have time to pause and consider.

This is not an amendment about thresholds. As most Members of the Committee will know, I tabled one such amendment last week. It was very modest, and in fact I was ticked off by some of my noble friends as it referred to only a 25 per cent threshold. However, that was last week and this amendment is different: it avoids the risk of an abstention counting as a "no" vote; it is about the result, not the turnout; and, as has been said, it bypasses any difficulties with the wording that the coalition may have. It is essentially, as the noble Lord, Lord Elystan-Morgan, said, an insurance against the irreversible change that the referendum might make. We could, of course, have different systems. I do not agree that just because it is one House there must be one system. I worked for a long time in the European Parliament where we had completely different systems that brought Members to the European Parliament. We lived quite happily with that result.

This amendment, therefore, is about having time to reconsider before the automaticity of the implementation happens. I hope that the Government are going to give

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some thought to this general view, whether it be a threshold on turnout, or outcome, or, indeed, looking at these four results.

Having failed, however, to win over even my own Front Bench I will, at this stage, beg leave to withdraw the amendment.

Amendment 44 withdrawn.

House resumed.

European Council


4.51 pm

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, it may be a convenient moment to repeat a Statement that has been made in another place by my right honourable friend the Prime Minister. The Statement is as follows.

"With permission, Mr Speaker, I would like to make a Statement on last week's European Council. Britain had three objectives at this Council: first, to bring stability to the eurozone, which is in Britain's interests; secondly, to make sure that Britain is not liable for bailing out the eurozone when the new permanent arrangements come into effect; and, thirdly, to build on the progress we made with the 2011 EU budget, with tougher settlements in the years to follow.

Let me address each objective in turn-first, stability in the eurozone. No one can doubt this is in our interests. Nearly half our trade is with the eurozone, London is Europe's international financial centre, and no one can deny that the eurozone faces very real challenges at the moment. We see that in the Irish situation and with Spain and Portugal paying interest rate penalties in the financial markets. Britain's approach should not be simply to say, 'We told you monetary union would require fiscal union', and leave it at that. We want to help the eurozone to deal with the issues it faces.

The fact that we have set out a path to deal with our deficit and seen our interest rates come down is helpful. Following the dinner at which leaders of all the EU countries had a wide-ranging discussion on the state of the eurozone, eurozone leaders issued a statement saying they,

to return the eurozone to stability. Part of that is a permanent mechanism for assisting eurozone countries that get into financial difficulty.

Enabling eurozone countries to establish such a mechanism is in our interests, but how this mechanism is brought about is equally important. After the October Council I made it very clear to the House that any possible future treaty change would not affect the UK, and that I would not agree to it if it did. I also said clearly that no powers would be transferred from Westminster to Brussels.

At this Council we agreed the establishment of a permanent mechanism with a very limited treaty change. This change does not affect the United Kingdom and it does not transfer any powers from Britain to the European Union.

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Secondly, on the issue of liability for any potential bailout of the eurozone in future, Britain is not in the euro, and we are not going to join the euro. That is why we should not have any liability for bailing out the eurozone when the new permanent arrangements come into effect in 2013. With the current emergency arrangements, established under Article 122, we do. This was a decision taken by the previous Government. It is a decision we disagreed with at the time and we are stuck with it for the duration of the emergency mechanism, but I have been determined to ensure that, when the permanent mechanism starts, Britain's liability should end. That is exactly what we agreed.

The Council conclusions state that this will be a,

This means it is a mechanism established by eurozone countries for eurozone countries, and Britain will not be a part of it. Crucially, we have also ensured that the current emergency arrangements are closed off when the new mechanism comes into effect in 2013.

Both the Council conclusions and the introduction to the actual decision to change the treaty itself-the actual document that will be presented to this Parliament for its assent-are clear that Article 122,

and that,

'Heads of State or Government therefore agreed that it should not be used for such purposes'.

So both the Council conclusions and the decision that introduces the treaty change state in black and white the clear and unanimous agreement that from 2013 Britain will not be dragged into bailing out the eurozone. Before the Government agree to this treaty change, Parliament must first, of course, give its approval, and if this treaty change is agreed by all member states then its ratification in this country will be subject to the terms of our EU Bill and so will be subject to primary legislation.

