Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coaker.]

My right hon. Friend the Prime Minister and I will represent the United Kingdom at the European Council in Brussels tomorrow and on Friday. We will fortunately be joined there by my right hon. Friend the Minister for Europe, who earlier received such a ringing endorsement in the House. Today the House has its customary opportunity to debate the Government's priorities. I shall deal first with the agenda of the European Council itself and secondly with the wider question of the European Union's future direction and priorities that has been raised by the referendums in France and the Netherlands. The two main items on the European Council's agenda are future financing—that is the EU's revenue-raising mechanism and its budget—and the constitutional treaty and the related issue of enlargement. Let me take those in turn.

The Council will discuss the EU's finances from 2007 to 2013. The European Commission first tabled proposals in July last year and the issue was subsequently discussed at the European Council last December and other meetings of EU Ministers. I attended the latest round of such talks with other EU Foreign Ministers in Luxembourg on Sunday.

The United Kingdom wants an EU budget that is better geared to meeting the challenges of this century, which means one that has a responsible level of spending and allocates money more fairly, effectively and efficiently, with a focus on helping the poorest nations and supporting good-quality research and innovation. The European Commission had proposed setting the EU's budget between 2007 and 2013 at 1.26 per cent. of European gross national income, or GNI, which would have represented a real-terms spending increase of 35 per cent., or €260 billion. Along with Germany, France, Sweden, the Netherlands and Austria, we have made it clear that such an increase is completely unacceptable and that the EU's objectives can be fully achieved within a budget that represents no more than 1 per cent. of the gross national income of its member states. As I have explained, not least to fellow Foreign Ministers, the difference between 1.26 per cent. and 1 per cent. sounds small, but as the denominator is huge, the difference is more than €200 billion, which is more than the gross national income of Poland, which is a medium-sized member state.

Two days ago the Scottish Executive produced a paper in which they said that if the UK position were to succeed, Scotland would receive no European structural fund support, so £710 million would be lost to the Scottish economy between 2007 and 2013. Can the Foreign Secretary confirm that the UK Government's position would lead to such a loss?

I cannot confirm those figures. I have not seen the paper, but I will address the hon. Gentleman's concern in a moment.

Our clear statement of the need for budget discipline has shifted the centre of gravity of the debate. The result of that pressure was a shift from the European Commission's original 1.26 per cent. proposal to a 1.09 per cent. proposal from the Luxembourg presidency, which is less than half the Commission's proposed increase. Although that represents a significant advance, it is still not good enough.

On the spending allocations themselves, there are two key areas of concern. First is the structural and cohesion funds, which are the EU's support for the poorest regions. As the proposals now stand, the member states of the old EU-15 would get almost as much from the structural and cohesion funds as the 10 new members, plus Romania and Bulgaria, which are, on average, far poorer. As well as being unfair, that is wasteful because much of the funding represents simply recycling money between richer member states that could more efficiently pursue their own national programmes of regional aid. The structural and cohesion funds should thus be focused on the EU's poorest member states, with others doing more to finance their own regional policies. If our proposals for reform are adopted in full, the British Government have given a commitment to domestic funding for the United Kingdom's nations and regions to ensure that they do not lose out as a result.

The second question of expenditure concerns the common agricultural policy, which still accounts for far too high a proportion of the EU's expenditure. About one euro in 12 of the whole EU budget is spent on French farmers alone. As a whole, expenditure on the CAP represents more than 40 per cent. of the total EU budget, which is odd as it goes to just 5 per cent. of the population. Only further reform of European agricultural support will begin to address those imbalances.

If the Foreign Secretary is saying that the UK will replace the regional funding currently paid from the EU with money coming directly from the British Government, is that not effectively the same as increasing the EU budget? Would we not be paying for something for which the money previously came back from the EU?

I am sorry for the hon. Gentleman, but he needs to understand the fundamental difference between money that we choose to spend ourselves, which is approved by the House, and money allocated centrally by the European Union. One proposal on the table to which we can certainly give some support is the nationalisation of part of CAP spending. In other words, individual member states would be given greater responsibility for financing their spending on agriculture. That would not amount to fundamental reform, but it would be a step in the right direction.

I am interested by the Foreign Secretary's assurance that the Government would ensure that nations and regions would get compensatory investment to replace the European money that they stand to lose. What would be the benchmark with which the Government would judge whether the same amount would be given? For example, would that be objective 1 funding in 1999 or 2003? I ask because it is crucial, especially for rural and deprived areas in Britain, to know what we will need to compare that investment with.

I understand the hon. Gentleman's concern. My area has benefited from European Union funding, so I confess that I am not without a constituency interest in the matter. I cannot answer his question because we do not know the denominator about which we are talking. We do not know how the overall budget will come out, or what the balance of spending for the structural and cohesion funds will be. However, I have put my statement on record.

The Foreign Secretary will no doubt be aware that an announcement was recently made to farmers that the CAP had been secured after a mid-term review. Is he suggesting that the process will be reopened and that the farmers will not know their future, bearing it in mind that agriculture is the mainstay of our economy in Northern Ireland?

Of course I appreciate that agriculture is one of the mainstays of the economy of Northern Ireland. I was actually present at the October 2002 European Council. The decisions about the mid-term review for the current financial perspective did not set in concrete the CAP for the next financial perspective, as is made clear in the text. The conclusions on direct payments begin with the words:

"Without prejudice to future decisions on the CAP and the financing of the EU after 2006".

The European Council set a ceiling for total annual expenditure for market-related expenditure and direct payments under category 1.A, but did not set a floor. It is thus entirely consistent with what was agreed in October 2002—and with common sense—for us to push for further reform of the CAP, if we can achieve it.

The House will welcome the last passage of the Foreign Secretary's speech, in particular the justification that appears to exist for those issues to be reopened. Irrespective of the level at which the budget is finally set, does he agree that a far higher amount of fiscal control is vital and that much more must be done to eliminate waste, inefficiency and corruption?

I entirely agree. In the rather quaintly named Foreign Ministers conclave on Sunday and three weeks ago, there was a lot of smoke and mirrors, but we were not locked in and there was no conclusion. In both discussions, I made the point to my Foreign Minister colleagues that our proposals for 1 per cent. GNI were in no sense inconsistent with the European Union being more effective—in other words, seeming to do more for its citizens. It is unacceptable for the European Commission to propose, as it did in its 1.26 per cent. budget proposals, a real-terms 5 per cent. increase in administration costs when we all know from our experience—this is a cross-party issue—that we get greater efficiency and better delivery if we turn the screw on costs. It is amazing what can be achieved. That is why we have proposed a similar approach for the Commission budget as for domestic administration budgets. Our budgets are going down by 5 per cent.

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I shall give way to Mr. Curry later. [Interruption.] It is always about the subject under discussion, but I have given way half a dozen times and need to make progress. If I do not, there will be complaints that I have taken up other hon. Members' time. [Hon. Members: "No."] Yes, there will be.

As one of the European Union's richer nations, the United Kingdom makes a net contribution to the EU budget, helping to support poorer member states, particularly new members in central and eastern Europe. The rebate that the UK receives on that contribution corrects for the fact that we are the lowest net recipient per capita of any member state, in part because of the small size and the efficiency of our agricultural sector. Without the rebate, our contribution would be out of all proportion to the UK's relative prosperity and economic weight within the European Union. Without the rebate, from 1995 to 2003 we would have paid 15 times more than France and 12 times more than Italy. Even with the rebate, we have still paid two and a half times as much.

When the UK's rebate was agreed at Fontainebleau in 1984, the European Council stated in its conclusions:

"expenditure policy is ultimately the essential means of resolving the question of budgetary imbalances".

In other words, the only way to resolve the current inequity in contributions between the EU's members is not through moving the UK's rebate—nor would we accept that—but, instead, through a fundamental review of EU expenditure. Until and unless such a rebalancing of spending takes place, the UK's rebate remains fully justified and we will, if necessary, use our veto to protect it.

On agriculture, the right hon. Gentleman knows that we have embarked on a lengthy transition from one form of support to another that will last for several years until 2010 or 2012. Other member states are doing the same. Is he suggesting that that transition will continue to its term or will be interrupted by a new mechanism of support halfway through, or is he merely talking about cutting the cost of it? If the Government have a new model of support in mind and precise reform proposals, will he put them in the Library so that we can see them?

What we want to do immediately is to get fundamental reform of the common agricultural policy back on the agenda. I appreciate that the right hon. Gentleman and many other hon. Members on both sides of the House have farmers in their constituencies. Although Blackburn may appear to be an entirely urban area, the constituency contains dairy and hill farmers. Half the area is agricultural land, not urban land. Notwithstanding those interests and the concern of the agricultural community, under the Commission's proposals the CAP, which takes up 40 per cent. of total EU spending, will be €1,000 billion a year, but it assists only 5 per cent. of Europe's populations and distorts that assistance towards the better-off countries. Everyone knows that that cannot go on. Nor can the situation continue in which we spend at least €2 a day for every cow in the EU.

We have to deal with those issues sensibly. We want reform of the CAP back on the agenda. As I explained to the leader of the Democratic Unionist party, Rev. Ian Paisley, that is in no sense inconsistent with what was agreed in Brussels in October 2002.

The Foreign Secretary links the rebate precisely to reform of the CAP. I understand why, because one gives rise to the need for the other. However, it might be difficult to get that reform, and there are other things that we want from the EU, such as implementation of the services directive, genuine completion of the single market and external tariff reform—perhaps even their elimination. If we could get some or all of those things in place, which would hugely benefit the British economy, would it be worth negotiating on the rebate in that context?

No, it would not. Those are not alternatives. People who want reform in one sector also want reform elsewhere. Those who want a socially responsible but liberal market economy want all those things. On the whole—this is not an exclusive point—they also want greater efficiency in the way in which the EU spends its money. People in the other camp want to keep hold of existing, rather dirigiste, structures. They do not want the services directive and are dragging their feet on implementation of the Lisbon agenda. Such a trade-off is not available.

Is the Minister being too modest? If he aspires to be a future Minister of the month, should he not be more ambitious in tying reform of the CAP to reform of the budget? Given that the CAP is a racket and increases welfare dependency among farmers, should we not be looking for a much greater cut in its budget—far greater than would be contained within a 1 per cent. ceiling of the EU budget? Surely it is unwise to accept at this stage that we are prepared to pay 1 per cent. because if we get drastic cuts, as we should, in the CAP, the budget will decrease at a much greater rate.

I am probably much more modest than my hon. Friend—

There is more to be modest about.

That is almost certainly true. I think that my right hon. Friend the Minister for Europe, who has done an outstanding job and will continue to do so, will clean up on the Minister of the month competition each month, at least for the rest of this Parliament.

We have to live in the world as it is, with the available possibilities. That part of the agenda set out by my hon. Friend Mr. Davidson—his transitional demand, to use language with which he will be familiar from his past—is probably not achievable. Of course, it was always the case with transitional demands that those who made them were never satisfied in the rare event of them being delivered.

I want to make progress on the other issue: the EU constitutional treaty. In my statement to the House on 6 June, I set out the Government's position on the treaty. As I said then, the forthcoming European Council will be the first opportunity for EU Heads of Government collectively to discuss the treaty since the no votes in the French and Dutch referendums. The Council needs to hear from the French and Dutch Governments about the reasons for the referendum results, and how they see the future of their ratification processes.

Obviously, I cannot anticipate the conclusions of the Council, but in the meetings of EU Foreign Ministers that I attended earlier this week, there was emerging consensus that at least decisions on whether to proceed with ratification should be left to individual member states. There is also growing recognition of the need for—to use the now well-worn phrase—a period of reflection. As I told the House on 6 June, Britain's position is that currently it would not be sensible to proceed with Second Reading of the Bill providing for our ratification of the treaty by referendum, given the current uncertainty over its future following the referendums in France and the Netherlands. We will, however—to use another phrase of some antiquity—keep the situation under review.

A direct and important issue raised by the no votes is whether the extension of the enlargement process to Bulgaria, Romania, Croatia and Turkey, and then to other parts of the western Balkans, will continue. Due to the sentiments in countries that voted no, there have been suggestions that there are questions about the enlargement process. We need to be clear about that. First, the EU's commitments on enlargement are categorical and were made under existing treaties, not the new constitutional treaty. Secondly, although, in our judgment, the process of enlargement would have been assisted by the constitutional treaty, it is taking place under the existing acquis, the EU's current rules and treaties, and not those of the constitutional treaty. We shall be pursuing those commitments, as the EU presidency, from next month. Lastly, when Foreign Ministers discussed the matter, the general sentiment in the room, which I hope will be translated into formal conclusions on Thursday and Friday, was that the European Council should recall the December European Council conclusions and underline the need to implement in full the commitments in respect of enlargement for Turkey, Bulgaria and Romania and the other countries involved.

How does the Foreign Secretary view the decision by the French authorities that after Romania and Bulgaria no further enlargement can take place without a referendum of the French people? How does that sit with the position that he has just explained?

There are two points involved. The first is when the European Union as a whole signs off the process of accession by Romania and Bulgaria. That has to be done by treaties that must be signed and ratified by each member state. It is for each member state to make its judgments about how ratification should proceed. I am pleased that in the House—as I often explain to my Foreign Minister colleagues—although one or two issues relating to the EU are contentious, there has always been a bipartisan, all-party approach to enlargement. We have never had demands—I hope that we do not—for enlargement treaties to be subject to referendum. It is for France to decide whether it has a referendum just as it was a matter for us to decide that.

Does my right hon. Friend recall that in fact Conservative Front Benchers tried to block the last enlargement by calling for a referendum on the Nice treaty? It would be good to hear their continued commitment to the enlargement of the EU.

My hon. Friend has made a helpful point and I thank him for it. The Conservative party, too, needs a period of reflection—[Interruption.] It needs a period of even longer reflection on its approach to the EU and I hope that wiser counsel will prevail.

Apart from the obvious decisions of the referendums in France and the Netherlands to say no to the constitutional treaty, the ballots raised wider issues about how the European Union can be made more relevant to people's lives. It was striking that in both France and the Netherlands, exit polls showed that a majority of older voters had supported the constitutional treaty, while younger voters in the main were opposed. That suggests that those who lived through the destruction caused on the continent by the second world war were more acutely aware than younger generations of how much the European Union had done to cement peace and stability.

In the UK, the situation is reversed: polls show that younger people tend to be more favourable towards the EU, in part perhaps a reflection of our relative economic success in recent years and of Europe's contribution to that. Yet the lesson from those two patterns of opinion is the same: if the European Union is to remain relevant to Europe's future generations, it cannot simply rely on the achievements of the past, but must continue to deliver practical benefits in the future. It must show that Europe can adapt and bring results on the issues that most matter to people's lives—jobs, prosperity, crime and personal security. Indeed. the EU has not only to deliver on those issues, but to show that it is delivering; to build a closer dialogue with Europe's citizens and to demonstrate how it is relevant to their lives.

Those challenges do not exist in a vacuum: we face them in the context of rapid change in the world outside Europe's borders. On current trends, people in the United States will be 50 per cent. richer than those in the EU by 2025. China's industrial production is growing at 17 per cent. a year, and its share of our imports increased tenfold between 1985 and 2003. India is producing 250,000 science and IT graduates every year, and is competing with European economies not just at the lower end of the market but in every sector, including cutting-edge industries such as software and biotechnology.

To maintain prosperity and social justice in a more competitive and fast-changing world, the EU has to adapt. A European economy in which 19 million people are unemployed is not by any standards delivering a social Europe, so we need to look at how diverse social models, from Scandinavia to Spain to the UK, have delivered growth and social justice in Europe, and discuss how we can sustain and build on those successes in this new context.

We have to do much more to make a reality of the ambitious targets for economic reform, training and employment in the European Union that were set by its leaders at the Lisbon summit in March 2000, which we in the UK, but not many others, have achieved. EU regulation needs to be reviewed to ensure that it benefits business, and does not harm it. Furthermore, we must strengthen the EU's ability to act globally against threats to our security, while building on its strength as a force for good in international areas such as trade and aid.

The debate on the EU's future direction also needs to consider how the organisation itself operates. One of the issues discussed in the House when I made my statement nine days ago was how we could ensure that the Commission and the Council, if they so wished, could move ahead with proposals in a protocol to the draft constitutional treaty to give national Parliaments a more direct say in draft laws. I believe that should be so, and I hope that the House—it is not a matter for the Government, it is entirely for the House—will make rapid progress on the recommendations of the Modernisation Committee on improving not only the scrutiny of European legislation, but the depth and breadth of debates on issues that arise in the EU.

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I have already given way to the hon. Gentleman, so I give way to Mr. Lilley.

The protocol states that the House will appoint one person and the other place will appoint another person to express our views, thereby enabling the House to have some say in European legislation. How would the House appoint one person, reflecting—as the protocol says—the balance of opinions in this place?

Although I have the full text with me, I hope that the right hon. Gentleman will excuse me if I do not look up that passage. However, if my recollection is wrong, I will write to him, and the Minister of the month, my right hon. Friend the Minister for Europe, who will wind up the debate, has my full permission to correct me. My recollection is that under the protocol in the draft constitutional treaty, draft laws would be made available to national Parliaments at an early stage. In fact, we already do that but it does not happen in many other national Parliaments. National Parliaments would then take a view on those draft laws. If they decided to disapprove of them, that would be communicated to the Commission, and if a third of the aggregate total of national Parliaments took that view, it would amount to a yellow card. The Commission would take that as a warning, and would have to think again. [Interruption.] For those who say, "What about a red card?", we discussed that a great deal in our debate on the detail of the constitutional treaty. The red card is an option for member states to exercise in the European Council under the voting system, which is rather antiquated at present, but would be improved by the constitutional treaty.

I support the scrutiny and openness embraced by the Foreign Secretary, but does he agree that a great first step by the House would be for the European Scrutiny Committee to meet in public, not in secret?

Whether or not the European Scrutiny Committee meets in public is a matter for it to decide. [Interruption.] With great respect, there is a division of powers. It is for Parliament to decide how it meets, not for Government.

On a point of order, Mr. Deputy Speaker. The European Scrutiny Committee did not have the opportunity to make that decision, as it was taken away from it.

I think that the hon. Gentleman knows that that was not a point of order.

It never is, Mr. Deputy Speaker.

In seeking reform within the EU we must recognise the benefits of the Union and the importance of the United Kingdom's engagement within it. When we have engaged, the UK has shaped to our benefit the rules that allow British citizens to travel, work and live freely anywhere in Europe, and to receive welfare benefits, health care and fair legal protection while they are there. We have secured European liberalisation, which has slashed air fares and brought the cost of telephone calls down by half. UK and other European businesses once had to fill in 60 million customs forms a year simply to trade with Europe, with all the attendant bureaucracy and delay. Today, however, they can trade directly to the same standards and rules as local firms in a market of over 450 million consumers. EU police and justice co-operation is bringing drug smugglers, people traffickers and fraudsters to book. Alongside those practical benefits, our position as a leading power in Europe makes the UK stronger and more influential in the world, as we can speak as part of an organisation that accounts for a quarter of world wealth and trade, and more than half of all development aid.

It is obvious to everyone that this European Council marks the start of a difficult period of discussion about the European Union's future direction and priorities, but it also offers the chance for a serious, democratic and vital debate. The United Kingdom has a clear interest in shaping that debate and in leading reform in Europe. Under this Government, we shall play that role to the full.

It is doubtful whether the individuals who organised the forthcoming summit foresaw that, following the decisive rejection of the proposed constitution by the Dutch and the French, it would become an historic event. After those two referendums, there has been much gnashing of Eurocrat teeth in the past few weeks, including by our new Commissioner, Peter Mandelson, who has set a new record for going native in Brussels. However, even diehards are starting to acknowledge the inevitable and bow to the fact that in a democratic Europe the clearly expressed wishes of voters must be respected and that the constitution is dead.

Others are in denial, pretending that nothing material has happened and that the process of ratification can still continue. The argument is that if people voted yes, they clearly understood the issues surrounding the constitution; but if they voted no, they did not understand the complexities and were voting against Chirac, Turkey, Polish plumbers or anything but the constitution.

We have been treated to a virtuoso performance by the EU political elites, who have shown how out of touch they are with the people whose interests they are supposed to serve. Today, the Foreign Secretary told us that there will not be a collective decision on the future of ratification. What a lack of leadership by European politicians. In the past week, we have been subject to the ritual brandishing of that favourite red herring, the British rebate. If one is in trouble in Euroland, why not indulge in ritual Brit-bashing, which is designed to deflect attention from one's own domestic political disaster and one's catastrophic misjudgment of one's own voters? We have read a huge amount of nonsense—how gullible much of the European media has been.

The real issue in Europe is the collapse of the constitution. There has never been a serious prospect of Britain unilaterally ditching the rebate, and even less chance of France negotiating away its common agricultural policy advantages to reopen the debate. Any British Prime Minister who voluntarily comprised Margaret Thatcher's hard-won veto would be treated with utter contempt by the British people. We know that, they know it, the Prime Minister knows it and President Chirac knows it. We are all knowledgeable, but it does not get us very far.

The summit comes not at a time of crisis for Europe, but at a time of enormous opportunity. French and Dutch voters have done us a great favour, as they have stopped in its tracks a constitution that would have taken Europe in entirely the wrong direction. As I said last week, perhaps the signing of the constitution by the Prime Minister and its other authors was the high-water mark of European integration. We now have a chance to develop a more flexible Europe that is more outward looking, less centralised, less bureaucratic, more trusting of national identity, and which is designed to be the servant, not the master, of its citizens. The House and the country need a realistic and balanced assessment of two key relationships—the relationship between the United Kingdom and the European Union, and the relationship between the European Union and the rest of the world.

We have moved from a century in which much of the world's conflict originated on the European continent to one in which war is unthinkable there. Membership of the European Union has had the effect of encouraging less stable aspirant countries to settle their differences. We have been able to welcome states from eastern Europe. We have also welcomed states, as the Minister for Europe said in a recent speech, with a different political history, such as Spain, Greece and Portugal—which suffered under right-wing tyrannies—into the family of European nations. The progress of the single market, albeit too slow, takes us in the right direction, but there is a terrible malaise in the European Union that cannot be ignored.

Too many European leaders still have a Eurocentric view of the world that is a generation out of date. As the Foreign Secretary noted, while the European Union gazes inwards, China, south Asia and the Americas continue to take an increased share of world markets, eroding opportunities for European prosperity and influence. It is not a coincidence that many more jobs have been created in the United States than in the European Union, or that the United States is still increasing its share of world trade. Social democratic policies on the continent are making Europe ever less competitive in an ever more competitive global economic environment. On a rapidly ageing continent, the omens are not good. As was said in our debate last week, by 2010 the EU's working-age population will begin a long-term decline. Over the next 40 years, the working-age populations of Germany, Italy and Spain will fall by about a third, which will have a major impact on the European economy. The EU's own financial projections are worse than the Foreign Secretary said, as they suggest that economic growth in Europe will be only half that of the United States between now and 2050. Projections show that the EU's share of global GDP will slump from 18 per cent. to just 10 per cent. by 2050, while America's share will rise from 23 per cent. to 26 per cent.

The problems are exacerbated by the willingness of too many European leaders to blame someone else for their country's economic woes. There is no point in French or German politicians blaming external factors for the dreadful performance of their economies. Unless they are willing to have the courage and commitment to introduce the supply-side economic reforms that Britain undertook under the Conservatives in the 1980s, they will consign yet another generation of young Europeans to structural unemployment, which is not an acceptable price for keeping European politicians inside their comfort zone.

Is it not right that if we are to fill the vacuum that exists because the constitution has been rejected, Britain and our partners need to move forward on the reform agenda? Some of those reforms were inherent in the constitution. Presumably, the hon. Gentleman would have no objection to EU countries moving forward on some parts of that agenda if it meant that the European Union would become more efficient and more effective.

Our party policy has been clear. If other countries want to move forward with plans that involve greater integration, that is fine if that is what they feel is good for them, as long as they do not force the United Kingdom to undertake reforms that it does not want to undertake. That concept of a more flexible Europe is central to our thinking.

Does the hon. Gentleman accept that some proposals in the constitution are worthy of consideration—for example, the Council of Ministers meeting in public when legislating? Could the spokesman for the Conservative party outline a brief list of aspects of the constitution that his party supports as part of a reform process?

