[Un-allotted Half Day] — European Union
Opposition Day
6:48 pm

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

I beg to move,

That this House
commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK;
regards the use of the veto in appropriate circumstances to be a vital means of defending the national interests of the UK;
and recognises the desire of the British people for a rebalancing of the relationship with our European neighbours based on co-operation and mutually beneficial economic arrangements.

Yesterday in the House the Prime Minister referred to a period of great change in Europe. There is a sense arising out of the European Council at the weekend that something very significant has happened in terms of the United Kingdom and our relationship with the European Union. A taboo has been broken. For the first time in living memory, a Prime Minister of the United Kingdom has gone to an EU summit not only prepared to say no but, in the event, actually using the veto when it became necessary in our national interest. I commend the Prime Minister for sticking to his word and wielding the veto in the circumstances that he outlined in this House last week. I have to say with regret that that is not something that we have come to expect from British Governments. We have been more used to Ministers going to crucial EU meetings in recent years and coming back having to explain why the latest EU regulation or measure is being implemented despite the implications for our national interests.

It is clear that what the Prime Minister has done has gained support from people from right across the political spectrum. That may not be reflected in some of the speeches, interventions and posturing in the House, of course, but it is clear that a large number of people from all backgrounds, whether they are Tory, Labour, Liberal Democrat or support parties in Northern Ireland, agree with what the Prime Minister has done.

Photo of Andrew Percy

Andrew Percy (Brigg and Goole, Conservative)

May I provide my right hon. Friend with an example of that? Two of my constituents living on the Isle of Axholme wrote to me last night by e-mail to inform me that they had voted Liberal Democrat in the general election but would now vote Conservative because of our Prime Minister’s actions.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

I am sure there will be many such messages flooding in to right hon. and hon. Members over the coming days. There is no doubt that, not for the first time, many Members are out of step with what the people think.

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Denis MacShane (Rotherham, Labour)

Very simply, what action did the Prime Minister veto? A veto is imposed to prevent something from happening.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

I will come on to that in detail, but he prevented a treaty from coming into place that did not have sufficient safeguards for the United Kingdom. It is

a pity that when the Labour party was in government, it did not take such action to prevent some of the things that happened to this country.

Photo of John Redwood

John Redwood (Wokingham, Conservative)

Of course, the Prime Minister stopped a treaty for the 27. Did the right hon. Gentleman see that the statement that was issued was made only by the 17 euroland Heads of Government? The other nine have not signed up to it. That is very clear in the statement, so it is misleading to say that Britain is isolated when the other nine think it is a lousy treaty as well.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

The right hon. Gentleman is absolutely right, and I will come to that. Even today, we are hearing of issues in Denmark and that Sweden is unlikely to sign up. In Poland, it has been pointed out that two thirds of each House will have to support what has been agreed if the country is to sign up, and it is unlikely to get that. We are hearing similar things in Finland, the Czech Republic and other countries, never mind what is going on in Germany and even France. This is potentially a watershed moment in British politics.

Photo of William Cash

William Cash (Stone, Conservative)

This is a good moment to place on record the fact that the Democratic Unionist party has played a stalwart role in this whole business from the beginning. That needs to be put on the record, as part of the historic tribute that needs to be paid to that party in this matter.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

I am very grateful to the hon. Gentleman for his kind remarks. Given that he was commended even by the leader of the Labour party in the House yesterday, those words are very welcome coming from someone with such vast experience in fighting these battles over the years.

What happened at the weekend is important not so much for the substance of the matter in itself but for the rebalancing of our relationship with the European Union that it might herald. I refer to that in our motion.

Many people say that because of the action that the Prime Minister has taken, we are now marginalised and isolated. Many of those who say that are, of course, the very same people who at one time not so long ago were urging us to join the euro. They were the people who castigated the euro-realists who dared to point out the in-built defects of the euro project. They made the same dire, doom-laden predictions then. They were wrong then, and they are wrong now.

Being outside arrangements that exist for most of the other EU members is, in any case, nothing new. For instance, the UK is not in the Schengen agreement. We were told by some that that was contrary to the spirit of being good Europeans as part of the EU, but it is absolutely right in the interests of the UK and the protection of our borders.

We heard much yesterday and over the weekend about the damage that the latest developments might do to our country’s standing in the world. For instance, we heard about how the Americans might view us. However, yesterday Hillary Clinton made very clear what she thought, saying that

“our concern has not been over the position that the UK has taken, it’s whether the decisions made by other members of the eurozone countries within the EU will work.”

With respect, that is the nub of the matter. What matters is what will happen to the eurozone.

We have talked about the role of other countries. Mr Redwood referred to other countries that have not signed up, and I mentioned Sweden. It will also be interesting to see what the position is in the Irish Republic when the matter has been considered in detail. It is not so much the text of the proposal as its substance that matters in the decision whether the agreement must go to a referendum. It will be interesting to see the reaction there. It is clear, is it not, that the French Government and others have a clear policy when it comes to corporation tax? Over the years, the Irish Republic has prided itself on attracting foreign direct investment through low rates of corporation tax, and it has built its economic policy around that to a large degree. It will be watching the matter very carefully.

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Anne Main (St Albans, Conservative)

Does the right hon. Gentleman share my concern about the fact that a French MEP is suggesting this evening that Britain ought to be punished for taking a view that supports the best interests of Britain? Should countries be punished for not behaving themselves?

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

The hon. Lady is right to point to some of the vindictive language that is coming out of Europe. Indeed, President Sarkozy was talking today about consequences for the United Kingdom because of the actions that we have taken. We have to recognise that there are dangers—I think the Prime Minister talked about “risks”—in the intergovernmental approach, and I will deal shortly with what that might mean. It is one reason why we cannot let matters sit where they are. We are in an unsatisfactory position, and we need to decide how we will deal with the situation.

In France, the Opposition Socialist contender in the presidential election, François Hollande, has made it clear that if he were elected, he would seek to renegotiate any agreement that was reached, because he opposes the loss of French budgetary sovereignty. The concerns felt in the House are not some isolated, strange, esoteric or unusual position, but are shared across large parts of Europe by many parties, many of which would not be described as naturally Eurosceptic, right-wing or anything of the sort. Members would do well to bear that in mind when they talk about the Government being in thrall to a small minority of MPs and others. They should recognise the reality. The idea that there is a united Europe of 26 against the UK is not correct.

Of course, many countries have to put the new euro-plus arrangements to parliamentary approval, at least, if not to a referendum. We will see what happens when they actually consider the implications of having their national budgets supervised by the European Commission, and the fact that strict rules will be imposed on their national Governments’ ability to borrow, with all the implications for sovereignty that that entails.

For all the adverse reaction from some on the Opposition and Liberal Democrat Benches yesterday, the fact is that the Prime Minister’s stance has the overwhelming backing of the people of the United Kingdom.

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John Baron (Basildon and Billericay, Conservative)

The right hon. Gentleman’s points are absolutely right. May I suggest to him that many Conservative Members

believe that the veto should be the start of a process to reset our relationship with the EU, based on free trade, growth and prosperity? We want to move away from political union and dead-weight regulation. That is not some utopian dream—such a relationship already exists. I ask him to reflect on the fact that countries such as Switzerland already enjoy such a relationship with Europe, so there is no reason why we should not.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

The hon. Gentleman is absolutely right, and I will come shortly to how we should rebalance our relationship with Europe. He is right to point to the type of relationship that we should have—one based on free trade and co-operation with our European friends and neighbours, but on a sovereign nation to sovereign nation basis.

There are those who tell us that the Prime Minister has gone against the whole thrust and approach of UK foreign policy for the past 40 to 50 years. I have no doubt that there is much wailing and gnashing of teeth in the bowels of the Foreign Office and elsewhere among the professional mandarins who have seen the EU as almost a sacred cause, to be advanced whatever the wishes of the British people or the views of the temporary occupants—as they would see it—of political office. For the mandarins, the people and those who occupy political office are to be managed and dealt with—although I am sure that that does not apply to the occupants of office in this Government.

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Martin Horwood (Cheltenham, Liberal Democrat)

The gnashing of teeth is not just among mandarins, is it? Has the right hon. Gentleman heard from the business analysts at IHS Global Insight? They said:

“the European council statement made clear that a new ‘fiscal stability union’ would seek to deepen the internal market, creating stronger fiscal and economic rules.

‘Outside this union the UK is likely to become increasingly irrelevant and marginalised’”.

Does not such concern on the part of business worry the right hon. Gentleman?

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

I have heard all that before. We heard it at the time of the UK’s withdrawal from the exchange rate mechanism and when Britain decided not to join the euro. We have heard time and again the dire warnings of doom and gloom. However, if we reach the position that Mr Baron outlined, of a relationship based on free trade and co-operation, it will free our economy from much of the regulation, red tape, bureaucracy and dead-weight of EU laws that currently hold us back from the true competitiveness and real growth that we need.

We have not just heard from Martin Horwood; we have also heard the hysterical reactions of blasts from the past such as Paddy Ashdown, Michael Heseltine and the other usual suspects. It is time the House realised that focusing our foreign policy on the narrow ground of greater Europeanism and ever closer political union in Europe is contrary to the UK’s vital interests.

We make it clear that we must and should work with our European neighbours and friends on a host of economic, political and policy issues. However, let us also recognise the enormous opportunities on the wider scene: our unique position in terms of the Commonwealth,

our special relationship with the United States, and our standing in the United Nations. For too long our vision as a country has been dominated by the little Europeanists, who want to take us in only one direction. It is high time that blinkered approach was discarded.

There are those who say that what the Prime Minister did was wrong because we must do all we can to save the euro. However, as was said earlier, in considering the events of last weekend, it has been overlooked that, for all the talk about arrangements to prevent future crises, not a lot was done to instil confidence that the immediate crisis will end any time soon.

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John Redwood (Wokingham, Conservative)

The right hon. Gentleman is making a good point. Did he see that if, for example, Ireland or the United Kingdom joined the so-called stability pact, they would have to make massive cuts in public spending and massive increases in taxes? It is a sort of mutually assured austerity pact.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

Yes. For precisely that reason, I believe that when the peoples of each country—and even some of the politicians, who are currently going around saying that the UK has done a terrible thing—begin to study the detail and realise the restrictions that will now be imposed on their freedom to set their budgets and taxes, to borrow and so on, they will seriously reconsider the proposal. Having caused the greatest economic catastrophe for many decades, by creating the euro and the one-size-fits-all approach, EU leaders have come up with a bizarre answer: no comprehensive solution to deal with the immediate and pressing crisis, and no overarching deal that will properly address the problems that Greece, Italy and Spain face, but a plan to deepen and extend European integration—a plan for more treaty change and more institutional tinkering.

After all the arguments about the Lisbon treaty, we were told that Europe had learnt its lesson and that there would no more institutional debates and treaty changes. Instead, Europe was to get on with the business of trying to create jobs, growth and economic prosperity, yet here they are, at it again. There is a one-track mind among many European federalists about deepening European integration, and political and fiscal union.

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Bob Stewart (Beckenham, Conservative)

When the euro was set up, were there not strict rules on compliance for those joining, which even some of the biggest countries largely ignored? Now there is again talk about strict rules on compliance. Perhaps the boy is crying wolf; I do not believe that those rules can be enforced on countries that have shown in the past that they will not comply. They will not comply in future, either.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

The hon. Gentleman makes a good point. He is right: in the rush to set up the euro, which was a political project from the beginning—it was believed that it would ultimately lead to political and fiscal union—those behind it permitted countries that they knew were not capable of meeting the requirements to join. What they are trying to do now will not succeed in patching the whole thing together.

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Julian Lewis (New Forest East, Conservative)

The right hon. Gentleman is being extraordinarily generous in giving way. To support what he has just said, does he

remember Romano Prodi, then President of the European Commission, on that fateful new year’s eve when the euro was brought into effect, being asked, “This is a political project, isn’t it?” and his replying, “It is an entirely political project”? Is that not the reason why those people are so desperate to continue with it, even though it is leading to economic disaster?

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

Absolutely. The hon. Gentleman is right to remind the House of Prodi’s words at that time, of the fact that the nature of the project is explicit, and of what lies behind it.

Some people say that the Prime Minister acted to protect the City and the big banks. If it was all about that, I would not be standing here supporting the motion. We need more regulation of the banks and of those who contributed greatly to the mess in which we find ourselves. One of questions that arises from the Vickers report is how to regulate banks more strictly, and we need to be able to go further, unfettered by the EU. I also believe in the so-called Robin Hood tax—provided that it is applied universally and not targeted mainly at London and the UK to prop up the failing euro, of which we are not part.

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David Morris (Morecambe and Lunesdale, Conservative)

On the Tobin tax, £40 billion would have been taken out of the City. Does the right hon. Gentleman agree that that would equate to £642 in taxation for every man, woman and child in this country?

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

The hon. Gentleman is right to point to the effects if the EU had targeted the financial services sector, unfairly penalising the UK. The tax revenues of which he speaks are enormous and the contribution to employment—not just directly—is significant for the UK. There are arguments for measures such as the Tobin tax, but they have to be applied universally. The UK alone should not be picked out.

Some say that the Prime Minister’s action will cost jobs and damage British business, but the EU’s share of world trade is decreasing. Who believes that the EU would want to stop exporting to a market of some 60 million people, or inhibit trade that would cost the jobs of millions of people in the EU? That simply will not happen. All the scaremongering about that, as in the past, is not based on economic reality.

We must guard against the inevitable pressure that will come—and is already coming—behind the scenes from diplomats, mandarins and others who will try to drag the Prime Minister away from his current stance and use the back door to achieve the UK’s acquiescence. The Prime Minister has already hinted at some sort of compromise on the desire of the euro-plus countries to use the EU institutions. He needs to be careful about that. If they want to do that, we need to ask what they are prepared to do for the UK in return. I hope the Prime Minister will not accede to the pressure being exerted to allow that to happen by the back door.

Of course, it is important to recognise the limits of what has happened. As a result of what happened at the Council, 26 countries—or however many it will be in the end—cannot themselves implement agreements on financial services or other things that have an impact on

the single market. That must be done through the single market Council. However, therein lies a problem. Yesterday in his statement the Prime Minister alluded a couple of times to the risks involved in the intergovernmental arrangement. As I said in my contribution yesterday, the very real risk is that other EU member states will gang up on the United Kingdom and outvote us through qualified majority voting.

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Mike Gapes (Ilford South, Labour)

Is not the reality that nothing has changed with regard to financial services? Twenty-six cannot impose qualified majority voting; nor can 27. At the end of the day, therefore, the so-called veto was not a real veto, because 26 have gone ahead. The reality is that we still have the right to block changes in that respect under the Single European Act.