Thirdly, let me turn to the issue of the EU budget. Securing a tight budget for the future remains my highest priority for the EU. I believe it is a priority shared by the vast majority of the country. At the last Council, we managed to do something we have not done in previous years. We were faced with a situation where the Council had agreed a 2.91 per cent increase. This was not the UK's position. We had wanted a tougher settlement, but were outvoted, yet the Parliament went on and called for 6 per cent increase, but instead of just splitting the difference between what the Council asked for and what the Parliament called for-which is what happened last year-Britain led an alliance of member states to decisively reject the European Parliament's request. We insisted on no more than the 2.91 per cent increase the Council had previously agreed. Many predicted this would be impossible and that Britain would be defeated, but this will save the British taxpayer several hundred million pounds. We also agreed a new principle that from now on the EU budget must be in line with what we are doing in our countries.

We did this by taking the initiative and galvanising others to join us, and we sent a clear message that when we are making cuts at home, with tough decisions

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on pensions, welfare and pay, it is simply not acceptable to go on spending more and more and more through the European Union. At this Council, I wanted to keep up the momentum on the EU budget by forging an alliance with like-minded partners and starting to work towards securing a tougher settlement for future budgets. At the weekend, Chancellor Merkel, President Sarkozy and I, together with the Prime Ministers of Finland and the Netherlands, sent a letter to the President of the European Commission. This letter sets out our goals for the budgets for 2012 and 2013 and the longer-term financial perspective covering the rest of this decade. It states clearly our collective view that,

in European spending should be stepped up in 2012 and 2013, and we call for a real-terms freeze in the period from 2014 to 2020. I want to achieve a decade of spending restraint in Europe, and the three biggest powers in Europe, the three biggest net contributors to the budget, have committed to that. This is an important step forward.

There are two problems that Europe must urgently address. First, the eurozone is not working properly. It needs major reform, and it is in our interests not to stand in the way of that. Indeed, as I have argued, we should be actively helping the eurozone to deal with its issues. Secondly, Europe as a whole needs to be much more competitive. Collectively we must press ahead with measures which will help European countries pay their way in a world where economic competition internationally is becoming ever fiercer. We must expand the single market in areas such as services, press forward on free trade and, crucially, avoid burdening businesses with costly red tape. We must promote stability, jobs and growth. That is the agenda this Government are pursuing in Europe, and I commend this Statement to the House".

My Lords, that concludes the Statement.

5 pm

Lord Hunt of Kings Heath: My Lords, I am most grateful to the noble Lord, Lord Strathclyde, for repeating the Statement made by his right honourable friend the Prime Minister in another place. There are three issues that I would like to ask him about. The first is the agreement on the European budget, the second is treaty change, and the third is the wider but most fundamental question of European growth.

I turn first to the European budget. I welcome the call for restraint in the years ahead. On the budget for this year, the Prime Minister applauded the outcome because, as he said, it avoided the ultimate sin of European negotiations: that of simply splitting the difference between positions. I would remind the noble Lord, Lord Strathclyde, that the Prime Minister originally wanted a freeze on the budget while the European Parliament wanted a 5.9 per cent increase, and the Prime Minister was still arguing for that days before the last European Council in October. Perhaps the noble Lord, Lord Strathclyde, can tell the House what the figure is that splits the difference between 0 per cent and 5.9 per cent. By my reckoning, it is somewhere around 2.9 per cent, which is the outcome we actually

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ended up with. So, after the Government's rhetoric, where have we ended up? We have ended up by splitting the difference.

We welcome the Prime Minister's support for the treaty change agreed at the Council. It is right that the eurozone replaces its ad hoc agreements with a more permanent mechanism. But why does the Prime Minister have to go through such hoops to justify accepting this fairly minor change? He is, after all, showing a sensible piece of what one might call Europragmatism. Of course, the problem for the Government is that before the election, the Prime Minister claimed not to be a Europragmatist but the great Eurosceptic, which is more rhetoric. He promised that if there was any chance for a reopening of the treaty and a referendum on Lisbon, he personally would make it happen. The Foreign Secretary has admitted that the treaty offers a pretext for a referendum, but that it would be absurd to use it to try to derail the whole of Lisbon. Indeed, the Prime Minister also used to say that he would take the first opportunity he needed to repatriate powers over employment and social legislation to Britain, but again, he has not. It would be helpful to the House, and probably more helpful for the noble Lord's own Back-Benchers, to explain why these pre-election commitments have been abandoned.

