I beg to move,

That this House
has considered the matter of European affairs.

I am pleased to open this traditional pre-European Council debate. The heavy European Council agenda shows why the UK needs a pro-European Government fully engaged with the European mainstream. On the range of issues that the Heads of Government will discuss in Brussels on Thursday and Friday—from economic supervision to climate change financing or strategic engagement with Pakistan—the decisions the EU takes will directly affect the security and prosperity of British citizens. If we want influence, we cannot be on the margins.

The first item on the Council's agenda later this week is the economic recovery. Over the past year, the EU has been at the forefront of the global response to the economic crisis. Last October, all 27 member states acted together to restore confidence in the financial system, agreeing to raise deposit protection thresholds to a minimum of €50,000. In December, we agreed an economic recovery plan, committing to provide a fiscal stimulus worth €200 billion, a figure that we have since met many times over. Indeed, according to President Barroso, the total fiscal boost now stands at 1.8 per cent. of the EU's GDP. If we include the automatic stabilisers, the net boost was somewhere around 5 per cent. At the spring Council in March, member states unanimously endorsed the goals of the London summit, providing a €75 billion injection to the International Monetary Fund, to enable it better to support the world's most fragile economies.

This week's European Council will do two things on the economic front. The first is to take stock of the European economic situation since the London summit and consider measures to support the economy. With the Commission predicting a 4 per cent. decline in output across the EU, and with 60 per cent. of all our exports, 700,000 of our companies and 3 million British jobs dependent on trade with the EU, the Prime Minister is right that a strengthened European growth strategy is a vital component in the move out of global recession.

We have already increased the resources available to the European institutions. Through its balance of payments facility, which was doubled to €50 billion, the EU has provided sizeable loans to Romania, Hungary and Latvia. However, further increasing the remit of the European Investment Bank and the European Bank for Reconstruction and Development will be important if we are to reignite the engine of growth. The Prime Minister has recently set out concrete proposals for the EIB to provide greater support to those in difficulty, through lending more, lending it faster and taking on more risk, to help stimulate a European recovery while commercial bank lending remains low. He will discuss those ideas with his counterparts in Brussels later this week.

Angela Merkel has been critical of the way in which Britain has addressed the crisis, yet the economies in the eurozone, and Germany in particular, have contracted more quickly that that of Britain. What is my right hon. Friend's response to Angela Merkel?

It certainly is not schadenfreude; we should be careful about that in these circumstances. Germany is the world's second largest export economy, and it has therefore suffered from the drop in global trade and the collapse of demand in some parts of the world. That is why German gross domestic product looks likely to fall by about 6 per cent. As we discussed in this debate in December, the German fiscal stimulus as a share of GDP is actually larger than ours, so we should be careful not to believe that some of the alleged divisions are as great as they are said to be.

The right hon. Gentleman has made an important point about exports and imports. Germany is quite dependent on the automotive industry, as are we. Will he address that question specifically with his German and other counterparts? Many of the job losses in my area have been a direct result of job losses in the supply chain for the automotive industry, and I have no doubt that Germany and other countries will have a strategic interest in working collectively to restart the supply chain for the automotive industry and to boost sales.

The hon. Gentleman makes an important point about the headline figures on jobs in the car industry, which often neglect to show the effect on jobs in the supply chain. I am sure that that issue will be discussed on Thursday and Friday.

The second economic priority is to take preliminary decisions on the supervision and regulation of the financial sector. Regulation means setting the rules; supervision means checking that they are implemented properly. This requires the right balance of national and international powers. The Government have already made it clear that the de Larosière report and subsequent Commission proposals are a good starting point. There is much that we welcome, particularly in regard to improvement in regulatory standards and supervisory co-operation, and the establishment of a new European body—the European systemic risk board—to monitor emerging systemic risks.

Does the Foreign Secretary accept that the United Kingdom faces some extremely unwelcome proposals on financial and banking regulation? The Minister responsible in what was then the Department for Business, Enterprise and Regulatory Reform, Ian Pearson, has written to the European Scrutiny Committee to say that we are now isolated on those measures. Will the Foreign Secretary confirm that we face being outvoted on these unwelcome and damaging proposals, which will regulate the City of London in a way that Parliament and the British Government do not want?

I do not accept that we are isolated, certainly not on the basis of the discussion that I had at the European General Affairs Council yesterday. There might be some confusion in the right hon. Gentleman's mind. What I am talking about here are the de Larosière regulatory and supervisory proposals. There are separate proposals in respect of so-called hedge funds, which are being discussed on a different track and will not be discussed this week. They are at a rather more preliminary stage.

It might help the House if I just make the following point about the balance between international and national regulation and supervision. Improved regulation is essential if we are to keep up with the increased dynamism of international capital markets. That means introducing improved regulatory standards across Europe—an agreed rule book for financial regulation. However, this Government believe that micro-prudential supervision—in other words, supervision of individual companies—must remain at nation state level.

Does my right hon. Friend agree that, in relation to the European economic recovery package, Britain has already shown that if we use the right arguments and they are ably prosecuted, Europe will follow suit, and that that principle is likely to prevail on regulation and supervision as well?

My hon. Friend makes a good point. It is important not to believe the fallacy that is sometimes promoted in some quarters—namely, that it is Britain against the rest. There is a recognition across Europe of the need to improve regulation and supervision, for example, and Britain is in good company in regard to the arguments that we are making. I very much hope that the proposals that are discussed on Thursday and finally adopted on Friday will recognise the need for a balance between the national and the international level, because that is very important.

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I give way to Mr. Davey.

Will the right hon. Gentleman explain why the British Government are so against the proposals from the European Commission on the regulation of hedge funds and private equity? Surely there is a debate to be had about greater transparency and capital adequacy in those organisations; and if we have learned anything from the recent problems in the City, it is surely that there is a case for good regulation to make those markets work more effectively.

I hope I do not disappoint the hon. Gentleman if I say that the Government also believe that whereas the old debate was about having more or less regulation, the debate we should have is about the details of the regulation that is needed. We think it is right, for example, to look at how to improve the regulation of the so-called hedge funds that the hon. Gentleman mentioned, but the details must be got right, and we are at a preliminary stage of discussions about hedge funds. Many detailed arguments, for example about funds coming from outside the European Union, need properly to be taken into account in the development of any detailed regulatory proposals. That has not yet happened, so that is what we will try to ensure over the rest of this year.

As the Foreign Secretary knows, President Barroso has made the EU's position crystal clear, as he strongly believes that all these matters should be enveloped within the EU legislative structure. On 27 February, I wrote a letter to the Financial Times, saying that we have to insist on the supremacy of Westminster legislation in accordance with the formula I put forward, of which the right hon. Gentleman is well aware—namely, that we would override any such European legislation if it were in our vital national interest to do so. Does he agree that, otherwise, through majority voting and co-decision, we will end up with the supremacy of this House being overridden? Does he accept that the formula I have suggested is the only way around the problem; otherwise we will be subjected to the European Court of Justice rather than to the democratic decision of the people of this country?

I think we will come to that a little later. I can assure the hon. Gentleman, however, that there will be no majority voting at the European Council this week, that the proposals that we make will not represent Britain acting on its own and that we will be able to exercise our own democratic rights in a way that I think he would approve of.

The second issue concerns climate change. It is vital that the EU continues to show leadership in achieving an ambitious global deal at the Copenhagen summit in December, and this Council provides an opportunity to push things forward. The green revolution is not just about avoiding devastating damage to our planet; it is also about avoiding another commodity price spike, which would be a major impediment to economic recovery. With the oil price now having hit the $70 a barrel mark, there is a real fear that, unchecked, it could choke off growth, just as we are working so hard to try to restore it. So tackling climate change is not a distraction from economic recovery, but a contribution to it.

The Council must therefore build on the agreements reached in March and indicate its willingness to contribute financially to help secure an ambitious deal at Copenhagen, because we are now firmly on the path towards that December conference. The EU needs to reaffirm its leadership in advance of the Major Economies Forum in July—given new momentum by the new American Administration—at which questions concerning developed country financing towards mitigation, adaptation, technology support and capacity building will be a top priority.

At their dinner on Thursday night, Heads of Government are expected to discuss the nomination of the next Commission President, which I hope is a matter of interest to Mr. Cash— [Interruption. ] I was not thinking of putting him forward as a nominee, I am sorry to say; I just thought I would get his attention, as I did not want him to doze off at this point and I had a nasty feeling that he might.

From the UK perspective, and certainly from the Government's perspective, Mr. Barroso has been an excellent President, who has prioritised economic reform and better regulation, and pressed for EU leadership on climate change. So we fully support Mr Barroso's decision to run for a second term, and will continue to work with him to ensure the EU delivers on the UK's agenda for an outward-facing, globally competitive Europe.

Another pressing issue for the Council is illegal migration across the Mediterranean.

Before my right hon. Friend moves on to looking towards the autumn and the new Commission President, will he say something about how the British Government intend to work with the two new British National party MEPs in the new European Parliament?

There is a minimal level of service that is the entitlement of all Members of the European Parliament, and that minimal level of service will be provided, but we will not go beyond it.

Following the crushing defeats experienced by the Government on 7 June, when the results of the European elections placed Labour even below the United Kingdom Independence party, what moral authority do they consider that they have to discuss any issue on behalf of the people of this country?

I am sure I do not need to remind the hon. Gentleman that general elections are the way in which we decide the Government of this country. He will not have that long to wait—a maximum of 11 months, according to any timetable—and I suggest that he contain his enthusiasm. [Interruption.] That is very unlikely, says my hon. Friend the Under-Secretary of State from a sedentary position.

We are currently witnessing the passing on of many members of the generations who saw Europe torn apart 70 years ago, and who worked so hard to put Europe back together. Do we not all have a responsibility to ensure that the pro-European message—that Britain needs to be engaged in Europe—is delivered over and over again?

I certainly agree with that. As I shall make clear later, I think it incumbent on those of us who did lose the elections not only to try to understand why, but to stick to what we believe and try to advocate it with full passion and drive. I think that that is what my hon. Friend meant. [Interruption.] Let me say to Mr. Evans that it is not a matter of blaming the electorate; it is a matter of saying that we should stand up for what we believe in, and then allow the electorate to make their choice.

They did make their choice.

They did, and for the next five years they will have the MEPs for whom they voted. That is the way in which the system works.

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I am blessed with too many interventions.

While the Foreign Secretary reflects on the fact that if he walks down the street he is unlikely to meet more than one in 20 who voted Labour in the European elections, may I ask to what he ascribes the declining turnouts in European elections? Why are all the people of Europe more and more disillusioned about participating in elections to the European Parliament? Is it because they are feeling more and more disconnected from institutions which are taking more and more of their power?

The answer to that question is that the European Union has spent the last seven or eight years debating institutional questions which people do not feel have addressed their concerns, and the sooner it puts such institutional navel-gazing behind it, the better.

Let me point out to Opposition Members who are nodding and agreeing that they want to put institutional sclerosis behind them that the proposals that they are advocating are designed precisely to introduce yet another decade of institutional navel-gazing. I suggest that if they are serious about wanting to allow the European Union to address the real issues, they should understand that it is a major mistake to try to unpick the Lisbon treaty after it has been passed in the House of Commons. We shall have to wait and see what happens in the Irish referendum, although I shall have some words to say about that later.

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I am happy to allow my hon. Friend to intervene, but I must then make some progress.

Does the Secretary of State believe that the results of the European elections were a ringing endorsement of Government policy, and does that Government policy remain "no compromise with the electorate"?

As my hon. Friend knows, the answer to both those questions is no. The old saying "no compromise with the electorate" goes back a long way in the labour movement.

Let me say a little about migration before discussing the external relations agenda. A pressing issue for the Council is illegal migration across the Mediterranean. It is right that we work with our EU partners to strengthen the border, help transit countries to control migration, and enforce our rules by returning illegal immigrants to their countries of origin. We support measures to increase the effectiveness of Frontex, the EU external borders agency which co-ordinates the operational activities of member states to strengthen the security and surveillance of the land, sea and air borders of the Schengen area.

At the General Affairs Council yesterday, I discussed the three external relations priorities for the Council: Burma, the middle east peace process, and Afghanistan and Pakistan. With Aung San Suu Kyi's trial continuing in Rangoon and the verdict seemingly a foregone conclusion, this Council provides an opportunity for a high-profile message of support for her.

Secondly, the EU will also want to send a clear message of support for President Obama's determination to achieve a lasting peace in the middle east. The British Government's position is clear: we support a two-state solution based on 1967 borders, with Jerusalem as the capital of both Israel and Palestine and a fair settlement for refugees. Without a decisive drive to peace, there will be a drift towards more conflict. The EU role, as a member of the Quartet, is important. I would highlight the importance of funding the institutions, both economic and security, of a Palestinian state, and providing political impetus for Israelis and Arabs to make the necessary compromises for peace. There is also a vital regional element. Israel needs security from Arabs, not just from Palestinians. Palestinians need support from Arab states, not just land from Israel. The EU needs to make its economic, political and diplomatic relations with the whole region count.

We will also, no doubt, watch carefully the emerging situation in Iran. I am sure that the whole House will deplore the loss of life yesterday. The General Affairs Council adopted conclusions yesterday, but as events overnight show, the situation is moving fast, and we will take stock on Thursday evening.

The EU has in the past adopted a quite successful common position with regard to dialogue with Iran. Does the Foreign Secretary agree that the prospects for a meaningful dialogue with Iran by either the EU or the United States are pretty grim, however, if the Iranian authorities do not show respect for what is clearly the will of the Iranian people in determining their future Government?

It certainly is for the Iranian people to choose their own Government, and for that to be done in a way that respects their wishes. We should allow the inquiry or investigation that has been established by the so-called Guardian Council to proceed. The right hon. and learned Gentleman will know very well that for some in Tehran the temptation to blame everything on perfidious foreigners is great, so I think it is very important that while we continue to deplore the loss of life, we insist that it is for the Iranians to choose their Government. Whoever the Iranian Government are, however, they have a responsibility to engage with the rest of the world in a way that promotes stability, as well as asserting their own rights.

On the middle east peace process, does the Foreign Secretary agree that there is a need not just for a grudging statement from the Israeli Prime Minister about a two-state solution, but for concrete measures that will make an agreement possible, and that Israel therefore needs to stop—totally stop—the expansion and enlargement of the settlements? Will the Government hold urgent discussions in the near future with the United States as to a way forward, to exert the maximum possible diplomatic pressure to get a solution to this matter?

As my hon. Friend knows, it is certainly the position of the UK Government that settlement activity needs to be frozen, including natural growth, which is, of course, a commitment of the road map. In respect of engagement with the United States, I spoke yesterday to Secretary Clinton and former Senator Mitchell, and I think that the US role will be absolutely critical. However, I would also say that it is not just a matter of applying "pressure"; I think that the European support for Palestinian institutions is going to be important, and I also believe that there are responsibilities on the Arab states to think through how they will achieve the goals of the Arab peace initiative and how they will operationalise the very important vision set out in that. The EU can play a role in that regard, too.

The third issue I want to touch on concerns the first ever EU-Pakistan summit, which will take place at UK instigation just before the European Council on Wednesday. Given the range of interests Europe has at stake, the UK has argued long and hard for more strategic engagement with Pakistan. There is a wide range of issues for discussion at the summit, including the following. First, there are the counter-insurgency operations in North-West Frontier Province and the consequent humanitarian situation now afflicting some 2.7 million or 2.8 million refugees, or internally displaced persons. The EU has rightly pledged to make available a sizeable contribution to assist the displaced population, but it will also have a role to play in rehabilitation and reconstruction. Secondly, in respect of governance and democracy, the EU can and should help with institution building both at the centre and in the provinces by providing finance, advice and expertise. Thirdly, on economic development, the EU is Pakistan's most important trading partner, so it is right that we should do more to improve access to EU markets. To this end, the summit is looking to agree a step change in the EU's engagement with Pakistan on trade, leading to a free trade agreement in due course.

I very much welcome that last point about aiming for a free trade agreement with Pakistan, on which I know my right hon. Friend has done serious work. If we can replace guns with goods, as it were, that must make sense for the region. I have read the paper that he has just drawn from, however, and it makes no mention of India. I do not know who will represent the UK at the summit, but not to discuss India in the context of Pakistan is to read out "Hamlet" without any citation from the prince. Can we have some input from this Government whereby they say politely and gently, "You will not solve these regional problems unless India is part of the solution; it should not always be seen as part of the problem"?

My right hon. Friend makes an important point. I am sure that he will have read carefully, as I have, the very important speech that the recently re-elected Prime Minister Singh made last week on how he wants to take forward relations with Pakistan. His point, at the heart of that speech, that Pakistan needs to take action against those who were associated with the Mumbai attacks is absolutely right. The fundamental building block of confidence for anyone in India—for the politicians and the people—in Pakistan's determination to be a reliable partner lies in its taking action on those associated with the Mumbai attacks. On that basis, I think there is then the prospect of reciprocal action occurring between President Zardari and Prime Minister Singh, and I would certainly like to see that.

Many of us will be pleased to hear about initiatives regarding Pakistan, but there is a question as to where the EU's responsibilities finish and where NATO's responsibilities should really begin. The Foreign Secretary is touching on some areas in which NATO has huge expertise; it has developed relationships through embassies, the military and so on to provide the exact answers about which he is now talking. I wonder whether a bit of mission creep is going on in the EU and whether we should allow NATO, which he has not even mentioned yet, and which incorporates the Americans and Canadians, who are already involved in Afghanistan, not to mention India, to participate in some of these solutions.

I certainly do not think that there is any mission creep in talking about humanitarian help, governance and democracy, and economic development. However, as we have said many times in this House, the situation in Pakistan and the situation in Afghanistan are inseparable. That is why Afghanistan is also on the agenda for the discussion this week. The focus is on NATO work not only to ensure that credible elections are held on 20 August, but to prepare for provincial council elections. These will be the first Afghan-run elections—they will have NATO support—since the 1970s. The European Commission, however, is the second largest donor to the UN's election fund for Afghanistan, and we hope that the EU will also be able to send election observers. Holding elections is a massive challenge that requires major, hard, military support from NATO, but it is also right to say that the wider international community, including the EU, does have a role to play. I do not see that as mission creep; I see it as genuine complementarity. The previous US Administration were absolutely insistent that Europe's external security and defence policy sat well with NATO's strategic concept. The new American Administration support that view, as do our Government. I do not see those things as being in conflict; I see them as being in partnership.

I understand where the Foreign Secretary is coming from, but as someone who has just come back from NATO, I can tell him that when I learn that NATO has no formal agreement on how it operates with the EU it demonstrates to me a massive clash between two organisations and how they seek these solutions. He says that this is not mission creep, but this work is exactly what NATO is good at doing and all these things are being repeated. These skills are having to be learned afresh by the EU; NATO has been doing this for an awful long time.

I have a lot of respect for the hon. Gentleman, and I would be happy to talk to him after the debate. Two words have to be used, unfortunately, when it comes to understanding why there is such difficulty in establishing coherent structures between the EU and NATO. Those words are "Turkey" and "Cyprus".

Exactly.

I am glad that the hon. Gentleman knows that. The one thing I would say to him is that co-operation on the ground is often better than the lack of institutional co-operation that exists in Brussels—that can be seen in Kosovo, for example. I hope that he does not take away from his visits to Brussels the view that because the institutionalised dialogue that he would like to see is not taking place, NATO and the EU cannot be wholesome partners.

The Foreign Secretary mentioned democracy: may we have some in Europe? Why do the Irish have to vote again, when their verdict was very clear? Why cannot we have a vote in Britain? And what did he not understand about the Eurosceptic majority in the European elections?

I am glad that the right hon. Gentleman has brought me on to this topic, because there is unfinished institutional business in the European Union. Since the Irish people voted no in their referendum on the Lisbon treaty on 12 June last year, the Irish Government have been deciding on their next move. In December, the European Council agreed, on the basis of Irish proposals, that the EU would give Ireland the legal guarantees it wanted on the issues of concern to its electorate. In December, as the Prime Minister reported to the House, the European Council conclusions set out what the Irish guarantees will cover—no change in EU competence on tax; no prejudice to national security and defence policy; and guarantees on provisions in the Irish constitution on the right to life. The December conclusions also record the high importance attached to the issues, including workers' rights.

There are now detailed Irish proposals for these commitments to be agreed as legal guarantees, for a declaration by the European Council on workers' rights and social policy, and for a national declaration by Ireland. We are assessing these texts against the two objectives that we have consistently set out to Parliament and to EU partners. The first is to ensure that the Lisbon treaty comes into force on the basis of support in all 27 member states. To do that, the EU collectively has to address the concerns of the Irish people to the mutual satisfaction of Ireland and other member states. The second is to ensure that the content of the Lisbon treaty as it affects the UK is not changed.

Can the Foreign Secretary explain how the EU or the member states can give legal guarantees to the Irish Republic without changing the terms of the treaty and requiring re-ratification?

Very simply, in the same way as the Conservative Government did in 1992 with a decision on Maastricht. On all these issues, the UK will be at the heart of the debate. That is more than can be said of the Opposition. First, their policy on Lisbon is in tatters after the interview given by Mr. Clarke on Sunday. The shadow Foreign Secretary has promised "not to let matters rest" in the event of the passage of the Lisbon treaty. So did the Conservative European manifesto—it was at the heart of their campaign. In an interview with The Times at the end of April, the right hon. Gentleman said that, if the treaty had been ratified, a referendum might still be promised in a Tory manifesto. He said:

"We would not rule anything in or out."

The Leader of the Opposition has backed him, saying:

"I want to change things and reform things and that's why we need to start by rejecting the Lisbon Treaty".

But the right hon. and learned Member for Rushcliffe was clear on Sunday that

"If the Irish referendum endorses the treaty and ratification comes into effect, then our settled policy is quite clear—that the treaty will not be reopened".

No wonder the hon. Member for Stone says that there has been a unilateral rewrite of Conservative policy. The right hon. and learned Member for Rushcliffe went on to say:

"I don't think anybody in Europe...is in the mood for any more tedious debates about treaties, which have gone on for far too long, which is why this needs to be resolved."

Too right, we say on the Labour Benches, and too true for the good of the Opposition. I look forward to Mr. Hague giving Parliament and the British public a clear answer to a simple question: in explaining Conservative policy on the Lisbon treaty, who is telling the truth, the right hon. and learned Member for Rushcliffe or the Leader of the Opposition?

The Foreign Secretary must be fair if he is going to quote selectively from my right hon. and learned Friend Mr. Clarke. The Foreign Secretary quoted correctly, but my right hon. and learned Friend went on to say that what the Conservative party is pledged to do is seek the repatriation of certain powers, quite apart from the Lisbon treaty, and that discussions—hopefully, negotiations—would have to take place with the European Union. If the Foreign Secretary wishes to play politics on this issue, it is no benefit to the debate to misrepresent what my right hon. and learned Friend said.

The right hon. and learned Gentleman does himself no service. He is a former Foreign Secretary. He talks about renegotiation, and what did his right hon. and learned Friend the Member for Rushcliffe say in that interview? He said that it would be not a solemn negotiation, but just a friendly discussion. Sir Malcolm Rifkind has sat in the Foreign Office; he knows that if one wants to renegotiate one's relationship with Europe, one cannot do it on the basis of a friendly discussion that is not solemn. The truth is that the right hon. and learned Member for Rushcliffe has said very clearly that there is not a cat in hell's chance of getting 26 other member states of the European Union to support Conservative policy on this matter.

The second aspect of Conservative disarray concerns the influence that the party expects to exercise in the European Union. The shadow Foreign Secretary needs to explain why his party is trying to seek a divorce from the French UMP, led by President Sarkozy, which has 29 seats in the European Parliament, and the German CDU, which has 42 seats—never mind the Greek New Democracy party, which has eight. Instead, the Conservatives have sought a new marriage with the Czech ODS, whose founder has described climate change as a "global myth", and the Polish Law and Justice party, whose members believe homosexuality is a "pathology" and which warned that President Obama's election would mean

"an impending catastrophe, the end of the civilisation of the white man".

