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Bill Cash MP
Bill Cash: we have reached a point at which much European legislation—the call for federation and all the rest of it—has now become utterly absurd

During a Westminster Hall debate on Dairy Industry, Bill Cash made the following speech:

Mr William Cash (Stone) (Con): I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) and the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing the debate, which is essential.

As my hon. Friend the Member for Stafford (Jeremy Lefroy) said, Staffordshire has one of the largest dairy farming industries in the country. I used to be the Member of Parliament for Stafford—now I am the Member for Stone—but I remain a Staffordshire MP. Dairy farmers work incredibly hard, and I was pleased to meet my dairy farmers at the Central hall rally a few weeks ago. I have had several meetings with them over the past few weeks and I entirely agree with all their arguments, which extend not only to the cost of milk and the price that they get for it but to TB and how, as a result of the legal decision in the High Court this week, we will be having further progress on that shortly. I also regard the ombudsman in the Groceries Code Adjudicator Bill, which I am glad that the Government have brought in, as important.

It must be 10 or 15 years ago that I spoke to the Office of Fair Trading, calling for fair competition in milk prices, so I have some history on the issue. As long ago as 1984, the by-election that got me into Parliament for the first time was completely dominated by milk and that has lived with me ever since. I have had great pleasure working with dairy farmers, who are wonderful people and work incredibly hard.

I congratulate the Minister, whose constituency of Somerton and Frome includes the villages that my wife’s family comes from, and the Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for North Shropshire (Mr Paterson), on their new posts. I welcome them to tricky problems on such things as nitrate vulnerable zones, as mentioned by my hon. Friend the Member for Tiverton and Honiton, or the potential for compulsory codes and various other European Union measures—people will be familiar with my concern over those. It is one thing to hope, as in the notes that we received today, that people might be able to amend grassland derogation, to promote the principles of better regulation and to deal with and reverse the nitrate vulnerable zones, but there is only one way of reversing them—as my right hon. Friend the Minister will acknowledge—which is by negotiating, which might be almost impossible, or by applying the notwithstanding rule, the use of which I have advocated for many years to override European legislation. That is what the National Farmers Union is calling for, which I am pleased to commend, because we have reached a point at which much European legislation—the call for federation and all the rest of it—has now become utterly absurd. There is also the question of public procurement contracts. I said that it would be a good idea if we in Parliament ensured that we paid a sustainable and fair price, because that would give a lead, and would demonstrate our commitment to our dairy farmers.

I believe strongly—and I commend my hon. Friends the Members for Shrewsbury and Atcham (Daniel Kawczynski) and for Stafford for joining me—in encouraging the prospects for dairy farming activity in export markets, and joint ventures. In India, I met an Indian businessman who is running a company called Milky Moo. He is coming over to see Staffordshire farmers, and I am happy to invite my hon. Friend the Member for Stafford to join us if Milky Moo needs experience and knowledge. Believe it or not, its milk production includes contracts with 10,000 farmers, and it expects that to rise to 100,000 farmers in that part of India in a few years. It is a huge business, and we can offer a lot of expertise. Some of the briefings we received contain sound advice, and the naming and shaming of those who are not prepared to co-operate in the new voluntary code is an important aspect of where we need to go.

That is all I need to say. I agree with so much that has been said by hon. Members on both sides of the House. This is a very good demonstration of the fact that Parliament is working very hard for the dairy farming industry, and the fact that so many hon. Members have turned up is a great tribute to their determination to do the best for their farmers.

Bill Cash MP: The clear and present danger… fiscal union

The EU is a compression chamber which is now reaching a dangerous level – the only solution is for the United Kingdom to hold a Referendum, as recommended in my pamphlet. This would release the democratic safety valve. I am writing my pamphlet as the Franco-German summit at the Elysee Palace of 16 August confirmed a step towards greater fiscal union of the Eurozone countries, following the economic collapse of bankrupt Eurozone countries in the economic crisis. The German Chancellor, Angela Merkel, and French President, Nicolas Sarkozy, vowed to defend the failing single currency project and form a real economic government for the Eurozone formed by an Economic Council of Heads of State and Government. This includes the proposal to elect a stable president for that purpose for two-and-a-half years beginning with Herman Van Rompuy (the current President of the European Council). On top of all this there are proposed draconian common tax policies for Germany and France, including a socialist-style financial transaction tax and a joint corporate tax rate by 2013 and the too-little-too-late deficit limiting laws. Now it is time for the Coalition Government to wake up to the dangers that this grave step to full fiscal union poses to the UK’s national interest.

So what will Eurozone fiscal union and economic governance do for the Eurozone itself, for the European Union and for the United Kingdom?

It is apparent that not only the Government but a number of others believe that it is in the interests of the Eurozone, the EU itself and the United Kingdom to promote the idea of fiscal union and economic governance of the Eurozone, led by Germany and France. This is a dangerous gamble – the balance of judgement for which must be thrown against the project, certainly for the UK, just as the opt-outs at Maastricht did not prevent the creation of European government, which has failed, with damaging consequences for the United Kingdom. There are a number of reasons why fiscal union will not work either for the Eurozone or for the United Kingdom.

The claim that there is a “remorseless logic” avoids the fact that it is the deeprooted causes of the structure of the Treaties and the attempt to create unity out of diversity, with overregulation and employment laws, which actively prevent growth and therefore prosperity and employment. Apart from Germany there is no evidence of growth in the Eurozone and Germany itself is insisting on conditions which would have to be complied with but given the state of the other European countries the evidence is that it will not succeed.

The sovereign debt countries of many of the Eurozone Member States’ including the original PIGS and now including Italy is evidence enough. There is no prospect of them retrieving the situation without growth but this will only come with the repeal of the employment laws, redundancy laws, the social laws and other impediments to increasing the prosperity to small and medium sized businesses. There is therefore a certainty that the Eurozone will not be a trading entity and therefore our own stability will not be enhanced by their fiscal union and economic governance. There will be further debt-crises which will be followed by the need for further bailouts but there will be no money to pay for them and Germany’s conditions will not be met – this is a chaotic fiscal union within the Eurozone and it would be better to recognise this immediately as a matter of realistic “remorseless logic”. Furthermore, when the implosion comes there will be even greater probability of the rise of the Far Right because the electorate will simply not put up with the burdens they would be expected to carry under such a debt/transfer union.

As far as the United Kingdom is concerned, the solidarity in relation to the Single Market within the Eurozone would lead to the Eurozone countries who are part of the fiscal union voting together, as Professor Roland Vaubel of Mannheim University has indicated the prospect of raising rival costs and “regulatory collusion” would do immense damage to our ability to compete and the Single Market itself would be in disarray. Apart from that, the United Kingdom’s trade deficit with the rest of Europe has increased by £40 billion in one year alone and a Eurozone with fiscal union would be even worse.

There is an Alice in Wonderland fantasy around that the idea of a fiscal union would be a possible runner or in any rate, a short term fix but unfortunately this judgement overlooks the fact that it is doomed to failure and we would be better off keeping ahead of the curve by avoiding the inevitable implosion and sitting down with those from other Member States or those who are prepared to discuss with us the want to avoid the implosion. The idea we would be able to discuss opt outs ignores the fact that we are now enmeshed in European government, but with two Europes, now built on sand. In order to remedy the situation we would need so many opt-outs, not only in terms of social and employment laws but also in relation to home affairs and justice, arrest warrants, immigration, energy (which through the Renewable Obligations will destroy the British landscape), the City of London and the whole overregulation of British business which must be repealed.

Adopting the idea of agreeing to, let alone promoting, fiscal union is shorttermism at its worst and also pandering to the determination of France and Germany to maintain the political will of the union, which will lead to the predominance of Germany which in turn will be faced with monumental difficulties in the struggle to maintain an unworkable Eurozone. We are told that these proposals would be put into effect under Article 136, which involves a Treaty, but under Section 4 of the European Union Act we would be denied a Referendum, and told that it would not affect us and only affect the Eurozone – this is a dangerous fiction.

Furthermore, the justification for the Coalition Government is said to be the reduction of the deficit. This will not be reduced without growth where 50% or our trading is with a moribund Europe, and bearing in mind our trade deficit we carry with the rest of Europe. The Coalition Agreement is said to determine our European policy – according to the question I put to the Prime Minister – and it is the Liberal Democrats who have put an end to renegotiation and repatriation of powers. This is a dead-end policy. This will be made even worse if we acquiesce in the creation of fiscal union because the Eurozone will not only fail to grow, it will implode. The rise of the Far Right is a serious prospect as the electorate of Germany and elsewhere begin to react accordingly.

There is a further concern that Maastricht itself lies at the root of European governance and which gravely exacerbated the dangers of the move to political and economic union. The acceptance by the Conservative government of Maastricht and now of Lisbon, leaving aside the smaller Treaties of Nice and Amsterdam have created a political problem embedded in the Coalition Agreement which significantly departs from the principles of Conservative policy. After all, the Conservative Party was united against Lisbon and for a referendum. The current arguments in favour of fiscal union appear to be seeking to justify the acceptance of both Maastricht and Lisbon when Maastricht is a self-evident failure and Lisbon was rightly opposed by the Conservative opposition in every respect.

It is a major strategic failure to claim that the policy of the Coalition is to reduce the deficit when so much of the policy that is needed to achieve this cannot be sustained without having a clear and definitive policy of disentangling our relationship with the European Union without dealing with the problems which it presents to the UK, let alone the EU itself.We are being marched into the black hole of economic chaos. There are those in Germany such as Hans-Olaf Henkel, former head of the Federation of German Industries (BDI) (“Having been an early supporter of the euro, I now consider my engagement to be the biggest professional mistake I ever made…”), who understand the dangers of all this for Germany and those such as Michael Sturmer who have been issuing warnings about the Maastricht Treaty and the current economic and political chaos which has evolved. They clearly do not want a fiscal union because Hans-Olaf Henkel, for example, is arguing for Austria, Finland, Germany and the Netherlands to leave the eurozone and create a new currency leaving the euro where it is, because they know that Germany is facing an ever-escalating stream of further financial commitments, including the impossibility of bailing out Spain and Italy, let alone the PIGS. There simply isn’t the money to do it.

We are at a cross roads and we are taking the wrong turn by endorsing fiscal union and creating two Europes without renegotiating Europe, without renegotiating the Treaties and without creating an association of nation states – an EFTA-plus – led by the United Kingdom, which is turning a vision of Europe into chaos.

Allowing Eurozone Member States to go ahead towards fiscal union and economic governance creates two Europes, to which the United Kingdom would remain bound by Treaty and law, though they are built on sand. It will have profound economic, political and constitutional consequences for UK vital national interests. This will fundamentally change the UK’s relationship with the whole of the European Union, not only our relationship with the Eurozone. We must have a Referendum in the light of such a profound change in our political relationship with Europe. The Franco-German summit joint letter states “The aforementioned proposals should be implemented in such a way as to serve the cohesion of the European Union as a whole.” It therefore fundamentally affects the UK. It also sets out how it will be achieved: under Article 136 and enhanced cooperation i.e. by Treaty without a Referendum but by Act of Parliament. Enhanced cooperation is being misused.

These new proposals would create a critical mass and an unlevel playing field with existing massive overregulation. We are talking about a two-tier low growth area already showing signs of inertia which makes a nonsense of Britain’s ability to grow on the back of European growth. We have to start trading vigorously and independently with the rest of the world and our strategic economic and foreign policy to be geared to these objectives. After all in the 18th and 19th Centuries, we did this with enormous success and in a global economic world, the opportunities are there to be taken but not if we are hamstrung by a simple trade policy dictated by the EU.

A new Treaty will be required to achieve these objectives but regardless of how they achieve fiscal union, a Referendum is now essential. It is therefore the British people who will save their Parliament.

This latest step hallmarks the failure of UK foreign policy for decades. The letter from the German Chancellor and the French President to Van Rompuy following the Franco-German summit of 16 August ultimately involves elements of EU-wide policy which those acquainted with foreign policy and EU-policy making will observe is deliberate. They threw in the push for the EU-wide common consolidated corporation tax harmonisation, knowing perfectly well that it would be rejected because it is by unanimous vote and that the UK Parliament would never accept it.What this amounts to is that, with that rejection, the UK leadership would be left agreeing to an EU Treaty or enhanced cooperation without a Referendum because they have evaded this under Section 4 of the European Union Act – despite my attempts to remove this provision and the commentary on it by the European Scrutiny Committee – where they claim or assert that such a Treaty applies only to the Eurozone.

The proposals for European economic government require a Referendum because the whole package involves a fundamental change in the relationship of the United Kingdom to the European Union. Thus, Cameron and Osborne will claim a victory asserting that they have repudiated the single currency and that the “remorseless logic” of the Eurozone policies leads to Eurozone fiscal union and economic government. Such a victory would be pyrrhic indeed – it would give the appearance of resolution, but in the words of Winston Churchill, the Government “go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, allpowerful to be impotent.” Indeed, as I warned Michael Heseltine at the time of his bid for the Conservative leadership election – what is the point of being Prime Minister of nothing?

The Coalition Government are acquiescing in ever deepening European integration. At Prime Minister’s Questions on 24 November last year I asked the Prime Minister to “… explain why at every turn-the City of London, the investigation order, economic governance of Europe and the stabilisation mechanism – the coalition Government under his premiership are acquiescing in more European integration, not less? And there is no repatriation of powers.”

As I stated to the Chancellor on 11 August, during the emergency parliamentary session, even Edward Heath would have vetoed, let alone called for, such a fiscal union of the other Member States. This surrender is nothing short of appeasement.