I turn to the third and most important issue, that of the European economy. The agreement on a permanent crisis mechanism for the eurozone after 2013 does not address the challenges that Europe's economy faces at the moment. Does the noble Lord, Lord Strathclyde, agree that eurozone members themselves should do more to promote stability in the eurozone before 2013, and does he also agree that we need European action to promote growth for there to be any chance of serious export growth for the UK? The Prime Minister's plans, with VAT set to rise and spending cuts kicking in, rely on an extra £100 billion of exports over five years, and over 50 per cent of our exports are made to Europe. But the noble Lord, Lord Strathclyde, will be aware that European Commission forecasts show slowing growth within the EU next year. Does he accept that the Government need to do more to work with colleagues in Europe to improve the prospects for growth?

First, the Prime Minister should argue that all countries engaging in fiscal consolidation, including Germany and the UK, should do so at a pace that supports economic growth both domestically and across Europe as a whole. Secondly, he should ensure that those countries facing problems, including Ireland, are not locked into repeated rounds of austerity with higher taxes and lower spending, hitting the growth those countries need to pay down their debts and recover. Thirdly, he should make sure that Europe's voice in the G20 argues for a growth-oriented strategy. Indeed, I would say to the noble Lord, Lord Strathclyde, that given the nature of this Statement, many people will wonder whether the Government see any connection between their own optimistic forecasts for exports and the summit that the Prime Minister attended at the weekend.

The Government's approach regarding Europe reflects their wider domestic approach. They think that you can reduce an economic policy to a pure deficit reduction

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policy with no focus on growth and jobs. In 2011, the Government need to start engaging in a growth agenda for Europe and Britain that can help us here at home.

5.05 pm

Lord Strathclyde: My Lords, I thank the noble Lord for responding to the Statement and for the way in which he did so. He made three substantial points and asked questions. I shall try to answer them but, if I am unable to do so, I shall of course right to him in the normal way.

This was an important Council meeting because the issues facing the EU were varied and substantially economic. Some issues were related to the eurozone and the Council took steps to deal with them; and some were related to the budget, which we believed had grown out of control in the past few years.

First, the noble Lord made the point-whether or not he was agreeing with me was hard to tell-that the budget was not the victory it looked because the European Parliament had wanted an increase of 5.9 per cent, or whatever it was. The point is that after the last Council the European Parliament voted for-indeed, demanded-6 per cent. The normal way would have been to split the difference between 3 per cent and 6 per cent and ended up at 4.5 per cent. However, with other countries, we stood firm at 2.9 per cent and were right to do so. In a letter that we have agreed with the major net contributors to the EU, we have set a new standard by which future budgets will be judged. I hope that noble Lords opposite will agree that that is good news.

Secondly, the noble Lord agreed that there is a requirement for a new permanent mechanism-I think that is absolutely right-but he went on to ask why we should go through the hoops. The hoops, incidentally, are to allow Parliament to have a say, not only in the arrangements that we already have in the House under the terms of the Lisbon treaty but in new primary legislation. That is not going through the hoops but putting the decision where it should lie-in Parliament-and that is why we are doing it. There is no question of a referendum because there is no question of a transfer of power from the British Parliament to the European Union.

On the question of growth, the noble Lord is again right to say that there is a problem; there is a crisis in the eurozone and with the euro. We want the EU to succeed-it is in our vital British interests that it should do so-including countries such as Ireland and others which have found themselves in trouble. We believe that we are on the brink of a substantial, export-led growth but Europe, too, needs a credible growth agenda. As the noble Lord pointed out, the EU's potential growth is forecast to be just 1.7 per cent in 2014.

We believe that each member state needs to carry out its own reforms-that is why the UK Government have launched their own growth review-but there is a strong case for similar determination at the EU level, where Europe 2020 needs to provide a more focused drive towards making progress in areas where there is significant EU value added and can genuinely promote

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growth. For example, we should focus throughout Europe on a more efficient and competitive single market, especially on increasing productivity and trade in the services sector; we need a more ambitious and open approach to global trade to allow Europe to benefit from growth elsewhere, particularly in Asia; we need a framework for innovation that enables technological change; and we need smarter regulations that will leave enterprise freer to drive the growth that we need.