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Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

I do not agree with the hon. Gentleman. The Prime Minister is right to say that it would have been entirely wrong, without sufficient protections, to have a treaty that, as he put it, would have hard-wired the situation into the European Union treaties. Mike Gapes alluded to protections, but QMV does not provide the UK with much of a protection. As has been said already in the debate, given some of the vindictive language being used in European capitals at the moment, we must be very careful indeed. It is clear, in my view, that the status quo cannot stand in the medium to long term.

Photo of William Cash

William Cash (Stone, Conservative)

Does the right hon. Gentleman accept that what he is saying is incredibly important in terms of the future path, because the real problems are contained in the existing treaties themselves, which need to be fundamentally changed, along with our relationship with the European Union? That is the real problem. We should not just nibble at the edges.

Photo of Nigel Dodds

Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

The hon. Gentleman is right in that regard. We cannot have a situation in which a bloc of eurozone countries acting collectively can use its voting power at EU level to force through measures to the detriment of the UK’s national interest.

Even the Deputy Prime Minister has warned against the dangers of a club within a club. The new club will have a common interest and act collectively. The Secretary of State for Northern Ireland pointed that out in a recent article in The Spectator. He said:

“a fiscally united eurozone will spend as a bloc, tax as a bloc…and…vote as a bloc”,

and he is absolutely right.

For that reason and a host of others it is clear, as Mr Cash said, that a fundamental reassessment of our relationship with the EU is required. The Prime Minister’s use of the veto is very welcome. Saying no to Europe has been and remains almost unthinkable for some in the political elite, no matter what the cost in terms of our national interests, but the question now is: where do we go from here?

As things stand we are left with all the old familiar problems with the EU that we had before the European Council. We are left with the huge issues of loss of sovereignty and EU control of vast swathes of UK laws and policies. We are still committed as a country, because of the EU treaties, to “ever closer political union”. We remain subject, for instance, to the common fisheries

policy, to the plethora of regulations and directives that stifle competitiveness and growth, and to interference in criminal justice and home affairs. Not least, we are still required to contribute almost £10 billion per year net to the EU at a time when domestic budgets are being slashed, and QMV provisions under the Lisbon treaty have reduced the areas where we can say no to EU intrusion.

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Ian Paisley Jnr (Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Environment, Food and Rural Affairs); North Antrim, DUP)

On that £10 billion net that we contribute each year to the European Community, does my right hon. Friend agree that we would be far better exercised in determining how those resources are spent on our own fishermen, our own farmers, our own industrialists and our own banks, rather than letting bureaucrats and eurocrats determine how it is spent?

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Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

My hon. Friend is absolutely right.

I sometimes hear others, particularly elements of the media, and particularly the BBC—this will not be first time that hon. Members have referred to the BBC in that regard—argue the case for Europe by saying, “But look at the vast amounts of money we get.” That has sometimes been stated about Northern Ireland; my hon. Friends will deal more particularly with the situation there later. We are told, “But you’ve benefited from all these initiatives,” and so on and so forth, but the money involved is a small percentage of what we pay into Europe in the first place. In many cases it comes with so many strings and conditions attached that it would be far better if it were disbursed by our own Government or at a regional level.

The Prime Minister said yesterday in the House:

“the balance of powers between Britain and Europe is not right”—[Hansard, 12 December 2011; Vol. 537, c. 530.]

I prefer the use of the term “United Kingdom”, because Northern Ireland is an important part of this, but the Prime Minister is absolutely right. We must therefore build on what has happened.

Many talk about the need to have powers repatriated. I sympathise with their aims and objectives, but repatriation can be limited. We may gain here, but we will lose there. I think we need a more fundamental and simpler approach. We know what the British people want, we know what makes sense for the UK in the long run, and, as we say in our motion before the House, we must rebalance our relationship with our European neighbours.

The relationship must be based on free and mutually beneficial co-operation. It must be about free trade and commerce, to the mutual benefit of businesses and consumers throughout Europe—that is the best way to create growth and prosperity—and it must be about laws being made in this country by democratically elected and accountable representatives of the British people. That is the sort of relationship that people in this country want with Europe. I believe that for too long there has been a determination on the part of the political and diplomatic elites in this country to deny the people of this country any say on Europe. Ultimately, people must be given the opportunity—finally—to have their say through a referendum. I believe that the events of the weekend have brought that day closer, and I commend the motion to the House.

Several hon. Members:

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Photo of Dawn Primarolo

Dawn Primarolo (Second Deputy Chairman of Ways and Means; Bristol South, Labour)

Order. Before I call the Minister, I inform the House that the amendment in the name of the Leader of the official Opposition has not been selected, and that after the Front-Bench opening speeches there will be an eight-minute time limit on Back-Bench speakers. That might need to be reviewed.

7:18 pm
Photo of David Lidington

David Lidington (The Minister for Europe; Aylesbury, Conservative)

I congratulate Mr Dodds both on his choice of subject for today’s debate and on how he presented his case to the House. I should say that I was intending in any case—given the number of Democratic Unionist Members whom I am sure wish to participate—to keep my remarks briefer than normal and to give way less frequently than I normally try to do in debates on European policy. Your warning, Madam Deputy Speaker, on time limits reinforces the need for me to behave in that fashion.

I thank the right hon. Gentleman for his robust support for the decision that our Prime Minister took at the summit meeting last week and agree with him that the priority for the EU ought to be—for the eurozone countries in particular—fixing the immediate and urgent crisis in the eurozone, which is having a chilling effect not only on the UK economy, but on prospects for growth and job creation more generally in the global economy, and particularly the western economy. I also agree with the emphasis that he placed on the need for the EU to focus on growth, jobs and competitiveness in framing its priorities for the future.

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John Redwood (Wokingham, Conservative)

Can the Minister assure me that the Government have no intention of agreeing to this fiscal pact or of letting them use EU institutions to enforce it?

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

The position on the use of the institutions was set out in some detail by my right hon. Friend the Prime Minister yesterday. The truthful response to my right hon. Friend Mr Redwood is that we are at an early stage. The 26 countries agreed to a pact, but not to a legal instrument, and we do not yet know what action they plan to take. We want the new treaty—if it turns out to be a treaty—to work in stabilising the euro and putting it on a firm foundation, and we understand why those countries want to use the institutions, but it is new territory and raises important issues that we will need to explore with our colleagues in those other European countries.

In the months to come, our intention is to be engaged in the debate about how institutions that have been created and built to serve the interests of all 27 member states and not some subset should continue to operate fairly for all member states and, in particular, for the United Kingdom. We have been very supportive of the role that the institutions—in particular, the Commission—have played in safeguarding the single market, and we will look constructively at any proposals with an open mind, but we need to be clear that if this country had agreed treaty change without safeguards, there would be no discussions going on at all and no protection for important United Kingdom interests.

It is not the case that there was something extraordinary or wrong about the Prime Minister’s decision to veto agreement to a treaty at the level of 27 member states

last weekend. The safeguards that he was seeking were safeguards not just for the United Kingdom, but for the whole of the European Union. They were modest, reasonable and relevant and, when they were not forthcoming, the Prime Minister made the right decision, which was to use our veto to protect our national interest.

As the right hon. Member for Belfast North said, we have heard before many of the dire warnings about isolation and retaliatory measures. We heard them when the euro was first created, and it turned out that far from joining the euro being a great opportunity for the UK and for UK business, we were well served by the decision to stay out of the single currency, and I have seen little evidence in the last couple of years to persuade me that—

Several hon. Members:

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Photo of Dawn Primarolo

Dawn Primarolo (Second Deputy Chairman of Ways and Means; Bristol South, Labour)

Order. I am sorry to interrupt the Minister. He has indicated several times that he is not prepared to give way at this point. I hope that we can hear what he has to say now, and he may feel like giving way a little later.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

I have already explained why I do not intend to give way as frequently as I usually do in these debates. Several of my hon. Friends have had, and will continue to have, many opportunities to put their arguments to me. I am sure that they will seize themselves of those opportunities, but tonight I am conscious that this is one of the rare occasions on which the debate belongs to the Democratic Unionist party, and I do not want their members to be crowded out because the Front Bench goes on for too long.

The truth is that we have always had a Europe in which there have been multiple forms of co-operation. We are not in the euro and nor do we plan to be. It is good that we have our own economic policy, interest rates and ability to deal ourselves with the problems we face in our economy. The United Kingdom remains a key—indeed, a central—member of all initiatives on European foreign and defence policy co-operation, but we are not in the Schengen borders organisation. We are a key member of the single market, and in fact it is the UK that often drives change and improvement in the single market.

On the other side of the equation, at the same time that the European Council was in progress, the British Government were working closely with EU partners to shape a successful negotiation on climate change this weekend in Durban. Our intention is to continue to work hard with our many allies in Europe to advance our interests. That is not isolation: it is defending Britain’s national interest, and that is what the Government are going to continue to do. That does not mean, as some have said, pulling back from our relationship with the European Union. We remain a full member of the European Union, and that membership is vital to our national interest. Our national interest and the EU interest are not mutually exclusive; we have genuine common interests.

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William Cash (Stone, Conservative)

I am profoundly and deeply grateful to my right hon. Friend for giving way at last. Would he care to comment on the report in the newspapers today that the Government have already received legal advice that they can use the institutions in relation to the agreement of the 26? The European Scrutiny Committee will be looking into this matter extremely carefully and will no doubt ask him to come to give advice on that matter.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

I look forward with my usual sense of delight to the opportunity to give evidence to my hon. Friend’s Committee. Seriously, I would be happy, as would my officials and those from other Departments, to give evidence to his Committee, but my hon. Friend has been in the House long enough to know that no Minister of any Government comments on legal advice that Ministers may or may not have received.

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Tristram Hunt (Stoke-on-Trent Central, Labour)

Can the Minister give us some sense of how much British taxpayers’ money has been wasted by the allocation of Foreign Office officials to talk with members of his party—the group of 81 Conservative MPs who voted for a referendum—about the repatriation of powers? Is that a good use of taxpayers’ money?

Photo of David Lidington

David Lidington (The Minister for Europe; Aylesbury, Conservative)

I actually think that it is a very good idea for officials, not only from the Foreign Office but from other Departments, to hear creative and constructive ideas, especially from Members of Parliament of all parties—and the all-party group on European reform includes members of the hon. Gentleman’s party, as well as members of mine—and from people outside Whitehall and government. The Foreign Office has a range of contacts with think-tanks and academics as well as with Members of Parliament, so that our policy making can be informed by creative ideas from outside. That seems to be a very sensible way in which to do government, and I am slightly shocked that the hon. Gentleman should appear to think that a closed cadre in Whitehall, insulated from all kinds of outside advice and influence, is the best way to proceed. If that is the thinking of the Labour party, it might explain the disastrous inheritance that he and his colleagues bequeathed to this Government.

The German Chancellor’s spokesman said yesterday that Britain is one of Germany’s closest partners and one of her most important allies and friends; that we work very closely together on a number of different policy challenges, including within the context of the European Union; that what Britain and Germany share are key convictions on competitiveness and on what creates jobs, innovation and creativity in the economy; and that we will both continue to work to make the single market a joint success. President Sarkozy, with whom we have had one or two disagreements, said in an interview with Le Monde yesterday that he recalled our partnership in defence co-operation signed in November 2010 and our joint intervention in Libya, as well as our shared commitment to nuclear energy as part of a balanced overall energy policy. Our partnerships with France, Germany and all our European allies remain strong and dynamic.

We need not listen only to European leaders. The US Secretary of State was asked the other day whether the position that the Prime Minister took at the summit

had caused her concern, given what the questioner termed “the historic bridge” that Britain had offered between Europe and the United States. Secretary Clinton replied in very clear terms:

“I have to say it does not. I think that the role that the UK has played in Europe will continue.”

I do not think that these fears of isolation, which for obvious reasons of vested interest the Opposition want to whip up, will turn out to have substance.

If the Opposition want a little more reassurance from someone whom they might trust a bit more than the German Chancellor’s official spokesman or the United States Secretary of State, I refer them to the comments of Lord Digby Jones.It is no good the shadow Foreign Secretary shaking his head. He was happy to serve in government alongside Lord Jones. In fact, the Labour members of that Government were happy to hail his recruitment as evidence that they were attracting a Government of all the talents and bringing in people from British business to strengthen their ranks—they certainly needed strengthening. Anyway, when asked whether Britain’s business interests would survive and flourish, Lord Jones said, “Definitely.” There is a clear view that our partnerships in Europe will continue and that the opportunities available for British business in Europe will continue to thrive.

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Andrew Percy (Brigg and Goole, Conservative)

Should we not try to regain ownership of this word “isolation”? Surely, it is not a bad thing to be isolated from something that is not in the country’s interest, that is bad for the United Kingdom and that the British public do not want to be a part of.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

There was a time when Labour leaders were prepared to accept that sometimes there was a need to stand out on their own in defence of British interests. Tony Blair said, when he opposed the introduction of an EU-wide tax on savings, that if we are isolated and we are right, that is the correct position to be in, but as we know, the Leader of the Opposition told his party conference:

“I am not Tony Blair”.

We have yet another example of that inheritance now being disavowed by those who were happy to serve when the opportunity arose.

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Anne Main (St Albans, Conservative)

Will the Minister provide a little more clarity on one point? I believe that the British public do not expect the EU institutions to be used to deliver what they could not deliver under a treaty. Will he give his view on that? If the institutions can be so used, we have been sold a pup—we will have refused something only to be given it in a different manner and in a way that we have to accept.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

I replied to that point at some length in response to my right hon. Friend the Member for Wokingham, and I have nothing to add to those comments.

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Andrew Murrison (South West Wiltshire, Conservative)

I thank my right hon. Friend for giving way; he is being very generous. The Labour party talks about isolation and influence, but does he recall the influence exercised by Mr Alexander when he surrendered the 1984 £7 billion rebate in return for a whole load of waffle about the common agricultural policy that, of course, has resulted in precisely no action whatsoever?

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

My hon. Friend is spot on. The right hon. Gentleman was the Europe Minister when the deal was made, and it cost this country a great deal of money for no gain or reform of the CAP, despite the pledges that we were given at the time.

I want to emphasise that despite the major disagreement at last week’s summit meeting over the proposed new treaty amendment, all 27 Heads of State and Government agreed on further measures to strengthen the single market and to cut the cost of European regulation and red tape on businesses throughout the EU. As part of a long-term campaign to cut back unnecessary regulation, the Prime Minister secured agreement from the European Council to endorse actions proposed in the Commission’s report on minimising the regulatory burden for small and medium-sized enterprises. Consequently, from 2012 micro-businesses employing fewer than 10 people will not be subject to European regulation, which stands to benefit 4.3 million businesses in the United Kingdom, including, I understand, about 95% of enterprises in Northern Ireland.