Then there is the motley collection of other fringe parties that the Conservatives are courting to try to make up their numbers: the three MEPs from the Latvian For Fatherland and Freedom party, which celebrates the Latvian unit of the Waffen SS troops; the two MEPs from the Danish People's party, which has warned that Muslim immigration would mean the end of European civilisation; and two more from the Dutch Christian Union, which previously banned women from being party members. Those will be the Opposition's new bedfellows in the European Parliament, if they can get seven of them together. It is little wonder that the Opposition's own MEPs have denounced their policy as either ridiculous or barking. Christopher Beazley MEP has said that under a Conservative Government, this country would "head for the rocks".

The European elections confirmed that the EU is not popular in the UK. I do not deny that. It is, however, the most successful regional institution in the world. It is a source of jobs and rights for our workers. It provides protection for our environment and stability for democracies on our borders. It is a voice for European values and interests in the world, and this Government will argue for its merits as well as for its reform.

In the last few years, the EU has magnified our influence on the global stage, helping to entrench peace in Kosovo and leading the global drive on climate change. At the same time, it has delivered concrete benefits for British citizens, cutting mobile phone charges and airfares and slashing business administrative costs. Over the next 12 months, it faces vital tests on the single market, on enlargement to embed stability in the western Balkans, and on leading the world to the ambitious deal that we need on climate change to replace Kyoto. That is why the Government's position on Europe is one of active engagement in working to shape the debate, forge an ambitious agenda and pursue necessary reform. That is why it is of such great concern that the Opposition are so steadfast in their determination to reverse that progress.

The truth is that the Government have a clear, positive agenda for Britain in Europe. We will use our membership to deliver concrete benefits for the people of this country and to forge global solutions to the problems we face. The Opposition have nothing but a confused wrecking strategy, which would cost this country dear, in terms of both our interests and our influence. The right hon. and learned Member for Rushcliffe came close to acknowledging that in his BBC interview on Sunday. It is about time that the right hon. Member for Richmond, Yorks, who speaks for the Opposition on these issues, did so too.

The coming European Council will consider a wide range of issues, as the Foreign Secretary has explained.

Let me begin by taking him up on the discussion of some of the wider foreign affairs issues that he mentioned, particularly the immediate issue of the situation in Iran, which will clearly be discussed at the meeting this weekend. In particular, I want to endorse the overall approach to Iran that he explained. The situation there is clearly extremely tense and fluid. Two huge rival protests are planned in Tehran this afternoon, with a possibility of a repeat of the violence that claimed seven lives last night. I want to support the Foreign Secretary's calls, repeated by his French and German counterparts, for the Iranian authorities to address allegations that the vote was rigged. We trust that Europe will continue to send a united message to Iran that the use of force against peaceful protestors is unacceptable.

The underlying factors in the international community's dispute with Iran remain unchanged. As we know, President Obama has given Iran until the end of this year to respond to his offer of engagement. We acknowledge that that is a calculated gamble given that, whatever else Iran does in the coming months, it seems highly likely to use this breathing space to push ahead at full speed with its nuclear programme. Nevertheless, we think that that is the right approach. Exploratory dialogue and laying the basis for successful negotiations will take some time, but my point is that European countries should be using that time well too.

The Foreign Secretary said in a written answer to me on 6 May that

"now is the time to back American outreach".

I very much agree, and he went on to say:

"If the Iranians do not respond in a positive way, we can then ensure that further steps are taken."—[ Hansard, 6 May 2009; Vol. 492, c. 172W.]

I agree with that too, but I hope that the Foreign Secretary will not neglect to try to ensure that American outreach is backed by EU countries by demonstrating to the Iranians that their situation would be worsened significantly if they rejected negotiations. The best-case scenario now would be for European nations to agree in the coming months on a detailed set of sanctions to be implemented if Iran did not come to the negotiating table, which would affect Iran's relations with Europe across the board. Although that looks unlikely, given the past record on agreement on sanctions, at the very least we should be trying to win the argument for such sanctions now, to ensure that no time is lost if their implementation is required.

Economic self-interest in some countries has prevented Europe from agreeing tough sanctions in the past. We hope that that will change, because if the EU does not muster the will to be tough on Tehran, we may find that it is too late to prevent the regime there from acquiring a nuclear weapon.

I very much support what the Foreign Secretary said about support for President Obama's initiative in the middle east, and we support continued EU engagement in both Afghanistan and Pakistan. We welcome the first ever EU-Pakistan summit tomorrow, which the right hon. Gentleman mentioned, and hope that it will turn into a regular fixture. It offers an opportunity for the EU to define a joint strategy with Islamabad to help fight extremism, provide assistance and help entrench democracy, all of which are important priorities for us.

The Foreign Secretary also spoke about Burma, which I too want briefly to mention. Of particular concern and cause for alarm at this time are the ongoing trial of Aung San Suu Kyi for breaching the terms of her house arrest, and the renewed offensive in eastern Burma that has prompted thousands of civilians to flee across the border into Thailand. We are now seeing gross abuses of human rights in Burma, including the continued detention of political prisoners and the suppression of all forms of democracy and freedom. Although we welcomed the EU's decision in April to extend sanctions against the Burmese regime, I hope that the Minister winding up the debate will tell us what assurances can be provided that the existing sanctions are properly implemented throughout the entire EU, and that he will also say what mechanisms are in place to ensure that that happens.

These international issues, and the other EU issues to which I shall turn in a moment, all merit a co-ordinated approach in the EU. They all require experience, concentration and focus in the Foreign and Commonwealth Office—a subject that brings me to the reshuffle of Ministers, including those who deal with European matters, that has just taken place.

This debate is the first opportunity that the House has had to comment on the resignation letter of the former Europe Minister, Caroline Flint. That letter will not be forgotten in a long time, for its perfect embodiment of the truth that Hell hath no fury like a woman scorned. In her letter, the right hon. Lady told the Prime Minister that she was—

This was in last week's speech.

No, this was not in last week's speech. I can tell the right hon. Gentleman that there is much more to look forward to in this week's speech.

He was sacked anyway!

Mr. MacShane was sacked as Europe Minister, but the right hon. Member for Don Valley resigned—with a little more dignity. She told the Prime Minister that she was

"extremely disappointed at your failure to have an inclusive Government."

She said that she had been treated by him

"as little more than female window dressing."

She went on to say:

"In my current role, you advised that I would attend Cabinet when Europe was on the agenda. I have only been invited once since October and not to a single political Cabinet—not even the one held a few weeks before the European elections."

She concluded that the Prime Minister had "strained every sinew" of her loyalty—something that may apply to the Foreign Secretary too, although he clearly has more flexible sinews. She later explained on "Woman's Hour" that in her year as Europe Minister, she had not had a single conversation with the Prime Minister about European policy. That on its own tells us a great deal about the dysfunctional and divided Administration that the Prime Minister has produced, but so does the sheer speed with which other Ministers have been, and are, rotated through their positions.

I truly wish the new Ministers who have joined the Foreign Office well, including the Under-Secretary of State for Foreign and Commonwealth Affairs, Chris Bryant—but it is impossible not to notice that this is the second year running in which the Foreign Secretary has had his entire Commons ministerial team shot from under him. We are to have the 11th Europe Minister in only 12 years. Given that it is so obvious to hon. Members in all parts of the House that in foreign policy, experience and knowledge are of some value, and that consistent relations with other countries matter, such a degree of chronic ministerial instability, including on European matters, cannot be good for either the execution or the evaluation of Government policy.

What is more, in a Government allegedly committed to democratic renewal, half the Foreign Office ministerial team now sits in the House of Lords. The Europe Minister, too, is to sit in the House of Lords, and will be beyond the scrutiny of most elected representatives. At the moment, in the run-up to an important EU summit, I do not think that she is sitting in either House, so she is not accountable to anyone at all. It is genuinely mystifying to me why the Foreign Secretary does not ask for a more stable, accountable ministerial team—or whether he does ask, but is ignored by the Prime Minister. Perhaps a clue to the answer to that lies in the fact that the Foreign Secretary, according to The Guardian newspaper, seriously considered resigning 12 nights ago on 4 June.

For a Foreign Secretary seriously to consider resigning is no small matter, particularly on the night of the European elections and in the midst of a Cabinet crisis. I believe that he owes the House an explanation of why he considered resigning, and his own party an explanation of why he thought it was helpful to the Prime Minister to reveal that he had considered resigning. If he has full confidence in the Prime Minister why did he consider resigning, and if he does not have full confidence in the Prime Minister, why did he not conclude that he ought to resign?

rose—

I will give way to another former Europe Minister—one of the 11 in 12 years.

This is not an application for my old job. Even though the Minister for Europe is in another place—when she gets to another place— [Laughter.] The fact is that the Foreign Secretary always attends the General Affairs and External Relations Council in Brussels, so he can come back to the House afterwards, and is accountable to the House for the decisions that affect his Department as far as Europe is concerned. We have the top guy here, if we need to question him on Europe.

We do have the top guy here, but as is evident from what I quoted, we only just have the top guy here, because he was seriously considering resigning. Keith Vaz makes my point for me, in saying that the Minister for Europe will be in the other place but is now lost in limbo somewhere. There is no Minister for Europe in the Houses of Parliament at the moment.

Is the right hon. Gentleman so fixated on the affairs of the Labour Government and the Foreign Secretary precisely because his party has nothing useful to say about Europe?

No. I am about to say a lot about European affairs. I do not think that the House is in any particular hurry today, and I thought that I might dwell on them at some length in a moment. It is not I who am fixated; there was a letter in The Times yesterday from a former Foreign Office Minister whom we miss, Dr. Howells, which said:

"The past month or so has been as disastrous for Labour as any I can recall. The next months will be worse if these people, my esteemed colleagues, don't begin to understand that feeding their egos is not the same thing as nourishing the Labour Party. Their apparent inability to resist leaking to their old university chums...their frustrated ambitions may be a consequence of having experienced only the barest of lives and careers outside the House of Cards."

That is the right hon. Member for Pontypridd speaking; it is not I who am fixated on such affairs.

Several hon. Members:

rose —

I will try to move on from the subject in a moment, but hon. Members seem to want to intervene on it.

To whom does my right hon. Friend think that Dr. Howells was referring when he talked about "Assisted Places Scheme" people?

From the context of the letter, the right hon. Member for Pontypridd seemed to have a great many of the Cabinet in mind. He talked about

"The remaining recipients of the Assisted Places Scheme for Cabinet members", and said that they

"should consider seriously the advantages of putting a sock in it for the next eleven months."

That is the direct language that we really miss from the Government Front-Bench team.

While we are entertaining ourselves with the misfortunes of our prospective opponents' parties, may I invite the right hon. Gentleman to enter a wager with me? I would bet that by Christmas the leader of his party will gracefully have to give in to the demands of his MEPs to rescind the rather foolish decision to leave the European People's party.

I am not normally a betting man, but I will take that bet with the hon. Lady. I have no doubt about that. Perhaps we will discuss later behind Madam Deputy Speaker's Chair the quantification of the bet. I do not think there is any danger that what the hon. Lady described will come to pass.

I had not quite finished with the Foreign Secretary's near resignation. He also revealed that he needed to decide very quickly whether to resign—a fact which, given the resignation of two other Cabinet Ministers in the previous two days, and the fact that the resignation of James Purnell had been extensively rumoured for the previous 24 hours, shows an amazing lack of political foresight on the part of the Foreign Secretary, if he had to consider that very quickly.

What is further revealing about the Government is that the crucial conversation that led to the Foreign Secretary's consideration of resigning coming to an end was with Lord Mandelson, who was at that very moment turning himself into the First Secretary of State. Not only is it fascinating to behold that the First Secretary of State, rather than the Prime Minister, was holding together what is left of the Cabinet, but it seems that the Foreign Secretary agreed not to resign from the Government only when he was assured by the noble Lord that he would remain Foreign Secretary. It is good to know that his decisions are based on such selfless and high-minded principles.

Although the Foreign Secretary tried in his speech to depict a division in the Opposition, he should reflect on the fact that the biggest division in politics is not the one he imagined in the shadow Cabinet, and possibly not even the one in the Cabinet. The biggest division in politics is the division between his desire to keep his position and his desire to come to the rescue of his party. That is the division inside his own mind, and it is the biggest division in politics today.

The upshot is that in the run-up to another important EU summit and at a time when, according to the results of the European elections, public support for the policies of the Government is at its lowest at any point in the entire democratic history of this country, the Foreign Office Ministers who the Prime Minister wanted to stay have gone, the Ministers who wanted to stay have been removed, and the Foreign Secretary had to agonise about whether to stay or go, having narrowly avoided being removed. It is hardly a recipe for British success at a summit that covers many detailed and difficult issues.

Will the right hon. Gentleman allow me?

Hon. Members:

Oh, no!

I will allow him. This is the House of Commons.

Does the right hon. Gentleman agree that the common fisheries policy has led to the wholesale destruction of marine life and our fish stocks, and the decimation of our fishing industry? What would a future Conservative Government do about it?

I do deplore the common fisheries policy, as the hon. Gentleman knows, and we have long argued that far greater control over fisheries should pass back to national and regional bodies. We will continue to make that argument, and I am sure that he will continue to make it—even though I think he has left the UK Independence party, which may be something to do with its success in the European elections. [Interruption.] We hope he will rejoin it. That might keep it under control.

The draft Council conclusions for the summit on Thursday and Friday put institutional issues at the top of the agenda, but the latest publicly available version has a blank space under the heading "Institutional issues". The Council has two institutional issues of particular importance to discuss, and the Foreign Secretary mentioned both—the guarantees to be offered to the Republic of Ireland in the hope that that will make the renamed EU constitution more palatable to Irish voters, and the timing of the formal nomination of the next President of the European Commission by the European Council.

The EU member states' representatives are meeting today at the EU to thrash out the first. European diplomats are nervously telling the press that the British Government are

"concerned about the perils of reopening discussion on the treaty".

Another helpfully explained that

"there are huge sensitivities around Lisbon for the British government"— as well there might be.

Will the right hon. Gentleman give way?

In a moment.

At the European elections, the Conservative party, which campaigned for the British people to have their promised say in a referendum on the Lisbon treaty, won almost as many votes as the Labour and Liberal Democrat parties, which voted against letting British voters have any say at all, put together—an extremely rare event in British elections of any kind.

rose—

rose—

I promised to give way to the Chairman of the Foreign Affairs Committee.

Is the right hon. Gentleman pleased or disappointed that opinion polls in the Irish Republic indicate that support for the Lisbon treaty has gone up to 66 per cent., while 34 per cent. support the no camp? Would he rather the treaty were carried in the Irish Republic, therefore taking his problem off the agenda, or does he want the Irish to scupper the treaty?

I am not going to try to tell the Irish voters how to vote—nor, after the experience of the Irish referendum last year, am I going to think that opinion polls are a reliable guide to their opinion.

Seldom can a British Government have gone into European negotiations with a greater lack of moral or democratic authority, as a result of the European elections. The Government and our European partners know that Ministers are trying to force through a treaty that, by every test of public opinion, the British people do not want. Ministers must negotiate knowing that the more satisfactory the guarantees offered to Irish voters to meet their concerns, the more pressing the case to consult the British people so that they can express their concerns as well.

Does my right hon. Friend accept that some of us who are in favour of the Lisbon treaty and against referendums still believe that parties that promise a referendum to the people of Britain ought to keep that promise? I believe a referendum to be contrary to the nature of parliamentary democracy—but we did have a promise, and that promise has been broken. That is what undermines the moral authority of this Government.

My right hon. Friend puts his point fairly and powerfully. It is the making of such promises and the flagrant breaking of them that undermines trust in politics in this country, undermines trust in how the affairs of the European Union are handled, and thus feeds public disenchantment with those affairs.

rose—

I must give way. The right hon. Gentleman referred earlier to "Hamlet" without the prince, and a European debate without him would be like "Hamlet" without the third gravedigger or something like that, so I shall give way to him.

Alas, poor Hague! I knew him well.

The right hon. Gentleman referred to moral authority. On 14 June The Independent stated that the Conservative party is considering linking up with the Mouvement pour la France, headed by Philippe de Villiers. Mr. de Villiers is a noted Islamophobe in France, and has made remarks about cosmopolitan financiers which many people have interpreted as being anti-Semitic. Can the right hon. Gentleman assure the House that the Conservative party will not enter into any alliance with that Eurosceptic party from France?

Yes I can, actually. There is no proposal to that effect, and no discussions about that party being any part of the new group that we are forming in the European Parliament.

I look forward to hearing later from the new Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Rhondda, about whether the British Government will grant the Republic of Ireland proper legally binding guarantees in the form of protocols in the areas where the Irish Government seek them.

On the second institutional issue, the formal recommendation of the next President of the European Commission is obviously of enormous importance to the EU's agenda for the next five years. Germany and the incoming Swedish presidency have made their position clear on the timing, but I am not sure that the Foreign Secretary has. He endorsed President Barroso and his work, and I welcomed that, but I hope that the Foreign Secretary will also make it clear that there is every reason for the Council to make the formal recommendation on the President of the Commission now, rather than letting the recommendation drift until October. [ Interruption. ] The Foreign Secretary looks as if I have just asked a tiresome question, but I take it from that that he did not make the point clear earlier in his speech. He ought to have done.

Although we certainly have some important points of difference with Mr. Barroso on some extremely important matters, such as the Lisbon treaty, there is much in his Commission's record of which he can rightly be proud: real progress on developing the single market and cutting the cost of EU regulation, including the introduction of regulatory impact assessments; a vice-president of the Commission with specific responsibility for better regulation; greater sensitivity to small businesses; a start to tackling the challenge of climate change, and so on.

In November 2005, the leader of our party spoke categorically about an imperative policy in relation to competitiveness and the need for repatriation. Does the word "discussions", used by my right hon. and learned Friend Mr. Clarke the other day, contradict the word "repatriation" in that context? We should be able to be entirely clear about whether the word "discussions" was inappropriate and needs to be rejected.

My hon. Friend can rest assured that nothing that any other colleague has said contradicts the explanations of European policy that my right hon. Friend the Leader of the Opposition and I have given. Those are, I assure him, the definitive text on these matters, and they will remain so.

I am grateful to the shadow Foreign Secretary for giving way. Will he use this opportunity to send a message to countries that have not yet ratified the Lisbon treaty? The message is that a future Conservative Government would hold an immediate referendum, and that the British people would be very likely to veto the treaty for them—so countries should hang on and not ratify, to give us the chance to do what they want us to do.

Those countries must make their own decisions; it is not for us to dictate to them what their decision must be. However, my right hon. Friend is correct in his description of the situation. The Lisbon treaty referendum, which all parties promised at the last general election, will certainly be implemented if the treaty remains unratified and is still on the table at the time of the next general election.

As the right hon. Gentleman is aware, I am and was in favour of a referendum. However, unless I am mistaken, he is being delightfully vague about what his party would do if the Lisbon treaty had been ratified and there were a Conservative Government. Would a Conservative Government hold a referendum in Britain if the Lisbon treaty had been ratified throughout the EU—yes or no? Many people who voted UKIP in the elections, not to mention many others, would very much like to hear the answer.

The hon. Gentleman will recall that we were being asked that question a year ago, on the grounds that that situation was, apparently, about to come about because the opinion polls in Ireland showed that the Irish people would approve the treaty. If what the hon. Gentleman has mentioned comes to pass, we will set out in our general election manifesto how we will proceed. [Interruption.] The Foreign Secretary laughs, but I suspect that he, as an enthusiast for the Lisbon treaty and for all the institutional changes that it brings, cannot say how he intends to proceed if the Lisbon treaty is not ratified. In that sense, we all face the hypothetical questions of the future which will soon be determined by whether the treaty is ratified or not.

rose—

As the hon. Gentleman is one of those in the Labour party who stands for making some compromise with the electorate, I shall give him the opportunity to intervene again.

I take it that the right hon. Gentleman's reply was not a yes or a no—it was either a "don't know" or a "won't say".

It is simply that we have not ruled that in or out. That is the correct position when faced with that hypothesis. There is no doubt whatever about what will happen if the Lisbon treaty is unratified and still on the table. Who knows whether that situation will come to pass?

Will my right hon. Friend give way?

I think I should move on, but I shall give way; I shall then make some progress.

Did my right hon. Friend notice that not a single Member from the Labour party cried that there would not be a Conservative Government after the next election? They have all accepted that that is what will happen.

My right hon. Friend may be pleased to know that I did notice that, but I have noticed that for a good year or so in these debates, as Labour Members' morale has steadily sunk lower—although not quite as low as their party's election results last week.

I was talking about the European Commission. Not all its legislative agenda has been wise; it is not coherent to seek to cut the costs of regulation on business on the one hand and then raise them by putting up the cost of employing temporary workers. The agency workers directive was rightly opposed by the Government until, in one of too many instances of their flaccid defence of British interest, that resistance was abandoned. That emphasises how important it is for us to restore our national control over social and employment legislation so that once again decisions on how best to help our families and businesses can be made here in Britain—a policy that today again received the support of the CBI.

Most important of all, the Commission has stood against those who have called for protectionism—a brave position that was not helped by the Prime Minister's ill-advised use of the slogan, "British jobs for British workers". If Mr. Barroso is to be reappointed, I hope that the British Government will seek assurances that he will not be diverted from the course that he has set on free market issues over the past five years, that that will be reflected in the composition of the next Commission overall, and that the Government will urge that this recommendation is made now rather than drifting on until October.

The Foreign Secretary referred to the discussion of new financial regulations in the context of this weekend's summit. The alternative investment fund managers directive and the proposals on EU financial services supervision could have a most serious effect on Britain's financial services industry, as one or two colleagues, including my right hon. Friend Mr. Heathcoat-Amory, said. The truth is that we have reason to be extremely concerned about how this legislation is shaping up and how the Government are handling the issue. There is not so much any fundamental difference of principle between those on the two Front Benches as a concern about how well the Government are pursuing the British national interest in these matters. There is a widespread belief that the Government have taken their eye off the ball, and it is now very important that Ministers focus on this.

In the draft Council conclusions, there is a great deal of language about the need for "rapid progress" and legislation "as soon as possible", but it is surely far more important that we get the regulations right than that we get them quickly. Otherwise, we risk making the same mistake at European level that the United States made with the Sarbanes-Oxley Act. Instead of rushing into ill-considered regulation, we should be facing the immediate challenge of rebuilding confidence in European banks.

Even within the Commission grave concerns are privately expressed about the lack of proper consultation and of a thorough regulatory impact on the proposed fund managers directive. That point has been powerfully reinforced this week by the Lords EU Committee report into the future of EU financial regulation, which concluded that

"the desire for speedy action must not come at the expense of thorough consultation, impact assessment and risk analysis by the Commission in line with their own Better Regulation principles."

After months in which Treasury Ministers have been absent from the European debate, although they are part of a Government who always lecture us on taking part in European discussions, we welcome the news that at last Lord Myners is to visit Sweden to discuss these issues with the incoming presidency. We hope that at the Council the Government will ensure that the final language reflects Britain's interests.

The establishment of a European systemic risk board is to be strongly welcomed; we support better analysis of the macro-prudential risks. However, decisions on what action should be taken in response to the risks that the board identifies are taken by national Governments, not by the EU. The board must embrace the whole EU, so it would clearly be inappropriate for it to be chaired by the president of the European Central Bank.

I think that I can help my right hon. Friend and the House, because we have the draft conclusions, although we did not obtain them from the Government: we had to obtain them from the Danish Parliament website. It is clear that the Council has already decided to go well beyond macro-supervision by regulating alternative investment funds, undertaking micro-prudential supervision, and setting up a European system of financial supervisors going way beyond what my right hon. Friend suggests. We are really up against it. We are already isolated, and it is apparent from the conclusions already published that the Government have already given in.

I suspect that there is a great deal of truth in what my right hon. Friend says. In fact, there clearly is, because he reads from the proposed conclusions. I was about to come to his point about the proposed European system of financial supervisors, which should supplement and strengthen, rather than seek to replace, the role of national supervisors. That is a point of great importance for the Financial Services Authority.

Proposals to give the three authorities proposed in the de Larosière report legally binding powers over national supervisors would represent a significant transfer of power from member states to the European Union, in an area in which Britain has a great deal at stake and the dangers are more apparent than the advantages. Moreover, as the Institute of Directors has pointed out today, the distinction that the Government seem to be seeking to draw between financial supervision and regulation in the proposed system is very dubious.