It is impossible to conceive against this background that the creation of a critical mass of a fiscal union and other coordinated policy making within the Eurozone will do anything but irretrievably damage the United Kingdom – nor will it stabilise the European Union, as the riots and protests, the PIGS crisis, the failed Lisbon agenda, the overregulation, the low-growth and the breaking of the rules constantly shows. Nor will the fiscal union prevent further bailouts which will create a deeper black hole, triggering German insistence on compliance with the conditions they are imposing. When this does not work then there will be political upheaval in Germany, as they seek to control the Eurozone, followed by total implosion. The reason this will happen is because the fundamental structural problems in the EU as a whole and the Eurozone of overregulation and uncompetitiveness in so many of the Member States and therefore excessive public expenditure without growth means that the conditions, as with the Stability and Growth Pact, are part of the Eurofantasy. The PrimeMinister and the Chancellor of the Exchequer’s fatal acquiescence is an act of appeasement to the Euro-integrationists. There is no reciprocal advantage to the United Kingdom whatsoever.

The announcement to the House of Commons by the Chancellor of the Exchequer on Thursday 11 August – which he slipped in whilst attention was riveted on the UK riots, during the emergency parliamentary session – that the Prime Minister has urged France and Germany to accelerate fiscal union in the Eurozone, is both historic and disastrous.

The Chancellor, replying to my objection to his statement on 11 August, argued that “The remorseless logic of monetary union leads towards fiscal union, and that was one of the reasons that I opposed joining the single currency. However, it is now in our interests to allow that to happen more in the Eurozone, because it is in our absolute national economic interest that the Eurozone is more stable. It is clear that that means that they need to have more fiscal powers to reduce instability. That means, of course, that Britain must fight hard to ensure that its interests are represented and that we are not part of this fiscal integration.”

The Chancellor has completely missed the point. Fiscal integration of the Eurozone would have the most profound impact upon the United Kingdom.

There has clearly been no attempt to discuss or consult on all this in Parliament or any of its committees or the British people. Nor has there been any attempt to obtain any reciprocal advantage to the United Kingdom such as renegotiation of the Treaties or the repatriation of social and employment legislation or any other powers, which are needed for UK growth.

It is impossible to conceive against this background that the creation of a critical mass of a fiscal union and other coordinated policy making within the Eurozone will do anything but irretrievably damage the United Kingdom – nor will it stabilise the European Union. The Coalition Government’s policy is based on a dangerous doctrine, as I put it to the Prime Minister after the Chancellor of the Exchequer’s statement on 11 August. There is no reciprocal advantage to the United Kingdom whatsoever.

A Referendum for the United Kingdom voters is indeed now a matter of “remorseless logic” and the question which must be put, given that the status quo is untenable, must be whether by a simple majority the British people decide either to leave the European Union altogether or to renegotiate all the existing Treaties and to form a trading arrangement with political cooperation but no more.

But it will only be the British people who can and will do this with the help of those of goodwill who are prepared to follow this through. We saved the UK and Europe through two World Wars. Now we have the greatest economic crisis that Europe and the UK has faced in generations and a breakdown in our own society. The cause of the economic crisis (not the symptoms, such as Greece, Portugal, Spain, Ireland, Italy, etc) is the construction of an undemocratic and unworkable European Union, most recently through the enactment of the Lisbon Treaty, but stemming from the unrealistic aspirations for political union provided in the Maastricht Treaty. This created European government and which set the course for a greater Germany, both peaceful but unacceptably dominant at the same time.

We only have to look, as my pamphlet does, at the impossible trade balance, between 2009 and 2010 – which has risen by as much as £40bn in one year against us – and the fact that the fiscal union dominated by Germany and which the Government has conceded, will massively increase this trade deficit, destroying British businesses and British jobs. Such treatment will be obvious to those concerned for what happened with the Bombardier plant in Derby, through the misuse and the machinations of the Public Procurement Directive.

As my pamphlet demonstrates, it is also about the massive unemployment generated by employment regulations which destroys small businesses and people’s lives, the transfers of power over UK financial services and the City of London – meaning that it is no longer only small businesses that are being cut off but the wilful acquiescence of conceding jurisdiction to the EU over the City of London as well. For a mammoth 1 trillion Euro budget, the British taxpayer is now being asked to increase our already substantial contribution by £1.4 billion every year for the next seven years until it reaches £23.1 billion. European overregulation has cost us £124 billion from 1998 until last year, meaning that EU regulation in the past eleven years has cost every UK household an average of £4,912.

Think of how much money we could spend on schools, hospital, defence and the wellbeing of our own people rather than bailing out failed European states, much of which is their own fault and the rest is the fault of the failed European project which has passed laws which prevent growth. With 50% of our trading with the European Union as a whole, we are trading with a bankrupt, low-growth Europe – the only exception being Germany. At the same time we allow our basic industries and utilities to be bought up by Germany and French companies (which they do not reciprocate) repatriating their profits at the taxpayer’s expense in the pursuit of so called European obligations and gaining control over our energy. This cannot be allowed to continue. There is no room for argument about the status quo.

This is an excerpt from a pamphlet, ‘It’s the EU, Stupid’, written by Bill Cash.

Bill Cash MP: ‘The Liberal Democrats and certain elements in the Conservative Party are quite prepared to allow further European integration’

In a debate on 24 May, the following Motion was put down by Mark Reckless MP: ‘That this House notes with concern that UK taxpayers are potentially being made liable for bail-outs of Eurozone countries when the UK opted to remain outside the Euro and, despite agreement in May 2010 that the EU-wide European Financial Stability Mechanism (EFSM) of €60 billion would represent only 12 per cent. of the non-IMF contribution with the remaining €440 billion being borne by the Eurozone through the European Financial Stability Facility (EFSF), that the EFSM for which the UK may be held liable is in fact being drawn upon to the same or a greater extent than the EFSF; further notes that the European Scrutiny Committee has stated its view that the EFSM is legally unsound; and requires the Government to place the EFSM on the agenda of the next meeting of the Council of Ministers or the European Council and to vote against continued use of the EFSM unless a Eurozone-only arrangement which relieves the UK of liability under the EFSM has by then been agreed.’ The Chairman of the European Foundation, Bill Cash made the following intervention in response to the debate:

Mr William Cash (Stone) (Con): The Government amendment—they have not tabled it in their own name, but that is what it is, to a great extent—reflects badly on the integrity of the coalition. It has nothing whatever to do with the national interest. It also says a great deal about a commitment to Liberal Democrat ideology, and it is primarily about numbers. The Liberal Democrats, and certain elements in the Conservative party at a very high level, are quite prepared to allow further European integration. There are alternatives that would allow us to renegotiate the treaties and/or to say no, but they are simply not doing so.

Indeed, only a few days ago, the Prime Minister made it abundantly clear that the object of the coalition was to stabilise the economy. We understand that. The problem is that this is about numbers, not about principles or policy. There are many people in the Conservative party, outside and inside the House, who know that the arguments we are seeking to address in a reasonable fashion are in the interests of the country. There is no question about that; the press outside believe it as well. The bottom line is that those of us who have relentlessly pursued the issue of the eurozone bail-out and have tabled many questions have invariably received what could reasonably be described as somewhat evasive answers.

Why should the British taxpayer or British hospitals and schools in our constituencies in any way underwrite what goes on in Portugal, or indeed any other country in the eurozone, particularly in times of austerity? It is nothing to do with the question, as suggested on a number of occasions, of qualified majority voting. This is completely contrary to the assertion made in reply to me today by the Financial Secretary. Article 122 is not compatible with the treaty and cannot possibly be used to support the European financial stability mechanism. Indeed, in their acquiescence, as shown in the amendment, the Government accept that the position is legally unsound. By saying that, they completely undermine their position. The Government know it and everyone knows it: it is not compatible with the treaty, and the Minister is wrong.

Mr John Redwood (Wokingham) (Con): My hon. Friend makes a powerful legal point. Does he agree that what these states in trouble need is a work-out, not a bail-out? We do not give alcoholics more drink; we cure the alcoholism. We should not give the over-borrower more borrowing.

Mr Cash: I could not agree more, and a course of Alcoholics Anonymous would not be out of place.

It is not just the European Scrutiny Committee that said the position was legally unsound or unlawful. Madam Lagarde herself, the prospective head of the IMF, said on this issue on 17 December: “We violated all the rules because we wanted to close ranks and really rescue the eurozone.” This is a stitch-up of the British people to maintain the so-called solidarity for further integration of a failing European project. That is what lies at the heart of the matter.

Why are people protesting and rioting all over Europe —in Madrid, Greece, Italy and the list is growing? What is not growing is the European economy and the reason is that the sort of policies needed—here and in all the other countries—to engender growth to deal with the deficit that the Government rightly say we have to address are impossible to achieve without generating the growth that is needed by repealing legislative burdens and generating policies that the integrationists in Europe simply refuse to allow. I would go further and say that the coalition in this country cannot achieve growth simply because the Liberal Democrats, as part of the coalition, have silenced the Prime Minister’s promise to repatriate burdens on business. It is called 56 votes and the keys to No. 10.

Jim Sheridan (Paisley and Renfrewshire North) (Lab): The hon. Gentleman might have heard, as I did, the Liberal part of the coalition talking clearly about what might happen “if ” these loans are repaid, which suggests some ambiguity and concern within the coalition Government about whether the loans will be repaid. He will also recall that when the Conservatives were in opposition, they opposed the bail-out of Northern Rock. What has changed between then and now?

Mr Cash: Very simply, we now have a new coalition Government who have been seeking to achieve a reduction in the deficit, but they are not doing the accompanying things that are required in respect of the failing European project. That is the key problem. There are young people throughout Europe—and, for that matter, in this country—who simply cannot get jobs because companies will not take them on as a result of European employment regulations and because the deficit in the public sector cannot be stabilised without reasonable tax revenues from the small business community, which is being deliberately destroyed by the refusal to repeal the burdens that strangle it.

In the meantime, Germany has had unit labour costs of a mere 2%on average over the last 10 years, whereas the average for the rest of the European Member States is between 25% and 30%. It is an impossible situation, making it impossible for Europe—this entity that the integrationists believe in—to be able to compete with the BRIC countries. Germany invests in cheaper labour markets in Europe, with 67% of all its trade being with Europe, while 45% of all European trade with China is German.

The reality is that what we are debating today is symptomatic of a failure in the coalition Government’s strategy. We are not going to get out of this problem— I say this in all sincerity and in the great hope that people will listen at last—as long as we go on with this failing project. We will not get out of the mess. Today’s debate is an opportunity to get the issue straight. As Michael Stürmer, the chief correspondent of DieWelt argued, the dream is over and the Maastricht treaty has to be revised, but the coalition has no will to do so. The European bail-out of Portugal is a symptom of this deeper problem.

Claire Perry (Devizes) (Con): Given my hon. Friend’s very pessimistic view of the outlook for the eurozone, which many of us share, does he not feel like giving just a tiny cheer that, thanks to the Chancellor’s efforts last December, we will take no further part in a permanent bail-out mechanism for Europe?

Mr Cash: I did not say anything adverse about it at the time other than that the opportunity was not taken, despite advice I tried to give, to use the treaty opportunity to say to other Member States that we would not agree to the treaty and would veto it unless we were taken out of the EFSM; we could then have brought forward the arrangements currently proposed for 2013. That proposition was eminently reasonable, eminently possible and €440 billion was available under the facility, which is in operation until 2013. In other words, the whole EFSM issue pivots on vanity and a determination not to unravel something that cries out for unravelling. It is not just; it is not right; it is completely irrational.

There are going to be further and deeper riots and protests. Worse still, I believe that the Government are contributing towards instability throughout Europe while claiming that within the time frame extending to 2013, bailing out the German and French banks—we should remember that that is what lies at the root of the problem—as well as Portugal and Greece will achieve stability. It will not. The argument is not only wrong, but totally—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order

. . . . . .

Bill Cash MP: Coalition Government’s defence of eurozone bailouts is a stitch up of the British people

On Tuesday afternoon, MPs in the House, including myself, debated a Motion which stated “That this House notes with concern that UK taxpayers are potentially being made liable for bail-outs of Eurozone countries when the UK opted to remain outside the Euro and, despite agreement in May 2010 that the EU-wide European Financial Stability Mechanism (EFSM) of €60 billion would represent only 12 per cent. of the non-IMF contribution with the remaining €440 billion being borne by the Eurozone through the European Financial Stability Facility (EFSF), that the EFSM for which the UK may be held liable is in fact being drawn upon to the same or greater extent than the EFSF; notes that the European Scrutiny Committee has stated its view that the EFSM is legally unsound; and requires the Government to place the EFSM on the agenda of the next meeting of the Council of Ministers or the European Council and to vote against continued use of the EFSM unless a Eurozone only arrangement which relieves the UK of liability under the EFSM has by then been agreed.”

The Government’s position on eurozone bailouts is about the integrity of the Coalition and has nothing to do with the national interest. The Liberal Democrats and elements in the Conservative Party at a high level are quite prepared to allow further European integration when there are alternatives to renegotiate the Treaties or to say ‘No!’ and they are simply not doing so. This is all about numbers – not about principle or even policy. I have pursued this issue of the eurozone bailout for about a year and have put down many questions and received evasive and in some cases untruthful answers.

Why should the British taxpayer – and why should hospitals and schools in times of austerity – in any way underwrite what goes on in Portugal or indeed any other country in the European Union?

It is nothing to do with Qualified Majority Voting because completely contrary to the assertion made by the Government minister in his reply to me today, the controversial Article 122 cannot possibly be used to support the EFSM. The Government knows it, everyone knows it. It is not compatible with the Treaty and the minister is wrong. He refuses to give the legal advice or any advice he was given and it is a disgrace.