No one underestimates the challenges that face this country and the rest of Europe. However, with some of our enlightened European partners, we believe that with this kind of agenda for growth we can get ourselves out of trouble.

5.10 pm

Baroness Falkner of Margravine: My Lords, perhaps I may take the opportunity to thank my noble friend the Leader of the House for repeating the Statement and, through him, to congratulate the Prime Minister on his perseverance and clarity in his clearly difficult negotiations in Brussels. One of the successes of the Statement is that it is forward-looking. We all know of the difficult issues that are still with us, two or three years after the financial crisis, in the peripheral countries of the eurozone. It was surprising to hear so much time devoted by the Official Opposition to the past and what the Government might or might not have promised in previous years. Media reports suggest that some concessions were made in terms of the financial perspectives moving forward to the period 2014 to 2020-indeed, the Germans secured their Lisbon treaty revision to establish the financial stability facility-but it was disturbing to hear that there was agreement with the French that the common agricultural policy would remain untouched. In other words, our desire to achieve greater efficiencies will not now bear fruit. Will my noble friend reassure us that we will continue with our commitments to reform the common agricultural policy? I wonder also whether he could reassure us that the newer eurozone countries, which have done very well by the structural funds and would naturally be loath to see them cut back, will nevertheless have conversations with us to attain that end, because we cannot all have cake every day.

Lord Strathclyde: My Lords, my noble friend is entirely right: we cannot have cake every day. Throughout Europe, different countries in different ways are learning the lesson of increasing productivity and trying to do more for less. The Prime Minister had one thing on his mind, and was not alone in so doing. He made it clear that, with leaders having to look at cuts in all sorts of very sensitive areas in their home countries, as we have had to do in ours, it was quite wrong to see net contributions to the EU continue to rise exponentially and that we needed to come forward with a very sensible plan over the next few years.

My noble friend Lady Falkner asked about our commitment to reform the CAP. This has been a long-standing commitment, and we cling very firmly to our view that the CAP needs to be reformed. Discussions on it will continue, likewise on the structural funds.

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Lord Liddle: My Lords, has the Leader of the House had an opportunity to study last week's financial stability report from the Bank of England, which demonstrated the interconnectedness of the obligations of British banks and those of banks on the continent and suggested to the reader that, should there be any kind of sovereign debt default in a member state in the eurozone, Britain and British banks would be heavily involved in any debt restructuring that was necessary? In this case, is it not time that, instead of trying to pretend to their anti-European and Eurosceptic Back-Benchers that Britain can stand aside from the problems of the eurozone, the Government recognised that we are in these problems up to our neck, that if we want a credible growth strategy for Britain we must also have a credible growth strategy for the eurozone, and that we should be ready as the United Kingdom in our national interest to play a full part in that?

Lord Strathclyde: My Lords, I have not had time to study the stability report from the Bank of England to which the noble Lord referred, but I understand exactly what he was saying. With the greatest respect to him, I think that his question was misconceived. There is no fear from us that we are trying to appease anti-European or sceptical Back-Benchers. These are bogeymen that obviously exist in the noble Lord's nightmares. We have no such nightmares and no such concerns. If any such concerns exist, they are partly dealt with by explaining that there will be a process in the British Parliament for agreeing the changes that we have made. Of course, as I laid out in the Statement and in reply to the noble Lord, Lord Hunt, we have a clear strategy for growth in the United Kingdom and believe that there should be a clear strategy for growth in the rest of Europe.

Lord Hannay of Chiswick: I perked up slightly at the Minister's first answer to the noble Lord, Lord Hunt, when he said that the treaty change would be settled in this Parliament, as it should be. I was then a bit saddened to hear that it is only treaty changes that do not affect us that get settled in Parliament and ones that do affect us get settled somewhere else. This reflects a very odd view about the primacy of Parliament.