The European Council’s conclusions also emphasised the need to prioritise growth and the single market, and the Commission’s annual growth survey, published just ahead of the Council meeting, reflected this country’s calls for faster action to be taken to promote growth, including through the creation of a single market in the digital economy and energy.

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Ian Paisley Jnr (Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Environment, Food and Rural Affairs); North Antrim, DUP)

I appreciate the Minister giving way on this point about business. On the pressures that the Republic of Ireland now faces, it looks like it will be forced to remove its beneficial low corporation tax as a result of this new arrangement. At the same time, however, this nation can extend to our part of the United Kingdom the right to reduce our corporation tax. I know what side of the line I would rather be on.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

The hon. Gentleman is right to point to the risks to any country of giving up control of its tax rates to some supranational body that cannot be guaranteed always to act in the interests of any one of the nations party to the decision. It was no secret at the time of the Irish bail-out last year that the Irish Government came under enormous pressure from other EU member states to raise their corporation tax rates. As he will know, the UK Government were steadfast in supporting the Taoiseach’s resistance to that move.

I recognise what Ian Paisley said about it not always being easy to be in the EU. There are plenty of frustrations and occasions when we can see so clearly what is wrong. Any Minister from any party who has sat in European Council meetings will be able to recall times when they wanted to scream with frustration at a piece of what seemed to be unnecessary bureaucracy or expense, or at the complexity and time taken to secure reforms when agreement was needed among a collection of different Governments.

There are many areas where we would like change, but I want to make it clear that the Government’s judgment is that membership of the EU remains very much in the UK national interest. I shall briefly sketch three key areas where we believe that the benefits of our membership far outweigh the difficulties: the single market, the single voice in international trade and diplomatic leverage in foreign policy. There is little doubt that our

membership of the single market has allowed us to reap the economic, because the EU comprises the largest single market and most important trading zone in the world. It is bigger than the whole of the United States and Japan combined and gives British business access to 500 million consumers without customs or trade barriers.

In Northern Ireland, EU countries remain key trading partners. Export sales to Europe from Northern Ireland alone amounted to £600 million in 2010, and many Northern Ireland companies have been doing significant business in the EU for many years. The success stories include a broad range of Northern Ireland industries, from engineering to information technology, synthetic fibres, pharmaceuticals, and food and drink. Recognising where additional growth could be achieved by targeting opportunities in EU export markets is one of the keys to improving economic growth prospects for Northern Ireland. That is why for Northern Ireland, as for the whole of the UK, a resumption of growth within the EU would be of immense benefit to our own interests.

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David Simpson (Shadow DUP Spokesperson (Communities and Local Government); Upper Bann, DUP)

The Minister will know that the agri-food sector is one of the biggest industries in Northern Ireland, and it could grow even more if we had a level playing field with Europe.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

I am aware of the concerns in Northern Ireland about the operation of the common agricultural policy. As the hon. Gentleman knows much better than I do, the CAP is implemented in a way in Northern Ireland that is different from how it is implemented in the rest of the UK. When I was in Belfast recently, the First Minister made strong representations to me about that. I ensured that they were passed on to my right hon. Friends the Chancellor and the Secretary of State for Environment, Food and Rural Affairs. The concerns of Northern Ireland are very much in the minds of British Ministers who will be negotiating these matters.

There is well documented evidence that trade integration brings wider benefits in areas such as investment and innovation. EU member states comprise seven of the United Kingdom’s top 10 trading partners and account for roughly half our overall exports of goods and services. However, the benefits go beyond exports. EU member states are the main source of foreign direct investment into the UK, with roughly half our total FDI coming from those countries.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

The hon. Gentleman has had a chance, and I want to make some progress.

The stock of inward foreign direct investment in the UK from the EU has risen by 800% in less than 10 years, and our membership of the EU single market helps to attract the other half of our FDI, from non-EU investors, who see the UK as a platform from which to break into European trade and access the wider single market.

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Robert Walter (North Dorset, Conservative)

Will the Minister confirm to the House that Norway also has access to the single market, as a member of the European

economic area, and in return has a better record in implementing EU directives, which it has no say in, than we do?

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

My hon. Friend makes the point well. Countries in the European economic area have to comply with EU regulations and implement them fully if they are to have the single market access that we enjoy by virtue of our membership. If we were in a comparable position, British business would have to meet the costs of compliance with whatever regulatory standards the UK decided to impose, in addition to the costs of meeting the differing standards of the remaining EU bloc or any of the other European countries with which they wished to trade.

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Jim Shannon (Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport); Strangford, DUP)

The right hon. Gentleman mentioned all the sectors that are trying to break into Europe, but there is one that cannot break in, and that is the fishing sector. Does he feel that, because of the quotas, the restrictions on days at sea and net sizes, and all the bureaucracy, the fishing industry can never really break through with Europe as it is now?

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

There is no doubt that the common fisheries policy has failed both the cause of conserving fish stocks and the cause of sustaining the livelihoods of fishing communities. It is several years ago now, but I can remember going to Portavogie, Ardglass and Kilkeel and listening first hand to fishermen and their families in Northern Ireland expressing the kind of frustrations that the hon. Gentleman has expressed on their behalf. That is why the UK Government believe that the kind of proposals now coming out of the Commission on reform of the common fisheries policy are, potentially, to be seriously welcomed. If they lead to a common fisheries policy based much more on regional and local management, and on rules that mean we can abolish the obscene practice of discarding, that would be of benefit to both conservationists and fishing communities alike.

The second great advantage of European Union membership is that it helps boost our international trade, because the EU’s position as a major trading power gives it weight in global negotiations and opens up new trading opportunities outside the EU for British business. The United Kingdom has already benefited from EU trade agreements with countries such as Mexico, Chile and South Korea, and is now engaged in multiple negotiations with other key trade partners, such as Canada, Singapore, India and the Mercosur nations. Let us be honest: without the size of the EU behind us, the United Kingdom on its own is unlikely to be able to secure the same deep and ambitious free trade deals with other regions or trading countries around the world. The South Korea free trade agreement alone is expected to provide £500 million of annual benefit to the United Kingdom economy. As the Northern Ireland chamber of commerce said when the deal was concluded:

“its opportunities are many and varied, and with”

Korea’s

“wealthy population, it is simply too valuable a market to be overlooked.”

The Northern Ireland chamber of commerce was right. I hope that there will be many opportunities for Northern Ireland companies in South Korea, as the EU free trade agreement is fully implemented.

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Bernard Jenkin (Harwich and North Essex, Conservative)

I will leave the matter of the institutions—it is obviously too sensitive a point—but why would South Korea not have agreed a bilateral arrangement with a country such as Britain in any case, given that we are one of its allies and so on? Why would the South Koreans want to take protectionist measures against us if they are prepared to make a free trade agreement with the rest of the European Union?

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

The terms that one is able to extract in the context of such a negotiation will be more favourable if one can negotiate as part of a bloc of 500 million consumers. What the EU was able to offer South Korea collectively was access to a market of 500 million. The UK on its own would have been able to offer access to a market of 50 million to 60 million consumers. That is not an insignificant number, but it is a tenth of the size of the European Union as a whole. That difference in scale means that European countries have greater weight and leverage when they are able to get their act together and negotiate en bloc.

The third reason why I believe it remains in our national interest to stay an active member of the European Union is that membership enhances our ability to influence events abroad. On issues where there is a genuine common European interest, where the national interests of the 27 member states converge, it makes sense for those member states to act together, pool our influence and speak with a united voice. One voice representing 500 million consumers is heard more loudly in Beijing, Delhi and Brasilia than 27 separate voices. However, it is equally the case that where EU member states do not agree, it is right and proper that, as sovereign nations with our own national interests, we speak and act independently. It is also right that foreign policy and security and defence policy should remain matters where unanimous agreement is required for a European position to exist.

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David Lidington (The Minister for Europe; Aylesbury, Conservative)

My hon. Friend must forgive me, but I want to press on.

Collaboration over Libya has brought in many—although not all—European states, including Italy and Belgium. In recent months, the EU has exerted collective pressure on Libya and Syria, as well as on Côte d’Ivoire and Belarus. Different European countries have different contributions to make. Poland and other eastern partners can give us a unique perspective as we seek to support the democratic movements in the middle east and north Africa, and can also improve our insight with regard to our relations with countries such as Russia and Ukraine. Spain’s influence in Latin America will continue to shape Europe’s engagement there, and Portugal is now helping European interests on the UN Security Council. If we look at the EULEX mission alongside NATO in Kosovo, the EU civilian and military missions supporting NATO elsewhere in the Balkans or the Atalanta mission to tackle piracy off the coast of Somalia, we see operations of European civilian or military experts focusing on particular areas of expertise, often in tandem with NATO, the United Nations or national forces. Those are good examples of where European countries have been able to give themselves greater clout by being willing to act collectively.

The motion in the name of the right hon. Member for Belfast North says that the British people desire “a rebalancing of the relationship with our European neighbours”, and I agree with the hon. Member for North Antrim that there is too much centralised direction of many European policies.

The Government are committed under the coalition agreement to examining the balance of competences between Britain and the European Union, and as both the Prime Minister and the Deputy Prime Minister have said, there is a good case for rebalancing competences between the EU and its member states. Clearly, this would require the agreement of all 27 member states on the basis of negotiation and agreement, and could not be achieved through a unilateral decision. We have made no commitment to a particular outcome from this review. Work has begun and it is in its early stages.

In contrast to the Government’s positive and active commitment to make a success of our EU membership and our robust defence of our national interests, we have heard nothing from Her Majesty’s official Opposition save carping and an evasion of straight answers. Yet Labour was the party that committed us to the EU bail-out mechanism. This was the party that meekly surrendered £7 billion of Britain’s budget rebate. This is the party whose leader refuses to say whether he would have signed the treaty that was before the British Prime Minister last week, but tells the BBC in an interview:

“I don’t think Brussels has got too much power”.

It is a party whose leader still yearns to join the euro, but the only certainty is that if we followed its advice, we would not just be attending EU meetings, as we would be in the queue for a bail-out, along with some of the others.

The Government are committed to a positive and active role within the European Union—on the single market, on global trade and on foreign policy. That is what is in our national interest, but we will not be afraid to stand up and resist, refusing to participate in measures where we believe that they run contrary to the national interests of the United Kingdom.

7:51 pm
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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

It is clear that the Government are deeply divided on this issue. It is also clear that the Prime Minister and the Deputy Prime Minister are at odds, that Back Benchers are divided and that the Cabinet is divided. Perhaps the Prime Minister and the Deputy Prime Minister have more in common than we think, however, given that the Deputy Prime Minister empty-chaired the Prime Minister’s statement yesterday in much the same way that the Prime Minister walked out from the summit last week. It seems that the Deputy Prime Minister could not stomach listening to the Prime Minister trying to justify his position to relegate the UK to the outer fringes of the EU in the early hours of Friday morning. I believe that the Deputy Prime Minister was right to say on Sunday that the outcome of the summit was “bad for Britain” and bad for jobs and growth. If only he had been able to convince the Prime Minister of his opinion before the summit.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

I am not giving way for the moment.

As I understand it, the Secretary of State for Energy and Climate Change has just this evening added his voice to the chorus of criticism of the Prime Minister from Liberal Democrat Ministers so I will be interested to see this evening whether, given that the Liberal Democrats have had three different positions in five days on this issue, they have now come to a settled position. I hope that they will oppose the motion. How could they vote for it when they are on record as saying that what happened is a bad deal for Britain?

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Peter Bone (Wellingborough, Conservative)

Will the hon. Lady say whether Her Majesty’s official Opposition are going to divide the House on this motion?

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Yes, we are going to divide the House, and if the hon. Gentleman had let me get to the second page of my speech, which I intend to be shorter than that of the Minister for Europe, he would have found that out.

I oppose this motion—we oppose this motion—as it bizarrely commends the Prime Minister for the outcome of last week’s summit. The truth is that it was the worst possible result for the country. We have never been so isolated: 26:1. I say to Mr Dodds that there is a difference between us and the other nine non-eurozone member states because the other nine are at least in the room, contributing to a decision that will have an impact on our economy. If the eurozone crisis deepens, it will have profound implications for our economy.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Now we find that the UK is in a position whereby decisions affecting us could be taken without us even having a seat at the table.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Sometimes the veto—

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Dawn Primarolo (Second Deputy Chairman of Ways and Means; Bristol South, Labour)

Order. I think that the hon. Lady has indicated that she is not giving way until she has made some progress in her speech. I heard it and I am sure that hon. Gentlemen did. Perhaps they could remain in their seats for a little while, and the hon. Lady will make it clear when she wants to give way.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

I promise hon. Gentlemen that I will give way, but I am attempting to give a shorter speech than the one we just heard.

Sometimes a veto is necessary as a last resort, but it is a negative device that can be used to prevent change that we oppose. Back in the early 1990s, John Major used the veto at the Maastricht treaty summit. He got something in return—an opt-out from the single currency,

which the Labour Government used to full effect while we were in office. However, the veto cannot be used as a positive device to force change that we want, as the Prime Minister demonstrated last week. He failed not only to secure the changes he demanded, but to stop the changes he opposed. The former Prime Minister got something in return for his veto; the current Prime Minister got nothing in return. It was a phantom veto; it failed to stop anything.

The truth is that the UK has never been outvoted on the financial services in the 38 years during which we have been a member of the Common Market. The Prime Minister has defended nothing—walking out of the summit, leaving us weaker, not stronger. It is the greatest failure of peacetime diplomacy in more than half a century. Our partners do not recognise the Britain that walks away from a battle. As one French woman said in a vox pop to The Observer at the weekend:

“I’ve never seen the British give up.”

This is not the bulldog spirit; it is a form of diplomatic defeatism.

It is not surprising that other European leaders did not even give the Prime Minister a hearing. They were completely taken by surprise by a list of demands that did not seem to have anything to do with the discussions in the summit. Not one single line in the summit’s conclusion refers to financial services. Baroness Thatcher pioneered a single market to be decided by qualified majority voting and signed the Single European Act in 1986. The Prime Minister sought to overturn that decision last week, arguing for a removal of qualified majority voting in single market decisions. Needless to say, the Prime Minister’s handbag was not as powerful as Baroness Thatcher’s.

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Bernard Jenkin (Harwich and North Essex, Conservative)

I hope that the hon. Lady will make the position of her party clear. Would she have signed up to the presidency conclusions agreeing to a treaty of 27 in principle—yes or no?