It is not just me or the European Scrutiny Committee that said this is “legally unsound” or unlawful. Madame Lagarde herself said "We violated all the rules because we wanted to close ranks and really rescue the euro zone."It remains a stitch up of the British people in order to maintain so-called solidarity for further integration of a failing European project.

Why are the people protesting and rioting all over Europe – Madrid, Greece, Italy, the list is growing but the European economy is not? The reason for the bailout is because there is no growth in their economies and the Coalition Government cannot deal with that because the Liberal Democrats have silenced the Prime Minister’s promise to repatriate burdens on business. It is called 56 votes and the keys to Number 10.

The consequence is disturbing for the economy because the justification for the Coalition is reducing the deficit but we cannot tackle the deficit without addressing growth and whether it is Portugal or Spain or Greece, the oxygen for enterprise is stifled, small businesses are strangled, young people cannot be employed throughout the whole of Europe because companies will not take them on because of European employment regulations and the deficit and the public sector cannot be stabilised without the tax revenues from the small businesses who are being deliberately destroyed by a refusal to repeal the small business legislation which strangles them.

In the meantime, Germany has unit labour costs of a mere 2%. The average for the rest of Europe is between 25 and 30% and therefore impossible for other countries to compete with the BRICs, whilst Germany invests in cheaper labour markets in Europe, with 67% of all its trade with Europe and 45% of all European trade with China being German.

All this has to be renegotiated as Michael Stürmer, Chief Correspondent at Die Welt argues, the dream is over and the Maastricht Treaty has to be revised. But there is no will to do so and the European bailout of Portugal is a symptom of this deeper problem – of appeasement, a lack of political will and a failure of the Government to lead the country out of this current catastrophe which is deepening and widening at the same time. There will be further riots and protests at the same time. The Government is contributing towards instability throughout Europe while claiming that bailing out German and French banks and Portugal and Greece within the time frame of 2013 is itself a means of achieving stability which is not only wrong but utterly irresponsible.

This debate is driven by the Whips on the instructions of the Prime Minister and at the behest of those so blinded by the politics of the Coalition that they cannot see what is in the national interest. There are conflicting statements as to what the Chancellor of the Exchequer said in May last year in his discussions with the outgoing Chancellor but we are told he did not agree. If so, there is no conceivable excuse for challenging the matter in the European court and the Motion I mentioned above should have succeeded on that account alone because the illegality will have led to the abandonment of the EFSM.

I warned the Prime Minister before he entered into the Treaty for the European Stability Mechanism itself (operant from May 2013) that he could use his veto to bring forward the new Mechanism in return immediately for the repeal of the EFSM which wrongly involves us in our national debt and imposes unwarranted liabilities on our taxpayers. This whole saga is a violation not only of common sense but of principle and the interests of not only the Conservative Party but the national interest itself.

I could not possibly support an amendment which is merely a device for a cover up for the real problem we face, namely that the Coalition driven by the Eurofanaticism of the Liberal Democrats, is put before anything else, even at the expense of our own economy and the impact all this has on Europe as a whole and Britain in particular.


On Wednesday night of 11 May, I welcomed the Government’s limited stand against the draft directive on the EU’s introduction of a Common Consolidated Corporate Tax Base, for the reasons given in the motion endorsing the European Scrutiny Committee’s report. I remain concerned, however, about one matter still hanging over the debate. It all goes back to a motion that was before a European Standing Committee which asserted, in the name of the Government, probably for the first time since 1640 – at the time of Pym and Hampden – that the British Government, as a sovereign Government, were only “primarily” responsible for direct taxation, whereas in fact our Parliament is exclusively responsible for it.

That motion was put to a deferred Division in the House and passed. That is pretty alarming. The Government must be clearer – at least clearer than the Treasury minister was the last time I put this point to her, because it must be made absolutely clear thatWestminster is exclusively responsibility for direct taxation. After all, on Wednesday night’s debate, the objective of this tax base is to raise money to pay for the profligate, incompetent and failing European project.

The Government was at pains to describe the context of this taxation measure in the light of the questions of subsidiarity but on 27 April I raised the matter with the Prime Minister, together with the proposed increase in the European budget and the Portuguese bail-out, not to mention prospective Greek bail-outs. I said that we expected the answer to be no to each of those proposals – ‘No, No, No!’ His reply referred only to the increase in the EU budget, and I hope that the Government remains unequivocal in reserving to ourselves the absolute determination, and not merely the right, to say no to these proposals. They infringe a number of important principles.

The Coalition Agreement says: “We agree that there should be no further transfer of sovereignty or powers over the course of the next Parliament.” Our European Scrutiny Committee report looked at that and found it wanting in relation to the EU Referendum Bill. The Government have also said that they would reject any proposal that “might threaten or limit our ability to shape our own tax policy.

I have the greatest respect for what the Government are trying to do, as they well know, but the Minister in her speech left out the next bit, which was the word “but”. After the words are “but under enhanced co-operation” the Coalition Government will “engage in discussions to help shape a CCCTB that does not undermine the competitiveness of the EU or the UK”. Now that is a monumental exception, because it is obvious that the proposal will undermine the competitiveness of the EU and the UK. And the Government knows very well.

As light follows day, there is no reason for us not to put our foot down now and say no. We know that the Tax Commissioner is saying that this is going ahead under enhanced co-operation, and this it not something magicked out of the air, as he knows perfectly well that that is what Germany, France and other countries are intending to do.

The proposals before the European Scrutiny Committee are, for reasons set out in our conclusions of our report all profoundly objectionable, but the draft directive falls down particularly on four main issues: one, the sovereignty of the House; two, the insufficient legal base; three, an inadequate and unconvincing impact assessment; four, grounds of proportionality, making the doubling of tax regimes in the EU, the cost of establishing 27 new regimes and the apportionment formula excessively disadvantageous for certain Member States.

The Oxford University Centre for Business Taxation says in its policy briefing that “it is unlikely that the introduction of the CCCTB would bring significant benefits to the EU in aggregate in terms of employment, GDP or efficiency, although some individual countries could benefit significantly.”

Under the formula of Roland Vaubel of Mannheim University, it is well known that there is such a thing as “regulatory collusion” and that through the clever use of certain majority voting systems, through negotiations in the case of unanimity as in this instance or by enhanced co-operation, it is possible to arrive at a point where some countries benefit to the disadvantage of others. The Oxford University Centre for Business Taxation has its finger on the concerns here.

The objective of this tax base is to raise money to pay for the profligate, incompetent and failing European project. Countries such as Greece, Ireland and Portugal are either on the verge of or in danger of bankruptcy or are actually going bankrupt because of the systemic failure of economic policies. The Stability and Growth Pact does not work: there is no stability, no growth and no pact.

The creation of a two-tier Europe will exacerbate these problems, as was noted when we debated the European Union Bill, and will lead to ever-greater German domination over the European economy. The economic predominance of Germany in east and central Europe might be a good thing from its point of view, but we now have a transfer Union and a massive redistribution of resources. What we are also witnessing as a result of the failure of this project are riots and protests as Germany repatriates its profits at the expense of cheap labour unit costs from the countries in which it has put investment in the centre of Europe, as Portugal, Greece and even Ireland have found to their cost.

The pumping of money supports not so much the Member States as the French and German banks, which have lent money indiscriminately to suit themselves – and we are expected to engage in the bailout procedure, the covert mechanism for which is the stability mechanism, coming into effect in 2013.

As the European Scrutiny Committee has insisted, this whole proposal for direct taxation proposal is in breach of the principle of subsidiarity. This principle is intended to ensure that decisions are taken as closely as possible to the citizen. Direct taxation is such a policy. The national Parliaments are able to use the procedure under the Treaties to challenge breaches of subsidiarity. At present, there are only six countries whose parliamentary Chambers propose to or have issued a reasoned opinion. The House of Commons has done so – but interestingly enough, the House of Lords has not.

In passing the motion, the House challenged the breach of subsidiarity. As far as I know, of the 27Member States, the five that are on our side are Ireland, Malta, Netherlands, Poland and Sweden. I am informed that Cyprus, Greece, Hungary and Slovenia have no plans even to scrutinise the proposal. Those yet to decide include Austria, Bulgaria, the Czech Republic (the lower chamber and the senate), Denmark, Estonia, France, Lithuania, and Luxembourg. Romania, Portugal, Italy and Spain believe that the draft directive complies with the principle of subsidiarity. The German Bundesrat is considering it only on the basis of content.

However, there is no guarantee that the accumulated number of reasoned opinions will be sufficient to meet the threshold requiring the European Commission to review the proposal – and because that will be known in advance, the EU Tax Commissioner will say that he has already received a demand to proceed with enhanced cooperation.

We have a serious problem on our hands. But we do have another card up our sleeve. Under Article 8 of Protocol 2, the United Kingdom Parliament can go to the European Court of Justice, which has jurisdiction to determine our claim as the House of Commons – which is regarded as a separate Chamber – that the principle of subsidiarity has been breached. That gives us the basis for a challenge.

I believe that if the Government are not prepared to say plain and simply ‘No’ (which I think that they should have done already), the House of Commons should take the matter to the European Court of Justice. Of course, it would save an enormous amount of time and trouble if we simply recognised that Parliament is sovereign – and that it has the right to take the action that it has taken.

Leaving aside the attack on Thatcherism, of all things, by the Deputy Prime Minister immediately after the disastrous showing of the Liberal Democrats in the polls, (which is probably why no Liberal Democrat Members were present at the debate on Wednesday night), there is every reason for the Liberal Democrats to back down and not veto the Conservative party veto simply because of the Coalition arrangements. The Prime Minister should do what I asked him to do at Prime Minister’s Question Time only two weeks ago and say “No, no, no.” That would save us a great deal of time and argument.

The UK corporate tax director of a major European bank has said that this proposal would increase our corporation tax and drive investment away, reduce our GDP by £73 billion over 10 years, increase administrative burdens and lose the UK an estimated total of £58 billion, again over 10 years. We already know that Mr Sarkozy and Ms Merkel are in favour of the competitiveness pact, which affects us although it is presented as a eurozone matter.

Whether this direct taxation proposal involves enhanced co-operation, the creation of a two-tier system, or whatever other means or machinations may be produced by the Faustian pact that is being devised in Europe, we must put our foot down, lead from the front, and say no. The window of opportunity to do this exists – but we need to hear it from the Prime Minister’s own lips. He will then be able to enjoy as much success on this battle as he, and we, enjoyed in the context of the Alternative Vote – when the Liberal Democrats got their come-uppance.

Bill Cash MP: Bailout debate: why the Prime Minister should have repealed eurozone bailout mechanism or held a referendum

As expected, the European Council on 24/25 March agreed on “a comprehensive package of measures to strengthen EU economic governance and ensure the stability of the euro area”, including the Euro Plus Pact, previously referred to as the ‘Pact for the Euro’ and the ‘Competitiveness Pact’. The European Council adopted the draft decision amending the Treaty to set up the future European Stability Mechanism (ESM). Angela Merkel was able to renegotiate the terms of European Stability Mechanism (ESM) recently agreed by the eurozone finance ministers. There was no agreement on expanding the size of the European Financial Stability Facility (EFSF). That decision has been postponed until June. There was, therefore, a lot of room for negotiations and the Prime Minister should have sought a better deal for the UK.

Last October, the EU leaders agreed to amend the Treaty in order to allow the creation of a permanent crisis mechanism by the Member States of the euro area. The European Council has launched the simplified revision procedure provided for in Article 48(6) TEU. Then, on 24 March, the European Council formally adopted the text of a draft decision amending Article 136 TFEU by adding a paragraph whereby the “Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole.” The permanent European Stability Mechanism will replace the European Financial Stability Facility (worth €440bn) and the European Financial Stabilisation Mechanism (worth €60 billion). The eurozone Member States have decided that the EFSF will remain in place after June 2013 (when it is set to expire), until all loans have been paid and all liabilities repaid. The European Council is expecting Member States to complete the procedures for the approval of this Decision “in accordance with their respective constitutional requirements” by the end of 2012 so that the Decision can enter into force on 1 January 2013.

The Minister for Europe, David Lidington, has been emphasising that the treaty amendment “does not apply to noneuro area Member States and cannot confer any obligations upon them.” However, I replied saying that “The issue is whether the United Kingdom is affected. The fact is that the arrangements in question do affect the United Kingdom.” Under the EU Bill a treaty or Article 48(6) decision would not be subject to a referendum if it involves “the making of any provision that applies only to member States other than the United Kingdom.” I drew attention to the fact that this is “a twin-track treaty”, meaning that the treaty’s arrangements are “… specifically designed to exclude the United Kingdom, even though we would be gravely affected by it.” That was the reason that I tabled an amendment to the exemption provision, abovementioned, to be taken out of the Bill.

The UK has veto power over any treaty amendment, however David Cameron has not used his negotiating power effectively. The approach of claiming this is between eurozone countries, the measures will not affect the UK, is not defending British national interests. David Cameron should have rejected the Treaty amendment until it was crystal clear that such an amendment as well as the Euro Pact Plus had no impact in the UK. Given the imminence of a Portuguese bailout, David Cameron should have demanded that any future bailout should use just eurozone money and that Article 122.2 TFEU should not apply even before 2013. I said before the EU summit, “Now that the whole issue is under review, the Government should insist on the repeal of the existing mechanism and if not the new mechanism, which requires a Treaty change, should now be subjected to a referendum.” However, the Government has sought none of these options.

Last May, an Extraordinary Economic and Financial Affairs Council adopted the Regulation establishing the European financial stabilisation mechanism. Using Article 122 (2) to set up this mechanism meant that Britain was unable to veto such proposal as Qualified Majority Voting decided it. In fact, Former Chancellor of the Exchequer, Alistair Darling had no say in the creation of such a mechanism as it was decided one day before, behind closed doors, at a eurozone leaders meeting.