A list? I can make it even simpler for the hon. Gentleman, and therefore more likely that he will understand it. We are happy to see powers returning from Brussels to the United Kingdom, but where there is any transfer of power from the United Kingdom to Brussels it should be put to a referendum of the British people. It is perfectly straightforward.

On the economic picture in Europe and the euro, what price is being paid for the speed at which the emblem of the EU's economic ambitions was introduced?

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I shall give way in a moment.

The euro was never an economic project; it was always a political project. The euro was designed to be the symbolic economic statement of political union. Such was the undue haste of its political architects that there was insufficient convergence before its introduction. The result has been an ill-fitting straitjacket that has left interest rates too low for some countries in Europe and too high for others. This is a clear vindication of the Conservative party's policy not to join the euro, yet the Government are still intent on abandoning the pound whenever they can. The Prime Minister said the euro is our destiny. Does the Foreign Secretary agree?

I want to ask the hon. Gentleman a question relating to European voting systems. Which system does he prefer—the Nice system or the one in the constitutional treaty?

We are perfectly happy to see improvements that do not give power away from the United Kingdom. Our objection to the system in the constitution concerns the extension of qualified majority voting into areas that are not currently dealt with by that method. I shall come on to the detail of the constitution in a moment. I am still dealing with the economic issue, on which the Foreign Secretary did not answer my question. The Prime Minister said that membership of the euro was Britain's destiny. Is that still the Government's position?

I asked the Foreign Secretary a simple question relating to the euro and European finance. Does he think that Britain would benefit from membership of the euro? He clearly does not know the answer. The Government's position is still that we would abandon our currency and join what is becoming ever more discredited as an economic project. The stability pact, which was designed to reassure those sceptical about financial discipline, has been a farce. A large country can get away with ignoring it, but a small one cannot. There is one rule for one group and no rule at all for another.

There is no doubt that resentment about the euro was at least one of the factors behind the French rejection of the constitution and was an issue in the Dutch referendum, too. With the death of the constitution, it is clear that there will not be a single political entity. [Interruption.] The question that inevitably will be asked is, what is the euro for? The treaty stated that the euro would be the currency of a single European union. Chris Bryant might do well to read it. What the euro is for is another question that needs to be considered at the summit.

We come to the EU budget, which the Foreign Secretary dealt with—

I know that the hon. Gentleman is familiar with the constitution. May I go back to the simple question that I put to him? It is not about the powers of the European Union—it is a binary question, yes or no, one or the other. Which voting system does he prefer—the Nice voting system or the one in the constitutional treaty?

To say that we would be delighted to continue with Nice would be to make a false statement of the party's position, but we did not regard what was in the constitution as an improvement, so we do not want to see the system changed. If we have to stay with the position under the Nice treaty or move to the position under the constitution, the answer is that we do not want to change to the position under the current constitution. That is a straightforward answer to the question. We would prefer to keep the treaty position as it currently is, rather than move to the abandonment of our vetoes under the constitution.

The subsidiarity and proportionality protocol of the constitutional treaty, though deeply flawed, can be regarded as a modest improvement on the inadequate provisions on the subject in the Nice, Amsterdam and Maastricht treaties. Does my hon. Friend agree that that provision could be implemented without a referendum?

Indeed. As I said earlier, the party would accept anything that is designed to increase the United Kingdom's ability to govern its own affairs, but anything that removes powers from the United Kingdom, including the abolition of areas where we currently have a veto, would be unacceptable and would have to be put to a referendum of the British people.

On the EU budget, the debate that we have had today and the debate that has taken place in Europe in recent weeks has been about how much extra we should be paying into the pot, but the real question that we should be asking is whether the pot should be increased at all. We should be aiming for an EU that does fewer things, but does them better. That includes doing them at a lower cost.

In the EU we have an organisation where, for almost a decade, the auditors would not sign off the accounts; where the whistleblowers, not the corrupt, get sacked; and where waste is endemic. Imagine a company going to its shareholders and asking for more money, when the auditors thought the accounts were indefensible. That is exactly what the Government are asking British taxpayers to do. There must be honest money—sound money—before there is more money, and we need reforms so that ultimately we need less money.

The position is slightly worse than my hon. Friend depicts. Under the treaty there is a new competence, which is

"to draw up a European space policy".

That is in article III-254. Last week, the European Space Council met in Luxembourg, and despite the "No" votes in Holland and France thundered ahead, promising a programme that will cost the benighted European taxpayer 10 billion euros every year from now on, without any treaty basis or legal basis.

The treatment of the European taxpayer has always been at the bottom of the agenda for all those involved in the current project. What I found interesting about the Foreign Secretary's answer to my hon. Friend Mr. Brady was the difference that seems to be emerging between the two sides of the House. We have said we think the European budget should be less, but that we should perhaps be spending money on some of the projects domestically. The Foreign Secretary said we would be spending more money domestically and increasing the size of the European budget. That means more cost to British taxpayers.

My hon. Friend Mr. Maples raised a good point. What can be done to improve the economic picture in the European Union? The big economies must undertake the sort of structural reform that we undertook in the 1980s. That is essential. It is not possible to maintain economies based on the current European social model and compete in a more competitive global economy at the same time. The burden of excessive regulation must be swept away. We need a genuinely competitive single market completed and more powers operated at a national level, in line with the true principle of subsidiarity. My hon. Friend said that the success of a single market in goods, capital and labour must be extended to the service sector if European businesses are to compete effectively. That should be done with minimum regulation.

Mr. Davidson is right. We need a complete overhaul of the common agricultural policy. The CAP roughly doubles our food prices, is unfair to developing countries, and is absurd and discredited. We need the removal of all the external EU tariffs and the reaffirmation that we are not responsible for one another's pension liabilities. These are essential protections for our taxpayers.

Will the hon. Gentleman clarify Tory support for cutting the CAP? By how much does he anticipate cutting financial support for Britain's farmers?

It is not Britain's farmers who need their financial support cutting; it is the absurd level of support for French farmers that needs to be reduced if we are to get control of the CAP.

We can build on the success of the accession countries, both economically and politically. As I said in our debate last week, about 5,000 UK companies now export to central Europe, attracted by the low costs of that area. Our trade with those countries is growing 10 times as fast as our trade with the rest of the world. Politically, many of those countries share the view of a Europe in which the nation state is as valued a concept as it is here in the United Kingdom. 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."

What of the constitution itself? We have made our objections clear—not just what we do not want in principle, but the detailed elements that we find unacceptable. We do not want the EU to be given the trappings of statehood: a President, a Foreign Minister, a diplomatic service and the ability to sign treaties in its own right. Those are not the tidying-up exercises that the Government pretended they were, but are steps on the road to creating a state of Europe. We do not want the EU to be given greater responsibility for the foreign and defence policies of all member states. The constitution would allow the EU to define the collective strategic interests of member states and to create an EU Foreign Minister to formulate and implement Union foreign policy and to represent the Union diplomatically. It would require member states to

"coordinate 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 for Europe.

Does my hon. Friend accept that the rules of the CAP apply to farmers across the European Union, subject to whatever national discretion is allowed to Governments? In fact, the Governments of different parts of the United Kingdom are applying them rather differently in present circumstances. Therefore, we can take action to reduce support for farmers and we can take action to increase support for farmers, but we cannot take action to reduce support for French farmers.

What we can do is ensure that we are not discriminating against efficient farmers. The UK has an extraordinarily efficient farming sector. The problem with so much of the CAP is that it is formulated in a way that helps inefficient farming. We need substantial reforms of the CAP because, as the Foreign Secretary said, a vast amount of money is going to a very small number of recipients. That cannot in any sense be just.

Will the hon. Gentleman give way?

I will not give way for the moment. [Hon. Members: "Give way."] I will give way later.

No one would disagree with the proposition that an EU of 25 needs different working arrangements to an EU of six, but as bland as institutional change sounds, it is far from simply greater efficiency. What is being proposed in the constitution represents the transfer of yet more powers from the people of Britain to the people of Brussels, with the giving up of up to 63 vetoes, reform of QMV and the removal of the veto on criminal justice, which is greatly different to what we have at present. I believe that that would require the specific consent of the British people were the proposal to go ahead.

The legal systems of member countries vary widely. They represent deep, culturally different attitudes about the relationship between citizen and state. Beyond the international crimes legitimately discussed in the constitution, the broad notion of so-called "judicial co-operation" challenges each member state's unique approach to criminal law. The idea of creating a European prosecutor who would be able to investigate and try certain types of cases does not seem objectionable at first glance, but when it comes to the definition—

Will the hon. Gentleman give way?

Give way.

I will give way when I decide, not when the Foreign Secretary decides. I understand why he does not like us discussing the details of the constitution, but when it comes to the extension of criminal law, it is of profound importance to this country and to the House.

The constitution talks, at a level of generality, about

"crimes affecting the interests of the Union."

That is virtually all crime. It is a massive extension of European power into how we run our country. I shall now give way.

Will the hon. Gentleman please define for me an efficient and an inefficient farmer?

It is reasonably widely accepted that farmers in the United Kingdom are far more efficient in what they produce and in their manpower than those in countries such as France. I do not want to get any further into views on the efficiency of French farmers, but we could probably establish a reasonable consensus across the House on the fact that British farmers are a good deal more efficient than most of our European partners tend to be.

I come to one of the most controversial elements of the constitution—the proposed charter on fundamental rights.

The hon. Gentleman said that the constitution was dead.

The hon. Gentleman thought that I said that, but the whole point of what the Foreign Secretary said today was that neither the British Government nor the collective European leadership have the courage to declare the constitution dead by bringing an end to the ratification process. The Prime Minister promised us that this country would have a referendum if the process of ratification continued. If other countries are to continue the process of ratification, and if the treaty is not dead, as the Foreign Secretary tended to suggest today, the British people must be given a referendum, because these issues are of fundamental importance to how we govern the UK and the powers that this House has in relation to that.

The charter of fundamental rights is one of the most essential elements of the constitution. It would be the bedrock of constitutional law in the EU. Judges in Europe would accrue new powers over legislation in this country. The Government have said that the charter is sufficiently explicit about limiting its own application. That has been one of the Government's central arguments about why we should not fear that part of the constitution, but I draw the Foreign Secretary's attention to a paper by Richard Wilkins and Marya Reed on the subject, which is in the Library. They compared the development of law in the United States to what is happening in the EU, saying:

"Comparative constitutional history suggests that, despite its own proclamations to the contrary, the Charter may well alter substantially the respective powers of the EU and its nation states. Like the Charter, the Bill of Rights appended to the United States Constitution was initially intended to apply only to the federal government, not the member states. Over time, however, and precisely because the requirements of the Bill of Rights were deemed to be 'fundamental to the American scheme of justice', constitutional provisions that were initially drafted to apply only to the federal government became generally applicable to all government entities, federal or state."

They concluded:

"This comparison suggests that the Charter will almost certainly broaden EU control over a significant range of social policies. As a result, and over time, member states may be required to submit to a more expansive EU will in human rights, social services and other areas".

That brings us to the crux of the European debate. As the German Minister for Europe said:

"the EU constitution is the birth certificate of the United States of Europe . . . the constitution is not the endpoint of integration, but the framework for as it says in the preamble, 'an ever closer Union'."

It is becoming clear to all but the most blinkered Eurocrat that the rejection of the constitution and the accession of the 10 new member states is producing a new dynamic and will create a new direction for Europe. The Conservative party, hon. Members and politicians in other member states must recognise that it is not possible simultaneously to believe in a more flexible Europe and an ever-closer Union. The logical end point of an ever-closer Union is union, while the logical end point of a more flexible Europe is a completely different dynamic.

We cannot have a meaningful debate about Europe unless we frankly acknowledge that an ever-closer union of states is not our intent. We must cut ourselves free from the resentment that so many feel about the ratchet effect that is pulling us towards an unwanted destination, if we are ever to give a positive view of how Britain's constructive engagement with a more decentralised, more outward-looking Europe could benefit the people of Britain and the people of Europe, which is not to say that other countries that want to see greater political integration should be stopped from pursuing it.

As I understand it, the treaty that most extended qualified majority voting, and was therefore of the greatest constitutional significance, was the Single European Act, which Lady Thatcher introduced. In retrospect, does the hon. Gentleman believe that we should have held a referendum on that treaty and, if so, how would he have recommended his supporters to vote?

It is disappointing that the hon. Gentleman, who has a high reputation, should ask such a poor question. We could spend our entire time going back over previous treaties. My view, for what it is worth—I was not in Parliament at the time—is that any treaty that takes away power from the British people and hands it to Brussels should be subject to a referendum. I am entirely in favour of that particular treaty, but we must accept that we joined the single market in the belief that we would get a market of mutual recognition, but we have moved almost inexorably into a market of harmonisation, which inevitably means an increased body of law. That may not be the model of the single market that I would like, but the single market has undoubtedly benefited this country and the rest of the EU, which is why Conservative Members want to see its extension into services as quickly as possible.

The hon. Gentleman was not in the House in 1986, but he was in the House when the Maastricht treaty was considered. I wonder whether he will refresh our memories on how he voted on the Maastricht referendum amendment.

That is largely irrelevant, because—[Laughter.] As I have said, any treaty that gives away powers from the UK to Brussels should be subject to a referendum. We could have saved ourselves a great deal of angst in this House, and in the Conservative party, by holding a referendum on the Maastricht treaty. Any British Government must understand one thing: they do not own the sovereignty of the British people, which they borrow from election to election, and they have no right to give away the British people's powers without the specific assent of the British people.

rose—

I shall be generous to the Labour party's future talent and give way once more.

The hon. Gentleman has given way to me two times.

Twice.

If the hon. Gentleman likes, twice. Is he saying that the extension of QMV in the Single European Act was a good thing for Britain because it allowed us to have a deeper and more effective single market, which he would like to see extended to services through QMV?

We have all benefited from those innovations. I want to see a proper market in services because European businesses cannot operate efficiently on a global basis unless our current market is extended into services, which is a reasonable step to take. As I have said, however, anything that takes powers away from the UK and requires further treaty change should be subject to a referendum. We should put the widespread abandonment of the British vetoes in the constitution to the British people.

Most importantly, the Prime Minister told us that we would have a referendum irrespective of what happened in other countries. The Foreign Secretary has told us that the ratification process will continue in other European countries, so he may want to answer this question—will Britain have a referendum? The lack of an answer shows that the promises made to this House are utterly worthless, because we were promised a referendum if the process continued. The Foreign Secretary will not tell the House whether the British people will have a say on the continuing ratification process. We have been told time after time that the British people's powers will never be given away without specific recourse to a referendum, but the Government are intent on the continuation of the process, which might ultimately lead to British powers being given away without the British people having a chance to speak.

This Government will waste a monumental opportunity to reshape the future of Europe if they refuse to give leadership in Europe on an issue as important as the constitutional treaty. We need a more flexible, outward-looking and decentralised Europe, and they are too short-sighted to provide it. We cannot simultaneously believe in a more flexible Europe and a Europe that is moving down the road to an ever-closer Union, and Conservative Members choose a more flexible Europe. The Government cannot be trusted with the future direction of Europe, and a great chance is being missed.

Several hon. Members:

rose—

Order. Mr. Speaker has placed a 15-minute limit on speeches by Back Benchers, which comes into operation now. I appeal to hon. Members to keep within that time by some margin if they can, because there is a long list of hon. Members wishing to catch my eye.

I welcome the opportunity to take part in today's debate. I also welcome the new Minister for Europe to his post, which, I am sure, will be one step in his further promotion in the Government. However, I remind him that he is the eighth or ninth—I have lost count—Minister for Europe since 1997. Some of those Ministers for Europe went up and some of them went down, but, subject to his not receiving too many compliments from my hon. Friend Mr. Davidson, I am sure that he will ascend further.

In my brief contribution, I will support the EU, the Government and, in particular, the position that the Prime Minister and the Foreign Secretary have taken over the past few weeks. In doing so, I seek to make common cause with other hon. Members on the need for better, more transparent scrutiny of all matters European by this Parliament.

I never thought that I would say this, but I pay tribute to President Chirac, who has done a momentous job in assisting our policy on European matters by irritating the Foreign Secretary. When I bumped into the Foreign Secretary in the Tea Room last night, I said that I like him more when he is angry. He replied that he is not angry or irritated, but forceful and responsive. Whether he was forceful, responsive, irritated or angry, however, I would welcome more of it in the future.

I wish to comment on how I would prefer Parliament to proceed from where we are to where I think the EU needs to be. The treaty may be as dead as the proverbial dodo, but we need to have processes in the EU that make decision making more transparent and closer to the people. As we have heard today, there were proposals in the draft treaty that did not need treaty changes—for example, the subsidiarity early warning system and the requirement on the Council of Ministers to legislate in public. Since I came into the House this afternoon, I am sure that I heard the Leader of the Opposition support that, and I believe that the shadow Foreign Secretary was supportive as well. I got the impression that he was even supportive of qualified majority voting, which was a boost for those of us who support such progressive changes.

The subsidiarity mechanism gives greater formality to something that Parliaments could already do—that is, send reasonable objections to the Commission, which it can then consider in order to do what it thinks is right. That did not need treaty change, but more formality was required, and that was why it was included in the treaty. The Foreign Secretary has stressed that the subsidiarity mechanism ought to go ahead, and I support him in that.

As for the Council meeting in public when legislating, again, that does not require treaty change, because it was agreed at the 2002 Seville European Council that it could meet in public, and it sometimes does.

I encourage my right hon. Friend to stand his ground, to stay angry and focused, and to deliver transparency and subsidiarity to national Parliaments.

If we are serious about encouraging the European Union to look to the future—and I applaud what the Foreign Secretary is seeking to achieve—let us understand that the best way to lead in Europe is to walk the walk, not just talk the talk, in our own Parliament first.

I am grateful to my esteemed Chairman of the European Scrutiny Committee over the last Session for giving way on this important point. Does he agree that when walking the walk one important signal to other countries would be to continue the scrutiny process in national Parliaments? Does he think it strange that this House's European Scrutiny Committee has not met for two months and that by the end of this month, more than 100 main items will not have been scrutinised by parliamentarians in the House of Commons but will still go to Brussels for decisions by Ministers in the Council of Ministers? What kind of message does that send out about parliamentary scrutiny in the UK Parliament?

I must have left my notes lying in the Tea Room because I intended to cover that later in my speech.

I have long argued for reform in our own procedures for scrutinising all matters European in this House. I must accept that this Government, more than any other before them, have done more to improve our scrutiny procedures in this House, but—this is a good wee phrase that I have heard before—we have done a lot but have a lot more to do. One of the first actions of our Government should have been to set up the Select Committees a lot more quickly. That is very important.

Angus Robertson mentioned some statistics. Since the European Scrutiny Committee met on 6 April, before the general election, 150 EU documents have been deposited in Parliament. The UK presidency begins in a couple of weeks' time, yet we do not have a Committee set up so have been unable even to question our Ministers on what they intend to do and what their priorities will be during their presidency. That is something that the European Scrutiny Committee has done on every previous occasion. There are 150 directives that will either need to have the scrutiny reserve removed from them or delay the business in the European Council. That cannot be a good example for the country that is taking over the presidency to set. I want to make a plea that next time our Parliament is dissolved the scrutiny processes must be in firmly in place as soon as we have a new Parliament back.

My hon. Friend is making a very important point. Likewise on the scrutiny issue, when EU legislation is being transposed into British legislation, it often ends up coming in through a statutory instrument, which means that we have only one and a half hours' debate and no opportunity to amend. Does he agree that we need to find some third way between a full Bill and a statutory instrument so that we can have better scrutiny of the transposition process into UK law?

I would welcome any such positive proposals. We have long had a debate on how best we scrutinise. Indeed, the Modernisation Committee will soon send the House some proposals that I hope will answer some of these questions. I gave evidence to the Committee and made some proposals that could improve the scrutiny process. I hope that we are able to get some progress as a result of its recommendations.

As I have some time left, I should like to answer the question that was asked of the Foreign Secretary about the European Scrutiny Committee. I have chaired that Committee since it was set up in 1998 under the new rules and procedures. The Committee meets and takes evidence in public and is televised, and we publish reports every fortnight on what we are doing. It does not meet in private. It does the same as every other Select Committee in this House. It deliberates with its legal advisers and special advisers in camera. The Modernisation Committee is proposing to revisit this and to have a trial period on how best to proceed. We should welcome that and consider it, but let us not give the impression to the public that we are discussing European issues in private, because that is not the case. I am sure that we will discuss the Modernisation Committee's proposals when they come to the House, and I look forward to that.

I am afraid that I cannot resist an historical reference. I apologise to those, including John Bercow, who has just left, who may have heard it before. It is this: there was an opportunity during the Committee stage of the Maastricht Bill to vote for a referendum. It was provided by new clause 51, which was tabled by Mr. Bryan Gould, who was then a Labour Opposition Member. There was a vote, and if my memory serves me right 50 or 60 Members voted in favour of a referendum. I do not offer that as an effort to establish virtue on my part or on the part of my right hon. and hon. Friends but to point out that there was an opportunity for those who felt that the treaty of Maastricht went so far that a referendum was required to express that preference by way of a vote. It is notable that the treaty of Maastricht was the origin of the common foreign and security policy about which we have had so many discussions in this House, and which envisaged the possibility of a common defence. That has not proceeded for reasons that are doubtless intelligent and sensible. However, it is worth re-examining Maastricht when people feel concerned about the extent to which—they claim—powers would be transferred unnecessarily and illegitimately to Brussels as a result of the constitutional treaty, which has been the subject of negative votes in France and the Netherlands.

We owe Mr. Hood—I wanted to say "Clydesdale"—thanks because he has brought the debate to where precisely we go from here. Although I found the contribution of Dr. Fox interesting, it seemed to those of us who are survivors—I use that expression advisedly—of the many debates on the constitutional treaty that he was dwelling in the past.

Much of what we discuss comes to down to belief. I shall therefore start with what could be described as an affirmation of faith. I have no doubt that the European Union has been instrumental in promoting peace, stability, democracy and human rights throughout Europe. With NATO, it has strengthened our security and, through the free market, it is the foundation of our economic prosperity. If that were not so, how do we explain why so many countries, freed from the yoke of communism, have shown such unbridled enthusiasm for joining not only NATO but the European Union and availing themselves of its benefits?

I believe—and have no doubt—that there is no option in the modern world for states to do other than co-operate in tackling global challenges such as cross-border crime, terrorism, weapons proliferation, the environment and climate change. Isolation or failure to co-operate would undermine, not enhance the national sovereignty, which we all, whatever our position, regard as greatly important.

I was intrigued to read early-day motion 318, which two of the right hon. and learned Gentleman's new colleagues tabled. If I interpret it correctly, it takes a much more lukewarm approach to the EU. I appreciate that custom and practice means that he cannot sign that early-day motion, but does he support its spirit?

It is the curse of the Front Bench not to be able to control the Back Bench. New Members of Parliament are entitled to their point of view; I am now setting my position clearly and unequivocally on the record.

Later this week at the Council meeting, the Heads of Government would do well to reaffirm their commitment to a Europe that is secure and economically strong. I do not discount for a moment the importance of the budget or the rebate, but over-concentration on them would be a diversion from a much larger debate, which is now necessary and prompted by the no votes in the referendums in France and Holland.

We have to decide what sort of Europe we want before we can determine the amount of resources required to support it, and what individual members are required to pay for that support. Of course, the rebate and the budget are important, but how much more important is the threat of nuclear proliferation on our doorstep or the vulnerability of European states on energy supplies? If we consider the long-term significance of those issues, perhaps it will put the rebate and the budget into perspective.

It must be the case that prolonged infighting, as one newspaper described it in the past two or three days, can only damage the European Union in the eyes of its citizens. It is worth making a point that could be perceived as partisan, but has some substance. The main protagonists in the European Union, Mr. Chirac, Mr. Berlusconi, Mr. Schröder and even the Prime Minister are, for various reasons—some voluntary and some caused by other pressures—reaching the end of their political careers. Perhaps a new prospectus for Europe requires new people to promote it.

I want a European Union that is decentralised, transparent and accountable and that protects human rights, civil liberties and the rule of law. There is no other economic association that requires those who wish to join it to satisfy a set of criteria on good governance and human rights. The Copenhagen criteria are unique. No other economic organisation or association requires its members to satisfy such standards of governance. That is often forgotten and not given sufficient emphasis.

The right hon. and learned Gentleman said that he was in favour of a decentralised Europe. Does that mean that he opposes the ratchet whereby powers can be transferred only from European nation states to European institutions, and not back again? If he opposes that, will he nominate any powers or competences that he believes should be transferred back from central institutions and decentralised to the nation state?