We want the Government to ensure that the Council makes no hasty decisions on the Commission's communication of last month until the proposals have been properly thought through. As the Lords Committee said,

"thorough and careful debate of the alternatives is more important than speed of decision on the outcome."

Given how closely these matters touch on a crucial pillar of the British economy, we would expect the Government to discuss them with EU partners and the President of the Commission. We would expect them to advocate our national interest with the necessary firmness, not just meekly give in as my right hon. Friend the Member for Wells described, so that there was no doubt about the importance that Britain attaches to the issue.

I have a lot of agreement with the right hon. Gentleman, particularly about the need for greater consultation on these matters. Will he explain the general Conservative position? Does the Conservative party support greater co-ordination between nation states on financial regulation, given some of the problems that we have seen in the past two years?

We certainly support greater co-ordination, but we do not want to see the end of national supervision and regulation. It is strategically and economically important for this country to be able to continue that. It is possible to get the balance right, but the evidence is mounting that it is going wrong in the negotiations that are now taking place.

rose—

I feel that I have spoken for a long time, but I shall give way one more time.

I thank the right hon. Gentleman. It is generous of him to give way at this stage in his speech. May I bring to his attention the comments made by the Minister in the other place, Lord Myners, when interviewed by the European Scrutiny Committee? They are broadly in line with the demands that he makes. When asked about national supervisory powers, Lord Myners said that

"we are not content with the suggested powers for EU authorities to change national supervisory decisions through binding mediation. We think that this, again, cuts across the basic principle of vesting supervision in national authorities where it is linked to fiscal accountability and responsibility."

Is the right hon. Gentleman demanding something from the Government to which the Government are already committed?

As I mentioned a few moments ago, I do not believe that there is a huge difference of opinion on that between the Government and Opposition Front-Bench teams, and perhaps not even with the Liberal Democrats. We are questioning the Government's effectiveness and firmness in pursuing the objectives that the hon. Gentleman talks about. The Government are fond of telling us that it is very important to be engaged in Europe and not to be at its margins, but over the past few months it seems that Treasury Ministers have been at the margins of Europe and have not been sufficiently well engaged to protect the British national interest in this crucial area. The debate is about the effectiveness of Government action within Europe rather than about British objectives.

rose—

I said that I was not going to give way much more, but go on.

I thank the right hon. Gentleman. Would he go further and say that rather than being at the margins, the British Government have been in the lead in having common sense in their macro-economic policies and method of dealing with the recession, and that we have done rather better than the eurozone in those matters? Will he confirm what I believe is the sensible view: that we should stay well clear of the eurozone and keep control of macro-economic policy?

The hon. Gentleman will know that I will go part way with him on that. Of course we should stay well clear of the eurozone, but I am not going to hazard a guess at the relative severity of the recession in different countries. I suspect that all of us who are suspicious of economic forecasts would do well to avoid such predictions.

There is one more subject that I wish to raise, and I shall try to do so very briefly. I know that the Foreign Secretary is extremely concerned about it, but he did not mention it in his remarks. It is the position in the western Balkans, and I make no apology for taking a few minutes at the end of my speech to raise the matter.

Although Bosnia and Herzegovina signed a stabilisation and association agreement with the EU in 2008, the country seems to be stuck. Important conditions go unfulfilled, few laws are passed, the central institutions are undermined and movement towards the EU is barely discernible. The entity of Republic Srpska continues to unravel some hard-won gains, including reforms required by the EU. Last month, the Republic Srpska Parliament voted to transfer all 68 state powers to entity levels, meaning that that part of Bosnia would no longer be bound by laws passed in the country's capital. The High Representative in Bosnia has called for the decision to be revoked, but last week, Republic Srpska pressed ahead none the less, reversing the principal achievements in the past 14 years of the international community's efforts in Bosnia without a single cry of protest, as far as I could detect, from European capitals.

We are greatly concerned that the framework that helped Bosnia make remarkable progress since the end of the war in 1995 is being gradually dismantled. The office of High Representative is expected to close in October. The use of Bonn powers has become unpopular in EU capitals. There is a desire for transfer of power to an EU mission, perhaps prematurely. We hope that the Government will agree with us and make it clear to other European countries that the international High Representative in Bosnia must have rock solid support from the EU and the rest of the international community as he addresses the problems, even if he deems that circumstances require him to exercise his Bonn powers.

The lack of progress in Bosnia in the past three years has been accompanied by the downsizing of EUFOR's deterrent capacity. As that trend continues, there are reports, about which Ministers may want to comment, of plans for EUFOR to relinquish its UN chapter VII authority, which we do not believe is justified. I hope that the Government agree that the international executive powers in Bosnia need to be retained for some time, along with a credible enforcement capability, as well as external guarantees for security and the rule of law—in particular the international judges and prosecutors, who are mentoring the fragile state institutions there.

Is not it also the case that stopping the backsliding in Bosnia will require sustained, high-level US involvement? I hope that the Foreign Secretary will pursue with his US counterparts the idea of a new US special envoy to Bosnia to prevent such backsliding. Continued efforts should also be made through the International Criminal Tribunal for the Former Yugoslavia to achieve justice for victims of war crimes and crimes against humanity.

I am grateful for that part of the right hon. Gentleman's speech. It is a substantive, major contribution and he is absolutely right. May I put it gently to him that the Conservative party continually condemns EU common foreign and security policy and EUFOR, and makes remarks about exactly the work that he mentioned, which undermine it? One cannot be so hostile to the European Union then demand that it become stronger and more authoritative in the western Balkans. I ask not that the right hon. Gentleman make one of his Oxford Union replies to me, but that he reflects on the contradiction between his hostility to Europe's common foreign and security policy interventions and the passionate and powerful plea that he has just made at the Dispatch Box.

The right hon. Gentleman and I differ in our philosophy of Europe. I see no contradiction between the positions that the Conservative party advocates and wanting a strong EU role in the affairs that I am considering. I have always been comfortable with the EU's taking a leading role on the Balkans—although I think that that works effectively only when there is strong US leadership on the Balkans; that is why I put that point to the Foreign Secretary.

Since Mr. MacShane effectively agrees with my point, although he doubts my wider analysis, I hope that he also agrees about the important role that Serbia can and should play. Serbia is a European country and should be encouraged on its road to join the EU. We should welcome steps by the Serbian Government to improve their co-operation with the ICTY. However, only when Mladic and Hadzic are in The Hague can we speak about Serbia's full co-operation with the ICTY. Only then should we support the coming into force of Serbia's interim stabilisation and association agreement.

I understand the argument that imposing such conditions makes it difficult for the reformist Government in Belgrade to withstand nationalist forces, but what stands between Serbia and the EU is not our insistence on full co-operation with the ICTY, but two alleged war criminals, whose extradition Serbia needs to facilitate. I therefore hope that the British Government will stand with the Belgian and Dutch Governments and be firm about that in EU discussions. Perhaps Ministers will be able to comment on that at the end of the debate.

I have taken up a large amount of the House's time, albeit with a huge number of interventions. There is clearly a wide range of issues that the EU summit should consider this week, including Iran, Pakistan, Burma and the Balkans, and I have not even mentioned Georgia, which I had hoped to. All are major foreign policy issues that would benefit from a cohesive and, in the main, a more robust approach from the European Union, of which—just so the right hon. Member for Rotherham is in no doubt—we are fully in favour.

We hope that the Government will do everything possible to work hard on those causes. However, we also hope that they will bring about a speedy decision on the Commission presidency, that they will mount a stronger, albeit belated defence of the national interest in financial regulation and supervision, and that Ministers who have spent too long defending themselves against each other in recent weeks will be vigilant in defending British national interests at this week's meeting of the European Council.

Several hon. Members:

rose —

Order. May I remind all right hon. and hon. Members that Mr. Speaker has imposed a 20-minute time limit on all Back-Bench contributions?

It is a great honour to follow Mr. Hague. Many of us in the Chamber have spent years debating matters European, and I hope that I will be forgiven for returning to some matters that we have talked about before, because this debate comes in the wake of the European elections.

We cannot ignore the fact that, yet again, we have had European elections in which voters have cast their vote on anything other than the matters of Europe. It was the same in the four European elections in which I took part from 1994. The electorate go out and cast their votes in dwindling numbers on something that is not on the ballot paper. This time, we should be worried about the fact that around one third of the Members who represent this country in the European Parliament have an agenda based on not co-operating in any way. None of the major political parties can be proud of what happened a couple of weeks ago.

I also hope that the Foreign Secretary or his ministerial colleague in his winding-up speech will address the fact that, were the Lisbon treaty to be ratified, it would create an extra MEP for the United Kingdom. However, I am not entirely sure how the Government intend to deal with that, if the treaty were to be ratified.

I have thought about how we could deal with the complete disengagement from Europe. My right hon. Friend Mr. MacShane and others keep telling us that we need to learn to love Europe, and I thought, "How do you learn to love a foreign country?" I cast my mind back to what it was like when I arrived here 30 years ago, and I remembered that three things struck me then that probably still apply to Europe. One was that when people say, "How are you?" they do not want to know how the other person is—it is a kind of ritual. It took me a long time before I realised that one does not answer; one just says, "Fine, thank you." Similarly, European elections may be called elections, but they are not what we might think they are. They do not result in a Government whom people recognise or in a change of political direction, so although we call them elections, they are not elections. European elections are something in the democratic process that we have not yet learned to define—they are almost like a Europe-wide opinion poll on something. We call them elections, but people simply will not engage if they do not have a definable influence.

The second thing—again, it took me a long time before I realised this—was that neither Danny La Rue nor Dame Edna Everage were what they seemed to be. That is so obvious to the natives, but no one ever spells it out to those who come here as foreigners. Eventually, one finally realises Dame Edna ain't no dame—and certainly no Edna either—and the European Parliament is pretty much the same. We call it a Parliament, but it does not do anything that we would recognise a parliamentary democracy as doing. The European Parliament is a caucusing body that is incredibly responsive to lobbying institutions, but it is completely unresponsive to public opinion. It may have been a long time before we got the message of what people thought about how we organise ourselves in this place, but, whatever one says about the past few months in the British Parliament, we did get the message. There were mechanisms that meant that we had to respond to the public, but the European Parliament and the Commission almost take pride in being unresponsive to what the public think.

The third thing—this one probably took me the longest—struck me while listening to Mornington Crescent on "I'm Sorry I Haven't a Clue". For those who do not live in the metropolis or are unfamiliar with the tube lines, it can take a pretty long time to realise what the true rules of Mornington Crescent are.

There aren't any.

Precisely, but everybody pretends that there are. Similarly, when one tries to explain to the British public how the European Union operates on a political level, one can explain the rules, but they are complied with only inasmuch as it suits the institutions to do so.

The Lisbon treaty is the classic example of that. A referendum is held, but we do not take any notice until people say yes. The Government say, "Well, we're not going to get into hypothetical discussions about what will happen if it isn't ratified," while the Opposition say, "Well, you know, don't trust what the Irish are going to say." The only thing that the public out there really know is that there is a political agenda that is defined by people whom they neither elect nor can remove, but who relentlessly pursue a direction over which they feel they have no influence. [ Interruption. ] It is no good scowling—that is how it is. If it were not so, why, for 20 years—over my entire political career—have European elections not been fought on anything to do with Europe? I do not know what the political families stand for, and I certainly do not know how they vote once they are elected.

This is not a party political point, but I put it to the Foreign Secretary that it is worrying if a governing party has only 13 MEPs out of 72, as we now have. I know that in the past our MEPs have quite often not voted with the Government anyway. We have had our problems, and Opposition Members will have similar problems with their MEPs. However, there is a serious disconnect when the political shaping of those who represent us at the European level is so fundamentally out of sync with the political direction of the Government here.

The hon. Lady is making an interesting and well-thought-out argument, but I would question her on one aspect. When the European elections took place, there were two elections in most areas: a county election and a European election. Voters were voting Conservative and, to a certain extent, Labour in the county elections, but voting for the UK Independence party in the European election. The great British public were sending a message about Europe, even if in a coded manner, by voting UKIP.

I am not so convinced. We did not have local elections in my constituency, and the result was essentially 21 per cent. for Labour and 27 per cent. for the Tories. That is why I say that none of the parties should be too joyful. Our analysis was that it was not possible readily to identify where either the UKIP or BNP vote came from. It was more the case that there was a protest vote against the European Union in the previous election; but this time there was a larger vote saying: "A curse on all your houses," with the houses being the established political parties.

rose—

rose—

I give way to my Scottish colleague.

We are both Scottish colleagues. There are perhaps two things that we can take out of the European elections. One is the myth that proportional representation results in a greater connection with the electorate and a bigger turnout, which clearly does not apply. Secondly, my hon. Friend is downplaying the message that the electorate sent us. We cannot disregard the fact that UKIP polled astonishingly well—far better than anybody would have imagined before the elections—which surely cannot be unconnected with the hostility towards the European Union.

Certainly, but my argument is a much wider one, about the disengagement from the political processes. We have become fixated with the process of elections, but just as an exam in school comes at the end of the year, but needs a whole year of work, we need engagement and debate, so that people know what the issue is all about. We simply do not have political engagement at the European level, so when elections come every four years, people do not engage with them.

As it happens, I agree with my hon. Friend Mr. Davidson that the votes in the election cannot be written off as unconnected with people's views on the European Union. My view is that many of those views are due to misleading propaganda about the European Union from the media and, indeed, Eurosceptic Members of Parliament. Leaving that aside, however, I am interested in my hon. Friend's comments about the European Parliament. Is her conclusion that it should have more power or that we should not directly elect MEPs? What is the direction in which she is going?

First, can we please stop using the labels "Eurosceptic" and "Europhobe"? They are completely and utterly meaningless. There are very few people who would actually advocate withdrawal from the European Union. It is disingenuous and quite insulting to accuse anyone who wants a different kind of relationship with Europe of being Europhobic. It is the same as calling anyone who questions the governing party in a general election an anti-democrat. I simply do not agree with that particular model.

We have an extremely important question to face on the European Parliament: do we think that the level of engagement is at European level or at national level? I have noticed that, over the past 20 years, every time we give the European Parliament more powers, the turnout at the elections goes down. I would be prepared—not here; this is not the place—to argue the case for getting rid of the European Parliament and going back to the double mandate. I will not go down that route now because that is not the argument for today.

At the European Council, I hope that the Foreign Secretary and his colleagues will not say that the electorate simply do not understand these matters, because this is not just a British phenomenon; it is simply more prominent in the United Kingdom. I hope that they will address why the political leaders increasingly want collective solutions. Even though they might not be moving towards a federal state, they increasingly go for collective solutions at European level, and at the same time, the electorate increasingly withdraws from thinking that that is the right way forward.

I speak as a former Member of the European Parliament. There are two reasons why the electorate feel so disengaged from the European Union. The first is that, despite the answer to a question in the Bundestag revealing that 70 per cent. of our legislation is now being formed in Europe, we would be hard pressed to find any coverage of that formation process in the British press. The second is the fact that, when we discuss European legislation in this House, we do so after the horse has bolted. Perhaps we should be more proactive and discuss European legislation at its formative stage, when the Commission brings forward the proposals, rather than when everything has been done and dusted in the Council and it is too late to make any real changes.

I agree with the hon. Gentleman, but only up to a point. I would love to blame the press, but on this occasion, I do not think that that would do any good. There are institutional problems involved. For example, it would be worth seriously considering the proposal that an incoming Commission should press the delete button on any proposals from the previous Commission's term that have not been completed. Such proposals should simply go, rather than being negotiated right to the end. We should also stop the rather dishonest system of delaying implementation. When something is politically difficult and a compromise is just about reached on it, the final dodge is to delay its implementation for a further five or 10 years. That means that no one who made the decisions is ever accountable for them.

The third problem is one that really grieves me. I know that the recent reshuffle was not the Foreign Secretary's responsibility, although some of us might quite like him to be the person who does the reshuffling—[Hon. Members: "Ah!"] But that is neither here nor there. We now have a Europe Minister who is not in the Commons, and that is deeply unsatisfactory. I would quite like the Europe Minister to have almost the status of a Deputy Prime Minister. I would like them to have the role of UKRep—the UK permanent representative in Brussels, a political role—and to be accountable here for all the compromises and deals that we strike. That would address the problem of the deals and negotiations not being reported here. The reason that they are not reported and debated in a meaningful way here is because, first, they are very long-winded and drawn out, with some lasting well beyond the lifespan of a Parliament, and, secondly, they are usually part of a trade-off. We cannot neatly label them as being simply health matters or environment matters, for example; they are always part of a trade-off. UKRep would fulfil the role that I have described.

If we in this place are serious about these matters, we must not fool ourselves. To reassure myself that I was right, I recently attended two European Committees. One was on external services; the other was on the environment. They really are the stuff that masochists are made for! We sat there for hours, for absolutely no purpose whatever. Everything that we were told was hypothetical—these things might or might not happen—and no decisions were reached. So, just being told more would not be the answer. When the Foreign Secretary talks to his colleagues here, he needs to engage with the election result and seriously think about the question of accountability and the fact that we are going in the wrong direction.

Finally, on a separate note, we have talked about the new Pakistan council, which will be an extremely important development. However, those of us who go to Pakistan and Afghanistan are surprised by the absolute plethora of representatives involved. There is the UK special representative, the French special representative and the Spanish special representative, as well as the EU Commission representative and the EU Council representatives. It would be really worth while for our European partners, as well as the Council and the Commission—which are often dually represented—to decide who should take the lead and to co-ordinate these arrangements much better. We have an important role to play in areas such as Pakistan and Afghanistan, but, at the moment, we are probably still speaking with too many voices.

Ms Stuart has made in interesting speech. People who describe themselves as pro-European, as well as those who are slightly sceptical—I know that she does not like that term—about the direction of travel in the European Union will be able to agree with much of what she said. It was also interesting that she seemed to be forming a leadership team for the Foreign Secretary during her speech.

The hon. Lady mentioned the need to reconnect with voters, and that is really important. She will not be surprised to learn that I draw different conclusions from hers, but there are ideas that we can share across the House and across the parties. For example, I think that we should have a Question Time in this House on European affairs as part of our regular questions. Putting European matters in with Foreign and Commonwealth Office questions, for example, pushes too much into an hour of questions. It would be good for accountability to separate them out. That would be a relatively modest reform, and I think that we could find agreement on it across the House. Perhaps it would help to get these issues debated more regularly—

There is no Europe Minister here.

The hon. Gentleman makes a very good point, but I would point out that the noble Baroness Thatcher, in her first Administration, appointed a Foreign Secretary who was in the other place. The Conservatives therefore need to be slightly careful on this matter— [ Interruption. ] Mr. Hague cannot simply say that that was a long time ago. It was at the time of the Franks inquiry, and I could take him back to another point that does not reflect well on his party.

The hon. Member for Birmingham, Edgbaston made a very good speech, although I have to say that, when I was on the doorsteps, I found that those who wanted to engage in a debate on the European issue—some of whom were hostile to my opinions—actually relished the opportunity to do so. They saw it as separate from all the other issues that we debate as politicians. So I would not want to see the elections go away; they are a healthy part of our democracy. And let us face it: the whole debate in the media and in this place in the run-up to the elections was dominated not by Europe but by expenses. That was one reason why the campaign was quite disappointing.

I had an interesting radio debate with Mr. Francois during the campaign. He and I were eager and enthusiastic in that debate, because it was the only one that we had in the broadcast media throughout the whole campaign. We disagreed vehemently on the issues, but we both felt that it was quite wrong that that was the only time that Front-Bench spokesmen had been allowed on to the media to debate Europe during a European election campaign. We need those debates during our campaigns, in order to connect with the voters. Yes, there might have been exceptional circumstances, but the media need to be criticised for not attempting to compensate for them.

The hon. Gentleman said that the discussions and decisions in the European elections were nothing to do with Europe. Why, then, did a party that is generally seen as Eurosceptic get three or four times as many votes as the party that is seen as Euro-obsessive? Does not that indicate the relative popularity of the parties' positions?

I did not say that European issues were not debated; I think that they should have been debated more. I do not deny that many people out there are against Europe and say that we should not go into Europe, even though we have been there for many decades. But that is not going to stop me or my party arguing the case for Europe, because we happen to believe in it. I am sure that the hon. Gentleman would not ditch his beliefs just because they were unpopular, and I hope that they were not determined by focus groups and opinion polls; otherwise, why on earth did he come into politics?

The House is debating European affairs today, and we have the European Council ahead of us. Although there is a packed agenda, I hope that the Foreign Secretary—or, at least, the Minister who will wind up the debate—will say a little more about how the British Government want the Council to address the economic issues that are facing us. We had the G20 summit in April, so presumably European Ministers will discuss the implementation of some of the agreements made there. I hope that we can have a little more focus on these pressing economic issues.

I know that the European Union has quite an ambitious agenda of employment-creating ideas and ideas for small business, but what is missing from the current agenda to deal with our current economic problems is any new determination to press forward on the single market. One of the reasons why we are not going even further in a downwards spiral in the world economy is that at least in this period, as opposed to the 1930s, we have not gone down the road of protectionism, as, overall, most countries support the idea of free markets. Surely, however, a deepened and strengthened single market is the way forward to help us out of the EU's current economic crisis.

Does the hon. Gentleman not accept that what actually happened in the 1930s was heavy deflation, particularly in Germany, but also elsewhere? It was deflation that caused the recession, not protectionism, as the hon. Gentleman calls it. Indeed, when tariffs were imposed later on, it helped countries to reflate behind those tariff barriers and get out of recession.

I totally disagree with that analysis of economic history. I think it was only when we started getting rid of the tariffs that we saw the expansion of the world economy, particularly after the second world war. I hope the Minister will say a little more in his response about the economic agenda.

I agree with much of what the right hon. Member for Richmond, Yorks said about the financial services. I know that the Foreign Secretary believes that the devil is in the detail; of course it is, but we need to be very clear in our overall principles. There must, of course, be supra-national co-ordination. We all know that capital markets are international and global, so the EU has a clear role to play, but so does the global community, which is why G20 developments are so important. The capital markets are not just European, but global, so we must ensure a European voice is heard and that Europe's conclusions are played into the global debate.

I agree that there is some concern that the European Commission is going too fast in trying to put some of proposals forward. In the initial part of the recession we rightly saw emergency measures taken to save the banking system. I thought that the Government were a little slow to act, but overall, those emergency measures were the right approach. What we are talking about now, however, is medium and long-term reform, and there is no need to rush to get those reforms through in the next 12 months. That would be extremely unwise. We need proper debate because these are incredibly complex matters.

Where the right hon. Member for Richmond, Yorks and I may disagree is that we Liberal Democrats see a role for the European Union in the regulation and supervision of financial markets, and welcome that. That does not mean that the EU should take over every aspect of national regulation—of course not, but some issues are clearly supra-national, which is why an organisation such as the European Union is so helpful.

Tackling climate change is, as the Foreign Secretary said, absolutely critical. Although we have seen some developments to prepare for Copenhagen under the Czech presidency, I have to say that I have been disappointed by their lack of depth and speed. I only hope that the Swedish presidency will take those issues forward much further. The EU has a critical role to play in Copenhagen, so I hope that the Foreign Secretary will talk to his Swedish counterparts at this European Council to encourage them to go as far as possible in tackling the vested interests in some EU member states that are getting in the way of a much stronger deal in Copenhagen and a more powerful EU voice in it.

We have rightly debated some of the external affairs issues that will crop up at the European Council. The right hon. Member for Richmond, Yorks tackled the issue of Burma in detail. I think that the EU needs to make it clear to the Burmese military junta that if it does not allow the opposition parties the freedom to campaign and if it starts imprisoning their leaders, the credibility of the elections promised for 2010 will be undermined absolutely. We must be strong in our warnings that if that happens, it will lead to even further isolation and even stronger sanctions against the Burmese Government.

I agree with much of what the Foreign Secretary said about Afghanistan and Pakistan. On Pakistan, we need to do even more to ensure that the humanitarian aid gets through to the 2 million or more refugees created by the conflict in the Swat valley. There are too many reports of that humanitarian aid failing to get through.