It is important to mention that under Article 122 (2), Union financial assistance may be granted to “a Member State (that) is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control” However, the Greek, the Irish, or the Portuguese crisis have not been caused by “…exceptional occurrences beyond [their] control …”. Brussels went beyond the powers conferred by the treaties to provide a legal basis for the emergency funding. The European stabilisation mechanism is a violation of the “no bailout” clause – Article 125 TFEU that forbids Member States for being liable for the debts of another and a misuse of Article 122(2). The European Commission “is empowered on behalf of the European Union to contract borrowings on the capital markets” up to €60 billion, using the EU’s annual budget as collateral. Hence, if a beneficiary country fails to pay back the loan, all 27 EU Member States are jointly liable for any payments due and would have to pay into the EU budget to cover the default. According to the Government the UK’s contribution to the 2010 Budget is currently estimated at 13.8%.

At the UK’s request, the EU leaders agreed, last December, that Article 122 (2), once the new mechanism entered into force, would no longer be needed to safeguard the financial stability of the euro area. The December European Council Conclusions as well as the recitals of the draft decision provide for that. However, the UK has a political commitment but no legal guarantee that the EFSM, based on Article 122.2, will be repealed in 2013. In fact, there is no proposal from the Commission yet to repeal the abovementioned regulation. The UK should have not have agreed to the treaty amendment until there was a legal guarantee that the regulation establishing the EFSM would be repealed. Moreover, the future crisis mechanism will only be effective from 2013, so consequently, until this happens the UK will contribute to any eurozone bailout through the European financial stabilization mechanism. British taxpayers may be asked to pay for other eurozone bailouts. The European Stability Mechanism will be in place in 2013, however eurozone Member States in serious difficulties such as Portugal, are seeking assistance now (not 2013).

The UK government should have endeavoured to avoid becoming liable for any bailout. Article 122(2) TFEU is not an appropriate legal base for the European Financial Stabilisation Mechanism, therefore, the UK could have challenged the mechanism, bringing an action for annulment before the European Court of Justice. It is important to mention that last June, Thomas Ax (Germany) brought an action for annulment of the Council Regulation establishing a European financial stabilisation mechanism before the ECJ (Case T-259/10). According to the applicant “the aid released by the contested regulation would infringe the prohibition under Article 125 TFEU on undertaking liability for or assuming the commitments of other Member States.” However, the ECJ might not consider the merit of this case, as it is very likely it will hold that there is no locus standi.

The European Financial Stability Facility (EFSF) is a temporary instrument established last May, based on an intergovernmental agreement between euro area Member States, to provide financial support to eurozone countries having difficulties refinancing their debts. The ESFS sells bonds and other debt instruments on the open market, which are secured against guarantees from eurozone states. Presently, in order to maintain its AAA credit rating only €250bn of the EFSF can be used as loans as the rest of the money has to be kept in a cash reserve. The fund cannot lend therefore more than €250bn. The Heads of State or Government of the Euro area, on 11 March, agreed that the effective lending capacity of the EFSF should be 440 billions euros until the entry into force of the ESM. The eurozone leaders also agreed that although full assistance from the EFSF will take the form of loans, in order “to maximize the cost efficiency of (its) support,” the EFSF “may also, as an exception, intervene in the debt primary market in the context of a programme with strict conditionality.”

Nevertheless, the eurozone leaders could not reach an agreement on the details on how to expand the effective lending capacity of the EFSF. Moreover, the eurozone Finance Ministers could not complete their work on the EFSF in time for the European Council as they failed to agree on the details of how to share the cost of increasing the effective lending capacity of the EFSF. They could not reach an agreement whether they should increase the amount of state guarantees beyond the €440 billion or use cash contributions. Additional guarantees would place a further burden on the triple A rated countries, including France, Germany and Finland. Finland could not agree to such an increase yet before parliamentary elections on 17 April 2011. According to the European Council Conclusions “The preparation of the ESM treaty and the amendments to the EFSF agreement, to ensure its EUR 440 billion effective lending capacity, will be finalized so as to allow signature of both agreements at the same time before the end of June 2011.”

However, in the meantime, Portugal will apply for the EFSF assistance. Portugal’s government fell just one day ahead of the European council meeting. All the opposition parties rejected the package of austerity measures proposed by the minority Government and Jóse Sócrates announced his resignation. Cavaco Silva, Portugal’s President, has recently called an early election on 5 June. Until then, Sócrates’ government would remain in office in a caretaker capacity. The Portuguese political crisis has further increased the cost of Portugal’s borrowing. On 6 April, Jóse Sócrates announced, “The government decided today to ask the European Commission for financial help,…” The President of the European Commission, José Manuel Durão Barroso, issued a statement saying that “this request will be processed in the swiftest possible manner, according to the rules applicable.”

A formal request for the activation of the EU financial support mechanisms still has to be made. A Portuguese bailout package has been estimated to amount between €60 and €80 billion, most likely to be €75 billion, which would come from the European financial stabilisation mechanism (EFSM), the European financial stability facility (EFSF) and IMF. It is important to recall that the Council, acting by a qualified majority on a proposal from the Commission decides to grant financial assistance, under European financial stabilisation mechanism. On the other hand, in order to release funds from the European financial stability facility, a unanimous decision by the eurozone Member States is required.

The European financial stability facility has enough money to rescue Portugal, therefore there is no need to use the European financial stabilisation mechanism. However, presently the EFSF cannot use its full amount and one could wonder if there is enough money if Spain also applies for it. Consequently, the decision would have an impact on the UK because if the lending capacity of the fund is not increased more money is likely to come out from the 60 billion euros fund, increasing the UK’s liability. David Cameron should have endeavoured for new arrangements to be decided so that Article 122.2 is no longer used and the UK would no longer be liable. With a Portuguese bailout imminent, I sought and obtained an Urgent Question on 24 March in the House of Commons. I made the following arguments “because the existing European financial stability mechanism (..) was described in the report of the European Scrutiny Committee, (…) as “legally unsound”“ and “because it involves the United Kingdom underwriting approximately €8 billion to eurozone countries until 2013” as I stressed, “The motion for a treaty change to create the new mechanism, which was passed yesterday, provides for amending article 136 of the European treaty without a referendum, but the amendment prescribes strict conditionality.” I asked – “Will the Government renegotiate the decision so that the European stability mechanism, if proceeded with at all, is agreed by the British Government with unanimity only if the legally unsound existing European financial stability mechanism, to which we are wrongly exposed, is repealed?” In this way, as I pointed out, the UK would no longer be “required to contribute to the bail-out of other eurozone countries such as Portugal, which would amount to approximately €4 billion.” However, my proposal has not been accepted. David Cameron has not taken that course of action in his negotiations at the European Council and the British taxpayer would not be relieved of the obligation to underwrite eurozone Member States’ bailouts.

The European Council welcomed the decisions taken by the leaders of euro area on 11 March and endorsed the features of the ESM. The eurozone leaders, at their informal meeting, agreed that the ESM “will have an overall effective lending capacity of 500 billion euros” and that “The ESM effective lending capacity will be ensured by establishing the appropriate mix between paidin capital, callable capital and guarantees.” The eurozone leaders pointed out that financial assistance from the ESM will take the form of loans, nevertheless, in order “to maximize the cost efficiency of their support,” the ESM “may also, as an exception, intervene in the debt primary market in the context of a programme with strict conditionality.” The eurozone leaders agreed to allow the ESM to buy sovereign bonds directly from a struggling government, but not on the secondary market, as the European Central Bank and the European Commission had requested, and only after that country agrees to austerity measures similar to those imposed to bailout countries.

On 21 March, the eurozone finance ministers, at an extraordinary meeting, agreed on the technicalities of the ESM. They agreed on a European Stability Mechanism with a capital base of €700bn. Hence, when it enters into force in 2013, the ESM would have an effective lending capacity of €500 billion, through a combination of €80bn of paid-in capital and €620bn in the form of callable capital and of guarantees from eurozone states. According to a “Term Sheet on the ESM” agreed by the European Council “The ESM will seek to supplement its lending capacity through the participation of the IMF in financial assistance operations, while non-euro area Member States may also participate on an ad hoc basis.” The eurozone is, therefore, also expecting voluntary contributions from non-euro zone Member States.

It was agreed that the fund would rely on 80 billion euro in paid-in capital directly provided by eurozone Member States, of which €40bn will have to be injected by July 2013 whilst the rest will be phased in over the three following years. However, Ms Merkel was able to change the details of capital injection, persuading the other leaders to spread the payments to €16bn per year over five years from 2013, which is election year in Germany. The payment contributions to the fund will be calculated according to the amount of capital eurozone Member States have in the European Central Bank. However, in order to address the concerns of Member States such as Estonia and Slovakia, it was agreed that countries whose GDP is lower than 75% of the EU average will contribute less for up to 12 years after they entered the euro. Germany, for instance, will contribute 27.1% of the fund’s capital. This means that German taxpayers will have to contribute in paid up cash to around €21.6 billion to the fund plus the guarantees.

The eurozone leaders stated “the ESM will provide financial assistance when requested by a Euro area member”, which “…will be subject to strict conditionality under a macroeconomic adjustment programme.” The Commission will propose a Regulation intend to clarify the necessary procedural steps under Article 136 of the Treaty in order to enshrine the policy conditionality in Council decisions and ensure consistency with the EU multilateral surveillance framework. The permanent stability mechanism is based on an intergovernmental arrangement. The treaty amendment allows for its creation but it does not provide for its establishment as in this case Article 125 (no bail out clause) would have to be amended. A treaty signed by the euro area Member States, subject to public international law, will, therefore, establish the ESM. However, it is important to recall that the European Parliament endorsed only one day before the European Council the so called “limited Treaty” amendment and, according to a press release “MEPs were satisfied with the “positive signals” given by the Member States on bringing the intergovernmental mechanism closer to the EU framework.” Moreover, the European Parliament agreed “with the view expressed in the opinion by the ECB supporting recourse to the Union method allowing for the European stability mechanism to become a Union mechanism at an appropriate point in time.”

The EMU has now proven to be a failure. Indeed, the crisis has exposed that the whole system of EU government is not working. Nevertheless, the eurozone crisis has provided an opportunity for closer political integration in the European Union and has opened the door for further economic and fiscal policy integration. If the Member States are already in a straightjacket, the situation is set to get worse as their flexibility will be further reduced, particularly with a strengthen stability pact and budgetary surveillance. Last September, the European Commission presented legislative proposals, on the so-called Economic Governance in the EU and EMU. It proposed broader and enhanced surveillance of fiscal policies as well as macroeconomic policies and structural reforms. The Council has recently agreed on a general approach on this package of measures, which was welcomed by the European Council. According to George Osborne “The UK negotiated a UK opt-out on the articles in the fiscal frameworks directive pertaining to fiscal rules…” However, the UK will still be subject to the macroeconomic surveillance framework.

The Commission has proposed a “new element of the economic surveillance process” the so-called Excessive Imbalance Procedure (EIP), which comprises a regular assessment of risks of imbalances, including an alert mechanism. It is important to stress that although the UK will not be subject to sanctions, it will be subject to the Council policy recommendations and might be placed in Excessive Imbalance procedure, moreover it would be subject to burdensome reporting requirements as well as surveillance missions from the Commission.

As expected, the Heads of State or Government of the Euro area formally adopted the Euro Plus Pact. The Pact has been drafted by Mr Van Rompuy and Mr Barroso and it is not as strict as the Competitiveness Pact proposed by Germany and France whereby Ms Merkel attempted to impose the German economic model on the rest of the eurozone. Nevertheless, at the end of the day, Ms Merkel got her Pact. According to Mr Van Rompuy, the Pact is now called the Euro Plus Pact, “because it is about what eurozone countries want to do MORE…” and “because it is also OPEN to the others.” The non-eurozone Member States are invited to participate on a voluntary basis. Bulgaria, Denmark, Latvia, Lithuania, Poland, Romania have decided to join the Pact. The UK has decided to opt out from it, David Cameron has said “…that Britain is not in the euro and will not be joining the euro, …That is why we are not intending to join the ‘pact’ that euro area countries have agreed.” Nevertheless, even if the UK does not participate, it will be subject to the side effects of it. It has not been clarified yet how the participating Member States intend to move forward without it having an impact in non-participating countries.

The pact aims to strengthen “the economic pillar of EMU and achieve a new quality of economic policy coordination, with the objective of improving competitiveness and thereby leading to a higher degree of convergence.” The main focus of the pact is on “areas that fall under national competence.” It seems that the participating Member States would be giving away their national competences over tax, wages and social security policies. The Pact is based on an intergovernmental agreement, but it is not outside the EU’s existing legal framework. The Euro Plus Pact stresses that it will be in line with the EU economic governance rules, and “consistent with and build on existing instruments” such as the EU2020, European semester, Integrated Guidelines, SGP and new macro economic surveillance framework. The UK is subject to all this measures and it is far from clear how the pact would be link to them and to the existing report requirements.

The heads of state and government will, annually, agree to common objectives. Each country would be responsible for choosing the specific policy measures to be implemented and the choice will take into account the issues mentioned below. Such commitments will be reflected in the national reform programmes and stability/convergence programmes submitted each year and will be assessed by the Commission, the Council and the Eurogroup in the context of the European semester. It is important to recall that the UK has to present national reform as well as convergence programmes and is subject to the European semester. The HOSG of the euro area and participating countries will politically monitor the implementation of such commitments and progress towards the common policy objectives under the pact, on the basis of a report by the Commission. The Pact is base on an intergovernmental agreement but one could say it follows the ‘Community method’, as the Commission will have “a strong central role” in monitoring the implementation of such commitments, and the European Parliament “will play its full role in line with its competences.” Moreover, the Pact reads “In addition, Member States commit to consult their partners on each major economic reform having potential spill-over effects before its adoption.” However, there is no reference to the euro zone/participating Member States therefore one could conclude that it involves all Member States.

