EU Constitution

– in the House of Commons at 11:30 am on 8th June 2005.

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Photo of Bernard Jenkin Bernard Jenkin Shadow Minister (Energy and Climate Change)

On a point of order, Mr. Speaker. On Monday, the Foreign Secretary said:

"the high representative of the European Union, was appointed . . . under the treaty of Maastricht".—[Hansard, 6 June 2005; Vol. 434, c. 1005.]

That was a wholly inaccurate statement. Will you give a Minister an opportunity to correct the record, as I believe that the Foreign Secretary inadvertently misled the House?

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

Further to that point of order, Mr. Speaker. The position is more serious than my hon. Friend has described. In fact, the Foreign Secretary was insulting my hon. Friend by alleging that he voted for the treaty that created the new post of Foreign Minister. That was incorrect: it was done under the treaty of Amsterdam, which was introduced by the Labour party. Therefore, not only did the Foreign Secretary mislead the House, but he insulted an hon. Member. It is your duty, Mr. Speaker—

Photo of Michael Martin Michael Martin Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons

Order. I will not have that said. I was here when the Foreign Secretary spoke. Had he insulted any hon. Member, I would have told him to withdraw, but he did not. As I said, if there is a feeling that an inaccurate statement was made, drop the Foreign Secretary a note. I am sure that he will appreciate hearing from Mr. Heathcoat-Amory and Mr. Jenkin.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs) 12:33 pm, 8th June 2005

I beg to move,

That this House, in the light of the rejection of the EU Constitution by the French and the Dutch people, urges the Government to make clear its intention not to ratify the EU Constitutional Treaty, and instead to pursue a policy of a more decentralised and deregulated Europe, better suited to serving the people of Europe.

All sorts of reasons have been proposed by all sorts of people for the French and Dutch rejections of the constitution. The general view of the European political elite seems to be that those who voted yes were voting for the constitution, whereas those who voted no were voting against something else. Certainly there were domestic considerations active in both France and the Netherlands. Nevertheless, the results killed off the constitution—at least they would have in any rational world that respected democratic judgments. Yet the constitution's ghost continues to stalk the corridors of the Commission as the énarques of Brussels struggle to salvage something from the wreckage. That salvage operation is misguided and fails to heed what the people of France and the Netherlands are telling the European political elite.

Those present in France or the Netherlands for the referendums realised that the atmosphere in the streets represented more than just a simple no to a complex legal document: it marked a shift in public opinion, away from the idea of an elite-driven Europe to a Europe run in the interests of the people of Europe. In the Netherlands, that mood was bound up with concern about the impact of rapid social change within a country over a short period, and in France with concerns about the economy. What came across strongly in both countries was a common resentment about the euro, and that from their own political perspectives they are trapped in a straitjacket that is ill suited to their economic needs.

This wider shift in the mood of the public is not confined to France and the Netherlands. The pitchforks are being dusted down all over Europe. Perhaps we have reached what my right hon. and learned Friend the Leader of the Opposition called the end of inevitability. We were told that membership of the euro was inevitable. Does anyone still believe that? Do even the Liberal Democrats still believe that? We were told that we had to accept the constitution because it, too, was inevitable. Politically, nothing is inevitable unless we in this House and the people of this country accept it to be so.

Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West

Will the hon. Gentleman confirm that, in talking about the euro, he was suggesting that many of the people who voted no to the constitution in France and the Netherlands were attempting to vote no to the euro? Otherwise, why did he bring up the issue of the euro?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

I can only repeat it to the hon. Lady; I cannot understand it for her. As I think I said, there were a number of issues, both domestically—relating to economics and to immigration in both France and the Netherlands—and to the constitution as a whole. What I find odd is the idea that people who voted yes were voting purely on the constitution and that those who voted no were voting on anything but the constitution, which seems to be the interpretation put on the result by too many European politicians.

What do we mean by a Europe run in the interests of its people? Some may honourably believe that it is a paternalistic centralised state. I do not. I believe that a Europe run in the interests of the people would be one where national Governments co-operate where it is in their mutual interests to do so, but retain the freedom to act on their own where their national interest is at stake.

There are areas where sovereignty can be pooled—for example, environmental policy. The challenge of climate change is a global one, and the nations of Europe must work together with others. There is no point, for example, in every nation funding identical research into different sources of renewable energy. But there are many more areas where sovereignty should not and must not be pooled.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

Does my hon. Friend agree, with the benefit of hindsight, that instead of going down the route of harmonisation, we should have had mutual recognition of goods and services? Does he agree that we should look again at the customs union and the terms under which we are bound by it?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

I think that even Lady Thatcher would now have some considerable reservations about the form of the single market that we have. As my hon. Friend rightly says, when we decided in Europe to have a single market of harmonisation rather than a market of mutual recognition, as has been adopted in other trading blocs, that inevitably involved a body of legislation, much of which causes problems in our economic system. There is no point in running away from these issues. If we want to see a successful completion of a single market, we will have to examine what type of single market best serves the interests of the economies of Europe.

We must not be afraid of having a genuinely mature debate about Europe in the light of experience. When we do so, there are far too many worries—dare I say it, though the Chief Whip is not in his place?—driven by party political unity worries, when what is required is a genuine debate about the United Kingdom as a whole.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

Is the hon. Gentleman saying that he believes that Lady Thatcher should not have signed the Single European Act? Is he saying that if he could go back in time, and was a member of the Government at that time, he would not have signed the Act?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

I was not even a Member of Parliament at that time, never mind a member of the Government. As I have said, I think that even Lady Thatcher would now say that the direction which the single market ultimately took was not the direction that the British Government sought at that time, and that many of the problems that came from the single market were not anticipated at the outset.

Let us have a rational debate. If the hon. Gentleman is saying that no mistakes were ever made by previous Conservative Governments in European policy, that is preposterous, because most Conservatives would recognise that mistakes were made. We are happy to take our responsibility for where mistakes in the direction of Europe occurred. I wonder whether the Minister will.

The current temptation for the European political elite is to pick over the corpse of the constitution like a latter-day Burke and Hare, extracting the parts of the constitution most dear to their vision in the hope that they can be smuggled through without anyone noticing. That must not be allowed to happen. If the Council of Ministers seeks to introduce any mechanism that takes power away from the people of Britain and gives it to Brussels, it should not be introduced without the British Government holding a referendum to give the people of this country their say. The House will remember that the Prime Minister told The Sun:

"We don't know what is going to happen in France, but we will have a referendum on the constitution in any event—and that is a government promise".

Photo of Douglas Hogg Douglas Hogg Conservative, Sleaford and North Hykeham

Will my hon. Friend remind the House that that Government promise was not made exclusively on 13 May this year? It was made on 18 April by the Prime Minister and was stated formally by him to the House on 20 April 2004 at column 164 of Hansard in a reply to a question from my right hon. Friend Mr. Heathcoat-Amory. In those circumstances, what credibility does my hon. Friend attach to the formal promises made by the Prime Minister?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

I gave up attaching any credibility whatsoever to the Prime Minister's words a long time ago. One difficulty that I experienced in preparing my contribution for today's debate was the fact that the Prime Minister gave that promise on so many occasions that it was difficult to know which one to pick. My right hon. and learned Friend is quite right that the Prime Minister promised on many occasions that we would hold a referendum in any event, irrespective of what anyone else voted for. Surely, even for him, that must be difficult to wriggle out of.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

I will give way to the hon. Lady later. I have accepted many interventions in a brief period, but I shall certainly give way to one of my favourite Eurosceptics in the House.

There are areas where we must not pool our sovereignty any further. It was into those areas that the now defunct constitution wished to trespass, and which the Commission is most likely to want to cherry-pick. We cannot simply sit back and allow the European Union to acquire the trappings of statehood, such as a single diplomatic service and a president, without giving the British people a voice. It would be unthinkable to allow the European Union to sign treaties as a single legal entity—the definition of a nation state—without the people having a chance to veto such a development. The development of the post of Foreign Minister and an EU diplomatic service are part of a much longer-term plan. Let us remember what the constitution does. It proposes to give the Union increasing responsibility for the foreign and defence policies of all member states. It would allow the EU to define the collective strategic interests of member states. It would create an EU Foreign Minister to formulate and implement EU foreign policy and represent the union diplomatically. It would require member states to

"co-ordinate their action in international organizations", to integrate and harmonise member states' defence capabilities and to provide for concerted action in the case of conflict. That represents a profound change for Britain and Europe. It is intellectually legitimate to have a vision of a united Europe. I profoundly disagree with that vision, but let us not pretend that it is an efficiency measure.

Photo of Gisela Stuart Gisela Stuart Labour, Birmingham, Edgbaston

A moment ago, the hon. Gentleman started to say something interesting when he defined what kind of Europe the Opposition want. Pan-European problems may require pan-European solutions. Is he saying that we should deal with asylum—not immigration and asylum—at the European level, because that would be in our collective national interests? Is that his vision of Europe?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

No; it is not. Powers over immigration and asylum should be determined by each nation state. I believe in a Europe of nation states co-operating where it is in their mutual interests to do so, but being able to act separately when their national interest requires it. On asylum and immigration, our national interest requires us to be able to act separately. The hon. Lady and I differ because she thinks that those powers should be exercised in Brussels, whereas I think that they should be exercised in this House of Commons.

No one disagrees with the proposition that an EU of 25 needs different working relationships from an EU of six. Although "institutional reform" sounds bland, it means much more than motherhood and apple pie. What is actually being proposed is the transfer of yet more powers from the people of Britain to Brussels, with the veto being given up in 63 individual areas. The reform of qualified majority voting, and with it the removal of the veto over key areas such as criminal law and justice, is another element of the constitution on which the British people must have their say.

The legal systems of the 25 current members and of possible future members vary widely in both procedure and substance. Those differences matter, because they reflect deep, culturally determined attitudes to the relationship between the citizen and the state. Beyond the specific international crimes discussed in the document, the broad notion of "judicial co-operation" challenges member states' unique approaches to criminal law. In particular, the constitution will create a European prosecutor, who will investigate and try certain types of cases. On the surface, the proposal does not sound so objectionable, but the constitution would expand the prosecutor's jurisdiction to include

"crimes affecting the interests of the Union."

At that level of generality, virtually all crimes occurring in the Union, and some that occur outside it, affect the Union's interests. Given that EU institutions would therefore be responsible for interpreting the extent of their own jurisdiction, the proposal is an unwarranted intrusion into our legal traditions and independence.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

On the European public prosecutor, the hon. Gentleman often discusses fraud in the EU in public, on the television and radio and in this House. He knows that 85 per cent. of EU-related fraud is perpetrated within member states when member states spend EU money and that a European public prosecutor is the only way to tackle those cases. Why will he not agree to such a post?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

There is no logic to that argument. The situation would be better if the EU Commissioners tackled fraud in the EU rather than whistleblowers. All too often, those who run the EU—in particular, the Commissioners—turn a blind eye to endemic fraud and waste because it does not suit their short-term political agenda to deal with it. The EU needs a system in which the Court of Auditors is willing to sign off the accounts, which did not happen for 10 years under the current system. If that were to happen to a British company, we all know what the consequences would be. [Interruption.] The hon. Gentleman has made his intervention, and I am sure that he will make an interesting speech that keeps hon. Members glued to their seats.

The constitution would also build on the European convention on human rights, with the proposed charter of fundamental rights as the bedrock of constitutional law in the EU. Judges in Brussels would accrue immense power over the interpretation of legislation, and thus over the people of this country. Once again, power would be transferred, and it is yet another element of the constitution on which the British people should have their say.

Iain Murray, a senior fellow in the international policy group at the Competitive Enterprise Institute, has made some interesting comparisons between the charter and the US Bill of Rights:

"As we all know, the American Bill of Rights is couched mostly in negative terms, forbidding government from certain action. The European charter, however, is couched in positive terms, bestowing rights upon citizens by the grace of its actions . . . The EU constitution is in many ways the complete opposite of the US Constitution. It protects institutions' powers and enumerates rights. It limits its member states' freedom while accruing powers based on one political world view to the centre".

He has also pointed out one great contradiction in the charter:

"the charter contains a get-out clause. Any of these rights may be limited in the interest of meeting 'objectives of general interest recognised by the Union.' A raison d'etat is thereby enshrined in the constitution. Presumably this is how the EU will reconcile its actions against 'xenophobia' with the general principle of freedom of expression."

But one of the best summaries of the failures of the constitution that I have yet read—it is available from the Library—came from Jonathan Kallmer, an attorney in Washington who practises international litigation and arbitration. He wrote:

"The problem is not precisely that the constitution is too ambitious; constitutions should be ambitious. The problem is that it is ambitious in ways that exacerbate the problems it was meant to remedy. The European Union has achieved great things, but part of the virtue of doing great things is recognising what cannot be done. All of the draft constitution's flaws flow directly or indirectly from its framers' failure to recognise limits."

He continued:

"The essential merits of a constitution are found as much in the process as in the substance. An effective constitutional document not only sets out the core rights of citizens and the basic structures of government, but does so in a way that is clear, concise, and accessible. A constitution is for people, not bureaucrats, and it is imperative that it speaks as plainly as possible. The European draft constitution shows few of these procedural virtues."

Finally, he noted:

"At over 200 pages the document is simply too long. If it takes that much paper to discuss fundamental values and a clear institutional structure, it is likely that the values are not fundamental and the institutional structure is not clear."

Photo of Clive Betts Clive Betts Labour, Sheffield, Attercliffe

Does the right hon. Gentleman not accept that if this vision of the decentralised European Union that he would like to see were to come about, that would in itself need a new constitutional treaty, the agreement of all 25 Governments, and the agreement of the people of all 25 states by referendum or whatever means? Does he further accept that there is not the remotest chance of that happening, and that the ultimate position therefore is that the Conservatives will either have to accept membership of a European Union that they do not really like or seek to withdraw from it?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

There we have a perfect example of the inevitability that my right hon. and learned Friend Mr. Howard was talking about earlier—"It is inevitable, therefore we are powerless to do anything about it; it is inevitable, therefore we should not try; it is inevitable, therefore we must take what we are given." What sort of attitude is that for any Government of the United Kingdom to have? We should set out what we believe to be in Britain's national interest and fight for it—without which, incidentally, there would be no rebate for the current Government to be defending at the present time.

Photo of Ann Winterton Ann Winterton Conservative, Congleton

May I suggest to my hon. Friend that in every piece of European legislation to be enacted in this country we have to amend the European Communities Act 1972? It is always one way, however. There is no reason why we should not amend that Act to bring back powers to this country, for example on fisheries policy, without coming out of the European Union.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

It is a great shame that the debate on Europe is always reduced to an oversimplified debate based on, "You have to be in or you have to be out." That is the argument beloved of the Government when they put forward the inevitability of our having to swallow everything that we are given because the alternative is to leave the European Union. That is a fundamentally dishonest way of portraying the debate on Europe. My hon. Friend is absolutely correct—there are other ways in which we could achieve the results that we want, and it is time that this country, in a reasonably mature way, started that debate. We have nothing to be afraid of, because if we fail, the consequences are grim not only for the United Kingdom but for Europe as a whole. That is the issue to which I shall turn in a moment.

We cannot accept this constitution either in whole or in part. We think that it is bad for Britain and bad for Europe. Yet less than half an hour ago in this House, the Prime Minister described it as "a perfectly sensible way forward."

We know that many in the European institutions still seem intent on ignoring the democratic will of voters and trying to resurrect their creature. Only two weeks ago, the present holder of the EU presidency said:

"the countries that have said no will have to ask themselves the question again".

Again, we seek clarity from the Government. Last year, the Prime Minister told this House:

"There is no question of any constitutional treaty going through without the express consent of the British people . . . Regardless of how other members vote, we will have a referendum on the subject".—[Offiical Report, 21 June 2004; Vol. 422, c. 1090.]

When he returns from the summit, the Prime Minister must come to this House and either tell us that the ratification process is over or reintroduce the legislation and hold a referendum in this country as soon as possible.

Photo of Bernard Jenkin Bernard Jenkin Shadow Minister (Energy and Climate Change)

I am listening to my hon. Friend very carefully and with great interest, because I think he is presaging a major shift in the policy of our party towards the European Union in the aftermath of the referendums.

Could he deal with the comment that the Leader of the House made from a sedentary position, which he may not have heard, to the effect that if we were somehow to legislate unilaterally to retrieve certain powers, we would instantly have to leave the European Union? Would my hon. Friend explain to him that it is most unlikely that the other member states would instantly wish to expel us and that they might want to negotiate about it?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

As you, Mr. Speaker, might have said, the Leader of the House is in his place and will have heard what my hon. Friend has said. No doubt when his colleagues have worked out the point he is trying to make we will hear it again from the Labour Benches.

The death of the European constitution provides us with a moment to stop and think again about the direction in which Europe is heading. Referring to the four big treaty negotiations since 1985, Sir Stephen Wall, a former ambassador to the EU, said:

"to an extent, all of them have been a proxy for the one negotiation the union has not had: how to define its modern vision, purpose and relevance".

That is the debate that we now need to have.

Photo of Robin Cook Robin Cook Labour, Livingston

May I return the hon. Gentleman to the amendment that he has put before the House? Is he aware that nobody would be more delighted if that were carried than President Chirac of France? President Chirac himself has not made it clear whether France will not now ratify the treaty, and he would just love to be let off the hook by being able to say, "There's no point in ratifying because Britain has said it will not." Opposition Front Benchers are not noted for their affection for France. Can the hon. Gentleman explain why he thinks it smart to let France out of the corner that it has painted itself into and at the same time make Britain unpopular with all the countries that have ratified?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

This may come as something of a shock to the culture of new Labour, but the reason why the French did not ratify is that the French people said no. When we start putting high politics and diplomatic etiquette above the democratic will of the people of Europe, we are in a very sorry state. I am sorry that the right hon. Gentleman has fallen into the trap of trying to play games with what is a very clear rejection of this treaty, in democratic referendums, by the people of France and the people of the Netherlands. Either we accept the democratic will of the people or we do not.

As we embark on this debate, it is worth remembering how we got to this point and making an assessment of the balance sheet of the Common Market, the European Community and, now, the European Union. I readily admit that many in this House will remember the 1975 referendum more vividly than I do. I remember it primarily because my parents campaigned strongly on opposite sides. My father supported the yes campaign. Like many others at the time, he did not want to see his children involved in a European war and believed that membership would bring greater trade and prosperity. My mother supported the no campaign. She believed membership would be a straitjacket and went against the grain of British historical experience. They typified the divisions up and down the country—divisions that still exist today.

Photo of Geoff Hoon Geoff Hoon Lord Privy Seal

In the Conservative party.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

The Leader of the House says, "In the Conservative party." These divisions run very deeply right through all parties. The right hon. Gentleman may want to trivialise the debate, but I am sure that when he hears the speeches of Members sitting behind him he will have his illusions shattered.

Those who take a very positive view of the European experience claim that peace and stability, higher standards of living and a better understanding of our neighbours' cultures have been the primary benefits. They point out that EU member states have had an almost unprecedented period of peace and stability since the end of world war two. They say that membership has also had the effect of encouraging aspirant members in less stable parts of Europe to settle their differences and that the EU helped to bring about the end of the cold war. They believe that EC laws have resulted in higher standards in many areas such as employment and the environment, and that the ability to access European funds has transformed the economies of countries such as Ireland and Spain.

Those who take a more sceptical view would claim that Germany as a stable democracy is not a threat to European security, and that the cold war was won by the military might of NATO, combined with the political strength of British and American leaders at a time when many European Governments had succumbed to the unilateralist tendency, as had the Labour party. They claim that loss of sovereignty has been too high a price to pay: more majority voting; the loss of the national veto, and the encroachment of the EU on matters such as human rights, health care and foreign and security policy. They point to the cost of being in the EU, the amount of legislation from Brussels and the over-regulation, fraud and corruption. They believe that, if allowed to continue unchecked, interference in national customs—perhaps best typified in Britain by the "metric martyrs" case—will persist. They say that the common agricultural policy, which roughly doubles food prices here, is unfair to developing countries, and corrupt, absurd and completely discredited. It could also be argued that closer links to other European citizens have been achieved through travel and the greater interface between students, artists and scientists. None of them require an institution to make them happy.

What are the facts? Civitas recently examined the cost of membership, in a report that I recommend to all hon. Members. The study suggested that the largest cost comes from EU red tape. Regulations implemented since 1999 cost British business £6.3 billion a year. The total cost of all EU regulations is at least £20 billion a year. The CAP costs the UK approximately £9 billion a year, while the net cost of payments to Brussels totals around £4.3 billion a year.

Photo of Henry Bellingham Henry Bellingham Opposition Whip (Commons)

My hon. Friend mentioned regulations. Does he agree that, although the Government say much about deregulation and trying to help small businesses and wealth creation, the time has come to get rid of the job-destroying social chapter?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

If my hon. Friend will forgive me, I shall consider the things that need to change shortly. However, as regards the example that he gives, the Conservative Government stood strongly against something that the socialists swept in as soon as they possibly could.

Changing demographics in Europe are likely to affect economic performance. A study that the City consultant Makinson Cowell published points to the problems of falling fertility rates and greater longevity. By 2010, the EU's working-age population will have begun a permanent decline. Over the next 40 years, the working-age populations of Germany, Italy and Spain will fall by a third. That will have a major impact on the European economy. The EU's projections suggest that economic growth in Europe will be only half that of America between now and 2050. Projected forward, the EU's share of global gross domestic product will slump from 18 per cent. now to only 10 per cent. by the middle of the century, while America's will rise from 23 per cent. to 26 per cent.

It is not only that the Anglo-Saxon economies of Britain, America and Australia are outperforming Europe, but, when faced with the challenge of competing with China, South Asia, India or the United States, the EU is beginning to look like an economic irrelevance.

None of the figures should give us comfort. Even if we interpret them as a sign not of European weakness but of British strength, we will still feel the effects of a faltering European economy.

Photo of Alex Salmond Alex Salmond Parliamentary Leader (Westminster), Spokesperson (Constitutional Affairs; Treasury), Leader, Scottish National Party

The shadow Secretary of State is making an interesting speech, which might stand him in good stead—who knows? However, like Mr. Jenkin, I detected a shift in policy. In the earlier passages of his speech, he appeared to suggest that the Conservative party could support a constitution, with the proviso that it had the clarity of thought and limitations of the American constitution and Bill of Rights. Did I interpret that correctly?

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

Not for the first time, no.

What can be done? The big European economies such as France and Germany need to understand that the improved performance of the United Kingdom is based on the supply-side reforms—Conservative reforms—that were introduced in the 1980s. It will not be possible to maintain economies based on the European social model and compete successfully in an ever-more rigorous world economy. The burden of excessive regulation must be stripped away. A genuinely competitive single market must be completed, with more powers operated nationally, in line with the true principle of subsidiarity. We must also consider, as Civitas put it, the radical overhaul of the CAP, the removal of all external EU tariffs and the reaffirmation that EU members should not be responsible for each other's pension liabilities. Those are not definitive solutions but the beginning of a necessary debate.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

I will not; I have given way several times already.

We can also build on the success of the accession countries, economically and politically. We have just reason in this country to be proud of having championed their cause. Approximately 15,000 UK companies export or invest in central Europe, attracted by the low costs of operating from that area. Three quarters of those are small to medium-sized, with fewer than 250 employees, but many are big City firms, particularly of lawyers and accountants. Since 1990, UK trade with the accession countries has increased nearly 10 times as fast as trade with the rest of the world. Slovakia, Poland, Hungary and the Czech Republic now proudly have Tesco stores.

However, the economic freedom inevitably has an effect on the centralising tendency that is so close to the heart of Europe's political elite.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

I have told the hon. Gentleman that I shall not give way.

As The Economist put it,

"whereas the traditional builders of Europe were suspicious of nationalism and keen to build up supranational institutions at the expense of the nation state, many of the Central Europeans are still joyfully reasserting their own national identities after decades of Soviet domination. As Vaclav Havel said, 'the concept of national sovereignty is something inviolable'."

That lesson has still to be learned by some of Europe's old masters. Last year, President Chirac slapped down accession states for daring to disagree with French policy on Iraq, and Chancellor Schröder threatens new EU states that use low tax rates to undercut German industry with financial retaliation.

Europe needs to have a genuine debate as we stand at the current crossroads. Yes, there have been many achievements, not least the liberation and stabilisation of Spain, Greece and Portugal, and subsequently the former east European states, from dictatorship to democracy. However, there are also many negative entries on the balance sheet.