We must also consider the institutional aspects to the European Council. We have debated the Lisbon treaty and where it will go. I think we need to listen to the Irish Government and see whether we can accommodate them—of course we should. If there is talk of protocols to deal with the concerns of the Irish people, and the Irish Government's view of those concerns, we should be supportive. I have to say, however, that many of the concerns brought up at the last referendum were, of course, bogus ones, because issues about neutrality, abortion and the right to life were nowhere near the terms of treaty of Lisbon, as we all know.

If I may say so, I think that the hon. Gentleman is effectively insulting the Irish people by referring to the concerns as bogus. Anyone who knows anything about the issue—I am wondering whether he does—knows the reality. As a confidential memo handed over only yesterday to other member states—the Foreign Secretary knows about this, as do I as a member of the European Scrutiny Committee—clearly indicates, the legal guarantees being provided are worthless in the context of treaty change. The hon. Gentleman referred to protocol; if what he said were true, it would actually change the treaty, so he should just stop insulting the Irish people.

I was not insulting the Irish people, of course, and I am not surprised that the hon. Gentleman disagrees with me on this issue. What he cannot do is point to anything in the Lisbon treaty that would undermine Ireland's neutrality or Irish views on the right to life, or force Ireland away from its current laws.

We have had some debate about the Conservative position on the Lisbon treaty and what it might be in various hypothetical situations. My suspicion is that those on the Conservative Front Bench would very much like to see Lisbon ratified, because if it is not, they will have to hold a referendum. Can you imagine, Mr. Deputy Speaker, the first act of a putative new Conservative Government being to hold a referendum on a treaty that the rest of Europe will almost certainly have ratified? I think it is a quite extraordinary position that would massively set back the Conservative party's foreign policy. It is a ludicrous position. Most people are focused on what will happen if Lisbon is ratified, so what on earth does the phrase "We will not let matters rest" actually mean? Today we have yet again had no explanation today. The issue becomes more interesting, if not slightly frightening, if we contemplate what would happen if Lisbon were not ratified and the Conservatives had to deliver on their promise.

I notice the relish with which the hon. Gentleman contemplates the discomfort that he believes the Conservative party may feel if the matter has to go to referendum, but does not his speech suggest that he is afraid of a referendum? He wants to try to reassure the Irish so that they will accept the Lisbon treaty and not protest as they did last time, and he does not want a referendum here, yet he claims that the people of the UK want to connect with Europe. Is not the best way to connect people with Europe to give them a say on whether they want further European integration?

We have certainly debated that many times, and the hon. Gentleman will know that we have just campaigned on a manifesto urging a referendum on the in-out question. That is our position.

Let me deal with the other specific issues that I hope the Foreign Secretary will raise at the European Council. He mentioned immigration, which I understand will be debated with respect to problems in the Mediterranean; I think that it is on the agenda at the insistence of Greece. However, there are concerns in this country about the way in which the whole system works. There are loopholes in the immigration system that affect this country, and we need support, partnership and co-operation with our European partners if we are to tackle them.

I am thinking in particular of what is known as the Lille loophole. People buy a ticket to Lille at Brussels and, rather than getting off the train at Lille, stay on it and come to the United Kingdom. Buying a ticket to Lille means that they need not have their passports with them; they are out of the jurisdiction of the UK Border Agency, and when they arrive in the United Kingdom—no doubt having destroyed any documentation that they have—they are not even checked in the normal way. The Lille loophole should be causing real concern, but although it has been raised on the Floor of the House by Conservative, Labour and Liberal Democrat Members, the Government have done nothing to deal with it. It constitutes a challenge to our immigration affairs, and it is time that the Government took it seriously and raised it with our European partners.

I was expecting to hear from the right hon. Member for Richmond, Yorks some discussion of whom the Conservative party would form a group with in the European Parliament. As we had expected, the right hon. Gentleman made some fantastic jokes at the Foreign Secretary's expense, but it depressed me slightly that he did not deal with an issue that affects his own party. He will have to do so: he will not be able to escape this for much longer.

The Conservatives' notion of leaving the European People's party strikes me as bizarre. We should remind ourselves that the EPP is the party of Angela Merkel, President Sarkozy and Prime Minister Berlusconi. It represents the centre right, the mainstream of Conservative opinion in Europe, but the Conservative party wants to leave it. That has been criticised by many Conservatives—by former Foreign Secretaries, by the grandees and by Conservative MEPs—but how does it appear to those in the capitals of Europe? What are people in Paris, Bonn, Rome and Madrid thinking about a possible Conservative Government? They must think that the Conservative party has taken leave of its senses.

The Conservatives should think about how this looks in Washington. President Obama, who wants to reach out and engage with the regime in Tehran, looks at the modern Conservative party and sees that it will not even reach out and engage with Conservatives in Europe. If there is ever to be a Conservative Government, what influence will that Government have? Just imagine the first meeting between a putative Prime Minister Cameron and President Obama. President Obama would say "I really need your help: we need to get these Europeans to help us with this issue and that issue. You must have some influence. Oh—you have left the European People's party, so you have no influence whatsoever." A party that may become a Conservative Government is forming a foreign policy which will do this country down. [Interruption.] The Conservative Members who are shouting "Rubbish" know in their hearts that they are going into a general election with the most ludicrous foreign policy ever to be put to the British people.

rose—

I happily give way to the hon. Gentleman.

I was following the hon. Gentleman's speech with some interest until I lost the thread. Why should a Conservative party that is not federalist sit with a group that is federalist? My right hon. Friend Mr. Cameron, who made this promise as leader of our party, is talking common sense and has the support of the British people. That is why this is happening.

Given that the hon. Gentleman is a member of the Better Off Out group, I am not surprised that he takes that view.

rose—

Perhaps the hon. Gentleman has left the group. The Conservatives are in favour of leaving lots of groups at the moment.

I am not a member of the Better Off Out group.

Perhaps there has been a resignation that we did not hear about.

Not only will the Conservative party have no influence in Washington and many other capitals in the world, but they will have some very odd bedfellows. We do not know the details, because the right hon. Member for Richmond, Yorks was rather frit today. That is unusual for him: he normally takes things on the chin and is not afraid of debate. However, he was not able to say with whom the Conservatives will form a group. He knows that they will have to find MEPs from six other member states. [Hon. Members: "Seven."] Presumably the Conservative party will be part of the group that it wants to form.

We ought to know who those MEPs will be, and which countries they will come from. We have been told that it is likely that the Conservatives will want to do a deal with the Law and Justice party in Poland. That is quite surprising, because Civic Platform, which is a centre-right party, believes in much of what the Conservatives—and, indeed, the Liberal Democrats—believe, it is in government, and it would seem to be a natural bedfellow for the Conservatives. Moreover, its Foreign Minister, Mr. Sikorski, was a member of the Bullingdon club. One would have thought that at least the right hon. Member for Witney could get on with a former member of the Bullingdon club, but apparently he is not extreme enough, so the Conservatives will have to do a deal with the Law and Justice party.

We should bear in mind that, as the Foreign Secretary said, the Law and Justice party is an anti-gay party. It is a homophobic party. When its leader was mayor of Warsaw, he banned a Gay Pride parade, but allowed a "parade of normality". Those are the sort of people with whom the Conservative party wants to do a deal—and I have not said anything about the anti-Semitic views of the Law and Justice party. The Foreign Secretary read out a quotation from one of its senior members which included an appalling insult to the current President of the United States. If the right hon. Member for Witney were to become Prime Minister, how would he explain that to the President? The Conservatives are in a ludicrous position, and they know it.

I apologise for not hearing the beginning of the hon. Gentleman's clearly uncontroversial speech. He has referred to separate groups. Would he care to explain how the following comes about? In the Council of Europe, the British Conservatives are in a group of their own. While it was the third largest—and bigger than the Alliance of Liberals and Democrats for Europe—it was very successful and made a great impact. Very recently, the hon. Gentleman's party overtook us by one or two members, but before that we had more members, notwithstanding what he has said about separate groups. He has spoken of bedfellows. Would he care to comment on why his party overtook us, and how it manages to justify the fact that a large number of Ukrainians—those great champions of democracy and human rights—have joined its group?

I cannot, because I do not know the details. However, I believe that the Conservative party is in bed with members of Mr. Putin's party in the Council of Europe, so I think that the hon. Gentleman ought to be slightly careful before giving such examples.

I will not list all the various parties to which the Conservatives appear to be talking, because the Foreign Secretary did that very well. He spoke of the For Fatherland and Freedom party of Latvia, which has Nazi sympathisers as members. This really is quite an interesting position for a so-called liberal Conservative party to adopt. We look forward very much to Conservative Members' coming clean. Apparently there was to be a press conference this afternoon at which they were going to present the deal, but it has been cancelled, so I do not think that they have managed to stitch up the deal yet.

As a former deputy co-ordinator for the Group of the European People's Party and European Democrats in the European Parliament, I can say that I spent most of my time negotiating with the smaller groups, which often held us to ransom in order to secure a majority, and that rather than being marginalised by being the fourth biggest group in the Parliament, in many instances we had more influence than a large group whose rapporteur represented our views while not actually agreeing with us. I think that the British Conservatives will be in a very strong position in the European Parliament. The hon. Gentleman should not speculate about who might be in the group; he should wait and see who will be in it.

I assure the hon. Gentleman that we are waiting, with great interest. However, he must bear in mind that if a group is to be formed, it must include MEPs from six other member states. We have been looking around to try to discover who they might be—as, no doubt, have others—and I must tell him that they will include some very odd people. I do not think that he would enjoy being the whip in that grouping.

Unfortunately, we were not able to address European issues in the European election campaign—partly because the expenses fiasco crowded out other debate—and one of the reasons why that disappointed me was that we wanted to discuss matters such as crime. We think there is a hugely strong case for co-operation at the European level on crime. We are witnessing the rise of international organised crime. We are experiencing drug trafficking, human trafficking and gun smuggling, the impact of technology with cybercrime and appalling things such as internet paedophile rings, and international terrorism, so it is clear that there are international sources of crime on a new and massive scale. By their very nature, we cannot, of course, deal with them by ourselves. We have to work with other countries to tackle them, and there is no better way of doing so than from within the European Union.

What worse possible route could we adopt than enlarging the European Union to bring in Croatia and Albania? Albania has human trafficking and is a centre of cocaine in Europe—it is the trade route for cocaine. Does the hon. Gentleman seriously think that bringing those countries into the EU will be of any value or use to us whatever? Is it not time he just woke up?

I am afraid it is time the hon. Gentleman woke up, because we are at present subjected to the appalling effects of that trade when we can do nothing about it as those countries are outside the EU. Trying to ensure that we can influence them by their coming into the EU is a much better way forward.

The EU is trying to push forward the crime agenda and tackle crime in many ways, such as through the European arrest warrant, which my colleague Graham Watson piloted through the European Parliament, and through Europol and Eurojust. We have had some fantastic benefits from this: extradition times have come down from 18 months to 43 days, and the costa del crime in Spain has effectively been got rid of thanks to the European arrest warrant. If colleagues doubt what I say, I can assure them that many people involved in tackling serious crime also think that this is the case. I could give many quotes, but let me give just one. Robert Lauder, regional director of the Serious Organised Crime Agency, said that

"historically, British criminals used Spain to escape justice. They found it simple to avoid the attention of UK law enforcement agencies. But the advent of the European Arrest Warrant and improved communications has made it increasingly difficult to evade UK courts."

Therefore, it is clear that if we are serious about tackling such serious crimes, we have to be in favour of European co-operation, but unfortunately the Conservatives have voted against these ideas: they voted against the European arrest warrant, Eurojust and Europol. That leaves them very exposed on this issue. There are 335 criminals who have been arrested and brought back to this country under the European arrest warrant. They include serious criminals such as murderers, rapists and paedophiles. Without the European arrest warrant, it is very likely that they would not have been brought to justice. I therefore say to the Conservative party in all seriousness that it will have to review its position. Were the Conservatives to come to power and were the Lisbon treaty to be in place and ratified, they would have choices to make, because all these measures to do with co-operation on law and order would then be subject to opt-ins. We would start afresh because this would become a new pillar. A future Conservative Government would therefore have to say whether they were going to opt back into co-operation in respect of the European arrest warrant and through Europol and Eurojust.

Let us imagine what would happen if a future Conservative Government said, "We're not going to co-operate." In that case, they would be refusing to co-operate with other European countries using these well-developed institutions and methods. That would be absurd. I look forward to having debates in the general election campaign—when it eventually comes—in order to expose the Conservatives' bizarre position, through which they are being incredibly soft on the most serious criminals in the world.

Human trafficking is a serious issue. I am a member of the all-party group on trafficking of women and children, and one issue that has come up is that young women are trafficked from other EU countries into this country quite legally and then forced into prostitution because there are not border controls for EU citizens. How would the hon. Gentleman address that problem?

Well, we can address it only by co-operating with other EU countries; I would have thought that that was self-evident.

The European Council is very important. We need to drive home on the economic agenda, and also on the climate change agenda. I hope we can find a way out of the problems that we have got ourselves into over institutional change. I hope we can use this chance to take forward a very positive agenda on Europe, which my party would support.

Several hon. Members:

rose —

Order. Before I call Mr. Bailey, I want to give notice that the time limit will have to come down if we are to give every hon. Member the opportunity to speak. Therefore, after the next speech the limit will come down to 15 minutes—and I hope that the hon. Gentleman might also try to work within that framework.

Thank you for calling me, Mr. Deputy Speaker, and let me say that I think my remarks should fall well within the available time limit. I am a member of the European Scrutiny Committee, and I should perhaps begin my remarks by conveying the apologies and regrets of its Chairman, my hon. Friend Michael Connarty, who ordinarily would have wished to have participated in the debate. Unfortunately, however, he is away on other European scrutiny business.

I do not claim to be a representative of the Committee because, as other Members will appreciate, it can be difficult to secure consensus on a body that incorporates those with a fairly pro-EU stance such as myself—I say that with due deference to my hon. Friend Ms Stuart—and those such as Mr. Cash, Mr. Heathcoat-Amory and my hon. Friend Kelvin Hopkins, whom I will not categorise, but who would fairly describe themselves as not being historically pro-Europe. We might, however, agree that the Committee has been well engaged in debates on matters to be discussed at the Council, particularly those to do with European financial regulation and supervision. It has rigorously examined the ministerial position by questioning a Minister from the other place, Lord Myners. Although Committee members do not all share the same European or other political views, I think it is fair to say that the issues have been thoroughly debated.

I have my own views, of course, and not only on broad European issues. Wearing my other hat as chair of the all-party group on building societies and financial mutuals, I also come at these matters from the perspective of a long-standing supporter of the mutual sector of the financial services industry, so I am alert to the impact that any proposals from Europe may have on such bodies.

It is important to recognise the context of the debate that will take place. It has, of course, in a sense been ongoing since the onset of the credit crunch. I think it is fair to say that our Ministers and Prime Minister have led the moves in Europe to ensure that there has been a Europe-wide response to the problems created by the credit crunch, and my right hon. Friend the Foreign Secretary outlined some of them in his opening remarks. There may be issues of concern for the Government—and, indeed, for all Members present—in the proposals for financial regulation and supervision, but our Government's track record in pursuing the interests not only of this country, but of Europe in general, has so far been fairly effective.

The proposals have developed from the original ones—the European economic recovery plan in December—to "driving economic recovery" in the March Council and now an element for debate is

"restoring and maintaining a stable and reliable financial system".

That is, obviously, at the core of my remarks.

There are two pillars to this approach. The European systemic risk council—the so-called "euro early warning system" or "macro-prudential board"—which is to be under the president of the European Central Bank, is an essential pillar. I think there is a huge degree of consensus on the need for an international body to examine and highlight any potential deficiencies in the European and international financial services industry. It was precisely the absence of such a body that allowed the problems in the American sub-prime market to continue. They were recognised long before the financial institutions and the regulators realised that what appeared to be a local problem in the United States had huge international significance that would have such a profound impact on the British economy, and the entire European economy.

The other pillar is the European system of financial supervisors. It will be made up of national supervisors, but will be overseen by three new European supervisory authorities, which would, in effect, develop European regulatory policy on supervision within the individual countries. Those proposals are due to be debated and delivered over the forthcoming year.

Will the hon. Gentleman give way?

How could I resist the entreaties of a fellow member of the European Scrutiny Committee?

I am most grateful to the hon. Gentleman. I, too, have a great interest in the mutuals; my family founded the Abbey National in the 19th century. What he has described comes out of the de Larosière report, as I pointed out in my letter to the Financial Times of 27 February. Does he accept that the structure is a legal framework from which everything else flows, and that if we were to disagree with its characteristics, it is only by asserting the supremacy of the Westminster Parliament and insisting that we legislate on our own account and require the judiciary to obey that we could get out of that situation—if indeed that was the policy of my party, or indeed his own?

Order. That was an excessively long intervention, given that we are time-limited. Perhaps the Procedure Committee might consider time limits on interventions. I call Mr. Bailey.

The hon. Gentleman potentially opens up a lengthy debate. All I can say is that these issues are properly negotiated and debated within the Council. There is a difference of opinion within the European Scrutiny Committee on whether it is necessary to have a European structure as opposed to an international structure, and whether Britain's best interests might be served in engaging with an international structure. Hon. Members will have differing approaches to that.

Given that the EU consists of 27 countries, including several of the world's major economies, and is a major economic force in terms of the eurozone, just as the City is a major financial source, I cannot believe that it is not better to combine the strengths of that bloc to represent European interests on the international forums more effectively. We have been engaging with the G20 to ensure that a world economic recovery takes place, and nobody has argued that that should preclude work undertaken at the European level with broadly the same economic objectives. I do not share the position that the hon. Gentleman outlines, but I recognise that it exists. I believe that there are global international financial movements that have to be looked at on a global scale, regional financial movements—and corporations and bodies that operate regionally—for which it is appropriate to have regional supervision, and national corporations, for which it is appropriate to have a national level of supervision.

Specific areas of concern were highlighted during the Committee's investigations, the first of which related to whether the European systemic risk council should deal with the whole of Europe and whether the way in which it is being proposed, under the presidency of the European Central Bank, was likely to mean that it focused only on the eurozone. It is clearly necessary for this particular body to deal with the whole of Europe, including countries, such as Britain, that are outside the eurozone. Another issue was whether its chair could be the president of the ECB, because in its deliberations and considerations it may have to look critically at the ECB. A clear potential conflict of interest is involved, and that issue must be addressed. The risk council should include the national regulators, and that should include the Financial Services Authority. I hope that Ministers will take up those issues and prosecute them effectively at the Council.

There will obviously be a tension between the national supervisory framework and the potential European supervision. I believe, and I know this to be the feeling of British financial institutions, that any outcome must be sensitive to the specific needs of the structure of the British financial services industry. In the past, building societies have been concerned that Britain's supervisory financial regulators have not had sufficient understanding of, or sympathy for, the mutual movement. That situation could be much worse if the balance of regulatory power moved away from this country to Europe. That is a matter of considerable concern, and it is fair to say that we expect our Ministers to prosecute that particular argument very effectively.

There are issues to address in relation to credit rating agencies. I know that our ministerial team is rather at odds with the Commission's recommendations on those. There is a serious issue associated with the credibility of credit rating agencies. The power that they have in their classifications has enormous significance for the survival of financial institutions, yet historically—this includes their role in the credit crunch—they have not been beyond criticism. Who regulates or monitors them to see just how accurate and relevant their ratings are? There is far more credibility than one might think, but I hope that the Minister will ensure that whatever model comes out of these deliberations will provide effective national accountability for organisations in this country, with particular reference to the sort of model that credit rating agencies use to assess British financial institutions. There is a need for much greater transparency and more monitoring of the outcomes of the ratings that those agencies give. Our track record in Europe in getting effective European action on the recovery is good, but the issues that I have mentioned must be vigorously addressed in the debates that will be held.

The broad thrust of the Commission's proposals is good, and the EU could play a vital role in leading the world economic recovery by re-establishing faith in the international financial system, but we must ensure that the proposals that we adopt are sensitive to the needs of the British financial services industry. The City is a major world financial centre, and the potential consequences of getting it wrong are serious indeed. We need a regulatory and supervisory structure that recognises not only the strength of the financial services sector but the diversity of provision within it.

These debates can on occasion become ritualistic, but today's has real significance because it takes place against a background of announced constitutional change. The European issue is, at root, a constitutional question. It is about where power resides, who exercises it and whether it is controlled and accountable. The Prime Minister has picked up the question of constitutional renewal as a possible way to save his Administration. The Labour Government have noticed that they are almost more unpopular than any other Government in history, but instead of changing the Prime Minister or the Government, they have hit on the idea of changing the constitution. We do not yet know what form that will take—whether it will be rigging the voting system or a genuine attempt to reconnect Parliament and the Government with the people.

Last week's statement by the Prime Minister contained little new, but I can at least agree with the aims of transparency, accountability and devolution. It is the devolution of power that interests me especially. The Prime Minister said that

"there is the devolution of power and the engagement of people themselves in their local communities."—[ Hansard, 10 June 2009; Vol. 493, c. 798.]

I do not think that there is, but clearly there should be. The only problem is that we have heard all this before, two years ago, when the Prime Minister first took office. He said then that he wanted

"a new British constitutional settlement that entrusts more power to Parliament and the British people."

He went on to announce a lot of gimmicky ideas about citizens juries and what he called a new community right to call for action—we never heard anything more about that. He also said:

"The right of all the British people to have their voice heard is fundamental to our democracy". —[ Hansard, 3 July 2007; Vol. 462, c. 815-18.]

Almost in the same breath, he denied the British people a vote on the Lisbon treaty, in an almost immediate contradiction between what he said and what he did.

I agree with the right hon. Gentleman that this is all about power, but power is about more than elections and institutions. It is about who controls the economy, and economic power is fundamental in the modern world. Does he agree that retaining power over our economy is fundamental to retaining democratic power in Britain?

I entirely agree with the hon. Gentleman who has an honourable history of standing up for economic self-government. I have always thought it bizarre that a left-wing party should contemplate handing over power to bankers who are not even in this country. The Government wanted a conclave of bankers meeting in private in Frankfurt to control the British economy. That is temporarily off the agenda, although it is—bizarrely—still official Labour party policy to join the euro, when economic conditions allow. I do not know when that might be, but we would be in real economic trouble if we had joined the euro. We would be being crucified by a high exchange rate that we could do nothing about. We need only look at the Republic of Ireland to realise what we are, luckily, missing.

The concept of devolution of power downwards is completely contradicted by the Government's European policy. Instead of devolving power away from political elites downwards to Parliament and people, the Government's European policy would transfer power upwards, away from this place and the people whom we represent, to the most remote and centralised bureaucracy of all—the European Union. This is a continuous dynamic process.

Like Mr. Bailey, to whom I listened with great care, I am a member of the European Scrutiny Committee. Every week, we deal with dozens of proposals to make that transfer of power. New draft directives, regulations and decisions about defence and foreign policy all come to our Committee and there is nothing that we can do to stop them. All we can do is to try to ensure that they conform to the legal powers in the treaty—the Commission is always trying to get round those powers and take more decision-making to itself. We can also recommend some proposals for debate, and some 5 per cent. are eventually debated in Committee. Again, those Committees can do nothing to stop or amend the proposals, and nor can Ministers, because they have been agreed by majority voting.

I would love to invite hon. Members to come to watch us trying to make sense of the blizzard of European proposals, but it is forbidden for them to attend our Committee. We meet behind closed doors, in private, which again contradicts what the Prime Minister said about openness and transparency. It is all talk: in practice, there is no transparency or openness. The Government are afraid of allowing anyone else to see how powerless we are.

Is my right hon. Friend aware that in a recent opinion poll 72 per cent. of the British public believed that Britain should break European rules if that is thought to be in the national interest? Does he not find that very interesting?

I do indeed. Frustration is building up, which was demonstrated in the recent European election results. People are either indifferent or hostile. The more powers that the European Parliament gets, the fewer people vote for it. In each and every treaty change since the founding of what was then called the common market, the European Parliament has been given more powers, but in each and every direct election since 1979, the average turnout has fallen. When people vote, they vote for rejectionist parties or extremist parties. We have to listen to that and do something about it.