I do not accept the metaphor of the ratchet, which is in common use on the right hon. Gentleman's Benches. I believe that Brussels should do only what it needs to do and that the principle of subsidiarity should be applied ruthlessly and rigorously. That was one of the advantages of the proposed constitutional treaty. It referred to subsidiarity and contained some measures that were designed to try to achieve that.

Will the right hon. and learned Gentleman give way?

In a moment.

The measures were not strong enough. Indeed, the hon. Member for Buckingham, who is currently absent, and I agreed on several occasions that more should be done. When we held a similar debate the other day—there is a sense of déjà vu about the proceedings—I posited that there should be an annual audit of subsidiarity. There should be a report to the House on the extent to which the principle had been properly applied in Europe. One can take a variety of measures to ensure that Brussels does only what it has to do for the purposes of the competences that the member states of the European Union have conferred on it.

Another advantage of the constitutional treaty was that it expressly set out that Brussels had only those competences that were conferred upon it. That appears in the early part of the treaty. We have lost that if the treaty no longer has any viability.

Will the right hon. and learned Gentleman give way?

The hon. Gentleman should contain himself, but I shall give way to him now.

How can the right hon. and learned Gentleman possibly describe the constitution as a decentralising measure when it extends qualified majority voting to 63 further matters? Is he genuinely in favour of that? How can he call it decentralising?

I hope that the hon. Gentleman has been through the 63 matters. One is the appointment of the Court of Auditors. Do we need unanimity in the European Union before we deal with such issues? I have seen the 63 matters, and I believe that there are occasions when qualified majority voting is in our interests. It makes no sense to reject qualified majority voting on principle in all circumstances unless one is willing to accept that, in all circumstances, every country can have a veto, and that all progress and development in the European Union, for example, on strengthening the single market, should be subject to the veto of one aggrieved country.

As I have said, I believe instinctively in the European Union but I believe equally instinctively in the need for its reform. I also believe that, where criticism is justified and constructive, we should not shrink from such criticism.

Let me deal briefly with the constitutional treaty. As I think is more than clear from what I have said already, I believed that the treaty should be supported, and my right hon. and hon. Friends supported it throughout discussions in the House, as we did in the previous Parliament on Second Reading of the Bill designed to give effect to it. Of course, it was not perfect, but the treaty of Rome most certainly was not perfect, and whatever claims were made for the Single European Act in 1986 by the then Government, I do not suppose that it was perfect either. Nor was Maastricht perfect, nor Amsterdam, nor Nice. All, however, in due course, passed the test of this House. However sympathetic one might have been to the treaty, one must now accept that we cannot afford to ignore the most recently expressed political will of two countries of Europe. We should also recognise that the likelihood of the people of France and the Netherlands reversing their vote is remote, and that the likelihood of the Governments of France and the Netherlands asking their citizens to vote again is even more so.

The harsh, practical fact is that without Dutch and French assent this treaty cannot be enacted. I therefore do not believe that it would make any sense to have a referendum of the British people. I have described that previously as being quixotic, and it would be bizarre to ask the British people to endorse a treaty that could not be enacted. One needs only to ask oneself, as Mr. Clarke did to some effect on a previous occasion when we discussed these matters, what sort of turnout we would achieve in a referendum designed to vote yes or no to a treaty that could not be enacted. I suspect, being rather partisan, that only the zealots who are opposed to Europe in all circumstances would feel motivated to come out and vote.

I am certainly not a zealot opposed to Europe. Given what the right hon. and learned Gentleman has just said about the sensible decision not to proceed, will he give some advice to his colleagues in the Dutch Liberal party who have been calling for precisely the opposite?

As I have demonstrated, I am not sure that I can give advice to Back-Bench colleagues in my own party. Setting myself up as an honorary and no doubt unpaid adviser to the Dutch Liberals does not seem to me to be a particularly constructive approach. We must all make up our own minds. If one were in a political party in Holland, perhaps one's attitude would be conditioned to a large extent by what had happened there. We are a little more detached and we are entitled to take our own view. I most certainly do not think that it would make any kind of common sense to seek a referendum on a treaty that cannot be enacted. In that regard, I find myself not for the first time wholly at one on these matters with the robust views expressed by the right hon. and learned Member for Rushcliffe.

I am grateful to the right hon. and learned Gentleman for making the point that he does not necessarily want to speak for the Liberals of Holland. Can he make clear, however, what is the view of the Liberal Democrats in the United Kingdom, given that their constitutional spokesman in the European Parliament, Andrew Duff, has said:

"My preferred choice, and that of the Alliance of Liberals and Democrats, is to continue with the ratification process as planned. Meanwhile France and the Netherlands can reflect . . . on the real consequences of their negative votes."

[Interruption.] Oh, that was last week, was it? Do the Liberal Democrats have a position here and a position in Brussels, a position this week and a position last week? Can the right hon. and learned Gentleman tell us what the position will be next week?

There is a terrible sense of déjà vu about this. I said to the hon. Gentleman last week that I thought that he had missed a career in music hall. If he goes on to any greater effect, I might even think that he could have survived the Glasgow Empire on a Monday night.

We had this out last week. Labour MEPs voted in the European Parliament against their Front Bench's view in relation to the working hours directive. People have different views. I am telling the House the view of my party and what I believe to be the proper approach on this issue—an approach that is likely to commend itself to the public rather more easily than the suggestion that we might have a wholly artificial test of public opinion with a referendum in relation to a treaty that could not be enacted.

To use the expression of the day, there ought to be a period of reflection. That period of reflection, however, must be used to try to re-establish confidence and trust in the European Union, remembering always that the structural problems with which the constitutional treaty was designed to deal still remain with regard to the operation of an enlarged Union. I was glad to hear the hon. Member for Woodspring accept that a European Union of 25, perhaps soon to be 27, cannot be run on the same arrangements as those that obtained with a European Coal and Steel Community, as it first was, of six.

That does not mean that I do not remain of the view that any significant change in the relationship between the Union, its member states and its citizens would require a referendum. If there are non-controversial items in the treaty, however, which have the aim of greater transparency and efficiency, and which can be achieved by institutions changing their methods and without any significant transfer of power to the Union, those should obviously be enacted.

We have already had extensive discussions—we did so at Prime Minister's questions—on the issue of transparency and the Council of Ministers. More can be done to involve national Parliaments and to allow national Parliaments—I was one who was rather more sympathetic to the idea of a red light than an amber light—the opportunity to express their opposition to proposals coming out of Brussels. Indeed, the Commission itself could undertake that, when a significant number of Parliaments entered caveats, any draft legislation would be suspended to ensure that proper regard was given to the principle of subsidiarity.

The Commission could be streamlined. Under Nice, for example, every member state has the right to a Commissioner. If Bulgaria and Romania accede, the Commission will increase from 25 to 27 Commissioners. How can that possibly be justified? As I understand it, that can be done without constitutional change, and it would obviously be desirable—

Give up the British Commissioner.

I will leave the hon. Gentleman to put that point in such meetings of the Labour party as he thinks might receive it sympathetically.

There is no doubt that the European Union will need to evolve. Further changes may be necessary to ensure that it works more effectively and efficiently. I believe fundamentally that change should be incremental, not convulsive. That is why I said in last week's debate that we must get away from the notion of a Maoist cultural revolution in which the European Union is permanently engaged in the creation of treaties and then their ratification.

It also seems that increased powers for national Parliaments in the European legislative process, and more frequent consideration of draft European legislation, would be an effective method of stimulating the extensive debate for which the hon. Member for Woodspring has called and which most of us would accept. The Prime Minister seemed to be sympathetic to that point today.

At Prime Minister's questions, the Prime Minister talked of two particular areas on which I want to touch briefly. The first was the impact of globalisation and he identified rightly the economic significance of the rise of India and China. We would do well, however, to consider not just the economic advance but the political advance. One does not have to go far among Indian politicians to find an overwhelming conviction that they are now entitled to a permanent seat on the United Nations Security Council. In relation to China, we do not have to accept the official figures for defence spending. Rather, we should look behind those figures to see that, in addition to the quite remarkable economic growth that China is enjoying, there is equally a growth, which is perhaps not quite so spectacular, in China's defence posture.

It is inevitable, if those countries expand economically in the way we have seen and in the way we predict, that they will exercise greater political influence, or seek to do so. That, I believe, is an overwhelming argument in favour of the European Union being not just a free trade area, but an institution that has a political purpose and, so far as possible, a unanimous common foreign and security policy.

The Prime Minister pointed to a second area, and he is quite right to do so, particularly against the background of the last two or three years in our relationship with the United States and Iraq. He said that it is important to consider the relationship between the European Union and the United States. That is absolutely right. I have some criticism, which I have voiced in the past, about the nature of the current relationship between our Government and the American Administration. I would prefer what I have described previously as a partnership of influence.

One eminent commentator in a broadsheet newspaper today has already begun to say that, in this new approach to the European Union, we should regard our membership of NATO as a shackle rather than a prop. That is a fundamental point to make. I believe NATO to be the cornerstone of Britain's defence and I find it very difficult to envisage circumstances in which I would do other than support NATO, and support it to the best of my ability, but there are others who are already beginning to raise these topics. That, once again, emphasises the need for the European Union to be not just a free trade area and a single market, but an organisation with a defined political purpose.

The right hon. and learned Gentleman began his remarks by saying that the free market has an important role to play in the prosperity of Europe and he is now talking about the impact of globalisation, yet in Europe we have 19 million unemployed and our job creation is way below that of the United States, as is our productivity. It is all very well talking about political structures. What economic reforms does Europe need to introduce far more quickly?

Not all countries in Europe suffer from the ailments that the hon. Gentleman described. For example—again, I think I said this last week—since joining the single currency, Ireland and Finland have enjoyed growth rates in excess of those of others. Many of the problems that France and Germany have experienced are structural. Indeed, there is a compelling argument for saying that it is easy to blame Europe and the single currency for a failure by some Governments to take decisions domestically that would otherwise prove unpopular. Anyone who has followed the election result in North Rhine-Westphalia will see that Mr. Schröder's efforts along those lines have proved extremely unpopular politically, and of course have precipitated a German general election in September.

I do not have a list of measures, but we need to consider the Lisbon agenda, which I shall come to in a moment, as well as European competition policy. We need a liberal, outward-looking trade policy towards the rest of the world, especially developing countries. Those seem to me to be the mechanisms by which to improve the economic performance of the European Union.

I cannot accept what the right hon. and learned Gentleman is saying. Does he not accept that Germany's real problem is a massively deflationary impact deriving from its membership of the eurozone? Germany joined the eurozone at a relatively high parity and interest rates were too high. It is not permitted to reflate using fiscal policy either. In Ireland, the opposite is the case.

Before making that judgment, we would have to consider the whole German economy, not least the nature of welfare state provision and whether that provision—the rights of retirement and levels of benefit it gives—can be sustained in that country in current circumstances.

I am not suggesting for a moment that we can compete against India or China in terms of wage rates or things of that kind. We must utilise innovation and be quick in the market—much quicker, perhaps, than we have been—but I certainly do not believe that it is simply a matter of membership of the single currency that has brought those difficulties to Germany.

There are structural problems and political inhibitions. Unless and until those are overcome, the position of Germany will continue to be one of great difficulty, although there are those who argue, with some justification, that, as a consequence of the deflation to which the hon. Gentleman referred, the Germany economy is, in its fundamentals and underlying features, extremely strong. They also argue that Ms Merkel, if elected in September, may well be the beneficiary of a substantial economic improvement in Germany.

rose—

If the hon. Gentleman will forgive me, I must make progress as others want to speak.

We need a greater effort within the framework of existing treaties to improve and extend the single market, including in services. I have said already that we must strengthen competition policy and have an outward-looking trade policy towards the rest of the world, particularly developing countries. On the rebate, we most certainly support the United Kingdom Government's approach. The United Kingdom is the European Union's second largest contributor. Of course, our receipts from the European Union are comparatively low.

No doubt Mr. Davidson has gone to the Glasgow music hall. [Interruption.] Oh, he is back. This is the point that I want to make: if there is to be any serious effort to reduce expenditure on the common agricultural policy, there may be a price to be paid for that in this country. We have to accept that. We cannot reduce overall support in the European Union and expect the French to take all the grief. That is an internal, domestic argument that we would have to have politically.

It is worth remembering how the current CAP arrangements came into being. We should remember—this made something of a change to the Prime Minister's usual sunny disposition—that, in 2002, he arrived at a Council meeting to discover that Schröder and Chirac had met the night before. They presented him with something of a fait accompli. Perhaps there were options in terms of not signing up to it, but, of course, the Government signed up, no doubt because at the time it was felt necessary to do so.

It is right that there should be a cap of 1 per cent. on the European Union budget, but I want to make the point that I put to the Foreign Secretary in an intervention: there must be concerted efforts to improve fiscal discipline, transparency, the elimination of waste, efficiency and the elimination of corruption. A greater application of subsidiarity in fields such as social policy seems to me desirable.

I still believe that there are circumstances in which Britain would be well advised to join the single currency, although not at the moment.

The right hon. and learned Gentleman mentioned corruption. Does he agree that the European Court of Auditors has for a number of years regularly signed off the Commission's accounts with no qualifications at all? The problems have been in the accounts of the member states, so far as member states have been disbursing a large number of programmes. Of course, we could take that power away and give the Commission responsibility for managing all those programmes throughout the Union, but would not that be an amazingly federalist proposal? Meantime, is not the corruption a function of the member states' role in the administration of the European Union's programmes, not of the institutions of the Union itself?

The hon. Gentleman is right, but those things, however they are caused and whoever is responsible for their supervision, none the less constitute a waste of money sent to the European Union for the purposes of the Union. If the member states are serious about dealing with this, then, as his intervention quite properly points out, they have the remedy in their own hands.

On enlargement, I hope that the candidates will not be the casualties of the current disarray in the European Union. I hope also that the accession of Romania and Bulgaria will proceed, provided that they meet the economic and governance criteria to which I referred. I also support the accession of Turkey, because it is fundamental to demonstrating that the European Union is genuinely outward looking and that it does not reflect the values, civilisation and religion of western Europe only.

Toward the end of this speech, the Foreign Secretary made a rather eloquent case for Britain's wholehearted participation in the European Union. On behalf of my right hon. and hon. Friends, I can do no more than to endorse that case.

I thank you, Mr. Deputy Speaker, for this my first opportunity to address the House as a Member of Parliament. I have been told that the long-held tradition is that a new MP should praise his predecessor, and I realise that this may be more difficult for some than for others. For me, it represents a particular challenge. My predecessor, the Reverend Martin Smyth, was MP for Belfast, South for some 23 years—since 1982. Given that Martin is a former grandmaster of the Orange Lodge and was an outspoken and constant critic of the Good Friday agreement, it would fair to say that he and I operated very much at opposite ends of the Northern Ireland political spectrum in almost every way. He is, however, an honest man and consistent in his views, and the efforts that he put into trying to frustrate the progress of the Good Friday agreement are worthy of note. His attempts to undo the agreement were in no small way instrumental in my victory on 5 May, and for that I am extremely grateful to him. Despite our many differences, I wish him well in his retirement.

I am pleased to contribute to this afternoon's debate on the future of the EU, and perhaps I will have a greater opportunity to do so on another occasion. Britain's attitude to Europe has long fascinated me, and that fascination remains after some of the events during today's Prime Minister's Question Time. As an Irishman and a member of a political party that fully embraces the ideal of European unity, I have looked at Britain's relationship with Europe with great frustration. It depresses me that a nation of many millions more people and with much greater financial power than most could not learn from the experiences of a simple country such as Ireland, whose financial power and political clout is much less, but which has benefited greatly from the social, political and economic opportunities offered by the EU.

For me, having listened to today's discussions, there is too much talk about putting Britain at the heart of Europe, and then facing the other way and starting to walk. At times in my despair, I am reminded of the apocryphal newspaper heading from early in the previous century, which stated, "Fog in channel—continent isolated." Given certain comments made in the House today, it is clear that some still consider the continent isolated. That remains one of the most depressing attitudes that we can experience in modern political life.

However, it is perhaps more depressing to consider what is happening to Northern Ireland in terms of attitudes to Europe. Despite unprecedented levels of EU investment in our region, totalling more than £3 billion, Northern Ireland returned three anti-European MEPs last June. That the EU remains one of our strongest supporters of the peace process and the move towards stability in Northern Ireland was established beyond doubt only one week ago, when, despite last June's verdict, the European Commission announced a further £97 million of Peace II funding. We in the Social Democratic and Labour party, along with my colleagues in this House, recognise and welcome that support, and we remain equally strong in our commitment to Europe.

In a maiden speech, it would be remiss of me not to mention some of my local interests. Although I am pleased to have the opportunity to speak in this august Chamber and to contribute to today's debate, the truth is that I would much prefer to be back on the ground in Belfast, working in the local devolved Assembly to bring peace and to strengthen the peace process that has been working there. I would prefer to be in Belfast, delivering real change for my constituents and making the Good Friday agreement work, but it is here that I must be, because of the intransigence, cynicism, lack of imagination and insecurities of other political movements in Northern Ireland. Because of the absolute absence of any democratic accountability in Northern Ireland, it is here that I must be. Because the Government have shirked from their commitments under the Good Friday agreement and have at times chosen the way of shady side deals and secret promises, it is here that I must be.

I am here without apology as an Irish nationalist. Like many Irish leaders before us down the centuries, my party and I choose to stand here and to fight our corner honestly, and to argue an honourable case. With no other forum in which to hold the Government to account, and no other way to address the many serious issues facing my constituents, we stand up for them and fight for their needs. It saddens me deeply that five out of Northern Ireland's 18 MPs do not have the courage to do the same and to be here to argue their case.

I stand here and fight for a better deal for my constituents because all the people of Belfast, South—nationalists, Unionists and those of neither persuasion—deserve no less from me. In Belfast, South, I am privileged to serve a constituency that encapsulates much that is good, and which perhaps better than any other illustrates the many and varied issues that are holding Northern Ireland back. It is the home of some of the most successful business and professional people in the country, and it also includes some of the areas of greatest deprivation and social need. It contains some of the most fiercely loyalist, and some of the most staunchly provo, districts in Northern Ireland.

Some of my constituents have enjoyed the benefits of relative economic success, while many more live under the yoke of paramilitary crime syndicates and are brutalised daily by gangs of one hue or another. The malaise that hangs over much of Belfast, South is the same one that hangs over Northern Ireland. It is a malaise born of economic stagnation, cynicism about our politicians and a general disillusionment with the breakdowns and the stop-start methods of the peace process. It is a malaise that is exacting a terrible human toll. I give a simple example. A generation of young men has been cut down by one of the highest suicide rates in Europe. In my constituency alone, we can treat only one third of those presenting with mental illness, an issue which we discussed earlier today. The development of mental health services in Northern Ireland has fallen well behind the rest of the UK. This is particularly so in, for example, certain inner-city areas in my constituency that have levels of deprivation and poor social cohesion that are among the highest in Northern Ireland. Inner-city deprivation results in higher mental health needs, but community mental health services in Belfast, South are inadequately developed, and staffed far short of the levels required to meet the range of mental health needs.

The disillusionment with our political process to which I referred has been encouraged by—and, in turn, encourages—parties whose strength comes from fear and division. It is an attitude that has served those parties well, but it serves no one else. As the parties of division have succeeded, our shared public services—the bread-and-butter issues that reflect the needs of our ordinary people—have failed. Be it the health service, schools, the infrastructure or the economy, we are seeing the direct and devastating effects of political failure. While the extreme loyalists and provos play their political games, everybody else suffers.

It might not be entirely clear to the House what a failure direct rule can be for us at times, but I would like to give two simple examples of what happens when accountability slips and is removed—examples that should be close to the heart of this Government. In Northern Ireland we have good schools and excellent teachers who are struggling to educate a new generation of our children to practise reconciliation, to build a future, to break the cycle of underachievement, resentment and violence, and to dare, perhaps, to hope for a better future. I am aware that the Government were once elected on a platform of education, education, education, but I regret that in Northern Ireland our education budget has been cut.

At times we hear of difficulties across Britain, and criticism of the Government that I often do not accept: I support the Government and most of what they do, and I do not like some of the allegations that are made. Let me, however, give a second example. Our region struggles with planning policy perhaps more than any other. We have a city, Belfast, that needs a co-ordinated urban regeneration policy. Perhaps I could refer briefly to what Sherlock Holmes might historically have described as the Sprucefield John Lewis case. Developers sought permission for a massive 500,000 sq ft development 11 miles from the city. I was satisfied that it would never go through—that the application would be thrown out—as was the chief executive of our planning service. Unfortunately, our new local Environment Minister had other plans. Barely a fortnight into the job he called a press conference and announced that the project would go ahead, devastating the heart of the city and Belfast, South in particular. My constituents are bewildered, to say the least.

Various factors have combined to bring the SDLP to this point. I have already mentioned the parties of division, but I am sad to say that at times another factor has been the attitude of Government. Last year, Government decided to sideline the SDLP in negotiations. Much time and energy was devoted to the parties of division. By sidelining the SDLP, Government sidelined the party of inclusivity and pluralism. It was never going to work, and when it failed the SDLP was expected to throw out the Good Friday agreement and cobble together a shady deal. We are not interested in a shady deal. We believe that there is a future in Northern Ireland. That is what we are working for here, and that is what we are prepared to fight for here.

We in the SDLP have shown, I think, that we will not be ignored. We stand up to militant thugs on the ground at home, and we will stand up politically everywhere else for what we believe in. For centuries Irish Members of Parliament have been returned to this House to make a case for justice, equality and peace in Ireland. The SDLP is proud to have three Members here, and to continue that honourable tradition.

Our party has played a major role in bringing the region to where it is today, bringing about the peace process, and bringing about the stability—or relative stability—that has been created. We stand closer today to achieving the goals that have been sought for centuries, the goals of justice, equality and peace, than at any other time in our history. I must warn the House, however, that Northern Ireland stands on the verge of something much less positive.

My colleague and great friend, the former Member of Parliament Seamus Mallon, has talked of the balkanisation of Northern Ireland. That is a nightmare for all of us. If the parties of division have their way, we will all live in single-community ghettos. I assure the House that the SDLP will stand up to those who would seek to establish such an apartheid society.

When we began our struggle 35 years ago, marching for civil rights—it continued until the time of the Good Friday agreement, as we sought justice, equality and fairness—we wanted to create a pluralist, tolerant society where every child would be cherished equally and our towns and cities would be shared places welcoming all. In that struggle, we will continue to fight for justice on behalf of families such as the family of Pat Finucane. We will continue to stand beside families such as the McCartney sisters as they resist mob rule and thuggery, and provide an example for all of us of decency, a high profile and courage.

Belfast, South reflects many of the problems of modern society in Northern Ireland, but it is a constituency from which I believe we can all draw some hope. It is one of the very few areas left in Northern Ireland where people from both main traditions can live genuinely in mixed communities and work together. It is a constituency where, despite some high-profile setbacks, we are welcoming in new immigrants from diverse ethnic backgrounds across the globe—from eastern Europe, Africa and Asia. I look forward to working every day during this Parliament to encourage all that is good in my constituency, and to shine a light on that which might be rotten. I will stand up as best I can to those who would divide, instil a fear or hold back our potential.

Thank you, Madam Deputy Speaker, for enabling me to make my first speech to this august Chamber.

It is a great pleasure to be the first to congratulate Dr. McDonnell—although I see that the Foreign Secretary is competing with me—on his excellent maiden speech. He spoke eloquently about his constituency. He mentioned his predecessor, the Reverend Martin Smyth, whom many of us counted as a friend. I hope that the hon. Gentleman will enjoy as many friends in the House as his predecessor, and that his constituents will enjoy the benefits of peace, of which he spoke eloquently as well. He also showed that he has understood from the beginning that it is not necessary to shout in the House in order to be heard. That is a new insight for some Northern Ireland Members in particular, and I hope it will set a continuing example to many other Members.

The hon. Gentleman referred—this is relevant to today's European debate—to the old saying "Fog in Channel, continent cut off". That may not be a fair comparison with the situation today. A closer analogy would be "Fog in Brussels, people of Europe cut off". One of the disappointments of the debate so far is that the Front-Bench speeches—with the exception of the speech of my hon. Friend Dr. Fox—have not quite lived up to the drama of what has happened. I know that this is the third parliamentary occasion on which the subject has been discussed in the past nine days, and that may partly explain it; but Sir Menzies Campbell is still cheerily clinging to the view that Germany's economic problems have nothing whatever to do with the euro. He was right to point out that those problems had other origins, but it may now be time for the advocates of the euro to recognise that it may be one of the factors making economic conditions in the eurozone substantially worse.