The French and Dutch voters have done us all a great favour. They have stopped in its tracks a constitution that would have taken Europe in entirely the wrong direction. Perhaps the signing of the constitution by our Prime Minister was the high-water mark of European integration. We now have the chance to develop a more flexible Europe, which is more outward-looking, less centralised, less bureaucratic, more trusting of national identity, and designed to be the servant, not the master, of its citizens. The UK must champion that agenda with leadership and courage. Nothing is inevitable; change is possible. All that is required is the strength, belief and courage to see it through.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe) 1:07 pm, 8th June 2005

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"endorses the Statement of 6th June by the Secretary of State for Foreign and Commonwealth Affairs, which set out the Government's response to the results of the French and Dutch referenda on the EU Constitutional Treaty;
recognises that discussions will now take place on the future of the Constitutional Treaty between European leaders collectively;
and agrees that the EU should uphold the concept of subsidiarity and pursue greater flexibility and better regulation, and continue the contribution it has made to peace, democracy and prosperity over recent decades for the benefit of the people of Europe."

I begin, on behalf of the Foreign Secretary, by extending his apologies to the House for his absence. My right hon. Friend is in Israel and the Palestinian territories.

The tone and tenor of the shadow Foreign Secretary's speech, not least his equivocation about Baroness Thatcher's view of the single market, reminded me why Europe, perhaps more than all other issues, has wrecked the Tory party and removed its prospects of power for well over a decade. Labour Members recognise that, with more than half our trade being with Europe, more than 3 million jobs linked directly or indirectly to exports to Europe and 750,000 British-based companies trading in the European Union, Britain's national interest is—and should continue to be—advanced by our engagement with the EU.

We further acknowledge that, on challenges as broad and diverse as environmental degradation and global poverty, Europe working together cannot only extend Britain's influence but can be a powerful and positive force for good, as we saw last month, when EU Development Ministers agreed a new collective target for overseas development assistance of 0.56 per cent. of EU gross national income by 2010. Only yesterday, EU Finance Ministers endorsed the commitment by the 15 richer EU member states to reach the United Nations overseas development assistance international target of 0.7 per cent. by 2015 and the agreement by the other 10 member states to work towards 0.33 per cent. on the same time scale. That will more than double EU aid in less than 10 years.

In my remarks today, I will reiterate the Government's response to the results of the French and Dutch referendums on the EU constitutional treaty. I will then address the wider case for economic reform in Europe and reaffirm that the Government will not act in a way that undermines the EU's continuing contribution to peace, stability and prosperity in Europe.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

Will the Minister tell us, given the events of recent times, whether the Government are still committed in principle to joining the euro?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

The position in relation to the euro stands apart from the constitutional treaty and remains as stated by the Chancellor of the Exchequer in October 1997. Although, in principle, we support a European single currency, in Britain's case, it has to be based on an economic assessment—the five tests—and, ultimately, on the judgment of the British people. There would be a decision in Cabinet, in Parliament and, ultimately, a decision by the British people. There has been no change whatever in the British position in that regard.

This debate takes place just a week before the customary debate preceding the European Council meeting, which will take place this year on 16 June, and two days after the Foreign Secretary addressed the House on its return from the Whitsun recess on the Government's response to the referendum results in France and the Netherlands. The House has been and remains divided on the merits of the constitutional treaty, as we have heard again today. The Government believe that it represents a sensible set of rules for the enlarged European Union, including a reduction in the size of the European Commission; a much better voting system, which benefits the UK; an end to the six-month rotating presidency, with replacement by a full-time President of the Council and team presidencies; and better arrangements for involving national Parliaments in EU legislation. The treaty, of course, requires ratification by every EU member state before it can come into force. To date, 10 member states have approved the treaty and, as the House is aware, two member states—France and the Netherlands—have, in recent days, rejected it in referendums.

Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

May I congratulate the Minister on the magnificence of his achievements since his appointment? In only four weeks, he has transformed Britain's relationship with Europe. When I heard that he had been appointed, I did not anticipate that he would be able, in such a short period, to preside over a French no, a Dutch no and the destruction—although he cannot possibly say so—of the constitution. Can he tell us what he is going to do for an encore?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

The warmth of that intervention gives the lie to the idea that Labour Members are divided on the issue, as the shadow Foreign Secretary suggested.

The constitutional treaty was the subject of detailed negotiation between member states, was agreed by all European leaders and is the property of the European Union as a whole. It is not, therefore, as the Opposition have suggested again today, for the UK alone to decide the future of the treaty. Rather, it is for European leaders to reach conclusions on how to deal with the situation that has now arisen in light of the French and Dutch referendums.

Photo of John Redwood John Redwood Conservative, Wokingham

Will the Minister confirm that the European Defence Agency was nowhere mentioned or conjured up in the Maastricht treaty, in contrast to what was put on the record in the House yesterday by the Foreign Secretary? Why is it that the British people could not have a vote on the establishment of the European Defence Agency and its rearmament programme, which is set out clearly in the draft constitution? Under the Conservatives, it was rightly said that the main point of the Maastricht treaty, the euro, would always require a referendum, and I am glad that we never made the mistake of joining it.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

The right hon. Gentleman raised a number of points. His point about the Foreign Secretary has already been dealt with by Mr. Speaker. As for the European Defence Agency, it is worth bearing it in mind that the legal basis on which it was established preceded the new constitutional treaty. It is headed by a British civil servant and is undertaking important work on European procurement.

It is also worth bearing it in mind, not least in the light of the wide-ranging speech by the shadow Foreign Secretary, that the idea of a European common security and defence policy was first mooted by Baroness Thatcher in 1984. If we look at the Maastricht treaty in terms of a common security and foreign policy, it was a Conservative Government who advocated at that stage working more closely with European partners. That emphasises further the extent to which the Conservatives have moved from the mainstream of debate on Europe to the very margins. Macmillan led the discussions with de Gaulle in the 1950s. In the 1970s, Edward Heath was central to the debate about Britain's future with Europe. It is not a coincidence that the period when the Conservatives have moved into Euroscepticism is the period when they have been in opposition.

Photo of Bernard Jenkin Bernard Jenkin Shadow Minister (Energy and Climate Change)

When the Minister has been in the job a little longer, he will discover that there was no question of any autonomous defence capability in the European Union until the Prime Minister made the agreement at St. Malo. That was a fundamental change in policy. Before the Minister starts taking instructions from the former Secretary of State for Defence, who is sitting beside him, they both know well that that has put the cat among the pigeons in NATO. It is undermining NATO. We should have a referendum on it before it goes any further. I agree with my right hon. Friend Mr. Redwood.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

The common defence policy was referred to in the Maastricht treaty. It is worth bearing in mind the long journey that the Conservative party has been on since the hon. Gentleman's time in the shadow Cabinet and beyond. It is for the Conservative party, rather than the Government, to explain the contradictions between its position a few years ago in opposition and today.

Photo of Alex Salmond Alex Salmond Parliamentary Leader (Westminster), Spokesperson (Constitutional Affairs; Treasury), Leader, Scottish National Party

We all understand why the Prime Minister has put the referendum into cold storage, but why was the Minister so definite in the House only two weeks ago in saying that there would be a referendum, come what may? Other Ministers at the time, even senior ones, were equivocating.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

If the hon. Gentleman were to reflect on the words in Hansard, he would see that I simply quoted the words of the Prime Minister, who set out the Government's position that, in the UK, the process of ratification for a constitutional treaty would be taken forward by means of a referendum. That continues to be the Government's position. Notwithstanding the speculation, there is no suggestion otherwise than that a constitutional treaty would be ratified in the UK by means of a referendum. The Prime Minister was drawing a distinction between the position in the UK, where we have said that that would be done by means of a referendum, and the position in other countries, where other procedures are being adopted. It is for other countries to determine the process of ratification to be followed in their countries.

Photo of Alex Salmond Alex Salmond Parliamentary Leader (Westminster), Spokesperson (Constitutional Affairs; Treasury), Leader, Scottish National Party

The quote from the Prime Minister was not that at all. The quote from the Prime Minister that the Minister used two weeks ago was:

"I've always said we'll have a vote on the constitution. It doesn't matter what other countries do; we'll have a vote on the constitution."

That is not the position that the Minister has just outlined. Will he explain why he was so definite two weeks ago?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I am happy to trade quotes from the Prime Minister with the hon. Gentleman. On the same day, the Prime Minister said:

"You can't have a vote on nothing."

That sums up the position exactly. If there is a constitutional treaty that we are taking forward and ratifying, it will be by means of a referendum.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

To help the Minister perhaps out of the dog's dinner of a policy that he finds himself in, since he is so close to the Prime Minister, will he tell us whether, at the summit next week, the Prime Minister, on behalf of the British Government, will press the other Governments, in light of the Dutch and French referendums, to drop the ratification process?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

We have recognised that the process of ratification is in serious difficulty in light of the decisive votes in the Netherlands and France. In the first instance, the Prime Minister will, appropriately, want to hear from the French and Dutch Governments about how they will respond to the decisions by the French and Dutch peoples. Clearly, as I have set out, there is a need for further discussions with EU partners and further decisions by European Union Governments on the matter. The first opportunity for that collective discussion, as has been anticipated in today's debate, will arise at the end of next week when Heads of State and Government meet in the European Council, before which there will be a further opportunity for debate in this House.

That is the context in which the Government have decided not to set a date for Second Reading of the European Union Bill until the consequences of the French and Dutch decisions, and their effect on the process of ratification of the treaty, are clarified. As the Government have already informed the House, we reserve completely the right to bring the Bill back for consideration if circumstances change, but we see no point in doing so at the moment.

Photo of Robin Cook Robin Cook Labour, Livingston

Before my right hon. Friend gives way to any more Conservative Members demanding a referendum, I am anxious to ask him to remind the House when we had a referendum on the Maastricht treaty or on the Single European Act, which introduced a record amount of qualified majority voting or on the decision by a Conservative Government to take Britain into the common market? Are we to add all those failures to hold a referendum to the mistakes that previous Conservative Governments have made? Were all three previous Conservative Prime Ministers wrong throughout about Europe?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I could not have framed the question better myself. The fact is that, if we look back more than 30 years to the referendum that took place, it is clear that Conservative Members now need to answer—perhaps it will provide an opportunity for Mr. Brady when he winds up the debate—whether it is the party's clear position that it regrets the fact that there was no referendum on Maastricht or, indeed, on the Single European Act, about which there seemed to be considerable equivocation in the remarks of the shadow Foreign Secretary.

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

We really want to know the Government's position at the European Council next week. If a majority decision were taken at that Council to continue with ratification, would the Government obey it or disregard it?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I cannot anticipate the position of the Council, not least in light of the fact that discussions are under way between European Heads of State as we speak. At this stage, it is appropriate for the Government to say only that we are moving forward with those discussions and that there will be a further opportunity for debate in the House ahead of the European Council, so the hon. Gentleman will have to wait a little longer.

Photo of Edward Balls Edward Balls Labour, Normanton

I am sure that my right hon. Friend listened carefully to the speech of the shadow Foreign Secretary and tried to discern, as did I, the change in European policy that is taking place in the Conservative party, and the principles that underpin the Tory approach to a referendum. Does my right hon. Friend agree that the shadow Foreign Secretary appeared to be saying that his mother, rather than his father, had been more influential in the shaping of his views on Europe, and that there should have been a referendum on both the Single European Act and the Maastricht treaty? Does he further agree that the hon. Gentleman would have voted against the Single European Act and, if so, that that would take us even further away from the prosperous, full-employment Europe that we want to see?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

My hon. Friend makes the important point that, following the shadow Foreign Secretary's contribution today, we are none the wiser as to his position on referendums as we look back to the Single European Act and Maastricht. My hon. Friend makes another important point—that the uncertainty and ambivalence is not limited solely to the issue of referendums, because it applies to the more fundamental issue of renegotiation. If we examine the Conservative manifesto, on which the party decisively lost just a month ago, we find explicit reference to the fact that the Conservatives would seek to repatriate powers in respect of the common fisheries policy, for example. In the light of at least one intervention today, the statements contained in the manifesto presage an even more fundamental shift in the Conservative party position.

We need to recognise that while, even a few years ago, the idea of renegotiation on the way to exiting the EU was regarded as being of only marginal interest to the more extreme fringes of the Conservative party, it now appears to be becoming the ruling orthodoxy of the shadow Cabinet. In that context, the repeated assertion by the shadow Foreign Secretary today that renegotiation matters and somehow represents Britain's national interest poses the further question—it could, ideally, be answered by the shadow Minister when he winds up the debate—of the specific areas in which the Conservatives are seeking to renegotiate the existing European treaties?

There is clearly uncertainty within the shadow Cabinet. I appreciate that a leadership election is under way in the Conservative party, but does the party policy include the sort of fundamental renegotiation of rights anticipated by the shadow Secretary of State for Deregulation or is it limited simply to what was contained in the Conservative manifesto? Perhaps the shadow Minister will clarify the position when he addresses the House later.

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

Why is the Minister so amazed at the word "renegotiation"? The Convention on the Future of Europe was a giant renegotiation of all the existing treaties that were going to be abolished. The Minister did not engage with it with sufficient determination to make it a success. We wish to do so in order to achieve a genuine, democratic Europe that is closer to its citizens. So yes, we believe in renegotiation and yes, the Minister's party tried and failed to deal with it.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I am not taking that intervention seriously. It once again opens up wide the clear divisions within the Conservative party. It is not necessary to listen to my views on the matter. Let us consider the views of the former Prime Minister, John Major, who said that the policy of renegotiation was "absurd, mad". Those were the words of the Prime Minister under whom the shadow Foreign Secretary served during his time in the Foreign Office. Equally, we could reflect on the views of Sir Malcolm Rifkind, who is now serving in the shadow Cabinet:

"Already there are those calling for the Tory Party to demand the renegotiation of Britain's membership of the European Union; a call which is little more than a euphemism for us to quit Europe."

Frankly, the divisions that exist on the issue of renegotiation are most apparent among Conservative Members.

Several hon. Members:

rose—

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I have been generous with the House and I want to make some progress.

Amidst the current headlines and debates on the constitutional treaty, it is all too easy to lose sight of the underlying reality that there is an economic transformation taking place of even greater long-term significance than the political transformation achieved by enlargement—and that is the process of globalisation.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I have already been generous, but I shall give way in due course.

Europe needs to adapt to the changing balance of global economic activity and the rise of fast-growing emerging economies, notably those of China and India. Rapid technological change, global capital flows and the global sourcing of products are leading to an increasingly competitive international market for goods, services and investment. The most successful economies will be those that can adapt quickly to change and promote enterprise, productivity and innovation.

That process of change challenges Europe economically, socially and politically. It demands concerted action to strengthen key drivers of growth such as levels of employment. It calls for greater flexibility in product, labour and capital markets to ensure that Europe's businesses and individuals are equipped to adapt to economic change and take advantage of new opportunities when they arise. Structural reform which promotes flexibility and fairness together is the key to success in the modern global economy. That is why advancing the economic reform agenda will be a key priority for the UK when we assume the presidency on 1 July. As the House well knows, the UK has long advocated economic reform in the EU, but as the Kok report confirmed, we risk falling far short of the goals set by EU leaders in Lisbon just five years ago to improve EU competitiveness and create full employment by 2010. With 19 million Europeans out of work, the main task for those who believe in social Europe is to get Europe back to work.

Vital to that is the task of tackling regulation. Twelve European countries, including the UK, have signed up to our better regulation agenda. European legislation can bring down barriers and improve competitiveness in Europe, but it needs to be high-quality legislation, properly tested for its potential costs and benefits.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

Why do the Minister and the Government amendment persist in talking about "better regulation"? We have already had the Better Regulation Task Force, but it did not bring less regulation. What we want is less regulation, not better regulation.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

That intervention yet again exposes the fundamental divide between Conservative and Labour Members. The argument that we do not need more regulation was precisely that used to oppose extending paternity leave and the introduction of a national minimum wage in the UK. There is, of course, a case for appropriately targeted and relevant legislation, whether it comes from Europe or Britain, but the approach that she advocates shows that, whether at the British or European level, there is an unthinking determination among the Conservatives to remove social protection rather than have an informed debate about it. As the shadow Foreign Secretary acknowledged, such a debate would be necessary to carry forward such work.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

May I remind the right hon. Gentleman that, during a debate in the House on 18 May, I asked him a specific question on this matter? I said:

"Surely it will be the people of this country who will decide whether the treaty is British or not, not some French politician who has an axe to grind in another place."

The Minister replied that

"as part of that process of ratification there will be a vote by the people of Britain. On that, at least, the hon. Gentleman and I have common ground."—[Hansard, 18 May 2005; Vol. 434, c. 155.]

Has he now lost that common ground?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

The quotation that the hon. Gentleman reads out reflected the assumption that the process of ratification would be taken forward. What we have established in recent days, in the light of the decisive vote by the French and Dutch people, is that the treaty is in a period of uncertainty ahead of the European Council. European leaders need to come to terms with where the process of ratification now lies, not least in the Netherlands and France, in the light of the decisive recent results about which the hon. Gentleman indicated concern in his original question in the House.

Photo of John Bercow John Bercow Conservative, Buckingham

The Minister was sniffily dismissive of the intervention by my hon. Friend Angela Browning, but the point stands that the burden of regulation is excessive, remorseless, disproportionate to need and beyond the capacity of member states to pay for, without damaging competitiveness. I ask the Minister in all sincerity—I sign up to the principle of economic reform—whether he accepts that a powerful argument can be made within the EU for the adoption of the principle of sunset regulation so that the process is not always one way and is not a continuing ratchet in favour of greater regulation without regard to the interests of business and the workplace.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

That is an important point, and it is well taken. However, the use of sunset clauses depends on circumstances. For example, we would not want the changes that we support in respect of economic reform to be sunsetted, as we want that reform process to go forward. I shall expand on some of the specific matters involved in better regulation in the remarks that I am about to make.

Twelve European countries, including the UK, have signed up to the better regulation agenda. The legislation must be properly tested for both potential benefits and costs. During our presidency, therefore, we intend to focus on improving the policy-making process through better consultation and the assessment of the impact of proposed legislation on business and on the EU's international competitiveness. Our fundamental goal is to reduce the volume and complexity of EU legislation and to review the impact and outcomes of existing legislation. I think that there is common ground in the House on that at least.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Much has been made of regulation and deregulation in this debate so far, but does my right hon. Friend agree that deflation is the big problem in the eurozone at present? There is a black hole in economic demand at a time when it should be high. The most successful period in European economics was in the post-war era, when economies were highly regulated but there was high consumer demand.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

It would not be appropriate for me to comment in this debate on the macro-economic strategies being adopted by other European countries, but I take issue with my hon. Friend's suggestion that the European economy in the 1960s and 1970s offers a model for the way forward in the 21st century. In the period to which he refers, the global economy was relatively closed, whereas it is much more globalised now. We must recognise that Europe faces particular challenges and that they are as significant as was the challenge of developing peace and stability in the second half of the 20th century. For example, the rise of China and India was never anticipated in the era that he describes with such enthusiasm.

During our presidency, we also want to make progress on the services directive. That directive has a strong focus on better regulation and aims to cut excessive bureaucracy that prevents businesses from offering services across borders or opening premises in other members states. Extending the internal market to the services sector, which represents around 70 per cent. of EU GDP, will be of enormous benefit to businesses and consumers alike.

Photo of Robert Walter Robert Walter Conservative, North Dorset

The Minister referred to the decisions that he hopes will be taken under the British presidency. One provision of the constitution that no doubt he would have promoted in a referendum is that the Council of Ministers should take its decisions in public. That does not require a treaty or any legislation. Will the British presidency meet in public?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I am intrigued to hear Opposition Members doing what the Government were accused of in a debate in this Chamber only a couple of days ago. I would have no objection to the European Council considering legislation in public, but it is for the shadow Foreign Secretary to explain whether Opposition Members commonly hold that view or whether a referendum on the matter is required.

In the financial services sector, our focus will be on completing the financial services action plan in a way that protects and promotes the competitiveness of the UK and EU.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

No, as I have been generous and want to make some progress.

We will also take forward the Commission's excellent Green Paper on the post-financial services action plan agenda to ensure better implementation and enforcement of measures affecting the financial sector, the use of alternatives to regulation and a clearer recognition of the global nature of financial services. [Interruption.] Although the shadow Foreign Secretary was not generous in giving way to newer hon. Members, I shall not make the same error. I therefore give way to Adam Afriyie.

Photo of Adam Afriyie Adam Afriyie Conservative, Windsor

I thank the Minister for giving way. My question is fairly simple. A promise was made that a referendum would be held so that the British people could have their say on the EU constitution: will the Government apologise for not providing that referendum?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I am not entirely clear that that intervention was worth waiting for. I hope that the hon. Gentleman has been listening to my remarks, and that he will also attend the debate that will take place in this House ahead of the European Council in just seven days' time.

Strengthening economic co-operation between the EU and the US is also a priority for the UK, as was made clear at Prime Minister's Question Time today. We will want to build on the work under way in the context of this month's EU-US summit and demonstrate clear progress in breaking down barriers to trade and investment in key areas.

The European Council next week will look at the EU budget for the period 2007 to 2013. That debate is part of the wider debate on how Europe responds to globalisation. Where can EU spending bring the greatest added value? That is the question. We think that the answer is clear, and it is that we must reduce the income gap between old and new member states and provide Europe with the means to strengthen research and development in the most competitive sectors of the global economy. We are convinced that the EU can do that within a budget of 1 per cent. of EU gross national income.

Of course, there is a lot of talk across Europe at present about the UK rebate. The rebate exists because of the particularly low level of UK receipts from the EU and our above average contributions to the EU budget. That situation has not changed since the Fontainebleau summit of 1984, to which reference has been made already in this debate. It will not change in the next decade either. That is why the rebate remains justified and why we will use the veto, as is our right, to defend our national interest.

As I have said, the EU's future prosperity depends on being able to compete in a global world. That requires strong economic performance, but it also means having strong political partnerships across the globe.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

No, as I have been generous and want to make progress.

During our presidency, we will take forward work to build up the EU's partnerships with its neighbours in the middle east and north Africa and in eastern Europe, not least with those countries aspiring to EU membership. Last December's European Council agreed to open accession negotiations with Turkey on 3 October this year. The prospect of EU membership has been one of the most significant spurs to political and economic reform in Turkey—a matter that I am glad to say has found cross-party consensus in this House. A stable and prosperous Turkey demonstrating that Islam, democracy and a respect for human rights and the rule of law are fully compatible would have a huge impact on regional peace and stability.

During our presidency, the UK will also lead the EU's efforts to help tackle poverty in Africa, in line with our objectives for the UK presidency of the G8 and the recommendations of the Commission for Africa. Part of that will be pressing ahead with the reform of the common agricultural policy. The next big issue is reform of the archaic sugar regime, which will fall to our presidency. Getting that right is an important part of delivering a broader agenda and a broader agreement at the World Trade Organisation ministerial meeting in Hong Kong in December, which will bring greater development through freer and fairer trade.

We will also work with our EU partners to ensure that the EU continues to play a leading role in reinvigorating the international negotiations on climate change. That will include engaging countries such as China and India. We will explore options for a post-Kyoto strategy and try to develop stronger co-operation and real dialogue with key international partners on ways of securing low-cost emissions reductions.

Photo of Paul Goodman Paul Goodman Shadow Minister, Work & Pensions & Welfare Reform

The Minister is outlining some of the challenges facing Europe, but Peter Mandelson has said that they are so serious that it is essential that the Prime Minister stay in office for another two or three years. Has the Minister discussed the matter with Peter Mandelson and, if so, what is his opinion?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

With respect, the EU Trade Commissioner has plenty of other matters that require his attention at present, and they have a direct bearing on British jobs and prosperity. It would stretch the House's credulity to suggest that the future of my right hon. Friend the Prime Minister was uppermost in the minds of either Dutch of French voters last week.

The challenges facing the EU both within its borders and in the wider world are considerable but they can be met. Taken together, the EU accounts for a quarter of world GDP, a third of world trade, 50 per cent. of the UN budget and 55 per cent. of global development aid. It would be wrong and wholly contrary to turn away from Europe now. One in eight members of the UN are members of the EU, so the EU has a vital role to play in international security and global development.

The EU has long been a beacon of peace, democracy and prosperity. The combined skills, capabilities and knowledge of the 25 EU member states can be a powerful force to extend those values in today's world. For the security and well-being of our own citizens and of all our neighbours and partners, this Government will work to ensure that it remains so.

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs) 1:39 pm, 8th June 2005

The exchanges in the debate so far suggest that there is a deep and perhaps unbridgeable divide on the topic of the EU. Those of us with longer memories will recall that a similar philosophical divide in respect of the EU existed in 1983. However, in those days the roles were reversed. Of course, it was the Conservative Government of the time who were defending Europe, and it was the Labour Opposition of the time who had in their manifesto for the election that year a proposal to withdraw from both Europe and NATO. I remind the House of that to point out that over time some parties have found it necessary or desirable to change their positions.

