Rt Hon Lord Lilley

    Date of Proceeding: 30.01.2008
    Reference: 471 c424
    Member: Lilley, Peter
    Title: European Union (Amendment) Bill
    Description: I bring the Committee’s attention to my interests as declared in the Register. However, I shall draw on neither my experience as director of an oil company nor my experience as an oil analyst in the City, but on my experience as Secretary of State for Trade and Industry in the lead-up to the single market. At that time, I urged Britain to take the opportunity that we would be offered by the liberalisation that the single market would bring about. I argued that the common market had given a particular advantage to Germany, whose relative strength was in manufactures, and that the common agricultural policy had given a particular advantage to the French, who had great strength in agriculture. It was our turn now, I suggested: we had a relative strength in services and the privatised utilities, and the liberalising measures in the single market should help us to fulfil that.

    Admittedly, in the ensuing 15 years progress has been rather slower than I hoped then, but-along with, I think, the whole of my party-I still believe in the liberalisation of energy markets in Europe. We have no objection to the liberalising provisions that are in the existing treaties and are, to a degree, mirrored in this treaty. We see no point in changing them, and we see no gain in reaffirming or altering them. If we were to stick with existing treaties, we would have all the liberalisation that we would have if we proceeded with this treaty. However, this treaty goes further than that.

    Mr. David Drew (Stroud) (Lab/Co-op): Does the right hon. Gentleman agree that, while we may have that liberalising agenda-over which some of us have nothing but fears-the French have made it absolutely clear that they will not liberalise their energy markets? That is why they have been so successful.

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    Mr. Lilley: I agree. The one change that this treaty makes is to reduce the liberalisation, not through the clauses that we are currently debating but through the change secured by the French President which removed the pre-eminence of competition policy from the preamble of the original treaties. This treaty lessens the liberalising force that we would have if we stuck with the status quo.

    I want to focus on the new powers, and above all, the new references to security of energy supply. That is to be a shared competence, and has been pointed out, we can legislate only in so far as the European Community chooses not to. Decision making will primarily operate through qualified majority voting, and therefore we will have no veto, except in certain circumstances to which I shall refer later.

    6.45 pm
    Kelvin Hopkins: I thank my constituency neighbour for giving way. He is talking about security of energy supply, and there has been much emphasis on the need for us to develop a degree of independence in energy in the longer term. His party-perhaps he himself-privatised our energy sector. Much of it was sold off to foreign companies, so not only do we not have the supplies, but we do not have control of the supplies because they are in the hands of foreign companies. Would it not have been sensible to keep those companies in public ownership in Britain?

    Mr. Lilley: I am happy to reply to that point because I have some experience relating to it. If a foreign-controlled company acts against the interests of this country, we can intervene and take control of it. I was probably the last Minister in this House ever to nationalise anything-I nationalised all the companies owned by the Iraqis when Saddam Hussein invaded Kuwait in 1991. We retain such powers over companies operating in our country, but would cede some of them to European institutions under this measure. It will give the EU competence to control, plan, influence or ration the supply of energy. That is what it is all about.

    For the Liberal party, the hon. Member for Northavon (Steve Webb) complained that we in the Conservative party were worrying our little heads unnecessarily, thinking up remote and unpleasant possibilities of what might happen to this country. But thinking about security requires one to think about unpleasant things that may happen. It is a bit rich for the Liberal party, having castigated the Financial Services Authority for not thinking about the remote possibility that Northern Rock might go under, and that there might be a run on a bank, which had not happened for the previous 140 years, to castigate us for thinking about what might go wrong in the sphere of energy. In the past, we have seen the Suez crisis, the OPEC embargo, the Iranian embargo and the Russian interruption of supplies to Ukraine. We know that energy can be used for political means, and can cause insecurity of supply. In such circumstances, it is important to know how to respond, and to have the powers to do so. Such issues are important, and we have to think about what might happen if we transfer authority for such decisions to the mechanism of qualified majority voting, and about how that would affect this country.

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    One of my hon. Friends said that we are all in it together, so it is worth pooling our sovereignty, or at least sharing risks, with other countries because we would then all be able to help each other. Logically, it is only worth a country sharing risks with others, and sharing its energy supplies, if those countries face fewer risks than it does, or have more energy supplies. In any other circumstance, one is simply exposing oneself to other countries’ risks, and may be sharing one’s energy resources with them without gaining anything in return.

    Mr. Philip Hollobone (Kettering) (Con): My right hon. Friend makes an excellent point, but member states do not need to be in the European Union to achieve that end. One reason that wind power is so successful in Denmark is that it has an arrangement with Norway giving it access to Norway’s hydro-power when the wind is not blowing in Denmark, and the same is true the other way round. Norway is not in the EU and Denmark is, so the Lisbon treaty is not needed to effect such arrangements.

    Mr. Lilley: That is true and my hon. Friend makes a good point. However, I was trying to focus on interruption in supply that is politically conceived or perhaps caused by a natural disaster, and whether we should retain our independent power to respond to that emergency or transfer it to collective decision making in the European Community, as the treaty of Lisbon requires.

    Ms Hewitt: Will the right hon. Gentleman give way?

    Mr. Lilley: I shall do so in a moment after making a little further progress, when the right hon. Lady, as a fellow former Secretary of State for Trade and Industry, may realise that my arguments require no qualification by her.

    We in this country have the biggest reserve of oil and gas in Europe. We would therefore share something positive with countries that face risks but do not have the same resources to share with us in the event of our needing their help. We have also diversified slightly more than other countries, especially in opening up to achieve 20 per cent. of our gas supplies from Qatar. That will relieve at least some of our dependence on future gas supplies from Russia and central Asia. I do not therefore understand the logical case for us, in our specific circumstances of being the principal oil and gas producer, to share risks and supplies with other countries.

    Mr. Bernard Jenkin (North Essex) (Con): Does my right hon. Friend recall that the potential of the then Common Market to take over our oil was one of the key issues of the 1975 referendum? Those in favour of joining gave copious assurances that it would never happen. Yet the treaty explicitly provides for that.

    Mr. Lilley: I confess that I had forgotten that, although I participated in the referendum. I campaigned ardently for a yes vote, having been persuaded to overcome any reservations by the attractive young lady who ran the Britain in Europe movement, and whom I subsequently married. I must therefore declare the further interest that I have done well out of Europe.