Even German Ministers now seem to think that. Apparently, Germany's Economy Minister, Mr. Clement, said at the beginning of the month:

"We're exporting stability within monetary union, and for the good of monetary union. We're paying for that, and it has to be said that the price is not negligible since we're losing the comparative advantage of lower real interest rates".

So even German Ministers are beginning to say that the euro is having an adverse effect on their economy. It is time for advocates of the euro in Britain to recognise that as well.

It was also disappointing to hear the Foreign Secretary continue to defend some of the supposed innovations in the European constitution as an improvement in democratic procedures. There should be a bigger role for national Parliaments, he said, quite rightly. Many of us throughout the House would agree with that. However, are we to believe the procedures outlined in the constitutional treaty, whereby if we get a third of all the other Parliaments in the European Union to object to something the Commission will deign to give it a second thought—and not necessarily change it? Can anyone imagine telling the parish councils of Britain that only if a third of them passed a resolution objecting to a Government White Paper would we consider thinking about it again in the House? That would be regarded as extremely arrogant, yet we are meant to accept it in the national Parliaments of Europe as a democratic crumb from the Brussels machine. We are meant to rejoice in the idea that our views may be considered if we can get other Parliaments to come along with us. If the Government are to champion the role of national Parliaments in European democracy, they will have to be far bolder and more radical than that.

It was also disappointing to find evidence in the Foreign Secretary's speech that the Government's negotiating position for the European Council may not have been fully thought through. My right hon. Friend Mr. Curry asked him about the implications of the Government's proposals at the Council for existing policy on the common agricultural policy and for the transition to a new system of farm payments over the next five or seven years, and it has to be said that the answer was roughly along the lines that the Government "haven't the foggiest" about those implications. Those, however, will presumably be among the first questions that French and German Ministers will ask when the UK rebate is discussed in the Council.

Nevertheless, I want to heap some praise on the Foreign Secretary today. Much ironic praise, no doubt deserved, has already been directed at the Minister for Europe, but it was the Foreign Secretary—or so it is said in press reports—who persuaded the Prime Minister during the course of last summer to commit this country to a referendum, and it was the Prime Minister's commitment, according to other press reports, that prompted President Chirac to hold a referendum in France. It just may be that if any one individual is to be thanked more than any other for the destruction of the European constitution, it should be the Foreign Secretary, who threw the pebble that created the avalanche. If that is the case, many of us would like heartily to congratulate him on doing so today. He has been a democratic catalyst and I hope that he will be one again.

Unfortunately, as a catalyst, he put the Prime Minister's policies on these matters through yet further changes. I believe that the Prime Minister is now on his seventh policy in 18 months on the question of holding a referendum on the European constitution. My right hon. Friend Mr. Duncan Smith compared it at Prime Minister's Questions to the Kama Sutra, but even with all the Prime Minister's skills of ambiguity, his endemic contortions and U-turns, he is not quite in that category. Nevertheless, there have been seven different policies so far.

First, the European constitution was nothing more than a tidying-up exercise, clarified, when I asked Mr. Hain some months ago, into a three-quarters tidying-up exercise, which was not important enough to justify a referendum in the UK. Then the policy changed, when the Prime Minister decided that it was too important to be put to a referendum in the UK. Holding such a referendum, apparently, would have been a gross and irresponsible betrayal of our national interest because parliamentary scrutiny was required.

The third policy was that a referendum was not ruled out, after all. The fourth was that it was an excellent idea—this was after the Foreign Secretary had done his handy work of persuasion—and the Prime Minister stood at the Dispatch Box last summer to declare in ringing terms:

"Let those of us who believe in Britain in Europe—not because of Europe alone, but because we believe in Britain and our national interest lying in Europe—make our case, too. Let the issue be put and let the battle be joined."—[Hansard, 20 April 2004; Vol. 420, c. 157.]

Astonishingly, after that he refused to join in the battle at all and spent the next 12 months totally evading that battle. It is as if Henry V had said before Agincourt that there were

"gentleman in England now abed should think themselves accursed they were not here" and then gone off for a nap himself. That was the position of the Prime Minister.

Having failed to join the battle and having been understandably quizzed in the general election campaign on whether a referendum would happen, we were then assured by no less than The Sun on 20 April that Blair had given

"an unequivocal promise to The Sun that he will allow the people to vote in a referendum on the constitution, even if the French vote No on May 29 and effectively kill the treaty."

That unequivocal promise, then, became the fifth Prime Minister's policy the issue.

Now, however, we have a sixth policy, which is a period of reflection. After a lengthy such period, we are told, we should take a leadership role in Europe. That is not exactly a stirring call to battle. A seventh policy is no doubt on the way—after that period of reflection or perhaps after the European Council meeting.

It is clear that the European constitution is dead. Of course, it is right for the Government not to hold a referendum if other countries recognise that the constitution is dead, but we should not believe that there would not be a large turnout in a referendum or that a referendum should not be held in this country because people would not find it interesting enough. They would find it interesting and they would turn out in large numbers. The real reason for the decision not to hold a referendum is that the Government know full well that there is not an earthly chance of winning such a referendum in this country. As I said, however, if the European Council is to consign the constitution to where it belongs on the scrapheap, the policy would then be acceptable.

It seems to be taking some European politicians a long time to realise what has happened. One French Minister on European Affairs said last week, in advocating that other countries should proceed with ratification:

"It is a question of democracy. It is not for one member of the EU to decide for the others, or to block the process of ratification of a treaty signed by 25 countries."

That is a remarkable statement. Surely, in a treaty that requires unanimous agreement, it is indeed for one member to decide for the others. If that country wishes to do so, it can block ratification. It merely adds to the bizarre nature of the remarks that I quoted that it is that Minister's own country that has blocked ratification. I hope that the Foreign Secretary will ram those points home—albeit in a diplomatic style—when he attends the Council in a few days time.

I am following the right hon. Gentleman's argument closely, but was it not Conservative policy to campaign for a no vote so as to renegotiate a better agreement? Has not France adopted the same approach in an attempt to secure a better deal for itself?

The French voted no emphatically, and they no doubt had many reasons for doing so. No doubt, some people were dissatisfied with their Government, and I believe that many felt that they were losing control of their own affairs. We can all believe in a better agreement, but what better agreement is available? For a long time, we have been told that there was no plan B if any country voted no, and no possibility of anything being agreed in place of the original proposals. We shall see from the actions of the European Governments whether that was a correct statement of the position.

Many of us would like better arrangements in Europe, and I shall use the minutes remaining to me to say what I think they should be. However, I believe that three great tensions in respect of the future development and policies of the EU have been thrown into sharp relief by the no vote in France and Holland. Notwithstanding their period of reflection, the Government must be very clear about where they stand on each of those tensions.

The first tension is the one emerging between enlargement and integration. It is said that an EU of the present size cannot be run without much closer integration. There is a danger that people will say that enlargement must pay the price now that integration is not immediately possible. Yet Turkey, Bulgaria and Romania ought to be entitled to join the EU. More than most, they have suffered from disunity in Europe over the centuries. If enlargement is not possible on the current model of how the EU is run, it is time to change that model. The Government must become the advocate of a looser and more flexible Europe, as suggested by my right hon. and learned Friend Mr. Howard and others over recent years.

The second tension is that between democracy and centralisation. Decisions in a democratic society are taken at the level at which people gladly accept governance at other people's hands, and it is often obvious what that level should be. For example, we in Yorkshire would not accept that decisions about streetlights should be taken in Lancashire, and heaven forbid that any such thing would ever be proposed in this House.

Equally, it is clear that people in France and Germany—and even more so in the Netherlands—do not want their taxes to be determined in other EU countries, but increasingly that is what is happening. We are meant to have a veto over taxation in the EU, yet some of this year's biggest decisions concerning the tax revenues of this and other EU countries have been taken not in the Treasury, but in the European Court of Justice.

The ECJ uses single-market anti-discrimination rules to expand the powers of the EU in affairs of taxation, and it rules against national laws in between 80 and 90 per cent. of cases. That shows that there is a creeping loss of democracy through the operation of the European Commission and the ECJ. It is time that the Government took a robust approach and said that the European Commission should be stripped of the right to initiate legislation as it is not a democratic body, and that the powers of the ECJ should be curtailed.

We are not going to be able to develop a single European democracy. It is almost 50 years since the foundation of the EEC, but even now the original member countries have not become a common political entity or developed a common political ethos. There is no European polity.

Is the right hon. Gentleman saying that he no longer believes in the EU and that what he wants is a free trade area, full stop?

No, I believe in the European Union, but I wish it to develop in a new way. The opportunity to advocate that new way is now presented to the Government and to the Governments of those countries whose peoples have shown that they are seriously concerned by, and strongly opposed to, the current trends in the European Union.

The third tension is between economic reality and political goals, and the euro is the outstanding example of that. Many of us have patiently explained for a long time that a single currency area created without a true single labour market, or without massive budgetary redistribution within that area—as in the US—will not work effectively. We have been denounced over the years as little Englanders and opponents of progress, but now we see from the comments by German Ministers—and Italian Ministers—which have been well publicised in recent days, the immense pressures that are building up as a result of adopting for political reasons an economic policy that is now destroying the jobs and livelihoods of hundreds of thousands of people across Europe. As unemployment rises in Europe, we await the apology from the people who put the euro in place. When will the problem be recognised by the Government and when will we get the formal abandonment of the now ludicrous notion that it is in this country's interests in principle to join the euro?

Those are the tensions—between enlargement and integration, between democracy and centralisation and between economic reality and political goals. In many ways, the Government have started to speak the right language on some of those subjects, but they will have to be far bolder in what they advocate to win adherents in the rest of Europe, and do something other than fight a rearguard action at a series of European Councils. This weekend, the Government could put us in the vanguard of change, instead of the rearguard on every occasion. From what the Foreign Secretary said, I suspect that the Government will not take that opportunity, and it is a tragedy that they will not.

It is a real pleasure to follow Mr. Hague, the former leader of the Conservative party. I recall that in the run-up to the 2001 election, he said that he thought that there should be a referendum on our position in Europe. It is a pity that my right hon. Friends on the Front Bench did not take him up on that.

As a result of the votes in France and the Netherlands, we face a serious crisis in the European Union and there is no getting away from that. The European Union is a magnet not only for economic progress and prosperity, but for democracy and uniting the peoples of the former Soviet Union and of countries that were occupied as a result of the Yalta agreement in a common European home. Those countries now act as a beacon to neighbours further to the south and east, and it would be a disaster if that process were put into reverse—if enlargement were put on hold or we returned to the squabbles and conflicts that made Europe an area of war for much of the first 50 years of the last century.

It was claimed earlier by Dr. Fox that it would be inconceivable to have a war in Europe now. People have very short memories. In the Balkans, we still have the potential for conflict and war. If the situation in Kosovo went wrong, the consequences could spill over into neighbours throughout the Balkans. We still have an unresolved historic territorial anomaly in Kaliningrad and we do not yet know how it will be resolved. If the process of Europeanisation does not continue in Turkey, who knows what might happen in 20 or 30 years? There are still issues relating to the break-up of the Ottoman empire and Turkey's relationship with Greece.

It is all very well to assume that because there has been peace for most of us in the continent since 1945 and because there have been fantastic positive changes in central and eastern Europe since 9 November 1989, it will somehow go on for ever. There are still significant minorities in countries that are now members of the European Union of a Russian ethnic background. Such issues have been dealt with calmly so far, and due to the enlargement of the European Union and the fact that we send out signals to the east that there is hope for people in the countries of the former Soviet Union, we have been able to provide the possibility of a peaceful transformation out of the ashes of the former Yugoslavia and the former Soviet Union. However, it would be ridiculous and dangerous to assume that if we get a renewal of nationalism and a breakdown of the European institutions, it still somehow means that Europe will be a continent of peace for all time.

The hon. Gentleman is the first person today to make the important point about countries that are not members of the European Union. In that context, does he acknowledge that the role of the Council of Europe and the European convention on human rights is increasingly important, and that the European Union cannot deliver peace and democracy to the whole of Europe because we need other agencies, too?

That is true, but organisations such as NATO—I am a member of the NATO Parliamentary Assembly—are also important, as is the Organisation for Security and Co-operation in Europe. Surely, as parliamentarians we recognise that we must maintain dialogue to help the process of encouraging good governance, democratisation and human rights protection in the wider Eurasian land mass.

I happen to chair the Westminster Foundation for Democracy, which does important work in several countries. For example, we were involved quite intimately in assisting some of the political forces involved in the changes in Ukraine. We, as a Parliament and a country, can be proud of our work on democracy building, which has been done on an all-party basis since it was established in 1992 by the John Major Government. The work has been carried on by successive Governments and we would be remiss to ignore it.

The Chinese and Indian economic boom and the fantastic impact that globalisation is having have been referred to. I agree that they are not only economic, but inherently political, which was a point made by Sir Menzies Campbell. India should be a permanent member of the Security Council as part of the enlargement package. However, we also need a democratic Muslim country on the Security Council because it is important that the UN is not seen as a group of countries that is somehow against the Islamic world.

A similar argument applies to the enlargement of the European Union and Turkey. We could perhaps get a democratic Turkey, with its moderate, Muslim, democratic AK party Government—or their successor if the left win the elections—in the European Union in 20 or 30 years' time, although we are currently talking about only the opening of negotiations to consider the possible terms of accession. However, we should not say as a result of the crisis that we are putting a block on the process. If Turkey is pushed out because the French Government get their way and say that they do not want to let it in, or because the rejection of the constitutional treaty in the Netherlands is blamed on globalisation or the threat of Islam, it will damage the European Union's relations with its Islamic neighbours. We are not only talking about Turkey because although the Mediterranean is clearly a European sea, there is a large number of Arab and Muslim countries on one of its borders.

We must have stable borders and security in our region, and that has implications for the movement of tens of millions of young people who live in countries in north Africa where there is mass unemployment and poverty. It is not just a matter of the economic prosperity of those countries, but of assisting democratic development, good governance, parliamentary institutions and the people of the Arab world. The Euro-Med relationship—the Barcelona dialogue—and other things in which the EU has been involved must continue. That is why the EU cannot just be about economic relationships, a free-trade area and arguments about budgets and agriculture.

As someone who also strongly believes in enlargement, does the hon. Gentleman agree that Turkey is unlikely to be admitted to a tightly integrated union, as foreseen by the European constitution, and is more likely to join a disaggregated and looser association of sovereign states? Surely advocates of enlargement should be against the constitution.

I do not think that those two statements follow. I agree that when the time comes for Turkey to be admitted, which will probably be in at least two decades' time, and its accession is on the agenda, we will have to face up to the need to make other arrangements. I assume, however, that intergovernmental conferences will take place between now and then. The current arrangements deal with the accession of the 10 countries that recently joined, plus the planned accession of Romania and Bulgaria in two years' time.

I take the point, however, that the EU as structured is not an efficient way to deal with an enlarged 25-member EU. We need to deal with that not just in terms of subsidiarity, which is correct, the powers of national Parliaments, which I support, and the scrutiny role, but in terms of sheer efficiency and competency in how we deal with things. Anyone who goes to Brussels will see the interpreters in booths and hear them translate different languages from, for example, Greek to Finnish to something else. The sheer cost of that is not an efficient use of resources for any organisation.

There are no easy answers because of national interests. Every country has its own national interest and will fight hard for it. I agree that we need to change the attitude taken. Although I would have voted for and supported the constitutional treaty, the fact that the French and Dutch rejected it gives those of us who believe in Europe, in dialogue, in co-operation and in an outward-looking enlarged EU the historic opportunity to move away from the narrow debate and to get into the wider issues of what Europe stands for and what it represents.

The world in which we live increasingly faces demands for intervention—in terms of pre-emption and prevention, or on a humanitarian basis—to deal with internal conflicts or interstate conflicts. We have to recognise that the EU needs to develop its capability to do more. We have seen developments in co-operation based on our European experience, including the important development of the British-led EUFOR taking over from SFOR in Bosnia. We can do more together. Despite difficulties on other issues, Britain and France can work well on some things, especially in Africa. We have been involved in the conflicts in the Congo, and we are already discussing the enlargement of the African Union's mandate and what support should be given to the AU with regard to Darfur. In some quarters, there have been discussions about how NATO can assist the AU, but the EU, too, could in different ways provide assistance on a more coherent basis to AU regional security structures, to deal with conflict prevention and conflict resolution.

My hon. Friend must be aware that there was conflict between NATO and the EU over the airlift to Darfur, which caused considerable difficulty. There is a problem when two organisations overlap. What the people of Darfur want is clarity, not argument.

My hon. Friend is right. Turf wars between NATO and the EU do not help anyone. In general, we have avoided such situations, but there is still the potential for them. Some people want to drive the Americans out of our security structure and build an alternative, which is completely unrealistic. Others, who live in the past, believe that we should do nothing unless the United States is in the lead. Neither position is correct. We need to build on what the Government agreed with the French at St. Malo in 1998, so that, incrementally, we can develop effective capabilities for the EU to act when NATO is not engaged. We should call on NATO assets for assistance when the United States itself does not want to participate.

We are doing that slowly and incrementally, but we need to get away from the rhetoric, especially some of the Gaullist rhetoric—a belief in Europe's capability that is not matched in reality by the contributions of the member states. Only the UK and France have forces that could seriously make such a contribution, and until the German Government take seriously their national defence responsibilities and reform their defence structures to move away from the cold war legacy of territorial defences, we shall never, either in western Europe or the EU, have a serious defence capability.

To be fair, the Germans have moved to some extent. They are part of ISAF—the international security assistance force in Afghanistan—where they are playing a positive and leading role. Nevertheless, there is great resistance in Germany, especially on the left, and I hope that German politicians will give the issue further consideration over coming months.

My final point is that we must recognise that what the EU does and says internationally matters. It is important that we ensure that the Doha round succeeds and that the meeting in Hong Kong later this year is successful. We in the EU have a responsibility both through our approach to the third world and the developing world and in our relationship with the group of 22 countries in the negotiations, led by Brazil, India and China. If we are not flexible, there could be no agreement. Similarly, the Americans must move. Their Farm Bill and their attitudes towards some of the farm issues are as bad as the CAP that we criticise.

Together, in western Europe and in Europe as a whole, we can, with the enlarged EU, have a significant voice in those international negotiations. If we revert to narrow nationalism, spending all our time squabbling and fighting, trying to rerun the battles of Agincourt or anywhere else, we shall fail. Failure will not be forgiven by future generations—either in our continent or the rest of the world.

I am sorry that the man who made his maiden speech from across the way has had to leave the House, so I shall reserve what I was going to say about Dr. McDonnell until another occasion. However, 35 years ago, when I first fought to become a Member of Parliament, he was so keen to have a go at me that he signed a nomination form stating that he was 21 when he was only 18. We had a battle royal, and when he was elected he told me, "It took me 35 years to get here, Ian, and I blame you for that."

Mr. Hague exhorted me not to be loud, but he did exceptionally well and was very loud himself today—he is learning quickly.

The wrangling over the future of Europe has spilled over into a debate on the European budget. The calls by some countries for the United Kingdom to give up its rebate have more to do with certain European Governments beating their breasts after electoral defeat than with the details of European finances. The rebate does not have anything whatsoever to do with the constitution and it was never part of the round of debates on the constitution. If certain Governments and countries are still smarting because the people have rejected their vision of Europe, that is their affliction, and the British people should not be told, "You have to give up something, because we have had a no vote on the constitution."

The pre-eminent view is that the people of the United Kingdom are all for co-operation with the other nations of Europe, but they are against incorporation in a superstate. Having spent 25 years as an MEP watching the European Parliament conduct its business, I know that there is a strong lobby in Europe for a superstate into which we would all be incorporated. I hope that that will never happen, because there are enough large states across the world and we do not want another superior nation to flex its muscles and ask others to take it on.

I firmly believe that the United Kingdom should not renegotiate the European rebate. The Treasury, in response to questions that I tabled, has confirmed that the amount of money per head of population that has left Northern Ireland for Europe is much less than the sum received by Northern Ireland. I was one of a number of MEPs, including John Hume, who secured well-deserved money for a peace programme. However, when I looked across the border, I saw that the southern Government was receiving £6 million a day. To keep my seat, I was supposed to say nothing about it. However fair play is fair play, and the British people should not be told that, because two nations have said no to the constitution, they must look at the rebate. I hope that the British Government stand firm on the rebate. The Prime Minister said that they will, but his resolve is growing a little weaker every day. Knowing from experience in Northern Ireland how weak it might become, I fear for the rebate. I would not put my money on it if I were a betting man, but thank God I am not.

It is like the Good Friday agreement.

It is. It will be dead and buried in the Sadducee's grave, which means that it will never be resurrected.

Agriculture is still our largest industry in Northern Ireland and it is vital that it is maintained properly. I have already asked the Foreign Secretary about the fact that, only a few short months ago, we received an undertaking that the common agricultural policy was secure after the mid-term review so the farmers could plan for the future. Now, suddenly, the farming community is asking us what is going to happen. We are alarmed about that. The Government must keep faith with the farming community because farming is in difficulty.

I hear a lot of talk about Poland and the fact that it will be a threat to the farmers of those states that were in the economic Union first. Not many people know that Poland leads the world in the production of strawberries, and is about to take over the raspberry business as well. Before we know it, Poland might take over the carrot business too, and maybe try the spud business, even though Polish farmers did not even know what a spud was. When such countries get their produce on to the market, our farmers will have many more difficulties. We need to face up to that.

I agree with many of the hon. Gentleman's comments. Does he agree that an over-hasty and ill-considered review of the common agricultural policy could put at risk the environment, rural communities and the security of food supply to this country?

The hon. Gentleman is right. We need to take a firm look at the farming difficulties that we will be up against.

Another matter was mentioned eloquently by Mike Gapes, who has left the Chamber. He spoke about all the gadgets for interpretation in Europe. I have just discovered that a translation into the Irish language is to be made available. I made some inquiries, which revealed that no Member of the European Parliament in this term or any other term has ever required an Irish translation to participate in the workings of the European Parliament. The translation will cost £3.5 million every year, and there will be 20 to 30 translators translating into Irish for Irish people who never even asked for it.

Where is the money going? We know that a former leader of the Labour party who was a Commissioner was given the solemn responsibility of trying to deal with fraud. What happened? The departments working on European strategy were responsible for much fraud and would not co-operate with him. A Commissioner appointed to deal with fraud came back and said that he could not do it, not because of one party or another, but because of the organisation itself.

The food supplements directive, which is due to come into force in July, has had an interesting history. In the past, assurances were given by Ministers and Governments, then the matter was referred to the advocate general, the senior adviser to the European Court of Justice. He found that the entire food supplements directive was invalid under European law. He declared that it infringed the principle of proportionality because basic principles of Community law such as the requirements of legal protection, legal certainty and sound administration had not properly been taken into account. It is expected that the European Court of Justice will rule in favour of this pronouncement, so the ban on vitamins and minerals that are not included on the EU positive list, which is due to come into effect on 1 August, will be declared illegal. In essence, the positive list of allowable nutrient forms will be deemed too narrow, too restrictive and as being based on flawed science. What are we to do about that?

Those are the difficulties that we have with Europe. The directive would put at risk more than 5,000 products on the shelves, including the main natural forms of vitamin E, several forms of vitamin C, the key natural form of folic acid and a range of minerals. That is a very serious matter.

I trust that the Minister will take up such issues that affect the well-being of our people. I trust that we will not be incorporated into this Union, and that we will show that we are European in the sense that we want co-operation with everyone and to make our contribution to the combination of people who want to go to places where they feel that they can work together and do a job, but that we do not want to lose the best things of our national life. We want to retain those.

Debates that precede European Council meetings are normally quiet affairs, but the result of the French referendum has made the European issue and the discussion on Europe central to this Government's foreign policy. I welcome the fact that so many speeches this afternoon have not just touched on what happened in the French and Dutch referendums, but have looked forward to Europe's future.

As the Prime Minister, the Foreign Secretary and the Minister for Europe prepare for a very important European Council meeting, they can take direction from our discussions this afternoon. Obviously, we have had the usual tour de force from Mr. Hague, although the luxury of Opposition is that one can make scintillating speeches with many jokes, normally directed at the Government Benches, but not have to follow through on any of the things that one has said.