Photo of Ian Davidson Ian Davidson Labour, Glasgow South West

The right hon. and learned Gentleman has pointed out that both the Government and Opposition have held different opinions at different times, unlike the Liberal Democrats who manage to hold different opinions at the same time. Does he agree with the Liberal Democrat leader in the European Parliament that the rebate should be scrapped? If not, is not that another example of the Liberal Democrats saying one thing in the European Parliament and another in the House of Commons?

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

Well, the hon. Gentleman has missed a career in the music hall. When it comes to the behaviour of Members of the European Parliament, he will of course recall that Labour MEPs recently voted against the Government's line on the working time directive. That demonstrates a degree of independence that the hon. Gentleman may wish to applaud.

Our position on the rebate has been set out by my hon. Friend Dr. Cable on many occasions. We take a firm and unequivocal view that the Government are right in their attitude to the rebate. It is not negotiable. The position outlined by the Minister is the position that should be taken by the Government, and we will support it. The leader of the Liberal Democrats in the European Parliament is entitled to his opinion, but on this occasion he will have to accept that it has not been persuasive. Perhaps it would blunt the hon. Gentleman's ardour if he were immediately promoted to the Whip's Office, where he might find a ready opportunity for a better display of his talent.

In the aftermath of the rejection of the constitutional treaty in France and Holland, it is important to resist—as the Minister did—the temptation to neglect the value of Europe. That is why I was pleased to hear the Minister say that the European Union had been instrumental in promoting peace, stability, democracy and human rights across Europe. Alongside NATO, the EU has strengthened our security and, through the free market, has been the foundation of our economic prosperity. In an era of globalisation, states have no option but to co-operate in tackling the challenges that globalisation brings, such as cross-border crime, terrorism, weapons proliferation, the environment and climate change. Isolation, or a failure to co-operate, would undermine, not enhance, our national sovereignty, endanger our economic strength, undermine our security and diminish our influence. The best way in which to achieve our objectives is through the European Union. Others may take the view that a less formal arrangement would be more appropriate and effective, but that is a question of the philosophical divide that I mentioned earlier. I believe firmly and unequivocally that it is in the interests of us all to make the European Union work, and work effectively.

Photo of Liam Fox Liam Fox Shadow Secretary of State (Foreign Affairs)

If the prosperity in Europe as a whole is a result of the free market operating through the European Union, to what does the right hon. and learned Gentleman attribute the structural unemployment in France and Germany?

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

Those are structural problems that require German and French solutions. It cannot be said, as is sometimes claimed, that it is membership of the single currency that has been responsible for those difficulties because other countries, such as Finland and Ireland, have achieved on average a higher rate of growth annually since they joined the euro. The German and French Governments have so far found it difficult to address those structural problems. Mr. Schröder has made some efforts to do so, but they have not been particularly successful, and the recent results in North Rhine-Westphalia suggest that they have been politically unpopular, to say the least.

Photo of John Maples John Maples Conservative, Stratford-on-Avon

The right hon. and learned Gentleman is right to say that Germany and France need to enact their own reforms if they want to solve those problems. However, part of the problem has been being in a single currency zone with a single interest rate. It has been impossible for the European Central Bank to set an interest rate that is appropriate for all of the members. The euro interest rates are far too high for the German economy, but too low for the Italian and Spanish economies.

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

The advantages of a single currency throughout a single market outweigh any potential difficulties of the kind that the hon. Gentleman describes. If we are to have a single market, it will be at its most effective when it has a single currency.

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

Well, we have always said that it is in the long-term interests of the United Kingdom to be a member of the single currency, but that we should not join unless and until the economic conditions were correct. We have all had some experience of that because the Conservatives took us into the exchange rate mechanism at a rate that was inadequate—

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

Well, I am not sure that we had much choice about coming out. We chose to go in, but we came out under the pressure of events, not least an afternoon during which interest rates rose to 15 per cent. Joining the single currency in circumstances in which the economic conditions were not propitious would not be to our advantage, but in the long term, the advantages would be considerable.

We should resist the temptation to interpret too closely the reasons for the votes in Holland and France. At least, we should show some restraint in our interpretation. Dr. Fox said that the voters were voting against an elitist Europe. He should be careful about general propositions like that, because the corollary might be argued against him—that those who voted for ratification were voting in favour of an elitist Europe—and I do not believe that to be the case. We have to accept the fact of the votes and their consequences. The hon. Gentleman is right to say that the constitution cannot be revived, and we have to accept that the problems that it was designed to address remain. Some solution will be necessary to those problems. However, as I said earlier this week in the House, to hold a referendum on a treaty that cannot come into force would be quixotic at best and, to the public, it might appear an act in the political theatre of the absurd. The British people would be bound to question the circumstances in which such a referendum were promoted.

While we appreciate that the Government have to walk a tightrope on the issue, not least because Britain will assume the presidency of the EU after 1 July, the rest of us need not be subject to the same inhibition. The truth is that when countries such as France, which has been part of the engine room of the EU, and Holland, which has been one of the most European of the members of first the European Coal and Steel Community, then the European Economic Community and now the European Union, reject the treaty, it represents a profound event of which account has to be taken. The question we have to ask is how long we can run an institution of 25, or 27 if we accept the accession of Romania and Bulgaria—legislation for that purpose is foreshadowed in the Queen's Speech, so we shall come back to those issues whether we like it or not—on an organisational structure designed in the first instance for six.

It would be absurd to claim that the treaty is all bad. There are non-controversial proposals that are in our national interest and would have widespread European support. That is why I was attracted by the notion that the proceedings of the Council of Ministers should be made much more transparent, and that they should cast their votes as well as conduct their deliberations in public so that people can see exactly what individual countries have voted for. Likewise the creation of what was described as an amber light for national Parliaments in relation to EU legislation seems an entirely sensible proposal and one that could, I understand, be enacted without the need for legislation or for a compulsory referendum if something of a legislative nature was proposed.

I make one point as an example of the need to recognise the fact that 27 cannot be run in the same way as six. At present, each country is entitled to a commissioner. Each country that joins will be entitled to a commissioner, so once Romania and Bulgaria have acceded there will be an entitlement to 27 commissioners. That makes no sense whatever. There is every argument for saying that the Commission should be reduced in size, not least to deal with legitimate arguments, some of which have been made today, about the need to deal with burgeoning bureaucracy.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The right hon. and learned Gentleman has listed several things that would not need treaty change but he has just listed one that would need such a change—perhaps he is about to set out a couple of others. There might be an argument that such measures should be included in the accession treaties for Romania and Bulgaria. Does he agree that that would be a suitable way forward?

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

There is much force in the view that we should not seek to bring about by the back door changes that the failure of the constitution to continue to have political life would prevent. People would have some sense of resentment if they thought that there was some kind of manipulation. In due course, there will have to be some form of treaty change to deal with the differing circumstances of six and 27. I used the illustration of the number of commissioners merely as an indication of where treaty change would be of great value and importance, not least to deal with the question of burgeoning bureaucracy to which reference has already been made.

Photo of Philip Davies Philip Davies Conservative, Shipley

The right hon. and learned Gentleman has pointed out that the EU is very different from when it was founded. Does he agree that it is also very different from when the UK joined? As the British people have never had a say about the current European Union would he welcome a referendum on our continued membership of it, given the benefits that he has just listed? Is he in favour of giving people a referendum on our continued membership of the current EU?

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

I know that it is advised that Latin be used sparingly in the House, Madam Deputy Speaker, but I cannot help saying, quot homines, tot sententiae. It seems that there are a variety of opinions on the Opposition Benches about just how far we should proceed. [Hon. Members: "Answer the question."] I should answer the question with more enthusiasm—

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

I shall do my best for the hon. Gentleman.

I should answer the question with more enthusiasm if more Conservative Members than Mr. Cash—if my memory serves me right—had joined Members on the Liberal Democrat Benches, as well as some Labour Members, in supporting new clause 51 in the Committee on the Maastricht treaty legislation, which called for a referendum on that treaty. Philip Davies may be surprised to learn that the Government of the day whipped against that proposal and as a result no such referendum was held. I do not think that it is necessary to hold a referendum for the purpose he described, but if there is to be any change in the relationship between Brussels and London there should be a referendum. That is why the former leader of my party, now Lord Ashdown, was the first leader of a national party to call for a referendum in the event that a decision was taken that Britain should join the single European currency.

Photo of John Bercow John Bercow Conservative, Buckingham

As a matter of record I argued for a referendum on the Maastricht treaty as long ago as 22 October 1992, in front of the Twickenham Conservative women's constituency committee conference. The right hon. and learned Gentleman is being uncharacteristically unfair to my hon. Friend Dr. Fox whose position, as I understand it, is rightly that there should be a referendum if the Government propose to go ahead with a constitution that adds to the legislative competence of the European Union. If the right hon. and learned Gentleman is arguing that the subsidiarity and proportionality protocol contained in the draft constitutional treaty should be adopted, and can be adopted, without a referendum, many of us on both sides of the House would celebrate that because it is a deregulatory and not a centralising phenomenon.

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

If I may say so, even in the hon. Gentleman's days before the Twickenham ladies' Conservative club, I always suspected him of being a closet Liberal and he may have just demonstrated that. If he is saying that the parts of the proposed constitutional treaty that have a deregulatory effect, or indeed that give substance to the principle of subsidiarity, might be adopted without the need for a referendum I think that he will find a ready audience for that proposition on the Treasury Bench, as indeed the Minister is indicating. As I said earlier, quot homines, tot sententiae.

Photo of Richard Shepherd Richard Shepherd Conservative, Aldridge-Brownhills

The first referendum call was on 28 February 1992 when I moved my Referendum Bill. I sought and obtained the support of the then leader of the Liberal Democrat party. It was the last measure on which Lady Thatcher voted in this Chamber. It predates all the Liberal Democrat claims that it was the only party that called for a referendum on Maastricht. The motion was debated by the House and there was a vote.

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

I have never claimed exclusivity in the matter. All I was saying was that some of us were arguing for a referendum on Maastricht when the formal position of the party of which the hon. Gentleman is a member—although it is not necessarily a formal position that he frequently supports—was in the opposite direction.

The notion that there is some unbridgeable ideological split between Anglo-Saxon liberal economics on the one hand and some Gallic social model on the other is entirely false. It is right to argue that we cannot abandon the values on which the European social model was founded—a model that is against exclusion and discrimination, that defends civil liberties and human rights and seeks to promote social justice—but in the globalised economy that model cannot be sustained without reform. There must be political reform to achieve greater accountability and transparency, some of which we have already discussed this afternoon, and economic reform to increase flexibility and productivity. Those two channels of reform must march robustly side by side.

Photo of Wayne David Wayne David Labour, Caerphilly

Is the right hon. and learned Gentleman saying that the Government are correct in their commitment to pursuing the Lisbon agenda?

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

I was about to come to that. So far, the Lisbon agenda has not received the strength of support and implementation that is required. As I have said in the House on many occasions, we must do much more to achieve the objectives of the Lisbon agenda.

The position of France and Germany has already been mentioned in the course of the debate and, as I have said, I believe that these are difficulties primarily of a structural kind. But we must be careful about offering ourselves as some paradigm of economic virtue and seek not, in some condescending way, to suggest to other countries in the European Union that we have found the perfect way forward.

The hon. Gentleman mentioned the Lisbon agenda. We should certainly seek to encourage productivity, enhance labour market flexibility and create a genuine free market in goods, persons, capital and, as has been observed, services. And we should seek to deregulate wherever possible—of that there is no doubt. But we should also have a rigorous approach here in London, because very often the argument is not that the original regulation from Brussels was particularly difficult or austere in its terms, but that by the time it had been through the machinery of government here it had become gold-plated, to the point where something that sought to create a common standard across the European Union was being implemented much more rigorously here in the United Kingdom, to the detriment of those whose businesses were affected by it.

I want to claim that the recent round of enlargement has been an enormous success. The ability to spread stability, democracy and economic opportunity to a wider region of Europe has been a tremendous thing for the continent. I hope that the demise of the constitution will not put an end to the accession negotiations with Turkey, or derail membership talks with other Balkan states such as Croatia. I hope too that we shall promote the forthcoming accession of Romania and Bulgaria with enthusiasm—provided, of course, that they meet the Copenhagen criteria in full.

But without doubt, in the changed circumstances since the referendums in Holland and France we must look again at the engagement of the people of Europe with the European Union. We need to start here first, not lecturing others but re-engaging the interest and awareness of the British people by ensuring that European issues are more frequently and more publicly brought into the national political debate. I do not think that any of us can be satisfied with the way in which we scrutinise European legislation in this place, and I do not exempt myself or my party from that criticism. We should find methods of ensuring that national Parliaments have a much greater role in the European legislative process and devote much more of their time to consideration of European legislative proposals. That is much more likely to stimulate active and wide-ranging political debate at a domestic level and bring about the sort of debate that the hon. Member for Woodspring was arguing for a little while ago. I see that as an obligation not just upon Government but upon Members of Parliament.

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

I agree with the right hon. and learned Gentleman about the role of national Parliaments, but why did not the Liberal representative on the Convention on the Future of Europe advance these propositions then? Why did he not join us in insisting that when national Parliaments said no to something on grounds of subsidiarity, that should be the end of the draft directive? It is all very well for him now to say that all these things are highly desirable; that was not what the Liberal Democrats were saying during the Convention process. Will he, on behalf of his party, admit that he made a mistake then and perhaps even go so far as to make an apology?

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

I have not heard too many apologies this afternoon; I am not sure that I should be the first. I must say to the right hon. Gentleman—for whom I have a great admiration, not least for the intellectual consistency and integrity of his position although I do not agree with it—that I am not sure that at this particular stage in these matters we advance the case or help the argument by going over what is essentially old, cold ground. What is important is, as has been said, that this is an opportunity as well as a reverse, and if it is an opportunity we must take it in perhaps a rather more positive spirit than his question might necessarily have suggested.

Let me deal with the question of subsidiarity, because this is an opportunity of the kind that I have described to consolidate that principle, and to ensure that it is properly applied. I have long toyed with the idea that the House, for example, might establish something approaching a subsidiarity audit, so that on an annual basis there was a report to the House, demonstrating the extent to which the principle had been properly followed and highlighting circumstances in which, in the opinion of the auditor responsible for producing the report, there had been a failure to apply the principle properly. We need a number of checks and balances. That would not require legislation, nor do I suspect that it would require a referendum. It is true, and one has to accept it, that in a number of areas there has been an incremental accretion of European Union powers without proper consideration of whether or not that is desirable.

I want to return to the question of enlargement because it is of such fundamental importance. In recent history, eight of the new members of the European Union were Soviet satellites and, as the hon. Member for Woodspring hinted, three of the older members—Spain, Portugal and Greece—were governed by dictatorships. The citizens of all member states, including the United Kingdom, have benefited from the resulting spread of democracy, the stability that that has brought about and the prosperity underpinned by membership of what is now the largest internal market in the world, consisting of some 450 million people. More than half of our trade is with European Union states, to whom we export three times as much as we do to the United States, and that trade supports some 3 million British jobs.

The European Union is unique globally as an alliance of states that has consistently and effectively extended democracy and has made part of its objective the bringing of stability and human rights to hundreds of millions of people, some of whom—I know that memories on these matters can be short—lived under Nazism and then under communism. If one visits any of these places, as I am sure Members of the House of all parties have done in recent times, one cannot help but be affected by the sense of release that these countries feel and their commitment to both NATO and the European Union.

It is said that a new generation does not recognise the enormous achievement that the European Coal and Steel Community began, which has been continued by the EEC and the EU—the prevention of continental war in Europe. We should not avoid an opportunity to remind a younger generation of the extent of that achievement. We can illustrate its contemporary relevance by pointing to what has happened in the past 15 years in the Balkans—now, at least for the moment, quiet, although not necessarily always in some parts. I do not believe that the outpouring of nationalist, ethnic and religious hatreds that we saw in that region would have been anything other than inhibited if the members of the countries there now represented had been members of NATO and members of the European Union as well. That is one of the enormous advantages that the European Union has brought and we should never be slow to point out that advantage to those who are sceptical.

I also say this. I do not seek to set up the European Union as a strategic rival to the United States, but our strong defence of the rule of law, and our commitment to human rights and multilateral action, provides an important counterbalance to the current doctrines and strategies of the present American Administration. As an illustration of that I point to the fact of the negotiations with Iran on nuclear non-proliferation—something which the United States, for a variety of doctrinal and other reasons, simply would not have been willing or able to engage in. The United Kingdom will be much better placed to influence America and other powerful states if we are at the heart of Europe, and a Europe with a clear and coherent foreign policy.

B

The idea of a subsidiary audit is frankly limp-wristed. What's going to happen when the auditor says that subsidiarity isn't happening?

Submitted by Bishop Hill

Photo of John Bercow John Bercow Conservative, Buckingham

I respect the sincerity and integrity of what the right hon. and learned Gentleman has just said, but I put it to him that he ought not to overstate the case of the European Union as a counter-weight, or even in some cases of trade and foreign policy a preferable alternative, to the United States. Would he not care to reflect, as he has many times in a different context, on the inappropriateness of the European Union lifting the arms embargo on China, and on the truly pitiful inadequacy of the current EU sanctions regime towards Burma? Those are two issues about which I know he has long been concerned; the American position is greatly superior to that of the European Union.

Photo of Menzies Campbell Menzies Campbell Shadow Secretary of State (Foreign Affairs)

In some respects, Congress rather than the Administration has sometimes been responsible, but I take the hon. Gentleman's point about the proposal—it appears to have run into the long grass somewhere, and let us hope that it stays there—that the EU embargo in relation to China should be raised. It should be remembered that it was imposed after Tiananmen square, on which there has never been full disclosure. I understand that some of those who were imprisoned at the time languish there still, despite the passage of time.

I do not for a moment overstate the European Union's capacity to achieve common foreign policy. Common foreign policy requires unanimity—which we may debate on another occasion—which necessarily inhibits its ability to proceed as far as the hon. Gentleman and I might like it to. I do, however, believe in strong defence of the rule of law, support for human rights and the importance of multilateralism. There is a sense in which the Americans have the battalions and do not need multilateralism. We do not have the battalions—I wish that we did—and therefore we do need it. That, I think, is an important doctrine and an important foreign policy position, and I hope that the European Union will continue to espouse it.

I believe that Europe needs a period of stability. We have been in what could be described as an almost Maoist permanent cultural revolution, experiencing treaty upon treaty. There ought, in truth, to have been sufficient flexibility in the institutions of the European Union to accommodate first enlargement, and then the arrangements necessary for a union that has swelled from six to 27 member states.

There have been crises in Europe before, and Europe has always survived them. Sometimes they have been personality-based, but on this occasion it should be recognised that the difficulties are more profound. The events of the past 10 days cannot be ignored, but nor, I believe, are they as apocalyptic as some would claim and—it would appear, at least—some would hope.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby 2:12 pm, 8th June 2005

It is a pleasure to be the first Englishman, indeed the first Yorkshireman, to intervene in what has so far been an argument among Scots about the relationship between Great Britain and Europe. It is, however, difficult to maintain the air of elegiac sadness maintained by Sir Menzies Campbell throughout his speech over what has happened in Europe. I see it more as a comic situation: the well-fed and well-oiled ruminations of Giscard d'Estaing and selected members of the European elite have turned into the John Cleese dead parrot sketch. Although we do not say as much in the House—apart from my hon. Friend Mr. Skinner, who did so on Monday—it is clear that the parrot is dead, snuffed it, passed on, gone into another land, tod, mort, no longer with us. That means that Eurosceptics like me will be deprived of months of fun and happiness in opposing the European constitution—successfully, at the end of the day. I regret that. At last, for that period at least, I would have had a useful role in politics. Meanwhile, my right hon. Friends will be deprived of months of straining their acting ability, pretending to be enthusiastic about something that they did not particularly want in the first place. A certain amount of clarity in politics has been achieved.

What will we have instead of all that? Well, we may have more debates on the post mortem than we were scheduled to have on the constitution itself. We began debating the Bill before the end of the last Parliament. It now seems that we shall be talking more about the constitution now that it is dead than we were when it was living. Certainly there will be weeks of hypocrisy, and there will clearly be a ganging-up on the United Kingdom, particularly over the rebate—as if we were responsible for the noes in France and Holland. Many crocodile tears will be shed by all parties, here and in Europe. There will be a prolonged attempt to postpone the funeral of the parrot, until the smell becomes overwhelming. I imagine that it will be carted around Europe, being given a lengthy state funeral—something unique for parrots. The corpse may well be interrogated on what it wants and what its intentions are. We may even see a post-mortem cutting up of the corpse to see which bits can be preserved: the beak, the wings, the feathers? Which bits of the plumage can be preserved? Will the dead bird itself be forgotten? I am not entirely sure, but there will clearly be weeks of that kind of activity.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

Common sense suggests it, but I cannot whip up that degree of enthusiasm for the thing.

Clearly the parrot is dead, although the Government cannot say so. Not only is it dead, however; it was the euro that killed it. There have been two consistent efforts in Europe to achieve the goal of ever closer union that was in the treaty of Rome and has been maintained since then. The first has gone down the constitutional track, constantly strengthening the centre as the European constitution did, turning this assembly of states into a state in its own right with its own foreign policy, its own army, its own economy, its own law, its own rights. The aim has been to build a state over the states. Then there is the economic track, or rather the monetary union track. Monetary union would provide a European economy, a European bank and the institutions to run that European economy and European bank. It would strengthen the institutions at the centre and the impulsion towards unity.

Unfortunately, it was that second track that produced the disaster. It involved taking what is essentially, and can only be, an economic instrument, an instrument of management—interest rates and the exchange rate, the only crucial weapons to manage the economy that are left to us—and using it for a political purpose, that of building ever closer union. Such a distortion produces damaging economic consequences.

The trend towards monetary union began with the snake, which failed. It was then revived with the exchange rate mechanism between 1978 and 1979—the Labour Government wisely stayed out of that—and the union was consummated with the euro itself. We hoped, when we entered Europe in 1972, to hitch ourselves to an institution with a rapid rate of growth so that our own economy would grow rapidly. Those growth rates stopped, however, when the entire EU went down the path of monetary union. What ended was economic growth; what came was high unemployment. Both were consequences of the use of the exchange rate and interest rates as a political instrument to build union.

Why? First, it is clear that one interest rate could not fit all. It could not possibly cope with the economic situation in Germany and that in Ireland at the same time. Secondly, it is clear that a nation state must use and retain its instruments of management if it is to manage the economy for its purposes, and offset any damaging consequences to the economy. It needs its weapons of management, and its own independent economy. Without those, there will be a deterioration. Thirdly, it is clear that the regime is deflationary, as exemplified by the growth and stability pact. The pact was, in fact, the most anti-Keynesian measure ever seen. It proposed savage cuts in Government spending. Deflationary measures imposed by monetary union were driving up unemployment, thus increasing public spending, reducing the inflow of taxes and therefore increasing deficits.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I agree entirely with what my hon. Friend is saying. Does he not think that it is even madder that the countries with high unemployment have been urged to cut their spending and deflate even further, making an even worse problem?

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

It is simply madness, and it goes against anything that is sensible in economics. We in this country have been inoculated against the dangers of managing the economy to maintain the exchange rate. Things should be the other way round: the exchange rate must be used and adjusted for the purposes of the economy. Failures in this country caused by such an attempt to maintain a fixed exchange rate at all costs should have inoculated us against any enthusiasm, interest or involvement in either the exchange rate mechanism or the euro. We have enough examples of the damage that that has done.

Fortunately, those examples have convinced the Chancellor of the Exchequer to control our Prime Minister's naive enthusiasm for making a political commitment by joining the euro. We are all very grateful for that because the country has benefited, but for France and Germany the consequence of that trend towards monetary union was that that their economies slowed drastically. They are the European economy's driving motors, but both slowed down: growth was much lower and unemployment was much higher, hovering between 10 and 12 per cent., with disastrous consequences.

The euro created the depressed economic situation that lies at the heart of Europe. In fact, the euro turned Europe into the high-unemployment, low-growth blackspot of the advanced world—the worst example of failure. Even Margaret Thatcher's Britain did better in growth terms, for reasons that I will come to in a minute, and it is that climate that produced no votes in France and Holland. "It's the economy, stupid," one has to say.

Clearly, Spain was going to vote for the European constitution to keep the money flowing because it has benefited substantially; it is laughing all the way to bank. But, equally clearly, those countries where the people have a say in a referendum and where the euro has done economic damage—Holland and France so far; there are others to come—will vote against the constitution in such circumstances.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

My hon. Friend is making a very strong point. Overall, during the Thatcherite period, growth in Britain was rather higher than in the eurozone. Does he accept that that growth was built on a big depreciation of the currency of about 35 per cent. during Nigel Lawson's term as Chancellor?

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

My hon. Friend anticipates a point that I was coming to 16 pages on, but I am grateful to him none the less because it is crucial.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

Can we skip those 16 pages?

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

Well, there is more excitement to come, and I am sure that my hon. Friend will be keen to wait for it.