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

First, had we been in government, we would not have been asleep at the wheel for the first nine months of this year. Secondly, we would have built alliances, not burned bridges, and we would not have found ourselves in a situation at the summit in which nobody agreed with us. We had no support from any of those member states.

It is clear that the Prime Minister spectacularly mishandled the summit by failing to prepare the ground, failing to talk to European leaders in advance and failing to build alliances. The Foreign Minister of Poland, until fairly recently one of our strongest allies, singled out the UK for criticism in a recent speech. It now transpires—[Interruption.] Conservative Members might be interested to hear about this. It now transpires that even our lead diplomat in Brussels, the British permanent representative, learned of the Government’s negotiating position only 48 hours before the summit. What a cack-handed way to prepare for important negotiations. No wonder the blame game has started in Whitehall between the Treasury and the Foreign Office.

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Mike Gapes (Ilford South, Labour)

My hon. Friend should also be aware that none of the ambassadors, based in London, of the other 26 European Union states knew in advance what the British Government were trying to get out of this

summit. How on earth could they report back to their countries in advance what might be the necessary concessions to get agreement if they were not told in advance?

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

As my hon. Friend has eloquently pointed out, the Government’s attempt to get agreement at the summit was amateur—they did no preparation. As a result of the Prime Minister walking out of negotiations, it is even more likely, not less, that vital British interests will not be taken into account when key economic decisions are taken at EU level. The eurozone 17 and the other nine non-eurozone countries will meet more frequently and take decisions that affect the UK, without the UK being in the room. How on earth do Conservative Members think that is a success? Without a voice, British business is more vulnerable to decisions that our Government are powerless to change or influence.

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Julian Lewis (New Forest East, Conservative)

I much admire the hon. Lady’s verve and style, but everything that she says points to the conclusion that, given a choice between the only two options—to sign or not to sign—she would have signed. Is that conclusion right or wrong?

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

I point out to the hon. Gentleman that nothing was signed at the European summit and negotiations are ongoing. A likely text might appear at the March European summit, but a text is not yet on the table. Yes, we would have stayed in the negotiations, because it is not in the national interest for decisions to proceed without us.

It is no wonder that businesses are concerned about what has happened over the last few days. Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, underlined the point:

“We need the government to develop a clear strategy for engaging with other member states when in theory it could find itself isolated on occasions.”

John Cridland of the CBI has called for the Government to

“redouble its efforts to ensure that the UK is not put at an economic disadvantage”.

Angela Knight—a former Conservative Member of the House—chief executive of the British Bankers Association, has stressed:

“We do not know yet what impact this new arrangement is going to have on the UK’s ability to secure agreements on sensible regulation—but that is critical.”

The penny is also starting to drop with some parts of the British press that originally welcomed the outcome of the summit. Even The Daily Telegraph states in its editorial today that it is unclear

“whether threats to the City really have been deflected”.

The Times laments in its editorial that the Prime Minister

“has not set out a vision of where Britain now stands in the world”.

In grave economic circumstances, the prospects for families, jobs, businesses and banks across our country are now all the more stark. Growth is flatlining and unemployment is at a 17-year high. Against the backdrop of that dire economic situation, the Conservatives want us to be further isolated, as if the reckless action of the Prime Minister at last week’s summit was not enough to isolate the UK from its largest export market.

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Glyn Davies (Montgomeryshire, Conservative)

I am trying hard to understand the Opposition’s position on this complicated issue, but that is incredibly difficult without knowing whether they would have taken an affirmative or negative stance. We want not clever words about whether they would have signed, but a yes or no.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

It is terribly complicated, because the Government have two positions rather than one. Some hon. Members want the UK to cut itself loose completely. They will only be happy when the UK leaves the largest single market in the world. The Government’s policies are already choking off the recovery and have made us more vulnerable to the eurozone crisis. Were our membership of the European Union also in doubt, the economic consequences would be devastating. In a recent written answer to my right hon. Friend Mr Alexander about the economic benefits of the EU to Britain, the Foreign Secretary replied:

European markets account for half of the UK's overall trade and foreign investments and as a result, around 3.5 million jobs in the UK are linked to the export of goods and services to the EU.”—[Hansard, 12 July 2011; Vol. 531, c. 256W.]

Isolation could also threaten foreign direct investment.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

I have given way to Mr Bone already, so I give way to Mr Jackson.

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Stewart Jackson (Peterborough, Conservative)

In passing, let me say that the hon. Lady owes an answer to the millions of patriotic Labour voters in the country on whether she would have signed. Is she aware, however, of a recent Civitas report, “A Cost Too Far”, which estimates the current recurring annual cost to the UK of EU membership to range between 3% and 5% of GDP, a likely figure of £40 billion a year?

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

I say to the hon. Gentleman that all our voters are proud patriots, and so are Labour Members. In constituencies across the country, foreign companies have invested in manufacturing facilities that support millions of jobs—Nissan, Honda, Bombardier, Airbus, to name but a few. In my constituency, Indian-owned Tata Jaguar Land Rover is building a new multi-million-pound engine plant, bringing hundreds of jobs. Those companies see the UK as a useful avenue into the single market. Those investments would be at risk if the UK continues to be on the sidelines, as Martin Sorrell, chief executive of WPP, stressed only yesterday when he recounted that he had spoken to an Indian investor who is considering where to locate a plant, and it was already the investor’s perception that the UK is outside western Europe.

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George Eustice (Camborne and Redruth, Conservative)

Is the hon. Lady not aware that all the arguments about inward investment leaving Britain were made when we decided not to join the euro, and they were all proved entirely incorrect?

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

If the hon. Gentleman remembers, it was our Government who kept this country out of the euro.

The UK’s isolation is bad not just in economic terms, but for our influence in the world. Even the Deputy Prime Minister said on Sunday that when we stand tall in the European Union, we stand tall in Washington. But it is not only our standing in Washington that is now of concern. Political and economic power is rapidly moving south and east, to Brazil, India and China. In this new multi-polar world, it is those who harbour a fanciful, nostalgic longing for the empire who naively think that the UK could be more powerful standing alone. The only game in town to further prise open markets in emerging economies and to change the rules of the trade game, is for the UK to act within the European Union—a Union that magnifies our influence. Only this weekend, at the climate change summit in Durban, we saw that by working together with our European partners, we amplify our voice on key global challenges.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

I will give way, if the hon. Gentleman will be patient.

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Andrew Percy (Brigg and Goole, Conservative)

I have been very patient; I am the last one to get in.

The hon. Lady talks about the issue of clarity. Will she tell my constituents what the Labour party’s position is? Would they have agreed to what was asked on Friday? Do they support further European integration? Will they rule out membership of the euro for ever? Three simple questions, to which they want three simple answers.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Last but not least, a simple answer—we are not in favour of joining the euro.

The cheerleaders who toasted the Prime Minister at the welcome home party at Chequers last Friday want out of the European Union. What was once the Eurosceptic fringe of the Conservative party has now become the mainstream, as has just been demonstrated. The Prime Minister is clearly following, rather than leading, his party. Naturally, Conservative Members are happy, albeit only for the time being. The right hon. and hon. Members who now back the Prime Minister do not agree with him that our membership of the European Union is vital to our national interest. They are the same right hon. and hon. Members that he tried to get on board when he ran for his party’s leadership. He beseeched them to “stop banging on about Europe”, but they did not obey.

I am not sure what was on the menu at Chequers, but the Prime Minister should be in no doubt that his guests have an insatiable appetite. After starters of prosciutto and cured meats, they will still want steak tartare for their main course. The Prime Minister has only earned himself a gap between the entrée and the plat principal.

The Prime Minister’s actions last week were apparently taken in the face of some unidentified threat to one part of our economy, but the real objective was to toss some extra red meat to the anti-Europeans, whose appetites have now been whetted but not sated. Had the Prime Minister spent as much time and energy speaking to our European partners in the run-up to the summit as he spent pandering to his anti-European Back Benchers,

we might be in a different place now—and it would be in the national interest for us to be in a different place. However, we have a Prime Minister who puts his party’s interest before the national interest, and as a result we have a bad deal for British jobs, businesses and banks. Our country needs and deserves better leadership.

Several hon. Members:

rose —

Photo of Lindsay Hoyle

Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

Order. As we are running out of time, I shall impose a five-minute limit in an attempt to ensure that all who wish to speak are able to do so.

8:10 pm
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Chris Heaton-Harris (Daventry, Conservative)

It is always a pleasure to follow Emma Reynolds. I know that when she worked for the Socialist group in the European Parliament she was behind the scenes doing deals, but they always involved giving powers away from the United Kingdom and to the European Union. I am sure that, like me, she is desperately upset about the fact that the Deputy Prime Minister has chosen not to be a distraction in this debate either.

The motion makes three points. It

“commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK”,

it mentions

“the use of the veto”,

and it refers to

“the desire of the British people for a rebalancing of the relationship with our European neighbours”.

I shall discuss all those points, and try to destroy some of the myths that have emerged from speeches made by Opposition Members.

It is fairly obvious that the British people, as well as some Members, commend the Prime Minister. I have a list of names of dozens of people who have sent e-mails supporting him. They are not Conservative party members or head-bangers. but they are passionate about this country, and I look forward to handing those e-mails to the Prime Minister in the near future.

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Denis MacShane (Rotherham, Labour)

I have to hold my arm up for blood-related reasons.

I have received similar e-mails. In 1983, 50% of the British people wanted to get out of the European Community, and a further 25% wanted a total renegotiation. The Labour party adopted that as its platform and its manifesto for the 1983 election. Margaret Thatcher ignored those feelings with contempt, won that election and the next one, and created the Single European Act without a referendum. What has gone so wrong with the spirit of Thatcher that today’s Conservatives are happy to betray it?

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Chris Heaton-Harris (Daventry, Conservative)

I must tell the right hon. Gentleman that times have changed just a tad since then. I believe that the attitudes of the parliamentary Conservative

party directly reflect the attitudes of the electorate. They certainly reflect the attitudes of the electorate in England, and they would probably prove to reflect the attitudes of those in Scotland, Northern Ireland and Wales should they ever be consulted, as I hope they will be one day.

Let me say something about the veto that we supposedly exercised. I was a Member of the European Parliament, and I saw negotiations of this type up close and personal on a number of occasions. I saw the French walk out of meetings over the common agricultural policy. I enjoyed seeing the Spanish throw a magnificent strop during budget negotiations, which eventually ensured that the bulk of the Spanish fishing fleet was rebuilt or renewed at the expense of European taxpayers. Those countries were doing what most people do in business: they were setting out a negotiating position on the basis of which they could proceed. The one thing that all Members know is that this process will take months to reach fruition. At least we have the starting block of a solid negotiating position, something that earlier Governments were been unable to secure when embarking on European negotiations.

We have other vetoes that could be used in negotiations. One example is the multiannual budget financial perspective. In 2010-11, our net contribution to the European Union was £9.2 billion. We are the second largest net contributor to this club, but we ask very little in return for the money that we give. Our contributions will average about £8.5 billion for the next five years, and we should be demanding much more value for our money.

So many myths have been circulated. Today’s Financial Times—a newspaper that some people consider to be an accurate record of what is going on, as indeed it normally is—contains an article headed “MEP threat”, which states:

“A British MEP who leads the European parliament’s most powerful committee on economics and financial regulation is facing the threat of being ousted in a post-summit backlash against Britain.”

In fact such positions are decided on the basis of the number of MEPs in a political group, and the only people who can oust Sharon Bowles are fellow members of the European Liberal group. That is a complete misunderstanding, and just one of the myths that are peddled nowadays.

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George Eustice (Camborne and Redruth, Conservative)

Does my hon. Friend expect anything different from a newspaper that thought we should join the euro, and maintained that position for several years after we had rejected the idea?

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Chris Heaton-Harris (Daventry, Conservative)

Yes, I do. I expect the highest standards of reporting from out national newspapers, but I take my hon. Friend’s point on board.

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Damian Collins (Folkestone and Hythe, Conservative)

Has my hon. Friend noted that other respected financial newspapers, such as The Wall Street Journal, have congratulated the Prime Minister on the stand that he took?

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Chris Heaton-Harris (Daventry, Conservative)

Indeed I have.

Other myths have been circulated. It has been suggested, for instance, that the Prime Minister’s actions caused Britain to lose a seat at the table. Given that the United Kingdom was never going to take part in the Merkel-Sarkozy pact and thus potentially be subject to EU sanctions—I assume that the Opposition would be quite comfortable with that—I would not expect us to be invited to the monthly EU meetings that will start in January 2012. If the Prime Minister had signed up, the United Kingdom would still not be sitting at that table, because we are not in the eurozone, The veto changes mean nothing structurally in terms of UK influence at those meetings.

Another myth is that the Prime Minister’s veto has created a two-tier European Union. That is complete tosh. We have a eurozone of 17, and a whole new group of Schengen countries. In 2004, when we signed up to the EU accession, a group of countries decided to allow entry to workers from the accession countries, but only Britain allowed them to hold the burgundy passport immediately. Other countries decided to move at a completely different speed.

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Bernard Jenkin (Harwich and North Essex, Conservative)

If there is a two-tier Europe, it was created by the formation of the euro, and its foundation was the Maastricht treaty. Those who supported the Maastricht treaty cannot now complain that we have a two-tier Europe, because they voted for it.

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Chris Heaton-Harris (Daventry, Conservative)

I entirely agree. The Prime Minister’s actions were, in fact, a timely reaction to the signs of caucusing of the 17 eurozone countries, and those countries that rely almost completely on Germany for their trade.

There are so many myths. There is, for instance, the myth perpetrated by the BBC’s Stephanie Flanders—or, at least, the person who wrote what was on her autocue—that the Prime Minister used his veto to protect a tiny part of our economy. In fact, financial services accounted for a £35 billion trade surplus last year, 2 million jobs in the United Kingdom, and £54 million paid to the Exchequer in taxes.

The truth is that these constitutional treaty changes are the result of yet another EU summit which skirted around the problem of eurozone debt without paying off one cent of it. Many commentators, and some politicians here and abroad, may well have had a fun weekend pointing fingers at the UK and pulling shocked faces at the fact that a British Prime Minister dared, after nearly two decades, to engage properly in negotiations by setting out a solid position at the beginning rather than just saying yes. Let us now get down to negotiations. Let us talk. I commend this excellent motion,.

8:18 pm
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Jeffrey M Donaldson (Shadow DUP Spokesperson (Equality), Shadow DUP Spokesperson (Energy and Climate Change); Lagan Valley, DUP)

I rise not just to support the motion, but to commend the Prime Minister on the stance that he took at last weekend’s negotiations.