We also had the maiden speech of Dr. McDonnell, who said that he prefers to be in Belfast than in the House of Commons, and has no doubt gone back there. I pay tribute to the former Member for Belfast, South, Martin Smyth, who was for many years the treasurer of the Indo-British parliamentary group, even though, as far as I am aware, he had nobody of Indian origin in his constituency. He was forceful in his contribution to the group and I wish him well in his career.

The central issue that will face the Prime Minister, the Foreign Secretary and the Minister for Europe this weekend is of course how to deal with the aftermath of the constitution. What we have heard from Conservative Members—not Liberal Democrat Members, as Sir Menzies Campbell spoke eloquently as usual, looking forward and not back—has been a rehearsal of the arguments made over the past few months about the European constitution. The Government's position is clear and I believe absolutely correct. As France and the Netherlands—two founding members of the EU—have voted so decisively against the constitution, it is now time for Europe to pause and reflect. It is now time for us to put back our timetable for a referendum on the constitution and to assess what impact the referendum results will have on European policy.

I happen to believe that there is not going to be a referendum in the United Kingdom on the European constitution, because the effect of France and the Netherlands deciding not to proceed will be that other countries will decide not to go ahead as well. A number of other countries have already indicated that they would prefer not to hold referendums and not to ratify the treaty until the detail has been examined as a result of the French and Dutch decisions. I would not be upset if the Government were to decide to put off the referendum for ever, because I was not one of those who believed that a referendum was necessary. Those major issues could have been decided by the House of the Commons in the same way as they were decided in Germany by the German Parliament. There is no need to put the matter to the British electorate, because the Government were elected with a clear mandate to support the changes in the constitution.

Conservative Members dwelled on the content of the constitution, and the fact that their speeches have been based on the substance of a constitution that cannot proceed shows the difficulties with Conservative party European policy.

rose—

I gladly give way to the hon. Gentleman, because he is consistent in his opposition to Europe—he is one of those people who strongly believes that Britain should actually withdraw from the EU.

I agree with the hon. Gentleman's remark about concentrating on the constitution. We should discuss the existing treaties embedded in the constitution, because they have given rise to all the problems. The constitution would have repealed and revoked existing treaties, so, following a rejection, the existing treaties should be revised and rejected, too.

At least the hon. Gentleman's views are consistent. The difficulty for Conservative Front Benchers is the inconsistent development of their European policy, of which we have recently seen an example. Last week, Dr. Fox told us at the Dispatch Box that the Single European Act should be unpicked. Today, he told the House that there should have been a referendum on the Maastricht treaty, which is a position that I am sure that Mr. Cash would support. However, the current Conservative party chairman signed that treaty, which shows the problems with Conservative party policy.

The Minister for Europe should leave it to other countries to make their own decisions on ratification. One cannot complain, as the hon. Member for Woodspring did, that Europe has become so centralised that Brussels makes all the decisions, while arguing that we should tell countries that have not decided on ratification what they should do. It must be up to those countries to make their own decisions.

Britain's rebate, which has made the negotiations so exciting, is the second key issue that will be discussed in the European Council this weekend, and, again, the British Government's position is absolutely correct. At the 2002 summit meeting, all the Heads of Government reached an agreement on the rebate, so there is absolutely no reason why we should enter into discussions or negotiations. If the rebate were tied to a fundamental review of how the European Union budget is constructed, the issue would be different, but the short period before the discussions in Brussels at the weekend does not allow sufficient scope for such a review.

We should maintain our position, which we adopted a long time ago and which was agreed by member states as far back as 2002, that the rebate remains intact. It should remain intact for the reason mentioned by all hon. Members who have contributed to this afternoon's debate: the inherent unfairness of the common agricultural policy means that 40 per cent. of expenditure goes on 5 per cent. of the population. It does not serve the British people's interests and British farmers' interests for the agricultural budget to continue on that basis, and the Government should continue with their policy.

It is very unusual for the Eurosceptic media to support the Government's position. Normally, no matter what is decided at European Council meetings and no matter whether it is in the best interests of the British people, those sections of the media who do not like the EU always criticise it. At the moment, of course, they are firmly on the Government's side because they believe that the stand that we have taken is the right one—that it is positive and results in the rest of Europe being on the other side. Despite the fact that the Government have the support of the leader writers, Mr. Trevor Kavanagh and all the other people in the Eurosceptic media, we should proceed along this course of action, because if we were to give in at this stage it would create enormous problems for the way in which we wish to continue with our discussions on the budget.

An essential part of our discussions on the CAP must also relate to economic reform. In just fourteen days' time, we will take over the presidency of the European Union. It is important that we take up the challenge of the vacuum that currently exists and provide leadership to the rest of Europe. That means pushing forward with the Lisbon agenda. Lisbon was different because, for the first time, we had a series of benchmarks against which all European countries were to be measured. The Kok report, which was published at the end of last year, gives us, for the first time, a scorecard that sets out exactly what each country has achieved as regards the Lisbon benchmarks. In some areas, we are doing very well because of the stewardship of the economy by my right hon. Friend the Chancellor. We are doing well on the liberalisation of utilities, but we are doing badly on social protection.

The difference between Lisbon and all the other summits before it and since is that those economic indicators have been vital in relation to the progress of the European economy. This is not about the euro. The right hon. Member for Richmond, Yorks was keen to suggest that the reason why the German economy is going badly and that we are doing well is that we are not in the euro and the Germans are. There is no wavering, in my view—perhaps the Minister can confirm this when he winds up—in the Government's commitment to join the single currency. Our principled position, which was set out in our manifesto at three successive elections, is that as a Government we are in favour of the euro but in practice will join only if the economic tests that have been set by the Chancellor are met. That remains our position, and it is the position that we have had since 1997. The right hon. Member for Richmond, Yorks is annoyed because in 1997, when the Labour Government were elected, he wanted to save the pound, and got on the back of a lorry and went round the country to do so. Then the Prime Minister announced that the pound was saved, and the Conservatives' cause célèbre was taken away from them, as is the case with the constitution.

The fact remains that we have to meet the benchmarks that have been set by the Chancellor. We have not met them. As soon as they are met, we will put this in a referendum to the British people, who will thereby have a chance to make the decision themselves.

I am pleased to participate in this debate with my hon. Friend. During the election campaign, the Prime Minister said that he does not expect a referendum on the euro in this Parliament but there might be one in a future Parliament.

If the conditions are met and the Chancellor announces that we have met the tests that he clearly set out in 1997, we will have a referendum. If the tests are not met—it is a matter for the Chancellor—we will not have a referendum. There is a danger in trying to see too far into the future. These are issues of fact that have to be reported to the House before a decision is made.

My hon. Friend Ed Balls observed in a thoughtful article in the Financial Times this week that the danger that we face in the forthcoming European Council meeting and in terms of the priorities for our presidency is that we may get so hung up on constitutional reform that we forget about the need to push forward the economic reform agenda. Without adopting the policies that were clearly set out by the Heads of Government at Lisbon in 2000, we cannot achieve the economic reforms that are necessary for us to do what all right hon. and hon. Members would like Britain in Europe to do—that is, to compete on equal terms with the United States of America.

I know that India and China have been suggested as global competitors for the United Kingdom and Europe in future but, at the moment, our biggest competitor is the United States of America. In the past 10 years, 10 million jobs were created in the USA compared with 1 million in the EU area. It is therefore vital that, in all the discussions, even those on the rebate and the constitution, we do not lose sight of one of the Government's key priorities—pushing forward the Lisbon agenda.

As we begin considering what we will do in our presidency, I hope that we will acknowledge the genuine and important progress that has been made under Tampere and The Hague agenda. The hon. Member for Woodspring complained about the appointment of the single prosecutor for the whole of Europe, but several important aspects of the justice and home affairs agenda will help British people—for example, the mutual recognition of decisions taken by courts. British citizens who go abroad and want to sue in a EU court find it difficult to get the judgment enforced. We are considering critical issues that, although not global, affect our citizens when they travel to other EU countries.

I appreciate that people do not want to be reminded of statistics because they believe that they are simply mantras spoken by pro-Europeans. However, eight of our top 10 trading partners are members of the EU. Of course, there is a world outside and, as a trading nation, we have to trade with nations outside the EU. However, our trade is based on that with EU countries and we need to ensure that that is enhanced and developed. Lisbon is important, but, as we move forward, we need to examine other matters on which we can co-operate.

I am not in favour of a single judicial system, but I support the exercising of our judgments in different parts of the EU. Switzerland voted only last week to ensure that its citizens joined Schengen. The Swiss people have decided that they want better and closer links with the EU because they realise what happens when one is not part of it or takes only some of the benefits that are on offer: one suffers not only economically but in terms of missed benefits for the people of the country.

I listened carefully to the comments of the leader of the Democratic Unionists about the Poles being after our strawberries and, indeed, our raspberries, but enlargement has hugely benefited our country and the whole EU. It is worth remembering that Conservative Front-Benchers predicted mayhem when the 10 new countries joined on 1 May 2004. They claimed that Poles and Slovaks would rush to London, take our jobs, benefits, strawberries and raspberries and cause chaos in the UK. They said that the Home Office would be inundated with applications. That did not happen. Enlargement has been good for the UK and the EU. Few people have gone on benefits. I therefore hope that Ministers will remember to push forward the enlargement agenda because it benefits not only the EU but the other countries that will join.

I wish all the Ministers well for one of the most important European Council meetings for many years.

Thank you, Madam Deputy Speaker, for allowing me to make my maiden speech.

It is a great privilege to follow Keith Vaz with all his expertise on European matters. I shall stick more carefully to the parameters of a maiden speech. One of my illustrious predecessors, the former Speaker Jack Weatherill, once said:

"A good speech will not be remembered; a bad speech will not be forgotten—or forgiven."

I hope that the speech that I deliver this afternoon will be speedily forgotten.

Certainly, one thing that I do not forget is just how conscientious Jack Weatherill was as a Member of Parliament. I remember being summoned to the Speaker's House when I was chairman of the education committee in Croydon, to negotiate with people who were unhappy about a new city technology college that was to be introduced in the London borough of Croydon. It was certainly Jack's style to bring people together, and he was most conscientious in pursuing constituents' concerns and always writing back, in green ink, with a personal note. That is the style of constituency Member to which I would like to aspire.

I am sure, however, that I have made more mistakes in the House in a few weeks than Jack ever would have made. The conviviality and friendliness of the House, however, ensures that such mistakes are easily forgiven. As a new Member of Parliament, I have been most impressed that the House's supposed reputation for not welcoming new Members is entirely untrue.

The way in which Officers of the House have inducted new Members has impressed me a great deal. I learned that it is important to be careful about where one goes and what one says. During one of the induction procedures in which we were shown around the House, and shown how Members put marks on the back of their seats in the Chamber to reserve a seat at Prayers, I made the mistake of referring to Germans and towels. Unfortunately, another Member's partner happened to say, in a Germanic accent, "What is this about Germans and towels?"

It will also disturb the Whips Office to hear that I found myself sitting in a hot desk area reserved for Labour Members. Only when I heard a large number of Scottish accents, and reflected that there were probably not many Conservative Members elected to the House who had Scottish accents, did I realise that I was in a Labour party room.

Before I talk about Croydon, I would like to refer to my predecessor, Geraint Davies, who was both a diligent local councillor and Member of Parliament for Croydon, Central. He took a particular interest in the provision of healthy food for school children and the damage to our local environment, including the loss of many birds, which is an important issue in our locality. Obviously, I am delighted to be elected to the House, albeit with a majority of only 75 votes. I am sure, however, that that is mirrored by the disquiet and upset that Geraint must face, having lost by only 75 votes. I wish him the very best in his future career, and no doubt he will return to the House—not at my expense, I hope. Croydon has a history of close election results. John Moore had a majority of 164 votes, and Mr. Winnick, back in 1966, had a majority in Croydon, South of just 81 votes.

It is a great privilege to represent the town in which one was raised and educated. I am a councillor of 23 years' standing in Croydon, and know very well how important the expansion of the European Union is to Croydon in terms of the businesses pursued. Businesses have been particularly keen to look for opportunities in the Czech republic and Poland, and Croydon already has a substantial Polish community. It is important that Europe is a free trading community, with Nestlé having its headquarters in Croydon.

It is also important that Croydon as a town has looked out to other European cities that are at the edge of metropolitan communities—so-called edge cities—to try to share experiences. Towns such as Croydon, which have seen significant changes, not necessarily to our advantage, in our social, demographic make-up, face many challenges in terms of serving the needs of our community.

Also with a European theme, it is fair to say that we welcome to our town many eastern Europeans from beyond European Union borders. I was very pleased when I attended a recent Turkish-Kurdish event to find many from those communities, when they welcomed me to speak, chanting, "Croydon! Croydon!". No one had ever chanted "Croydon! Croydon!" like that before, but it is a sign of how migrants to Croydon have identified very quickly and positively with that community. It is important, I feel, to reach out to all communities, and I am so pleased that the al-Khair school, which is based in Croydon, Central, has also been successful. A real example of a great success from Croydon and a way that one can prove it is important to welcome migrants to our shores is the story of Katie Melua, who came from Georgia and was educated in Croydon at the BRIT school.

There are many businesses—28,000 in all—in Croydon, which reach out across Europe and seek to export their services and products, but what is important to them is how we can reach and transport ourselves around a congested town. Thus, it is very good news that Croydon is likely to be connected to the London underground's East London line and possible that the successful Croydon tram link will be extended to Crystal Palace. Also, in the constituency of my hon. Friend Richard Ottaway, a bypass is being built around Coulsdon. I am grateful to my hon. Friend for supporting the home team by being here with me this afternoon.

Croydon is also an important retail centre. Indeed, its retail centre dates back to the Surrey street market founded in the 13th century, although people can shop until they drop at many other places, such as the Whitgift centre, the Drummond centre and the new Centrale centre. But Croydon is not just retail heaven. Indeed, we compete with other important centres when it comes to culture. The creation of the Croydon Film Commission—which competes with Prague for sites for films and, in particular, adverts—is important because we can provide not only 1960s brutalist chic through our skyscrapers, but many attractive heritage items and open spaces.

Croydon's name comes from a Saxon word meaning saffron valley or, perhaps less flatteringly, crooked valley. One of our many open spaces was promoted by James I in terms of starting racing in Croydon in the Ashburton area, but unfortunately the Croydon race course was closed in the late 19th century by a mayor of Croydon because of all the undesirables who came to it. I guess the modern equivalent is the many undesirables who frequent the centre of Croydon while using our night-time economy.

Another open space in Croydon was Fairfield, which is now the site of the important Fairfield halls. Many people have been there to see many good performers, but a particularly important musician who is an export of Croydon is David Bowie. We have other important exports, such as David Prowse, who played Darth Vader in "Star Wars", and Derren Brown, the famous mind-reading TV star.

I doubt very much, Madam Deputy Leader, whether—I am sorry, Madam Deputy Speaker. My local government background has leaked out. I doubt very much whether I will be able to display such persuasive, mind-reading skills in the House, but I very much hope that I will be persuasive to some extent on behalf of my constituents in Croydon and put Croydon first.

It is a pleasure to follow the maiden speech of Mr. Pelling. I am not sure that he has persuaded me to go on a weekend break to Croydon instead of Prague, but he has done a good job in persuading me that it is at least worth thinking about. His predecessors have clearly served the constituency with some distinction, and it is good to see Jack Weatherill in the other place.

It is a pleasure to speak in this debate. I had hoped to speak in last week's earlier incarnation of it, but I was at least able to hear the speeches of the various Front Benchers, so I had some forewarning of what we were likely to hear today. Interestingly, in his opening remarks during that debate, Dr. Fox came as close as any Conservative Member has yet come to saying that if the Single European Act were debated today, the Conservatives would be much warier of enshrining it in statute. From my perspective, that is a jolly good move—albeit not far enough—in the right direction. If we get an apology for Maastricht as well, we can begin to think much harder about the Europe that some of us on the Labour Benches would like to see.

There are those who are still disposed to believe that there is yet some hope in the Euro project, but for some of us the reality is that the European constitution is dead—not long live the constitution! When I intervened on the Liberal Democrat spokesman, Sir Menzies Campbell, I managed to elicit the fact that Nick Harvey might not be quite so lonely in future, if early-day motion 318 is to be taken at face value. It is good to see some Eurosceptics in all parts of this House, and not just on the Labour and Conservative Benches.

So a seismic shift has taken place in the past fortnight, and anyone who pretends otherwise is being optimistic, naive or oblivious to the reality of what is happening. That shift may have been led by the French and the Dutch, but it is the people of the whole of Europe who have spoken. They have completely ripped up the Euro project, and they want a very different sort of Europe to be taken forward. The reasons for that can be interpreted in many different ways, but I like to think that my favourite economist, Anatole Kaletsky, put his finger on it in a series of articles in which, in simple terms, he took the view that, "It's the euro, stupid, what done it." Trying to force together all the various currencies has created great resentment among the peoples of Europe. In his article of 9 June, he drew parallels between the no votes in France and Holland and our own, in a sense voluntary expulsion from the exchange rate mechanism in the early 1990s. Perhaps those votes will prove to have the same value.

I make no apology for saying that in my view, the days of the euro are numbered. Not only will nation states not want to join the eurozone, which we have wisely decided to stay outside; it will collapse from within because of the completely daft policies that have been introduced on the basis that such a currency union can be achieved. The reality, however, is that it will not work.

The growth and stability pact is what is really doing the damage. At the very time when we need to grow the economies of Europe to deal with increasing worries about employment and all that comes on the back of that, we have a pact that insists on the opposite. That is why countries such as Germany, France and indeed Italy are either trying to cheat on the pact and gain more economic freedom and flexibility or, more particularly, are trying to live in denial and pretend that they can get away with it regardless.

We are not talking just about economics in the pure sense, though. This is not just about some economists playing with various theories; it is about the direction in which the European project was going. Worryingly, we have learnt nothing from the destruction of manufacturing on the mainland of Europe, followed, I dare say, by our destruction of it here. Under the Bolkestein directive, we have been moving towards the disruption of public services as well in the mad pursuit of even more privatisation. We must wonder whether we have learnt anything from what has been going on. If we followed the same route as the rest of Europe, we would have even more unemployment and a further detachment and disengagement of the European peoples. We hope there will be an opportunity for us to think again about what is happening. Perhaps countries will start listening to their people, rather than trying to believe that it is the people who are out of touch and what they really want is more and more euro-centralisation.

I have been playing a game with the Table Office, trying to find out whether it is possible to ask the Treasury whether it has carried out analysis to establish what will happen if the eurozone breaks up. Could the lira be recreated? Perhaps in the interim prices could be quoted in pounds; a stable currency might be more desirable than the euro in its current state, which is causing all sorts of problems. I tried to table a question to that effect, but it was not allowed. Sadly, it seems that it is not possible to work on the basis of supposition, although according to Kaletsky and Larry Elliott of The Guardian, the other economist who appears to know what he is talking about, the situation is becoming daily more realistic and less a matter of pure speculation.

It is not just a question of economics, however. It is also about what else the European project implies. There is a political and social argument that needs to be had. Sadly, because of the various defeats faced by my party during the 1980s and 1990s, we were somewhat seduced by the views of Jacques Delors 17 years ago, when he made a memorable speech to the Trades Union Congress. Much of what he said was laudable; the problem was that people saw all the answers in terms of ratcheting us even further towards—linking us even more directly to—everything European. There were good things that we could take from the EU, but there were also bad things that we should avoid.

rose—

I give way to my hon. and thoughtful Friend.

I agree with everything that my hon. Friend is saying. Does he agree that the reason the labour movement and the trade unions ran for cover was that Jacques Delors was promoting the idea of a social Europe, not a neo-liberal Europe? The reverse is now true: the trade unions are running away from Europe because of neo-liberalism.

My hon. Friend has obviously read my speech, which is not surprising because we come from the same school of thought. That is exactly it. We thought that we were getting, dare I say, a social Europe. Some of us were even persuaded that we were getting a socialist Europe. Of course, we were getting anything but that: we were getting a neo-liberal Europe, and we continued to move in that direction until the countries—rightly, in terms of their populations—began to smell a rat and began to reject it out of hand.

These arguments have been debated and will continue to be debated. As my hon. Friend Kelvin Hopkins rightly said, the trade unions are now beginning to realign themselves, with union after union moving gradually, if not from a sycophantic position on Europe, through a more sceptical position towards one of almost downright hostility. I welcome that; we need to have that debate.

I am not arguing the case for busting up the EU; we need to change it. We need to change our thinking on the EU and advance new ideas. A political and social argument needs to be conducted on the left, as well as, dare I say it, on the right. It seems that the right have got their position together. It could be argued that they went through a dark period during which they were too friendly towards the centralising tendencies of the EU, but they now appear to be clearer in their perspective than some on the left. The left will, I hope, respond in due course. If not, they risk being completely out of touch with their own people.

I welcome the fact that the constitution is dead. I welcome the fact that there will have to be a clear realignment of thinking on the left, as well as on the right, and I like to think that some of issues that we have debated today are relevant to it. I am not going to go over the same ground in detail, but in this day and age, I cannot understand how anyone who believes in justice in the wider world could support the common agricultural policy. Irrespective of its impact on producers and consumers here, that policy is bereft of any moral justification in respect of its impact on the less developed world. We have to put our hands up about that. We need to understand that some producers—not only in this country, but in France and Germany where the CAP has been part of a protectionist rump—face tougher times ahead. I do not want further neo-liberalism, but the re-establishment of local food chains through which producers can have greater say over what consumers really want. That can now begin to happen.

Does the hon. Gentleman agree that the mid-term review of the common agricultural policy has done much to take incentives away from production, thereby improving the position of third-world producers?

I am not sure that I do agree. Although the CAP has done things differently in different periods of history, I believe that its operation has done immense damage. The sugar regime, for example, has inflicted enormous damage on third-world countries, which has not done much to justify the case for the continuance of the CAP.

We need to rethink the best way for Europe to proceed. There are Europeans in my party and, as in other parties, there are friendly disagreements about how best to take Europe forward. We need to have a proper debate about that and it is wrong to give the public the impression that there is uniformity in the Labour party about the European project. There are some benefits from European social arrangements, such as the charter of fundamental rights, but it is desperately dangerous to buy into Europe wholesale because of the neo-liberal aspects, which might lead to further deterioration in our industries and harm our labour relations. We have a strong history of collective bargaining in this country, which is alien to the European model. There are dangers in viewing European social engagement as an alternative, as it might further weaken the structures of our trade unions and our labour relations. We need to think hard about that problem.

There is a way forward. Some of us belong to a new cross-party grouping called the Centre for a Social Europe. My hon. Friend the Member for Luton, North is one of its founding fathers, and we have a rather good photograph of the new hero of the Labour Back Benches, my hon. Friend Mr. Davidson, who is the leading proponent of a new approach to Europe.

Those of us who are members of that cross-party group will make our point of view clear, and we do not apologise for saying that our approach is somewhat different from the one adopted by the Government and the Labour mainstream. However, we hope to be a growing influence. We will engage with people from all parties to state our desire for a decentralised Europe and our belief that an attack on neo-liberalism is long overdue.

In conclusion, I repeat that it is important for both left and right to produce a rationale in respect of how we take Europe forward. I believe that we should aim for a very different sort of Europe, one that is entirely at odds with what has happened over the past 10 to 15 years. I am sure that we will enjoy putting across our point of view in debates like this in the future.

It is a pleasure to follow Mr. Drew, who made a characteristically sceptical and thoughtful speech. That took some courage and, although I do not necessarily agree with his policy prescriptions, I do agree that it is important that, where possible, decisions about matters such as the extent of our economic liberalism should be taken democratically, by this House, and then opened to change and revision by the electorate.

Enthusiasts for the European constitution have tried to play down the importance of the results of the referendums in France and Holland by arguing that many of those who voted no did so for reasons not directly related to the constitution. My simple point is that people voted no because the treaty's advocates could not produce convincing and positive reasons for voting yes. They were unable to do that because there are no convincing reasons for voting yes that appeal to the ordinary populations of Europe. Without a good reason to vote yes, people had every freedom to vote no. They may have done so for trivial reasons but, had there been a positive reason to vote yes, they would have set aside domestic and unrelated factors and voted for the treaty.