My conclusion on the twin-track approach in which the monetary union track has done such damage to the constitutional track is, "It's the euro wot done it," as The Sun might put it, and there is no point in dredging around for further explanation. The question for the House and for Europe is: what happens now? There have been attempts—particularly in Europe, but also by some of our Euro-enthusiastic friends in this country—to look at the vote and say that people were not really voting on the constitution; they were voting against Chirac or against unemployment, or whatever.

We are having séances to interrogate the parrot—there is a lot of excuse making—but we cannot pick and choose with an electoral verdict: no means no, means nein, means nee, and that is it, frankly. I appreciate that the Government cannot say that as openly as we Back Benchers can say it. They have to hang back, dressed in black, looking sombre and serious, perhaps with a few tears added for special effect. They must say nothing, and let the fact of death emerge in Europe. That will certainly complicate my right hon. Friend the Prime Minister's presidency of the European Union—it will make it very difficult.

My right hon. Friend the Minister for Europe listed a quite exciting prospectus for Europe, including fighting poverty in Africa and getting rid of the common agricultural policy. I wish that he had added the common fisheries policy as well, and I certainly wish that its impact was diminished. That agenda is very attractive and important, but it will be difficult for this country to do anything about it, given that the other member states will object to British leadership because that is the only policy left to them. That will make getting anything done in Europe stickier, more difficult and harder during our presidency. In any case, it will make it difficult to lead members of the European Union in a wholly new direction.

It is sad therefore that added to the attractive list of things that need to be done that my right hon. Friend outlined is so-called reform—this is our central proposition—which amounts to liberalisation, rolling back the state, cutting public spending, cutting welfare provision and weakening the power of labour and the unions. That is laughingly referred to as freeing up labour markets or deregulating them. It amounts to a Thatcherite programme so flagrant that the Europeans could well erect a Thatcher statue next to the pissing boy in Brussels, which we could look on with a certain feeling of shock and concern. It is very much a Thatcherite programme. A Labour Government are urging Europe to get rid of its social programme just as that social programme has been diluted in the Labour party. That is not the answer to Europe's problems. That kind of Thatcherite, monetarist programme—we call it a reform programme—is not what Europe wants and it is not what the electorate of France voted for. They voted against such a programme, which they regard as British.

That programme will not work. It did not even work in this country. That is where I come to the point interjected by my hon. Friend Kelvin Hopkins. In the 1980s, the Thatcherite programme inflicted deep damage on our manufacturing sector, which was more severely harmed and reduced than that of any other country. That makes it very difficult for us to pay our way in the world, to provide jobs for people and to fight back against our current economic circumstances. There has been an expansion of the white-collar and consumer sectors, but the manufacturing base has been drastically eroded.

That programme also increases public spending because the more that we put people out of work to discipline the unions and to weaken the power of labour, the less tax comes in and the more goes out in benefits. Do we want that in Europe? Do we want to force that sort of programme on countries that already have a 12 per cent. rate of unemployment? It is ludicrous to suggest that the rest of Europe should go down that path.

The recovery in the 1980s came, as my hon. Friend suggested, when the value of the pound came down, precipitating the Lawson boom and stimulating the whole economy. That performance was repeated—Conservative Governments repeat themselves in this fashion—in the early 1990s, when deflation was made necessary by joining the ERM.

I was interested to hear the Liberals' view on the ERM, because I remember that, at the time, they were leading wild mobs down Whitehall, chanting the popular cry of "Move to the narrower bands now!" Now they tell us that we went into the ERM at an over-valued rate, but, back then, they wanted to make things even harder by tightening up the rate. That was the Liberal strategy in the 1990s. We escaped the disastrous consequences of all that only when we were forced out of the ERM, and the economy immediately began to recover.

Labour Members have every reason to be grateful to the Conservative Government who began that recovery by taking the decision to leave the ERM. That has certainly benefited Labour in power substantially, but it indicates that it is not deflation or reforms but a change in the exchange rate that produce recovery and expansion. The problem was effectively ended by devaluation, as was the Thatcher period. That was what stimulated the economy, and it is what Europe needs, given its current situation. An expansion of demand is the only way out of the trap.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I agree entirely with my hon. Friend. Does he agree that each member state needs to find its own way forward with the depreciation of its currency, if it has one, to an appropriate level? Some countries' currencies might need to depreciate, but not the whole eurozone. Countries should develop their own national currencies again at an appropriate value.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

That is absolutely true. The key to German recovery would be extremely low, or even negative, interest rates and a much lower exchange rate, but that is exactly what it cannot have. Continuously trying to cut costs, labour, investment and public spending is no way to achieve competitiveness. Such measures take years to improve competitiveness, or do not work. We cannot achieve competitiveness by driving European standards down to those of countries in the far east and China, with which Europe competes. The value of the euro must come down substantially if an uncompetitive Europe is to become competitive, and although European interest rates are low, they must come down further.

It is important for that process to begin now. Given the scale of America's deficit, the dollar will fall because markets will bring it down. The funny money—the money flows—will thus transfer into the euro, which is what people desired in the first place when they said that they wanted another reserve currency that could look the dollar in the face. The euro would thus go up as the dollar came down because money would be flowing out of America and into Europe because people would fear a loss of investments.

That situation will be compounded if the European Central Bank continues on its present path because it is a banker's bank par excellence. It is a monetarist, high-exchange-rate bank that believes in building up surpluses, as the French always have. The obsession with an overvalued currency and surpluses is the legacy of Jacques Rueff, de Gaulle's adviser in the 1960s. The health of the European economy cannot be restored if that process goes on.

The bank is based on one target: inflation. It is not based on any other targets, such as full employment, the health of the economy and economic growth, which have successfully guided the Fed over the past few years. The ECB apparently has no concern for the exchange rate, which it regards as an unimportant residual. However, there will be no future for the European economy unless the exchange and interest rates come down. Until that happens the damage will continue, so reform, modernisation and all other agendas put forward will not be acceptable to electorates until demand is expanded and the currency comes down. The flight of jobs, investment and production to the far east will go on if the current situation continues.

Those who hold out Europe as a shining ideal are over-enthusiastic. They exaggerate Europe's prospects and their enthusiasm for it leads them to accept anything coming from Europe as a good thing, whether that is the rotten, monstrous and awful constitution, monetary union or the ERM. However, those people will have to face the fact that Europe is degenerating in an unstoppable way towards a relegated area and a zone characterised by high unemployment and defensive decline, which will offer no future for our people or theirs.

Photo of Bill Cash Bill Cash Conservative, Stone 2:34 pm, 8th June 2005

As I stood in the Place de la Bastille and the Place de la République a few days ago and heard the results as they came through, I was bound to reflect on the fact that there had been an historic change. The Chamber is not entirely full—on the other side of the House to say the least—for a debate that is a reflection on a new French revolution. There has been a massive change with the rejection of a concept and project that has developed since the second world war, and even before.

I was also bound to consider at that moment that our party could have made Europe a central issue during the election campaign. An opinion poll commissioned by the European Foundation immediately after the general election showed that 55 per cent. of people in this country, and 62 per cent. of 18 to 24-year-olds, thought that Europe should have been a central issue in the election campaign. That ICM poll surveyed people across the board from all parties. If we had treated Europe as a central issue, I think that we would have got close to winning the election, or even have had the opportunity to win it, given that we are in the wake of an historic vote in France.

We are debating the most fundamental question facing the people of this country, as we have said in many debates over the past 20 years. The fundamental question that was before the people of France and Holland was about who governs them. We heard much about the fact that the vote in France was a rejection of President Chirac, but the people were really rejecting the policies that President Chirac was following on the economic and political structure that he had agreed through his relationship with the European Union. The historic rejection was, in truth, as Mr. Mitchell said, a rejection of the high unemployment and low growth that were the inevitable consequence of following those policies. That is the true lesson, as I tried to indicate while the results were coming through.

The Maastricht treaty is history now, but there are elements of this debate that relate to questions raised at that time. It is not necessary for us to say who got there first or to bring up those of us who were part and parcel of the referendum campaigns. Many Conservative Members fought strongly against the Whip and the conventional wisdom of the time for a referendum because we believed that the matter was so fundamentally important that it could not be left to the party Whips. We said that the treaty would ultimately lead to a constitution, as indeed it did, and we wrote about that at the time. We took a stand, and the best that we can say about it now is that we were not entirely proved wrong.

The most important thing now is to look to the future and regard the historic change as an opportunity. It is an opportunity for not only the United Kingdom and this Parliament, but Europe as a whole. Our only problem is that the language coming out of Europe from Mr. Juncker, Mr. de Villepin, President Chirac and Mr. Schröder is third rate. They do not seem to have been able to take on board the fact that the elite of Europe has been rejected. The arguments that they put forward, which accumulated over time, have been rejected by the people of Europe. There is no serious doubt that if there were an attempt to resurrect what has now been called the dead Euro-parrot by having a second vote in either France or Holland, there would be an even bigger vote against it. Can they not listen and realise what is going on? There is an absolute arrogant refusal to believe that what they constructed—the European project—is dead in the water. That is not to say that we have not got an important job to do in trying to find the elements of the way forward, but massive unemployment and low growth have led to the overwhelming rejection of the constitution.

The origins of the European Union—I hope that this is a constructive view—lie in the League of Nations. In the 1920s, on seeing the catastrophic holocaust of the first world war, Monsieur Briand, who worked with Jean Monnet, resolved that he would try to prevent anything like that from happening again. Nobody can dispute that that was an honourable motive.

Let us consider the second world war. My father was killed 61 years ago in Normandy. The plain fact is that those of us who suffered, if I can put it that way, from that sacrifice by those young boys have to accept that there was an understandable reason why, in the aftermath of the second world war, people like Sir Edward Heath and other distinguished members of Conservative Cabinets over 20 years, who themselves had been part and parcel of that war, thought that the idea of a European union was the way forward.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I am listening with interest. Does the hon. Gentleman agree that the second world war grew out of the economic collapse of Germany, particularly in the 1920s, and the subsequent rise of Nazism? Had we got the economics rights in the interwar era, we may not have had that war.

Photo of Bill Cash Bill Cash Conservative, Stone

That is possible, but the point that we reached in 1945, with Jean Monnet and the Schuman plan that followed in 1951, was an attempt to prevent such a war from happening again. People sought a stable solution to a chaotic and dreadful holocaust. The problem was that, however understandable it may have been, in reality they embarked on a process that was essentially undemocratic. They thought, almost in despair, of the democratic process. They remembered the Weimar Republic and what that led to in the shape of Nazism and Hitler. They thought that there was another way of dealing with the problem, but essentially their message and philosophy were wrong. That was where the problem lay, however understandable it may have been at the time.

Then there were discussions between de Gaulle and Adenauer. I read an interesting observation in de Gaulle's memoirs when he said that they spent a long time discussing the future of Europe and both agreed that neither would allow their respective countries to become merged in a stateless institution. That was an understanding between them.

We know de Gaulle's position: he was in favour was a Europe of nations. We also know that Churchill spoke about a kind of federal Europe, but he was not talking about the kind of Europe that is represented by the constitution rejected in France and the Netherlands. He spoke about our being associated but not absorbed. In other words, there was an appreciation by those people in the 1940s and 1950s of the dangers of going down that undemocratic technocratic route. They were not going to allow, so far as they could, the situation to develop along the lines of the technocrats, as expressed by Monnet and Schuman.

Furthermore, a remarkable book—Erich Fromm's "The Fear of Freedom"—got close to the heart of the problem faced by the current monolithic creature that was created in the aftermath of that period. An inability and a despair—a refusal—led people to think that they could not have freedom and that they must be constrained by the new institutional arrangement because it would make them more secure. In fact, the opposite was true.

We heard reference to historical inevitability. The communists and fascists believed in that. I have even heard some members of my party talking about it. The reality is, however, that nothing has been clearer, in terms of the history of Europe over the past centuries, than the fact that the nation state has been the glory of Europe. Whether it is music and the great principalities that gave rise to Mozart, Beethoven, Bach, Handel and so forth, or whether it is the great painters of Venice, Florence or wherever, the competition that existed between those principalities and those states gave rise to the flowering of the renaissance and the subsequent development of the great glories of European culture. That is what has been lost as the stateless institutions have impinged on the culture of Europe as a whole.

Again, in the institutional sense, let us consider the attempts to create empires throughout Europe. The Roman empire foundered—of course it did—as, indeed, did the empires of Charlemagne and Charles V, and the attempts by Henry of Navarre in the early 17th century and those by Napoleon, Hitler and others. The fact is that attempts to bring together this vibrant diverse collection of nation states, which co-operate and work in association with one other in the modern day, can produce results that are beneficial, not only to this country, but to Europe as a whole.

Photo of Wayne David Wayne David Labour, Caerphilly

I am reluctant to become embroiled in the hon. Gentleman's historical discourse, but does he accept that nation states, as currently defined, are a distinct product of a period of history—namely, the 19th century?

Photo of Bill Cash Bill Cash Conservative, Stone

I suspect that the hon. Gentleman refers to the treaty of Westphalia. To carry on with the historical analogy, 1648 is defined as the year of the nation state. The fact remains that since then we have had terrible problems of nationalism, which is different from a proper appreciation of an association of democratic nation states. No democratic nation state has ever gone to war with another democratic nation state. That is the truth. Yes, nationalism is wrong, but not the idea of a democratic nation state.

Indeed, I would go further and say that the problem that lies at the heart of the way in which the European project has gone wrong is the essence of double-speak, which has also undermined people's ability to believe in the project. In George Orwell's "1984", there are references to the Ministry of Truth, where freedom is slavery and the words are inverted in just the same way as we find in the European Union. It is strange that that should have been done. There was a deliberate determination, running against the realities, to use expressions that had the opposite meaning. For example, subsidiarity really means centralisation and primacy. Not once has the principle of subsidiarity been applied. I have asked repeatedly in the House for one example of subsidiarity in action, but it has not happened.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

Does my hon. Friend agree that we have had a single empire in Europe, the Roman empire, a single currency, gold, and a single language, Latin; that we now have a Europe that is in danger of going the "dominus et deus" route or even the dictatorship route; and that if Europe continues in the direction adopted by its present political elite, they might end up going the same way as the Roman elite?

Photo of Bill Cash Bill Cash Conservative, Stone

There is a great deal of truth in that. The refusal by the elite to accept the inevitable consequence of the rejection of the constitution by the people in referendums in their own countries indicates their failure to appreciate the democratic requirements of a modern state.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

Will the hon. Gentleman give way?

Photo of Bill Cash Bill Cash Conservative, Stone

I shall give way to the hon. Gentleman later.

Price stability was embedded in the Maastricht criteria, yet there has been no price stability. That is why, as the hon. Member for Great Grimsby made clear, the whole concept of the central bank does not work. The result is high unemployment, as my old friend Peter Shore and I argued during the debates on the subject.

Photo of Christopher Huhne Christopher Huhne Shadow Minister, Treasury

Is the hon. Gentleman aware that unemployment in the euro area has fallen by 10 per cent. since the launch of the single currency, and will he revise his views in the light of that fact?

Photo of Bill Cash Bill Cash Conservative, Stone

He certainly will not. [Laughter.] I will go further and say that the hon. Gentleman, with whom I have had the pleasure of debating on other occasions, should reflect on the results of the French referendum in the light of high unemployment in that country—at least 10 per cent. but actually much higher. Unemployment in Germany is running at 12 per cent. and more—higher than in the time of Adolf Hitler. Perhaps it is he who should change his position, not I.

Photo of Bill Cash Bill Cash Conservative, Stone

I have had many debates with the hon. Gentleman in the past and will do so in the future, but I shall not have a running debate with him this afternoon.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

Will the hon. Gentleman have one with me?

Photo of Bill Cash Bill Cash Conservative, Stone

I ought to give way to the hon. Gentleman, even though he is fully clothed this afternoon.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The hon. Gentleman might like to reflect on whether to make comments of that nature in future. Those of his colleagues who have made such comments in the Chamber have chosen to apologise.

The hon. Gentleman makes some interesting points about subsidiarity, a concept whose origin lies in an encyclical of the Roman Catholic Church of 1881, I believe—if I am wrong he will correct me, I am sure. The Church expounded that no power should ever arrogate to itself the authority to make a decision that could more properly be made by a lower authority. Can he cite any example of the Roman Catholic Church abiding by that principle?

Photo of Bill Cash Bill Cash Conservative, Stone

My remark was jocular and certainly not intended to cause offence. I withdraw it. As for the Catholic Church, as the hon. Gentleman knows, subsidiarity was—

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I hesitate to intervene, but we are going rather wide of the motion.

Photo of Bill Cash Bill Cash Conservative, Stone

I shall say only that subsidiarity was a theological concept, not applicable to questions relating to political institutions.

To return to the subject of double-speak, the common agricultural policy and the common fisheries policy have undermined farming and fishing. That is the problem. Attempts have been made to persuade us that there is a democratic rationale to the European Union. In reality, it is permeated by lack of accountability and lack of democracy. That is the real problem. When European politicians speak of reform, in fact they go further, into over-regulation. The Government and the House must grapple with the fact that if we want to make changes to improve regulation, we will have to do one of two things: either we will have to persuade all the other member states of our case—we have just seen what has happened in relation to the services directive and the working time directive; or, if we are determined to make the relevant changes, we will have to make legislation in this place that is expressly inconsistent with legislation already made in Europe. To do that—the Minister for Europe knows my Sovereignty of Parliament Bill and the principles that it enunciates very well—we shall also have to lay down a clear policy wherein it is stated that it is in the interests of the United Kingdom to make the changes in respect of any directive or regulation, then pass the legislation stating that we do so notwithstanding the European Communities Act 1972, and then require our judges to give effect to that inconsistent law. Otherwise, the result is all talk and no action. Reform cannot be achieved any other way, unless the right hon. Gentleman can tell us that we can get unanimity among all the member states on the reforms that he and the Chancellor of the Exchequer have proposed.

We have to make a decision. Are we just going to do what the European Union tells us to do—by majority voting, as often as not? Or are we going to defend our national interests and insist on doing so by using the powers of this place? It is we, through this House, who govern the United Kingdom. That is the key point. What is important is the electors and democracy. The right hon. Gentleman and the constitution must provide answers to those issues.

What is to be done? Remember that, as I told the Prime Minister some months ago, the constitutional treaty repealed all the existing treaties. We therefore have an opportunity. If the Government are prepared to sign up to a treaty that repeals all the existing treaties and imposes a law of primacy of the European constitution and the European Court of Justice, surely, in the light of the rejection of that treaty, the Government will now say simply, "We were prepared to repeal all the treaties, so let us do so and then go back to the drawing board." Let them heed another opinion poll commissioned by the European Foundation from ICM, in which people were asked whether they want associated status—a relationship with a Europe that is, in effect, the Common Market plus political co-operation. Some 68 per cent. of 18 to 24-year-olds said yes, as did 62 per cent. of most of the other grades and classes in the poll.

The Government have a real problem, which is why I believe it would have been sensible to make Europe the centrepiece of the general election. If we do as I suggest, we must bear in mind the comment made by my hon. Friend Dr. Fox, in what is, by any standards, a significant shift away from what Front Benchers have been saying for many years. My hon. Friend even referred to the Single European Act in terms of considerable uncertainty.

Photo of Wayne David Wayne David Labour, Caerphilly

I notice that the hon. Gentleman supports what Dr. Fox said, but does he believe none the less that Britain should have associate membership, not full membership, of the European Union?

Photo of Bill Cash Bill Cash Conservative, Stone

The hon. Gentleman knows perfectly well that my right hon. Friend Mr. Heathcoat-Amory and I tabled a series of amendments to the European Scrutiny Committee report that appeared just before the general election—amendments to which the hon. Gentleman subscribed—and some of those called for associate status. It is all there on the record, so I do not need to repeat it today.

The real problem now is not the constitution itself. The constitution is dead. The real problem is the existing treaties. What has given rise to the over-regulation, the lack of democracy, the double-speak and the inability to produce policies—foreign policy and so on—for Europe that are constructive and stable? The short answer is that the whole project is filled with contradictions and riddled with double-speak. No wonder the people of Europe have looked at that failed project, with its high unemployment and low growth, and concluded that they cannot live with it any more. We must address the existing treaties, which have given rise to all these problems, to restore democracy in Europe and to the nation state and, irrespective of the Whip, to the House as well. The only thing that has driven all the failed attempts to get the issue straight since 1990, and since the Single European Act 1987, is that the whipping system has insisted that Members do what they are told, keep their mouths shut and carry on as if nothing has happened. As it happens, it did not happen, and it will not happen now. The fortunate truth is that truth has now prevailed. The movement towards examining the basis of the Single European Act onwards includes Maastricht, Amsterdam, Nice and the constitution.

My hon. Friend the Member for Woodspring said unequivocally, as far as I can recall, that we had to have a debate. I would prefer a decision. Now is the time when the British people—certainly from the Opposition Benches and those whom we represent—would expect us to be able to say that we want to have a Europe that is stable. We know that if Europe implodes as a result of the chaos that could come from the continuation of ridiculous policies and failed projects, there is more danger in the instability and the tension that could come from that than there is from having a good and settled discussion as we move forwards.

It will not be a matter only of debate. I wrote a pamphlet entitled "Associated but not Absorbed", in which I pointed out that other nation states, in my opinion, would tend to follow us if we took a lead. It is down to the Government to do that, but I do not think that they will. I am therefore heartened that it appears that we, the Opposition, are now re-evaluating many of the things which previously were regarded as off limits. We are listening and I believe that changes are about to occur, but I would like to see a decision. I would not like simply a debate. We need to go back to what is effectively the Common Market and, at the same time, political co-operation. It will be something that is perhaps a bit more than the Common Market but it will probably be less than the Single European Act.

Photo of Christopher Huhne Christopher Huhne Shadow Minister, Treasury

Perhaps the hon. Gentleman would explain the difference between his vision of associated status and the status that Norway currently enjoys with its relations with the EU. Perhaps he will remind us that those in Oslo call it the fax democracy. Directives arrive by fax from Brussels and are put into Norwegian law without any influence of Norwegian Ministers, the Council of Ministers and Norwegian MEPs. Does the hon. Gentleman regard that status as an increase in sovereignty?

Photo of Bill Cash Bill Cash Conservative, Stone

The hon. Gentleman should know—I know that he does know—that the basis of Norway's status is in accordance with the European economic area. I do not agree with that. We need to go back further than that. Norway is confined within that area to commitments that have lead to the fax democracy. I do not want a fax democracy; I want the House to make decisions on its own terms in a manner that enables our democracy, and those who voted for us in the general election, to have a say as to how things are to happen. It is typical of the Liberal Democrats to come up with the rubbish that has just emerged from the hon. Gentleman.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

My hon. Friend will be aware that the EU has more than 60 bilateral trade and tariff agreements with other countries throughout the world, on favourable conditions, without single market regulation. I am sure that he is referring to that.

Photo of Bill Cash Bill Cash Conservative, Stone

Indeed he is. I am grateful to my good and hon. Friend, who has fought many a battle on this subject over the years.

We are at a fundamental moment of change, which we must seize as an opportunity. There is nothing negative about trying to get Europe right; if we get Europe wrong, we get everything wrong. Given the impact of Europe, it is our duty as a party, as a nation and as a Parliament to remember that high unemployment and low growth are no remedies. Disconnecting the people is no remedy. Being undemocratic and unstable is no panacea for the European people or for this country.

We do not want a centralised and undemocratic state. We want to maintain the sovereignty of our Parliament on behalf of the people who elected us most recently. This is a moment of change. This is the time when we must decide, on behalf of the people who have elected us, that we will put up with this constitution no longer and will reverse the existing treaties that have led to chaos and disintegration in the European Union.

Photo of Chris Bryant Chris Bryant Labour, Rhondda 3:05 pm, 8th June 2005

It is an enormous privilege and a great honour to follow Mr. Cash. I am particularly glad that he is a Member of this place. He has always been a fine Member in participating in these debates over the past few years. I am delighted that he is becoming such a prominent member of the Conservative party. His passionate belief that Europe should have been at the forefront of the general election campaign for the Conservative party reflects precisely the agenda that will probably keep the Conservative party on the Opposition Benches for many years to come. During the general election campaign, not one person talked to me about Europe on the streets. That is despite the fact that I have been fairly prominent as a pro-European within my constituency as well as in the House.

I note in passing that the Conservatives had at any one time 28 national billboards in the Rhonda constituency. I guess that it was a good use of resources since they secured 1,800 votes. They increased my majority and saw a 3 per cent. swing to Labour in the constituency. I hope that the hon. Gentleman will continue to play a significant part in the Conservative party. I hope that he returns to the Opposition Front Bench, a position which he occupied briefly, and that we hear a great deal more from him. Undoubtedly that will keep the Conservative party in the shadows.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

My hon. Friend is right that Europe was not an issue on the doorstep with Labour voters, because they knew well that Labour had promised them referendums on both the constitution and the euro, and that they were free to say no in those referendums.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

There may be some truth in that. We should not be too ideological in this debate. I am not entirely convinced, as I often am not by my hon. Friend's arguments.