The hon. Member for West Bromwich, West described at some length the transfer of powers in the area of financial regulation and I have an example to discuss further. During the passage of the Bank of England Act 1998, the Opposition criticised the fact that the regulation of banks and financial institutions would fall between the triangle of the Treasury, the Bank of England and the Financial Services Authority. We were told at the time that we need not worry, because there was something called a memorandum of understanding that would sort everything out. Well, the credit crunch arrived and nobody could find the memorandum of understanding. Profound and urgent reform is needed to sort out exactly who makes the rules, who enforces them and where the lines of accountability lie.

However, the EU has another idea, which is to transfer the process to the EU. That will create more confusion, because a similar problem will arise. The Commission wants to control and regulate and so does the Council of Ministers—and we also have the European Central Bank. Instead of a triangle of confusion, we will have a hexagon of confusion. Instead of reforming and changing our system for the benefit of the City of London, we will transfer the whole process to a jurisdiction that we do not control.

The Government do not want that. The Committee of which I, my hon. Friend Mr. Cash and the hon. Member for West Bromwich, West are members has taken evidence from Treasury Ministers and they resist the transfer of power upwards, although there is of course very little that they can do about it. Indeed, we had confirmation of that in a letter that we received last week from the Minister who was responsible for such matters in the Department of Business, Enterprise and Regulatory Reform. He admitted that he objected to the setting-up of the new regulatory committees as it would

"undermine the independence of the committees."

He said that there would be no check on whether or on how future committees could be set up without any national agreement and confirmed that the proposal had been adopted by the European Parliament, which does not say much for the influence that the governing party is supposed to have through the European Parliament. He also said that that

"the UK will vote against" the proposal.

The only problem with that is that that is all decided by majority voting. We have a situation in which the Government and Parliament do not want something, but it is to be forced on us. The European Union is an organisation to which we pay a net sum of £6 billion a year, during a recession. We are being told what to do by an organisation that we fund. Am I alone in finding that rather bizarre? I do not think that I am, because that is the clear outcome of the European Parliament elections. People do not want this, they do not like it and something has to be done about it. It makes nonsense of talk about the devolution of power when we progressively transfer power from this House upwards.

That is not just the case in financial services regulation. It also applies in other policy areas, such as immigration and asylum policy. We are losing control. The details of residency rights, access to benefits and of whether and according to what conditions we can kick people out if they have a criminal record are not decided here. They are decided by the European Union by majority voting. Of course, that plays straight into the hands of the extremist parties.

A stitch-up between the main political parties in a Parliament—who pretend that they can change things when they cannot, because the decisions are rooted and entrenched in European directives that can be changed only when the Commission proposes it—hands an enormous argument to the British National party and other extremist organisations. That happened in the recent elections. The sad truth is that this Parliament is no longer self-governing in a range of policy matters and the public have discovered that.

Quite apart from the rise of the BNP, which I greatly regret, anyone who has an atom of democratic sensibility in them must realise that the recent elections send a message not simply to my party but to the Government. What are the Government doing about it? First, let me say what we are doing. My hon. Friend Mr. Francois, who is now on the Front Bench, has a plan at least to tackle the question of powerlessness in the European Parliament. Instead of a fake division between the Socialist group and the European People's party, both of which agree on more powers for Europe and want to transfer powers away from national Parliaments to the European Union, for the first time we will have a right-of-centre grouping that gives people a choice between whether they want more or less Europe. That, of course, terrifies the European Parliament. The last thing that it wants is people to make realistic choices about the direction in which they want Europe to go.

Our second policy is to repatriate social and employment policy. There is no provision in the treaty for doing that, of course—it is a one-way valve—but we will get some powers back. I call that proper devolution. I call it giving substance to what the Prime Minister merely talks about. I wish my hon. Friend the Member for Rayleigh well and I have great confidence in his ability to do that. It will not be easy, but he has behind him in this endeavour, demonstrably, the majority of the British people.

A European Council is coming up at the end of the week. We do not know in detail what will be discussed, but I have a fairly good idea because I have a copy of the conclusions. Hon. Members might innocently think that Heads of Government arrive at the Council meetings, discuss matters, decide and then tell the world what they have done. It is not like that at all. It is all decided beforehand. I have with me a copy of the conclusions, obtained from a Danish Parliament website. The Government talk about openness and transparency, but I had to go to a website abroad to get the conclusions. They contain pages of stuff about economic and financial regulation that goes much further than what the Foreign Secretary was talking about earlier.

The conclusions contain absolutely nothing about the lessons to be learned from the European Parliament elections—the disconnection between the rulers of Europe and the ruled. The only thing that they address, I am afraid, is how further to bully the Irish electorate in the forthcoming second referendum, if and when it is held.

I am grateful to the right hon. Gentleman for giving way, not least because I had to miss the beginning of his speech; I had hoped to be here for it. Do not the draft conclusions—their publication is quite normal practice in many international negotiations, but never mind that—reflect the fact that in the European parliamentary elections the Eurosceptic parties did not make progress in Europe as a whole? They made progress in some countries, but in many countries the parties that took the most anti-European, Europhobic or Eurosceptic line made no progress. Do not the draft conclusions reflect the general opinion throughout Europe? Is that not what should be happening?

No, that is not my reading of the results at all. Rejectionist parties made a clear advance in other member states. In this country, overwhelmingly, the majority vote was for parties that want to leave the EU altogether or that want at least to reject the treaty of Lisbon. According to the conclusions, the Council has nothing to say about that at all. It is business as usual. Let me make a suggestion to the Under-Secretary, who apparently now speaks for Europe in this House—although I welcome him to his new position, I greatly regret the fact that we do not have the Minister for Europe in the democratic House. If he wants at one stroke dramatically to show that he has learned the lessons of this disillusionment, will he keep the promise that his party and the Liberal Democrats made before they were elected to have a referendum on the Lisbon treaty?

We have a constitutional crisis in this country. It is a crisis of self-government that is undermined by the progressive transfer of powers to another jurisdiction. The Prime Minister talks about devolution, but he means the opposite. He talks about accountability, but he means or does the opposite. He talks about openness, but we have a culture of secrecy and a refusal to listen to democratic outcomes.

One problem with these European debates is that we are like two peoples speaking completely different languages—it is a dialogue between the deaf. One view, which we have just heard, is that this is somehow all a plot by the bureaucrats in Brussels. That takes no account of the fact that the real threat to democracy in the world is the unelected bankers, financiers and chief executives of multinational companies. The people of democratic countries need to find ways to co-operate, regulate and take control so as to minimise the worst effects of what those corporate individuals do.

However, there is another model. We have just had the fifth anniversary of the 2004 EU enlargement, and the conclusions of the EU Council of 5 May said that the

"enlargement was not only a historic step in unifying a long-divided Europe but also a success from an economic point of view resulting in a win-win situation for the whole EU."

If the EU is such a terrible organisation, why have 10 countries that used to be in the Soviet bloc or the regulated communist system, from the Baltic states down to Slovenia, joined it in a period of just over 10 years? Despite the fantasies of the Conservative friend President Klaus of the Czech Republic—who believes that the EU is somehow recreating the Soviet bloc in Europe—people in Poland, Estonia, Latvia, Lithuania, Hungary, the Czech Republic, Slovakia and Slovenia have come out of communism and said overwhelmingly that they wish to be part of the voluntary club that now consists of 27 nation states. They want to work co-operatively together: why is that?

There are 500 million people in the EU, and 6 billion in the world as a whole. There are more than 1 billion people in India, and in China as well. Japan has a massive economy, as has the US, so it is clear that we in Europe need to work together in world trade talks and, with the Copenhagen meeting coming up later this year, in the international negotiations on climate change. If we do not, the agendas will be set, and the conclusions written, by others. As Europeans, we have to get into the real world of the 21st century and stop pretending that we are still in the 19th century.

I thank the hon. Gentleman for giving way, and I apologise for interrupting the flow of his rhetoric, but perhaps we should get down to the reality. We need to look at the examples of the smaller countries that have applied to join Europe, which is something that the eastern European countries are now copying. Does the hon. Gentleman accept that they were attracted by economic bribes, with money being transferred from the larger countries to the smaller ones? Once those bribes dry up, the reality hits and those smaller nations realise that they are in a system that takes away their national freedoms, interferes in their affairs and imposes burdens on them.

I am grateful to the hon. Gentleman for that intervention, as it allows me to develop an argument that I was going to come to anyway. However, I did not mention another interesting phenomenon: one of the countries that is seriously considering joining the EU, despite its historic problems with fisheries, is Iceland. The newly elected Government there have recognised that, in this global world, they need the protection of a big organisation.

Iceland is one of the most extreme examples of what the crisis of unfettered and deregulated liberalisation has caused. One consequence is that the Icelandic Government recognise that they need the support of other countries, but there is a problem, and Sammy Wilson alluded to it. It is that the EU needs to get away from its obsession with the institutional agenda and think of ways that it can assist the many countries on its periphery to become members.

There is, of course, quite a lot to be discussed in that regard. One of the items on the agenda of the forthcoming Council will be a debate about the so-called eastern partnership. Unfortunately, there are signs that some of the bigger countries in the EU are growing cold on the future enlargement agenda. I think that that is very disappointing.

There is a growing queue of countries wishing to join the EU. I have mentioned Iceland already, but the others include Montenegro, Albania, Croatia, and Bosnia and Herzegovina. Earlier, the shadow Foreign Secretary referred to the difficulties that Bosnia and Herzegovina is experiencing with Republic Srpska and growing nationalism. The real danger is that, 14 years after the Dayton process, we could, through lack of attention, find ourselves with a new crisis in the heart of the Balkans. Then, of course, there is Serbia, and Turkey has had an outstanding application to join for many years.

I want to say something about the importance of the EU's future enlargement. It would be a terrible tragedy if, at this time of economic uncertainty and crisis, we started to put up barriers to the future enlargement of the EU. If we create an arc of instability in the Balkans and say, in effect, that the existing EU is full and cannot have any more member states, that would send out very bad signals for the future stability of the Balkan states. In addition, it would also send out signals to those other eastern partnership countries which, although they may not be candidates for EU membership, are nevertheless important neighbours of the EU.

I refer the House to the crisis that is developing in Moldova, and to the authoritarian and anti-democratic tendencies of President Saakashvili's Georgia. If the EU does not provide economic and political support to neighbouring areas countries—I am not talking about membership—we will find that Russia will once again try to have a hegemonic role in the region.

Russia is not a pluralistic democracy in the western European model. It sees itself very much as a country with a near-abroad, and that is an area that it will want to dominate. That is not the kind of Europe that we want, the kind that will lead to the prosperity and peace that have been developed by the EU over previous decades.

The Swedish Government are about to take over the presidency of the EU. Sweden, along with Poland, has developed the concept of the eastern partnership, and it will no doubt be trying to take that concept forward over the coming six months. I believe that we need to take seriously the Swedish and Polish initiatives on these matters, as there is a clear need for EU countries to extend their focus beyond their internal problems. We must recognise that neighbouring areas—the applicant countries in the Balkans or the partnership countries to the east—provide very important lessons. We must not allow our internal obsessions to cause us to fail to provide co-operation, assistance and help for our European neighbours.

I am listening to what the hon. Gentleman is saying with great interest, especially with regard to the western Balkans. I visited Kosovo last year, and I was struck by the impasse that exists between Kosovans and Serbians. It is hard to imagine how they will ever manage to live side by side, but the one thing that I heard from both was that existing together in the EU might offer some route to peace in the future. Does the hon. Gentleman agree that the EU has been successful in that way over the past 50 or 60 years, and that creating peace and security could be extended to the western Balkans in a very important way?

I agree absolutely with everything that the hon. Lady said. The Serbian Government have a clear foreign policy priority of integration into the European Union, but progress has been slow, and not just because of the difficulties with regard to Kosovo. The European Union Foreign Ministers have not activated the trade-related parts of Serbia's stabilisation and association agreement, following the arrest by Serbian authorities in July last year of Radovan Karadzic, the former Bosnian Serb leader. Serbian politicians of all kinds ask, "Why not?" They feel disappointed. The reason progress has been slow is that the Dutch Government, in particular, have continued to oppose the unfreezing of the SAA for as long as Ratko Mladic, the former military commander of the Bosnian Serbs, remains at large. He is one of the two remaining indictees of the International Criminal Tribunal for the Former Yugoslavia in The Hague.

There have been reports in the press recently that the issue of Mr. Mladic is resurfacing in debates and discussions, and it may be that steps will be taken to deal with that issue in the near future. Similar action was taken in Croatia a few years ago, and that accelerated the opening of the talks with the Croatian Government, but sadly there are now problems with Croatia's application for membership because of a territorial dispute to do with a bay between Slovenia and Croatia. That is causing difficulties, and is unresolved. The Czech presidency has failed in its efforts to make any progress on that issue; it will have to hand that on to Sweden, too.

In other parts of the Balkans, the situation is more positive. Montenegro submitted an application in December. On 23 April, the Council of Ministers invited the European Commission to submit a formal opinion on that, as a first step towards possible enlargement. Similarly, Albania applied in April. Let us hope that the first assessment of that application will take place in the near future, in the autumn. So there is progress in some areas, and it is important that progress continues. In a sense, if we are to resolve the problems that came out of the civil war in the former Yugoslavia, the best solution is, as Jo Swinson says, to recreate a mechanism within the European Union through which there is trade and free movement of peoples, so that borders, and historical animosities, are overcome within the context of an enlarged European Union.

The European Union is the way forward for many in Europe, but it is sad that debate in this country is dominated by an obsessive Eurosceptic media. It is absolutely the case that in the European elections, the Labour party had dreadful results, but the votes for the other main parties were also down significantly. There were different results in different European Union countries in the elections. Mr. Heathcoat-Amory gave the impression that the Eurosceptics had won everywhere in the European Parliament elections; that is not true. In some countries, the pro-European parties of the centre right had very good results. In France, an ecological, green party led by Dany Cohn-Bendit did extremely well. One cannot say that there is a generalised trend. In some countries, the percentage poll went up. In other countries, it fell drastically. The problem, I suspect, is that because there is not a general European media, in every country, the elections were reported and campaigned on in national terms.

rose—

I will give way, but I am conscious of time. I want to make one more point, and I do not get any more injury time for taking interventions.

Just a quick question: how does the hon. Gentleman square the wave of Euro-enthusiasm that he describes with the fact that the turnout was the lowest ever for European elections?

I did not say that there was a wave of Euro-enthusiasm. I said that the situation was complex, and much more sophisticated than was suggested in the impression that the right hon. Gentleman gave. Overall turnout in the European elections was 43 per cent., which is down 2 per cent. on the 2004 elections. That is disappointing, but in some countries, the percentage turnout was over 60 or 70 per cent., whereas in others it was around 20 per cent.

Will the hon. Gentleman give way?

No. I cannot give way any more. The reality of the situation in the European Union elections was complicated, and different in different countries. It is, after all, a 27-country organisation. It is sad that people are trying to write a narrative based on selective quotation of data from different parts of the world.

I will conclude with a point on the UK results. I am pleased to say that in London, we resoundingly rejected the Nazi British National party. It did not get anybody elected. In my constituency and other constituencies in east London, there was a significant reduction in the share of the vote for the far-right party. In Barking and Dagenham, where the BNP has 12 or 13 councillors, its share of the vote was significantly down. That indicates that where people were prepared to go out and put the arguments, that made an impact. That does not in any way minimise the fact that, to our shame, we in this country have elected, in areas where the turnout went down significantly—Lancashire and Yorkshire—people who stand for small, unrepresentative groups. In a proportional representation list system, when there is a low turnout, such groups are always liable to get people elected. That is why, if we are to have constitutional change—this comes back to the point made by the right hon. Member for Wells about such change—and if we bring in different electoral systems, we have to keep the link between the Member of Parliament and the constituency. We must have a system that does not provide for a top-up list for extremist parties that cherry-pick issues and are not capable of being elected in any single constituency.

I always find these debates fascinating. I see that the Annunciator says "European Affairs", but these debates are usually about the European Union. I still have an atlas that has Norway, Switzerland and Russia in Europe, so this is not wholly a debate about the European Union, and I want to speak on a different subject. I have the pleasure and the privilege of leading the Conservative delegation to the Parliamentary Assembly of the Council of Europe. There is a team of 11 of us, and as I said earlier, our group is separate from the European People's party. I rather think that we do a good job in that guise.

I want to speak because I believe that the Council of Europe matters. It is the oldest of the pan-European institutions, and it still has a real role with regard to democracy, human rights and the rule of law. It has done important work, and it still has more important work to do. In and among the work that it has done, there are some major and important successes for the continent of Europe. The most notable of all, and one that most people know a little bit about, is the European Court of Human Rights, although I keep being told that it belongs to the European Union. Nevertheless, there is something that the public recognise of the work that we do. Sadly, people do not know much else about it. People do not understand very much about why the Council of Europe is important.

Even more sadly, as I view it, all is not well with the Council of Europe. That is what prompted me to speak, and what I want to speak about. I urge this Government, and the next Government, to take the matter seriously, and to do their level best to make sure that things are put right. I fear that the Council of Europe has lost its way. It seems to wander ever further across subjects that are not its core business, and ever further across the globe. Of course, any organisation that believes in democracy wants to spread it, but we are talking about a Council of Europe, not a mini-United Nations. There is work to be done there.

Even more importantly, the Council of Europe, the oldest pan-European institution, the originator of the flag which has been hijacked by the European Union, is being upstaged—

And the anthem.

My hon. Friend mentions the anthem as well.

The Council of Europe is being upstaged by the European Union and the European Parliament. Vast sums of money are being spent on duplication of the human rights work done by the Council of Europe. We have this great institution of human rights, which the European Union is claiming for itself, and huge sums are being put into duplicating the work of spreading democracy. Since that is the core work of the Council of Europe, all donations—I shall come to finances in a moment—would be gratefully received. If the European Parliament and the European Union have money to spare, they might like to give it to the Council of Europe to do the work that it was set up to do and continues to do so well.

My next concern is the funding issue, which the British Government and all other Governments seem to have got stuck into. The budget has been cut year on year, while the cost of the European Court of Human Rights has gone up and up. As a result of underfunding, money has had to be diverted away from the other core work of the Council of Europe to fund the European Court of Human Rights. It is crucial that the administration of the Court and its logjam of casework is sorted out.

The third aspect of the Council of Europe that concerns me is the current internal wrangle as the Council plays politics with itself. If my hon. Friend Mr. Walter catches your eye, Mr. Deputy Speaker, I know he will elaborate on that, so I shall not bore the House with the details. The dispute is about how to appoint the next secretary-general, which has to be done this year. All I will say—I hope the Government will be able to respond to this—is that the work of trying to appoint a new secretary-general has been badly handled by both sides.

I have some sympathy with what the Committee of Ministers is seeking to do. Among those pushing that agenda have been the British Government. I understand only too well what is being attempted, but if I may say so as gently as possible, the way in which the Committee of Ministers of the Council of Europe has set about it is not very clever. That is where the row started. On the other hand, the Parliamentary Assembly has allowed itself to be confused between principles and personalities.

I have to go to an emergency meeting in Brussels on Thursday to talk to Ministers and see whether we can sort out the problem. I fear that we will not be able to do so, and that at the part-session in June there will be deadlock. I plead with the Government. After that has happened, as I fear it will—I do not see how we can stop it—some cool heads need to settle down and find a way out.

As I said a moment ago, I still believe that the Council of Europe matters. It matters to the new democracies that came out of the Soviet Union and elsewhere and are trying to set up a pluralist democracy, which we want to help them to do. The Council of Europe plays a big role in that.

I have mentioned the European Court of Human Rights. It is almost self-evident that the Council of Europe has an ongoing job in protecting human rights throughout Europe, and it does a great deal of work, often unseen and certainly unsung, trying to help countries that have come out of a different type of regime where the rule of law does not mean very much. We try our level best to help people get rid of the corrupt legal system that they have and to establish a legal system that we would be proud of. That is important work and it still matters.

The Council of Europe is still the only efficient, effective pan-European forum. Jest has been made of Iceland's bankruptcy. I have mentioned Norway and Switzerland. They are there already. They are part of that forum. Mention has been made of countries in the Balkans wanting to join the European Union. They are there already, and those are the sort of countries that we help. Mention has been made of Turkey. It is a major player in the Council of Europe. To the best of my knowledge, mention has not been made of the Caucasus and beyond, but those countries are there. Above all else to me—the Liberal spokesman mentioned that I have some connections with United Russia—the Russians are there. I could, if time allowed me, say a great deal about our relationship. In saying "our relationship", I am talking about British parliamentarians, not just the Conservative relationship with the Russians.

There is a choice to be made when we deal with people whose democracy is far from perfect, whose rule of law leaves a lot to be desired and whose human rights record is bad. We can cast them into the outer darkness and say, "You're awful. We don't want anything to do with you," or we can say "If people are asking for help, yes, we will help." There is one school of thought in Russia that wants to go it alone to build a Russian sphere of influence in the world, and there are those who say, "The best way to improve Russian democracy and the rule of law in our country is to integrate into the continent of Europe." I make no apologies for trying to help those Russians who want to do that, because that is the best way I can think of to share the values that we take for granted.

The Council of Europe has a further important role in conflict prevention. I know that we had a spectacular failure in conflict prevention because the Russians and the Georgians went to war together. Nevertheless, there are lessons to be learned from that, and there are lessons that we can apply to places such as Nagorno-Karabakh, because Armenia and Azerbaijan are both members of the Council of Europe, and incidentally, both are members of the group that I lead. We can do something, I hope, about Transnistria, because the Moldovans, Ukrainians, Russians and Romanians are all members of the Council of Europe.

The most important thing about the Council of Europe at present is the human rights commissioner. I was in New York not long ago, where I was talking about the Russian-Georgian conflict. The message that I got from the United Nations was that of all the things that have happened to try to sort out that dreadful mess, one stood out above all else: the human rights commissioner of the Council of Europe was somebody on the world stage who the United Nations thought was doing a magnificent job, and with whom it wanted to work more closely.

So we do matter. We do have a job to do, and we must take care of that. If we have problems and this Government and the next Government want to help, may I suggest a few things that they might like to consider? They might like to consider helping us build a higher profile for the Council of Europe, which is what the row about the secretary-general comes down to. If we have a higher profile, we will be taken more seriously and we will do more good. They could help us have a clearer focus, sort out what is core business and sort out the real geography of what we should be doing.

The Government could help us try to organise a new settlement between the Committee of Ministers and the Parliamentary Assembly, which is what has, in many ways, given rise to the ongoing political infighting that I mentioned. They could help us stand against the ever-increasing encroachment of the European Union. They could help us get them to take their tanks off our lawn and let us do what we are good at, and we will withdraw from the things that we are trying to do which we could safely leave to the European Union to get on with. They could help us by providing sensible funding. This is not a pitch for vastly more money. If only the problems with the European Court of Human Rights could be sorted out, the budget would look so much better for the rest of us.

We have problems. We have done a great deal. All I would say to the Government, and to my hon. Friend Mr. Francois when he becomes the Minister in due course, is please, please do not let the Council of Europe wither on the vine.

It is a matter of great regret to me that the Government's policy can best be characterised as "no compromise with the electorate." Irrespective of whether we agree with the results of the recent European elections, we are beholden to pay some attention to them. It might very well be okay for the Foreign and Commonwealth Office to take the view that the people have let down the Government, but it is not appropriate for an elected Government to take that view. As the Foreign Secretary was outlining the Government's policy on the forthcoming European Council, it struck me that not a single word, jot or comma had been changed as a result of the European elections. Not the slightest attention had been paid to those results, and that is a cause for considerable concern.

The party that secured the most votes would generally be seen by the public to be Eurosceptic, and the party that got the second highest number of votes would generally be seen to be "withdrawalist". The Government were characterised in Europe by two things: first, that they were enthusiastically in favour of ever-greater union; and, secondly, that, having promised a referendum and then refused to provide one, they were damned by it. The party that is most enthusiastically in favour of the European project, the Liberals, came quite a bad fourth. That balance of voting was not just simply an act of God, random or due to the expenses scandal; it represented a clear pattern of political opinion in the United Kingdom.