In the absence of positive reasons to vote yes, the treaty's supporters came up with all sorts of negative reasons and threats, ranging from the vague and incredible to the insulting and absurd. For example, they said that voting no would mean a loss of influence, and that investment would be repelled. At the insulting and absurd end of the spectrum, people in Holland were told by that country's European Affairs Minister that a no vote would mean a return to the holocaust and the gas chamber. Other treaty enthusiasts in both France and Holland said that a no vote would open up the prospect of war and an end to peace. Happily, the peoples of both countries realised that those were insulting and absurd arguments and gave them no credence.

Those who supported the European constitution made clear its appeal to the elites. They believed that it would make it easier to take decisions centrally and override the objections of member states. However, that was precisely what did not appeal to the electorates in France and Holland.

Constitution enthusiasts have a second excuse to explain why we should disregard the no votes returned in France and Holland. They say that different arguments against the constitution were used in those countries, which conflict with the no arguments presented in this country. They add that that incompatibility and inconsistency means that both arguments cannot be right. However, I believe that they can both be right, because the treaty offered a one-size-fits-all constitution that would have imposed one-size-fits-all policies on member countries. If only one size of suit was available in the shops, it would be tight on my hon. Friend Mr. Jenkin in some places and tight on David Howarth in others. The imposition of one-size-fits-all policies would have been facilitated by the European constitution, and it was that to which the people in Holland and France objected.

An hon. Member earlier complained about a resurgence of Gaullism. I remember when General de Gaulle stood up for the rights of France and French sovereignty against the combined establishment in France. He bemoaned the fact that the media were against him, the unions were against him, the patronat was against him, the Church was against him and the intelligentsia were against him. He said, in his sardonic fashion, "Only the people of France are on my side." We are now in the unique position that the people of France and Holland are on our side. They share with us a desire to have fewer centralising, one size fits all policies imposed on us.

We should seize this opportunity to try to change the agenda from one that accepts that there has to be a ratchet—with the only direction being the transfer of power from member states to the European institutions—to one that accepts that there can be some return traffic. We should actively seek with our partners in Europe to ask what powers have been unnecessarily transferred to European institutions that could be repatriated to the member states to allow them to take decisions and tailor policies to their own needs. That is clearly what lies behind the malaise in Europe and it is an opportunity for us to seize the agenda. Sadly, although we may have the people of France and Holland on our side, we do not seem to have our Government on our side, and that is most regrettable.

On the subject of one–size-fits-all policies, I come to the rebate, which was designed to correct the adverse consequences of a one–size-fits-all financing mechanism. We call it a rebate, but it is well described in the relevant European document:

"The United Kingdom shall be granted a correction in respect of budgetary imbalances."

As the "Oxford English Dictionary" says, a correction is a change that puts right something that was wrong. That is what the rebate does and it is right therefore that it should be maintained.

To obtain the rebate, Margaret Thatcher had to obtain unanimous approval for a change, which was very difficult, but she succeeded because she argued persuasively that a wrong needed to be corrected. However, the present Prime Minister has reversed the situation so that member states are unanimously against the rebate. Fortunately, one veto can maintain the status quo. Unfortunately, he has invited pressure by moving from saying that the rebate was not negotiable to saying that we would not negotiate it away entirely. He indicated clearly that he was in the market for altering the rebate's terms and conditions, thus reducing its value. That is a sad and dangerous step, which has made his life more difficult and will make it more difficult to uphold the correction mechanism in future.

I hope that the Prime Minister will manage to do so, but he will have to regain control of the agenda. He should ask the French for their explanation of what happened in the referendum and what we do next. We should also follow the French, who have ruled out firmly and adamantly any discussion of their benefits from the agricultural policy, by firmly and adamantly refusing to discuss the correction mechanism and the British rebate. If he does so, we can uphold our position. It is necessary to have a Government who recognise that different countries have different interests. Britain has different interests from countries on the continent—perhaps more than any other. It has different structures and ways of doing things that must be accommodated.

I was first elected in the same year as the Prime Minister. He was elected on a pledge to leave the Common Market, but unlike him I have always been, and remain, an unwavering supporter of British membership of the European Community. However, I understand the concerns of Dutch, French and British voters that the ratchet mechanism that allows transfers of power and the one-size-fits-all approach to policy making are not acceptable and have gone far enough, if not too far. We should look in the opposite direction, return powers to the United Kingdom where possible and allow greater diversity and the tailoring of policies to the needs of individual countries, not least our own.

I am pleased to follow my near neighbour, Mr. Lilley. I agreed with much of what he said, although I disagreed here and there. There is a consensus among hon. Members of all parties—even, perhaps, including one or two Liberal Democrat Members—that we need a different Europe.

Harold Wilson suggested that a week in politics is a long time. It certainly seems like a long time since our last debate on Europe a week ago because a lot has happened. Could we have believed that there would have been such a serious falling out between the Prime Minister of Britain and the President of France, between the Prime Minister and the Chancellor of Germany, or even between the Prime Minister and his erstwhile friend Peter Mandelson, who has said that we should not use our Thatcherite handbag in Europe? Such events initially sound amusing, but they are rather worrying because we want to build a future Europe that is friendly and in which we can co-operate with our neighbours. It is a sad irony that the European Union was ostensibly designed to ensure that there was not war between the nations of Europe, yet it is currently creating friction between member states. I believe that that is happening because of inherent faults in the arrangements of the European Union.

It is also said that nothing happens for years in politics, but then the world changes in a day. The day of the French referendum was such a day. Europe looked different after the referendum, so the day will be referred to again and again as a remarkable point in history. The no votes show that there has been a profound psychological shift in the attitude of the peoples of Europe to the European Union. Working people and socialists, especially, have rejected liberalisation. The banners of the people marching in the streets showed that their decision was about liberalisation. They did not want a liberal Europe and neither do I. They wanted to retain the social democracy of post-war Europe that worked so well and gave full employment, redistributive taxation, properly funded welfare states and public services, a degree of public ownership of essential utilities and a more equal and fairer world than that which went before. That was a world that worked, but we have started to give it away due to the European Union's arrangements—or has it been undermined?

There has been a drive to impose a supernatural—I mean supranational—neo-liberal construct and to dismantle post-war social democracy, but the working people of Europe are rejecting it. That rejection happened first in Sweden because the Swedes were extremely well informed and, after many months of thorough debate, they voted no to membership of the euro. I am a board member of the Centre for Social Europe. We have many colleagues with similar views in other countries and met Swedes who were involved in the campaign. It was very much the left, the trade unions and working people who voted no in that referendum. The same was true of the recent referendums in France and Holland, and if we had a referendum in Britain, working people would naturally vote along with Labour and Conservative Members who support the no campaign. Clearly, there will be no referendum because there would be a massive vote against the constitution.

We have heard many interesting speeches, but Mr. Hague made an especially fine, trenchant contribution. I agree with much of what he said. He rightly congratulated the Foreign Secretary on persuading the Prime Minister to have a referendum. I do not want to claim too much for myself, but I tabled the first early-day motion, signed by many Labour Members, that called for a referendum. I should, perhaps, have a small footnote somewhere.

We have to consider what has happened. The European Union has been failing because there has been slow growth in major countries and economic contraction in some, particularly in big countries such as Germany, Italy and France. The economic model is clearly not working. The growth and stability pact has been shot full of holes and is being ignored. We have had dead as a dodo, dead parrots, and now a dead duck. So the birds are all dead, whatever they are. The growth and stability pact has caused difficulties and it is right that it is ignored.

There is a possibility of the euro unravelling in Italy and Germany in particular. People in Italy are gathering signatures for a referendum on whether they should leave the euro. It will not be difficult for them to get the 500,000 signatures they need. Behind the scenes, the Germans have been discussing how they could or would leave the euro. There is a prospect of the whole euro arrangement unravelling. There is certainly no prospect of any member state joining the euro at this stage. It would be daft to join an arrangement that is so shaky and performing so badly. We are obviously not thinking of that for the foreseeable future.

The budget is also in crisis. The problem is not just the UK rebate, but the whole common agricultural policy. I have called many times for the CAP to be abolished. The presidency gives us the opportunity to have a serious debate on the future of the European budget. As I said last week, when Ministers go to the Council meeting they should say, "If you want to talk about our rebate, let us discuss the whole CAP", because it is the CAP that brings about the necessity for a rebate. If there is no CAP, we do not need a rebate.

Let us suggest how we might return to an arrangement under which individual member states have their own agricultural policy and can choose to subsidise, or not, their agricultural sectors. We could easily subsidise our agricultural sector as we chose in appropriate ways. I always mention Welsh hill farmers. We want to preserve certain traditional farming areas and their local cultures. There is no reason why we should not do that. It would not cost that much—certainly not as much as our contribution to the European budget.

Other aspects of the budget do not work either. Structural funding will be withdrawn from Britain. Many poorer countries are coming into the EU and money should be directed towards them rather than us. We believe and hope that Ministers have committed themselves to substituting state national funding for EU regional and structural funding so that we get the funding that we have lost. That means, however, that we have another net loss in the EU budget contribution.

On international aid, the Department for International Development has said many times—I have spoken to Ministers privately and in European Standing Committee B—that it is not happy about the international aid that is channelled through the EU because it is spent inefficiently, there is corruption, and it is not well targeted. Yet DFID has a justified good reputation for directing aid efficiently, fairly and transparently to the poorest nations, where it is most needed. Let us give aid through DFID rather than through the EU.

If we remove the CAP, structural funding and international aid, not much of the budget is left. However, as I said last week, if we do have a budget, let us have one that redistributes money to the EU countries that need it. Let us have contributions according to ability to pay and receipts according to need. If Slovakia is poor and we are rich, let us make sure that the whole EU budget is distributed according to the relative prosperity of the nations of Europe. That would be a fundamental change, but a much better arrangement, and I hope that my hon. Friends on the Treasury Bench will discuss that during our presidency.

Last week, I said that the appointment of Dominique de Villepin as French Prime Minister marked an interesting change; it was a move to someone who is much more Gaullist than liberal. Even as I spoke, he was addressing the Assemblée Nationale, saying the sort of things that I would say if I were in his position. He suggested that there should be a more relaxed fiscal policy nationally to bring down unemployment. Very sensible, but hardly in the spirit of a Europe-wide, eurozone, neo-liberal, deflationist approach to economics. He was saying, "French people are unemployed, so let's spend more money and give them jobs". If individual member states of the EU controlled their economic policy, that is what they should be able to do. We should return to an arrangement whereby macro-economic policy is a matter for the member state and not for the EU. Those things are fundamental and I hope we can at least discuss them. They may be heresy to some people, but they are common sense to others.

There have been calls to abandon UK controls on imports of tobacco and alcohol. That has been proposed, I think, by Liberal Democrat MEPs, but I think that it would be completely unacceptable—it would be madness. The Treasury obtains substantial revenue from taxes on alcohol and tobacco, which pays for hospitals and other public services. If there were unlimited imports of cheap tobacco and alcohol the effect on Treasury revenues would be devastating. Even more important, it would bring in floods of cheap alcohol, exacerbating our already serious alcohol problems. We are trying to persuade people to drink more sensibly and not to smoke, so to allow in mountains of cheap tobacco and floods of cheap alcohol would take us in completely the wrong direction.

I hope that, if necessary, Ministers will tell the Commission, or whoever it may be, that we intend to retain our strict limits on alcohol and tobacco imports and that we shall enforce them. We could even reduce the current limits. When I go abroad I could not manage to carry the amounts that are currently allowed; my car would not hold the volume of beer that we can bring in. Let us deal with the white van brigade and at least enforce the current limits properly.

As I have said before, the lost revenue from imported cheap tobacco amounts to about £4.5 billion, which is a vast sum. Half that lost revenue would pay for free long-term care for the elderly. We need a world where we drink and smoke more sensibly and look after our elderly more properly.

Several hon. Members:

rose—

Order. Obviously, a number of hon. Members are seeking to catch my eye. As time is running out, it would be extremely helpful if people did not necessarily take the full 15 minutes that they are allowed so that we can get in as many Members as we possibly can.

I shall speak only briefly about the EU and then about the wider Europe. This is, after all, a debate on European affairs and so far I think that only Mike Gapes has made much acknowledgement of the 22 countries that are not members of the EU.

In the wake of the constitution, it is certainly appropriate that we should have a rethink, even a reinvention, of the EU, but some Members appear to think that that is an opportunity to unravel the EU, to bring everything back home, with merely a loose treaty arrangement. If we were to do that, we should throw away the huge amount that has been achieved over the years, which we take for granted and would realise that we had lost only after it had gone. After all, as my right hon. and learned Friend Sir Menzies Campbell pointed out, the fact that countries have queued up to join the European Union is proof of huge success. In spite of the difficulties over the working arrangements that that change has brought about, no one is suggesting that they should leave or that another arrangement should be adopted. I remember standing outside the Polish embassy and talking about the support for Solidarity and the case for Polish democracy. Some people have short memories, as they now complain about the fact that, almost by accident, the Poles belong to a free and democratic country, with the freedom to come and work here and with their own place in a democratic common market that we helped to create. We should not deplore that but welcome it. We should not throw that achievement out just because we find it difficult to work out the decision making.

Kelvin Hopkins spoke about all the things that we could do nationally. If, for example, we decided to tackle aid or structural funds on a national basis, that would only work with international agreement. In other words, every member would need to agree the framework for such work. That could be an acceptable way of delivering moneys instead of delivering them through the European Commission. We still need a mechanism, however, for making agreements and, if I may say so, we would probably find that qualified majority voting was the best way to achieve efficient decision making.

There is no doubt at all in my mind that Jacques Chirac has raised the issue of the budget to distract attention from his own miserable and comprehensive failure to lead the people of France anywhere useful. We should not make assumptions about the reasons why people voted the way they did. We must simply accept that they did so for various reasons. Surprisingly, one Frenchman in Paris told me this week that he had voted no because he thought that France was too dominant in Europe. He wanted a renegotiation of the constitution to give more power to the smaller countries. We should therefore not presume that we know why the French voted as they did, but we must live with the consequences of their vote. In the long term, the CAP must be reformed. A perfectly reasonable British position would be that we negotiated a rebate, so if it is to be renegotiated the whole budget, of which the CAP constitutes the lion's share, must be renegotiated. There is common agreement that that is a proper and legitimate argument, although there is disagreement about strategy and outcomes.

There are anxieties about structural funds. My local council has sent me a communication expressing its worries about the British position, and whether those funds would be brought back home. In some cases, local authorities have a more constructive and objective arrangement with the European Commission than with the British Government. That is not an argument for the arrangement—it is simply a practical reality. Aberdeenshire council operates a number of projects supported by European Union funds which it believes are at risk. Many of those projects tackle the consequences of agricultural and rural decline. A large rural council such as Aberdeenshire requires assistance with such problems, and it has benefited from European structural funds over the past four years to the tune of £8.691 million. The loss of that money would be extremely damaging to the regeneration of our fishing and rural communities. I am not suggesting that the British Government cannot achieve success, but any change is bound to create concern. My council has been able to secure funding for various projects across Aberdeenshire, and would like an assurance that if there is any change, it will have continued access to such funding.

On the issue of a wider Europe, I speak as a member of the Parliamentary Assembly of the Council of Europe, of which the United Kingdom is a founder member. Indeed, we were the first country to ratify the European convention on human rights. In the current climate of uncertainty, the European Court of Human Rights and the convention offer a particularly important focus for upholding human rights issues across post-Communist Europe. It is not the only such forum, and I acknowledge that the Organisation for Security and Co-operation in Europe, NATO and the European Union in its external relations all have a role to play. There is no doubt that there is an active engagement which the Government should and do support.

It is therefore particularly regrettable that given our good record on human rights, we have experienced some pretty sharp criticism by the Council of Europe Commissioner for Human Rights on a number of pieces of legislation introduced by the Government, to which my own party has vigorously objected. In his report, Alvaro Gil-Robles substantially echoed the criticisms that I and my Liberal Democrat colleagues have been making—for example, of control orders and the Government's proposals on those. The Commissioner states:

"It is essential . . . that the necessary judicial guarantees apply to proceedings resulting in their application and that the legislation providing for such exceptional measures be subject to regular parliamentary review."

Given that we have had a guarantee from the Government that the legislation will be revisited, I hope that the comments of the European Commissioner will be taken fully on board, and that the House will continue to have a proper role in oversight of that.

The Commissioner is even more outspoken on the role of evidence that may have been secured through torture, even in other countries. He puts it in pretty direct language:

"torture is torture whoever does it, judicial proceedings are judicial proceedings, whatever their purpose—the former can never be admissible in the latter."

The British Government response to that is inherently mealy-mouthed, unsatisfactory and unacceptable. As an architect of the European convention on human rights and as a country that tries to encourage others to apply high standards of human rights, we should take the report seriously. Criticism to which we do not respond constructively undervalues our ability to lead and influence other countries.

In my capacity as a member of the Parliamentary Assembly of the Council of Europe, I am the rapporteur on political prisoners in Azerbaijan. In one way or another, Azerbaijan has probably experienced 200 years of external oppression and has become an independent state only since the collapse of the Soviet Union, and only after a fairly violent war against the Russians and a subsequent civil war in Azerbaijan, which went remarkably unreported in the British media. The idea that we have had peace in Europe since the second world war is not borne out by many of those small wars that have had devastating consequences for people. There has, in addition, been the war between Azerbaijan and Armenia, leading to the occupation of Nagorno-Karabakh and a million displaced refugees, with whom Azerbaijan has had to deal. Yet we are trying to lead countries like Azerbaijan—Georgia has found its own way—Armenia and others to some kind of democratic future.

I have two further points to bring to the attention of the House. The first concerns the plight of British citizen Almas Guliyeva, who was arrested in Baku on 3 June. She is a constituent of Dr. Vis, who I know has made strenuous representations on her behalf and I am supporting him in that. Mrs. Guliyeva is the niece of a former speaker of the Azerbaijan Parliament currently living in exile in the United States who wishes to be a presidential candidate or a parliamentary candidate. There is no doubt that her arrest is directly connected to that relationship.

Mrs. Guliyeva is in hospital, having suffered a heart attack as a result of the inquisition that she underwent on her arrest. Today her doctors have authorised the authorities to question her—something her family are extremely concerned about. The background to the situation is that the authorities claim that they found a gun in her luggage as she was leaving the country. Is it realistic to believe that any international traveller today taking luggage through any international airport and putting it through an X-ray machine would put a gun in their luggage? That does not seem to be a rational or credible piece of behaviour. Indeed, circumstances suggest that the authorities asked for the luggage to be run through a second time, when, mysteriously, the gun was found. We must be aware that this kind of thing is happening and that a British citizen has been subjected to it.

I also have an e-mail dated 13 June which says:

"On June 12"— last Sunday—

"at prime time several TV channels of Azerbaijan . . . exposed to insults Dr. Leyla Yunus, Director of the Institute of Peace and Democracy because of her human rights protecting activities and in particular for the preparation of the lists of political prisoners and for sending them to Mr. Malcolm Bruce the rapporteur of the Parliamentary Assembly".

It goes on to say that journalists mentioned the exact address at which she and her family were living and called for viewers of the programme to take appropriate action. That is the kind of society that exists in Europe today and in a country that is a member of the European convention on human rights, which we are responsible for trying to enforce. I say with a sense of support that the people of Azerbaijan and countries like it should achieve genuine democracy and we should accept our responsibility for that.

Important as our internal debates on the future of the European Union are and important as it is that we get the right mechanisms for EU decision making, we should not forget the wider Europe of which we are a part and our responsibility to try to bring pluralism, democracy and human rights to such countries. I plead with the House that when we have a debate on foreign affairs, it is just that, and that when we have a debate on EU affairs, it is regarded as separate. I hope that the Minister for Europe will acknowledge that these are important issues that we need to address.

Thank you, Mr. Deputy Speaker, for the opportunity to make my first speech in this House. In doing so, I am conscious that in their very different ways Dr. McDonnell and my hon. Friend Mr. Pelling have raised the bar to an ambitious height. Although both are no longer in their places, I congratulate them on their contributions to a debate that ought to be addressing one of the great political challenges of our time: how does the European Union reconnect with its people and what role does Britain play in that process? I speak from the delicate position of being both the son of the Foreign Secretary who negotiated the Maastricht treaty and the successor of John Wilkinson, who fought that treaty tooth and nail through the Lobby. It is a genuine pleasure to pay tribute to John, and in so doing I beg the indulgence of more seasoned Members of the House who are waiting to contribute to the debate.

It would be quite wrong to cast John as an anti-European. He campaigned vigorously for our entry into the Common Market and some of the greatest satisfaction in his parliamentary career came from his work on the Council of Europe. He simply felt that the European project was heading in the wrong direction, and he would enjoy the irony of the fact that the majority of the people in France appear to share his view.

John has been a very good model for a young politician working out how to earn the respect of the people whom he intends to serve. His commitment to country and public service is deeply rooted. He brought real expertise to this place. Jeremy Hanley, an ex-Defence Minister and now a constituent, observed

"his knowledge of the RAF and its capabilities is probably second to none in the house."

He was no one's poodle. His fierce independence of mind may have cost him some shallow glory on the Front Benches, but it won him the long-term admiration of his constituents. They simply trusted him to speak his mind. Over 25 years of service, John was a dedicated local champion who helped many people with endless supplies of courtesy, good humour and patience. Every week I meet individuals and groups who lose no time in reminding me of that. I am sure that the House will join me in wishing John and Ceci a very happy retirement.

I am very proud to have inherited the constituency of Ruislip-Northwood from John Wilkinson. Sitting on the western end of the Central, Piccadilly and Metropolitan lines, it is superbly connected to London but proud to keep a distance. Few constituencies are more regularly visited by the royal family or senior members of the Government, although I should point out that their journeys rarely extend beyond the mile that it takes them to travel from the A40 to RAF Northolt. That famous airbase celebrates this year its 90th anniversary and the proud distinction of being the oldest continually operational RAF station in the country.

The story of Ruislip-Northwood is one of evolution from sleepy rural hamlets to thriving suburban towns, which are determined to maintain their identity and quality of life. The key agents of change were the railwaymen and the property developers who followed in their wake. The extension of the Metropolitan line opened up rural Middlesex and the opportunity for people to pursue the dream of a better quality of life, more space, better air and a greater sense of security, and those aspirations remain as valid today as they were in the late 19th century. Northwood is separated from Ruislip by magnificent ancient woods that once provided sport for kings. Harefield stands apart, surrounded by precious green belt, and it is proud to be the last village in Middlesex and home to the world-famous Harefield heart hospital.

My constituency may have played a quiet role in our nation's history, but it is not without its heroes: the Polish war memorial honours those brave Polish fliers based at RAF Northolt who laid down their lives for a free Europe; the genius of Sir Magdi Yacoub attracted the brightest and the best to push the boundaries of medicine at Harefield hospital; and Paul Strickland's vision and drive means that patients at Mount Vernon cancer centre have access to the most sophisticated scanning equipment in the country.

On the whole, our heroes are low-profile, local people who have stood up for what they value over the years and who have done far more to shape their communities than any politician sitting in Whitehall, let alone Brussels. In the 1930s, Ruislip residents took decisive action in saving their woods from being turned into houses, which meant going to Cambridge and persuading the then bursar of King's college Cambridge, one J Maynard Keynes, to sell the land to them rather than to the developers.

In 1983, local residents took the drastic step of physically occupying Northwood Pinner hospital for three months until the bureaucrats saw sense and abandoned plans to close it. Today that spirit lives on in organisations such as Heart of Harefield, which has been so effective in exposing the folly of trying to move Harefield hospital to Paddington. The tradition of civic pride is rooted in a strong conviction that the quality of life in Ruislip, Eastcote, Northwood and Harefield is worth fighting for. I strongly share that conviction, and it is my privilege and responsibility to give those communities a strong voice in this place.

The clearest message that I heard in the general election was one of frustration and lack of confidence in politicians. People feel less able to control what is important to them, and the big decisions seem to be taken by remote, unaccountable bureaucracies. For example, the public consultations on the future of Harefield hospital and Mount Vernon hospital were widely seen as shams conducted by an increasingly arbitrary and remote NHS. Few issues arouse more local passion than planning, not least because local planning departments seem so toothless in the face of central Government directives. People are deeply worried about increased antisocial behaviour and want to see more police on the streets, but their voice appears to have little weight in shaping local police priorities. My concern is that communities that do not feel empowered quickly lose their sense of community.