The Pact stresses, “Participating Member States are fully committed to the completion of the Single Market which is key to enhancing the competitiveness in the EU and the euro area.” One could say that this has been David Cameron’s “achievement” at the European Council. The Pact also points out that “This process will be fully in line with the treaty” and it “will fully respect the integrity of the Single Market.”

The Pact is, therefore, based on participating Member States’ commitments to achieve several commonly agreed goals in key policy areas and the Heads of State or Government will politically monitor its implementation on the basis of policy and quantitative indicators. Participating Member States would be required to take all necessary measures to pursue the following objectives: foster competitiveness, foster employment, contribute further to the sustainability of public finances, reinforce financial stability. The Pact provides that “Countries facing major challenges in any of these areas will be identified and will have to commit to addressing these challenges in a given timeframe.” Whereas Ms Merkel’s Competiveness Pact has foreseen sanctions for Member States which breach the agreement, the present Pact does not provide yet for enforcement measures. According to the President of the European Council “the commitments under the Pact” will have “a politically binding force.”

The progress towards fostering competitiveness will be assessed on the basis of wage and productivity developments. According to the Pact each country will be responsible for choosing specific policy actions to achieve this objective, but attention should be given to reforms such as “review the wage setting arrangements,” and “the indexation mechanisms.” Moreover, participating Member States should reform labour markets to promote flexicurity and they will have to introduce tax reforms, “such as lowering taxes on labour.” Participating Member States will also have to consider the necessary reforms to ensure the sustainability of pensions and social benefits such as “Aligning the retirement age with life expectancy.”

It is important to mention that under the Commission proposal for a regulation on the prevention and correction of macroeconomic imbalances, currently being negotiated, the Commission will draft a “competitiveness scoreboard”, which will rate Member States’ performance as regards economic stability and competitiveness, including current accounts and external debt, price or cost competitiveness as well as productivity, unit labour costs, public debt and private sector credit. Member States performance, including the UK, would be assessed against these indicators. An excessive imbalance procedure would be initiated if the Commission in-depth review identified severe macroeconomic imbalances in a Member State. The Council may recommend the Member State concerned to take corrective action within a specified deadline to remedy the situation. One could wonder whether the Pact indicators and targets would not be taken into account for the launching of the excessive imbalance procedure.

The participating Member States also “commit to translating EU fiscal rules as set out in the Stability and Growth Pact into national legislation.” Each country will decide on the formulation of the rule limiting their debt levels, but it should have “a sufficiently strong binding and durable nature (e.g. constitution or framework law).” The Commission would review the precise fiscal rules before their adoption to ensure they are compatible with the EU rules. Member States also commit to introduce “national legislation for banking resolution, in full respect of the Community acquis.” Hence “Strict bank stress tests, coordinated at EU level, will be undertaken on a regular basis.” The level of private debt for banks, households and non-financial firms of each Member States will be closely monitored.

Obviously, the economic crisis is also being used as an excuse to harmonise Member States’ tax policies. Sarkozy and Merkel have called, in their Competitiveness Pact, for the creation of a single company tax regime. The Euro Pact Plus stresses that “Direct taxation remains a national competence” however, it also says that “Member States commit to engage in structured discussions on tax policy issues,….” The Pact points out that a common corporate tax base could “ensure consistency among national tax systems while respecting national tax strategies,….” In the meantime, on 16 March, the Commission proposed a draft Council Directive on a Common Consolidated Corporate Tax Base (CCCTB). Several Member States, particularly Ireland and the UK as well as the Czech Republic and Slovakia are opposed to the proposal. Nevertheless, it is already known if there is no unanimity, the CCCTB would be pursued by “enhanced cooperation.” No one should be surprised if the Commission puts forward other legislative proposals intended to attain other objectives included in the Pact, which are very likely to apply to all Member States.

The so-called Euro Plus Pact would be another failure as the SGP, the Lisbon strategy and as it will be the “2020 Agenda”. The Pact would reduce Member States’ ability to run their own economic and social policies without achieving competitiveness. Moreover, the Pact is set to create a ‘two-tier’ EU. The UK has no guarantees that it won’t be affect by the Pact, in fact it will damage the UK’s own ability to compete.

United Kingdom Parliamentary Sovereignty Bill

Remember this proposed Bill?

The Sovereignty Act that never was, page 10 of The European Journal.

The Sovereignty of the United Kingdom Parliament is hereby reaffirmed

On 11 January, Bill Cash MP made the following speech in the House of Commons on the Committee stage of the European Union Bill.

Mr William Cash (Stone) (Con): I beg to move amendment 41, page 11, line 25, at end insert-  

‘(1) The sovereignty of the United Kingdom Parliament in relation to EU law is hereby reaffirmed.’.

Mr Cash: The group relates specifically to clause 18, and I shall explain a little of the amendments’ purpose.

Amendment 41 would insert at the beginning of the clause, which covers the status of EU law, the simple words:

The sovereignty of the United Kingdom Parliament is hereby reaffirmed.”

Amendment 10 would add to the end of the clause the simple phrase, “and not by virtue of a common law principle”.

The effect of that would be to prevent the courts from applying a common law principle, which has become entrenched in certain thinking in influential academic and legal circles, and in the Supreme Court. The explanatory notes suggest that it has also become entrenched in the Government’s thinking. I understand that the explanatory notes may be in the course of being corrected, as the European Scrutiny Committee and one of its main witnesses suggested. However, precisely what effect that will have remains to be seen. Perhaps we can debate that this afternoon. After all, the explanatory notes may have been prepared to aid interpretation of the statute – statute law is open to interpretation by the courts – but will the removal of the relevant words necessarily have the effect of preventing those most distinguished and eminent Supreme Court judges from departing from principles and doctrines to which they have apparently become wedded?

The two new clauses are directly relevant to clause 18 to ensure parliamentary sovereignty in view of the continuing trend towards judicial interpretation along the lines that I have already expressed. It is a matter of grave concern to many of us – far more than may turn up in the Lobbies today – that the courts, on a range of matters, have accumulated greater and greater influence, and, indeed, action, in relation to their judgments on Acts of Parliament. I refer not merely to interpretation or construction of the words but the underlying judicial activism, sometimes of a quasi – political nature. That has caused a great deal of concern, which has arisen particularly in the case of the Human Rights Act 1998. Although we are not discussing that today, there is an analogy because the charter of fundamental rights, which mirrors the Human Rights Act, is part and parcel of the arrangements under the Lisbon treaty. In that area of law, if there were any inconsistency between legislation – many centuries old and based on well established democratic principles – passed in this Westminster Parliament, would the judiciary presume to make judgments about the nature or legal effects of parliamentary sovereignty?

Mr Edward Leigh (Gainsborough) (Con): Will my hon. Friend deal with the canard put around by Foreign Office lawyers that if his amendment is passed and we add talk of sovereignty to the statute, judges will be given a chance to intervene because it is not mentioned elsewhere? Surely the issue is clear: Parliament is sovereign, so why do we not just pass this amendment?

Mr Cash:My hon. Friend is right and I am grateful to him. Indeed, I suspect that many other colleagues, not only on the Back Benches but among the ministerial ranks, agree with me strongly. I also suspect that many Opposition Members feel exactly the same way. I hope, although without too much confidence, that one or two Liberal Democrats might take a similar view, although I would not wish to over-egg the pudding on that score.

Mr Bernard Jenkin (Harwich and North Essex) (Con): I happened to be doing a television interview earlier today with Mr Chris Davies, who is a Liberal Democrat MEP. When I asked him what the problem was with incorporating this amendment in the Bill, he said he could not possibly disagree with it. So there are Liberal Democrats who agree, and I simply do not understand why the Government object.

Mr Cash: I am grateful to my hon. Friend for that point. Indeed, I would be fascinated to know what would happen if any hon. Member were to appear before their local association and say, for example, “I just want to inform you that the sovereignty of the United Kingdom Parliament in relation to EU law is not reaffirmed.” I think they would get a dusty answer from their constituents, especially as they elected that person to represent them in Parliament.

I am concerned to ensure that the courts are excluded from the construction or interpretation of the nature or legal effect of parliamentary sovereignty. It is of course still inherent in the arrangements, even after the Constitutional Reform Act 2005, that the judiciary are not only quamdiu se bene gesserint, as the Latin has it – in other words, they hold their position during good behaviour – but, in exceptional circumstances, it would be possible for judges to be removed, by an address by both Houses of Parliament, if they were to depart from that dictum. I would have said that some of the remarks relating to the sovereignty of Parliament that have emanated from some judicial circles in recent years have trespassed closely on the question of whether Parliament is the supreme law-making body in this country. I include that new clause because I want to exclude the courts in relation to section 3 of the European Communities Act 1972, but I am not attempting to extend its range beyond that.

I find it strange that the Government say that the Bill does not attempt to embrace the whole doctrine of parliamentary sovereignty. Of course it could not have done so, because the scope of the Bill would prevent that. For practical purposes, my amendments are all devised and worded in relation to EU law, but without prejudice to my concern about the fact that justices of the Supreme Court should not pick and choose between the different kinds of statute to which they apply these attitudes if they were to gain critical mass.

New clause 4 states:

“Nothing in Part 3” – the provision relating to the status of EU law – “adversely affects or shall be construed as affecting the existing constitutional law of the sovereignty of Parliament”.

I then add, for the purposes of the scope of the Bill, the words “in relation to EU law.

I have provided a fail-safe mechanism and firewall against any attempt by the judiciary to interfere with the sovereignty of the House. I have done that not simply because that sovereignty is centuries old in its derivation, but because, certainly since the mid- 19th century, our democratic representation, which leads Members of Parliament to convene in this Chamber and pass laws, has derived its supremacy exclusively from that democratic right.

Mr Cash: The amendments, if passed, would enable us to deal with those questions. In point of fact, I intend to come on to the implications of my new clauses and amendments in relation to a number of matters, including what I regard as the totally unnecessary and unacceptable jurisdiction being given to the European Court and other European institutions over the City of London. I have been talking about that in national newspapers for the best part of two and a half years.

Mr Jenkin: Does the previous intervention not underline why we need my hon. Friend’s amendment? There might be no doubt in our minds that Parliament is sovereign and that the functions and powers to which he has just referred are simply delegated to the European Union by this sovereign House, but because such misunderstandings exist, it is time for the House to make a clear declaration that sovereignty and ultimate legal authority still rest with the House of Commons.

Mr Cash: I am deeply grateful to my hon. Friend for his intervention, because he is exactly right. Since 1972, there has been an accumulation that has now turned into a tsunami – a sort of Pied Piper of Hamelin, whom we all remember from our childhoods-as the accumulated rumbling and tumbling has gone on and on. We are now faced with a continuous stream of legislation divesting the House of its right to legislate, and this is an opportunity-one not invented by me in terms of the clauses proposed by the Government – to enable us to regain the sovereignty that belongs to the people of this country, the voters in general elections and Members of Parliament elected to the House for the purposes of protecting those voters’ interests.

Mr Denis MacShane (Rotherham) (Lab): Will the hon. Gentleman give way?

Mr Cash: I certainly will. I am always glad to see the hon. Gentleman. MrMacShane: Just as we start this interesting debate, I would like to know whether the hon. Gentleman accepts the broad principle of pacta sunt servanda.

Mr Cash: To which I would simply reply: “Et sine lite loquax cum Palladis alite cornix”. Mr

MacShane rose –

The Chairman: Order. We cannot have two hon. Members on their feet at the same time.

Mr Cash: I was talking about the crow that was quacking on the fence.

Martin Horwood (Cheltenham) (LD): Is the hon. Gentleman now in favour of establishing a common European language?

Mr Cash: As long as it subscribed to the classical arrangements that were provided for when we all actually spoke Latin properly, the answer would be yes.

There is obviously-we all know it in this Committee, and so do those outside this place, because it has been well publicised – a disagreement between the Government, the European Scrutiny Committee, of which I have the honour to be the elected Chairman, and me personally, regarding the meaning, nature and effect of clause 18. The disagreement falls into several categories, all of which can be categorised as matters of national interest. That is why I trust that Members of Parliament from all parts of the Committee will listen carefully to the arguments and vote according to these, and not according to any instructions that have been issued by the Whips.

Mr MacShane rose –

Mr Cash: With the greatest respect, we have already had one intervention from the right hon. Gentleman. Perhaps he would be kind enough to wait.

It would be ironic to say the least if the slogan “Working together in the national interest”, which we saw at our party conference, were to become “Working together against the national interest”. I do not believe that any Member of Parliament or any Minister would agree that the coalition – a “temporary alliance”, according to the “Oxford English Dictionary” – should be employed in any way to pass legislation that would undermine parliamentary sovereignty. Incidentally, I am somewhat appalled at the lack of coverage not of this debate but of the European Scrutiny Committee report when it came out, given the fundamental nature of the issues at stake, and the quality of analysis not only in the report itself but in the evidence given to us by probably the most distinguished constitutional experts in the land.