The reality is that a bandwagon driven by Germany and France is taking the EU inexorably towards a European superstate. Those countries are using the current crisis in the eurozone as a cover to advance their agenda, and the fiscal compact is deepening and strengthening their desire—and the mechanisms that go with it—to build that European superstate. Our experience in Northern Ireland, as one of the UK regions, is not a positive one in terms of EU membership. Some member states that point the finger at the UK today are the very ones that sign up to treaties and then drive a cart and horse through every rule that those treaties create, and it is this country that abides by the rules in the European Union. Time after time we are told that Euroscepticism is a bad thing, yet those who are most strong in their defence of the European Union are often those who do not play by the rules created by the EU.

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David Simpson (Shadow DUP Spokesperson (Communities and Local Government); Upper Bann, DUP)

Does my right hon. Friend agree that France is one of the biggest offenders in this regard?

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Jeffrey M Donaldson (Shadow DUP Spokesperson (Equality), Shadow DUP Spokesperson (Energy and Climate Change); Lagan Valley, DUP)

I accept that entirely. People who talk about vox pops in France and who quote the French ought to talk to the French farmers about the European Union and the rules that their Government sign up to. As my right hon. Friend Mr Dodds said, it is all very well talking about Britain being left outside the door, but let us wait until this treaty gets to the people in these member states and see the response when they realise its full consequences. In Northern Ireland, we have of course seen the consequences, at times, of bad European policies. As my hon. Friend Jim Shannon reminded us, we have seen those consequences and the impact on our fishing industry in Northern Ireland. Our white fish fleet comprised more than 40 trawlers in 1999, but it now numbers just four—that is the result of the common fisheries policy. At the end of the 1990s, the Northern Ireland over-10 metre fleet comprised 240 vessels, but now it comprises 140—that is the result of the CFP. We could also say the same about our farmers, because although there have undoubtedly been some benefits, small farmers have paid a very high price for the common agricultural policy. The directives that have been imposed on agriculture have presented a real challenge for many farmers across the United Kingdom, not least those in Northern Ireland.

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Denis MacShane (Rotherham, Labour)

On that very technical point, I would not object if the CAP were abolished, but what would a British agricultural policy—a BAP—look like? How much would it cost in taxpayer subsidies to keep our farmers, small and large, going as we would wish? Has anybody done the figures?

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Jeffrey M Donaldson (Shadow DUP Spokesperson (Equality), Shadow DUP Spokesperson (Energy and Climate Change); Lagan Valley, DUP)

The reality is that we would spend a lot more of the £18 billion we give each year to the European Union—half of which we get back—in supporting our farmers to produce the food that our country needs, and we would do so without the kind of silly regulation that Europe imposes on us. If we had a national policy in place of the CAP, we would use our own money to help our own farmers.

The same applies to our haulage industry. I talk to hauliers in my constituency and they tell me that they do not understand these crazy regulations that are imposed

at times by the European Union. Business faces the same situation. As we all know, business is struggling as a result of the recession, yet the endless stream of bureaucracy emerging from Brussels continues unabated and we continue to fund those who create those regulations, with no diminution in the budget that goes into the super-structure that is European Union bureaucracy. So, as the leader of my party has pointed out, there are many benefits to the concept of rebalancing our relationship with the European Union. There are benefits for the economy, for business, for farmers, for fishermen and for hauliers—indeed, it is difficult to see who would not benefit from such a rebalancing.

Northern Ireland is the only part of the UK with a land border with another European member state. When we look across the border, we see the Irish Government subjected to the ignominy of having to give their budget to Europe for approval—and it leaks all over the place—before their Finance Minister has the opportunity to get up in the national Parliament to tell the people of the country what their Government are doing. Many people in Dublin now regard Berlin as the capital of the Republic of Ireland, not Dublin, because that is where the real decisions are being taken about their future.

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Glyn Davies (Montgomeryshire, Conservative)

Does the right hon. Gentleman agree that there is a serious democratic issue to address in how Europe is developing, and not only in Italy and Greece? Having budgets approved by the European Commission means that there is a massive challenge to the whole democratic basis on which the European Union is formed.

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Jeffrey M Donaldson (Shadow DUP Spokesperson (Equality), Shadow DUP Spokesperson (Energy and Climate Change); Lagan Valley, DUP)

Indeed, and for that reason I pointed out that the real agenda is to build a European superstate, which is to denude nations of their democratic sovereignty. This fiscal compact exists precisely to benefit that agenda, and when a country and a nation cedes fiscal independence, it cedes a huge part of its national sovereignty. That is why DUP Members object so much to what some in the European Union are trying to do. We do not want to see the United Kingdom and our fiscal independence abrogated and given to those in Brussels, who are accountable to nobody, who were not elected by anyone in this country and who are not answerable to the Parliament or people of this country.

We have heard the Labour spokesperson talk about walking out of negotiations. I had the experience of doing that on one occasion and I still believe it was the right thing to do. I can do no better than quote the words of Mohandas Gandhi, who said:

“A ‘No’ uttered from the deepest conviction is better than a ‘Yes’ merely uttered to please, or worse, to avoid trouble.”

The Opposition would do well to listen to those words, and I am grateful that the Prime Minister, for once, took them on board.

8:26 pm
Photo of William Cash

William Cash (Stone, Conservative)

The reality is that the markets are already demonstrating that there is almost no chance of the euro being saved. In addition, it is way beyond legal devices for people to claim that they will be able to stitch together an arrangement through some method of enhanced co-operation, article 136 and all the rest of it, against the background of the implosion going on outside in the eurozone, and indeed

in the European Union as a whole. I am disturbed by some of the language that I have been reading in the papers. As I indicated in an intervention on my right hon. Friend the Minister for Europe, legal advice has already been given, presumably by the Foreign Office, to the Government that they will be able to stitch together some kind of device that will enable the European Commission and the European Court of Justice to give a spurious authority—a spurious jurisdiction—to the deal between the 17 plus the others that wish to join in with them.

I would go further and say that, as has been said by a number of my hon. Friends, there are indications that some of the countries concerned are beginning to realise that when they go back to their Parliaments they will have to look also to their electors. The idea of unanimity in the confines of the euro establishment’s comfy offices is not quite the same as having to face the consequences of the austerity measures, and to face up to protests and riots in some of those countries. That is where the decisions will eventually be taken, because we are talking about people; we are not talking about machines. We are not just talking about jurisdiction. There is far too much talk of trying to stitch up arrangements for the sake of convenience.

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Stewart Jackson (Peterborough, Conservative)

Is my hon. Friend not as incredulous as I am that those on the left in this country and across Europe are willing to be complicit in support for these fiscal policies? Working people in Europe will be subject to social discord, stagflation, unemployment and depression for the sake of the continuation of the European Union’s policies.

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William Cash (Stone, Conservative)

Yes. This fantasy of a European Union and how it has developed through the existing treaties is the reason why we have the crisis in Europe as a whole. That is why we need fundamental change: the existing treaties are the cause of the crisis. It is not just a question of the single markets or, for that matter, the single market—

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Ian Paisley Jnr (Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Environment, Food and Rural Affairs); North Antrim, DUP)

rose —

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Michael Connarty (Linlithgow and East Falkirk, Labour)

I am very grateful to the hon. Gentleman but I think he is perhaps getting carried away by his own conclusions before using logic. Clearly, the crisis that faces all the countries in Europe, and most other developed countries, comes from the profligate madness of the casino-based banking system that all the countries joined in with. The eurozone might be under greater pressure, but it is not in as bad a condition, in reality, as the US economy at this moment. It is just that, unlike the US, it is not united enough to deal with the crisis as one country.

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William Cash (Stone, Conservative)

I understand what the hon. Gentleman is saying, but with about 47% youth unemployment in Spain and in Greece, for example, and 30% in Italy, and so on, youth unemployment is a really serious problem, and there is not the same problem in some of the other countries to which the hon. Gentleman referred.

I am afraid that both the Opposition and the Liberal Democrats are completely out of their depth on this subject. For the Deputy Prime Minister to say that this historic vote, which will change the whole future of the European Union and our relationship with it, is bad for Britain is simply absurd. I do not want to go further than that, but I want to get on the record the fact that it is irresponsible of the Deputy Prime Minister to make such a statement. To claim that influence can be retained in a room when you know in advance not only that everyone will vote against you but that they all have the power to continue to do so involves living in a fantasy world not unlike that of Alice in Wonderland.

Let me turn briefly to the question of this attempt, this device, this spurious method that people are trying to stitch together to give the measure some degree of authority despite all the realities of the crisis in the eurozone and in the European Union as a whole. There is an attempt to give the European Court of Justice and the European Commission some jurisdiction over this so-called separate treaty. I am not at all sure that it will be a treaty—at best it will only be an agreement—but people are calling it a treaty. I am very worried about the looseness of the language; I want just to make that point on its own.

The main objection to reinforcing the eurozone by means of an intergovernmental agreement is that the rules agreed under the European Union treaties—by which I mean EU primary legislation—by the 27 member states for the operation of the eurozone are to be modified by a separate agreement that does not have primacy over EU treaty law, and so cannot modify or be in conflict with EU treaty law, and that has not been agreed to by all 27 member states. It is vital to stick to that principle, which is at the heart of how the European Union functions. I might be critical of how the European Union has developed under the existing treaties, but those who are against us cannot have it both ways.

As for the objective, the hope seems to be that the provisions of an international agreement can be incorporated

“into the treaties of the Union as soon as possible.”

That is in the statement on the agreement. In other words, the objective of getting the arrangement stitched up into the new treaty has already been set. I must advise the Government that it will not be in their interests to give effect to the proposal through a stitch-up or a device. The European Scrutiny Committee, of course, will be considering all those questions. In addition, the EU treaties require unanimity, so in order to make such a change unanimity would be required—unanimity that would have to include the United Kingdom. That would lead to a great deal of trouble for the Government if they were to attempt to achieve a stitch-up.

8:34 pm
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Gregory Campbell (Shadow Minister (International Development); East Londonderry, DUP)

I support the motion. In the past year or 18 months, many people in Northern Ireland and some across the rest of the UK have attempted to sideline my party and say that the issues we would be raising in Parliament would be negligible, isolated and of interest to very few people. Only a few weeks ago we tabled a motion on the important topic of fuel poverty, and more than 200 Members joined us in the Lobby. I hope that more

will join us tonight on this very important matter, which affects every man, woman and child across the length and breadth of the United Kingdom.

Almost 40 years ago a Euro-dream began, and we have seen the emergence, change and evolution of that dream, which many would argue is fast turning into a nightmare. Over the past weekend we saw its culmination, when the Prime Minister of this nation went into negotiations and, thankfully, when faced with a fait accompli, decided that it was time to say no. He was right to say no. What the Prime Minister has given to the Parliament and the people of this United Kingdom is a door-opening opportunity that we must not waste or cast to one side, but must seize with both hands.

In recent months we have seen the huge gulf—the chasm of Grand Canyon proportions—that exists between the economic development of countries such as Greece and Germany. But there is still insistence among the Europhiles that one size does fit all, when it is apparent to us all that that cannot and will not be the case. What we need, by way of opportunity, is for the competitiveness of the UK to emerge from the opportunity with which we have now been provided.

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Bob Stewart (Beckenham, Conservative)

Is it not competitiveness within the European Union that is at fault—the competitiveness of the north against the lack of competitiveness in the south? That is what will kill the euro project, in money terms.

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Gregory Campbell (Shadow Minister (International Development); East Londonderry, DUP)

I thank the hon. Gentleman for those comments, and there is a significant amount of truth in what he says.

Here is a microcosm of some of the issues that might emerge. Some of my colleagues have mentioned the difference between the Irish Republic and Northern Ireland. Over the next few days millions of pounds will be spent in retail outlets in Northern Ireland by shoppers from the Irish Republic. That is good for the businesses of Northern Ireland, but why are they doing that? It is because only last week the Government of the Irish Republic had to announce an increase in VAT to 23%, so of course there is a 3% differential. We do not know where that 23% rate will go next year or the year after. The fact that this nation state retains the right not only to keep VAT at 20%, but possibly, I hope, over the next year, to reduce it back to 17.5%, will increase yet again the differential between the Irish Republic and Northern Ireland.

Colleagues have mentioned corporation tax. Again, that could add to the competitive advantage that we in the United Kingdom, particularly in Northern Ireland but in other regions as well, will have over other parts of the euro region, where corporation tax will be levelled at a rate that will not be similar to the current rate in the Irish Republic, but will have to be raised because of Franco-German demands.

In short, the issues are very clear. The Prime Minister has taken a stand. We commend him for that, but it must be only the beginning, not the end. We must now push the door open, ensure that we rebalance our position in relation to other nation states within the European region, and try to renegotiate a much better deal so that the £10 billion or £11 billion net that we put

each year into the EU is deployed more cost-effectively to ensure that as we go forward, the competitiveness of this nation state benefits the people of this nation state.

8:40 pm
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Martin Horwood (Cheltenham, Liberal Democrat)

I congratulate the Democratic Unionist party on a timely choice of topic and on some smart draftsmanship in the wording of the motion.

It is reasonably common knowledge that the Liberal Democrats think that the outcome of last week’s summit in Brussels was not a good one. The less important reason for the outcome being bad was that the Prime Minister felt compelled to threaten the use of a British veto. That has generated a great deal of media interest and political over-excitement, but that was not the big issue. The big issue, as the Minister rightly emphasised, is the economic and financial crisis still facing the continent of Europe and, by extension, still facing the UK economy and the global economy.

It is already pretty clear that the hundreds of billions of euros mustered by the IMF, the European stability mechanism and potentially the European Central Bank have not been enough to reassure the markets. Italy, Spain, Portugal and Greece are all still under pressure. Some people have talked as if overnight exits from the eurozone would be desirable, even if they were possible, but they would not be; they would be catastrophic. The prospect of disorderly defaults and eurozone exits would threaten wholesale bank failures, bankruptcies and insolvencies across Europe, and that is still possible. I do not think the eurozone countries have yet put in place the firepower required to avoid it.

The capacity needed by the financial institutions will probably run to trillions of euros. It is not just a short-term crisis, as some of my Eurosceptic friends have pointed out. There are long-term structural issues concerning the compatibility of the German economy with those much weaker and less competitive economies in the same currency union, and those problems have not yet been sorted out. Perhaps the structures and the rules of a new treaty or agreement, whatever form it takes, may prove to be the beginning of a solution, but the process is still a long way from complete and there are quite a few obstacles in its path, some of them sitting in this Chamber.