You may well ask, Mr. Deputy Speaker, what relevance that point has to the future of the European Union. The EU has begun to symbolise what people feel is wrong with politics: it is too elite, it is too remote and it is seen as too self-interested and too corrupt. Over the past decade, the British people have recognised the degree to which Europe meddles in their lives, and they want less interference rather than more.

The current European leadership reminds me of the board of a grand multinational company that has lost contact with its customer base over many years. The decision by the French people has prompted a crisis in the boardroom and a vacuum of leadership. It is time for someone to stand up and make the case that this is the opportunity to save the company, if the board accepts the need for a new strategy.

Instead of appearing to focus endlessly on its own workings and the allocation of power, the EU must prove its value to a new generation. I argue humbly that it must first explicitly ditch the principle of ever-closer political union and focus instead on re-establishing the EU's credentials as a force for prosperity, growth and jobs. That means winning the argument for the Anglo-Saxon model of economic liberalism, which is the only sustainable response to the new competitive age. That means focusing minds on extending the single market, breaking down external tariffs and strengthening the economic ties that will do more to bind us together than any artificial political structure. It also requires a fundamentally different approach to regulation. As my right hon. Friend Mr. Hague pointed out so powerfully, it asks very awkward questions about the value of monetary union.

The second priority, I would suggest, is to prove that the EU can deliver an effective lead on some of the issues that we cannot tackle on our own, because that is a large part of what it is for. Take climate change, for example. The science has moved on, and there is an urgent need to look beyond the first, very small step that was Kyoto. It is clear that the world is not going to get a lead from the superpower. In this vacuum, the EU has a chance to play a constructive and possibly decisive role in building a coalition of the willing around a post-Kyoto framework. It can certainly take practical steps to put words into action. If, for example, we have to live with the common agricultural policy, is not there a case for using it to incentivise the production of biofuels? A robust EU emissions trading scheme could be, and must be, a template for a global scheme.

In short, it is time for the EU to be seen to be taking a lead on the difficult issues that matter to people. It is time for radical reform to replace a culture of power grab with one of delivering tangible benefits to people. In truth, real progress will require new leadership, and in the short term only Britain can supply it until a new generation of leaders takes the stage in France and Germany. While the old regime struggles to respond to the impudence of the French and Dutch people, it is time for Britain to find a bold, positive voice on the EU—one that steers the Community towards better defining its role, setting its limits much more clearly and, above all, proving its relevance and value to the people who pay for it.

If I can compare the nations of Europe to the inhabitants of the 100 acre wood, I would say that Britain has traditionally and usefully played the role of Eeyore, but it is now time to show some of Tigger's bounce in pointing the way forward. In 1999, the Prime Minister threw down this challenge:

"If we believe our destiny is with Europe, then let us leave behind the muddling through . . . the half-heartedness . . . and play our part with confidence and pride".

If ever there was a time for him to walk his talk, it is now.

It is a particular pleasure to follow the maiden speech of my hon. Friend Mr. Hurd. He introduced himself as the son of a former distinguished Foreign Secretary. I suppose that he thought that he had better do so before anybody else referred to it. If I may say so, he has no need whatsoever to lean on his genes, as it were, because he has immediately shown that he is eloquent and informative in describing his constituency, generous and indeed accurate in praising the work of his predecessor, John Wilkinson, and intuitive and perceptive in describing the attitude of his constituents towards the European Union.

I know that it is difficult sitting here waiting for many hours to make a maiden speech. My hon. Friend was third, and by no means the least, and he deserves all our congratulations. He was powerful and articulate in setting out his own view of what Europe should be doing. I am glad that he mentioned the climate change agenda, which no other Member has touched on today. As he said, we are concerned that Europe should do those things which affect the way in which people can live their lives. Climate change is climbing up the agenda rapidly, and nation states are, almost by definition, incapable of responding to it by themselves.

There has been a lot of visionary talk this afternoon. Coming from much further up the A1 than Ruislip-Northwood, I am going to be rather less visionary and, I hope, a little more practical.

I wonder to what extent the Government do any competent preparation and planning on European issues at all. Two years ago, they walked into a meeting to find that Chirac and Schröder had stitched together a package on agricultural financing. The Government made the best of a bad job, but the fact is that it was put together in their absence and they have been unable to unstitch it. Now, I get the impression that the Government did no real planning as to what the consequences of a no vote in France or elsewhere might be. Again, it looks as if they have been caught on the hop by a French counter-offensive on the rebate. Perhaps we did not anticipate trouble on that. Perhaps the Chancellor, with his well-known and well-advertised impatience with Europe and all its works, his anxiety to take the last flight to and first flight from Brussels, his reluctance to engage in what the French call les rondes de jambes—a necessary part of European negotiations, which goes better with alcohol than without—and preoccupied with G8 issues, took his eye off the ball.

A month ago, no one in Government was talking about a fundamental change in the balance of EU funding. During the general election campaign, I did not detect anyone telling me that a fundamental decision to change the orientation of Europe would happen, however much we might have welcomed that. We appear to have stumbled into a demand for a fundamental revision of European finances almost by accident and as a reaction to coming under attack about the rebate.

We were already at the beginning of a major change in the common agricultural policy. The first transitional period in the move to the single farm payment is this year. There are years to come. It applies differently to different parts of the United Kingdom, but it represents a fundamental change and the other EU countries have timetables in a broadly similar framework. If the Government now say that we will start from scratch and that we need a new reform, the sooner we know about it, the better.

Do we have any idea of the change that we want? I do not believe that we do. I have heard nothing from the Department for Environment, Food and Rural Affairs about the future shape of the CAP. I congratulate the Secretary of State on negotiating the single farm payment reforms, which was a significant achievement and a fundamental break with the past of the CAP. However, I have not heard that it is the aperitif before a much bigger change later.

Are the Government aware that CAP funding will be cut significantly and that that the sword will fall precisely on the most useful parts—the environmental and rural development elements? It is already clear from the management committees that there is serious axing of the very programmes of which the Government made most in arguing that they have introduced a new environmental chapter into agricultural policy.

The best hope of reforming the CAP is for the British Government to pursue vigorously the World Trade Organisation round and ensure that Europeans do not lapse on their way to the ministerial meetings at the end of the year. The demands of the marketplace and the WTO have always been more effective drivers of change in fundamental policies such as agriculture than self-generated demands. It will take all the skills of the British presidency to ensure that Ministers arrive in Hong Kong in December still determined to strike a deal. It would be a significant win simply to ensure that the farm support of Bulgaria and Romania falls in the envelope that is currently envisaged when they join the EU.

As I said to my Front Benchers, the stuff about horrible, miserable, inefficient French farmers, ghastly peasants and how we should stop them getting more money is tedious. First, it is inaccurate. The French have some of the most efficient farmers in the world. East Anglia has little to teach the French cereal farmers in the Paris basin and northern France about agricultural productivity. The Dutch, the Danes and other European nations are as efficient as us in other sectors of agriculture. We do not help ourselves by perpetuating some of the little British myths because it means that we sometimes fool ourselves about the genuine needs of our farmers.

We need to examine the current politics of the EU. I am a well-known Francophile, sometimes to my cost. However, President Chirac is undoubtedly the empty man of European politics—l'homme vide de l'Europe. He brought about his own misery. He has made a series of heroic miscalculations in his political career and the latest is probably the most fatal. That is not our fault. At the moment, he appears almost to want to take revenge on his people, but there is no reason for the United Kingdom to help him. We helped him before the referendum on the services directive and I see no reason for continuing that help.

It is ironic that, in many ways, the vote in France was to stop the world and get off, whereas some of the most efficient multinational companies in the world, in the insurance, aerospace, nuclear and motor industries, are based in France. Some French companies are world-beaters, so we should not characterise the whole of France as some backward industrial society hiding behind a luddite exterior.

Chancellor Schröder is going for an early election in September, which we hope profoundly that he will lose, and which I am sure that the Prime Minister also hopes that he will lose. He will be much more comfortable with a Christian Democrat regime than with a Social Democrat regime, as the Prime Minister is much more a Christian Democrat than a Social Democrat. Angela Merkel would be a much more effective partner in sharing a vision of the sort of economic society that she wants in Europe than Chancellor Schröder. I hope that there will be no last-minute electoral dashes to Germany to help the Chancellor, although, on second thoughts, perhaps I would like that, as it will no doubt reinforce the determination of the German people to get rid of him.

Signor Berlusconi has an election a year from now and is in serious difficulties. His status as the Prime Minister's best friend, which brings such singular delight to the Labour Benches, might not continue for much longer. In Spain, there is a relatively newly elected but unfortunately moralising leader, with whom the Prime Minister has nothing in common. Let us not fool ourselves—Chirac-Schröder is not Schmidt-Giscard or Kohl-Mitterrand. It is an old man in a hurry and a middle-aged man in a panic, and both of them might be heading for the exit.

We do not need to blink on the rebate issue. Europe will need its budget eventually and, if we hang on, a budget will have to be agreed. We should be clear that it is not permanently sustainable, for the reasons that have been explained. It is not reasonable that the new member states should be asked to bear a mounting burden over a long period. If we believe in our own liberalising agenda, and that the geometry of Europe has changed because of enlargement, we look to precisely those states to be our allies in delivering that liberalising agenda. As the Prime Minister has said, albeit belatedly, we need to address not merely the rebate but its causes, to coin a phrase. Perhaps we need a wider mechanism to address legitimate concerns of countries such as the Netherlands, Sweden and Germany, and we need a long-term shift in the balance of European spending. Globalisation and the WTO are likely to be more efficient drivers of that than internally generated forces.

I hope that the UK presidency will not be a huge brawl, which it could become if we are not careful. We have interests in driving forward a single market agenda in services, working for a successful WTO round and developing the European Union's capacity to deliver soft power, of which enlargement is part, while accepting that, essentially, member states must address their own economic difficulties. We will not do anything at the European level that will solve France's economic problems with the labour market, or stop the German problems, which stem as much from the terms of reunification as the exchange rate of the euro. There is no single Anglo-Saxon model, and no single continental model and nor, we should remember, is the UK always supremely better and different from everybody else in its economic performance. If we are to get the outcomes that we want, we must make sure that we get French and German engagement. We cannot deliver those outcomes in Europe against the French and Germans, so we must try to create that boring old consensus to try to move forward.

I agree that we must maintain the course for enlargement, which is the European Union's greatest achievement—the creation of a civil society, with a functioning democracy and accountability, through member states from very diverse dictatorial or totalitarian backgrounds having to subscribe to certain civil liberties criteria in order to be part of the European Union. The changes that they bring about to do that are much more fundamental than they would achieve autonomously, as we are seeing in Turkey at the moment. The final prize would be Turkey. The ability to demonstrate that an Islamic society can be part of a much wider association that is predominantly, but far from exclusively Christian, would be an enormous contribution of soft power by the European Union to geopolitical stability.

Europe faces two huge tasks. The first is that we need to discuss properly how the European Union works in the new world of global investment and trade. Issues such as education, training, research and development, and market-based culture will become much more important, because globalisation will not go away and we cannot close the frontiers again. We will have to deal with that incredibly competitive society, and Europe has a role in ensuring that we can do it.

Secondly, there is the question of connection with citizens. The problem is that the European Union has lots of institutions, but they do not have the legitimacy with which citizens endow the institutions of member states. In other words, they do not have demos, unlike the institutions of a nation state, which draw directly on the people.

That means that we need to find mechanisms to draw national bodies—not just governmental, civil society bodies, but national Parliaments—much more closely into the working of the European Union and the decision-making processes, so that people can find in those institutions and bodies geometry with which they are familiar. They will see shapes, functions and procedures with which they are familiar and that they can relate to until we can create a marriage of institutions that are necessarily supranational, but which draw to the maximum on familiarity with institutions in which people have invested a certain trust and faith—although perhaps not always deservedly, considering the history. None the less, they are what people have chosen. If we can do that, it will be a significant help.

Finally, I want to make one little point. It would be awfully helpful if Europe could occasionally dismantle something instead of creating it. May I recommend the Economic and Social Committee? The European Parliament is the international democratic body of the European Union, so I cannot for the life of me see what the residual function of the Economic and Social Committee is. I am not a great fan of the Committee of the Regions either. We must be able to say, "This has served its purpose, but it has been superseded. Europe can be more efficient and slimmed down." That would give a great lesson to everybody. We talk about devolution: let us do it at home and do it in Europe. Then, perhaps, we will be able to show the citizens that we have listened to them.

I am particularly pleased to speak in this debate on the important subject of the European Union, but also to have heard the maiden speeches of the hon. Members for Ruislip-Northwood (Mr. Hurd), for Belfast, South (Dr. McDonnell) and for Croydon, Central (Mr. Pelling). I must confess that I have never heard of the link between Croydon and "Star Wars"—the actor who played Darth Vader comes from Croydon—but I note with relief that the hon. Member for Croydon, Central did not claim the support of the dark side of the force for his arguments.

Kelvin Hopkins mentioned, I think with a slip of the tongue, the supernatural element of the European Union. I certainly hope that there will be no false effort to resuscitate a constitution that is well and truly dead. Representing as I do the first party in the House to call for a referendum on the constitution, I nevertheless believe that a corpse is a corpse. It would be odd to hold a referendum on a constitution that is as dead as Monty Python's parrot. That may not be pining for the Norwegian fjords, but, as the new Minister for Europe knows—I welcome him to his place—Norway's advantages from being outside the common fisheries policy reflected the SNP's main objection to the constitution.

Despite our objections on the incorporation in the draft constitution of the common fisheries policy as an exclusive competence, we believe that there is much to merit further consideration. I strongly warn against the tabloid approach taken in some quarters, which seems to rule out any change to the European Union that may have been within the draft constitution. For example, the idea that we should not think about proposals to open up the Council of Ministers and make it meet in public because the draft constitution is dead and almost buried has been raised a number of times and the same applies to pursuing an enhanced role for national Parliaments. Not considering those things would be folly. We need to consider all these proposals on their merits and not paint them as discredited. They are not.

I firmly believe that we should regard where we are as an opportunity to redefine the European Union that we want. We do not want a negative, anti-European attitude, but one that recognises the need for a confederal European Union that reflects a very real, 21st-century independence. Such independence is not the same as the 19th-century, outdated idea of autarkic independence, but it none the less constitutes independence. The idea that the Slovaks and the Slovenes, who regained their independence from larger incorporating unions, have thrown it out the window within 10 years by joining a supranational united states of Europe was folly before and it is folly now. We have, and should continue to have, a confederal Europe. However, we need to look hard at what does need reforming, and I want briefly to talk about our responsibilities in this House in that regard.

Can the hon. Gentleman first clarify what he means by a confederal Europe, compared with the one set out in the constitution?

A confederal Europe resembles the constitution definition, which describes the EU as a union of states that decides to pool sovereignty in various areas, while retaining the principle of subsidiarity. I firmly believe that powers should be handed back. Someone asked what should be handed back, and first on my list would be the common fisheries policy. That has been an absolute disaster, yet no mention has been made of it today.

I return to what we in this House should be doing about reform. The esteemed Chairman of the European Scrutiny Committee, Mr. Hood, who spoke at the beginning of the debate, talked about the important role that it plays in ensuring that this House is properly informed about proposals from the European Commission, the Council of Ministers and elsewhere, and about important regulations, directives and communications. Every week, the Committee goes through as many as 30 to 40 documents, some of which are profoundly important. Yet for the past two months, it has not met. There has been no scrutiny whatsoever of European business during this Parliament. Does that mean that the Council of Ministers was not meeting—that it was not deciding whether such regulations and directives should be introduced? Of course not. Such regulations and directives were introduced. What happened to the scrutiny reserve, or has everything been put on hold? I do not know, but if we want to reform the EU we must lead by example. I am sorry to say that we have failed in that regard.

We also failed in terms of turnout. During the debate on the draft constitution, a Standing Committee that brought together Members of this House and of the other place had twice to be declared inquorate because Conservative members did not attend. That is extraordinary. We can take European business seriously or choose to grandstand once or twice a year on our hobby-horse subjects. We need to get on with the nitty-gritty work and to take our scrutiny function much more seriously.

Another issue that has not been touched on is the role of devolved Administrations and institutions. Some 60 to 70 per cent. of the European legislation that gets handed down to the United Kingdom relates to shared sovereignty with the Scottish Parliament, not to this House, yet no mention has been made of how we might choose to improve that situation. Members might not be aware that the relationship between the UK Government and the devolved Administrations is currently secret. Concordats on intergovernmental relationships between the central authority and devolved Administrations say that Ministers should not talk about their discussions on important policy issues. How can we talk about an improved EU when scrutiny Committees do not meet, interrelationships are secret within UK governmental structures and the European Scrutiny Committee itself, on the most important times that it meets, does so in secret? That is indefensible. The Dail Eireann can work out a way to meet in public and go through the various issues, so why cannot the European Scrutiny Committee do the same?

I am mindful of the time, so I will be brief in discussing my final point. I am concerned that, in the current climate of megaphone, gunboat diplomacy on the rebate, we might be missing out a very important element of the budgetary debate that is of profound importance to UK areas that receive EU funding. I do not know whether, given the large amount of paper in his in-tray, the new Minister for Europe has had a chance to examine what is known as statistical effect. Let me try to explain a rather complicated development.

Because of enlargement, money needs to go from the older, richer EU states to the poorer, new member states, but 17 regions throughout the old EU are very much at the margins of EU funding, and may lose it. The EU has been considering ways of dealing with that difficulty. One of the affected areas is the highlands and islands, part of which I represent.

If statistical effect does not operate, there will be an estimated £350 million loss from the next programming period. If that is compounded with the accountancy error on the part of the Office for National Statistics, which has denied the highlands and islands objective 1 funding—it amounts to a loss of between £200 million and £250 million—and the potential loss of cohesion funds, the Scottish economy alone will lose up to £1 billion. That is confirmed by a document drawn up two days ago by the Scottish Executive. When I asked the Foreign Secretary about it, he said that he was not aware of the exact numbers. I should be grateful if the Minister for Europe could confirm that that would be the position. The document says:

"If the UK position was to succeed"

—that is, its current negotiating rounds on the budget and how the UK Government would like to proceed—

"Scotland would receive no European Structural Funds support".

It confirms that that would mean a loss of £710 million.

I noted carefully what the Foreign Secretary said earlier in reply to a question from me. He said that the UK Government had given a commitment to the regions and nations that they would not lose out. I should be grateful if, when summing up or indeed now, the Minister could confirm that the UK Government will cover—as a minimum—the nigh on £1 billion that will potentially be lost from the Scottish economy, given the detrimental impact that that would have on the highlands and islands in particular. Can he give that minimum guarantee that the Government will stump up £1 billion of additional funds to close the gap?

I assure the hon. Gentleman that I have had an opportunity to discuss the impact on the highlands and islands. Indeed, I paid a visit to Highland regional council and spoke to its representatives about exactly these matters. Does he accept that, given the terms of the Treasury guarantee that has been offered on structural and cohesion funding, there is a genuine statistical difficulty? The bases on which the numbers can be calculated rely on European statistics that are not yet available to this or any other EU Government.

I am surprised, because the Scottish Executive seem to have the figures. The Scottish Executive, run by the Labour Government together with the Liberal Democrats, say that the amount is £710 million. The statistical-effect figure is public and confirmed, as is the amount lost to the highlands and islands because of ONS errors. We are talking about something in the order of £1 billion. Perhaps when he sums up the debate the Minister will take the opportunity to confirm that the UK Government will give a minimum guarantee to plug that £1 billion gap.

We must of course accept that structural funds are for the poorest regions. It is absolutely right for us to invest to raise parts of the newer EU states to the same economic standards as exist in the older states, but the transitional arrangements for the poorer regions of the established EU states must also be dealt with properly. The Foreign Secretary has conceded that mechanisms will be available to plug the gap, and I await the Minister's guarantee that the Government will indeed plug a gap in the Scottish economy that amounts to at least £1 billion.

I want to be reasonably brief this evening and concentrate my remarks exclusively on the consequences for Britain of the referendum decisions in France and Holland. Before doing so, however, I join my right hon. Friend Mr. Curry in congratulating my hon. Friend Mr. Hurd on a very distinguished maiden speech. He opened his remarks by saying that another new colleague, my hon. Friend Mr. Pelling and, indeed, Dr. McDonnell had set a high hurdle for him to jump over, but everyone who heard his speech would conclude that my hon. Friend jumped over that hurdle and made it look easier than we all know it truly was. I congratulate him again on an excellent speech that came over extremely well.

I unreservedly welcome the rejection of the constitution in the referendums of France and Holland and it is important to be clear why. I am not one who thinks that the constitutional treaty was the finishing touch or keystone for a new superstate. Such a presentation of the constitutional treaty is grossly overblown. I welcome its rejection because I have always thought that the treaty that emerged from the process was a major lost opportunity for Europe and I am delighted that the political classes in Europe have a second chance to produce a new constitutional arrangement that addresses the needs of the whole of Europe at the beginning of the 21st century. If we are to achieve that, we must be specific about the nature of the problems that we currently face and how best to take the opportunity to deal with them.

I am not one who believes that the problems that Europe has encountered as the European Union has grown and as the world has become more complex should lead us to the conclusion that we should give up on the European project. I am an unapologetic Europhile and I believe that the motivation that led us first to join and then to develop the EU is still correct, but we must be clear about precisely which objectives are achievable. Some of the objectives that were written into the treaties as we have gone along have proved, in the light of experience, to be over-ambitious, so we should consciously drop them. My hon. Friend the Member for Ruislip-Northwood suggested that we should consciously drop the commitment to build an ever-closer union. He is almost certainly right about that.

As a former Secretary of State, I used to be responsible for health and, from my point of view, there was no reason for that policy area to be included in the various treaties. I would now delete any reference to an EU angle on health from them. I also used to be responsible at one time for what was then called national heritage. There were some minimalist EU functions attached to that, but again I would now drop them because they are over-ambitious and do not focus on the core of the common interest that should, in my view, be at the heart of the European project.

Let us be clear about that. First and foremost, I agree with my right hon. Friend Mr. Lilley that the European project has to be about creating a competitive market economy that brings together all the EU member states. Some people talk as though that means no more than a commitment to a customs union, but I believe that it runs very much deeper than that. A successful market economy is not a state of nature. It depends on a very intricate collection of regulations and commitments that are enforced on all the participants in that market economy.

The EU was established for a central purpose—to deliver the political objectives of neo-liberalism. That is greatly to the UK's advantage. I fundamentally disagree with Kelvin Hopkins, who says that we should reject the neo-liberal agenda. I am very strongly in favour of that agenda, and the EU's institutions should be designed to deliver it.

The right hon. Gentleman is offering a plausible and principled case for getting rid of the EU's superfluous power and concentrating on its core business. However, voters in France rejected the constitution for being too minimal and Anglo-Saxon. Would not renegotiation of that text give rise to a document even more shrunken than the one already rejected by French voters?

The hon. Gentleman makes an important point, which I shall address later in my remarks. It goes to the heart of what I consider to be the constitutional treaty's failings.

The second policy area in which the EU must engage much more effectively than has been the case so far—the environmental agenda—was also mentioned by my hon. Friend the Member for Ruislip-Northwood and by my right hon. Friend the Member for Skipton and Ripon. As the latter said, the environment is rising up the political agenda very quickly. Member states have a real common interest in it, and there is a real requirement for a common policy. In contrast, the areas in which I am not in favour of deepening co-operation include security, defence and foreign policy. They are outside what I understand to be the common interest among EU states in ensuring an effective delivery mechanism.

Why have the existing constitutional arrangements, and the treaty proposals that we can now consider to be dead, been found wanting in respect of delivering the policy agenda that I have set out? I believe that the answer is that the present system is insufficiently flexible for the world in which we now live. It was consciously designed that way by the people who put the arrangements in place in the 1950s. At that time, the concern was to agree a common purpose and make it difficult for countries to resile from it. Therefore, the EU's designers built in the provision that only the European Commission could initiate new proposals, and they also built in the principle of the acquis communautaire.

However, the dangers that we face today are fundamentally different from the ones that the European institutions were designed to address. In the face of globalisation, those institutions make change too difficult: they slow down the change that is essential to the economic survival and success of the EU's member states. Furthermore, a Europe of 25 states has an institutional resistance to change that makes change more difficult to manage than was the case with the original six member states.