I will turn first to the constitutional and legal issues that clause 18 raises and which were carefully considered for several weeks by the European Scrutiny Committee, which received evidence on a completely even-handed basis, which, because of the fundamental importance of the issues to our constitution and our democracy, was well worth doing. In the course of the proceedings it became clear that many of the constitutional experts concerned felt that, at the very least, clause 18 was completely unnecessary. The most compelling evidence – the evidence that we received from Professors Tomkins and Goldsworthy, along with a number of others – was that clause 18 was hazardous and dangerous, particularly in the light of the Government’s assertions.

The issue of parliamentary sovereignty has been a matter of fundamental concern, importance and action since the 17th century. However, parliamentary sovereignty acquired a special and fundamental significance with the extension of the franchise in the mid-19th century, from the Reform Act of 1867 onwards – for example, through the Reform Acts of 1885 and 1884 – and is undoubtedly the democratic basis of the United Kingdom constitution. However, irrespective of its now democratic basis, parliamentary sovereignty has become increasingly questioned recently – and only very recently – by reason of judicial assertions. Although on the tin, as well as in many repeated statements, we were told – I refer now to my hon. Friends on the Conservative Benches-that we would be getting a sovereignty clause or even a sovereignty Bill, clause 18 is emphatically not a sovereignty clause. For reasons that I will explain, the clause will actually undermine parliamentary sovereignty by encouraging judicial supremacy. The explanatory notes put forward the dangerous notion that parliamentary sovereignty is a “common law principle”, and therefore subject to judicial authority. However, even if the explanatory notes were disavowed on this matter, the problem of judicial assertions relating to parliamentary sovereignty would not disappear.

Mr Kevan Jones (North Durham) (Lab): The hon. Gentleman and his Conservative colleagues stood in the election on a manifesto that said on page 114: “We will introduce a United Kingdom Sovereignty Bill to make it clear that ultimate authority stays in this country, in our Parliament.” Is he therefore disappointed that the Government have binned that part of the manifesto that he stood on?

Mr Cash: Not disappointed-absolutely appalled. The sovereignty of Parliament is the most important principle of the United Kingdom constitution, and has been since 1688, as confirmed by constitutional authorities without question until very recently. Indeed, the greatest judge in recent times, the late Lord Bingham, who died only a few months ago, stated in the Jackson case in 2005:

“The bedrock of the British constitution is...the supremacy of the Crown in Parliament.

I fear that the sovereignty of Parliament is in grave danger, however. There are judges in the Supreme Court whom Lord Bingham himself felt it necessary to name in black and white in chapter 10 of his book “The Rule of Law”, published shortly before his death. He publicly criticised their judgments and their attitude to parliamentary sovereignty. In the Jackson case, Lord Hope, who is now deputy president of the Supreme Court, said that

“parliamentary sovereignty is no longer...absolute”.

He went on to say that, “step by step”, it “is being qualified”. In his view, the rule of law, enforced by the courts, is the ultimate controlling factor on which our constitution is based. Lady Hale, who also remains on the Supreme Court, agreed with Lord Hope. The fact that that case did not relate specifically to EU law does not alter the fact that the views expressed by Supreme Court judges can be as easily applied to cases involving EU law as to another judicial matter, contrary to the suggestions being put forward by the Minister in evidence earlier. It is not an answer to the question, as the PrimeMinister has sought to suggest in a letter to me, for the Minister for Europe to state in his evidence to the European Scrutiny Committee that the Government are not seeking, and have never sought, to provide

“an all-embracing doctrine of Parliamentary sovereignty.”

The Supreme Court justices, who have a process of selection outside the Judicial Appointments Commission, have a significant critical mass of those with profoundly Eurocentric credentials. I mention this because the sovereignty of Parliament, which is a constitutional doctrine of the United Kingdom, is also under threat by virtue of the European Communities Act 1972. The construction placed on legislation emanating from that Act affects the daily lives of the electorate in almost every sphere of presentday activity. According to the Government themselves, such legislation affects at least 50% of all economic laws in the United Kingdom, including those that impose burdens on businesses small and large that, according to the best estimates, have cost £124 billion since 1998.

The threat comes not only from the common law radicalism of such judges but from the EU law itself, which claims constitutional supremacy over member states’ constitutions. We have also seen cases of terrorists appearing to get away with things and people not being deported when they should have been, as well as a whole range of other matters occurring under the European Human Rights Act, which, as I have said, is mirrored by the new charter of fundamental rights in the Lisbon treaty. We are witnessing a vast increase in the volume and impact of such legislation on the British people, and this is resulting in the anxieties I have described. Those anxieties could be allayed by my amendments, however, and it is time for us to turn the tide and make it clear exactly where we stand.

Sir Malcolm Rifkind (Kensington) (Con): My hon. Friend is undoubtedly correct to say that the role of the courts has increased significantly, but is not the ultimate test of the sovereignty of Parliament whether Parliament can amend the law, either on domestic matters, when the courts have interpreted the law to our dissatisfaction, or in relation to our international treaty obligations, from which Parliament should always have the right to withdraw if it so chooses? Given those circumstances, the sovereignty of Parliament ultimately remains available to us.

Mr Cash: I am extremely grateful to my right hon. and learned Friend for that. I agree with the sentiment; the problem is the practice. The difficulty is not only the tsunami of laws: attitudes within the Supreme Court, particularly since the Constitutional Reform Act 2005, have so enhanced its independence that, in conjunction with the arguments it is beginning to present, very serious questions are raised. It was the same with the Bill of Rights of 1688 – it was not an Act, but it is regarded as one of the central instruments of our constitution – when Parliament said that it was going to put its foot down and set down a marker that Parliament was sovereign. That is what I am saying in my amendments.

Dr Julian Lewis (New Forest East) (Con): Our right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) is surely correct in saying that there is always what the Business Secretary would perhaps call the nuclear option of withdrawing completely. Is not one of the reasons why we, as a sovereign Parliament, are feeling more and more repressed by this sort of judicial activist legislation that things are so often put forward as if they were absolute rights whereas they should be viewed as qualified rights? That is why a common-sense Parliament would say that someone had abrogated some of their rights by bad behaviour, for example, but these courts say that the rights are absolute so that no matter how badly people behave, they cannot, for example, be deported.

Mr Cash: My hon. Friend makes a very important point, which I think allMembers will want to take into account. As a lawyer myself – there are many other lawyers in the Chamber – I know that there always exists within the framework of the judicial or court system the adversarial nature of arguments based on words. One reason I came into this House after a fairly lengthy career in the law was that having had so much exposure to parliamentary legislation and its impact on people, I was conscious of the fact that however clever or adroit a lawyer might be in expressing his opinion in court or in his practice, the impact of law on the people who receive it – the voters – was quite a different matter. The common sense mentioned by my hon. Friend the Member for New Forest East (Dr Lewis) provides a salutary reminder of the necessity to remember that we in this House are Members of Parliament. We are legislators; we are not lawyers.We are seeking to apply principles that will enable this country’s people to be better governed.

Unfortunately, much of our legislation emanates from the European Union, for example, on issues such as food labelling. My hon. Friend the Member for South Norfolk (Mr Bacon) has just proposed a privateMember’s Bill to deal with that issue, but his Bill has no chance of becoming law unless we disapply the European element and pass it in this House. That is the problem, and it is, in part, what the supremacy of Parliament debate is all about.

Martin Horwood: I would like to question the hon. Gentleman on one of these principles. He is presenting this as a competition between European and British law and between judges and Parliament, yet he himself has said that these debates are happening and this authority has been conferred on British courts because of the European Communities Act 1972, which, unless I am very much mistaken, was an Act of this British Parliament. That rather reinforces the principle of supremacy.

Mr Cash: If I may say so, that is not only true but precisely what I am seeking to deal with in new clause 1, which I tabled because the courts have been allowed this unwarranted intrusion the legislative process by judicial activism. Much of the European Communities Act 1972 invokes regulations, which come into effect in a different way from directives. In the new clause, the interpretation and the construction put on legislation by the judiciary should not under section 3 of that Act extend to the nature or legal effect of parliamentary sovereignty.What I am doing is exactly what the hon. Member for Cheltenham (Martin Horwood) highlighted – dealing with the mischief, as I see it, created for that ultimate source of authority, which lies in this House as a sovereign Parliament, to be able to make and unmake laws as it wishes.

That does not necessarily mean that we would automatically take extreme positions. Some academic lawyers – very distinguished they are, too – have gone to extraordinary extremes in trying to demonstrate, in print, the necessity for their case, and have not done themselves a service in so doing. It is at a much more mundane level that the people of this country are unreasonably affected by some of the legislation that needs to be dealt with in Parliament, and which can be dealt with only by the sovereignty of Parliament in its traditional sense.

The sovereignty of Parliament is not an arcane constitutional curiosity or a theology; it is an essentially practical question. We in the House of Commons are elected. I am elected. We are all, individually, elected in our constituencies. What does that mean? It means that we are voted for by people who go into polling booths and register their votes for us individually. It is exclusively on that basis that our authority to legislate is derived. It is the very root of British democracy, and itsMembers of Parliament have an absolute duty to protect it on behalf of their constituents. A threat to parliamentary sovereignty is a threat to democracy.

Removing sovereignty from Parliament would pass that sovereignty to some other body, whether it be the European Union, the Supreme Court or any other organisation. Sovereignty is about giving ultimate power to the people’s democratic representatives in Parliament, not to the courts and not to international bodies such as the European Union. It is that democracy which gives voters freedom to choose who governs them and how, and for which people have fought and died.

Martin Horwood: The hon. Gentleman is being extremely generous with his time. According to a report from his own European Scrutiny Committee,

“the term ‘Parliamentary sovereignty’ bears a number of meanings which can get confused.”

Does not the risk posed by his amendment lie in the fact that it is so simple that it allows for wide and different interpretations that might be exploited by the very courts about which he seems to be so worried?

Mr Cash: I should be more than happy to show the hon. Gentleman a book that is entirely devoted to the issue of the sovereignty of Parliament. The point is that there is no need to define parliamentary sovereignty. The Constitutional Reform Act 2005, which gave greater independence to the judiciary and the whole of which ultimately turns on the rule of law, does not contain any definition of the rule of law. Certain fundamental principles, and methods whereby we are governed, do not require definition for that purpose. They are applied, in the case of both sovereignty and the rule of law. There is a natural constructive tension between the two, but it is our job to protect the element that involves the sovereignty of Parliament.

Mr MacShane: I do not disagree with what the hon. Gentleman has been saying, but the fundamental rule of international law in regard to treaties is “pacta sunt servanda”. Those who sign a treaty must abide by it. If Parliament does not like a treaty, it has a sovereign right to withdraw from it. We can withdraw from the European convention on human rights, which is concerned with deporting people and so forth, and we can do the same in regard to the European Union. That is not a nuclear option; it is a perfectly fair choice that this Parliament could take. I rather wonder whether that is the speech that the hon. Gentleman should be making.

Mr Cash: I shall deal with that point shortly, but – with respect to the right hon. Gentleman – he will have to be a little patient. As Members will have noticed, I have sought only to strengthen clause 18, which, as it stands, merely refers to the “Status of EU law”. We were promised a sovereignty clause, and my amendment would achieve that. The clause as it stands would be subject to statutory interpretation, and it would be strange, uncertain and hazardous not to insert this provision in the framework of the European Communities Act 1972 itself. Clause 18 is a stand-alone clause. It refers to the “Status of EU law” and to section 2 of the European Communities Act, but it does not amend the Act. I am talking here about section 2 through section 3, when the judges apply themselves to any law. The clause is only six lines long, but it incorporates and absorbs within it every single piece of European legislation, so it applies to everything. However, although we know that law from the European Union emanates through from the 1972 Act, this measure does not amend the Act when incorporating the status of EU law. I am extremely concerned about that and find it very strange. In fact I will go further and say that I think the measure is deliberately contrived to make sure it is not an amendment to the 1972 Act.

Mr John Redwood (Wokingham) (Con): I am grateful to my hon. Friend for drawing the House’s attention to this crucial matter. As I understand it, he, like many of us, rightly wants to reassert the sovereignty of Parliament and make it clear that Parliament remains sovereign in all circumstances, and as I understand it, those on the Treasury Bench have the same aim. Given that his proposal seems to be stronger in this regard, can he think of any good reason why they should refuse it?

Mr Cash: No, I cannot. I am a bit puzzled by that, but as I develop my speech I hope to be able to explain where I think the origin of the problem lies.

The Government and the Prime Minister fail either to explain why the 1972 Act was not amended in the way I have just suggested or to follow the route I have provided in my sovereignty Bills, and which has also been provided by the Bills that have followed from colleagues over the past few years. I have to say, however, that my sovereignty proposals of 2006 in relation to the Legislative and Regulatory Reform Bill were accepted by the current Prime Minister when he was Leader of the Opposition and by the party Whips. Indeed, I might add that the Minister for Europe voted for those arrangements. I am glad that he smiles, because the smile is on the face of the tiger.

The fact is that we went through the Lobby then. The Whips came up to me in the middle of the afternoon and said, “Bill, will you please be good enough to allow us to adopt your amendments and put in Tellers?” I was extremely impressed, and slightly flattered. They decided to do that, and then, having accepted that and having faced down the then Government with such incredible force, they went off to the House of Lords and whipped it through the Lords six weeks later. A degree of conviction clearly lay behind that, and it matches up rather nicely with the manifesto promises about the sovereignty Bill and so forth.We were nearly getting there – we were on the brink, it might be said. The question is: where are we now?

As I have said, it is well-established that there is an historical and constitutional tension between the courts and Parliament because of the democratic basis of parliamentary sovereignty, not by virtue of a common law principle, and I have also proposed an amendment to prevent that principle from being subject to judicial application. It is also necessary to include the reaffirmation of Parliament so that the courts would not be able to ignore those words, which are lacking in clause 18 as it is currently drafted, and in order to address the problem relating to the 1972 Act.