The hon. Member for Stone said that he believed that the votes in France and the Netherlands showed that the elites of Europe had been rejected. I do not understand that argument. It is clear that the French and the Dutch took a view on the constitutional treaty and on a range of other issues. I do not suppose that there will be a full analysis for many years. Whether the French people and the Dutch people were specifically taking a view on the elites of Europe, whoever they may or may not be, I do not know.

The hon. Gentleman spoke rather curiously—perhaps with a loose tongue—about the empires of Europe. He seemed to conceive of the EU as another empire in the model of Charlemagne or Napoleon. There is a substantial difference between an empire that is created by war and subjugation and co-operation between member states, which is precisely what the constitutional treaty was arguing for. That is an important distinction. I hope that he will not slip back to his conception of the EU when, I suspect, he returns to these issues in a future debate, or whenever he opens his mouth in the Chamber.

I know that I am meant to be profoundly depressed today. I am a pro-European and argued the case for the constitutional treaty. I argued for us not having a referendum and then I argued for us having a referendum when we decided that we were having a referendum. I know that because John Humphrys told me and the whole country that all pro-Europeans should now be very depressed. He said that Europe was in meltdown. He added that Italy would almost certainly leave the euro, with many senior politicians demanding that, saying that their country should abandon the euro and return to the lira.

I do not believe one part of what John Humphrys said in that context and I do not feel depressed. I accept that the French and Dutch voted against the draft constitutional treaty. That means that, at best, the treaty is on a life support system. I suspect that it will be shut down in the near future, but I do not accept that my entire pro-European argument is founded on this particular document. In principle, many of us believe that it is a good thing for Britain to play a role at the heart of Europe. It is our destiny to be an intrinsic part of Europe. We should not be on the sidelines like Norway nor should we be in the marginalia of European history, as the hon. Gentleman would argue.

It is important that we are at the heart of Europe, but that is not intrinsically associated with the future of the constitutional treaty. Indeed, many of us were sceptical from the very beginning about whether the term "constitution" should have been used. Parts of the document were subject to negotiation between different countries. When the European Union Bill was introduced before the general election, many of us said on Second Reading that there were things that we wanted to change. None the less, there was a negotiation between 25 different countries and it was probably the best package that we could get.

In the Chamber and elsewhere, I argued with Opposition Members that the draft treaty was a very good document for Britain that showed how well we had done diplomatically. I am delighted that the French agree with that argument, as 40 per cent. of people who voted no said that they did so because they believed that the European treaty would be better for Britain than for France. People who argue that the constitutional treaty is on a life support system and that the pro-European ideal must die have given a premature verdict. There is a fundamental choice. Many hon. Members have said that this is a significant moment with an historic choice to be made, but that choice is not the one that has been presented to us. It is a choice between a pragmatic and patriotic adherence to Europe and an ideological attitude towards Europe.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

I shall give way to the hon. Gentleman to see whether he is pragmatic or ideological.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

I am glad that the hon. Gentleman conceded that the treaty is dead. I hope that he will inform the Prime Minister and the Foreign Secretary that that is the case, as they seem to be dithering and giving a different answer on any given day. He may therefore wish to pass his thoughts on to Ministers. Does he agree that there is fundamental paradox in his argument? Many Conservative Members who argue against federalism are accused of threatening jobs, yet federalism has caused the highest unemployment in Europe since the second world war.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

It is good to see new Members taking part in these debates—it would be good to see a few more Labour Members doing so. However, I gather that the Conservative party was so divided last week that it was not until late yesterday that it decided the topic of today's Opposition day debate. Many hon. Members first learned that there were was going to be a debate on European affairs and the European constitution when they saw the Order Paper this morning. I think that that shows a gross discourtesy to the House.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

I will not give way to the hon. Lady. She can get back into her teapot for a few minutes longer.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I urge the hon. Gentleman to remember the rules on the use of language in the Chamber.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

I am grateful, Madam Deputy Speaker. I would merely say that the hon. Lady used that phrase against me a few months ago when you were in the Chair. In all humility, Madam Deputy Speaker, I apologise for using such language. [Interruption.] I urge the hon. Lady to restrain herself for a few more moments, as I am still trying to answer the question that Mark Pritchard asked about federalism.

It is dangerous to use the word "federalism" in debates about Europe without being precise about its meaning. Different European countries have different federal structures. France is a federal country and Spain has asymmetric devolution. For some people, federalism means subsidiarity and taking decisions at a level as close as possible to the people affected. For others, it means trying to bind everyone together into a single unity. It is therefore important that we use the word "federalism" with care.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The hon. Lady must surely be given the opportunity to make the intervention that has been burning within her heart for many ideological months.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

On a point of information, I was advised by Conservative spokesmen of the subject of this debate on Monday night. They thought that I might have a passing interest in it.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The hon. Lady has just revealed a gross discourtesy to the House if that was known by Conservative Members on Monday, but not revealed to the House in time to appear on the Order Paper yesterday morning. I hope that you can investigate, Madam Deputy Speaker.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

It is time that we returned to the substance of the debate.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

I shall give way to the hon. Gentleman in the hope that he will bring us back to the subject and explain when he was first told about the debate.

Photo of Philip Davies Philip Davies Conservative, Shipley

I shall stick to the subject of the debate. The hon. Gentleman mentioned subsidiarity, which appears in the Government amendment. I understand that that means that decisions should be made at the most local level. Does he therefore agree that the best way to ensure that decisions are so made is for all decisions to be made in the House, not in Brussels?

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The most important thing is that decisions should be made at the most local level that is appropriate. [Hon. Members: "Ah!"] It is an important point. Historically, the Conservative party has not supported devolution in this country, but many of us argued the case for it, because we believe that decisions on, for example, the health service or education should be taken at the most local level possible. The people with the best understanding of those services are those who use them locally. That is what we should try to achieve in the European Union. We should not adopt a federalising tendency if it means creating a uniform Europe, but it is pragmatic to try to enable different European countries to co-operate systematically and not on an occasional basis when that can create added value.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

My hon. Friend is making a point about voting at national and local levels and each European country having its own democratic system. If those democratic structures do not have any power over the local economies, is that democracy not meaningless?

Photo of Chris Bryant Chris Bryant Labour, Rhondda

It would be quite meaningless. In a changing world environment where countries such as India and China have entered the market much more forcefully, we must consider how we can both protect the economies of individual EU countries and make sure that their Governments have the powers that they need to tackle economic problems and create high employment and low unemployment. At the same time, we must try to ensure that we create a sustainable and competitive market that is large enough to build prosperity for the whole of Europe. I am 43, and I have lived in Spain, Belgium and, briefly, France. The economic changes in those countries have occurred of necessity and have been helped, not hindered, by the European Union. I also point out to my hon. Friend that the treaty made it clear that, on nearly every economic measure, a vast array of powers would remain with the member state. The British Government tried to ensure that that was in the treaty from the very beginning. Our fundamental choice is between taking a pragmatic attitude to Europe and taking an ideological one. In my view, we must try to develop a new consensus within the 25 countries in Europe.

The hon. Member for The Wrekin asked when the draft treaty will be declared dead. As I have said, it is on life support, but one tends to try to bring the whole family together before one switches off the life support mechanism, which is what will happen over the coming weeks, rather than leaving one person, the doctor, to make the decision.

We should develop a new consensus. Nobody in France or Holland, or for that matter in Spain—the Spanish feel bruised, because many people have ignored their resounding yes vote—voted for the status quo in Europe. That is not to say, as some, including Dr. Fox, have argued, that they voted for Europe to be rolled back, but they did not vote for Europe to be preserved in aspic.

The Council, which is probably the least transparent supposedly democratic body in the world, is one of many problems. This afternoon, the Minister said that the Council could legislate with greater transparency without treaty change. In my view, we should go a step further and ensure that transparency exists not only when the Council is legislating, but when it is deliberating, because many of the negotiations and processes are as important as the final decisions.

Similarly, many countries feel that the role played by member states in the decision-making process is not sufficiently substantial. Who can tell whether the treaty was worded correctly on that point? However, national member states' Parliaments should maintain their role, even if the treaty falls by the wayside.

Photo of Robert Walter Robert Walter Conservative, North Dorset

A treaty may not be necessary to address the transparency of the Council, on which I intervened on the Minister, and the role of member states' Parliaments, because such decisions could be taken in the Council. Perhaps the Government will adopt my proposal, because the UK will have the presidency in just a few weeks' time.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The hon. Gentleman makes a good point in part, like the curate's egg. The transparency of the Council is entirely up to the Council, which could decide that it wants to operate on the basis of transparency without a treaty. However, if the Council were to implement a provision for member states' Parliaments to play a role, when the first problem arose, one of the member states would go to court, which is why a new treaty would be necessary. The difficulty is that many of the changes that all hon. Members want cannot be implemented without a new treaty. It may be a case of, "The treaty is dead. Long live the treaty."

The hon. Gentleman and I might also be able to agree on the ability of member states to leave the EU. As he knows, there is no current provision for any member state to leave the EU. If a member state held a general election and decided to leave the EU, it would probably just do it and pick up the pieces afterwards. It would, of course, be more sensible to introduce a process of negotiation, which the treaty provides for, whereby a member state could leave the EU, if it chose to do so. That process should probably take place under QMV rather than a process of unanimity, which is currently the probable system. It is another area in which treaty change would be necessary to proceed with something that nearly everybody in the British body politic agrees is a good idea.

Most people probably agree that the European Commission's powers should be more clearly delineated. I used to work for the BBC in Brussels, which is Conservative Members' two major bogeys in one. When I worked in Brussels, although the Commission had no direct power to determine whether the BBC licence fee was state aid, it chose to interfere fairly regularly because that was the thrust of the treaties. The European Commission's role should be more clearly delineated, which would be in the Commission's interest and our interest. It would also help to address the democratic deficit and some people's lack of understanding of how Europe works. Again, treaty change is necessary to achieve that goal.

Poland and Spain liked the voting system in the Nice treaty. Some people wondered whether the new system of double majority voting would be accepted in Spain, because it put Poland and Spain in a less advantageous position and the UK in a stronger position. That system must be changed, but, again, it is written into the Nice treaty, so, again, treaty change is necessary.

A number of hon. Members have mentioned the number of commissioners. The EU Commission was unwieldy when there were 15 commissioners, but we must be inventing jobs for people now that there are 25. If any further increases occur, it will be practically impossible for the Commission to maintain any sense of corporate responsibility. We must move to a position in which the commissioner works for the whole of the European Commission rather than for the individual member state that put them there. I know that that is the basic principle on which commissioners are theoretically appointed, but sometimes it does not feel like that.

Photo of John Maples John Maples Conservative, Stratford-on-Avon

Is not the problem that the Commission has powers of its own, including the sole power to initiate legislation? If the Commission were more subservient to the European Council and the Council of Ministers, the commissioners' nationalities would not be a problem because it would be more like a civil service. One of the problems with the constitution was that it made the Commission more powerful, which would have provided individual countries with a greater incentive to ensure that they had a player on the Commission.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The hon. Gentleman has made half a good point. The European Commission should be more like a civil service that works to the political direction of the Council. To achieve that objective, however, the Council must become more transparent, which is a sine qua non—Latin is the order of the day. The treaty made it clearer that the Commission is not always in the driving seat and that it is sometimes subservient.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

I am hesitant to give way, because John Bercow just asked whether I was still speaking. I shall conclude my speech in the near future, but first I shall give way.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

In his reply to the previous intervention, my hon. Friend might have mentioned that the Commission work programme must be agreed by both the Council of Ministers and the European Parliament. The Commission does not come up with proposals that other people must swallow.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

That is a good point, which takes me to another—namely, that the rotating presidency process gives the Commission too much power. A much tighter presidency of the Commission established for two and a half, or possibly even five years, and based on the Council, would create a much better chance of keeping the Commission working to the political guidelines that have been set by the elected Governments of the member states of Europe, rather than the other way round. I hope that we will find some way of abolishing the rotating presidency. Again, this is an area where there is a great deal of consensus but where I suspect that treaty change will be required if we are to move forward.

The one area where I suspect that there will be no consensus between Labour Members and the Conservatives is the extension of qualified majority voting. In many of the areas in which QMV was extended in the constitutional treaty, it was only common sense to do so. In many of the more controversial areas, there were—although this was rarely mentioned by no campaigners—opt-outs, or opt-ins, for member states that wanted them. In many areas, Britain would be cutting off its nose to spite its face were we not to push for further extension of QMV, a classic instance being energy policy, whereby one country can all too easily prevent British companies from doing business elsewhere in Europe by using its veto.

I said earlier that there is a fundamental choice between a pragmatic and an ideological position and I have outlined a series of areas where one could pragmatically move forward to a new treaty. If that is cherry-picking, I am happy to cherry-pick, but I believe that it is simply being pragmatic. Interestingly, what we have seen over the past year from the Conservatives—oddly, ever since the party changed its leadership—is a move towards a more ideological position. Many Conservative Members—some are here today, although it is sad that Mr. Clarke is not with us—are entirely pragmatic in their attitude to Europe. However, as we have heard today, the prime Conservative argument is that we should move towards complete renegotiation on the basis of a position somewhere between that of Mr. Heathcoat-Amory—that is, to try to secure for Britain a different status of some kind from that of other member states, be it associate or whatever else one wants to call it. The difficulty with that objective is that, because it would require treaty change, in order to achieve it, one would have to get every other Government, and then every other member state in Europe, to agree to it. At the moment, I can discern only two political parties in Europe that would support the Conservatives' position—the National Front in France and Herri Batasuna in Spain—so they would find it difficult to argue their case.

Over recent months, that argument has been adapted towards withdrawal from specific pieces of treaty obligations such as the social chapter, the overseas aid provisions that were made in the Maastricht treaty and the common fisheries policy, as primarily advocated by the hon. Member for Stone. That is a dangerous path for the Conservatives to tread.

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

The hon. Gentleman is completely misrepresenting my position. Let me just give him one fact. In the Convention on the Future of Europe, I made common cause in the democracy forum with representatives from other countries who did not belong to established political parties to advance the cause of democracy. What is important to me is to get together with the people of Europe, as we have shown that we can, following the two shattering defeats in France and Holland. The hon. Gentleman would do better to listen to the people of Europe rather than casting false aspersions on someone who fought this right from the word go.

Photo of Chris Bryant Chris Bryant Labour, Rhondda

The right hon. Gentleman has made a series of different arguments over the past few years. I think that I have listened, as attentively as possible, to every single one of the speeches that he has made in this Chamber. Perhaps I am not as intelligent as he would want me to be, or perhaps his position is contradictory. The internal contradictions in the Conservative party position, from which I do not think that he wishes to dissociate himself, are so manifest that it is difficult to understand why Conservatives cannot see them. Without getting the Governments of other member states to agree to a renegotiation on the basis that the hon. Member for Woodspring wants to advance, I do not see how they can possibly argue their case with credibility.

Today, we have heard a new development in Conservative party ideology—the single market is now up for grabs, too. The Conservatives want a renegotiation of the single market. I thought that that was simply the view of Mr. Redwood, another man of whom I am a phenomenal fan because he keeps the Conservative party in its current position. However, it is difficult to understand how the Conservative party could go to the people of Britain arguing for withdrawal from the single market.

Photo of Bill Cash Bill Cash Conservative, Stone

Will the hon. Gentleman give way?

Photo of Chris Bryant Chris Bryant Labour, Rhondda

I shall not give way, because Conservative Members are saying, "Please don't give way to him." I believe that that is because they want to be rude to me, not him.

A new Member, Philip Davies, advanced the extension of the Conservatives' ideological position. He called for a referendum on whether we should remain in the European Union. He did not reveal whether he would argue that Britain should leave the EU—[Interruption.] Yes, he would argue that Britain should come out of the EU. It is good that some Conservative Members are finally coming out of the closet on the matter.

We should acknowledge our debt to the EU. Europe, not alone but with NATO, has brought peace to a warring continent. It has extended human rights in a way that many people would not have thought possible in the dictatorships of Spain, Portugal, Greece or the eastern bloc. It has made possible a shared market where many can share in the prosperity that was once enjoyed by only a few European countries. It has also enabled freedom of movement so that one in four British people take a European holiday every year.

I believe that, in 100 years, we will not bemoan today as a terrible date for Europe but think that Europe still has a long way to go.

Photo of Ed Vaizey Ed Vaizey Conservative, Wantage 3:36 pm, 8th June 2005

Thank you, Mr. Deputy Speaker, for giving me the opportunity to make my maiden speech this afternoon. It is a great honour to follow Chris Bryant, who spoke with eloquence and passion. I could happily have listened to him for many hours except that I was anxious to break my duck. Although I do not know him personally, I have tremendous regard for his work as a parliamentarian and a constituency Member of Parliament.

I am the first maiden to speak in the debate and I therefore crave the House's indulgence. I am surrounded by some titans of the European debate and I feel them straining at the leash to make their points. I applied on Monday morning to speak in the debate, and although I did not know the subject, I had a shrewd idea of what might come up. Consequently, hon. Members will be relieved to know that I have had time to write a short speech.

As the new Member of Parliament for Wantage, I have won an especially poignant privilege. Whenever I walk into the Chamber, I pass under the shield of my most illustrious predecessor, Airey Neave, who served what was then known as the Abingdon division for a quarter of a century before his cowardly murder by republican terrorists. I never met Airey Neave but his name, spirit and reputation live on in my constituency. It is a matter of personal pride that I attended the same college as him—Merton college, Oxford.

I was selected as the Conservative candidate for Wantage as long ago as 2002. From that time, I worked extremely hard and very closely with the sitting Member of Parliament. At the end of those three years, he joined the Labour party. I have tried not to take that personally. Despite that humiliation, hon. Members may be surprised to learn that I feel that I owe Robert Jackson a huge debt of gratitude. It is thanks to him that I achieved something that has been all too uncommon in recent elections—I took a seat from Labour and gained it for the Conservatives. Hitherto, my record in that respect had not been good. When I stood in Labour-held Bristol, East in 1997, I turned a Labour majority of 5,000 into one of 17,000. I am therefore delighted that history did not repeat itself.

Robert Jackson's decision to leave the Conservative party and join the Labour party caused his many friends and supporters in the constituency a great deal of pain, sorrow and not a little anger. However, I am sure that they would join me in acknowledging his contribution as the Member of Parliament for Wantage for the past 22 years—indeed, for more than a quarter of a century if one includes his service as a Member of the European Parliament. Robert Jackson was an assiduous constituency MP. He was involved in a huge range of issues but, above all, he played a major role in maintaining the scientific pre-eminence of my constituency.

In my constituency is Harwell, the home of Britain's first nuclear reactor, which was built in 1947 and at the time generated enough electricity to boil a kettle. My constituency has a huge scientific heritage not just in Harwell but in Shrivenham, where the Royal Military college of science resides. During his time as a Member of Parliament, Robert Jackson championed that scientific heritage and played a major part in bringing the Diamond synchrotron, the largest UK-funded scientific project in this country for 30 years, to Harwell.

This morning, some of my hon. Friends, on seeing my tie, expressed concern, not because, as a so-called Tory moderniser, I was actually wearing a tie, but because of the colour of my tie, which I should explain to the many readers of Hansard is deepest red. However, my tie has nothing to do with politics. Although it is not an uncommon occurrence for Conservative Oxfordshire MPs to cross the Floor of the House, that is not my intention. My tie is related to something far more important than politics: football. This is the tie of Didcot Town football club, which last month won the FA Vase at White Hart Lane. [Hon. Members: "Hear, hear."] I am grateful for that. Hon. Members are free to sign an early-day motion recording that fact. Their victory has put a huge smile on the face of Didcot, which is the largest town in my constituency—I sometimes feel that it should be called Wantage and Didcot.

Didcot has hitherto been known mainly for its railway station and its power station. It now has a cup winning football team and a new town centre is being built. Rightly, there has been a huge surge in civic pride in Didcot. Didcot is a boom town, home to more and more highly qualified professionals attracted by its rural setting, excellent transport links and first-class job opportunities. It sits at the centre of one of the most economically dynamic areas of the country.

In Milton park, next door to Didcot, we have hundreds of modern, dynamic businesses, including RM, the largest private sector employer in Oxfordshire and, for aficionados of trivia, the largest manufacturer of personal computers in the UK. Nearby in Grove, we have Williams Formula 1, and elsewhere companies such as Oxford Instruments and numerous other hi-tech and bio-tech firms.

Despite the economic dynamism of the constituency, it is still overwhelmingly rural in character. It is an area steeped in history and tradition. Wantage is the birthplace of King Alfred, and the nearby village of Uffington is the birthplace of Thatcherism, because it is where the late Sir Denis Thatcher's forebears hail from. To the south of Wantage lies the ancient Ridgeway, and nearby can be found the ancient chalk horse that gives the Vale of White Horse its name, as well as the hill where St. George slew the dragon.

At the eastern border of the constituency sits Wallingford, a town which celebrates its 850th anniversary this year, but which I think over the next few years will become known as the town that educated my hon. Friend Mr. Wilson, who I should acknowledge as a former youth team player for Didcot Town football club. Looking at him now, he seems ready to take them into the upper leagues.

Near the western border of my constituency sits Faringdon, which still bears the physical scars of the English civil war, and which has recently become the first fair trade town in the south-east. In Grove, we have the largest village in Europe, and in Steventon we have the largest village green in England.

Truly this is a constituency of superlatives. If hon. Members feel that my hymn in honour of my constituency sounds too much like a tourist information brochure, I make no apologies. If I do not sing its praises, nobody else will, because the Liberal Democrats have just closed all the tourist information centres.

The subject of today's debate—the future of Europe—provides, for me, an interesting symmetry, because it was the subject of Robert Jackson's maiden speech as a Conservative Member of Parliament. While his views on Europe may have had much in common with those of the hon. Member for Rhondda, they had much less in common with mine. Nevertheless, in that maiden speech, Robert Jackson said, rather prophetically, that

"no free polity can succeed whose actions run ahead of the comprehension and consent of its subjects."—[Hansard, 28 June 1983; Vol. 44, c. 521.]

I believe that recent events have proved him right. In my view, the European constitution was a step too far for the European Union. That is why it has been roundly rejected by the peoples of two of the founding members of the original European Community.

For far too long, the agenda of the EU has ignored the desires and wishes of the peoples of Europe. The nation state, far from declining, is reviving on our continent. The new members of the east, as Sir Menzies Campbell pointed out, are rejoicing in the rebirth of their sovereignty and enjoying the opportunity to run their own affairs at last. If I may be so bold as to say it, they do not necessarily owe their independence and freedom to the EU, but to America and NATO. Even in old Europe, national pride remains a strong emotion. After all, as London, Madrid and Paris compete to win the venue for the Olympics, they do so not for the glory of Europe, but for the glory of their nations.

The European Union must work with the grain of national identity, not against it. It should seek to evolve and develop, not to impose an artificial blueprint on unwilling peoples. The death of the constitution—that is what it is—presents, as my hon. Friend Mr. Cash mentioned, a unique opportunity to re-evaluate the role of the EU in the 21st century. That means several things. It means a much lighter touch from Europe; it means far fewer laws made in Brussels and a vast swathe of laws returned from Brussels; it means a focus on reform that encourages enterprise, growth and job creation—not, I hasten to add, in Brussels, but in the whole of Europe. It also means an approach that binds us together only so far as it is essential and beneficial for all.

Today, to my generation at least, the EU seems out of touch and a relic of the past. I come from a generation that has travelled not only in Europe, but all over the world, whose horizons extend far beyond Europe. If we have the courage and foresight to take advantage of the current crisis, we can build a new European consensus for a new age—one that looks forward, not back; one based on honesty and transparency, consent and not compulsion. We want a Europe of nation states trading freely with each other, not subsumed within an artificial construct. That seems to me a vision worth fighting for. Any other approach should be one that we fight against as vigorously as we can.

W

Good first time effort.

Submitted by William Service

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 3:48 pm, 8th June 2005

First, I congratulate Mr. Vaizey on his maiden speech, which was very impressive, indeed—[Interruption.] Yes, I did agree with much of it. It was confident and competent. Although it is the custom not to intervene on maiden speeches, I am sure that the hon. Gentleman would have dealt with any such interventions very readily and brushed them off with ease. He has a significant future ahead in the House and his reputation goes somewhat before him. I greatly enjoyed listening to his fine speech.

The hon. Gentleman's predecessor, Robert Jackson, who latterly joined this side of the House, came over for specific political reasons, but I did not agree with him on any of them. He obviously did not move very far to the left; in any case, he certainly did not reach me. He moved over specifically on account of his support for the EU and his support for the war. I cannot remember the other issues—[Hon. Members: "Tuition fees."] Yes, tuition fees. I clearly remember not agreeing with a word he said, but there we are. Once again, I congratulate the hon. Gentleman on his enjoyable maiden speech.