On the budget, on the financial perspectives, I strongly welcome the fact that the Government are taking a tough line in the initial phases of that negotiation. I think that that is absolutely necessary, but they seem to have nailed their colours to something that used to be known in the jargon as "zero real growth" for a period of 10 years. That is a very long time. I do not imagine that the Government will be proposing zero real growth in public expenditure in this country for 10 years and, if they do, their prospects of re-election in 2015 may be a bit damaged. So some care needs to be taken about what is a very long period ahead, although I very much agree that taking a tough line at the beginning is good.

Finally, will the noble Lord confirm that the fact that Montenegro was accepted as a candidate country shows that the European Union is continuing with future enlargement in the Balkans and elsewhere?

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Lord Strathclyde: My Lords, I certainly agree with what the noble Lord said at the end about Montenegro, which we hope, over time, will be able to play a full part in the European Union. I liked the noble Lord's characterisation, at the start of his words, about treaty modifications. Of course, what he did not go on to say, when speaking about parliamentary sovereignty, or the primacy of Parliament, is that if there is a substantial transfer of power, we will take it to a referendum of the people of this country. We may disagree about that, but I think that it is a perfectly logical position for us to have.

The substance of the noble Lord's point was about zero real growth for 10 years. We have proposed that we should reduce growth up until 2014 and that between 2014 and 2020 there should be no growth, or zero real growth, as the noble Lord pointed out. We cling strongly to this view in part because of the difficulties faced by individual member states within the European Union. There is also a sense that over the last few years some of the spending within the EU has not been as carefully controlled as it might have been. This is an opportunity for the EU to review its own budgeting process and I very much hope that it will be supported by other member states in due course.

Lord Pearson of Rannoch: My Lords, since it must now be clear, even to our political class, that the euro is designed for failure, with its single interest and exchange rates and its absence of a federal budget, except in extreme illegality, will the noble Lord give a commitment on behalf of Her Majesty's Government that we will not voluntarily bail out Portugal, Greece, Spain, Italy and Belgium in the same way that we have volunteered to bail out Ireland?

Secondly, have the Government worked out how much it would cost to return Ireland to its national currency? Would that not be the obvious and very cheap thing to do, followed in short order by Portugal, Greece, Spain and Italy? Have they any idea what that would cost compared with the billions that we are throwing down the eurodrain?

Lord Strathclyde: My Lords, it is not for us to work out the cost of Ireland or any other country leaving the EU.

Lord Pearson of Rannoch: Because it would save us pouring all these billions down the drain.

Lord Strathclyde: My Lords, we certainly played a part in the Irish bailout because we perceived it to be in our national interest, whether Ireland was in the eurozone or otherwise, for reasons that the noble Lord knows well.

The noble Lord asked another question: what happens if another country asks for similar support? He went on to list a few of them. There have been no requests for financial assistance from other member states. It is therefore inappropriate for me from this Dispatch Box to speculate on what may or may not happen in other member states given that no request for assistance has been made. The European financial stability mechanism and the European financial stability facility are fully

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operational. Any request for assistance from a member state would be considered on its own merits.

The noble Lord started by saying that the eurozone was designed for disaster. It is not easy for those who were not in favour of us joining the euro in the first place to make a coherent argument for the euro, but it is in existence. It is in our political and economic interests in Britain for the euro to succeed and that is why we continue to support it.

Lord Maples: My Lords, could my noble friend help me with my memory of the Maastricht treaty, which set up the euro? I seem to remember that two of the conditions were that: first, no Government should run a budget deficit of more than 3 per cent of GDP; and, secondly, that there should be no bailouts? Is not the reason that the European Union-or the eurozone at least-is now having to breach the no-bailout clause because Governments were allowed to breach the deficit clause? Will that change not create a huge moral hazard? They were getting away with breaking the deficit clause but they did not know that they were going to get bailed out. Now that they know they are going to get bailed out, that is creating a moral hazard that surely will encourage bad behaviour in the future. When my noble friend says that we are in favour of these arrangements, is that because we think that it will make the euro stronger or weaker?

Lord Strathclyde: My Lords, my noble friend is right some of the conditions for entry into the euro that were laid out in the Maastricht treaty, and other conditions including those on deficits, have been broken. I believe that there is a sense of moral hazard because they have been bailed out, but it is in the interests of everyone within Europe to make sure that no further countries find themselves in financial trouble. That is why the eurozone is itself taking steps to try to manage its affairs in a more coherent way.