In one of the Prime Minister’s letters to me – he has written two letters in the last few days – he claims:

“I can, of course, assure you not only that we have no intention to affect adversely the principle of Parliamentary sovereignty, but also that we do not believe that Part 3”

– that is a reference to clause 18 –

“runs this risk. As you would expect, we made sure we looked at this matter very thoroughly.”

My letter to the Prime Minister of 13 December, which I have sent to a number of colleagues to ensure fairness and transparency, indicated that I thought that in the light of his previous observations and assertions about a sovereignty Bill, not to mention the manifesto and so on, this principle of parliamentary sovereignty was a given and that the drafting of clause 18 – this is so in the light of the evidence given to the European Scrutiny Committee and our conclusions – had demonstrated that the Government’s intentions had merely produced unintended consequences. I went out of my way to say that I was sure that he did not intend this. However, our European Scrutiny Committee was doing what he has continuously said it should do: improve the scrutiny of European legislation. That is one of our fundamental principles; we are going to make sure that European legislation is looked at properly. That is what we have done, and we have reported. We revealed, after four weeks of taking evidence and engaging in crossexamination, that, unbeknown to others, this clause will have unintended consequences.

So our Committee came up with its conclusions, as a result of having followed the Prime Minister’s advice to scrutinise as well as we have done, and he then turns around and says, through his Ministers and in letters to me, that

we looked at this matter very thoroughly

and that,

“We do not believe that part 3 runs the risk that you are identifying.”

Basically, he said that we were wrong. It is a serious matter for a Prime Minister to say that to a Select Committee, which is one of the reasons why I am taking these steps. I hope that I am doing so with a good sense of timing and humour, because it is very important that we do not turn this into something more difficult.

However, I have to say that his reply of 10 January shows that the Government stand by the wording, having made sure that they examined the matter “very thoroughly”. I must say, on behalf of myself and others, that I am afraid that the consequences remain damaging for parliamentary sovereignty, for all the reasons that I have been setting out. He goes on to say that

“the words you have suggested would create uncertainty, because the term ‘Parliamentary sovereignty’ is not defined. There are no precedents for...referring to Parliamentary sovereignty in Acts of Parliament.”

He also says that attempts to define it will be “difficult and complex”.

With respect, that does not take us anywhere, because the expression “sovereignty of Parliament”, which is the one I have used, does not require definition in statute, as any examination of constitutional authorities makes abundantly clear. Some of those authorities prefer to use the expression “legislative supremacy of Parliament”, by which is meant that there are no legal limitations on the power of Parliament to legislate. I return to the words of the late Lord Bingham:

“The bedrock of the British constitution is...the supremacy of the Crown in Parliament”.

In the words of one of our greatest constitutional authorities – according to Dicey – under our constitution, Parliament has the right to make or unmake any law whatever and, furthermore, no person or body has the right to override or set aside the legislation of Parliament. There is no definition of “the primacy of European law”, nor, as I have just said, is there any definition in the Constitutional Reform Act 2005 of “the rule of law”. The fact is that certain expressions do not require that degree of definition, so I do not agree with the Prime Minister or with the Ministers on that point.

One of our witnesses, whose evidence the Committee did not accept, argued that Dicey’s exposition of sovereignty has been based on assumptions about representative democracy that, in his view, were flawed even in 1885 and could not be made today. That witness happens to be proponent of and is in agreement with the views of other witnesses who promote the common law principle, such as Professor Trevor Allan.We rejected that view, distinguished as those people are, as we rejected the common law principle as set out by the Government in their explanatory notes – but merely removing them from the notes will not influence this kind of thinking in the Supreme Court or in influential academic circles. One has only to see the amount of time and effort that has been expended on this in learned journals to realise that they are not going to be pushed out of thinking the way they do merely because we correct them in the explanatory notes.

The same could be said of Lord Justice Laws’ views on constitutional statutes, which do not have special status in the traditional sense against any other statute. All are subject to repeal where Parliament so decides in the national interest. That is an advantage of our organic, unwritten constitution, so that we can, in a Burkean sense, adapt as and when necessary on firm and principled foundations. As Bradley and Ewing indicate by contrast to written constitutions such as that of the United States, the legislative supremacy of Parliament amounts to a fundamental rule of constitutional law and this supremacy includes the power to legislate on constitutional matters.

Under the short clause 18, which applies to all European laws, the vast array and impact of which are set out chapter by chapter throughout the Lisbon treaty, there is endless scope for the judiciary to apply principles that are alien to the traditional doctrine of parliamentary sovereignty where, as is the case with clause 18, there is a failure to incorporate the clause into the European Communities Act 1972 and a failure to reaffirm explicitly the sovereignty of Parliament and to eradicate by express words from judicial judgments the common-law principle. There is more to this than is apparent in clause 18 as it stands, and the Foreign and Commonwealth Office lawyers know that very well. I was persuaded that Ministers and the Prime Minister did not appreciate that, but I am now deeply concerned by the manner in which they have fallen for these new fancy notions with hazardous and dangerous consequences for parliamentary sovereignty and I urge hon. Members to take note.

It is important to make the statement that the sovereignty of Parliament is reaffirmed. It is at last necessary to stem the tide to which Lord Denning referred in his famous judgment in McCarthy’s v. Smith, and that is what my amendment would do. This was omitted from the original explanatory notes and is now included in the Government’s reply to the Committee, which is surprising. For too long, we have witnessed further seamless and ceaseless integration and it is time we took a stand, removing ambiguity, uncertainty and the gradual absorption of the EU into our own constitutional DNA – that is the point. This is about not just the European Court but our constitutional law, of which Parliament is an integral part.

On compliance with international obligations being obligatory if we were expressly to legislate inconsistently with the 1972 Act or with legislation made under it, the Minister for Europe has stated on several occasions that he does not regard it as a matter of policy. I must emphatically refute that assertion as being entirely inconsistent with the legislative supremacy of Parliament and its sovereignty. That was clearly stated in Mortensen v. Peters in which it was held that the courts may not hold an Act void on the ground that it contravenes general principles of international law. Let me mention the right hon. Member for Rotherham (Mr MacShane) at this stage as he raised this question. Furthermore, the courts may not hold an Act invalid because it conflicts with a treaty to which the United Kingdom is a party. Statute is superior to prerogative in law and any treaties or legislation flowing from those treaties, even within legislation passed under the 1972 Act, is subject to parliamentary sovereignty and to repeal.

Suppose that we decided to disapply a provision on matters close to the Prime Minister, such as social and employment legislation, as he promised in 2005, or declined to bail out Portugal or Spain as part of the unlawful financial stability mechanism, or insisted on legislating within the United Kingdom for the City of London or decided to disapply investigative orders? On that and a vast range of other matters, if we thought it was in our national interests to do so, we could and should disapply EU law and require the judiciary to give effect to that law provided that it was clearly and expressly stated, whether or not it came from an international treaty or a European law. That includes repatriation, which has been specifically rejected by the Deputy Prime Minister. Furthermore, if we were to do that, we could not allow the judiciary flagrantly to contradict Acts of Parliament. That has never been accepted in our constitutional law, and the vagueness of clause 18 is, in the words of one of the distinguished witnesses, “an invitation to litigate”. The uncertainty and ambiguity that would arise as a result of the need for interpretation would invite that part of the judiciary that does not accept the traditional view of parliamentary sovereignty to prevail. That is why I am being so specific in the wording that I have used: it is a marker of the same kind as the Bill of Rights, and it says, “You do not touch the sovereignty of the United Kingdom Parliament.”

SirMalcolmRifkind: Is my hon. Friend not in danger of being so learned as to confuse himself about his own amendment? The sovereignty of Parliament was not created by an Act of Parliament, and it has never depended on an Act of Parliament. How can its restatement in an Act of Parliament given any real added value to its legitimacy?

Mr Cash: Precisely because the courts have moved further and further down that route, as I explained when quoting Lord Hope’s speech. The Supreme Court has been given independence under the Constitutional Reform Act 2005. I see a slight smile appearing on my right hon. and learned Friend’s face.

Sir Malcolm Rifkind: Not for that reason.

Mr Cash: Ah. He knows that he may have to answer that question during the debate. Judicial trends have recently moved along that route, and that movement is firmly entrenched, so it is time to call a halt to them, and that is what the amendments would achieve.

Mr Cash: That would be the case if it were accepted by the judges in the Supreme Court. It is precisely because we know that they are not inclined to take that view that the amendments are necessary. We are extremely grateful for the evidence that we have received from distinguished witnesses, but the problem is not what they have said, because they aided us in arriving at conclusions in the light of our need to defend parliamentary sovereignty. The problem does not lie in Parliament or with the witnesses; it lies in the assertions of a circle of certain judges and lawyers.

Mr Jenkin: I am intrigued by the intervention of my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind), who appears to be suggesting that Parliament can simply assert its authority over the judges by some means other than statute. I would like to know by what means it can do so. In the 17th century, it was violence, and I would prefer that Parliament should not have to resort to violence. I think that we should resort to statute, which would govern the judiciary, and we can direct them to behave according to statute.

Mr Cash: I am grateful to my hon. Friend, because as I mentioned earlier, under the Constitutional Reform Act, there is no displacement of the doctrine and, indeed, the constitutional principle that judges may be removed by an address of both Houses of Parliament. Furthermore, as my hon. Friend has mentioned the 17th century, the 1610 case of Dr Bonham continues to apply, up to and including the 2005 Act. Lord Chief Justice Coke asserted that the common law could usurp Acts of Parliament – I am paraphrasing, but he was specific – but he was dismissed by Parliament for making such assertions. My hon. Friend’s point is therefore well made, and was part of the constitutional settlement in the Act of Settlement 1701 and is still part of that settlement by virtue of the Constitutional Reform Act 2005.

Mr Cash: What is simple is that the concept of parliamentary sovereignty requires some explanation, and Jeffrey Goldsworthy does that. The question is not merely about parliamentary sovereignty; it is also about the manner in which the courts apply themselves to that doctrine. That is where the mischief lies and that is what my amendments would deal with.

I should like to respond to the Government’s reply, published only yesterday, to the European Scrutiny Committee. The Government say that they have never claimed that parliamentary sovereignty is under threat from EU law, but a problem remains for them. The evidence to the Committee was that that could well change in future, given current judicial trends; that is exactly what we were told.

The Government claim that disapplying EU law, an issue that has just been raised, would have unacceptable consequences – with infraction proceedings, and so on. But I make the point clearly that according to the evidence that we received, not only are several countries already in breach of EU law – France’s deportation of Roma immigrants, for example; no action was taken – but there is non-compliance on a massive scale. We know all about that, with the stability and growth pact.

There has also been the more recent failure to comply even with EU law itself in respect of the financial stability mechanism. Anybody with two brains to rub together would know that article 122 could not possibly justify – [Interruption.] Well, “Two Brains” could. No one could justify the use of article 122 for the purposes of that mechanism. If in the national interest, Parliament decides to do so, that is that.We obey EU law only in so far as it is a matter of statute and continues to be regarded as a matter of national interest.

As to the background of all this, my right hon. Friend the Prime Minister made several speeches before the general election that clearly demonstrated that we would no longer allow Britain’s laws to

be decided by unaccountable judges.

He said that their role was to interpret not to make law and that the sovereignty of Parliament needed to be safeguarded not only from the EU but from current trends in judicial thinking. We were promised last year:

“you can be assured that you have a Conservative prime minister who will act in the national interest. And putting your country first is about the most important Conservative value there is.”

The Prime Minister also said:

“The Conservative Party has always been a party that puts the national interest first.”

I absolutely and entirely agree. By the way, it was Disraeli who said that the Conservative party was a national party or it was nothing; I agree with that, too.

The tragedy is that the coalition and the Liberal Democrat influence in the formulation – and subsequent discussions, I suspect – of clause 18 and the Bill as a whole have gone a long way towards undermining the commitment to putting the national interest first. I fear that, far from working together in the national interest – and it is not just on this one clause – we are now witnessing policies that in relation to matters as important as the sovereignty of Parliament are actually working against the national interest.

That could be remedied very simply by dealing with the omissions, dangers, ambiguities and hazards that the clause throws up and by accepting my simple and modest amendments. My challenge is this: will hon. Members vote down an amendment that says:

“The sovereignty of the United Kingdom Parliament in relation to EU law is hereby reaffirmed”?

We all know that it is not possible to constrain the judiciary in relation to EU law except by using clear words. Those are lacking in clause 18, and I have substituted words that have the appropriate effect.

Mr Peter Bone (Wellingborough) (Con): On my hon. Friend’s point, is he saying that if we had a Conservative Government, we would have a totally different Bill?

Mr Cash: I congratulate my hon. Friend on that extremely perceptive remark. I entirely agree with him. If that were the case, we would not be where we are now. That is part of the lesson. [Interruption.] That might be true too, but who knows.

My new clauses and amendments to clause 18 would put the matter beyond doubt and I cannot for the life of me see why they cannot be accepted in the national interest. I believe firmly that they would have been accepted under a Conservative Government and we know that in 2006 we were almost there. The very fact that the Government might obtain a majority for the legislation should be of no comfort or satisfaction to anyone in the country, inside or outside Parliament.

In that past, those of us who have been criticised or perhaps underestimated for our predictions on Europe need only to look at the record to see how often some of us have been proved right in the national interest.Winning a vote does not always come into that category. I can only hope that failure to accept the clarification that my amendments would give will not, in a few years’ time, have seemed in retrospect a price worth paying, rather than seeking to uphold on every score a coalition of parties that on matters relating to judicial supremacy, the European Union, a written constitution and the national interest are often fundamentally poles apart. “The fault, dear Brutus, lies not in our stars, But in ourselves, that we are underlings.