Mr. Cash is no longer in the Chamber, but I was impressed by the fact that he had read Erich Fromm's book "Fear of Freedom". I read it in my youth, and another book by the same author entitled "The Sane Society". As presently organised, the EU is not a sane society, and we ought to try and make it saner in the future.

I welcomed the no votes in France and Holland, as they presage a new beginning. We must not pretend that the verdicts were passed simply by the people, as specific sections of those societies voted against the constitution—working people, socialists, young people, and trade union members. In other words, it was people of the left who voted no as a specific rejection of neoliberalism. They rejected the deflation of the eurozone, and they objected to the drive towards a world of unconstrained market forces. Many of them when interviewed said so specifically, and I agree with them.

People in France and Holland have seen unemployment rise to unprecedented levels in the post-war era, while growth has weakened. In fact, in the last quarter of last year, the economies of Italy and Germany contracted, while welfare state provision has been salami sliced and future pensions threatened. Moreover, the word "reform" has appeared again and again. In the past, that word had a progressive flavour. In 1832, it meant increasing democracy and the power of people over their Governments, and that Governments had more power over their economies.

Nowadays, reform seems to mean handing back power to the market and away from people and their elected Governments. I do not accept that. That trend is most obvious in the eurozone, and many people believe that the post-war social democracy that worked so well across the whole of Europe is now under threat.

The crisis goes deeper than a mere rejection of the constitution. People are increasingly aware that the direction being taken by the EU is not what ordinary working people want. They are saying no to the broad drift of Europe. They want a different Europe—the sort of Europe that I want too.

I supported enlargement precisely because I thought that it would provoke the sort of difficulty that I have described and bring matters to a head. Two of my colleagues on this side of the House who take a Eurosceptic view voted against the Nice treaty on the grounds that it was pro-European. I voted in favour of it, because I thought that enlargement would weaken the EU's central core, against which we have railed for so long.

Indeed, one of the last speeches made in this House by Sir Edward Heath—who, as a matter of fact, used to sit in the place occupied by the Leader of the Liberal Democrat party—was against enlargement. He thought that it was impossible for countries with very different economies to merge in a single economy. He wanted a deeper and stronger western European alliance—what one could consider to be the old core Europe. I think that he was right. Retaining the old Europe strongly controlled from the centre meant that member states' economies had to be very similar. I think that it will be impossible to bond 25 separate countries into one economic unit and, given Turkey's possible accession to the EU, the number may be even greater.

We must reassert democratic control by elected Governments over governance by right-wing bankers and eurocrats in the European Commission and the European Central Bank. Interestingly, after the French referendum decision, the French President replaced former Prime Minister Raffarin with Dominic de Villepin. The new Prime Minister is allegedly a Gaullist, or at least his Gaullism is stronger than his economic liberalism. He is committed to the state—l'état—which he sees as being above the market. That represents a significant change in French politics. He may not remain in post for very long, but his appointment at least represents a shift back towards Gaullism rather than towards economic liberalism.

De Villepin is a true conservative and not a liberal. The posters in the no campaign across Europe urged people to say no to liberalism. In this context, the word liberalism does not mean slightly left of centre. It is used in the sense of economic liberalism.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

Is not my hon. Friend concerned that Mr. de Villepin has never held elected office?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Yes, and in our constitution such an appointment would be unacceptable. However, under the American constitution, for example, Cabinet members are frequently appointed who have never stood for election. I do not approve of that approach, but it is in the French constitution and the Assembly and the President are elected democratically.

The Conservatives are equally divided. The history of Conservative policy on Europe over the past 20 years or so reveals an internal struggle between traditional Conservatives—I hesitate to call them Gaullists—and the neo-liberals. Mrs. Thatcher had political schizophrenia, because she could not make up her mind whether she was a neo-liberal or a nationalist Conservative. She gave way to the neo-liberals in accepting the Single European Act. I opposed that Act—I was not a Member of Parliament but I wrote and spoke against it—and the same was true of Maastricht. However, her successor, John Major, was a neo-liberal and was pro-Europe. Indeed, he still says much the same today. Had Mrs. Thatcher chosen not to support the Single European Act history might have been different, and the issue might have been easier to deal with now than it is.

I was opposed to both the Single European Act and the Maastricht treaty, and I would have been happy—had I been a Member of Parliament—to work with the Labour Opposition against the latter. Unfortunately, we did not have quite enough votes at the time to defeat it, but had we done so we would have solved a big problem and saved a lot of trouble in the future.

Like many other hon. Members, I believe strongly in a looser association of democratic member states, co-operating for mutual benefit, and not in a bureaucratic, neo-liberal superstate, which is what others have in mind.

Photo of John Bercow John Bercow Conservative, Buckingham

The hon. Gentleman raises the spectre of an essentially economically liberal European Union, but it has been extraordinarily well disguised in recent years, unless there is something wrong with my eyesight. Given that globalisation is driven on the one hand by the development of technology and the demands of commerce, and on the other by the rules of the World Trade Organisation, the hon. Gentleman is engaged in an ultimately futile mission if he thinks that objecting to a treaty will prevent that process. He might better attend to the argument by dealing with the issue of the volume of legislation that is driven from Brussels rather than from this country. On globalisation, I suggest to him politely, that he is fighting a losing battle.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Well, we shall see whether the people of Europe, and indeed the world, will accept a neo-liberal globalised world or whether they will react against it. We do not know what will happen, but I suspect that many people question the direction of the world economy and the rules governing trade. At this very moment, demonstrations against the G8 are being planned. I do not want to broaden this debate too far, but I believe that working people across the world question that direction. As I have told the House before, I was on holiday in Portugal some five years ago and saw a notice on a building site saying:

"No to flexible labour markets."

At least, that is my translation from the Portuguese. The authors of the sign were clearly aware that flexible labour markets meant less security and lower wages, and they did not want that.

The Keynesian world created after the second world war was fairly structured, controlled and regulated. It involved redistribution of income, a degree of public ownership of public utilities and big welfare states, and it worked—at least, until 1970 when we started to unravel it all. The 19th century liberals got hold of the world again and started to get their revenge on the Keynesians. It was a political struggle even then and to this day there are three tendencies in this Chamber. There are the Labour party democratic socialist-social democrats. There is the Conservative party that wants to stand up for the country but still believes in a bit of inequality and noblesse oblige. And then there is a neo-liberal group with members in all three parties—and I think the Liberal Democrats are split three ways. Those are the three political tendencies in this Chamber and across the world, and we must recognise the struggle between them. It is not recognised properly at the moment, because two of the tendencies are represented in my party, two in the Conservative party and all three in the Liberal Democrat party.

I have heard debates in this Chamber about Europe and about world trade rules, and I have heard the same speeches from all three Front-Bench representatives. None of them represented my view, or indeed that of the European workers who have just voted in the referendums.

There is a real problem. People are realising that giving away control of one's macro-economic policy by joining the eurozone was a disaster for Germany and Italy. It was beneficial to Ireland because it joined at low parity for its currency. It was forced to cut its interest rates and received a 5 per cent. net fiscal transfer to its economy from the European Union. Imagine if the British economy had received a net transfer from the EU of £55 billion every year. We should be doing pretty well, too. In fact, we are doing well without it.

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

I went to Ireland with the Select Committee on Welsh Affairs in 1997 shortly after I was elected. We met the head of the Irish development commission who said that although the European grants were nice, the real trick to the success of the Irish economy was corporation tax at 10 per cent.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

That is an interesting point and I should like to debate it with the hon. Gentleman, although I cannot help but feel that being forced to cut interest rates and being given 5 per cent. of one's economy is quite helpful.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

Surely, receiving £6 million from the Common Market every week for five years was what put the south into a good position.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I have an interest in this matter because my constituency includes the largest Irish community in the east of England. Many of those people came to England 20, 30 or even 50 years ago from extremely poor backgrounds and many are now returning to a prosperous country that has done well from its membership of the EU. The situation in Spain is similar; Spain still receives substantial net transfers. On the other hand, countries such as Germany and Britain have to make those transfers, and I shall refer to those contributions later.

More important is having one's currency cemented into a single currency at an inappropriate exchange rate and being unable to change it. The interest rates were too high for the German economy and Germany can do nothing about it. The Germans have even been told to cut their borrowing but that will deflate their economy even further and put it into a worse state. An economic crisis in Germany could give rise to unpleasant politics and if we do not consider that we may have problems. I can quite understand why 56 per cent. of Germans want the Deutschmark back.

Former Chancellor Erhardt, who created the German economic miracle, must be turning in his grave. He was not a socialist but a Christian Democrat who believed in moderate managed capitalism. He would say that the currency is obviously overvalued. He always kept it slightly undervalued to give Germany a competitive edge. That is how the German economic miracle was achieved—by building up a big trade surplus with every other country in Europe. Good business, if nobody notices. That is what Germany did in the past but now it is doing the opposite. Germany cannot solve its problems without withdrawing from the euro, recreating its own currency and adopting a more sensible macro-economic strategy.

The Italians are even further along that route. A member of the Berlusconi Government has called for a referendum on reintroducing the lira. I should strongly support that, albeit from a position on the left rather than from Mr. Berlusconi's Government, with whom I do not sympathise.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I thank my hon. Friend for his generosity in giving way again. Is he not making the same mistake as many people in France and elsewhere, in that he is discussing the euro and monetary union when in fact the vote should have been about a new constitution to make the EU work better?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

The constitution was a consolidation of earlier treaties to provide one treaty that covered all aspects of EU arrangements. Indeed, I have suggested in previous debates that there should be two treaties—one for the eurozone countries and one for the whole of Europe, so that we could separate the eurozone component. On that basis I might be more sympathetic to the proposal, although I am not saying that I would vote for it. If one could adopt the constitution without implicitly accepting Maastricht and the Single European Act, I should be much happier about it.

Photo of Graham Brady Graham Brady Shadow Minister (Europe)

Perhaps I can help. The hon. Gentleman may be looking for article I-8 of the constitution, which explicitly says:

"The currency of the Union shall be the euro."

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Indeed, and there are many more provisions relating to the European Central Bank and so on, so clearly the treaty covers the whole of Europe but includes the eurozone component, which should be separated. The majority of European Union members do not belong to the eurozone and many are unlikely to join—including Britain, one would hope. Indeed, it is just possible that the whole thing might dissolve fairly soon and we shall be saved the trouble. But we certainly would not join the euro at this moment, for all sorts of reasons, but particularly because it is very uncertain.

If or when one country, perhaps Italy, chooses to withdraw from the eurozone and recreate its own currency—which is possible; it is not too difficult—the whole thing could start to crumble. All it needs is for one elected majority Government in any member state of the eurozone to say, "We think this isn't working; we are going to withdraw," for the whole thing to start to crumble. We could then start again with a more sensible economic arrangement in Europe, based on each country having its own currency and its own macro- economic strategy but working together with the other countries co-operatively, in a sensible way but on a voluntary basis.

Photo of John Bercow John Bercow Conservative, Buckingham

I am grateful to the hon. Gentleman for being so generous in giving way again. It is most unfortunate that Mr. Hendrick is so coy about discussing the perfectly relevant subject, in this context, of the euro. Does Kelvin Hopkins think that might have something to do with the fact that, at any rate the last time I looked, the governing council of the European Central Bank comprised three Germans, two Dutchmen, two Finns, two Frenchmen, two Italians, two Spaniards, a Belgian, an Irishman, a Luxembourger and a Portuguese, and the Government have never been able successfully to explain how or why it would ever be in the long-term interests of this country to have the interest rate judgment made for Britain on the say-so of those people, who owe no loyalty to our economic interests?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

As so often, the hon. Gentleman has an encyclopedic knowledge of these things, which I do not possess. I did not know the nationalities of the European Central Bank council members, but I am interested in what he says. I believe that they are appointed for eight years. They are deliberately appointed in a way that ensures that they are not subject to political control by their own country. Deliberately to create an institution that controls one's economy, which has no responsibility to any kind of democratic structure, is an abnegation of democracy; it is daft economically, but in democratic terms it is extraordinary. I am interested in what the hon. Gentleman says, but I think that those people will spend increasing amounts of time pondering their navels in the next few years because the economies will be in difficulties.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I thank my hon. Friend for his excessive generosity in giving way to me a third time. Is he saying, then, that apart from the new provisions in the constitutional treaty, citizens of other countries are actually now passing judgment on every other previous treaty, as he is? Do the people who opposed previous treaties now want to bring the whole thing down? If so, why do not people say that they are for withdrawal from Europe and disintegration of the European Union instead of pretending that this is about the new provisions in the constitution?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I am very positive about Europe. I see myself as historically, culturally, linguistically and geographically European and I want Europe to work, but it will not work on this basis. That is the problem. I go to the continent of Europe for holidays every year. I like nothing better than France, Italy and Germany—they are wonderful places. I want them to work. I want to have good relations with my German, French and Italian neighbours. I want to enjoy their company, try to learn their language and even drink their wine, but I want us to do that on a happy, co-operative basis where we all volunteer to work together for our mutual benefit. I do not want to see half my trade union colleagues and half the socialist voters in Germany and France out of work because the economy is not working. So I want a Europe that works, not one that does not work, and the one that we have at the moment does not work.

I am not just going to whinge about the unfairness to Britain of things, because we are doing quite well—outside the eurozone, I may say, and several other countries are also doing quite well outside it, by contrast with those inside. Before I draw to a conclusion, I want to talk briefly about the rebate, because it is significant. It is not just about our money and their money. The gross contribution is currently about £12 billion, and it is likely to rise to £14.5 billion in three or four years, according to today's newspapers. Well, £14.5 billion is a fair amount of money. I should prefer it to be spent on hospitals, schools or pensioners, for instance.

I appreciate that there are countries in the European Union that are poorer than us. There should perhaps be transfers between rich and poor countries on a co-operative basis. The problem is due not to our giving money to poor countries, but to the perverse operation of the common agricultural policy. I have said here many times that we should abolish the CAP, and make the problem disappear. I have said, in the Chamber and in Committees, that if we want a fair budget that everyone would accept, we need contributions and receipts on the basis of differences in prosperity. Rich nations should contribute according to their ability, and poor nations should receive according to their needs. That would be fair, and everyone would know how it worked and would accept it.

I have suggested that many times in Committees. I do not know whether it was just me, but it is significant that the last EU document we looked at in the Chamber, shortly before the general election, specifically rejected my suggestion without giving any good reason. It said something along the lines of "It has been suggested that the budget might be distributed according to relative degrees of prosperity in the different nations of Europe. We reject that because, because, because . . . " I do not remember the precise reasons, but they were not very persuasive.

The CAP is not just unfair to us; it is unfair to the rest of the world. I have argued that if we want to subsidise agriculture, European member states should be able to do so from their own budgets. If there are countries that are poorer and countries that are richer and we want to work together to aid the poorer countries, there should be fiscal transfers from the richer to the poorer.

If we abolished the CAP, the budget problem—the rebate problem—would disappear. That is what Ministers should say next week when they discuss these matters with their European colleagues. If the CAP is abolished, we will not ask for a rebate. It is very simple.

Other people may say that the European Union might then start to fall apart, because the CAP is what glues it together. Inventing some grotesque form of agricultural subsidy to hold the EU together, however, is illogical and silly. We ought to work co-operatively, on the basis of international solidarity and a mutual interest in helping other Europeans—and, indeed, people throughout the world. We would all then be happy to be in the European Union, but a European Union completely different from the one that we have now.

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform 4:12 pm, 8th June 2005

The House heard a delightful maiden speech from my hon. Friend Mr. Vaizey. It was very competent, and we look forward greatly to my hon. Friend's future contributions. We also heard two contrasting speeches from Labour Back Benchers—Chris Bryant, who sadly did not wait to hear comments about his speech, and Kelvin Hopkins, with whom I have debated these matters on many occasions.

Those speeches showed that divisions on this European Union issue exist within the parties as much as between them. The hon. Member for Rhondda could offer no more elevating metaphor for the European Union than that of a corpse, or rather a near-corpse on a life support machine. All he could suggest was that the family, as he put it—presumably the other Heads of State—should gather round the bed to decide who should switch off the machine. That is not a very elevating or exciting vision of Europe with which to energise future electorates.

I agreed much more with what was said by the hon. Member for Luton, North, as I often do. He was right to tie the question of the euro to that of the constitution. It is pitiful to behold the dilemma of the German Government. They are trapped in a currency system that they do not control. They can do nothing. They have happily broken the ludicrous growth and stability pact, which was not delivering growth or stability, but they are still quite unable to change the value of their currency or let it adjust, or to change their interest rate. It is a pitiful sight to see the engine of European prosperity for so many years after the war reduced to that status—a terrifying warning of what happens when a country loses control of its currency.

Photo of Angus MacNeil Angus MacNeil Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs)

The right hon. Gentleman describes the difficulties of one-size-fits-all economic policies. I should like to point out that we in Scotland suffer from the same problems. Indeed, a former Governor of the Bank of England once said that the price worth paying for economic prosperity in the south was unemployment in the north. The right hon. Gentleman is right to say that once-size-fits-all economic policies create difficulties; they have certainly done so in the European Union and, indeed, in my constituency, which has lost 11 per cent. of its population in the past 10 years.

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

If the hon. Gentleman would advance the case for Scottish independence and win an election on that basis, he might be able to set up not only an independent Scotland, but an independent currency—he could debate that issue at that time—but I would observe that the United Kingdom is an optimum currency area because there is completely free movement and a great deal of labour mobility between the parts of the United Kingdom. I contrast that with the eurozone, which, as the chief economist of the European Central Bank has observed in recent days, is not an optimum currency area and is very unlikely to become one.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Within national economies, there is scope for substantial fiscal transfers, which can overcome the problem of having a single interest rate throughout an economy. However, within the EU, the fiscal transfers would be politically impossible because of their vast size.

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

The hon. Gentleman makes another telling point. Although there is no true analogy between the different situations, I would always examine the case for a Scottish currency in the spirit of rationality and fair play, but I would not recommend it.

I want to return to the Prime Minister's promise. It is a bad start to a new Parliament that the right hon. Gentleman has already broken a promise. It was quite explicit. In answer to me and Mr. Field, he said that in all eventualities, even if other countries said no, we would have a referendum on the issue. The Minister for Europe now says that the Prime Minister was answering a different question, but he was not, and the Official Report bears that out. Therefore, an apology, or at least a better explanation, is due from those who sit on the Treasury Bench before this debate is over.

Of course, it may well be that the Prime Minister—living, as he does, in a world of supranational European politics, where the public hardly ever intrude—has never countenanced the possibility that the public could ever wreck this party. That is a pretty feeble excuse, because Ministers were warned repeatedly and emphatically throughout the European Convention that those proceedings were not just ignoring but contradicting the instructions given to the Convention in the Laeken declaration of December 2001.

The Laeken declaration, drawn up by Heads of Government, was fairly candid about what was wrong in Europe. It referred to the gap between the people and the leaders, to the excessive bureaucracy and to the complexity of the treaties, and it mandated the Convention, on which I had the honour to represent the House, to create a more democratic, simpler Europe, closer to its citizens. That was the phrase used. It mentioned the possibility of creating a constitution only as an afterthought—that was not the instruction given to the Convention—but once the Convention started to sit, some of those involved forgot the instructions and went ahead with the constitution. Almost all the members of the Convention regarded it as their duty and priority to give more powers and influence to the very European institutions that were causing the problem in the first place, with every encouragement from the British Government. It is a bit late to say now that there should have been more thoroughgoing reform.

It is rather puzzling that Government spokesmen bait the Opposition about our demand for renegotiation. The process was the most profound renegotiation possible because it was envisaged that all the existing treaties would be repealed and replaced by the constitution and a new legal order. What could be more radical than that? Our position is that we want a genuine renegotiation that gives not more but fewer powers to Europe. I am not scared of the allegation that we want renegotiation. I lived through a failed renegotiation, so I want a proper one.

Even more scary is the fact that the Foreign Secretary is catching the European disease of trying to implement failed proposals by the back door. I was in the Chamber to hear his statement on Monday, in which he said that certain changes could be introduced by "other means". He even gave some examples, such as strengthening the role of national Parliaments. That is a complete fraud, because the constitution would not strengthen national Parliaments. The right hon. Gentleman might have been referring to the subsidiarity proposals, but that rule already exists in treaty, so the constitution is not needed to enact subsidiarity.

The only measure that was devised was that if national Parliaments objected to a proposal on the grounds of a breach of subsidiarity, the matter should be referred to the Commission so that it could decide whether to proceed, but we have such a system at the minute. I was a member of the European Scrutiny Committee in the last Parliament. The Committee often objected to measures on the grounds of subsidiarity and wrote to the Commission, which wrote back to say, "Sorry, we're still going ahead." There is no advance from that in the European constitution, so it is completely untrue to pretend that there would be a new great role for the House under it.

The Foreign Secretary cited changes to the voting system as a good example of a measure that should be implemented by other means. The constitution would introduce qualified majority voting in 63 new areas, including sensitive matters such as social security and the criminal justice system. That is intensely controversial, but according to the Foreign Secretary, it is a modest measure on which we can all agree, so he can slip it in without a referendum or even a proper treaty change.

The introduction of more qualified majority voting will simply give the European institutions the ability to legislate, but we do not suffer from too few directives and regulations. What is more, the Foreign Secretary has not explained that the mechanism for taking decisions by majority voting will become much easier. Rather than more than 70 per cent. of weighted votes being required to implement a measure under qualified majority voting, the percentage required will fall to 55 per cent. of member states, representing 65 per cent. of the population.

So, not only will qualified majority voting be extended to 63 new areas, but it will be much easier to get votes through. Does the Foreign Secretary think that the people of Spain were voting for that, and does he really think that the people of France and Holland did not object to it? I submit that that is precisely what people were objecting to. How can it bring Europe closer to the citizen if decisions about matters such as immigration, asylum, the rights of the accused in criminal trials and criminal procedures are taken away from member state Parliaments and the electorate after a general election and given to the European Union? It is a complete contradiction of the instructions given to the Convention on the Future of Europe. That is why people are saying no.

The problem transcends matters of left and right. The hon. Member for Luton, North comes at such things from the perspective of the left. I respect that. Of course, a great deal in the constitution should be anathema to a socialist, such as the instruction that competition shall be "free and undistorted". I do not know how many socialists there are left in the Labour party—

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

Well, there is one, and we listened to the hon. Gentleman and agreed with him, but not on this point.

Whether people believe in competition or not, it is wrong that a country should sign up to a constitution that forbids competition being overruled. Under the constitution, it must be free and undistorted, as stated in article I-3 of the constitution, judiciable by the European Court of Justice. Of course, the entire constitution has primacy over the laws of member states.

Whether the French or anyone else vote for a socialist Government in the future, they will come up against that fact, in the constitution, which forbids the creation of a socialist economy and society. From a right-wing perspective, those of us who believe in the free market find much to object to in the new powers over economic and employment policy. From our different perspectives, we both believe that such matters should not be decided in advance in a constitution, but should be left to future electorates to decide through the democratic system.

A proper constitution, like the American one, is a boxing ring—a set of rules—into which people get to fight it out according to the democratic process. Once those decisions are removed from an electorate and entrenched in a constitution, there is less democracy, not more. That is why the French and the Dutch voted against the constitution.

The Government have retreated into a hope for European economic reform. I hope that they have told their Members of the European Parliament about that, because they recently voted against the working time directive opt-out in defiance of their Government. Labour MEPs do not believe that working hours should be set by national Parliaments. They want all such matters transferred upwards to the European Union.

Then there is the Lisbon process, which we all remember being launched five years ago. We also remember what the Prime Minister said about it. It marked

"a sea change in European economic thinking. It points Europe in a new direction . . . The Lisbon European Council represents a turning point in Europe's approach to economic and social policy."—[Hansard, 27 March 2000; Vol. 347, c. 21–22.]

It did nothing of the sort. Many reports since then, including some from the British Treasury, have shown that nothing has changed. The only hard-edged proposal to come out of the Lisbon process is for the services directive, and that has been abandoned as an unsuccessful and futile bribe to the French electorate.

By all means let the Government promote economic reform, but it is essentially a matter for each country. If the French want to opt out of the world economy to have a protectionist system, let them do so. It is rather odd that the supreme aim of British foreign policy is to insist on reforming our business competitors. In return for struggling to reform the French and German labour markets, we face a blizzard of job-destroying and business-destroying regulations. We pay nearly £4 billion a year in an annual tribute only to be told what to do. We cannot even suggest the obvious reform in Europe, which is to get out of the euro. It is still Labour party policy—official Government policy—that we should join the euro and be submitted to the same rigours of economic policy as the wretched Germans.