My hon. Friend draws attention to the political pattern in the United Kingdom. What conclusion would he care to draw, therefore, from the results in Scotland, where the party that came first was, of course, the Scottish National party, which I would not describe as Eurosceptic? The Labour party came second, the Liberal Democrats vied with the Tories down below and the Green party, which is generally pro-European, did better than the UK Independence party. So what conclusions would any analysis of the Scottish results draw?

I would certainly draw on one point, because I remember that the Scottish National party was in fact in favour of a referendum on the European constitution. The SNP also had the great advantage of not being us in those elections, and that was undoubtedly helpful to it. In my constituency, it was noticeable that, such was the support for European integration, the Liberals were beaten not only by ourselves, and the nationalists, and the Conservatives, and UKIP, and the Greens, and the British National party— [ Laughter. ] The Liberals did, however, fly the flag for their position—the kamikaze approach to politics—and it had the merit of honesty if not of sense.

From the election results, it is perfectly clear that being associated with ever-closer union is toxic, and I should have thought that the Government would want to take that into account. We might deplore the results of democratic elections, but we must recognise them and take account of what people are actually saying to us.

For me, the only bright moment in the whole European election debacle was when I heard that the Minister for Europe had resigned. I thought that she had taken responsibility for the result but no, it was unfortunately not to be. She certainly wanted to remove herself from the ministry of Europe but, regrettably, she was not going to be moved in the direction that she wished. When I heard that the Foreign Secretary had been thinking of resigning, I thought that he had wished to take responsibility for the European election results, but apparently not. He quite rightly thought that other people should share the blame.

The important thing about not paying attention to the election results, however, is that it undermines completely the Government's initiative on democratic renewal. All the stuff that we are told about how Parliament is going to refresh itself to gain public support is completely undermined and treated with absolute and utter abject cynicism if the public so clearly express a view on a major subject, as they have, and we then pay absolutely and utterly no attention to it.

The Government's commitment to democratic renewal will not be taken seriously unless we revisit the question of a referendum, which we promised, on the European constitution. When is a constitution not a constitution? When it is a scam. Everyone believes that the constitution is no longer called the constitution simply to get around the democratic roadblock that was placed in its path by the decisions initially of the French electorate and then of the Dutch electorate. When politics is dealt with so cynically, it undermines any support for the Government's European policy and their credibility on democratic renewal issues.

When the constitution, and then the Lisbon treaty, progressed through Parliament, we were told that change was not possible, that no amendment was possible and that no qualifications were possible. Now, however, we find that, for the Irish, changes, qualifications and amendments are all possible in order to persuade them to vote "for". The assumption is, quite clearly, that the Irish were too stupid the first time around to do what they were told and therefore, have to do it again.

Will the Government clarify how they intend to pursue the question of Irish renegotiation? Will the Irish be given legally binding commitments? If they are legally binding, the issue will have to come back to the House, because such commitments would either change the whole nature of the previous treaty or require a new treaty to which we will be obliged to give assent. If, on the other hand, the commitments are not binding, they will be absolutely and utterly worthless and would, I predict, be eroded over time by the ever-growing centralisation of the European Union. I want the Government to clarify their position on the matter. Are they prepared to offer the Irish legally binding commitments, or are they simply trying to help the Irish Government fudge the position with their own people, so that they can persuade them to undo what they previously did?

On Britain's financial position, I heard with great interest that, apart from in a couple of areas of the Budget, the main Opposition party would make a 10 per cent. reduction in all headings. However, I seek clarification about whether it, in government, or the current Government, will seek to renegotiate our financial contribution towards the European Union. The Public Accounts Committee has agreed a report spelling out yet again how the EU's accounts have failed to be properly audited and passed, and such extravagance is not justifiable or supportable in the present economic circumstances. I therefore hope that the British Government will, as a matter of urgency, seek to reduce considerably our contribution to the EU. I support some solidarity payments but, in a time of austerity, can see no justification for such extravagant expenditure as that which the EU undertakes in many areas of its economy.

To reinforce my hon. Friend's points, I should say that recent estimates of the total misappropriation of common agricultural policy money vary at between 30 and 50 per cent. of the entire fund.

I am always glad to have my points reinforced. It is perfectly clear that the level of extravagance in the European Union at present is not justifiable.

Finally, I want to pursue the question of the Opposition's position on the referendum. I was not satisfied by the response given to me by Mr. Hague, who spoke on behalf of the Conservative party. I genuinely do not understand what the Conservative party intends to do. I do not accept that it will inevitably form the next Government, but if it does, and if the treaty has been ratified, will it hold a referendum or will it not?

The issue is of particular importance because there are substantial numbers of UKIP voters in my constituency, as there are in many other constituencies. I have discussed the matter with them; many said that they voted UKIP in the European elections but that they will vote for the Conservatives in the general election because they think that they will give them a referendum. I do not believe that that is necessarily true.

Is not my hon. Friend being untypically charitable to the Conservative party? Given the number of times that the shadow Foreign Secretary was asked the question and dodged it, is it not patently clear that there is no such intention and that there is no possibility whatever of a future Conservative Government, if there were to be one, holding a referendum if the treaty had been ratified?

As my hon. Friend knows, I am much more charitable than he is on almost all issues, so I am inclined to give the Conservatives the benefit of the doubt until there is confirmation to the contrary. The issue is still unclear. What do I tell UKIP voters in my constituency?

There are only two of them.

There are more than two of them; in fact, there are more UKIP voters than Liberal Democrat voters. Did I mention earlier that the Labour party, the nationalists, the Conservatives, the Greens, UKIP and the BNP came ahead of the Liberals in my constituency? That shows how much Eurofanaticism there is there.

Let us be clear. What exactly is the Conservative policy? Perhaps I am not as charitable as my hon. Friend thought, because my view is that the Conservatives cannot be trusted on the question of a referendum. In my view, anybody who believes that the Conservatives will hold a referendum on the European constitution/Lisbon treaty if they win the general election is deluding himself.

I look to Mr. Francois, who is summing up for the Conservatives, to make his party's position clear. This far out, people are entitled to know. If the Conservatives said that they would do one thing if the treaty was ratified and another if it was not, that would be fair enough. Let them be open and honest and spell out exactly what they intend to do. Otherwise, it will be a case of, "You can't trust the Tories on Europe."

I do not propose to say much about the European Union, although I want to talk about European affairs. However, I cannot help reflecting on the statistics just cited by Mr. Davidson, and by Mike Gapes earlier, about some of the votes in the European parliamentary elections. The hon. Member for Ilford, South told us that the Greens did well in France; in my constituency they got two and a half times the vote of the Labour party.

The Labour party, unfortunately—or fortunately—has been completely routed in the south-west, and has no Member of the European Parliament there. I hope that that bodes well for the forthcoming general election. There are now no Labour county councillors in my county of Dorset, despite the fact that Labour still holds a parliamentary seat in South Dorset.

And so we shall in future.

I am interested to hear the hon. Gentleman's view on that.

Today I want to deal with a question of democracy in Europe: the denial by Governments of well-established principles of democracy in the Council of Europe. Her Majesty's Government are not only complicit in that denial, but are a leading advocate of it. I should give a little background. Mr. Terry Davis, a former Member of this House, has been the secretary-general of the Council of Europe for some time. Before that he was a member of the Parliamentary Assembly of the Council of Europe; in fact, he was the leader of the socialist group there.

We are in the process of seeking a replacement for Mr. Davis. The person replacing him will be elected by Parliamentary Assembly members, who are Members of Parliament from the 47 member states of the Council of Europe. In the same way, judges at the European Court of Human Rights are democratically elected by parliamentarians from across Europe.

Some would say that as the secretary-general for the past five years has been a socialist, it is now time for someone from the centre right to have a go at the job. However, I do not want to portray the issue in a party political manner, because the election, which is due next Tuesday in Strasbourg, will involve a vote on the nomination by the Committee of Ministers' Deputies, who are the ambassadors. The committee has given the Assembly a list of two to choose from, and I shall come back to those two in a moment.

What is at stake next week is the very position and credibility of the Parliamentary Assembly, and that debate has nothing to do with individual candidates for the post. In a strictly legal sense, the regulations for the election were drawn up in 1956. As long as they are not formally changed by agreement between the Committee of Ministers' Deputies and the Parliamentary Assembly, only those regulations are valid. Until today, the Committee of Ministers' Deputies had not proposed to review the criteria applicable to candidates for the post of secretary-general. The long-standing practice, in force for more than 50 years, has involved co-operation, consensus and consultation between those two important pillars of the Council of Europe.

However, on this occasion the Committee of Ministers' Deputies did not respect the existing procedure and rules as it had in all previous elections for the post of secretary-general. In all the previous elections, all the candidates nominated to the Committee of Ministers' Deputies were forwarded to the Assembly for it to deliberate and vote on. Our diplomats—for they are the people who normally sit on the Committee of Ministers' Deputies—have created a problem by coming up with a draft opinion on a shortlist of two candidates, instead of the four who were nominated. They did so because they believed that they were solving a problem, created by their Governments and by the Assembly, which endorsed the so-called Juncker report in 2005.

I stress that the Juncker report, drawn up by the long-serving Prime Minister of Luxembourg, Jean-Claude Juncker, with its 15 proposals, is an excellent document—but it is not the law. Among much else, the report contained the wish that the next secretary-general should be a high-ranking figure in European political life. The diplomats therefore advised their Ministers to present a list of two candidates to the Assembly next week, because, in the opinion of the ambassadors, those candidates meet the so-called Juncker criteria. The ambassadors would have preferred more candidates under those criteria, but unfortunately Mr. Blair became special envoy to the middle east, Mr. Rasmussen went to NATO, Mr. Putin became Prime Minister of Russia, and Mrs. Merkel, Mr. Sarkozy and Mr. Berlusconi were unavailable. Our own Prime Minister might become available, but probably not before September.

The ambassadors' list therefore became a very short shortlist. They then created a huge problem by not accepting the candidacy of two other applicants, both of whom happen to be members of the Parliamentary Assembly, as well as the leaders of two of the larger political groups in the Assembly: the European People's party—the Christian democrats—and the Liberal group. Incidentally, they both meet the Juncker criteria, as they have been Ministers and are certainly notable figures. The ambassadors also forgot that the rules are clear that the Parliamentary Assembly has to be consulted before a decision is made on a list of candidates. In April, my hon. Friend Mr. Greenway produced a report for the Parliamentary Assembly that provides complete clarity on the issue; I congratulate him on that. However, the Ministers cannot pick and choose from the Juncker proposals; they must respect the rules and procedures.

At their meeting in October 2008 the Ministers' deputies—that is, the ambassadors—decided that candidates should comply with the criteria set out by the Ministers in 2007. The key point of the criteria is that candidates should have previously served as a Head of State or Government, or have held senior ministerial office or similar status relevant to the post. On that basis, candidates applied and were invited for interviews, and the four candidates apparently fulfilled the criteria. After the closing date for the receipt of nominations, and following a series of votes, the Ministers' deputies changed the procedure and the criteria to a more restrictive interpretation. For ambassadors involved in what is essentially a democratic procedure, that is unprecedented. The Foreign Ministers of member states apparently made a decision, and their deputies decided that they would accept as candidates only former Heads of State or Government. The Ministers' deputies decided to establish different criteria after the closing date for the receipt of nominations.

It must also be emphasised, with great regret, that the Ministers' deputies never considered it appropriate to consult the Assembly before making their decisions. In the past, all regulations relating to the appointment of the secretary-general were adopted by the Committee of Ministers, with the agreement of the Assembly, yet the Committee of Ministers now took a decision prior to any consultation with the Assembly. The Ministers' deputies—the fonctionnaires, or civil servants—moved the goalposts while the game was under way. If they want to apply other criteria and another procedure, that must be done in co-operation with the Assembly, and prior to the opening of the election procedure. They failed to do that.

In effect, this is an institutional coup d'état and an unacceptable limitation of the prerogatives and competences of the Assembly and its parliamentary representatives, all of whom have been democratically elected. This is a test case and a precedent for the Assembly—the parliamentary guardians of democracy and human rights in Europe—regarding one of its most important prerogatives: the election of the highest officials of the Council of Europe. Members of Parliament from across Europe are now unified on this principle, yet the weight of all future elections, including the election of judges, could, if we are not vigilant, shift to the officials, to the Committee of Ministers and to the Executive.

This debate is about the principle of parliamentary democracy. It is about the balance of power between Executives and Parliaments. In many countries across Europe, that battle goes back over several hundred years; in some younger democracies, it is as recent as 20 years ago. It is about the balance of power between the Executive and Parliament: in this case, between the Committee of Ministers and the Parliamentary Assembly. We must remind the Foreign Secretary and his representative on the Committee of Ministers that they represent national Governments: they are ambassadors, functionaries, advisers. They advise the very same Governments whom we collectively, as parliamentarians across Europe, authorise and oversee in our daily work.

The democratic legitimacy of the Council of Europe Assembly is beyond question, but I question the procedure in this process. First, it is normal practice for the Committee of Ministers to look at all candidates and forward the list to the Parliamentary Assembly. In this situation, therefore, had the Committee of Ministers followed custom and practice, the names of all four candidates would have been submitted to the Parliamentary Assembly.

Secondly, the Committee of Ministers normally acts by consensus. I can count on the fingers of one hand the number of occasions on which it has taken a vote in the last five years—so why on this occasion, unless it was looking for confrontation, did it decide to use the voting procedure? Why not use the normal consensual procedure to arrive at an opinion which could have been forwarded to the Assembly, and which we would have respected?

Thirdly, I believe that this is a cynical attempt by the Committee of Ministers to prejudge the decision of Members of Parliament. It has submitted two candidates. One is clearly its favourite; the other, although he meets the Juncker criteria, is probably unacceptable to the Assembly. It has therefore decided already and ensured that we in the Assembly have no decision to take on the election. I believe that the rejection of two candidates from the Parliamentary Assembly is a blatant attempt by the Committee of Ministers to shift the balance of power from elected parliamentarians to appointed ambassadors. Custom and practice say that they should have sent us all four candidates. We may well eventually choose their preferred candidate—he is the Speaker of the Norwegian Parliament and a former Prime Minister—but that is up to us to decide. We in the Assembly are the guardians of democracy in Europe.

The Government should take note of this: in April the Assembly voted by 158 votes to one to reject the procedure adopted by the Committee of Ministers. If that had been a vote in this House—and therefore a resounding rejection of a Government position—Ministers would have had to think again, but the functionaries and the Committee of Ministers' Deputies battle on with their established position. I hope that the Minister will tell the House that he will now endorse the proposal that the Committee of Ministers, when it meets the Parliamentary Assembly on Thursday, should present the Assembly with a list of all four candidates on which the Committee can indicate its preference, as foreseen in the rules. Anything else will be a negation of the very principles of democracy on which the Council of Europe is built.

One of the issues that will be high up the agenda for the meeting at the end of this week will be climate change. All the parties represented in the Chamber recognise the importance of tackling climate change. The evidence is mounting that even previous projections for the rate at which global warming was taking place have been on the low side. Much depends on the possibility of the world's agreeing a comprehensive climate change treaty at Copenhagen later this year. It is fair to say that if that agreement is not reached, we are almost certainly beyond many of the famous tipping points after which damage from climate change will be irreversible.

We all know that reaching a climate change agreement at Copenhagen will be extremely difficult. Notwithstanding the commitment of the Obama Administration, there are signs that there will be difficulties in getting a comprehensive agreement through the US Congress. Other major industrialised states have not yet come forward with an indication that they are prepared to sign up to a comprehensive agreement. For example, the position of the Japanese Government, which was revealed only a week or so ago, is extremely disappointing; and other Governments still have a long way to go.

The role of the European Union in getting a global climate change agreement is extremely important: first, because the EU has to agree to its own domestic policies on climate change in order to show that it is serious about tackling emissions; and secondly, because the EU has a crucial role to play in developing a global agreement on providing finance for climate change mitigation and adaptation in developing countries. Those are the two essential characteristics of any EU position.

If the EU does not agree ambitious climate change targets, other countries are less likely to follow our lead. Similarly, it is widely recognised that if we are to get developing countries to agree to a comprehensive agreement on climate change, they will expect financial compensation and assistance to allow them to adapt to climate change and mitigate its effects. They rightly say that they are not prepared to make commitments on emissions limits if countries such as our own, which have benefited from a period with no limits, are allowed to get away with not providing anything towards the costs of helping countries that have not previously enjoyed economic growth.

Those are the essential building blocks of any international agreement on climate change. It is therefore essential that the EU agrees a clear and comprehensive position and takes it forward to the negotiations leading up to Copenhagen. Unfortunately, the signs are that so far there have been difficulties, to put it mildly, in getting a European agreement on the type and scale of finance that is required for climate change adaptation and mitigation in developing countries. For example, Finance Ministers were unable to reach agreement on a number of occasions and have effectively kicked the decision into touch for the Council of Ministers to discuss this weekend.

There are now suggestions that an agreement will not be reached this weekend but will be left for the Swedish presidency to deal with at a later stage. It is widely recognised, of course, that for all sorts of reasons the Czech presidency was unable to take forward the negotiations necessary to reach an agreement on a European position. I strongly urge the Government not to allow this weekend's discussions to finish without an agreement on finance for developing countries for adaptation to, and mitigation of, climate change. It would not be right to leave the matter to negotiations in the next few months under the Swedish presidency, as that would send a bad signal to the rest of the world about the EU's willingness and ability to enter into a widespread and comprehensive agreement on climate change later this year.

Does the hon. Gentleman agree that it is not just a question of sending a bad signal to other countries? Actually, time is running out. Although the Copenhagen conference does not take place until December, many pre-negotiations will take place in the months leading up to it. If Europe does not agree this coming weekend a firm, good, robust negotiating position that will work for developing countries, there will not be time in those pre-negotiations to get the deal that we so badly need at Copenhagen.

I agree that there is a real risk of that situation developing. That is why it is essential that we get an agreement this weekend, and I hope that the British Government will make that one of the themes of the discussions. I hope that the summit will not be allowed to conclude until an agreement has been reached, even if it means going through from Thursday to Sunday or Monday next week. The summit will not be regarded as a success in the run-up to the climate change negotiations if anything other than the most minor details of an agreement are left to future discussions and meetings. It is essential that that point be made in the run-up to the Council.

I wish to refer briefly to two other matters of European policy on climate change that came up earlier in the debate. The first is the common fisheries policy. We have heard repeated in today's debate—by some of those who, although they do not like being called Eurosceptics, tend to fall into that category—the view that the policy is basically a bad thing because it prevents member states from fishing as much as they want to. When it comes to climate change, however, there is evidence that over-fishing is one factor that leads to acidification of the ocean. There have been announcements and scientific findings about that in the past couple of weeks. We must recognise that we have to control fishing and prevent over-fishing. That is one of the many factors that have to be addressed if we are to deal with climate change.

Another issue that was mentioned earlier was the economic rescue and recovery programme. I welcome what is being done at European level on that, too. One disappointment for me in considering the recovery programme so far has been that the elements of what are generally described as green jobs or green employment have not been as strong as they ought to be. I hope that in the European summit that is coming up, the UK Government will strongly emphasise that a high proportion of the funding set aside for the European recovery programme must be devoted to economic activity and employment-creation schemes that recognise the importance of renewable energy and renewable technology, not just in creating employment but in meeting a wider climate change agenda.

I turn briefly to another matter that has been mentioned in the debate and is of concern to me and, I know, to many colleagues: policy on the middle east and the EU's policy towards Israel and Palestine. I welcome, as I suspect do most colleagues, the support and the high profile given by the Obama Administration to getting some type of settlement agreement between the Israelis and the Palestinians. The Administration's approach to the dispute seems to underline clearly the fact that only by putting pressure on the Israeli Government can we get a real change in their position. It is surely no accident that Prime Minister Netanyahu's statement that he would be prepared to accept a two-state solution, even if in a very qualified way, came after the clear message from the United States Administration that they would not be prepared to accept anything less from the Israeli Government.

Similarly, the EU must take a strong position towards the current Israeli Government. There should certainly be no question of any upgrade in Israel's current relationships with the EU until there is genuine movement towards a settlement in the middle east that is acceptable to both Israel and the Palestinians.

The final subject that I should like to deal with briefly is one that my right hon. Friend the Foreign Secretary dealt with towards the end of his opening speech: the question of how those of us who are enthusiastic about the EU and about greater co-operation between the nations of Europe can get our argument over. We have patently not been very successful at doing that, certainly in the recent elections and perhaps over a longer period.

It seems to me that the most important and significant thing that those of us who support the EU and greater European co-operation can do is ensure that it results in not just positive words but positive actions. We can refer to what has been achieved and what we have gained from European Union membership for our own country over many years. The economic advantages of membership of a trading bloc are clear, and we can point to the fact that for the 53 years of the EU we have seen peace between all the member states. One of the objectives of the EU was to prevent European wars from happening again. Whereas in the previous 53 years not only two but six major conflicts in Europe affected states that are now members of the European Union, in the past 53 years there has been no military conflict between members of the European Union. That was a major reason for its establishment; it is certainly one of its major achievements.

However, we must speak not only about the past but about the deeds that can now be undertaken to create greater support for Europe, the European Union and closer and greater European co-operation. Three things need to be done. First, we must end the institutional argument—that is why I welcome the recognition on the Government and Opposition Benches that, if the Irish agree the Lisbon treaty, it will end the institutional argument for some time to come.

Is my hon. Friend suggesting that if a Conservative Government were returned at the next election and if, by then, the Irish had ratified the Lisbon treaty, the Conservatives would not hold a referendum? Surely that cannot be the case.

In the unlikely event of a Conservative Government being returned at the next election, not holding a referendum would indeed appear to be their policy.

Surely not.

It surprises my hon. Friend as much as it surprises me.

Secondly, we need to tackle reform of the European Union institutions. We have had problems, to put it mildly, about the way in which we have operated as Members of Parliament and about our expenses and allowances. We all recognise that there are also problems at a European level, which cannot be left untouched for much longer.

Above all, our Governments must ensure that the European Union devises solutions and programmes for the important issues of the day. I have mentioned climate change, the middle east, economic recovery, international development and global security. If the European Union can get back on track, tackle such issues and get results, we will witness a major change in the British public's opinion of it.

The British Government have the opportunity to bring about those genuine policy changes and advances at European level. A Government and a party that have links with political parties throughout the European Union have a much greater chance of securing benefits for this country and genuine change and progressive policies in Europe than the Conservative party, which is apparently choosing a road of isolation in Europe through its decision about whom it wants as friends and whom it wants as enemies in European Union matters.

Listening to Mark Lazarowicz and his explanation of the reason for the necessity of the European Union after the last war, I wonder, as I often do, what my mother, who is now 90, thought on the day I was born—10 May 1940, when Hitler invaded the Lowlands at Maastricht, the Government fell and Churchill became Prime Minister. It must have been a momentous day for her. On 10 May 1941—one year later—the Germans dropped a bomb on the House of Commons. It seems as though something has been following me for a long time.

I wonder exactly what we think we are in Parliament. We need parliamentary reform enormously, and we must remember that approximately 75 per cent. of what happens in this place is engineered by the European Union. We went into it in 1972, and, I make no bones about it: I voted in 1975 for us to stay in. I have had serious doubts about it ever since, but at least I was prepared to give it a reasonable chance.

rose—

No, I shall not give way to the hon. Gentleman—he talked enough rubbish previously.

In July 1990, before Baroness Thatcher was assassinated, we had a policy that seriously began to make sense. She said, "No, no, no" to the developments that had subsequently taken place. I was invited to No. 10 Downing street to a lunch with a fair number of Cabinet members, and she turned to me and asked, "What do you feel about Europe, Bill?" I replied, "The problem is, Prime Minister, that your task is more difficult than Churchill's." She said, "What do you mean?" I said, "Churchill was faced with bombs and aircraft; you are faced with pieces of paper." That has been the case ever since.