Lord Lea of Crondall: My Lords, I sympathise with the noble Lord, with the puppies snapping at his heels, but will he accept my congratulations on the first few paragraphs of the Statement which say that we indeed think that it is in Britain's interest to bring stability to the eurozone? That is an important signal for people in the City of London and elsewhere who think the opposite.

Secondly, President Sarkozy, Chancellor Merkel and our Prime Minister have written a joint letter on the budget. If we are going to have that close triangular relationship, does it not follow that that will probably be true of banking, energy policy and other areas? The question of creep towards Brussels running things, which is a bit of hyperbole, is one of evolution rather than any major revolutionary change.

Lord Strathclyde: My Lords, yes, we are in favour of stability in the eurozone, but we also feel that it is entirely right for nation states to stand up for their interests and to get together. That is in a way exactly what happened in this letter between Chancellor Merkel, President Sarkozy and others, who suggested-rightly, in my view-that it is time for the European budget to

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come under further control. That is not seeking to centralise power within Brussels; it is seeking to exert more pressure and more control from member states on the European Union. That is a very good direction of travel.

Lord Stoddart of Swindon: My Lords, the noble Lord has been under attack for trying to kowtow to his Eurosceptic Back-Benchers in the Tory Party. Some of us think that the Government kowtow far too much to the Europhiles, so there is a real difference of opinion. In all the latest opinion polls, a majority of the British people do not want any further powers to be ceded to Europe, and over half of them would like to leave the European Union.

Could I ask the noble Lord a question about the eurozone? In one part of the report, the statement is made that it could work only if there was fiscal union as well- saying that it did not want to tell the European Union this, but going on to do so anyway. Is the noble Lord aware that any reform with regard to the larger powers involves fiscal union? That is what France, Germany and, indeed, Italy want. Can I have the assurance that this would be opposed by the British Government and, perhaps, even by the British people through a referendum?

Lord Strathclyde: Yes, my Lords. The noble Lord says that we have been accused of kowtowing too much to Europhiles. We have certainly been accused of kowtowing to Eurosceptics. The main point of this, which the noble Lord has understood very well, is that we have said clearly that if there is to be a transfer of power from this Parliament to the European Union, it should be subject to a referendum. We hear what people are saying in various polls about their view that too much power has been ceded, that they are not consulted enough and it is all being done the wrong way. We will make this a matter of statute when later in this Session we get to the European Bill, which I hope the noble Lord and other noble Lords will support.

The countries of the eurozone need to sort out their own problems. No doubt some of us will have different views as to how that should be done but, if there was a move down the road towards a European-wide fiscal solution for European-wide economic problems, we would oppose it.

Lord Trimble: My Lords-

Lord Dykes: My Lords-

Baroness Northover: I suggest that we hear from the noble Lord, Lord Trimble, and then the noble Lord, Lord Dykes.

Lord Trimble: My Lords, my noble friend is quite right to say with regard to the proposed new bailout proposals that they affect only the eurozone and do not affect us, so there is no change in our position and no need to consider a referendum on the issue. However, it is probably worth pointing out that, with regard to the eurozone, the proposed changes would be very

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substantial indeed. The new proposals empower the EU to enforce strict conditionality, which the Wall Street Journal says today is bureaucrat-speak for telling a country what it must do on taxes, spending and economic policy as a price for being rescued. Those are very substantial changes.

Lord Strathclyde: My noble friend is absolutely correct; they are substantial changes. However, the eurozone needs substantial changes because of the problems that it has found itself in.

Lord Dykes: My Lords, the Prime Minister's Statement says that the eurozone needs major reforms. What specific items did he have in mind?

Lord Strathclyde: My Lords, it is not for us to tell the eurozone how to sort out its own problems. I have laid out some proposals this afternoon on how we think Europe should grow again, and I stand by them.

Lord Gilbert: Has it not become clear to even the blindest Eurofanatic that the real problem with the eurozone is that the north is moving at a very different rate from the south, and that tensions would be considerably relieved if they broke up into two?

Lord Strathclyde: My Lords, I am not sure that that is plain to everybody, nor is it, I think, a desirable solution. What is desirable is that the member countries should work together to find common solutions to common problems, including economic ones. If that means that the eurozone needs to rewrite its rules, then that is exactly what it should do.

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