The point is this: even if we succeed in magically transforming the entire economy of Europe, it does not solve the problems identified in the Laeken declaration—the alienation, the gap between rulers and ruled, the fantastic complexity of it all, which the constitution has, of course, made worse. I have here the existing treaties—bad enough at 184 pages of pretty complex provisions, but nothing like as bad as the Foreign Office version of the constitution, which runs to 511 pages even though the draftsmen were told to reform it, so in fact that is the simplified version. In the Convention I made the modest proposal that, if our aim was to simplify Europe, we might start by attacking the acquis communautaire. Of course, my proposal was ignored.

In fact, the position is getting worse. As I said, I was a member of the European Scrutiny Committee, which last year examined 1,080 new bits of European regulation—more directives, more laws, more regulation adding to the acquis communautaire. There is no appetite or drive for simplification, and if there is, it is not shared by the Government. It is all talk. My group of friends in the democracy forum in the Convention tabled specific amendments to prune the European institutions, to reduce the budget and to get the institutions to listen to the European Court of Auditors. Not one of our proposals was supported by the British Government representative on the Convention.

Photo of John Bercow John Bercow Conservative, Buckingham

Does my right hon. Friend not think that his argument is strengthened by reflection on the wording of the provision on subsidiarity and proportionality in the treaty of Nice? That states:

"The application of the principles of subsidiarity and proportionality shall respect the general provisions and the objectives of the Treaty, particularly as regards the maintaining in full of the acquis communautaire and the institutional balance".

In reality, where there is exclusive competence, subsidiarity and proportionality do not get—and are not intended to get—a look in.

Photo of David Heathcoat-Amory David Heathcoat-Amory Shadow Minister, Work & Pensions & Welfare Reform

My hon. Friend makes an unanswerable point. The subsidiarity requirement has been in the treaties since 1992 and has been widely ignored. His other point is also extremely valid. Subsidiarity is exempted from those areas in which the European Union has exclusive competence—areas that the constitution expands, thus making the position worse. As long as it is in the hands of the very institutions that do so well out of defying it, there is not the remote possibility of subsidiarity being made a reality.

The ultimate arbiter of subsidiarity, as of everything else, is itself a European institution: the European Court of Justice. Just as the Supreme Court in the United States was the engine of federation after the republic was founded, so the European Court of Justice performs the same role in the European Union. My small group of genuine reformers in the Convention tabled more than 400 amendments to tackle some of those issues, all of which were ignored. However, I think that we had something to say—not on behalf of the Ministers and Governments of Europe, but on behalf of the people of Europe.

I believe that there is another Europe trying to be born. To my hon. Friends I say that, if we are to modernise the Conservative party, we must take it upon ourselves to try to modernise Europe and our relationship with Europe as well. We can start to rise to that challenge by listening to the electors of France and Holland. In the short term, the task must fall to the Government. Rather than fiddling around with a few cosmetic reforms or trying to implement bits of this wretched and discredited constitution by the back door, the Government should grasp the opportunity for Britain to take a genuine lead in Europe. Deep surgery and fundamental reform are needed. The opportunity exists to take a lead in Europe and to create a people's Europe rather than a Europe for politicians.

Photo of Wayne David Wayne David Labour, Caerphilly 4:35 pm, 8th June 2005

Last week I went to Brussels, to speak not to Members of the European Parliament or to members of the Commission, but to a group of young people drawn from Belgium, the Netherlands and France. The purpose of my visit was to hear from them at first hand their views about Europe, the European Union and the referendums in France and in the Netherlands.

Most of those young people had voted no in the referendums. When I pressed them on that there was no simple and straightforward answer by any means. Many of those young people felt alienated from the political system in their respective countries. Many of them also felt alienated from political elites. That was not only at a European level, but also at a national level. Many did not relate to politics in the traditional definition of that term. That alienation found expression in voting no in the referendums.

Many of those young people felt aggrieved by the policies being pursued by their respective Governments. There was some personal hostility to President Chirac and Prime Minister Raffarin. There was no uniformity in terms of what the young people were rebelling against but there were certain European policies which they did not relate to, understand or see in their best interests. Those sentiments also led those young people to vote no in the referendums. Let us just say that what happened among young people in France and in the Netherlands defies simplistic analysis—it is a complex phenomenon. What happened is not, however, peculiar to young people in France and in the Netherlands. We must be careful not to say that it is all down to the EU because people feel alienated from it. The malaise goes much deeper than that, and we must be honest in appreciating that.

Although there was a difference of opinion between the young people whom I met about why they voted no, there was no widespread opposition to the idea of European co-operation and association. Many recognised that the EU had contributed to the fact that we have had peace in the European continent for the longest time in its history. They recognised that, appreciated that, and wanted that achievement to be preserved.

They recognised also that on issues such as the environment it was necessary in the modern world for national Governments to co-operate and not simply tackle the problems of environmental despoliation nationally. They understood that there was a need for European and transnational co-operation generally on such an issue.

A few of them recognised, too, that there is a need in a global economy, where increasingly we see trade blocs being established, for the EU, on behalf of the people of Europe, to have a powerful voice in organisations such as the World Trade Organisation. Above all else, although there was a raft of reservations, they recognised that people in different countries in the EU see themselves as not located in one particular or narrowly defined labour market. They understood that people see themselves as perhaps having a choice to work in their own region, their own country or elsewhere in the continent of Europe. They understand that the single European market has helped to bring that about. We are seeing more and more young people travelling across the EU and across the globe, taking advantage of the new opportunities that are opening up.

I took some encouragement as someone who believes in European co-operation, in which I believe our best interests lie. The young people to whom I spoke were not embracing a narrow, inward looking nationalism. They were groping towards a future new definition of their involvement in Europe. That is something that this country needs to take into account.

I was intrigued by the comments of Opposition Members, particularly Dr. Fox. There was a significant elaboration of Conservative policy today, the likes of which we have not witnessed for some time. If I analysed the hon. Gentleman's comments correctly, he was questioning not the usual things that Conservative Members question such as the extension of qualified majority voting, but a fundamental cornerstone of the European Union—the single European market. In the past, many Conservatives called for a rapid completion of the single European market, and Labour Members are doing so now. However, the hon. Gentleman called for a re-examination and unpicking of the whole ethos of the single European market. That has profound implications, because the single European market is the most important part of the European Union. It has proved to be of great economic benefit to the UK, let alone other countries.

In contradistinction to Opposition Members—I am sure that they will make their arguments more vehemently in the coming months—Labour Members, in association with members of other parties who wish to join us, will make a positive restatement of the case for European co-operation. It is incumbent on us, however, to say clearly that we do not want a centralised Europe or a European superstate. We do not want what some continental Europeans call a federal Europe. We want a Europe based on individual nation states working in co-operation and harmony. Where there is commonality, there must be deeper co-operation. If that is our starting point we can begin to hold a long overdue debate with the British people. If we are honest with ourselves we will accept that there is a great deal of misapprehension, confusion and, without wishing to be patronising, ignorance among the British people about what the European Union is and what it could be. We must go back, as I said, to basics, and talk about what European co-operation involves. The fine detail of the constitutional treaty or the ramifications of directives and regulations are not important, but there is a basic necessity for us to work together as European people with mutual self-interest. That fundamental case has to be made in the UK, and our presidency of the EU provides us with the ideal opportunity to do so.

As well as providing an opportunity to make the case for Europe, the British presidency will allow us to consider what happens once the treaty receives its official death knell. It is important that we are not locked into the view that it is a take it or leave it document. Some members of the European Commission have hinted that we might accept it through the back door, but that would be quite wrong. On the other hand, some believe that the whole enterprise is dead and the treaty is best forgotten. We should be honest and accept that there were good things in the constitutional treaty, which is why many of us were prepared to argue vigorously for a yes vote in a British referendum. It is therefore incumbent on us to look carefully at which parts of the constitutional treaty can be implemented in a constructive and consensual way.

I was pleased that the Foreign Secretary suggested on Monday that we could focus on increasing the involvement of national Parliaments in the European decision-making process. I listened carefully to Mr. Heathcoat-Amory on that matter.

I must be honest and say that I would have liked the stipulations on national Parliaments in the constitutional treaty to have been stronger, but I nevertheless recognised that it was a good starting point. We must build goodwill among national Governments and, indeed, members of the European Commission, so that when the Commission floats ideas on a European level, the initial stages of legislation come to national Parliaments for consideration. That does not happen now because, as the right hon. Gentleman knows, much of the European legislation that comes to this House, and to the European Scrutiny Committee in particular, has already travelled some way down the line.

The draft constitutional treaty proposed that as soon as the European Commission had an idea—a law in gestation—it would be considered by national Parliaments. I want national Parliaments to continue the process of extending co-operation at a European level through organisations such as COSAC, so that they can exercise a collective voice as well as their individual voices.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

Will my hon. Friend therefore support this simple change, which the British Government could introduce now and which has been advocated frequently: the European Scrutiny Committee should be able to accept and vote on amendments? If necessary, such votes could be brought to the Floor of the House. The change could be made immediately, and it would resolve many of the difficulties that concern my hon. Friend. It would also address the concerns of young Dutch people, who have not had the opportunity to vote on many of the things that have been imposed on them from above since the inception of Benelux.

Photo of Wayne David Wayne David Labour, Caerphilly

My hon. Friend has made an interesting point, but I ask her to note that the European Scrutiny Committee currently has a scrutiny reserve, which it can ask the Government to take into account—if the Government were to fail to do so, they would have to account for their action in Committee—and that scrutiny reserve should be examined and possibly strengthened. I hope that hon. Members will take seriously the Modernisation Committee's recommendations on how European scrutiny can be improved in this House.

Frankly, it would be nothing short of a disaster if hon. Members assumed that we should not discuss European scrutiny in this House because the constitutional treaty has reached the end of its life. We should recognise that recent events are a catalyst for our taking our European obligations far more seriously in this House. I believe in the implementation of the principle of subsidiarity. Leaving aside possible religious connotations, subsidiarity is about national Parliaments exercising the greatest possible say about European legislation, and we must make sure that our own structures are as effective as possible in order to do so.

Whatever reservations people might have about the EU's economic role, there is a general consensus that if the EU has a meaningful function, it is to stimulate job creation through the single market. This debate has shown that the single market must be made more effective, and many of our continental partners must ensure that their markets are more in tune with what is happening in the UK, which is why the Lisbon agenda is vital. The Lisbon agenda is about improving efficiency and competitiveness, and we must use the British presidency to make sure that that takes place.

But let us be clear too that this is not an abstract economic debate—it is all about creating a dynamic British and European economy because we are linked together in the interests not of a self-serving elite but of the ordinary people of this country. We are close to full employment in this country, and that is because of effective economic policies. We need to ensure that we move towards a situation of near-full employment in the rest of Europe, and the way to do that is to ensure that the Lisbon agenda is implemented effectively and vigorously. We must make the connection between what people want and need and what is possible through European action. That connection is not always made by politicians.

These and other issues must be debated vigorously in this House and across the length and breadth of this country during the next few months. The debate needs to be honest, as well. If some Conservative Members believe that the real agenda is not about how to make Europe more effective and more in tune with people's realities, but how to unpick the single market of the European Union and manoeuvre us towards a situation in which withdrawal becomes a serious option, then for goodness' sake let them say it openly, publicly and clearly, so that we all know where we stand.

Photo of Tobias Ellwood Tobias Ellwood Opposition Whip (Commons)

The hon. Gentleman talks about a full debate. Surely that includes listening to the people, and one way in which we could do that is by having a full referendum on the constitution.

Photo of Wayne David Wayne David Labour, Caerphilly

I thank the hon. Gentleman. I do not know whether he was here earlier, when that issue was debated and, I would say, exhausted. Ultimately, we have to recognise that the constitutional treaty would come into effect only if there was agreement by all member states of the European Union. Two member states have already rejected the European constitution, and the conclusion is pretty self-evident.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

I ask the hon. Gentleman this simple question: if, as he says, this situation has arisen because two members have voted against, why does the Prime Minister want us to go ahead and wait for the ratification by the rest of the members of the Union?

Photo of Wayne David Wayne David Labour, Caerphilly

It is not for me to speak for the Prime Minister, but that is not my understanding of his position. The Government are saying, quite sensibly, that we should wait to hear what our partners have to say in the European Council. We are part of the European Union, and I would like to see a collective decision, but as far as I am concerned it is pretty obvious where matters are leading and in which direction we are pointing.

It is vital that we have an honest and open debate in the country. As some Members have said, we are at a crossroads in Europe's development. We have to take the debate away from elites, whether they be in the European Parliament, in the Commission, in the Council of Ministers or, indeed, in this Palace of Westminster, and have it with the people of this country. I am absolutely confident that the arguments are overwhelming, but if the debate is held openly, honestly and frankly, the people of this country will recognise the worth of European co-operation, as they have in the past. We have a marvellous opportunity to have that debate over the next six months when Britain takes the presidency of the European Union and will give an effective lead not only to Europe, but to this country.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Before I call the next speaker, I point out that many hon. Members are waiting to try to catch my eye and that unless speeches are considerably shorter, many people will be disappointed.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party 4:54 pm, 8th June 2005

As I sat and listened to the debate, I was reminded of what happened in the House, of which I was a Member, when we voted ourselves into the Common Market. I remember one incident in particular. The Tory Government depended on the votes of the small Liberal party but Labour colleagues thought that Liberal Members would remain faithful to them. The leader of the Liberal party was sitting in the seat directly in front of me and, at the end of the debate, a Labour Whip—I shall not name him—took his Order Paper and smacked the Liberal leader over the head. The House was a bedlam. That was our entrance into the Common Market.

It is strange to note that people on both sides have changed their views. Mr. David was a Member of the European Parliament, of which I was also a Member. The first time I went to Europe, the Labour Benches were filled with people who were anti the Market. The Tory party was divided. Some members were against the Market and others wanted it as it was. However, that has changed over the years.

For the first time, everyone in the United Kingdom has to face the fact that the European Union has not been what the politicians painted it to be—Conservative, Labour and other politicians painted it to be something different. The reality for those of us who sat in the European Parliament for many years—I sat there for a quarter of a century—and watched the proceedings was that certain allies came together in the government of the Common Market. They were intent on doing what they wanted their way. I believe that the people of Europe have realised that and they are saying, "We will not be dictated to by the Government and elite of our country. We are going to show them that we have strong feelings about the European Union."

That feeling was manifested in the French. Who would ever have thought that the French would turn against the EU? Who would have thought that the Netherlands would turn against it? However, they have. We are now faced with deciding whether to heed those people's message or try to stop the people of other countries from giving their message. I believe that the United Kingdom and its people should have the opportunity to give its judgment on the matter.

It was convenient to have a referendum in the offing during the election campaign. It was a good way of putting off consideration. The EU was not an issue in the campaign because those who were asked about it simply said, "Oh, we're going to have a referendum," thus putting it on the back burner. However, the time has come for this nation to have an opportunity to express itself on the issue.

I was interested in the speech of Chris Bryant, who told us—another hon. Member has already repeated it—that the Union was lying there and no one knew whether it was dead or alive but the machinery was working. He said that everyone would come and decide whether to switch it off. Do we want our country to be governed by such a Government? People are looking for a Government who know what people need and who will honestly face up to the wishes of the people and to what they promised the people.

It seems in this debate that, if someone speaks against what is happening in Europe, they are accused of wanting to get their country out of Europe. I fully believe that there needs to be co-operation between the states in Europe. We all need that co-operation. Anyone who has read European history knows that it is necessary for the European states and their national Governments and Parliaments to get together to pursue their own mutual interests and to deal with the issues that affect their people. I am all for sovereign Governments co-operating with other sovereign Governments on the things that they can do together to secure the best way forward for the people, but I do not believe that a superstate should be created.

Opponents who take a different view must realise that there are those in Europe who want to create a superstate. Federalism as we know it means handing over certain powers to a central body. If the people who hand over those powers want to recall them, they can do so, but the superstate then says, "We will give you a little bit, we will give you something more, but we will dish out what we want and keep the powers that we want." By doing that, it robs the Parliaments that make up the nations of Europe of real power.

The people of Europe know nothing about a little village in my bailiwick called Ahoghill. Some of the Ministers from here who visit me say, "Ian, what about this village, Ahoghill?" I say, "You could go down and ask about it and you will never find it." The decisions affecting that village should be made as near to the people as possible. That someone in an office in Brussels should have the right to say "That will go there and that will go there" is nonsense. There would be bound to be opposition from the people. The people need to be heard. We will have respect in this nation only when the people can say that the politicians are doing what they said they would do, but we in this House cannot do what we promised if there is a superstate out there that can call the tune for us all. I do not want to dance to the European tune. I want to dance to the nation's tune. We all have to face up to that.

I have heard you say, Mr. Deputy Speaker, that you do not want long speeches. I am reminded of the apostle Paul, who in a certain part of scripture kept saying, "Finally, brethren." I am not going to do that. I am going to sit down now.

Photo of Mark Hendrick Mark Hendrick Labour, Preston 5:03 pm, 8th June 2005

From what started off as a European coal and steel alliance in 1951, born from the ashes of the second world war, the countries of Europe have evolved into a huge trading bloc with 450 million customers. From just six countries—Belgium, Germany, France, Italy, Luxembourg and the Netherlands—Europe now finds itself, as many other hon. Members have said, at a crossroads. In 2004, the EU saw its biggest ever enlargement, with 10 new countries joining. The markets of all the nation states have now been harmonised and integrated by the introduction of rules on consumption taxes, such as VAT, on excise duties, common standards and labelling. Much of that evolved from the Single European Act.

I must confess to being amazed when I heard the shadow Foreign Secretary earlier today. He seemed to suggest a substantial shift in the Conservative party's position on Europe in the direction of throwing into doubt his party's commitment to the Single European Act, which was supported by the Thatcher Government at the time. When Angela Browning talks about replacing common standards and harmonisation with mutual recognition agreements, she is talking about unravelling generations of agreements between the member states of the EU and moving towards the idea of Europe as a free trade area.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

What does the hon. Gentleman think of the fact that the EU has more than 60 bilateral agreements, with countries as far away as Mexico, on favourable tariff terms, but without the harmonisation directive that is the cause of all the regulations that the House has to deal with?

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I am happy to answer the hon. Lady. Those bilateral agreements are important and help to ensure that goods coming into the EU meet appropriate European standards. If they do not meet them, they cannot be traded within the single market. That is the simple answer to the hon. Lady's question.

While economic integration has moved on at a pace, political and social integration has been much slower. That is clearly the result of differences of opinion about the EU's role. As we have heard in today's debate, there are genuine differences over which internal European policies are acceptable or unacceptable. We have seen over recent weeks, particularly in connection with the referendums, that there are divisions within, as well as between, countries about the future direction of the EU.

To those who have an apocalyptic vision of the significance of the referendums in France and Holland—believing that they bring the EU into reverse—I say that I recall the referendums in Denmark and Ireland. The Government have called for further reflection and discussion, and the beginnings of the necessary debate will take place at the European Council of Ministers next week. I am sure that a resolution of the problems now faced by the French and Dutch Governments will be reached, so that Europe can continue to move forward.

Photo of John Maples John Maples Conservative, Stratford-on-Avon

Is the hon. Gentleman seriously suggesting that the main conclusion to be drawn from the overwhelming French and Dutch no votes is that the people of those countries should be asked to think again?

Photo of Mark Hendrick Mark Hendrick Labour, Preston

What I am saying is that those no votes cannot mean the end of the EU's development. Agreements are needed between the 25 member states on how to proceed in future. We can now fall back on the Nice treaty in respect of the governance of the 25 member states, post-enlargement, but that cannot be the end of the story. Rev. Ian Paisley, who served with me in the European Parliament and speaks for the Ulster Unionists, explained that when Europe was originally sold as a common market, it was very different from the EU that we have today. He is quite right. Europe has developed over many years, and such development needs to continue because the world is changing around us. If we want European development to continue, the no votes in France and Holland cannot be the end of the story.

Photo of Justine Greening Justine Greening Conservative, Putney

How many no results from referendums would be necessary before the hon. Gentleman took a different view—that the people of Europe should be listened to?

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I thank the hon. Lady for that question. If people in other countries also vote no in referendums, the treaty that was agreed will have to be revised, but Europe will continue to go forward. It will not be the old Common Market that we joined, but it will be a Europe that retains social and political integration.

Photo of Keith Vaz Keith Vaz Labour, Leicester East

My hon. Friend must be right to say that the fact that people in France and the Netherlands decided to vote against the constitution does not mean that we have reached the end of the European project. Does he agree that the nations of Europe will still be able to make progress on common issues, and that it would be quite wrong to stop that process? Where there is common agreement among the 25 member states on reform initiatives, it is our duty to ensure that they are taken forward.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I totally agree. In the future, member states that do not want to go forward on particular issues may choose to go it alone, and that is already happening in one or two cases. I am not in favour of a multi-speed Europe. I have argued, both in this House and in the European Parliament, that we should not go down that road, but it would be unrealistic to expect total agreement on every matter among all 25 EU member states. I believe that the debate on that matter will develop over the coming months and years.

Photo of John Bercow John Bercow Conservative, Buckingham

We seem to be edging slowly towards clarity on this matter. The hon. Gentleman replied to my hon. Friends the Members for Stratford-on-Avon (Mr. Maples) and for Putney (Justine Greening) in a studiously ambiguous way. Does he accept that the people of France and the Netherlands cannot be corralled into acceptance of an increase in the EU's legislative power, given that they have said no to that so decisively and explicitly?

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I cannot speak for the motives of the voters in France and the Netherlands in their rejection of the constitution. I am sure that many voters in both countries agree with much of what was on offer, just as they obviously disagreed with other elements. I would never assume, however, that the no votes in those countries mean that all the voters disagreed with everything proposed in the constitution.

The decision-making framework designed for the six original member states has evolved through successive treaties into what is clearly an unwieldy set of procedures, as Mr. Heathcoat-Amory so aptly put it. Nevertheless, the streamlining offered by the constitution is a step in the right direction.

If it is nothing else, the EU is a family of democratic countries committed to working together for peace and prosperity. It is not a state intended to replace existing states, but it is bigger than any other international organisation. The EU is unique. Its member states have set up common institutions, to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at a European level. We call that pooling of sovereignty European integration, which is what the whole process is about. Clearly, it is what Opposition Members are most opposed to.

The right hon. Gentleman, who is no longer in the Chamber, described himself as a genuine reformer. In fact, I think that he and some other Opposition Members are not reformers, but wreckers. I shall be blunt: some people are rejoicing about the no votes in France and Holland not because they disagree with the constitutional treaty proposals but because they disagree with the consolidation in the new treaty of all the other treaties going back to the treaty of Rome and the origins of the EU. So when hon. Members talk about the people of France and Holland having spoken, some mean that they genuinely believe that all those treaties should be revoked and we should return to a Europe in which member states are not joined in a common union.

Photo of John Bercow John Bercow Conservative, Buckingham

I fear that the hon. Gentleman distorts his argument through over-emphasis and that he has just erected an Aunt Sally. Although of course some people oppose the constitutional treaty because they oppose the EU per se, it would be unwise and arrogant to assume that they constitute the majority of objectors. A much larger number of people would like the European Union to work better and support much of what it does, but believe that the treaty would take it in the wrong direction. Their opposition is not about absolutism or withdrawal, but legitimate criticism of the institutions.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I take in good faith the hon. Gentleman's assertion that not all of his colleagues are totally opposed to all of the treaties. I did in fact say "some" when I made my comment. There are some genuine reformers among the Conservatives, but when hon. Members talk about the European Union going in the wrong direction but offer no alternative direction, I question their commitment to it.

Photo of William McCrea William McCrea DUP, South Antrim

Had the voters of France and the Netherlands voted yes, would the hon. Gentleman suggest that the rest of Europe should listen to them and honour their wishes? If they were given time to reflect and an opportunity to vote again, would it not be advisable for them to know the mind of the people of the United Kingdom?

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I take it that that is a roundabout way of asking whether we should have a referendum. The House will be aware, from my comments to my right hon. Friend the Foreign Secretary on Monday, that I am not in favour of referendums. However, I am not the Prime Minister, and never will be, and the decision is not in my hands. I hope that that answers the hon. Gentleman's question.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

It is the stated position of the Conservative party that we oppose the constitution in principle, as well as content. Constitutions are for countries, because they are a hallmark of nation statehood. Conservatives may have differing views on Europe and where it is going, but our stated position is opposition to the constitution in principle.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I accept the hon. Lady's interpretation, but I have heard differing views, not least in today's debate. Not everybody in her party takes that view, in the same way as not every Labour Member agrees with the Government's position in supporting the constitution or, for that matter, joining the single European currency.

The EU deals with many other issues of direct importance to our everyday lives, including citizens' rights; ensuring freedom, security and justice; job creation; regional development; environmental protection; and, of course, making globalisation work for everybody. Europe and society need rules. Globalisation needs rules, which is why we have the World Trade Organisation. Like many other Labour Members, I am not in favour of many of its rules and the way in which it operates, but we accept the need for rules.