The balance has therefore shifted fundamentally and we need to ensure that in future the EU's institutions are much more effective drivers for change. As proof of that, one need only list the items on the change agenda about which the liberals among us, at least, broadly agree—excessive social costs, misplaced agricultural expenditure, wasteful expenditure in the rest of the budget, the important elements in the world trade round that were mentioned earlier, and the sensitivity surrounding enlargement, especially as it relates to Turkey. All those hugely sensitive items are on the change agenda.

On the point raised by Mr. Clegg, the second problem with the existing institutions is that they do not allow the process of change to be driven through. Supporters of the constitutional treaty say that that is exactly why they wanted to extend qualified majority voting and make it easier for the EU to reach decisions. Let us consider that. The changes that I have listed are hugely controversial. One need only consider how the French electorate reacted to the introduction of Turkey, the case for the Anglo-Saxon model or liberal change. However, we need to introduce those changes because power is already seen to be remote. If we streamline the institutions and make them more powerful, it might make it easier for the institutions to introduce unpopular and controversial change, but it will divorce them even further from the electorates to whom they are responsible and build up an even bigger bow wave of resistance to the changes that are essential for the success of the societies of the member states.

The central point is that if one wants to introduce change—especially unpopular, difficult change—in a democracy, it has to be based on a public dialogue. We cannot expect our electorates to come with us on a journey that is uncomfortable if, to put it crudely, it is explained to them, literally, in a foreign language. Change requires explanation and a public dialogue, and the institutions of the EU as currently constituted do not allow sufficient dialogue to take place to include—a fashionable word these days—the electorates of Europe in the change process that is essential for our survival.

I support the need for radical change to the institutions of Europe, but the defining characteristics of those changes must be that they allow us to embrace a faster driven change process. If that is to be successful, the changes must be based on a more effective public dialogue and increased accountability by the decision makers to those who elect us. That means that the institutions must be more firmly rooted than the existing ones in the successful democracies based on the nation state, instead of trying to create a European demos. If we have to wait until we have a successful European public dialogue, the Chinese, the Indians and the Americans—indeed, all our competitors around the world—will have left us standing. We do not have time and nor, in my mind, do we have the will to create a European political debate to support that process. That leads to the conclusion, which I find acceptable, that we should engage the member states and their institutions in supporting the change process. If we do not do that, we shall find that our institutions have become dangerously ossified. We shall also come to regard the European Union as like the pre-Reformation Roman Catholic Church, and that is not a world in which I want to live.

I listened to the earlier speeches in the debate today and I listened to much of the debate last week. I have also listened to several European debates in the past few years, and two things are immediately obvious. The first is that at the last three general elections in the UK the party that has been vociferously anti-European has been heavily defeated—

Not in England.

I said in the United Kingdom. Therefore, for the Conservative party to argue that a single vote on a particular issue by French electors is a justification of their position is the triumph of hope over experience. The logic of their position is that they should abandon the attempt to win support for their anti-European views in the United Kingdom and simply export themselves to France or the Netherlands.

My hon. Friend heard Mr. Paterson say that we did not win the election in England. Will he comment on the fact that the Conservative party now seems to regard itself as the English nationalist party?

I do not want to be diverted on to that specific issue, but my hon. Friend makes an important point.

It is glaringly obvious that these debates always start with a flurry of tabloid hysteria from Opposition Members, which is whipped up by the chauvinism and intense nationalism of some of them, but as they move on, we tend to hear a few more voices of reason and sanity on both sides of the House and a degree of consensus emerges, so I hope that I can make my contribution in that context. I associate myself with much that was said by the two previous Conservative speakers: the right hon. Members for Charnwood (Mr. Dorrell) and for Skipton and Ripon (Mr. Curry).

I reiterate the point made by the right hon. Member for Skipton and Ripon about French farmers. It is ludicrous and self-defeating to delude ourselves into thinking that all United Kingdom agriculture is superbly efficient, but all French agriculture is immensely inefficient. Anyone who compares the range, quality and diversity of food production in France with what we produce and the circumstances in which we produce it would draw that conclusion. Equally, when considering the strength of the French and German economies, we must compare the number of British consumers who choose to purchase motor cars manufactured in those countries with the number of French and German consumers who purchase motor cars manufactured in Britain. That comparison provides us with an important comment about the relative strengths of our manufacturing economies.

I want to tell the House about the fruits of my recent experiences in France. I happened to find myself in France during the later days of the referendum campaign, so I set out on an attempt to convert a small network of my French friends to the virtues of the European constitution, which proved to be utterly futile and misguided because despite my passionate commitment to the cause of European union and general support for the European constitution, albeit in the context of my schoolboy French, I failed miserably to persuade a single friend or colleague to vote yes. However, that was significant because the people to whom I was talking were strong Europeans. They believed in the European Union and probably believed in ever closer union. They certainly managed to combine a strong sense of their French identity with a sense of European identity.

Those people did not vote against the constitution for the reasons outlined by Conservative Front-Bench spokesmen today and during last week's debate. They were not voting against the single currency because they strongly supported it, and nor were they voting against the precise constitutional changes proposed in the treaty. They were not necessarily against a directly elected President, a common foreign policy, or even the changes to qualified majority voting. They were voting on the grounds of anxiety, fear and security. I cannot speak for people in Holland because I suspect that there were one or two slightly different issues there, although many were the same. However, the theme of everyone to whom I spoke, every newspaper article that I read and every television and radio programme that I watched or listened to was economic, rather than constitutional, although it was certainly nothing to do with the single currency. That fact is really important, so our Government and all European Governments must take it on board.

The supreme irony—Mr. Clegg made this point—is that the Conservative Opposition here believe that the result of the French and Dutch vote was a vindication of their economic policy. That is a delusion of a high order. The minimalist state—the ultra-deregulated economy and free movement of capital—is precisely what French voters voted against. They voted against the kind of economic policy that is dear to the heart of the Conservative party in Britain. We have to recognise that the vote was about economic insecurity as much as it was about the detailed text of the constitution. I think that my experience on that was widely shared.

I am interested in the hon. Gentleman's analysis of why the French people voted as they did, but in a sense that is less important than the constitutional and political repercussions of their decision. We can have an interesting debate about what went on in the minds and hearts of the French people and what motivated them, but that is rather academic. We are now in a constitutional crisis in Europe which obliges us to reconsider our future role in Europe and the direction of the Community as a whole.

I understand the hon. Gentleman's point, but the two issues are not completely separate. It is important to understand how the vote came about if we are to chart the way forward. We also have to recognise that 45 per cent. voted for a 191-page document of densely printed text. It is odd that the Conservative party can say that a 33 per cent. share of the vote in the recent general election represents a historic vindication of their leadership and an end to the terminal decline of their party, but that a 45 per cent. vote in France represents a complete rejection by the French people of the European constitution. That is twisted thinking.

I was not privileged to be in the Chamber to hear my hon. Friend Kelvin Hopkins, but I disagree with his analysis of the constitutional treaty and the way forward for the European economy. However, I share his understanding of why many people in France and Holland voted against the treaty.

There is something else to consider. On the way to the Chamber, I called in at the House of Commons Library to get a copy of the constitutional treaty, not because I expected to read the 191 pages before the start of the debate, but because I wanted to see how accessible it was. There is no copy in the Library. There is an excellent research paper, but I could not access the treaty from the Library Desk. [Hon. Members: "Go to the Vote Office."] My point is that the document is not widely available to the general public in the United Kingdom, so it is highly unsurprising that we do not have a clear understanding of the issues. The document was circulated to every household in France, but if we expect people to take a considered view on a 191-page document, we are deceiving ourselves. There is a lesson for the leadership throughout the EU.

I am interested in what my hon. Friend says. Was it not the case that the more people knew about the constitutional treaty, the more likely they were to vote no?

I disagree. It is a comforting thought that one's viewpoint is supported only by people who have the greatest knowledge, but that was not the case in this instance.

We are poor at communicating complex political issues. That applies to the UK as well as the EU as a whole. Who knows what will happen to the treaty? It is fairly obvious that there will be a gradual move to withdraw the document. Who knows what other nation states will do after the meeting of the European Council? I hope, as I think many Opposition Members do, that it is not the end of a European constitution.

In a Union of 25 nations, with more than 400 million people, it is evident that there must be a basic statement of principles and values around which a majority of the electorate can coalesce. The problem is that we have a document to which we refer as a constitutional treaty. The enlarged EU needs a treaty and it also needs a constitution; but to expect people to vote in a referendum on a constitutional treaty of such complexity is unrealistic.

I am conscious that time is short and I hope to allow one more Member to speak, so I shall draw my remarks to a conclusion. First, it is important that the treaty adapts to the new reality of the EU, and takes into account the fact that it is a Union of 25 nations and that the rules have to be changed. It is entirely reasonable that the leadership of nation states can choose to ratify such a treaty without a referendum. Secondly, if we are to continue to gain public support for the wider European Union, we also need a constitution expressed in simple terms. I would not necessarily cite the American constitution as an example, but other countries have comparatively simple constitutions that people can understand and remember, so they know what they are voting for.

We need a constitution that establishes basic principles. However, in whatever document we produce in the future—and there will have to be such a document—we must address basic economic security. Without withdrawing from the commitment to a market economy in the EU, we must recognise that the risks of globalisation are great and that the insecurities of ordinary people are immense. We must give reassurance about those insecurities, and I hope that our Prime Minister will take that message to his colleagues at the European Council later this week.

In view of the lateness of the hour, I shall make only one point. There is something odd about the EU budget: 80 per cent. of it is made up of items whose main motivation is redistribution—CAP, regional structural funds and regional development. Only about 10 per cent. of the EU budget provides any sort of public service, and that includes the 6.6 per cent. proposed for research and development in the 2007–13 financial framework. That is very different from a normal national budget. In the UK, for example, the Budget contains about 55 per cent. for redistributive measures and about 30 per cent. for public services. If the EU is to be popular with the population of Europe, there must be some change in the balance between public services and redistribution.

It could be argued that some public services are best provided to some degree at European level. For example, environmental questions such as alternatives to air travel need to be dealt with at European rather than national level. Similarly, the kind of equipment and capital investment needed for vast scientific research programmes is plainly beyond the reach of many nation states and that, too, needs to be dealt with at supranational level.

As many Members have pointed out, we must also consider the balance within the redistributive part of the budget. Forty per cent. of the whole budget—half the redistribution element—goes to agriculture and rural development. Whatever the situation might have been in the 1950s, do we really believe that the major redistribution problem in Europe at present is between urban and rural areas? No one believes that. Nowadays, 76 per cent. of the population of Europe is urban, and the figure is closer to 90 per cent. in countries such as Britain. There must be a change in the balance of redistributive budgets that better reflects our current problems.

Leaving aside the hon. Gentleman's remark about the rural and urban split—he would not argue that the importance of rural areas depended solely on the number of people who live there—on public services and spending, he is implying that as well as spending money the EU would have competence for the areas of public spending that absorb the greater part of national budgets such as health. Does he assume that competence and spending would go together, or would he separate them?

The budgets would be only for those functions that the EU can take up under the existing arrangements.

Finally, we need radical change, not just incremental change, in the distribution of the budget among different projects. My main fear is that, because of the events of 2003 and the fundamental rupture caused by the Iraq war, the Government and the Prime Minister cannot bring about that change.

I am sorry that David Howarth had to cut short his speech on European affairs because I had not heard his argument before. I hope that he will resume it in our next debate, and I look forward to hearing the rest of it.

Mr. Chaytor said that Conservative contributions to European debates become better and wiser as the debate progresses. As I always make the winding-up speech for the Opposition, I am tempted to agree with him. I apologise to the few contributors whom I did not hear. I had the pleasure of hosting a meeting with Altrincham grammar school for girls, which has introduced an exciting and progressive scheme to train Chinese teachers to teach GCSE classes in science, IT and maths in the English language. That illustrates the fact that while we debate great changes in the world and the UK, the more far-seeing people in the country are getting on with it and are responding to the great challenges that we face.

I am delighted that Mr. Alexander, the Minister of the month, will respond on behalf of the Government. Today, the Prime Minister repeated his view that we need a fundamental debate about the future of Europe. Yesterday, he said that we have a "moment of opportunity". I agree, but instead of offering the leadership that Europe needs and seizing that opportunity, he says that we need to pause for reflection for several months. Nine days ago, in his statement to the House, when asked what the Government would say at the European Council, the Foreign Secretary said:

"We will make judgments about our position at next week's summit—based on the statement that I have made today—much nearer the time."—[Hansard, 6 June 2005; Vol. 434, c. 994.]

The Council meets tomorrow—we could not be any nearer the time—yet we have not heard anything from the Foreign Secretary about the position that the Government will take at the end of the week.

Many interesting views have been expressed in our debate, and excellent maiden speeches were made by Dr. McDonnell and my hon. Friends the Members for Croydon, Central (Mr. Pelling) and for Ruislip-Northwood (Mr. Hurd). My hon. Friend for Ruislip-Northwood ingeniously moved the debate on from a discussion of dead parrots to Winnie-the-Pooh. My hon. Friend Dr. Fox set out the Conservative vision of a more flexible, modern, outward-looking European Union doing less, but doing it better. Sir Menzies Campbell correctly identified the concentration on the rebate over the past few days as a diversion from more important questions that need to be faced. However, he refused to accepted an invitation from my right hon. Friend Mr. Lilley to express opposition to the ratchet whereby powers are transferred to the EU but can never be returned to the member states. Mr. Hood said that he preferred the Foreign Secretary when is angry, and wanted an EU that is closer to the people.

My right hon. Friend Mr. Hague, in a typically perceptive and amusing speech, rightly drew attention to the massive dislocation between Governments and peoples across Europe. He congratulated the Foreign Secretary on starting the spread of referendums across Europe, but perhaps he should have given some credit to the previous Minister for Europe, who told us a few months ago that he had confronted the Foreign Secretary and apparently said—I paraphrase—"Jack, we're stuffed. We've got to give way on a referendum", so he may have had some part in that great persuasion.

My right hon. Friend went on to describe the seven positions that the Prime Minister has held on a referendum, and what he called the three great tensions in European policy, between enlargement and integration, democracy and centralisation, and economic reality and political goals.

We had a number of other interesting contributions, including those from Mr. Drew and from my right hon. Friend the Member for Hitchin and Harpenden, whom I have already mentioned. Kelvin Hopkins spoke of the need for a European Union without uniformity, where member states are free to take a more social democratic or a more liberal approach, as they choose—something with which, from a very different perspective, we agree.

My right hon. Friend Mr. Curry spoke of the massive forces that are being exerted on European trade and the CAP from external sources, the World Trade Organisation talks and the power of global investment. My right hon. Friend Mr. Dorrell welcomed the rejection of the constitution because he believes that something much better and more oriented towards creating a genuine market economy can be put in its place.

All those interesting, compelling and sometimes visionary views were expressed about the future of Europe, but from the Government we heard nothing on the key challenges that face us. The Foreign Secretary spoke about the possible changes in the way UK regional funding or agricultural funding might be found and the fact that such funding might come from the UK, not from EU budgets.

I return to the point that I made in an intervention on him. If we maintain the level of contribution that we make at present, but spend regional funding or agricultural funding from UK Government resources, not from the EU, it is in effect an increase in our net contribution. That is the typical sleight of hand by the Government that we must watch for. There are two ways to increase the net contribution to the European Union budget. One is to increase the gross contribution and the other is to reduce the amount that we get back. From what the Foreign Secretary said earlier, it seems likely that the second of those might be the Government's preferred alternative.

The debate that we have had about the rebate, as the right hon. and learned Member for North-East Fife commented, has been a diversion—an elaborate charade. The Prime Minister could have prevented the extended discussion of the rebate if he had just made it clear from the outset that the British rebate is not negotiable. Britain has an absolute veto on the removal of the rebate. If the Government had just been firm, this week's discussions would have been so much more productive. The only conclusion that can be drawn is that discussion of the rebate has been convenient for the British Government, as it has been for the French. President Chirac has been able to bash the British, and the Prime Minister can swing his handbag and grandstand about his battle to save the rebate.

Meanwhile, there has been silence about the real challenges facing the European Union—the challenge of establishing a new and very different direction. A less centralised, less uniform, less regulated European Union is what the people are crying out for, and it is what businesses struggling to compete under the burden of red tape so badly need—but on this the Prime Minister and the Foreign Secretary have been silent. They apparently believe that the future direction of Europe and of Britain's relations with the EU is too important to share with the House or with the British people.

These debates are meant to be the nation's opportunity to hold the Government to account and to scrutinise the negotiating position of the British Government prior to the Council meeting, but today the Government have treated the House and the British people with contempt. Our future will be decided behind closed doors by Governments who have plainly learned nothing from the sharp rebuke delivered in the French and Dutch referendums just a couple of weeks ago.

After Prime Minister's questions, the burden of expectation with which I rise weighs heavily on my shoulders, but we have had a vigorous debate on the key questions concerning the future of Europe. The debate has ranged widely and also focused on the main items to be discussed at tomorrow's European Council: the European Union's future financing and the constitutional treaty. Hon. Members have raised questions on many other issues too, and I will endeavour to address such questions in my remarks.

The range and intensity of this afternoon's debate show once again how central the European Union's future is to our role, but let me begin by paying tribute to Dr. McDonnell, who made a generous maiden speech, thanking his predecessor and wishing him well in his retirement. He brought the perspective of a Northern Ireland politician to our deliberations and recognised on behalf of his SDLP colleagues the significant contribution that the EU has made to the peace process. He spoke movingly of his desire to make a difference to his local community in Belfast and of his determination to work for his constituents during his time in Westminster on issues such as education, mental health and planning. He said that he was determined to advance all that is good in his community. In those endeavours, I wish him well.

Later in the debate a second maiden speech was made—this time by Mr. Pelling. He informed the House that Croydon is not just retail heaven and went on to describe its many attractions. Anybody who represents the birthplace of Darth Vader, as we discovered, has to taken seriously. I am sure that the whole House and particularly Labour Members appreciated the generous tributes paid to his predecessor, Geraint Davies.

The third maiden speech of this afternoon came from Mr. Hurd. He was warm and generous in his tribute to his predecessor and gracefully acknowledged the proud family heritage of public service and service in this House of which he is now part. I learned much from his description of his constituency and its civic pride, and I am sure that on the basis of his auspicious start this afternoon we have not seen the last of the Hurd family occupying senior positions in the Conservative party.

Dr. Fox stated—I hope that I quote him accurately—that

"this Council comes not at a time of crisis for Europe but a time of opportunity for Europe".

Presumably, he hopes that the same can be said for the Conservative party at the present time. I cannot say, on the basis of his speech, that I am convinced that opportunity knocks for the Opposition. His speech ranged widely, acknowledging rightly the scale of the economic challenges for Europe in the face of globalisation, although the condemnation that he offered of structural unemployment on the continent, coming from a party that gave us two recessions in as many decades and a Chancellor who said that unemployment was a price worth paying, rang rather hollow on the Labour Benches.

My hon. Friend Mr. Hood was warm in his praise of my right hon. Friend the Foreign Secretary. I have sympathy with his substantive point about the establishment of the European Scrutiny Committee—a point echoed by Angus Robertson. I shall certainly ensure that the Leader of the House is made aware of the concerns raised in the debate.

There then followed a speech by Sir Menzies Campbell, who spoke with characteristic knowledge, eloquence and wisdom. In a rather, if I may say, Fabian-like fashion, he made the case for incremental change before addressing the wider issues, both economic and political, of the rise of India, China and Asia generally, which are of course the backdrop to much of our discussion today.

Mr. Hague spoke with the wit for which his time as Leader of the Opposition is so warmly remembered on both sides of the House. I assure him that, as he quoted Shakespeare and remembered Agincourt, no Member was inclined to nip off for a nap, as he put it.

My hon. Friend Mike Gapes emphasised the importance of enlargement and the key contribution that that process has made and can make to securing peace and prosperity across Europe. In that, I am in complete agreement, and I welcome the continuing broad consensus across the House on the importance of taking forward the process of enlargement. It is true that in certain countries it has been suggested that one direct issue raised by the no votes was whether the enlargement process to Bulgaria, Romania, Croatia and Turkey, and then to the western Balkans, will continue. However, the EU's commitments on enlargement are clear and the process is being undertaken under existing treaties and EU rules, and not those of the constitutional treaty. The UK will therefore be pursuing those commitments when we take up our presidency in just a couple of weeks time.

I also willingly recognise the strength of the point made by Malcolm Bruce that debates in this House must recognise the importance of wider European matters and not simply the institutional architecture of the European Union.

My hon. Friend Keith Vaz, in a telling speech, queried why Conservative Members spent so much time dealing with the detail of the treaty provisions rather than the wider issue of the future direction of Europe ahead of the British presidency. As my right hon. Friend the Foreign Secretary has said, a consensus is emerging among EU leaders that the decision whether to proceed with the ratification of the treaty should be left to individual member states. The Government's position is that it would not be sensible at this stage to proceed with the Second Reading of the Bill that provides for ratification of the treaty by referendum, given the uncertainty following the referendums in France and the Netherlands.

Does the Minister agree that it might make sense for all countries to hold referendums on same day in future to avoid the mess that we are currently in? Bearing in mind the results in France and Holland and the discussions about currency in Germany and Italy, does he agree that if there were ever a time to re-evaluate the situation, re-engage with the electorate and revisit the plans for Europe, this is it?

I agree with the hon. Gentleman's final point about the need for a wider debate on the future of Europe, but I disagree with his initial point about the treaty ratification process across Europe. I would have thought that he supports the principle of subsidiarity and recognises that it is for individual member states within the EU to determine their own ratification processes. The Spanish people have already ratified the treaty by referendum, and nine other countries have also ratified it, but two founding member states have rejected the draft constitutional treaty by referendum. I take the view that in the first instance it is for each member state to determine the means by which the ratification process can be taken forward.

Last week, the Minister refused to answer this question: if there is a majority vote over the next two days in the Council to continue the ratification process, will the Government obey or ignore the decision?

I have already sought to make it clear to the House that a consensus is beginning to emerge across Europe, and I believe that it will be reflected in the work that is taken forward in the Council tomorrow. However, it is for individual member states to make that determination, rather than a decision being taken on the basis of a majority, as suggested by the hon. Gentleman. Ultimately, we have only a little longer to wait for the European Council's final conclusion.

The Council's first requirement is to hear from the French and the Dutch Governments about the referendum results in their respective countries and about how they see the future of their ratification processes following the decisions made by their respective populations. The Prime Minister will, of course, have the opportunity to report back to the House in a statement following the Council meeting.

Mr. Curry questioned the Government's approach to the discussions in the Council, particularly on the issue of the future financial perspective. However, it is surely right to acknowledge that the current discussions about the future financial perspective are taking place in the context of a much wider debate about the future of Europe, which has been reflected in our deliberations and discussions this afternoon. That debate is about how the EU responds to the challenges of globalisation and technological change, how the EU addresses the needs of its citizens and how the EU adds value through its agenda to take forward growth and prosperity.

I agree with the right hon. Member for Skipton and Ripon about the importance of the next World Trade Organisation ministerial meeting in Hong Kong, and I assure him that we are determined to continue our work on a pro-poor, pro-growth agenda in the world trade talks. Although tomorrow's discussions in the European Council will be important, further discussions will take place in Gleneagles between 6 and 8 July, after which much critical work remains to be done at a European level to ensure that we have a strong position when we continue those discussions in Hong Kong in December.

The Commission has proposed an EU budget of €1 trillion or 1.26 per cent. of gross national income, a real-terms spending increase of 35 per cent. or €260 billion. The British Government take the view that that increase is unacceptable. Furthermore, the Commission has not come up with any proposals to reform expenditure. We believe that a budget of 1 per cent. of gross national income, which is €815 billion over the period 2007–13, is ample for the EU's needs.

In his opening remarks, my right hon. Friend the Foreign Secretary set out the Government's position on EU expenditure and, more specifically, on Britain's rebate. The UK was given an abatement back in 1984 because of its low share of receipts and above-average contribution, and there is no doubt that that situation continues today, even with the abatement. In the eight years between 1995 and 2003, the UK's contribution to the EU was two and half times that of France and Italy, even with the British rebate. Without the rebate, we would have paid 15 times more than France and 12 times more than Italy. In that same period, the UK received the lowest average per capita share of receipts of all member states, hence, as we have made clear, the UK abatement remains fully justified.

Some member states argue that the UK rebate is no longer justified because spending on the CAP counts for a lower proportion of EU spending now than it did when the abatement was agreed in 1984.

It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.