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William Cash (Stone, Conservative)

As one of the immovable objects to which the hon. Gentleman refers, may I stress that we are talking about the rule of law? I am sure he would not want a device to be used which attempted to bypass the legal processes of the very treaties that he so strongly advocates.

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Martin Horwood (Cheltenham, Liberal Democrat)

Of course not, and the law will be followed, but we may find that European Governments have to gather yet again for more crisis summits in the not-too-distant future. That offers Britain a bit of an opportunity. We now need a process of positive and active diplomacy to persuade some of our more traditional allies in Europe—Ireland, Sweden, even Germany, and many others—of the benefits of having Britain fully involved not in the eurozone, but in the overall process of European economic decision making. Why? Because one of the medium to long-term solutions to Europe’s problems is to have a real focus on jobs and sustainable

prosperity—jobs and prosperity in the UK, as well as in the rest of Europe because, as has been pointed out, half our trade and foreign direct investment comes from other EU members.

The argument about repatriating powers, let alone leaving the EU, completely misses the point. It is in our interest not just to have a competitive and vibrant British economy, but for there to be a competitive and vibrant European economy as well, and Britain can help to bring that about. It is not just in Britain’s interest to be at the heart of the European economy and European economic decision making; it is in Europe’s interests too, and that in turn will help British jobs, British business and British prosperity.

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Bob Stewart (Beckenham, Conservative)

In those circumstances, would it not be wise for those people who want us to stay in to come to us and say, “Look, talk again. We want to give you what you want. We really require you”? I think Europe requires us rather more than we require Europe.

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Martin Horwood (Cheltenham, Liberal Democrat)

The hon. Gentleman makes a very good point. The Liberal Democrats supported the initial negotiating position. The mystery of last week’s summit is why we seemed to have so few friends in the negotiating chamber who would support those reasonable initial demands. That is why I am suggesting that we have a process of much more active and positive diplomacy in the run-up to what might be future summits.

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Martin Horwood (Cheltenham, Liberal Democrat)

No. I have taken two interventions, I am afraid, and time is short.

The reason why we can go forward positively within Europe is that in Europe there are means of building alliances that do not depend on treaty changes or such complex and confrontational tactics. I cite in evidence the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend Mr Davey, who, by collaborating with European counterparts, has lifted onerous accounting rules from the smallest businesses in Britain and created a like-minded growth group, which the UK has joined with the Czech Republic, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Lithuania, Malta, the Netherlands, Poland, Slovakia, Slovenia, Sweden and Romania to tackle common priorities and establish common negotiating positions on everything from the digital sector to services, impact assessments and smarter regulation.

We have the prospect, as the Europe Minister has pointed out, of rules over fisheries being returned increasingly to the local and national levels, and that is a positive development. There is the prospect also of co-operation leading perhaps to the reform of the EU’s budget processes, and there are plenty of opportunities for a common reform agenda.

If I may finish on a positive, coalition note, I think that mainstream Conservative MPs and Liberal Democrats can absolutely unite on the need for reform.

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Julian Lewis (New Forest East, Conservative)

Before the hon. Gentleman sits down, can he tell us whether his party will vote for the motion, against the motion, in both Lobbies or not at all?

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Martin Horwood (Cheltenham, Liberal Democrat)

Any Liberal Democrat who votes for the Democratic Unionist party motion tonight will do so extremely reluctantly, that is all I have to say.

It is a shame to try to snatch division from the jaws of unity, however, because I was finishing on a positive note. Conservatives and Liberal Democrats should unite on a reform agenda in Europe which does not necessarily require treaty change but will, I hope, be supported by other countries. Then we can build alliances and go forward positively, with the like-minded countries of Europe putting forward a positive and good plan for British jobs and British prosperity, for European jobs and European prosperity.

8:47 pm
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William McCrea (Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs); South Antrim, DUP)

When my colleagues and I considered the motion for today’s Opposition day debate, we chose something that was both timely and relevant—namely, the UK’s relationship with the European Union. It is vital that we as elected politicians give leadership to the country in these uncertain times, and today we can do so here in the mother of Parliaments.

Some members of Her Majesty’s Opposition have expressed to me their surprise that an Opposition day motion would include the phrase “commends the Prime Minister”, but if the Prime Minister has done something worthy of commendation I do not understand why an Opposition would not rightly say so. We believe that we were correct to begin the motion in such a fashion.

The Prime Minister did what was right, and that is not always easy. As a young preacher, I was told, “Do right should the stars fall,” and, when the Prime Minister does what is right in our opinion, it is right for us to acknowledge that in the House.

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William McCrea (Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs); South Antrim, DUP)

No. The hon. Lady has not been present for the whole debate, so I am going to take this time to respond to the issues that have already been raised.

The Prime Minister went in to the negotiations. Naturally, there were pressures on him from other European leaders. Their demand was to go with the flow, but he stood firm and resolute for the interests of the United Kingdom. He did not come back to the House waving a “Neville Chamberlain” piece of paper, but became the first Prime Minister to have the courage to veto a new European Union treaty.

There are those in the House who condemn the Prime Minister for doing that. I ask them what authority he had to do other than stand up for the interests of the United Kingdom—that is why he is Prime Minister. In the past, other Prime Ministers have gone into important negotiations and when it came to the point of decision, they did not do what was in the interests of the country—although their consciences were saying that they should do something, they were not willing to do it because it was not popular.

Politicians are vain enough to desire popularity; they love compliments, especially from others on the world stage. However, it is better to do right than be forced to do wrong. The Prime Minister stood at the Dispatch Box in the House before going to the European summit. He told the House that he would act in the best interests

of the United Kingdom and that he would make certain demands to protect British interests, and if he could not get them, he would use his veto.

There is no use in someone’s talking tough and taking a weapon to defend themselves if they are not prepared to use it. The Prime Minister took the veto weapon with him into the negotiations. Angela Merkel and Nicolas Sarkozy flatly refused him even the most modest concessions simply because they believed that he would do what other Prime Ministers had done before and that he would not use the nuclear option of the veto. History had told them that Prime Ministers did not have the bottle to use the veto, and, after the huffing and puffing, would concede rather than hold firm.

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Bob Stewart (Beckenham, Conservative)

The President of France and the Chancellor of Germany were acting in their best interests. They wanted to do a raid on the City of London—something that provides 11% of the income of this country—and take it away from us so that we could not use it. That is what the Prime Minister was defending and that was why he was in the right.

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William McCrea (Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs); South Antrim, DUP)

I agree. The European Union has been used to raiding our coffers over the years; we have been paying for many of their wonderful, unique programmes, which have in fact been an abuse of some of the finances hard earned by the people of this country.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Will the hon. Gentleman confirm that the decision-making procedure for any financial transaction tax is subject to unanimity, not to qualified majority voting, and that no attempt at all was made to impose such a tax on us at last Thursday’s summit?

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William McCrea (Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs); South Antrim, DUP)

The hon. Lady has come to the Dispatch Box today, but has not yet told us what the official Opposition would have done had they been in government, so it is rich of her to ask questions of other Members about the issue.

What has happened is that Europe has been taught a salutary lesson, which it will not forget. Perhaps it will be one of the last lessons that Mr Sarkozy will face on the international stage; the presidential elections are coming and one never knows the results of those. Since the Prime Minister’s justifiable action in Brussels, many commentators have tried to suggest that he has lost credibility on the European stage. What kind of influence could our Prime Minister have had if he had failed to honour his pledge to act in the best interests of the British people? It is clear that Mr Cameron has the support of a vast number of people throughout the United Kingdom on this issue, and we want and encourage him to continue to stand firm.

I suggest that if some Liberal Democrats feel that this does not have the support of the community, they can test it in two ways. First, they could have a referendum; certainly, it would be interesting for them to support that idea, as they wanted a referendum recently on something that was also a side, rather than an important, issue. Secondly, they could allow the electorate to decide. If they thought that Mr Cameron did not have the

backing of the people, they could allow an election to take place and let the electorate make their decision based on that situation.

It is absolutely disgraceful that the leader of the Liberal Democrats stayed away from the House but was happy enough to go to bed in his constituency when the Prime Minister was standing up for the interests of the United Kingdom. He was happy to agree with a certain standard, but whenever the chips were down he claimed that Mr Cameron was yielding to his Back Benchers. I suggest that the change came over Mr Clegg because he was yielding to the shouts from his own Back Benchers. We do not need Mr Flip-Flop on this issue. We need a definite stand for the interests of the United Kingdom, and I am delighted that our Prime Minister took that stand in Europe.

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Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

Order. Before I call the next speaker, may I remind Members that they should refer to other Members by constituency, not by name?

8:55 pm
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Damian Collins (Folkestone and Hythe, Conservative)

It was stated earlier in the debate that there was some surprise at the British negotiating position in Europe and that other member states were not fully apprised of the stand that we would take. That came as a great surprise to me, because I think that the Prime Minister was incredibly clear about what he was going to do. Last week, he wrote an article in The Times setting out what he would do, and then when he got to the negotiating chamber, and had no alternative, he did what he said he would do. Perhaps if there was surprise in Europe it was at the fact that we have a British Prime Minister who actually does what he says he is going to do and does not roll over in the negotiating chamber at the last minute in the face of pressure from other countries.

Emma Reynolds said that when John Major was Prime Minister he secured, under threat of veto, the British opt-out from the single currency. That is quite right. To my mind, that suggests that it was his Conservative Government who kept us out of the euro by creating the mechanism by which we could stay out. However, that was not the only opt-out that he secured at the Maastricht negotiations; he also secured the opt-outs from the social chapter and the working time directive, which were given away by the Labour Government with nothing in return. One of the reasons we now have a big debate about returning powers to this country and to this Parliament is that those opt-outs were given away, together with the powers that went with them.

As Mr Dodds said, this is by no means a done deal. It is not true that we are isolated and that every other country is lined up against us and is committed to the compact that was set out by the eurozone members. It is clear from what we read in the European press today that the Parliaments of countries such as Denmark and Poland are raising severe doubts about what is in the compact. Speaking from the negotiating table itself, Hungary and the Czech Republic have said that they need to go back to their own countries to ask the permission of their Parliaments.

When one looks at the wording in the compact, it is hardly surprising that people are starting to raise those concerns. For the sake of the record, I should like to share with Members some of the things that it says. For example, it says that the rule on deficit and debt reduction

“will contain an automatic correction mechanism that shall be triggered in the event of deviation. It will be defined by each Member State on the basis of principles proposed by the Commission…Member States shall converge towards their specific reference level, according to a calendar proposed by the Commission…the Commission will in particular examine the key parameters of the fiscal stance in the draft budgetary plans and will, if needed, adopt an opinion on these plans.”

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Mark Reckless (Rochester and Strood, Conservative)

Can my hon. Friend explain those repeated references to the Commission? I understood that the Prime Minister had said that we were not going to allow the fiscal union to use the EU institutions of the Commission and the European Court of Justice.

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Damian Collins (Folkestone and Hythe, Conservative)

My hon. Friend makes a perfectly valid point. Of course, this is only a communiqué produced by the eurozone countries, not a binding agreement. However, it is clear that these decisions will be taken at European level. It will be the Commission’s decision, or that of whatever European body is created to police this compact, to determine how quickly countries should reduce their deficit, to decide whether they are keeping on track, to propose what measures of intervention should take place if they fail to do so, and to create what it calls a common economic policy that is the stated aim and objective of these countries. If the eurozone members wish to proceed down that path, then that is a decision that they will take. It should be clear to all that Britain would never go down that path. We would never countenance such a transfer of power and sovereignty over our economic affairs to the European level. In setting out his objections and vetoing a treaty of 27, the Prime Minister clearly reinforced that point. There can have been no doubt and no surprise.

A question that has been asked is, what next for Britain and Europe? The summit in Brussels on Thursday and Friday was not about Great Britain, it was about the eurozone and its crisis. My concern, and that of other hon. Members, is that the crisis has not been fixed and that the measures that have been put in place do not provide the guarantees that the financial markets want. That makes it more likely that there will be a default in the eurozone, and that countries may leave the euro. The economic consequences of that are unknown, but most countries around the world predict that it will not help the world economy and, if anything, will make its problems greater. Europe has to overcome that problem.

European leaders may well reflect on the negotiations in Brussels and say that it would have been better to give the Prime Minister the concessions and reassurances that he was seeking rather than force us out and force us into using the veto, thereby delaying the possibility of a proper and sensible negotiation of a resolution for the eurozone crisis. That will be seen to be an error.

Turning to our own position, there has always been much talk about the amount of trading that we do with the European Union. As a bloc, it is worth more than 50% of our trade. Over the past 10 years, however, our trade with the developing economies around the world—

Brazil, India, Russia and China—has been increasing, as has that of countries such as Germany. Those are large, developing consumer markets, and it is reasonable to expect our exports there to increase in relative terms and those to the European markets that have been the major home of our trade in the past to decrease in relative terms.

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Kelvin Hopkins (Luton North, Labour)

Of course, we have a massive trade deficit with the rest of the European Union, so it needs us more than we need it.

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Damian Collins (Folkestone and Hythe, Conservative)

The hon. Gentleman makes a clear point about our trading relationship, but the point that I was seeking to make was that in the decades to come, our trading relationship with other countries around the world will become increasingly important. The idea that the only expression of British wealth and interest comes through the EU is not correct. Also, not just us but other EU members will have to put far greater priority on developing and expanding markets in other countries. That issue of trade policy has been neglected, particularly by countries in the eurozone.

Our focus has to be on making our economy more competitive both within the European market and around the world and on developing our trade interests around the world. That should be a priority for Europe as well. The idea that we can ignore the euro crisis, the challenges that Europe faces and the challenge of the emerging and dynamic economies is false.

My concern about what happened in Brussels is not about the fact that Britain took a firm stand and made it clear that we would not be part of policies that are an outdated solution to an old problem. We see the world not as a series of competing blocs, with the EU fighting against China and the United States, but as a developing patchwork of economies that we want to engage broadly with. We took a stand for what I believe will be the future direction of the world. My concern is that other members of the European Union have missed that challenge and missed the opportunity to put their own house in order, which was what the summit was supposed to be about.

9:02 pm
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David Simpson (Shadow DUP Spokesperson (Communities and Local Government); Upper Bann, DUP)

I start by congratulating the Prime Minister on the stance that he took in the negotiations at the weekend. However, I also wish to sound a note of caution. Although he is currently on the crest of a wave and the people of the United Kingdom are backing him—rightly so, and I congratulate him again—there will be more trials ahead. As other right hon. and hon. Members have said, the journey is not over yet. There is still some way to go, and we expect, hope and trust that he will show the same grit and “bulldog spirit”, as it was put in the House last week, in doing again what he did at the weekend.