Today, our Parliament is a sham. We do not really legislate here—it is done out there, by majority voting, and particularly nowadays, by co-decision. As the leader of the Conservative party made clear in a good speech in November 2005 to the Centre for Policy Studies, we must draw back powers—repatriate them—to govern market legislation, employment legislation and so on. He said that it was imperative to regain competitiveness for this country and, to do that, we would repatriate those powers. He used the word, "repatriate", not "discussion", and not the words that my right hon. and learned Friend Mr. Clarke used on Sunday, to which I felt obliged to reply. It took me six hours of negotiation with the BBC to be allowed a right of reply—it is all on e-mail and in telephone conversations.

The House is being dragged further and further away from its democratic origins. As I said to the Prime Minister when he made the statement on constitutional renewal, people fought and died to maintain our democracy and the link between the Member of Parliament, the Government and the constituency. That is what people voted for in the previous general election and preceding elections. They did not vote for us to be governed by majority vote, out there in Europe. They certainly did not vote for the Lisbon treaty.

Of course, a referendum would be authorised by Act of Parliament, so those strange people—bizarre eccentrics —who claim that a referendum is inconsistent with our parliamentary democracy simply do not understand what they are talking about. Referendums are authorised by Acts of Parliament. Why? Because Parliament decides that a matter is of such importance and so fundamental that it must be returned to the people. I give the Labour Government in 1975 credit for giving people that chance. So many millions of people today have not had that chance.

That is why I say, as I have said before—Conservative Front Benchers know my views; I wrote a letter to The Times last week about the subject—that we must have referendum, irrespective of the Irish vote. It is essential that people in this country have the right to decide matters that Parliament has completely bypassed. The Government have betrayed the people—that is why we must have a referendum. It is very simple. As I have said, much of that is to do with, for example, the increase in institutional power, which we are now supposed to regard as being of no consequence. However, the power of co-decision is the most lethal piece of institutional machinery that has been devised. It means that we will have virtually no power over vast ranges of activity.

Let me clarify the hon. Gentleman's position. As I understand it, he is saying that if the Conservatives are elected at the next election, and even if the Lisbon treaty has been ratified, he is in favour of holding a referendum. Does he believe that that is the policy of his Front-Bench team?

That is why I passed a note to my right hon. Friend Mr. Hague—because I want to get to the bottom of the matter—and, indeed, why I made my response to my right hon. and learned Friend the Member for Rushcliffe. I have great faith in my party doing the right thing, for the right reason and at the right time, but I shall have to wait and see.

That is part of the problem, so I will continue to pursue my objective in that respect, just as I will continue to pursue my objective of returning the supremacy of this Parliament to this Parliament, because it is not our Parliament; it is their Parliament—it belongs to the people. That is why they deserve a referendum and why they deserve a Parliament that functions effectively. That is also why I say that this Parliament is a sham—because the two conditions that I have described are not operating. We do not have the supremacy of Parliament, nor do we have a referendum, so—it has to be said—this Parliament is a sham.

In 1993, I wrote a piece entitled "A Brave New Europe", which was a chapter in a book, in which I referred to the fact that

"No treaty, no piece of paper, will alter" the fact that history repeats itself. I said that, at worst, we could return to racism and fascism. In The Times last week, I pointed out that I had made those remarks in 1993 about the rise of the far right. I also said then that the traditional conservatism in Europe was a

"dangerous 'Conservatism' known to the authoritarian, even racist, tradition".

Look at the rise of the far right in Austria and Hungary, Mr. Deputy Speaker. Look at it—it is happening on the back of unemployment, immigration and the failure of the European Union. When the hon. Member for Edinburgh, North and Leith talks about all the achievements, I ask the question: what are these achievements, given the mess that we have got into with enlargement in the Balkans, which I mentioned earlier and which I have been concerned about in debates in the European Standing Committee?

In 1993, I talked about immigration coming from the east. I spoke about the fact that we were facing

"the prospect of enlargement to"— in those days—"up to 20 countries," and about the difficulties of not bringing those countries into a democratic environment. Indeed, what we have brought them into is an undemocratic environment. That is part of the problem. I asked what would happen if they were to be flooded with new immigrants. That is part of the difficulty with the way in which the European Union functions these days.

Finally, in arguing for an association of nation states—a position that I have maintained ever since—I said that I had written a paper in 1991, at the invitation of the then Foreign Secretary, Douglas Hurd, when I was chairman of the Conservative Back-Bench European affairs committee, having been chosen by a substantial majority of Conservative party MPs in a secret ballot. I was asked to write the paper for the Conservative manifesto committee and warned, as I wrote in "A Brave New Europe", that the direction in which we were going

"would leave us on the outer hub of a two-speed Europe which would undermine the United Kingdom and the European Community itself. I was staggered when even the words 'independent sovereign state' were removed from the final draft. The lines for the battle of Maastricht were drawn—and it is by no means over.

What is being created is a craven, defeatist, self-destructing European Community riddled and corrupted by a fear of freedom—a Brave New Europe indeed.

The forces within this Europe—the artificially created Europe engineered at Maastricht—will darken and destabilise Europe as a whole. The real Europeans must continue the battle from within."

That is exactly what has happened. Indeed, I would go further. The most recent opinion polls show that 88 per cent. want a referendum, while 72 per cent. of the British people believe that we should break the rules of the European Union if it is in our national interest to do so and 68 per cent. do not want the euro. In answer to the question, "Does Europe listen to you?", 71 per cent. said no. That is the reality that we are faced with on a whole raft of matters, including the bullying of the Irish people.

I am sorry that I have come late to this debate, but I have been on a Standing Committee. Given the party political breakdown of those views, does the hon. Gentleman accept that, if anything, the Labour party view would be even more against Europe? However, that is the problem with our party: it is completely at odds with its base of support.

That may well be the case in the country at large, but it is certainly not the case in this Parliament, as far as the Whips are concerned. That is part of the reason we are living in a parliamentary sham; that is part of the problem.

On the question of UKIP, the deputy leader of that party stood against me at the last general election, and he lost his deposit. There is a lesson to be learned there: if we put forward policies that are genuinely in the interests of our electorate and they know what those policies are, they will vote for us. That is exactly what has happened: my majority has tripled since 1997. I am simply making the point, in common with several of my Conservative colleagues, that people will vote for those of us who have consistently pursued a policy of looking after our constituents and the country by arguing the case, not for a completely absurd, negative view of Europe but for trying to make Europe work properly. That is the whole point.

In order to make Europe work properly, we have to have an association of nation states. If hon. Members read the speeches of Václav Klaus of the Czech Republic, they will see that he speaks exactly the same language. I have done many conferences with him, and we talk the same language for the same reasons. We want a Europe that works; we do not want a European Government. As my right hon. Friend Mr. Cameron said the other day, we want trade and co-operation. I must have said that a thousand times. We also want British laws for British judges. That was my comment, which I made to the Prime Minister on 10 November last year, and which was picked up by UKIP.

If we had a policy that genuinely argued for the kind of Europe that we ought to have, I know that we would win the next general election by a landslide. We would see the end of the BNP argument on the Europe front. I have already argued against racism—I was arguing against it back in 1993—but the plain fact is that people have not been listening. We have argued our case, and I have put myself on the line over this matter. My constituents—in Stafford up to 1997, and subsequently in Stone—have backed me all the time, and so has my local association, although I can tell the House that there have been attempts periodically to destabilise my position. During the critical time of the debates on Maastricht, Mr. Ted Bowers got up at the end of my speech to the annual general meeting and said, "Mr. Cash, remember the words of Churchill: your first duty is to your country; your second duty is to your constituents; in the third instance, your duty is to your party's policy and programme." Anyone who adheres to that is doing the right thing for their constituents and for their party, because, as Disraeli said, the Conservative party is a national party or it is nothing. He did not mean nationalistic; he meant national. We must have a programme involving an association of nation states that can and does work, and that is what people want.

When we look at the comparisons between ourselves and the eurozone, we see that, time and again, we have done better: on inflation, on employment and on a whole raft of measures. As we move towards the summit that is coming up in a few days, the bottom line is that it is time for the Government to stand up for this country and to stand against the ridiculous sell-out on City regulatory matters. They must stand up for this country, because if they do not, this place will remain a sham. We need to stand up for our parliamentary democracy, because it is the electorate's democracy, not ours.

I strongly agree with the point made by my hon. Friend Mr. Davidson about the recent European election results. It is as plain as a pikestaff that the two parties that did well were the two Eurosceptic parties, and that the two that did badly were the Euro-sycophant parties. That includes the Liberals, who are kind of Euro-daft. The vote went very much against Europe in those elections, and if we ignore that very obvious decision, we are not listening to the people.

My heart was lifted up during the game of musical chairs that constitutes the appointment of the Minister for Europe these days. I thought that the party, having gone through all the available Euro-sycophants, might have turned to me, as a man with sensible, moderate views on Europe. So I sat there all weekend, but the phone did not ring. I have to confess that I was very disappointed.

The result of the election is a clear signpost to the Government. We cannot say that whatever the people think about Europe is wrong or that whatever is damaging to Europe is wrong. We simply cannot say that to the people, because of the kind of frustrations that led, for instance, to the increase in the British National party vote.

Unfortunately, a BNP county councillor was elected in North-West Leicestershire, in the heart of the constituency, and the vote continues to build. I share, endorse and applaud my hon. Friend's views on Europe in general terms, but may I correct him in one respect? Although UKIP is certainly Eurosceptic and benefited from being so, the BNP is much more than Eurosceptic; it is xenophobic, which is much worse and much more significant.

I am not defending the BNP; I am trying to explain the nature of the vote. What will happen when people come to us and ask why the Government cannot do more to help industry and all we can reply is, "Aid to industry cannot be allowed in Europe," or if the Government's reaction to proposals for retrospective business rate payments in the docks, which will cause closures and unemployment, is that they cannot stop them because aid to industry will be struck down in Europe? What about when people say they want something done about immigration or labour conditions or that they want British jobs for British workers at the oil refineries on south Humberside and all we can reply is, "Sorry, we cannot help you; Europe stops us from doing anything"? That speaks of the kind of futility and discontent that leads to an increase in the BNP vote.

We all know the old joke about how many MPs it takes to change a light bulb. Nowadays, the answer is not 646, but 785—the number of MEPs required to change a lightbulb, because it is something that we in this Parliament seem unable to do. That cannot be good for democracy, and it is certainly true that the EU is not good for the economy. We are now moving towards cuts, stringency and austerity—a period in which there will be an onslaught on Government spending probably from both main parties, although it will, of course, be more massive from the Conservative side.

Let us look at the burdens imposed on us by Europe, which have increased for two reasons: the first is our former Prime Minister's agreement to give up a substantial chunk of the rebate in order to bring about reforms in the common agricultural policy, which everybody knows we will not get and we cannot get in any case until 2013; and, secondly, payments to Europe are increasing because of devaluation. Those payments have to be made in euros across the exchanges, so every time the pound goes down, the payments increase.

Our net contribution, excluding the £2 billion or so we contribute to projects such as Galileo, which is about providing a satellite guidance system that people have to pay for, unlike the American one that we get for free, is now about £6 billion a year. That is spent across the exchanges, and it increases to £7 billion and a bit because of devaluation, while the £2 billion increases to £2 billion and a bit, so we are ultimately talking about £9 billion and a bigger bit before we have even started. That contribution does not include the costs of the common agricultural policy, which the OECD calculates as having a real resource cost of £15 billion for our economy, or the common fisheries policy, which was much praised by my hon. Friend Mark Lazarowicz, but which costs about £3 billion a year in fish that are not caught by British vessels but are taken to Europe and sold there, without any contribution to processing jobs in Britain. Then there is the cost of regulations, which is calculated at about £28 billion.

Finally, there is the cost in lost growth because Europe drives with the brakes on the economy. The non-European world economies grew over the last 10 years, before the recession, at 3.8 per cent. a year, while Europe's economy, including ours, grew at 2.6 per cent. a year. Why? Europe believes in deflationary economic management, which means that we lose about 0.5 per cent. of our gross domestic product annually. That is a cumulative process, so we are losing about £7 billion a year in growth that we would have had if we had not been forced to make these contributions and join this club.

That is damaging the British economy. We are carrying a considerable burden—the second greatest in Europe—and we cannot afford to carry it at a time when the Government are going to launch themselves into cuts in budgets of all kinds. Why should we make such a massive contribution to Europe and across the exchanges at such a time?

Last night, in the Public Accounts Committee, we agreed a report on financial management of the European Union. That might be considered quite a comic issue, and the report is pretty hostile and critical. I do not want to quote from it because it has not been published yet, but I must point out that for 14 successive years the European Court of Auditors has refused to agree to the European accounts. There is enormous scope for fraud and fiddles in the two biggest funds, the cohesion and common agricultural policy funds. Between them, they hand out 80 per cent. of Europe's expenditure. Eleven per cent. of spending on the cohesion funds is irregular, while between 2 and 5 per cent. of spending on the common fisheries policy is irregular. That leads to massive deficits.

According to a fascinating book by Marta Andreasen, a former auditor to Europe, in 2003

"the Court of Auditors had estimated that 50 per cent. of suckling cows which were claimed to be grazing in Portugal did not exist. Eighty-nine per cent. of farms in Luxembourg had submitted claims for payments"— area payments—based on an inaccurate assessment of the area of those farms which, if correct, would have doubled the size of Luxembourg. We are told that

"In Greece, one enterprising farmer...claimed"— and he was paid—

"to have lost 501 sheep to wolves between 2000 and 2004".

That is the way in which the money—our money—is wasted, and the European control system appears to be incapable of doing anything about it. The book from which I have quoted, which I hope Ministers, including Treasury Ministers, will read, shows that the funds are controlled by énarques—brilliantly educated French civil servants whose role is to oppose all reform, all change and all adequate systems of auditing, because they would expose the embarrassments and corruption that go on. That is the benefit that we obtain from Europe.

My mother once told me that at the first election meeting that she ever attended, which was in Halifax just after the first world war, the Conservative candidate was obviously to a degree simple-minded. His mother spoke for him: his mother was a lady. She asked the electorate to be "to his virtues very kind, to his faults a little blind". That is our position on Europe in the Labour party, apart from the fact that we are not a little blind but totally blind to its faults.

I consider it tragic that some of the finest minds in the country, including Foreign Ministers in the Labour Government, are involved in the development of second-rate excuses for third-rate policies imposed on us from Europe. A classic example was given earlier in connection with the referendum. Such tortuous reasoning is devoted to explaining that a constitution on which there could have been a referendum, because it involves a basic change in our democracy, is very different from a treaty which is not important although it contains exactly the same provisions, and that while it is possible to vote on one, there is no need to vote on the other. That kind of tautology cuts no ice with the British people. They regard us as fools for even listening to it. They want a referendum, but we are having to listen to a tortuous, Jesuitical explanation saying that they cannot have a referendum, because this is a treaty and not a constitution. I think that that is partly, indeed largely, responsible for the degree of alienation that we are facing. We are trying to sell a culture of lies to the people.

The classic argument about the referendum relates to what is happening in Ireland. The Irish did reject it, and we are now involved in shipping container-loads of blarney over to Ireland to persuade them to vote in favour of something that they have already rejected. As has been pointed out, there have been concessions, but if they are not in the treaty, they are not valid and cannot be sustained, and if they are in the treaty, we will have to re-pass it in this place. I am afraid that all this might well work, however. The Irish have been scared into thinking that if they vote no this time, they will be on their own and out of Europe, and that they will therefore not get all their agricultural subsidies, which will produce terror.

I remember my first visit to Brussels. It was in the early '80s, and I was with a party of Irish MPs. One of them was a member of Fianna Fail. We were in the back of a bus, and he had had a bit to drink—although not much—and he was enthusiastically singing the following campaign song for us all the way around Brussels: "Arise and follow Charlie." That was a reference to Charlie Haughey, and his rendition of the song was stirring. This time the electorate in Ireland need a slightly different theme song, however: "Arise and follow Tony." In other words, if the Irish vote for the constitution, they will get Tony Blair as President. That would be a big inducement to them to turn out in their thousands or millions to vote for the constitution. I am afraid that our hope that we might get a vote in this country because the Irish have rejected the treaty will probably be vitiated, therefore, but that is just me being gloomy in my assessment.

I want to conclude not by being gloomy, however, but by saying that what we need in this European debate is neither the vacuous enthusiasm of the Liberal Democrats—and, indeed, of those on the Labour Front Bench—nor the negativity of UKIP, but just a degree of realism. Why cannot the Treasury do a cost-benefit analysis of the gains and losses of being outside Europe? Why do we not have that to put to the British people so that they know all about what is involved—what they are paying for, and what they are getting? We should provide that information, instead of debating abstractions such as "Europe is wonderful for the environment" or "Europe is good for fish"—a manifest untruth that will cut no ice in Iceland. We should not indulge in such mythology and enthuse about a Europe that does not exist. We would get sensible decisions from people if we gave them sensible information, and if we ourselves had sensible information. It is the responsibility of Government to tell us what we really get from Europe, and the responsibility of the Treasury to do an accurate and full study of the costs and benefits of Europe. On that basis, we could take rational decisions, which is not the basis on which we can take them now.

It is a pleasure and honour to participate in this debate. Having listened to the previous speakers, I find that I am probably in the unique position of rising to support my Front-Bench colleagues, rather than to speak against them. May I begin by welcoming the new Europe Minister to his place? It seems that the shelf life of a European Minister is about one year, so he might just make it to the next general election before he is rotated into another post, but he is most welcome, and I look forward to hearing what he has to say in response to the many questions that have been put in the debate.

Many of us come to such debates having dusted off the old speech we have used in previous years and say the same things about our position, either for or against Europe. Today, however, we are in a very different situation, and we are certainly in unique times. Let us just pause and think about some of the events that have taken place over the past couple of months. We have had an expenses scandal that has rocked the foundations of Parliament itself. We are enduring one of the worst economic downturns since the second world war. We have had record jumps in unemployment. We have had disastrous local election results for the governing party, to the point where it no longer represents any county in the country. We have also had calamitous EU election results for the ruling party, in which it got only about 16 per cent. of the vote. We have had the resignation of 11 Ministers, and The Guardian—a left-wing newspaper—has called for the Prime Minister to go. Also, as revealed today by my right hon. Friend Mr. Hague, the Foreign Secretary has considered resigning. Each of those events is dramatic, but taken together they are unprecedented.

One would think that the Prime Minister might get the message that he and his Government are unpopular and that it is time for a general election, but efforts by Labour Members to try to unseat him did not get anywhere; in fact, his weakness was put into context only by the weakness of the plot to oust him—and so this discredited Government limp on for another year. In the recent elections Labour managed to poll only about 15 per cent.—the last time it polled that sort of figure was in the days of Michael Foot—and came third behind the UK Independence party; the Labour Government were the first to allow the British National party a foothold in the European Union; and Labour was also beaten by the Scottish National party for the first time in a UK-wide election. The results were disastrous for Labour, so I have been amazed by some of its Front Benchers saying, "We'll ignore all that. We'll ignore what the nation is saying and plod on in our own way. We believe that what we think is right is the way forward, and that the very people who voted us in are wrong." That shows how out of touch this Government are, and why we are in such need of a general election.

There are many reasons why Labour achieved such a dismal result, one of which relates to the Lisbon treaty—or the reform treaty, to use its correct name. The public have never had their say on that treaty, which is so pivotal to today's debate and to our relationship with the European Union. Of course, the nation knows that we were promised a referendum in Labour's 2005 manifesto, and that semantics are being relied on to say that we do not need to have one. Hon. Members may recall that on the very day the treaty was signed, 13 December 2007, the Prime Minister turned up after all the other leaders of the various countries had signed the document, popping in during the evening to try to avoid the cameras. That shows how embarrassed the Government and the Prime Minister are about this treaty, and why they are ignoring what the nation is trying to say today.

Another aspect of the Lisbon treaty that has been mentioned many times today is the pivotal position of Ireland, whose people voted against the treaty in their referendum. Not being content with that result—not being content with democracy having its say—the EU has put pressure on Ireland to hold the referendum again. What does that say about the moral authority of, and democracy in, the European Union? What does that say about listening to the people and how they have voted? Of course sweeteners will be given to Ireland, and we will have to wait to see the outcome of any result, but it is sad indictment of the democratic standards that we try to uphold in this House and beyond that when we are not happy with a result, we then work on the situation until we get the result that we require. I plead with the Minister to recognise that there is a desire for the electorate—the stakeholders, who very much have an interest in this—finally to have a say. Why not allow us to have the referendum that was promised in the manifesto?

rose—

Perhaps the hon. Gentleman has an answer.

I seek to propose a question. The hon. Gentleman said that he is in full support of his Front-Bench team and a referendum on the European constitution/treaty. Can he clarify what the position of his Front-Bench team is on what they will do if the Conservatives win the election and the Irish and the rest of the European Union have already ratified the treaty? Will the Conservatives still be committed to a referendum, or can the Tories not be trusted on Europe?

The hon. Gentleman posed the same question to my right hon. Friend the Member for Richmond, Yorks at the beginning of this debate and he will get exactly the same answer now. The sooner we have a general election in this country, the sooner we can have that referendum too.

rose—

Perhaps the hon. Gentleman would allow me to finish my sentence. If he is keen to have a referendum, as he implies, I encourage him to call on his colleagues on the Front Bench to hold a general election so we can have the referendum that we all want. We need a referendum because of the scale of the question.

At least the Irish have been given a second chance to have a say. The Dutch and the French, who also said no the first time, have lost the right to have a say. It is therefore imperative for the Conservatives to give a clear commitment that, whatever the circumstances, they would give the people a say. It would be really good to hear that right now.

The hon. Lady just glosses over the fact that the Irish are being given a second chance, as if they should somehow appreciate that. We have not even had a first chance. Why not give it to us? Let us have a general election, and then we will have the opportunity. I promise the hon. Lady that it will be in our manifesto, and it will be done very quickly.

Let us remind ourselves what would happen if the Lisbon treaty were fully ratified by this country. We would be signing up to an EU President, an EU Foreign Minister and a single legal personality for the EU, under a self-amending treaty, with national vetoes to be abolished in 60 key areas. It was interesting listening to the Chairman of the Foreign Affairs Committee—who disrespectfully scuttled out of the Chamber 10 seconds after he had finished his speech. He talked about the European Union as a volunteer club, and many hon. Members would agree that that is exactly what it should be. We are volunteers in the club, and we have some general interests on which we come together, but there are ways in which we differ greatly from each other. Like the hon. Lady, I grew up in Europe—[Hon. Members: "We all did."] I meant that I grew up in various different places across Europe, rather than in one place, but I am grateful for the correction. The important point is that there are some wonderful differences as well as the things that bring us together.

The European Union is forcing us together and labelling us all the same. We are not all the same; we have some interesting differences—we manage our economies in different ways, for one—and those are what we hope to defend. "One size fits all" simply does not work. The consequence has already been seen when the EU tried to speak with a single voice about what should be done about the threat from Saddam Hussein. There was no unilateral agreement. The same happened with Bosnia. I served in Bosnia in the lead-up to the Dayton peace accord. That was an EU responsibility, and if I remember correctly, it was Lord Owen who walked away from the table. He was the EU representative, but he could not make progress. It had to be done by the Americans, and it was not until Richard Holbrooke came in that we could sign the accord and get things moving.

Europe should be less like line dancing and more like rock and roll. We all want to dance to the same tune, but we do not want to dance all lined up with arms linked; we want to do our individual thing in the same room, enjoying ourselves as neighbours. Labour Members claim that the Conservatives want to run away from the European Union, but that is wrong. We want to change the European Union to make it work for the benefit of Europe. It was designed to provide a platform for free trade. It was also designed, as Mark Lazarowicz said, to prevent conflict, but it has now gone beyond that and is taking powers away from sovereign nations to run Europe as a whole. That is where we say enough is enough, and that is why we say that powers should be handed back.

We had an opportunity to vote on this issue in March 2008, and I am proud to say that I voted against the Lisbon treaty and in favour of a referendum. Sadly, we will not get one from this Government, and they are running away from what the nation wants.

It was interesting to hear the comments of the Liberal Democrat spokesman. Rather than trying to justify why his party scored an abysmal 13 per cent. in the recent elections, he chose to attack the Conservatives. He did not even touch on what Labour had to say. That reflects the writing on the wall about where things are going with the movement of power in this country.