I am very glad to see that the Prime Minister is in his place for these final moments. He and I have had some interesting correspondence. I thank all the hon. Members who have participated in this debate, which included some brilliant speeches from my hon. Friends the Members for Harwich and North Essex (Mr Jenkin), for Hertsmere (Mr Clappison), for Aldridge- Brownhills (Mr Shepherd) and others.

In the brief time that I have left, I confirm that I will press amendment 41 and I would be astonished if anybody voted against it. However, I am certain that they will. The difficulty that they will then be in is that, although I will not move the other amendments because of a lack of time and because the issues have been encapsulated in the debate, I have demolished the argument put up against the amendment that the status clause should not be by virtue of a common-law principle, both in respect of the academic arguments and of those that have been put forward by the Foreign Office in the explanatory notes. I have, I believe, demolished the argument relating to the question of parliamentary sovereignty, and I refer the Minister to the State Immunity Act 1978, which clearly deals with the question of the sovereign or other head of state in his public capacity. It is already in an Act of Parliament and, by the way, it is not defined, any more than “the rule of law” is defined in the Constitutional Reform Act 2005. It does not need definition: the statement and the principle stand.

The sovereignty of Parliament is inviolate, but requires to be reaffirmed, as the Prime Minister has repeatedly told us in the past, but unfortunately will not do through this Bill. With respect to the question about section 3, it eliminates the impact of the courts seeking to use the European Communities Act 1972 to achieve their objectives in relation to parliamentary sovereignty. The other provision in new clause 4 reaffirms the existing constitutional law on the sovereignty of the United Kingdom Parliament in relation to EU law, and I am glad that the Minister has said that he agrees with the sentiments, which I believe are justified.

Having said all that, I believe that we have had thoroughly good debate, and that, above all else, we have proved our point.We know that we are not going to win the vote. The Labour party has completely reneged on its principles, as expressed by the leader of the party when he said that their rubbish amendment was a matter of principle in defending parliamentary sovereignty. He must be joking! The fact is that clause 18 does not defend parliamentary sovereignty either.

Debate interrupted (Programme Order, 7 December ).

The Chair put forthwith the Question already proposed from the Chair (Standing Order No. 83D), That the amendment be made.

The Committee divided: Ayes 39, Noes 314.

The Sovereignty Letters: Bill Cash-David Cameron on sovereignty amendments to EU Bill

Please read: ‘The Sovereignty Letters: Bill Cash-David Cameron on sovereignty amendments to EU Bill’ on page 11 of The European Journal. 

The EU Bill: Parliament, judges and the national interest

Ahead of the vote on vital sovereignty amendments to Clause 18 of the EU Bill on 11 January, Bill Cash MP and Bernard Jenkin MP and others issued the following Memorandum.

Summary of points

• The Sovereignty of Parliament is the democratic basis of the UK constitution but has become increasingly questioned by judicial assertions (see below).

• Prior to the election, the Prime Minister made clear the need for a “Sovereignty Bill”, and to restrain “unaccountable judges”. • Clause 18 of the EU Bill is not a “sovereignty clause”. It would undermine Parliamentary Sovereignty, by encouraging judicial supremacy. • The government’s Notes on the EU Bill, which the courts can and would use, advance the dangerous notion that Parliamentary Sovereignty is a “common law principle”, and therefore subject to judicial authority.

• This reflects the influence of those including certain academics and judges and the Liberal Democrat wing of the coalition, because they support a written constitution which would entrench judicial supremacy.

• An exchange of letters between the PrimeMinister and the Chairman of the European Scrutiny Committee, Bill Cash, (attached) fails to provide any reassurance on these points. It is therefore urgent that Parliament reaffirms its Sovereignty as a legal and historical fact by voting for Bill Cash’s amendments.

• Bill Cash, and others, have tabled two linked amendments to translate the inadequate Clause 18 into a sovereignty clause, firstly, by expressly reaffirming the sovereignty of Parliament, and, second, by precluding the courts or the Supreme Court from invoking any common law principle under Clause 18.  

The Sovereignty of Parliament: the basis of the UK Constitution: under threat 

The sovereignty of Parliament is the most important principle of the United Kingdom constitution. This has been the case since the Revolution of 1688 and has been confirmed since by numerous writers, not least Blackstone and Dicey. The greatest judge of our time, the late Lord Bingham, re-confirmed it in his authoritative judgment in the Jackson case in 2005, when he stated that ‘the bedrock of the British constitution is… the supremacy of the Crown in Parliament’.

Yet, the sovereignty of Parliament is in the gravest danger. Not all of our judges agree with Lord Bingham, and they have said so plainly. In the same Jackson case, Lord Hope (now Deputy President of the Supreme Court, no less) said that ‘parliamentary sovereignty is no longer…absolute’. He added that ‘step by step’ it ‘is being qualified’. In his view, it is now the ‘rule of law enforced by the courts’ that is ‘the ultimate controlling factor on which our constitution is based’. Moreover, in Jackson Lord Hope was not alone: two further law lords agreed with him, including one (Lady Hale) who remains on the Supreme Court alongside him.

The sovereignty of Parliament is under threat, however, not only from the common law radicalism of judges such as these, but also from EU law (which has always regarded itself as having supremacy over the domestic law – including the domestic constitutional law – of the Member States); from European human rights law, which is growing and growing in prominence throughout our legal system.

It is important to be clear as to what is at stake. The sovereignty of Parliament is not merely some arcane matter of dusty constitutional curiosity. It is the very root of British democracy and is at the root of the daily lives of every elector. Its protection by Members of Parliament is an absolutely fundamental duty and to their role on behalf of their constituents. A threat to parliamentary sovereignty is a threat to democracy itself. Parliamentary sovereignty means that the last word in determining matters of public policy lies with Parliament. Removing sovereignty from Parliament means that some other body will have the last word instead. Irrespective of whether this other body is the European Union, the UK Supreme Court or the European Court of Human Rights, it is clear that if we wish to preserve our democratic heritage, it is imperative that sovereignty remains with Parliament. It is our only elected body. There is a chronic democratic deficit in the European Union, and no-one elects judges in this country (and nor should they be: judges are appointed to determine questions of law, not to govern us politically).

Sovereignty, therefore, is about power. And the most beautiful and precious thing about the British constitution is that it gives ultimate power to the people’s democratically elected representatives in Parliament. Not to courts. Not to international bodies such as the EU. But to elected representatives on behalf of the voters. This, constitutionally, is what makes Britain a democracy. Take it away, and you strike at the very root of British democracy itself and the freedom of the voters to choose who governs them and how, for which people have fought and died.

The need for a Sovereignty Bill: the words of David Cameron

Before the election David Cameron made it clear that it would be his intention to safeguard, indeed to buttress, parliamentary sovereignty. Two Bills were promised: a Referendum Bill to ensure that the UK could not transfer yet further powers to the European Union without both Parliament and the people positively voting for it; and a Sovereignty Bill. In his speech, ‘Giving Power Back to the People’ (given at Imperial College on 25 June 2009), David Cameron said this: ‘Because we have no written constitution … we have no explicit legal guarantee that the last word on our laws stays in Britain…So, as well as making sure that further power cannot be handed to the EU without a referendum, we will also introduce a new law, in the form of a United Kingdom Sovereignty Bill, to make it clear that ultimate authority stays in this country, in our Parliament.’ The Coalition Agreement likewise talked of a ‘United Kingdom Sovereignty Bill to make it clear that ultimate authority remains with Parliament.’ In a further speech on 8 February 2010, ‘Rebuilding Trust in Politics’, David Cameron also stated:

“We will push power down not just from the Government to Parliament but from Whitehall to communities, from the state to citizens, from Brussels to Britain, from judges to the people…”

And we need

“to strengthen the place of Parliament at the heart of our democracy, I believe we should be increasing its powers over unaccountable bodies. We will make sure there is proper Parliamentary scrutiny of everything that comes out of the European Union - the laws, the regulation, the spending, the lot.” 

The Prime Minister’s present rejection of the European Scrutiny Committee report flies in the face of this statement. Furthermore, in the same speech he says,

“…we would claw back powers from the EU and make sure no future government can ever give powers away in future without first asking the British people. And it’s why we will abolish the Human Rights Act and introduce a new Bill of Rights, so that Britain’s laws can no longer be decided by unaccountable judges.” 

The same applies in the context of this European Union Bill. The preelection understanding that two Bills would be required to achieve this was correct and sensible, for the reason that the EU is far from the only current threat to parliamentary sovereignty. The sovereignty of Parliament needs safeguarding not only from the EU but also from our own judges.

Clause 18 of the EU Bill: not a “sovereignty clause”: the Notes on the EU Bill 

The Minister for Europe claimed in his evidence to the European Scrutiny Committee that the agreed “Bill is being introduced by the means of Clause 18”. However, As the European Scrutiny Committee unanimously points out, Clause 18 certainly is not a Sovereignty Bill and on the evidence is not a sovereignty clause. Clause 18 is expressly stated to be no more than a declaration about the “Status of EU law”.

Unfortunately, the wrong signal which this Bill is sending to the courts is amplified by the misrepresentations and distortions of case law contained in the Bill’s Explanatory Notes. These state that the basis of the principle of parliamentary sovereignty is the common law. It is not. The Committee described this as “dangerous”. The common law is the judge-made law of this country. The judges are its authors and its guardians. They may change it whenever they judge that it should be changed. The sovereignty of Parliament should not be understood to be a common law principle. To understand it in this way would mean, of course, that the judges would be free to change it whenever they judged it appropriate to do so. As the greatest judges have long since recognised, however, they do not have this freedom.

Is this the Coalition Effect? 

It is ironic that a Conservative PrimeMinister should be willing to place parliamentary sovereignty in such jeopardy, or to pursue a policy deliberately devised to promote Liberal Democrat ideology. The Coalition attitude to parliamentary sovereignty, judicial supremacy and the EU is part of the disastrous constitutional revolution which is underway. The Liberal Democrats have never troubled themselves to seek to defend parliamentary sovereignty. It is their policy is to destroy it. They seek not only a federal Europe, but also a written constitution for the United Kingdom: a written constitution would be a legal document, enforceable by the courts destroying parliamentary sovereignty and replacing it with judicial supremacy.

The exchange of letters with the Prime Minister 

Bill Cash wrote to the Prime Minister on 13th December, who replied on 5th January (letters attached). Throughout his letter, the Prime Minister avoids the fundamental constitutional issue. Given the European Scrutiny Committee’s report and the debates in Parliament, there can no longer be any doubt but that the Government are fully apprised of the risks they have created by the partial drafting of Clause 18 and the misleading nature of the Explanatory Notes.

His suggestion that the Foreign Secretary, the Minister for Europe and the Prime Minster agree on the need to assert and defend the sovereignty of Parliament is not supported by the facts of Clause 18 of the Bill or by the Prime Minister’s own words. The PM states that all the Conservative ministers were “very much aware during the course of the preparation of the EU Bill of the need to avoid undermining Parliamentary sovereignty”. However, he also makes clear that there was never any intention to provide an all embracing doctrine of parliamentary sovereignty. In any case, this does not address the fact that this Clause as a matter of UK constitutional law, in the context of EU law, does undermine parliamentary sovereignty.

The PrimeMinister’s reply therefore again makes the situation worse. His letter shows how that the whole matter has been misconceived and opens the gateway to the Supreme Court undermining parliamentary sovereignty.

Having said, first, that Britain needs a Sovereignty Bill to safeguard Parliamentary sovereignty in the round and, then, to retreat so publicly to the meagre offerings of Clause 18 sends as clear a signal to the judges as it would be possible to concoct that this Government is relaxed about the current questioning of Parliamentary sovereignty. This is precisely the opposite of the signal that the Government should be sending. And it is precisely the opposite of the signal that David Cameron indicated he would send in his speeches of June 2009 and February 2010 (above).

The Government have either been gravely misled or they truly believe that the sovereignty of Parliament is a common law principle. The blunder has been pointed out to them yet the PrimeMinister seeks to resist making a correction, asserting that the issue “goes far beyond the scope of this Bill”. The letter to him of 13th December was couched in terms indicating that he must have been given bad advice. However, his reply does not deal with this and his Government’s course could not be more dangerous – unless of course the Government is prepared to accept the amendments put forward as set out below.

In the last paragraph of his letter of 5th January, the Prime Minister states that he noted with interest Bill Cash’s amendments for the Committee stage and “we will consider these proposals carefully and they will properly be debated” and in a hand-written note added that he would come back on specific amendments later. The vote however is on Tuesday 11th January and voting for the amendments is essential.

The Amendments

The amendments would translate the inadequate Clause 18 into a sovereignty clause firstly, by expressly reaffirming the sovereignty of Parliament, and, second, by precluding the courts or the Supreme Court from invoking any common law principle under Clause 18. These amendments have been on the Order paper for the best part of a month. The only conclusion to be drawn from the Prime Minister’s reference to the amendments suggests that everything will turn on the votes on the Committee stage on Tuesday 11th January.

Currently, we have a Supreme Court in name only. The grave danger of this Bill is that it will result in the UK having a judiciary that really is supreme: a judiciary that can quash or set aside Parliament’s legislation. At least two current members of the Supreme Court indicated in the Jackson case that they would welcome such a move. And with it, three hundred years of British constitutional law and history will be swept away, as we wave our once-cherished parliamentary democracy goodbye and journey into the age of Rule by Judges.


Bill Cash has been the Conservative Member of Parliament for Stone since 1997 and an MP since 1984.

He is currently the Chair of the European Scrutiny Committee and the founder member of the European Foundation...

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