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Peter Bone (Wellingborough, Conservative)

I am sorry to interrupt the hon. Gentleman’s powerful speech, but I have listened to the speeches made from the DUP Benches and the speech made from the Liberal Democrat Benches. I ask him, is it not a great shame that you gentlemen are not sitting on the Government side of the House and those gentlemen on the Opposition side?

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David Simpson (Shadow DUP Spokesperson (Communities and Local Government); Upper Bann, DUP)

If that is an invitation—[Hon. Members: “Don’t be tempted.”] I will not take it further; I think that is probably an internal matter for the coalition.

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David Simpson (Shadow DUP Spokesperson (Communities and Local Government); Upper Bann, DUP)

I will not give way because time is short.

Of course, I rise to support the motion that my party has tabled. The whole of Europe—countries in the EU and outside it—faces a major crisis. It is an immediate crisis that is made worse by the drag or gravitational pull of long-term policies, treaties, agreements and directives that lock EU countries, especially those in the eurozone, into a negative economic cycle. Countries were allowed to join the euro that were simply in no fit state to do so and should never have been permitted to do so. Their admittance had nothing to do with their ability to survive and prosper with the euro, but everything to do with the ideology of those who have pressed for an EU superstate. The Republic of Ireland, Greece, Portugal, Spain and Italy were welcomed into the euro on the ground of a pro-European superstate rather than hard economic assessment.

At the same time as those fundamental weaknesses were being built into the eurozone, there were cries in the UK that we should be part of that disastrous undertaking. There were ardently pro-euro factions in the Conservative party and the Labour party. However, in both parties sanity ultimately won the day.

Many of us predicted that locking ill-equipped countries into a position whereby they could not devalue or set their own interest rates was a recipe for disaster. Some would say that, with the benefit of hindsight, Britain had a lucky escape. However, we do not need hindsight because we have history on our side—the history of the European Union and what has happened in it down the years.

From the phone calls and e-mails that I have received, the general public in the United Kingdom are fed up to the back teeth with the money that we pour into Europe every year: £17 billion—£10 billion net, or, to put it in everyday terms, £200 million each day, only to see increasing red tape and an increasing desire to meddle in our courts, our immigration, our foreign policy, our tax system, our employment market and our national defence. For many people, that is simply not acceptable.

We should take the advice of the Prime Minister, who said at the end of October:

“This is the right time to sort out the eurozone’s problems, defend your national interest and look to the opportunities there may be in the future to repatriate powers back”

to the United Kingdom.

9:08 pm
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Neil Carmichael (Stroud, Conservative)

The debate is important, and I congratulate Mr Dodds on securing it. It has been thoughtful and measured, and it paves the way for a succession of debates in the same vein, which we will have to hold. As the previous speaker noted, much has yet to happen.

The Prime Minister made what he intended to do absolutely clear, and we should salute him for getting on and doing it. Not only did hon. Members and other members of the Government know it, but the Chancellor

of Germany and the President of France knew it too, because they reacted calmly as if they had been pre-warned. Therefore, it must be recognised that our position was clear and the Prime Minister acted.

It is important to amplify some issues, one of which, of course, is that the events of last week mean that we will not have a referendum in the immediate future. There is no treaty to sign, and therefore no transfer of any power in any direction. Effectively, a line has been drawn under the referendum debate, unless or until another treaty is signed or another significant power is transferred. We should recognise that and move on to the next phase.

The next phase is something to which my hon. Friend Martin Horwood referred: renewing relations with many of our partners and establishing good, effective bilateral relations so that we can have a sensible dialogue on the kind of Europe we want to build. It is critical that we start thinking in terms of the competitiveness of Europe and the single market, but to do so we must have friends, a proper understanding and a long-term plan that makes sense. I therefore urge the Government to redouble their efforts to make good contacts and friends out of the 26 members.

Our interests are clearly associated with the fact that the euro must survive and become a sustainable currency, because if it does not, we will all be in a big mess. We should say that and mean it. Of course, we must ensure that the compact that leads to further decisions is good enough and appropriately structured, but we also know that the US is equally interested in the future of the euro, because it, too, recognises that the world’s largest market—with the eurozone within it and a key part of it—is not the best place to have a major currency crisis.

That brings me to the use of EU institutions. The Minister for Europe made it absolutely clear that there is plenty to do in connection with the compact and beyond, so it is far too early to talk about who should or should not use EU institutions. I have two things to say about that. First, Germany, France and other countries have made their mind up to do something. If they do not use EU institutions, they will do what they want nevertheless, and we might have even less influence over what happens. We must think carefully about that fact. Secondly, if we want to repatriate powers—we have said very clearly that we do—we will want friends who will help us to do so. I do not believe that taking an intransigent view on the use of EU institutions will help in that respect at all.

My final remark is this: we have a clear and obvious interest in ensuring that the single market works and that it works well for us. We must understand its strategic importance not just to the whole of Europe, but especially to our industry and services, which depend on it. We therefore must make it one of our key objectives to play ball with those who want to make that market even more competitive and effective.

9:13 pm
Photo of Mark Durkan

I commend the Democratic Unionist party on this timely motion. It is effectively an invitation to a party in our House for the Eurosceptics on the Government Benches, who have been good enough to turn up.

It is important to recognise, as Neil Carmichael did, that we are not talking about a done deal as such. Some right hon. and hon. Members who have been cheering the Prime Minister’s position make him a hero because he stood outside what they have presented as an all-consuming, fixed done deal that can move only one way, whereas the reality is that the deal is not done. What the Prime Minister has done is take the UK out of the important, detailed negotiations that need to take place over the next few months. At a time when, given the safeguards that he and the Chancellor of the Exchequer have said they want for the eurozone and the separate safeguards they want for the UK—and at the time when they could most have used and built up key alliances in Europe—he has taken a position that says, “No, I am out of this.”

Let us remember that it is the Prime Minister and the Chancellor who, for nearly their whole time in office, have been saying that what is needed is closer fiscal union in the eurozone. They were the people who were commending a unitary fiscal position, together with the US Administration, and now the Prime Minister is being cheered because others have moved to the very fiscal compact that he advocated as necessary.

There is a danger in this debate that those who were yesterday grinning like horses chewing thistles when the Prime Minister came in to make his statement will get carried away and become over-jubilant. They might find in a few months that their celebrations and anticipation will turn out to be ephemeral. The same goes for those in other European countries who are jumping up and down with indignation and raging at the Prime Minister. They might find that a lot of their concerns are ephemeral as people concentrate on the shortcomings of the deal itself—the shortcomings that are written into the pact and the even bigger difficulties that are not accounted for in the pact at all.

We need to remember that the deal is a fairly weak construction. It will not inspire enduring confidence among investors. The extra resources remain insufficient and the failure to deliver a credible plan for growth will only worsen the debt problem in Europe. There are serious shortcomings with the Merkozy deal, but the Prime Minister’s approach should have been to point out those shortcomings and to build alliances in the months to come when those details have to be worked out further. We have seen the difficulties with all the previous deals that have come apart, and that will happen to this deal too.

The Prime Minister told us that he was going to the Council looking for certain golden rules to be put in place in the eurozone, but now he seems to be opposing a deal because people want to introduce some of those golden rules. The real issue has to be the difficulties that will be faced in achieving those rules. Let us remember that he did not tell us that he had vetoed a treaty because of its shortcomings in terms of guaranteeing fiscal discipline, stopping contagion and erecting a firewall. He told us that he stayed outside because the safeguards for the UK were not right. He would have been in a stronger position if he had focused his criticism and concern on the inadequacies of the deal per se, because he would have had alliances in times to come, including possibly assistance with his own safeguards.

We cannot afford isolationism, but we have heard talk of it tonight. Nor can we afford the vindictiveness that has been expressed in some political chambers in

Europe. This is not the time to revert to predictable political postures on Europe and simply rehearse the totemic positions of our traditional European debate. Empty political certitudes are no answer to the raging economic uncertainties that face us in Europe, which do not affect just the eurozone, but fundamentally affect the sterling zone as well.

9:18 pm
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Andrew Percy (Brigg and Goole, Conservative)

To continue the party analogy introduced by Mark Durkan, I am certainly a willing attendee, although judging by his speech he is a bit of a party pooper. I did not agree with much of what he said, but I certainly agreed with the speech by my right hon. Friend Mr Dodds and others who have spoken from the Opposition Benches—if not always in opposition to us.

I want to mention the response from my constituents. Since the Prime Minister’s action on Friday, we have been inundated with e-mails, Twitter messages, answerphone messages and telephone calls to the office from people—people who voted for all different political parties—saying that the Prime Minister was absolutely right to draw a line in the sand. It has been interesting listening to the people who criticise us on this issue and the language that they use. It is the usual sort of Euro-fanaticism that we hear from them, the usual patronising guff, as I called it the last time I spoke.

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Neil Parish (Tiverton and Honiton, Conservative)

My hon. Friend is right. The Prime Minister used the veto to stop this European integration. Sitting in the European Parliament, of course, one finds that people are ever driving for greater union. This is one Prime Minister who has actually stood up for the British people. We must commend that.

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Andrew Percy (Brigg and Goole, Conservative)

I could not agree more with my hon. Friend, who, having been not at the heart of the EU but certainly present, knows a lot more about its workings than I would ever wish to know.

I was talking about the language used by those who object to or criticise the Prime Minister’s actions despite having no alternative plan. They say that it is ill thought out, that we are ill informed and ignorant and that we do not understand the issues. My response is this: we understand the issues perfectly well, we understand how the EU works; we just do not like it—and you know what, Mr Deputy Speaker? They need to wake up because the public do not like it either, if the response to opinion polls and in our constituency offices and e-mail inboxes is anything to go by.

Of course, these are exactly the same people who argued for us to be in the euro. We hear this nonsense from Labour Members that they were the party that kept us out of the euro. They were not at all. They would have had us in there had it not been made so politically inconvenient and difficult for them. That is why they spent so much money trying to prepare us for the euro. I suspect that quite a few of them, if they were honest, would have us in the euro at the first possible opportunity. So we will not take any criticism from the Opposition Benches—I mean the Labour Benches, not the finer Benches occupied by Irish Members.

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Angie Bray (Ealing Central and Acton, Conservative)

Does my hon. Friend think that the Leader of the Opposition would have been more successful at delivering a result during last week’s talks in Brussels, given that every time his party went into talks, they said yes to everything? Surely, the fact that for once we have said no might make people sit up and listen.

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Andrew Percy (Brigg and Goole, Conservative)

Love thy neighbour, I say, and the Leader of the Opposition is my constituency neighbour, so I do not wish to speak ill of him, but I entirely associate myself with my hon. Friend’s words.

I want to concentrate on the Opposition’s position before saying a few words about the Minister’s response. Emma Reynolds did not answer my three questions: she did not say whether the Opposition have ruled out membership of the euro forever; she did not say whether they believe that we have integrated too far and whether they are against integrating further or ceding more powers to the EU; and she did not answer my third question—one posed by many Members on both sides of the House—about what they would have done last Friday. There is this fanciful configuration under which they would have grabbed a deal—because the negotiating skills of the Leader of the Opposition are so renowned—that was good not just for Europe and the euro but for Britain. I simply do not buy it, and I strongly suspect that the British public do not either.

I want to say a few words about our valued coalition colleagues and their response over the past few days. I used to agree with a lot of what the Deputy Prime Minister said. Indeed, I clutch in my hand—although one must not use a prop, Mr Deputy Speaker—a photocopy of a Liberal Democrat election leaflet. They are mercifully thin on the ground in Brigg and Goole because we have no Liberal Democrat councillors. It is headed, “It’s time for a real referendum on Europe” and continues:

“It’s been over thirty years since the British people last had a vote on Britain’s membership of the European Union. That’s why the Liberal Democrats want a real referendum on Europe…But Labour don’t want the people to have their say. The Conservatives only support a limited referendum…Why won’t they give the people a say in a real referendum?”

The leaflet reads: “It’s time for a real referendum”.

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Andrew Percy (Brigg and Goole, Conservative)

No, I have heard the hon. Gentleman’s explanation of this in the past, when he talked about a referendum at some time in the future, but this leaflet says very clearly, “It’s time for a real referendum”. People can even send it back to the real referendum petition, 4 Cowley street, London.

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Andrew Percy (Brigg and Goole, Conservative)

I am not going to give way, because I have heard the nonsense about the Liberal Democrats’ manifesto commitment on this issue before, which was all about how there would be a referendum at some point in the future. However, I am afraid that the quotation given by the Deputy Prime Minister on this leaflet—he is named as “Lib Dem Leader Nick Clegg”—says:

“It’s time to give the British people a real referendum on Britain’s membership of the European Union.”

I can only assume that when this leaflet went to the printers, the bit saying, “At some point in the future, but not any time soon,” was missed off. Some people would say that the Deputy Prime Minister

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Martin Horwood (Cheltenham, Liberal Democrat)

On a point of order, Mr Deputy Speaker. Is it in order for someone repeatedly to attack Members in the Chamber, and by implication the Liberal Democrat parliamentary party, and not give way when that is challenged?

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Lindsay Hoyle (Chairman of Ways and Means; Chorley, Labour)

I think one would say that it is a political comment rather than an attack. As both parties are joined together, I am sure that the hon. Gentleman would take it not as an attack, but as a political comment.

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Andrew Percy (Brigg and Goole, Conservative)

I am upset if any of my valued coalition partners thought that I was in any way besmirching their characters individually or attacking them. I am not: they are valued partners in this enjoyable coalition that we find ourselves in. However, I have said enough about the election literature.

Some people would say that the Deputy Prime Minister has acted disgracefully in the last few days. I am not going to say that. Some would say that he has acted appallingly, and I am not going to say that either. I will leave it to others to comment on that. What I would say in conclusion, however, is that I heard the Minister’s comments, and I was warmed by much of what he said. We need a little more detail about whether the institutions will be used, but I hope that last Friday shows that a line has been drawn in the sand and that we have said, “We’ve had enough integration, and the British public have had enough.” Whatever the other arguments, we have to accept that the British public are not where the political elite are in this country, but are much further on in the argument. They have looked at the European Union and they do not like it. That is why it is time we gave them a say, or at the very least ensured that nothing is given away to Brussels.

Mr Deputy Speaker:

I remind the next speaker that we have only two minutes to go until the wind-ups.

9:26 pm
Photo of Margaret Ritchie

I commend the Democratic Unionist party and Mr Dodds on tabling the motion. However, it will be no surprise to him and his colleagues to hear that I will be in a different Lobby from them this evening.