I believe that a voluntary club is the idea on which we need to focus, and that that is what a Conservative Government would bring about. At the moment 27 countries containing 490 million people are in the EU. As has been mentioned, Croatia, Turkey and Macedonia, along with other countries, want to join. Indeed, 10 years down the road we are very likely to see other countries, such as Albania, Bosnia and—moving forward—Ukraine and Turkey, becoming members. Will it be possible to get all those people round the table to agree some of the key policy issues on international foreign policy? No, it will not.

The worry is that that will lead to stagnation. Decisions will not be made, and we will end up trying to run Europe as a whole. That will mean that we will lose the individuality that is so critical in allowing countries to flourish as they have, while being united closely enough to avoid the wars that were the original reason why the Union was put together in the first place.

Much comment has also been made on what will happens with the European People's party. People need to understand how the European groups operate in order to comprehend fully why many parties sign up to them. They get funding: that is the bottom line. They get large sums of money. If a party breaks away from those groups—from the EPP, the party of European Socialists, or the Alliance of Liberals and Democrats for Europe—it loses an awful lot of funding. That is one reason why many other parties are not thinking of jumping ship right now, or are cautious about it. They want to ensure that the Conservatives are forming a group that will move forward. We are proving that that is the case.

I am sure that announcements will be made in the not- too-distant future about how we will set up a group that will say, "We want the European Union to work, but we do not want to cede powers substantially. We want to honour the nations individually, too."

Would the hon. Gentleman be quite happy if Conservative MEPs sat with the Law and Justice party from Poland?

The hon. Gentleman repeated all the jokes that we heard from the Foreign Secretary, and they were not funny the first time. He needs to wait and see the group's full complement. He will see how powerful it will become and how much of a stronger voice it will be in the EU.

I am running out of time, but I want to reiterate the point that I made in an intervention on the Foreign Secretary to do with the problems of the relationship between NATO and the EU. As I have mentioned, I visited NATO recently, and I was astonished to learn that there is no formal agreement whatever. The two operations in Brussels do not talk to each other formally, because in NATO Turkey refuses to talk to the EU, and in the EU Cyprus refuses to talk to NATO. We cannot have such powerful organisations using such large sums and dealing with matters as serious as security not only in Europe but in the middle east and beyond, if those organisations cannot operate sensibly. As a consequence, the responsibilities of the two organisations are starting to overlap. Mission creep is taking place. Security, humanitarian aid and so on are all things that NATO does extremely well already, but the EU is now doing exactly the same sort of things. There needs to be better co-operation, so that they decide who is doing what. At the moment, that is not the case.

NATO has huge experience in peacekeeping and stabilisation operations, monitoring EU elections and so on. Why are we deciding to repeat all that, using very much the same people but in a different guise under the EU? Let us understand what the EU can do; it can do certain things well—but Bosnia is one example of where it did not work, and Iraq is another.

We need to recognise that there are limits to what large international institutions can achieve. The Galileo project has been mentioned, and what an astonishing waste of money that is. It merely replicates something that already exists, and I do not understand why we do not hear more objections from Labour Members. When it was put to a vote not long ago, they were whipped into approving huge sums of money for a system that will probably never fly. There is one satellite up there now, but there are supposed to be 24. The system is about five years out of date, and it is simply not going to work.

I have been dismayed by what I have heard today. The elections gave us in Parliament an excellent opportunity to listen to the electorate and understand what people want. It is clear that people want to put a halt to wandering any further into the relationship with the EU. They want to make the EU work, but only up to a certain point, and that is exactly where the Conservative party wishes to place itself. I remind the House of the EU's original objectives. If we were to review them now, and understand what we can do with the EU, we would march forward to a better tune and in a better direction than the one that we are going in now.

It has been a long wait to be called, but worth it.

I am very pleased to say that, in my borough of Luton, Labour came first in the European elections. We had a good result, with slightly more votes if a slightly lower percentage. I have a very high profile as an opponent and critic of the EU. Indeed, I toured on an open-top bus with a loud hailer during a mini-referendum that was held in the town on whether we should have a full referendum on EU membership. We won it massively: there was a big majority in favour of a full referendum, and there were pieces in the newspaper and on television and so on. I might be flattering myself, but I like to think that I had a small influence on the election result in Luton and that being very critical of the EU actually benefited Labour in the town. I might say that we also had a very successful campaign against the British National party.

The results show that only a small proportion of those who voted were Euro-enthusiasts. I suspect that the overwhelming majority of the 65 per cent. of people who did not vote were not Euro-enthusiasts, as such people would have known that they were under pressure and so made sure to get their vote out. I suspect that the people who did not vote were either Eurosceptics or, at best, disinterested or cynical about the EU. It is clear that an enormous majority of people in this country take a critical position on the EU, and only when we move to a more democratic Europe—an association of independent democratic states collaborating for mutual benefit, and not a bureaucratically driven economic arrangement—will we see Europe becoming more popular.

However, what I really want to talk about is the European economy because, in common with the rest of the developed world, it is in serious difficulty. We have been affected by the recession and the credit crunch very badly, but differentially: in the first quarter of 2009, UK gross domestic product declined by 1.9 per cent., but in the same period the eurozone's GDP fell by 2.5 per cent., while Germany's fell by 3.8 per cent. Despite that, Angela Merkel is critical of the UK's policy of providing fiscal stimulus by putting money into the economy to sustain demand through these difficult times.

I think that the policy is absolutely right. I might criticise details, but we have taken the right approach. We have to sustain demand through this difficult period, because otherwise we would be in even worse trouble.

Does my hon. Friend accept that there is at least a note of irony here? It would appear that Chancellor Merkel is the favourite to win the German elections later this year, at a time when capitalism is in crisis. The simple fact is that that is because the left is not believed, due to its passionate support for the EU. Clearly, that is a dilemma that all of us on the left face.

My hon. Friend is absolutely right. The Social Democrats are in coalition with the Christian Democrats and are being dragged along. German working people and trade unionists face a choice: they can vote either for a collaborationist Social Democrat party, or for a Marxist party that is based on what is left of the East German Communist party. They find that a very difficult choice, and I suspect that many will not vote at all. If the Social Democrats came out with a strong, democratic socialist, Euro-critical position, I suspect that they would do much better in the elections than if they were just dragged along by a right-wing, deflationist Government.

There are many reasons why I think that Britain is better placed to weather the storm. The major one, of course, is that we are not members of the eurozone. One thing on which I congratulate my right hon. Friend the Prime Minister is having kept us out of the euro. For the past 12 years, we have had the advantage of having our own currency. There has been substantial sterling depreciation, which has been helpful. I know that there are costs and benefits to depreciation, but by and large it has been beneficial; there has been a slight improvement in our balance of trade in these difficult times, and it is right that there should have been. Unfortunately, we have had an overvalued currency for some years, but it is now coming into line. That is a necessary correction, and I hope that we sustain at least some of that depreciation for the longer term.

We also have control of our interest rates, and can adjust them monthly to benefit the economy. There was a massive drop in interest rates, and that was followed in other countries, too. It affects those with mortgages. Members of my family have had their disposable income increase by £300 in a month. That has put an enormous boost into the economy just when it was needed. That is another benefit. There has also been some printing of money to help us on the way.

The crisis in the eurozone is most interesting. There is speculation about whether it will survive at all. In May, the German Finance Ministry was drafting plans to prevent default by countries on the edge of the eurozone. Such a default could lead to a full-blown collapse of the EU's monetary system, yet years ago a solemn pledge was given to German voters that the German political elite would never leave German taxpayers exposed on the hook of the debts of half of Europe, which is what is happening. The countries involved have a dilemma: do they save the eurozone, or look to their own economies?

The eurozone's bail-out liabilities could be enormous. Italy is in serious difficulties. It has net debt of 111 per cent. of gross domestic product—that is more than twice our figure. Austria has loans to eastern Europe that are equivalent to 70 per cent. of GDP. Spain has serious problems, and we know about the position of Ireland. We should dwell on Ireland; if it had not joined the eurozone, it could have depreciated its currency in line with the depreciation of sterling and saved itself an awful lot of pain, as its major trading partner is, of course, Britain. It blames us for depreciating, but what were we to do? We could not sustain our currency at an overvaluation just to help the Irish; we have to do what we must to help our economy. I have even suggested to Irish politicians that they might re-introduce the punt and devalue to help their economy. They are rather shocked at the thought, but it is a practical proposition.

The eurozone is in a critical state, especially for Germany. In Germany, a mortgage lender, Hypo Real Estate, is imploding, despite the fact that it has been lent €87 billion of state money. The German Finance Minister, a Social Democrat, has said that nationalisation is inevitable. If Germany does not nationalise it, there could be a collapse with an impact similar to that of the collapse of Lehman Brothers. There are really serious problems inside the eurozone, and Germany has a dilemma: does it move towards an interventionist policy, in which it borrows and spends considerable amounts of money to save the German economy, or does it spend even vaster sums of money bailing out weaker members of the eurozone? It is a real question whether the eurozone can survive. If one or two members on the outside start seriously to default, and perhaps to withdraw, the whole shooting match could be over. As I have said in previous debates, there are those in Germany who, quietly behind the scenes, think that there is a possibility—or probability—that eventually Germany will withdraw and go back to the Deutschmark, and that national currencies will once again be created.

This year, 700,000 German workers will lose their jobs. They will not be at all pleased, to put it mildly, to see vast sums of what is effectively German money being used to bail out weaker members of the eurozone. I suspect that there will be a point at which some politician will be brave enough to say, "The eurozone has gone far enough, it does not work, and it does not benefit Germany or anyone in Europe."

Currencies are necessary as shock absorbers between economies. We are not one economy; we are an association of economies that trade with each other, and those economies must have a degree of independence to ensure that they are managed at a national level, not at a supranational level by bureaucrats in Brussels.

For the past five minutes or so, I have listened to the hon. Gentleman's tale of doom about what is going to happen to Germany. Can he tell me how much money the German taxpayer has used to bail out those other economies? I am not aware of any.

I am speaking about what will have to be done to keep the eurozone a reality. If the smaller, weaker economies start to default, the big rich countries will have to bail them out. If those start to default, there will be serious trouble.

May I add to the debate? The monetary union is not a credit and debt union. Bail-outs have not yet happened, and of course they would be useless because long-term intervention would be required. For Germany to be in a position to rescue other currencies would require a change in the structural arrangements.

There are debates about whether that would be illegal or acceptable. If there is a monetary union with a single currency and the members are still effectively separate countries, they cannot allow individual countries to collapse, in the same way that we could not allow Yorkshire to collapse.

Unthinkable!

Indeed. I should perhaps have said Bedfordshire; I stand corrected.

If the deflationist tendencies in the eurozone continue, particularly in Germany, we could see uncomfortable parallels with the early 1930s and the Brüning deflation, to which Sir Peter Tapsell constantly refers. He is wise and knowledgeable in these matters and he keeps drawing attention to the fact that what led to the rise of Hitler was the deflation in the early 1930s under the Weimar Government. That is the danger.

We must have reflation, managed economies, intervention and a return to the kind of economic strategies that worked very well between 1945 and 1970. That was a world of full employment, growth, redistribution, growing welfare states and relative equality—a much better world than we have now. The present situation is insecure and frightening. A more democratic socialist approach to Europe, with individual member states managing their own economies, taking account of other countries' interests and working together co-operatively where appropriate, would be a much more sensible way forward towards a Europe that worked.

I shall be brief in order to allow Mr. Turner to speak.

I was in Committee earlier, but since I have been in the Chamber all the Labour Members who have spoken represent what I would call the traditional Labour view, rather than the view of new Labour. Although I did not hear my hon. Friend Mr. Davidson, I know that he made a ripping good speech and said what I would like to have said.

I shall make three quick points. I spent last Friday evening with good friends at the annual presentation of the Stroud and district skittles association, of which I am a well known advocate. One of my friends there, who is well into his 70s, had to admit, with some shame, that for the first time in his life he had not voted Labour in an election. I know that he is a regular voter because I keep an eye on him. He did not say how he had voted, but he said that he did not vote Labour because he felt robbed, as we had failed to deliver on the referendum on the Lisbon treaty. It was as simple as that. He felt that the party could no longer be trusted. Although he finally said that he would vote for me, until we are trusted on that there will be a huge divergence between the support base of the Labour party and what the party and members of its Front-Bench team stand for. Until we overcome that, we will be in grave difficulties.

My second point is that the Labour party did so badly in the European elections because, yet again, a totally alien electoral system was foisted on us. The closed list system has no history that makes any sense in this country, and I know that on polling day many people were confused about the length of the list of people and parties for which they could vote. The system's antecedents are alien to this country, and we must ditch it. We loved the Justice Secretary's explanation of the d'Hondt system, which kept many of us riveted during the most boring of those Electoral Commission debates that led up to the introduction of the new electoral system. However, it is wrong, it has been proved to be wrong and it has cost this party dear.

My third point, on which I intervened on my hon. Friend Kelvin Hopkins, is about the anger felt on the Labour Benches. At the very time that socialists should feel that the capitalist system has a huge question mark against it, the greatest losers in the recent elections, and those who stand to be the greatest losers in the national elections, are on the left. The reason why the left is losing is, quite simply, that our electorate do not believe us on economic policy, and that is because we have fastened ourselves to the mast of the European Union. Until we regain some credibility with our electorate on that issue, they will continue to vote for other parties, and not even for the main Opposition.

Will the hon. Gentleman give way?

I shall not, because I want to give the hon. Member for Isle of Wight at least a couple of minutes.

Until we are absolutely clear that we have a policy on Europe which is more in touch with our voters, we will face that problem. The real anger and dilemma that many of us face when we see Governments of the right sweeping through national elections is entirely down to the fact that we as a party are so arrogant, so indifferent to our electoral base and so completely beset by the notion that we will eventually persuade them that we are right—when the reality is that they are right and we are wrong.

My first point is about the European common fisheries policy, which has completely failed. Only last month, the EU Commission was forced to admit that its quota fishing system had failed. The position paper stated that 88 per cent. of European fishing stocks are overfished and 30 per cent. of managed fisheries are now outside "safe biological limits". The single market is encouraging greed in the fishing industry at the cost of ecosystems and the national fish stocks that they support. Enough is enough. The best place to make a safe and sustainable fishing policy for Britain is here in this House. Is it not time to renounce the European common fisheries policy before the British marine ecosystem is damaged for ever?

My second point is that, although the single market has some clear advantages, such as the removal of trade barriers, there are elements that still harm rather than help our country. First, there is the open-door policy for labour to move back and forth across our borders. That may help to fill vacancies for unskilled labour and the like, but it may be damaging to the future of certain professions in this country. I am sure that Members from throughout the country will have heard stories, from their constituents or in the media, of EU workers undercutting their British counterparts. I welcome healthy competition in the market, but prolonged and widespread cost undercutting in plumbing and joinery, for instance, damages our economy. It forces many British tradesmen to retrain or leave their professions entirely. Some people simply have nowhere else to go and join the unemployed. As we have seen, since the expansion of the EU, labour has almost always been in a state of flux. Once British tradesmen have been forced out of the market through undercutting, British expertise will be lost. If the migrant workers decide to return to their home countries, who will be left to carry out the work?

It is a pleasure to wind up this debate on behalf of Her Majesty's Opposition. I am particularly pleased to be following my hon. Friend Mr. Turner; we are delighted to see him back in his place, speaking so eloquently on behalf of his constituents.

I take this opportunity to welcome Chris Bryant to his new responsibilities. He will now serve the Government as an Under-Secretary of State at the Foreign and Commonwealth Office and will have the additional responsibility of being the Government's spokesman on European matters in the Commons, as their Minister for Europe now sits in another place. I first crossed swords with the hon. Gentleman in 2004, during a Westminster Hall debate about Gibraltar. Shamefully, the Government were trying to sell out the people of the Rock in a deal with the Spanish Government behind their backs. We won that argument and I hope to win other arguments against the hon. Gentleman in future.

There have been some lively Back-Bench speeches in this debate; I shall not go through every one in turn, but I noted that the majority of speeches from the Labour Back Benches opposed, rather than supported, their Government's policy on Europe. There were a number of interventions, including on my right hon. Friend Mr. Hague, from Mr. MacShane, who, unfortunately, is no longer in his place. Presumably, he is quietly consoling himself following his failure to get the job of Minister for Europe when it came up again. A number of us, himself included, wondered whether he would be recalled to the colours when an opportunity presented itself. The call, however, did not come. But we have news for him. He should not be too downhearted; given the very high turnover of Labour Ministers for Europe—there have been 11 since 1997—it is not inconceivable that, if he hangs on a little, he will get an opportunity to serve in that position again.

During the last debate on Europe, we discussed the situation in Georgia. In the intervening time, unfortunately, the situation has not improved. It is now almost a year since the Russian invasion of Georgia, and Russia has still not abided by the terms of the ceasefire brokered by the French EU presidency. Specifically, Russian troops have not returned to where they were prior to the invasion. Russia has still not allowed Organisation for Security and Co-operation in Europe monitors into South Ossetia, and ethnic Georgians expelled from areas under Russian control have still not been allowed to return.

Given that, it was wrong for the European Union, supported by the Government, to begin discussions with Russia on a new EU partnership agreement. It would be doubly wrong for the EU to agree the terms of a new partnership agreement with Russia while that country is in flagrant breach of the ceasefire agreement that the EU itself negotiated. I would be grateful if the Under-Secretary reassured the House this evening by saying that the Government will not allow the signature of any such agreement while Russia remains in breach of its ceasefire commitments. [Interruption.] I know that the Under-Secretary is new to the Front Bench, but when his opposite number asks him a specific question for his winding-up speech, it is considered courteous for him to listen, not least because if he does he might be able to provide a reply for the benefit of the House.

Having welcomed the hon. Gentleman to his new post, let me turn to Bosnia. In the last debate on Europe, we set out a number of the challenges faced by the international community there. Since then, unfortunately, there has been minimal progress; Bosnia and Herzegovina's dysfunctional central institutions are still racked by nationalist rhetoric. The Office of the High Representative is still under threat of closure, and the EU is still planning to remove its peacekeepers. Despite that period of drift, we have seen some signs of a renewed commitment to Bosnia in the new United States Administration, in particular from Vice-President Joe Biden. We hope that that leads to a greater recognition on the part of the US and the EU of the dangers that are still present in Bosnia, and we hope that both the US and the EU will act to address them.

The European elections showed a rejection of socialist parties, policies and Governments across Europe, but in Britain the people's rejection of the Labour party was particularly decisive. The Labour party did worse than its socialist brethren in France or Spain. It got just over half the number of MEPs that the Italian socialists returned and a similar result compared with the German SPD, despite that party's having its worst election result since the second world war. In the new European Parliament, the British Labour delegation will rank as only the sixth largest party in the Socialist group, only just ahead of the Romanian socialists, who have 10 seats.

The decisive rejection of socialism in Europe flies in the face of those in Britain who seek to use the financial crisis to justify a re-emergence of big government. Nor was the result in Britain simply a protest against a weak and unpopular Government, weak and unpopular though they undoubtedly are. In France and Germany, centre-right Governments managed to increase their votes, despite serving as incumbent Governments during a period of recession.

rose—

I do not want the Chairman of the Foreign Affairs Committee to spoil my flow, but I will of course give way to him in a moment.

The result in Britain was astonishingly bad for Labour. It was pointed out earlier that the Labour party did not compromise with the electorate; in return, the electorate certainly did not compromise with the Labour party. For instance, Labour came second in Wales for the first time since 1918. One startling fact is that in the Rhondda valley, Labour got only a third of the vote, down from 68 per cent. at the last election—and on that point, I give way to the Chairman of the Foreign Affairs Committee.

The hon. Gentleman mentioned the good results for the conservative parties in France and Germany. Given that he is using that argument to make his case, why is his party rejecting those parties?

We are not rejecting them— [ Interruption. ] We are not; I shall answer the question directly. Some months ago—over a year ago, I think—we established working groups between our party and the German CDU-CSU that have looked in detail at issues such as the environment, maintaining European competitiveness, and combating terrorism. More recently, we have established a similar system of working groups with the French UMP. That does not sound like rejection to me.

Let me turn to our new grouping in the European Parliament. One of the results of the European elections is that a reinvigorated Conservative delegation of MEPs is determined to put the case, which we believe is shared by a majority of the British people—and we did win the European elections—for a flexible, open and free-trading European Union. In order to do this, the Conservative delegation will, along with the ODS party in the Czech Republic and the Law and Justice party in Poland, form a new centre-right grouping to campaign for a new type of Europe. That work is ongoing, but we aim to announce the membership of the group well before the delegations are legally constituted on 14 July.

Given that the Liberal spokesman attacked our policy on that, it is interesting to look at some of the Liberals' allies in the ALDE—Alliance of Liberals and Democrats for Europe—grouping in the European Parliament. Is he, for instance, proud of the fact that his party was allied with the Swedish party, Feminist Initiative, whose policies include the abolition of marriage because it regards that as detrimental to women, and special additional taxation on men, simply because they are men? Is he proud of that? I should advise him to declare an interest before he answers the question. Is he not going to answer? In that case, I will press on.

My next subject is the Government's lack of interest in Europe. They now seek to forget about the European elections, but they seemed to forget about Europe itself some time ago. One of the details to emerge from the Government's chaos last week is that the former Minister for Europe said:

"I am not willing to attend Cabinet in a peripheral capacity any longer."

As my right hon. Friend the Member for Richmond, Yorks, reminded the House, Caroline Flint told Radio 4's "Woman's Hour" that she had not had a single conversation with the Prime Minister about European policy in her year as Europe Minister.

We therefore have the truth of the Prime Minister's vision for Europe in his Cabinet. It is, in one word, peripheral. Despite the Government's appointing 11 Europe Ministers since 1997, including the previous Minister, who remarkably admitted that she had never even bothered to read the Lisbon treaty, we now have no Minister for Europe in the House of Commons—a Minister for Europe who also does not attend the Cabinet as of right.

For a while, it even looked as though we were to have no Minister for Europe at all. Due to the shambolic nature of the Government's reshuffle, nobody had bothered to double-check whether Lady Kinnock was able to be a Member of the European Parliament and a Minister in this Parliament at the same time. Perhaps when the Under-Secretary winds up the debate, he will confirm whether Lady Kinnock is now formally a Minister of the Crown, and when she will formally take up her duties in the House of Lords. Parliament deserves a clear answer on that matter.

So much for this Government's commitment to Europe. We now know from a Labour former Europe Minister that it has always been of peripheral interest to this Prime Minister, and indeed to his Cabinet.

Will the hon. Gentleman give way?

I give way to the hon. Gentleman, who said clearly that Labour refused to compromise with the electorate over Europe.

The hon. Gentleman indicated that he was in favour of clear answers. May I seek a clear answer from him about whether the Conservatives can be trusted on Europe? In the event that there is a Conservative Government, if the Lisbon treaty has been ratified by the 27 member states, will they hold a referendum—yes or no? People who voted for the UK Independence party and a number of other parties will want to know that before the general election. Yes or no—will there be a referendum?

My right hon. Friend the Member for Richmond, Yorks, was asked almost exactly the same question at the start of the debate, and he said that we had not ruled that in or out. I know that the hon. Gentleman is a patient man, and he will have to be patient yet.

I wish to press the Minister on the working time directive before I conclude. The directive, from which Britain has an opt-out, could affect 3 million people in this country, not least all those who work in the national health service. The opt-out is often referred to as the UK opt-out, despite the fact that some 15 countries around the EU now utilise it. In the crunch vote in the European Parliament in the run-up to Christmas, the majority of Labour MEPs voted to abolish the UK opt-out, even though their own Government ordered them to do differently. They were led in that rebellion by their then Chief Whip, Glenys Willmott, who now leads the Labour MEPs in the European Parliament.

Can the Minister assure us that if the matter is returned to in the new European Parliament, all Labour's MEPs will vote to defend the UK opt-out from the working time directive, so that people in this country can choose how many hours in the week they wish to work and not have that dictated to them? Conservative MEPs, led on that issue by Philip Bushill-Matthews, to whom I pay tribute for his work, valiantly defended that opt-out. I should like to know that Labour MEPs would do the same.

Will the hon. Gentleman give way?