I genuinely believe that the European Union has delivered half a century of stability, peace and prosperity. It has helped to raise living standards, built a single Europe-wide market, launched a single European currency and strengthened Europe's voice in the world. It has brought unity in diversity. The continent has many traditions and languages, but it also has shared values. The EU defends those values and fosters co-operation, promoting unity while respecting and preserving diversity. In the increasingly interdependent world of the 21st century it will be even more necessary that every European citizen co-operates with people from other countries in a spirit of curiosity, tolerance and solidarity.

To refer again to the intervention of the hon. Lady, I have no hang-ups about the terminology—whether the document is called a treaty or a constitution—but we would not be having this debate if it had simply been called a treaty. People's hang-ups about the word "constitution" make it much more difficult to agree to the document, especially for people from the UK, which has no written constitution. However, it has been called a constitution, and simplifying the overlapping series of treaties and protocols that provide the current legal basis for the EU is important. It is important to enhance and streamline the decision-making procedures of the Union now that 10 countries have joined the previous 15. It is also important to enable citizens to feel much closer to the EU by giving national Parliaments more say in how it is conducted. That is what the constitution does.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

I have been following my hon. Friend's argument closely. I point out that I have a long history of arguing with Mr. Heathcoat-Amory, and indeed with other members of his family, so I do not always accept his ideas, but does not my hon. Friend feel that the case being made, stated plainly by someone who was part of the negotiations, was that far from enhancing the powers of national Parliaments the constitution widened the number of subjects over which European institutions took control? Far from extending democratic involvement, the constitution narrowed it.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I take my hon. Friend's point about the comments of the right hon. Member for Wells, but he was part of the minority group on the Convention. The majority view was the one supported and signed up to by the 25 member states. For the first time, we have a treaty that has been agreed by European politicians rather than in smoke-filled rooms, as was the case before the European Convention was set up.

The treaty establishing a constitution for Europe is extremely important and although it is clearly not acceptable in its current form, as we have seen in other member states, something similar, changed to make it more acceptable, will nevertheless be required in the future. As I said earlier, the story does not end here. The Prime Minister's announcement that he would consult UK citizens created widespread concern, as we have heard today, about the possibility that the UK might reject the constitution, which in the longer term would jeopardise the ratification process. It might also give rise to the possibility, perhaps to the amusement and probably with the support of some Opposition Members, that the UK could one day be outside the EU, although that is probably extremely unlikely.

Of the countries that have held referendums, two have said no and Spain has said yes. The question that was framed for a United Kingdom referendum was:

"Should the United Kingdom approve the treaty establishing a constitution for the European Union?"

I think that the question should go even further, because as we have seen in today's debate, certainly from my hon. Friend Kelvin Hopkins, some people are saying that they not only oppose the new provisions in the treaty, but wish to vote on all the consolidated texts of previous treaties, which are in the new constitution. For me, that provokes only one question: should we hold a referendum on whether we should stay in the European Union, and inform people beforehand that if the result of the referendum is yes, a new treaty will be accepted?

Let us assume that, eventually, a treaty or a constitution will be adopted by all member states of the European Union. What will have been achieved? What will the European Union have become? Will Europe ever be truly and genuinely united? Earlier, I said that the European Union is a family of democratic European countries, committed to working for peace and prosperity. It is not a state intended to replace existing states—contrary to what some people have said in the Chamber, the EU was never intended to be a state or a superstate—but it is more than any other international organisation. It is becoming an economic superpower purely because of the size of the EU internal market; the fact that all trade agreements are now negotiated by the European Union, not by individual member countries, is an important testament to that fact.

Obviously, this negotiating power gives the EU weight in the WTO negotiations. However, it is not an economic superpower governed from the centre. The EU budget accounts for just over 1 per cent. of GDP and comes nowhere close to the size of a federal budget, such as exists in the United States. So the EU is an economic superpower but it certainly is not, and is never likely to be in the foreseeable future, a competing military superpower, as some Members have suggested—but it has ambitions.

Photo of Justine Greening Justine Greening Conservative, Putney

Thank you for allowing me to intervene. You just talked about the size of the EU budget being minimal compared with that of the US. Are you saying that you believe it represents value for money?

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. May I just say very gently to the hon. Lady that we do not use the word "you" when we are addressing people in this place; it is the hon. Gentleman. The hon. Lady has made her maiden speech now, so I hope that she does not mind my mentioning that.

Photo of Justine Greening Justine Greening Conservative, Putney

The hon. Gentleman talked about the percentage of GDP spent in Europe on running the European Union and related it back to the United States. May I take it that he therefore believes that the European Union's budget represents value for taxpayers' money?

Photo of Mark Hendrick Mark Hendrick Labour, Preston

Well, at the moment I think it does represent value for taxpayers' money. I have certainly seen in my own region the benefits of European Union structural funding, which has created thousands and thousands of jobs and continues to improve the north-west of England.

Photo of Michael Connarty Michael Connarty Labour, Linlithgow and East Falkirk

I commend my hon. Friend for his consistent argument. As a member of the European Scrutiny Committee, he was one of the people who scrutinised the European Union properly. This Chamber, including Opposition Members, has been criticised by some for not properly scrutinising the European Union over the last 10 years. However, when he mentions the economic factors, is not the truth that straw men are being made here? In Holland and France, the constitution became a symbol for the left, including the socialists, to attack because they did not want to restructure, modernise their economy, get flexible labour markets, and do what the Opposition have been calling for for some time, which is to perform as economic units without prejudice, and in a fair and equitable manner as we do in the UK. Is not the truth that we are debating the failure not of the constitution but of those countries to take the consequences of a proper European common market?

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I agree with that analysis. I was not going to raise this, but it is interesting to note that the far right and the far left in France have come together—with, obviously, the help of others—to scupper the constitution. It would seem that the sensible mainstream has been drowned out by those voices. Nevertheless, we are where we are.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I am somewhat bemused by the hon. Gentleman's statement that the European budget has benefited the people of Europe. How does it benefit the people of Stuttgart, who have been so dependent on the Mercedes company over the last 10 years? I should be interested to hear the answer, and I am sure that they would as well.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I was not aware that the European Union was funding the Mercedes-Benz company, or, for that matter, the company in the city of Stuttgart. I fail to see the hon. Gentleman's point. Does he wish to repeat it?

Photo of Brian Binley Brian Binley Conservative, Northampton South

The hon. Gentleman will know that the number of people employed by the company in Stuttgart has fallen dramatically over the past 10 years. I wondered how he felt that the European Union and its budget had helped those people specifically. I think they would tell us that they have not been overly helped.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

I genuinely accept the hon. Gentleman's point. In fact, I would ask the people in Stuttgart what help they would have expected from the European Union. Similarly, what help would the people at Rover in the west midlands have expected? In the west midlands, and in that region of Germany, economic development agencies will be seeking alternative sources of employment for them. Many infrastructure or business projects will find their way into those regions through European funds, and alternative employment will be found in due course.

As I said earlier, the EU is an economic superpower, but not—and never likely to be—a military superpower. On the contrary, there is a continuing commitment to NATO, and the disparate forces that make up the European arm of NATO are far from being coherent at present, although—as we are now seeing in Kosovo—they are well suited to individual tasks.

There is huge scope for further consolidation of European defence equipment manufacturers, and defence industry co-operation continues apace to improve capability. The growing research and development elements of defence expenditure mean that pooling of resources by European companies is the only way forward. However, that is more an economic measure aimed at competitiveness with the US defence giants, for example, than a strategy for a European defence force.

In political terms, the creation of a European President and Foreign Minister to speak for the Union would give Europe a more coherent voice. I believe that that would be effective in relation to issues of soft diplomacy, when the lowest common denominator will suffice in terms of the EU's response to an international situation involving, for instance, humanitarian aid or peacekeeping efforts. When it comes to hard diplomacy, as we have seen in cases such as the war in Iraq, that will not suffice. The European Union countries will continue to adopt their own policies, and, of course, retain sovereignty over the use of their armed forces.

I see a more united Europe functioning better as a single market, more coherent as a political voice in the world and co-operating more economically and politically, as it will need to if the economic and political challenges facing Europe over the next 10 to 15 years—for example, competition from China and India—are to be met by the west. The European Union has been an extremely successful experiment in international co-operation to create a family of nations that will never go to war again. I see it as the embryo, or model, of a family of nations that I would like to see across the globe, which could improve and enhance the United Nations. The EU has a big role to play in that respect, and I look forward to our achieving it in a united Europe.

Photo of Philip Dunne Philip Dunne Conservative, Ludlow 5:34 pm, 8th June 2005

I am grateful to you, Mr. Deputy Speaker, for the opportunity to address the House for the first time, and I am pleased to follow Mr. Hendrick. Your predecessor encouraged us to be brief and I shall be relatively brief in accordance with his advice.

I am particularly pleased to speak in a debate on such a vital topic at such a pivotal stage in European relations. I feel honoured to be in the company of such distinguished architects of the Conservative party's position on European subjects, not least my hon. Friend Mr. Cash. I am pleased to say that he is one of my constituents and he chose to vote in my constituency rather than his own. I am only sorry to say that he is not with us at the moment to hear me praise him.

I am pleased to follow my right hon. Friend Mr. Heathcoat-Amory, who has been such a champion of the position that I share in respect of the constitutional Convention. I am also pleased to participate in the same debate as Rev. Ian Paisley, whose position in the House I have followed since I was a small boy. Again, I am sorry that he is not here to hear me say so. I also applaud the eloquence, wit and style of the maiden speech made by my hon. Friend Mr. Vaizey.

It is indeed a great honour for me to stand here today to represent the Ludlow constituency. Ludlow is my home town and that of my forebears. In fact, one Dr. Dunne, who practised in Ludlow in the early 18th century, was a pioneering exponent of electric shock therapy. I can give a categoric assurance to the House that I did not use such techniques in securing my seat.

I join a long tradition of local Members representing Ludlow. To my knowledge, with the sole exception of one individual since 1885, the seat has been held by local people: from the Windsor-Clive descendants of Robert Clive of India to Sir Jasper More, one of the most distinguished post-war Members to represent the seat, to, latterly, Christopher Gill, who would, I am sure, have made a forceful contribution if he were still here—some Conservatives Members may remember him with somewhat mixed emotions—to my immediate predecessor, Matthew Green, who hon. Members on other Benches are, I am sure, surprised is not still here.

Matthew was an energetic MP in the constituency, where he is much liked and still casts a large shadow. I hope to be able to match that, at least in part. In Parliament, he was an able spokesman on youth affairs for the Liberal Democrat party and became a knowledgeable champion of local housing need. He was rightly proud of representing Ludlow, as indeed am I.

I have represented Ludlow town centre on South Shropshire district council for the past few years, so I have a modest experience of such things, but I also come to the House with more than 25 years of varied business experience, the benefits of which I hope to bring to the proceedings of this House.

I also feel a strong sense of public duty in coming to the House and have a family tradition of such service, albeit from a rather catholic political background. My great great grandfather sat on the Liberal Benches. My grandfather sat on the Conservative Benches. After the second world war, my great uncle sat briefly on the Labour Benches before he did a very wise thing and crossed to the Conservative Benches, in contrast to the previous Member for Wantage, about whom we heard earlier.

Ludlow is one of the largest and most beautiful rural constituencies in England. The constituency stretches roughly 40 miles, from the Welsh border west of Bishop's Castle to the villages east of Bridgnorth, abutting the South Staffordshire constituency, which some hon. Members may get to know well over the next few weeks. The constituency is almost 20 miles north to south, from the towns of Broseley and Much Wenlock on the northern boundary across to Church Stretton, which nestles in the Shropshire hills, south to Burford on the River Teme.

For Members who do not know the area, the Shropshire hills have rightly been designated an area of outstanding natural beauty. They have been described as the Switzerland of England and are also known locally as the blue remembered hills—especially apt following last month's general and county council election results in Shropshire. If you will indulge me, Mr. Deputy Speaker, this brings to mind A. E. Housman's description from "A Shropshire Lad":

"From Clee to heaven the beacon burns

The shires have seen it plain

From north and south the sign returns

And beacons burn again."

Ludlow itself is a fine Georgian town built on a mediaeval town footprint, with one of the most complete surviving sets of mediaeval walls in not only this country, but Europe. I am pleased to declare an interest in that because I expect to become a trustee of the newly established Town Walls Trust, which was set up to fund their restoration at a meeting last evening. Latterly, the small market town of Ludlow is perhaps better known for its well-deserved reputation for good food, which is actively promoted by the food and drink festival each September. Not for Ludlow the uniformity of the nation's high streets. We boast four independent butchers and four master bakers. Until very recently, we had three restaurants with four Michelin stars between them, which might be known to some hon. Members. We also have two greengrocers and specialist cheese, chocolate and organic produce shops, all of which support local producers. If I may say so, the only thing that some say that we lack is a modern bookshop.

Although the constituency is known as Ludlow, its largest town is Bridgnorth, which is another attractive town straddling the River Severn with an historic heritage. Bridgnorth lays claim to being the aluminium capital of the country with some 600 people employed in its two rolling mill plants, which recently attracted tens of millions of pounds of inward investment. That is an important example of manufacturing excellence in my constituency that needs to maintain its global competitiveness. Bridgnorth also has several suppliers to the motor industry, some of which are suffering following the collapse of MG Rover, to which Mr. Hendrick referred earlier.

Overall, the constituency's economy reflects its geography. There is a strong reliance on a healthy farming and agricultural sector that is now coming to terms with the new single farm payment and the complex cross-compliance regime. As I have mentioned, there is a vital manufacturing sector, some interesting technology companies are emerging and there is a growing tourism and service sector.

However, all is not rosy. Although we live in a beautiful area, we suffer from the deprivation that can affect sparsely populated places. Immigration was an issue during the recent election, but the immigration in my part of Shropshire has been mostly from the black country and the home counties. We welcome those coming to live in Shropshire, many of whom have retired, but the consequences of that have included rapidly rising house prices and an ageing population. Local people, especially the young, have difficulty continuing to live where they have grown up. We also have declining school rolls and pressure on our community hospitals.

That brings me briefly on to the subject of the debate. The European constitution was of great concern to the people whom I met in the run-up to the general election, in contrast to several remarks made by Labour Members. My constituents' main worry was a genuine fear of greater political integration, with more regulations imposed by a remote bureaucracy over which there is scant democratic control. There was genuine confusion about the Government's position on the matter, and I regret to say that following the Foreign Secretary's remarks earlier this week and those of the Prime Minister today, they will be none the wiser. As a new Member, I wish to help the Government out of their predicament. I would be more than happy to arrange a local referendum in Ludlow on the European constitution, the result of which I am confident would give the Government a clear steer to help them make up their mind.

There are real worries about Europe in my constituency, from the hill farmers on the Welsh borders to the sugar beet producers in the east whose livelihoods are threatened by the common agricultural policy reforms that are now being implemented and, in the case of sugar, as we heard earlier, are under consideration. We also cannot afford to export more of our manufacturing base. Such matters require a light regulatory touch, not more costly directives from Brussels that try to impose a continental social model on our already overburdened employers.

Our Government have been consistently wrong about Europe and they are in danger of making another strategic blunder. They should declare the EU constitution dead and do everything in their power to lead a debate in Europe on the real reform that is needed to bring back to nation states the powers of self-determination. I look forward to pressing the Government on that and other issues in the years to come, and to standing up for the people of Ludlow in this Chamber.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party 5:44 pm, 8th June 2005

It is a great pleasure to follow my hon. Friend Mr. Dunne. I congratulate him on his maiden speech.

I had the opportunity in the past year to speak in, I think, three debates on European matters, including a specific debate on the constitution. I do not want to reiterate what is on the record because I am aware that others wish to speak, but I want to pick up a theme that I ran with last year that is now more pertinent, given the situation with the constitution.

I said that, in the history of what was the Common Market and now the European Union, successive Governments of both parties have painted a picture of the objectives of being part of the EU. In doing so, I did not suggest that they sought to mislead the House or the people of this country, but focused on what they omitted to say, particularly when treaties were introduced in the House. They led people to believe that we could sign up for treaty after treaty while controlling those things that naturally worried us about them and that the end game would not be where we now are, which is a treaty and a constitution that have all the hallmarks of the final stages of creating a nation state.

When people such as myself and others, especially on the Conservative Benches, have put it to the Government of the day that political leaders in other EU states have clearly stated their objectives of closer political union and greater control of many more areas by the Commission and the EU, we have been derided. I do not mean that there has been disagreement, but that there has been active name calling by Ministers and Labour Members. The word "xenophobia" has been bandied about openly in the Chamber when we have quoted Mr. Chirac and others. The Minister for Europe says no, but his predecessor is on the record as saying just that.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

The hon. Lady accuses us of talking about xenophobia, but she should recall the comments of Mr. Heathcoat-Amory, who described the Germans as "wretched".

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

I am not that interested in the Germans. I am interested in the British people. The Germans have had their say; the British people have not. For clarity, the Minister whom I was referring to was Mr. MacShane, who not only called people such as myself xenophobic, but repeated the allegation when questioned on it.

If leaders of any party or country mislead the people about the stage that we have reached with the European project, the consequences will be more serious than anything we have seen for three generations. That sounds dramatic, but if we cannot tell people the truth, and if political leaders bypass the voice of the people when they have a chance to make their contribution, as in a referendum, by referring the question back in a modified way and going around the circuit until they get what they want, not only is democracy denied, with all the implications that that has, but the European Union project, in whatever form one happens to view it, will be derailed completely in such a chaotic fashion that the consequences will ripple out.

I am not someone who ever says the word "out", however frequently I have been pressed—as I have by people such as UK Independence party supporters—but we are at a watershed, or a crossroads, in Europe, especially with the no votes from France and the Netherlands. We have to decide, and we have to be open and honest about, what sort of Europe we want. We will not all want the same sort of Europe. That is inevitable, but when people suddenly wake up to what has been done and what is being proposed in their name, they do not like it or want it. If their view is not listened to, the repercussions will be huge.

Today, I shall not attempt to put my views to the House—I suspect that many of my colleagues, including those on the Front Bench, are only too well aware of them. To encapsulate them, I would seek constructive and friendly negotiations with our EU partners to secure bilateral agreements on matters of mutual agreement and concern. I would also seek free trade, unfettered by the harmonisation rules that cause many of the problems in this place with regulation.

I see hon. Members shaking their heads, so let me explain. Some say that Parliament should be better able to scrutinise European regulation. I am not talking about the big set pieces—the treaties that the whole House deals with—but the subsidiary legislation that is dealt with in Committee every week when the Commons is sitting. Despite the fact that we have the European Scrutiny Committee and other Committees that examine each piece of so-called regulation, not one regulation has ever been overturned by the House expressing its views. That is because the decision on a regulation is made by qualified majority voting in Brussels, and the regulation is signed up to by representatives of the British Government. Sometimes—we do not vote on all of them—the regulation is considered by a Committee of the House, but because the Committees are structured to reflect the balance in Parliament, the votes in Committee are weighted on the side of the Government, who have already signed up to the regulation, so the regulation is passed and enacted in UK law. That is the system.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

I shall not give way to the hon. Gentleman before I finish my point. As an Agriculture Minister for three years in the 1990s, when dealing with European regulations, I tried desperately hard to do what I thought was in the British interest, but I was thwarted on every one. Ultimately, the unelected Commission told me—a British Minister, democratically elected and accountable to Parliament—"Sorry, but if you don't do what we say, we will fine you and your Government." We had no power and that has not changed—it remains the case today. It is simplistic of any hon. Member to suggest that merely changing the process of scrutinising European regulation will make a ha'p'orth of difference in reducing or improving the implementation in the UK of regulation from Brussels.

Photo of Mark Hendrick Mark Hendrick Labour, Preston

The hon. Lady is generous to give way, given that some of her hon. Friends wish to speak. May I remind her of one point that she has not mentioned? On many such issues, the European Parliament now has a power of co-decision with the Council of Ministers and issues cannot be resolved without agreement between the two. The European Parliament is directly elected by the people.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

I do not buy that argument. Those of us who are democratically elected to this House are answerable to the people who elect us. Our parliamentary system is such that we should be answerable: we should not send responsibility to another group of people, whether they are elected or not. I take very seriously my duty to the people I represent. I believe that I should be accountable to them and that Ministers should be accountable to me. The EU goes against everything for which the democratic process stands.

To return to my argument about accountability, honesty and saying what direction we should take, I have no problem with people on either side of the House who have for many years expressed a view of what they want from Europe and where it is going that is different from mine. That is part of the democratic debate, which I enjoy both inside and outside the House. However, it is no longer acceptable for any Government or Minister to attempt to deny the objectives and purpose of our relationship with, and membership of, the European Union. We have reached the position where another treaty and more of the same are not acceptable.

The people of France and of the Netherlands have spoken. I make no difference between their right to express their views and the right of the people of Spain, who have also had a referendum, to express an entirely different view. That is democracy as we understand it. I am concerned not about the people of France, the Netherlands or Spain, but about the rights of the British people, and especially the rights of my constituents. The idea that, in smoke-filled rooms, Ministers and members of councils in private meetings can cobble together some alternative because they know that they will not get the issue past the people in any other way is no longer an option.

I hope that the Minister will accept from me—a self-proclaimed Eurosceptic—that I understand that he comes from a different point of view and a different philosophy, but I demand of him and of the Government honesty and clarity, and the right for the British people to express their view. If it is the case that this constitution is dead, stuffed or any of the other descriptions we have heard today, we should give the British people a vote on what our future relationship with the EU will be from here on.

The idea that we go on without the British people having the right to express a view is wrong. Whatever that view is, it should be recognised. I have not been impressed by the way in which the Government held a referendum in the north-east on the regional assembly. They carried on as if nothing had happened. That is not my idea of a democratic assembly. If the people say no, different action is required. There is a need for a different policy. That is what I call honesty.

I was impressed and encouraged by my hon. Friend the Member for Ludlow, whose maiden speech built in some poetry. I am a great one for finishing off what I say with some poetry or a quotation. Cicero said:

"A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gate is less formidable, for he is known and he carries his banners openly. But the traitor moves among those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself."

Honesty, integrity and openness with the House and with the British people are essential from now on with this issue. If that is not the position, the situation does not bode well either for the people of this country or for the people of Europe.

Photo of Nick Clegg Nick Clegg Shadow Spokesperson (Foreign and Commonwealth Affairs) 5:58 pm, 8th June 2005

I agree with Angela Browning that a fork in the road presents itself to us. I am not sure that I agree with her conclusion about where we should go when we encounter that fork. It is obvious that the overwhelming no votes in France and the Netherlands present us with a moment of crisis in a long history of crises in the development of the European Community and the European Union.

It is somewhat ironic that the crisis seems to have been elicited on the back of a text—this infamous constitution—which by any objective measure is more modest in the changes that it proposes to the function of the EU than many of the treaty provisions that preceded it. I hope that it is not an issue of debate that the Single European Act pooled far greater areas of policy, decision making and sovereignty at EU level than the constitution that we are discussing. Yet the comparative modesty of the constitution seems to have given way to a degree of public anxiety, the depth and breadth of which we have not seen for some time.

There are many reasons for that. The fact that it was called a constitution was arguably a mistake. It was a grandiloquent mistake that implied that a relatively modest treaty provision was dressed up to be something more than it was. As my right hon. and learned Friend Sir Menzies Campbell said at the beginning of the debate, the sheer pace of change in the European community and the EU—one treaty has been replaced by another, almost without pausing for breath, for a decade and a half—has perplexed many voters in many EU countries. I assume it is not a point of great dissent or debate to suggest that we need a prolonged pause for reflection. However, I suspect that as we consider what happens next, that pause will be much longer than many commentators believe.

What should we do during that pause for reflection? Instinct tells me that this is not just a crisis about the EU but a crisis of domestic politics in the Netherlands, France and, arguably, the UK. What has been lost is not only public confidence in the EU but public confidence in what Governments of all shapes and sizes in many different countries are saying to their electorates about the EU. That strikes me as a crisis of legitimacy and of confidence with much deeper roots than is often appreciated when we exchange blows about the EU and the mechanics of EU decision making. In my constituency and in groups in which I have discussed European integration, I have been struck by the fact that there is a hard-core minority that is passionately for and a hard-core minority—invariably, a little bigger, it must be conceded—that is passionately against. The vast majority of people, however, are bewildered, anxious, perplexed and confused by the European Union. They have lost their bearings and do not know in which direction the process is going.

In this period of reflection, the priority should be not to try to cobble together agreements or relaunch initiatives at EU level, but to try to re-establish in the UK and in the House a clearer understanding, free of prejudice, misunderstanding and misinformation, of what the EU is and what it is not. As the hon. Lady said, that requires a great deal of honesty and consistency. In parenthesis,