As a committed European, I feel that there is no doubt that the Prime Minister’s unilateral decision to veto any prospective new European treaty aimed at achieving greater financial stability across the eurozone is indeed regrettable. Not only did he appear to fail to consult his coalition partners; more importantly from our perspective in Northern Ireland, he failed to consult any of the devolved Administrations, despite the fact that his actions could have profound implications for those jurisdictions. I ask the Government seriously to

consider those implications in the medium and long term, because although there are many, shall we say, downsides, there are also many economic, financial and social benefits to membership of the European Union. In fact, Northern Ireland is the only part of the UK with a land and a water border with the eurozone. We are entitled to be consulted about any UK Government action that fundamentally impacts on Britain’s relationship with the eurozone. Anything short of that is, frankly, disrespectful. I hope that the Government will bring forward a solution this evening and tell us that the Prime Minister will return to the negotiating table and not turn his back on the European Union again or the opportunities that could be there for us all.

9:28 pm
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Sammy Wilson (Shadow DUP Spokesperson (Treasury), Shadow Spokesperson (Education); East Antrim, DUP)

It is a great joy to sum up in what has been a timely debate, touching on an issue that concerns millions of people across the United Kingdom, not only because their attention has been focused on last weekend’s events in Europe, but because of the continuing drift that we have seen. As my hon. Friend David Simpson said, on everything from foreign policy and macro-economic policy right down to the basic things that affect people’s lives every day, people are more and more concerned about the impact that Europe has on them.

A number of matters have been discussed in a good debate. Those who have opposed the motion have raised a number of issues, which I would like to go through quickly. The first is the damage done to the United Kingdom by the Prime Minister’s stance. This was epitomised by the comments of Emma Reynolds as shadow Minister when she said that the Prime Minister had left us on the outer fringes of the EU and that it was bizarre for us to wish to commend him for that.

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Jim Shannon (Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport); Strangford, DUP)

Will my hon. Friend give way?

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Sammy Wilson (Shadow DUP Spokesperson (Treasury), Shadow Spokesperson (Education); East Antrim, DUP)

Of course, but I want to develop this point first.

There is nothing new in this. The chattering classes have all come together to condemn the Prime Minister for standing up for Britain and for our interests in Europe. There is nothing new in those who see the European project being attacked using that tactic in debates such as this. In fact, a leader of the Liberal Democrats said, as revealed by Hansard:

“There will be a second-tier Europe”—[Hansard, 24 September 1992; Vol. 212, c. 34.]

in which we will be led into “isolation”. People may wonder how on earth that can be, when the Liberal Democrat leader has not been in the House since these events happened. How can he have anything on record in Hansard? Of course, I quoted not the present Liberal Democrat leader but the Liberal Democrat leader from 1992—nearly 20 years ago—when we had exactly the same situation. They have not even learned new lines, for goodness’ sake. If they are going to criticise someone for undermining the European project, one would have thought that they would learn to find some new arguments.

People have said that we are isolated in the world. It is interesting to note that when Hillary Clinton commented, she said that she was not concerned at all about what

the Prime Minister did in Europe this weekend. She was more concerned—and America is more concerned—about whether this will be an effective way of dealing with the crisis of the euro. As a number of hon. Members—including even Martin Horwood —have pointed out, even the markets agree that this has not been a good deal. How on earth can we be isolated and left alone on the edges of Europe on this issue if we find that all those looking at the effectiveness of the deal have found it wanting?

The second argument is that Britain will be left alone and other nations in Europe will not support us. Hon. Members, including again Damian Collins and even Mark Durkan, have pointed out that this is not the end of the matter. Many of those hailed as supporting the deal are already beginning to have second thoughts. The list is endless: Denmark, Sweden, Poland, Finland and Czechoslovakia. Ironically, even one of the candidates who might well be the next Prime Minister of France has said that he would undo what has happened. I think that, far from being alone, we will find this issue being revisited by others. That requires a word of caution: if it is to be revisited, it is important for the Prime Minister to take the same stance again.

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William Cash (Stone, Conservative)

Does the hon. Gentleman agree that, in the light of everything he has so soundly said, it would be extremely unwise for our own Government to make any attempt to endorse the arrangement, given its uncertainty and apparent instability?

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Sammy Wilson (Shadow DUP Spokesperson (Treasury), Shadow Spokesperson (Education); East Antrim, DUP)

Absolutely. As other nations start to look at the implications of the deal and see the essentially undemocratic nature of it, they will ask themselves whether they are prepared to put their destiny in the hands of the European Commission.

I find it strange that the party that has opposed the Government’s austerity measures in the United Kingdom has taken the view that it is better to hand the ability to impose those measures to the unelected bureaucrats in Europe. At least the Prime Minister can be held to account in this place every Wednesday and the Chancellor can be held to account here, too. We will not be able to hold European bureaucrats to account if we give them this power. That is one reason why I find the attitude of Labour Members very strange.

The third argument that has been made is that we have gained nothing and lost everything. The hon. Member for Wolverhampton North East put it succinctly: it was bizarre of us to support the Prime Minister, she said, because decisions will be made that will affect us, and we will not even be in the room when they are discussed; it has failed to stop any changes in the financial system; and it is bad for Britain, and bad for jobs. Therefore, she and the Labour party oppose what the Prime Minister has done. With such an argument, she should have found it easy to say, “We want to be in the room, we want to safeguard financial institutions, and we want to create jobs, so we will support the deal.” But no matter how many times those in the Labour party have been asked the question, they have not been able to say that they would have supported the deal. Perhaps she will now tell us that the Labour party will support the deal.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Nothing was agreed on Thursday that led to a signing of a treaty change. We would have to see what was in the treaty change to decide whether we would sign up to it.

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Sammy Wilson (Shadow DUP Spokesperson (Treasury), Shadow Spokesperson (Education); East Antrim, DUP)

This is the problem—if that is the case, why would those in the Labour party not support a deal? Why will they not say that they would also have vetoed a deal? If they would not have vetoed it, they are saying that they would support something that they believe is bad for jobs. That is the logic of their position.

The other argument is that the Prime Minister has taken this action because he is afraid of his Back Benchers. If anyone is afraid of his Back Benchers, it is the leader of the Liberal party. On Friday, he was saying that he agreed the terms, the tactics and the approach. By Sunday he had changed his mind. What changed his mind? I suspect that his Back Benchers changed his mind. It is a bit rich to say that the Prime Minister is in hock to his Back Benchers. Equally, I suspect that the Labour party has taken the attitude it has adopted because it is afraid of the public. It knows that the vast majority of the public—57%—support what the Prime Minister has done. I would rather have a Prime Minister who is cognisant of the British people’s views and then responds to those views. For that reason, we commend him in our motion.

I am sure that we will have plenty of opportunities to disagree with the Government, and times when we criticise the Prime Minister. This is not the end of the matter. The Prime Minister will have to show again the backbone that he showed last Friday, and we will look for him to do it.

9:38 pm
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Henry Bellingham (The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs; North West Norfolk, Conservative)

I congratulate our friends in the Democratic Unionist party on bringing forward this debate on the Prime Minister’s decision last Friday to protect the national interest. They are true allies in these challenging times. I pay tribute to Mr Dodds and Sammy Wilson for their speeches.

As the Prime Minister explained to the House yesterday, we went to the European Council in good faith, seeking to reach an agreement acceptable to all 27 members of the European Union. In doing so, we were clear on the need to have the necessary safeguards in place to protect our national interests on the single market as a whole and on financial services. We did not seek special treatment or carve-out for the UK, but safeguards that would ensure a level playing field. As my right hon. Friend the Minister for Europe said, those safeguards were modest, reasonable and highly relevant. As he also pointed out, it was a question of protecting not just the City of London, but financial services across the whole of Europe. As it was not possible to reach agreement on satisfactory safeguards, we were not able to agree to a treaty at 27. That was clearly the responsible course for us to take in order to protect the United Kingdom’s national interest.

Emma Reynolds asked whether the Government had been properly prepared, and concluded that they had

been ill prepared. She said that we had asked for too much, too late. Where has the hon. Lady been for the last month? The Prime Minister and the Deputy Prime Minister talked to most leaders and visited key capitals during that period. The Prime Minister saw Chancellor Merkel three weeks before the Council, and met President Sarkozy a week before it. The Prime Minister was clear about the position on safeguards, and made it crystal clear that the safeguards he wanted were moderate and reasonable. As was pointed out by my hon. Friends the Members for Folkestone and Hythe (Damian Collins) and for Stroud (Neil Carmichael), the position was well understood.

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Emma Reynolds (Shadow Minister (Foreign and Commonwealth Affairs); Wolverhampton North East, Labour)

Will the Minister give way?

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Henry Bellingham (The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs; North West Norfolk, Conservative)

I will not, because I must cover as much ground as possible.

The course taken by the Prime Minister allowed eurozone countries and others to proceed with a separate treaty in which they could pool their sovereignty on an intergovernmental basis with the aim of implementing tighter fiscal discipline in the eurozone as part of the process of restoring market confidence. It is right and important for eurozone countries to take the action that they deem necessary to deal with the crisis in the eurozone. We want and need the eurozone to sort out its problems. That is in Britain’s national interest, as it is clear that a crisis in the eurozone is having a negative effect on the UK economy.

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Jim Shannon (Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport); Strangford, DUP)

Will the Minister give way?

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Henry Bellingham (The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs; North West Norfolk, Conservative)

No, I will not.

Let me say something about the UK’s influence in Europe. The decision not to proceed with a treaty at 27 has no impact on our status in the European Union. Our role in the EU is safeguarded by the existing treaties. Britain remains a full member of the EU. Our membership is vital to our national interest. We are a great trading nation, and we need the single market for trade, investment and jobs. Contrary to what was said by the hon. Member for Wolverhampton North East, we will remain active and influential in the EU. The European Council does not in any way diminish our role. As was pointed out by Martin Horwood in a wise and sensible speech, this week there will be meetings of the Councils on Transport, Telecommunications and Energy, and Agriculture and Fisheries, and we will be present as full active members in each of those Council meetings.

I am trying to respond to speeches made by a large number of Members on both sides of the House. As was pointed out by my hon. Friend Chris Heaton-Harris and the hon. Members for East Londonderry (Mr Campbell), for South Antrim (Dr McCrea), and for Upper Bann (David Simpson), the decision not to be part of the treaty that will be agreed by the eurozone and others does not in any way reduce our influence. The EU is not a monolithic block, and it already contains flexible arrangements.

As the right hon. Member for Belfast North observed, the United Kingdom is not part of the single currency or the Schengen no-borders agreement, but that has not prevented us from leading the way in the EU on a range of issues, from an activist foreign policy to the completion

of the single market. As my right hon. Friend the Minister for Europe pointed out, our position is incredibly important in terms of not just the single market but foreign direct investment, 50% of which comes from the EU. As he also pointed out, much foreign direct investment from other parts of the world, such as the BRIC nations—Brazil, Russia, India and China—is due to our membership of the EU.

My hon. Friends the Members for Stone (Mr Cash) and for Stroud referred to the EU institutions. We want the new treaty to work in stabilising the euro. That is in our national interest, because our economy is closely tied to that of our EU partners. I understand why the eurozone member states would want to use the institutions to help to ensure fiscal discipline. We will look constructively at proposals to use the EU intuitions with an open mind, but this is new territory which raises important issues.

The right hon. Member for Belfast North was spot on when he said that nothing must be done through the back door. We must ensure that institutions built for 27 continue to operate fairly for all member states, including the UK, and in particular we must ensure that the role played by the EU institutions in safeguarding the single market is not affected. I assure my hon. Friend the Member for Stroud that we will continue to intensify bilateral relations with many different EU countries. Let me assure the hon. Members for Foyle (Mark Durkan) and for South Down (Ms Ritchie) that we will not take the isolationist route.

On the repatriation of powers and the balance of competences, the Government are committed, under the coalition agreement, to examining “the balance” of competences between Britain and the EU. There is a case for doing that—as Mr Donaldson pointed out, it is a very strong one. The work on the review has begun and is in its early stages. In taking it forward, we will look at how to engage with our EU partners on individual competences. A change in the balance of competences would require the agreement of all 27 member states on the basis of negotiation and agreement.

I wish to say a few quick words about the working time directive, because it is important at a time of economic uncertainty that we remain focused on job creation and growth. That will require all of Europe to improve its competitive position, including in respect of labour markets. A key part of that will be limiting the barriers to flexibility in the working time directive. The Government are committed in the coalition agreement to limiting

“the application of the Working Time Directive in the United Kingdom.”

Our priority is that the working time directive keeps a secure economy-wide opt-out; working people should be able to work the hours that they choose. We will also be looking to secure more flexibility in the areas of on-call time and compensatory rest.

I pay tribute, once again, to our friends in the Democratic Unionist party, because this very good debate has come at a crucial time for Europe and, throughout, the contributions of DUP Members have been incredibly consistent, solid and reliable. What can we say about the Opposition? I agree with my hon. Friend the Member

for Brigg and Goole (Andrew Percy) that we have heard nothing but carping and criticism. The hon. Member for Wolverhampton North East did not tell us whether Labour would have signed the treaty. She said nothing at all in response to two interventions, including one from my hon. Friend Dr Murrison, asking why Labour gave up Britain’s £7 billion EU rebate when the now shadow Foreign Secretary was Minister for Europe? She also made no attempt to answer the question about why Labour signed the UK up to a euro bail-out mechanism after the general election—on 8 and 9 May 2010, before the coalition agreement was completed. She also failed completely to answer the questions put to her about her leader, who first—

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Nigel Dodds (Shadow Spokesperson (Justice), Shadow Spokesperson (Foreign and Commonwealth Affairs); Belfast North, DUP)

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put .

The House divided:

Ayes 278, Noes 200.

Division number 411

See full list of votes (From The Public Whip)

Question accordingly agreed to.

Resolved,

That this House commends the Prime Minister on his refusal at the European Council to sign up to a Treaty without safeguards for the UK; regards the use of the veto in appropriate circumstances to be a vital means of defending the national interests of the UK; and recognises the desire of the British people for a rebalancing of the relationship with our European neighbours based on co-operation and mutually beneficial economic arrangements.

9:47 pm
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John Spellar (Shadow Minister (Foreign and Commonwealth Affairs); Warley, Labour)

On a point of order, Mr Speaker. We live in some fairly interesting times, because not only do we have a Deputy Prime Minister who has gone missing, but I am reliably informed that not one Liberal Democrat Member voted in the Lobby to support the Prime Minister. Is there a precedent for that within a Government?

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John Bercow (Speaker)

The right hon. Gentleman is a wise greybeard, and he will know that there are precedents for most things, but fortunately whether people vote or the way in which they vote is not a matter for the Chair. However, he has put his point forcefully on the record.