European Council (Hansard, 12 December 1994)

§ The Prime Minister (Mr. John Major)
With permission, Madam Speaker, I should like to make a statement on the European Council at Essen which I attended with my right hon. Friend the Foreign Secretary and my right hon. and learned Friend the Chancellor of the Exchequer. The Council's conclusions have been placed in the Library of the House.
The European Council achieved five key British objectives: strong support for the peace initiative in Northern Ireland, including additional funding of £240 million; commitment to an intensified fight against fraud and mismanagement; solid progress on subsidiarity, and it was agreed that next year the Council will complete its review of the existing Community statute book; priority for labour market flexibility and deregulation to make Europe competitive and create jobs; and a strategy to prepare for accession to the Union of the six central and eastern European associate members.
At the request of the presidency, I briefed the European Council on the peace process in Northern Ireland. There was unanimous agreement for a Commission proposal to provide an extra £240 million over three years to help urban and rural regeneration in Northern Ireland and the border counties of the Republic. I am grateful for the strong support President Delors has given to Northern Ireland in recent weeks.
I raised the subject of fraud, waste and mismanagement of the budget following the Court of Auditors report. I said that the European Union would not enjoy popular support unless it took vigorous action against these abuses. I made a number of proposals which were agreed by the Council. These were: the Council must ensure that reports from the Court of Auditors are rigorously scrutinised and followed up; each member state must report to ECOFIN, the Economic and Finance Council, on what it is doing to combat fraud in its own country; and agreement should be reached rapidly in Brussels on measures now under discussion—these include a British proposal put forward by my right hon. and learned Friend the Home Secretary which would oblige member states to co-operate and act effectively to fight criminal fraud against the Community budget—and the new powers given in the Maastricht treaty, as a result of British initiatives, to the Court of Auditors, the European Council, the European Parliament and the Commission should be used to the full.
I made it clear that taxpayers' money must not be misused. The fight against fraud, waste and mismanagement will remain high on our agenda. That view was strongly endorsed by the Commission and a number of member states, and it echoes points that we have been making for some time in the European Council.
The European Council confirmed again that subsidiarity—the principle of minimum Community interference—must be a guiding principle of the European Union's future work, as agreed at the Edinburgh summit. I am encouraged that so far in 1994 there have been only 42 Commission proposals for significant legislation compared with 185 in 1990. But the new Commission must keep up the fight against unnecessary interference.
Discussion of the economy focused on the need to create jobs. Yet again the policies that we have been following in this country were widely accepted to be right 614 across the European Union. We agreed that Europe must be more competitive. We agreed on the need for more flexible working arrangements for the reduction of labour costs and for better education and training. There was nothing in our discussion to suggest that socialism had triumphed over market liberalism. The reverse is plainly the case—[HON. MEMBERS: "Test it."] I will test it with the conclusions, which show that clearly.
The European Council added three new priority transport projects to the list of trans-European networks agreed at Corfu. Four out of the 14 are United Kingdom projects: the channel tunnel rail link, the west coast main line, the rail route from Cork to Larne and the Holyhead to Felixstowe road link.
The Essen Council effectively rejected the long-debated proposal for a European Union-wide carbon energy tax. It supported instead the approach which Britain has advocated all along—a flexible framework allowing the member states hat wish to introduce a carbon energy tax to do so. We will not wish to do so.
Enlargement of the European Union has long been a British objective. At the Edinburgh and Copenhagen Councils, the decision in principle to open membership to the six countries of central and eastern Europe was taken. At Essen, leaders of the 15 European Union states, including Austria, Finland and Sweden, met their central and eastern European counterparts. Agreement at the Council on a strategy to draw the six associate members closer to the Union was another important step to help prepare for their eventual accession.
On Bosnia, there was strong support for the protection force commanders and for the work being done by the brave men and women whom they lead. They are saving lives and bringing better living conditions to many parts of Bosnia than would otherwise be possible.
We agreed that the United Nations protection forces must be allowed by the Bosnian Serbs to get on with their job without obstruction and that they should stay, provided that the risks were acceptable. It was our unanimous view that the enforced withdrawal of UNPROFOR could have disastrous consequences—above all for the people of Bosnia. But we agreed that we needed to plan for all eventualities and to keep in close touch with other troop contributors and interested Governments.
The European Council gave strong backing to the Contact group's efforts to achieve a negotiated settlement. The immediate need is for a durable ceasefire as a prerequisite to a successful negotiation.
Over dinner, the Heads of State and Government had an informal discussion about the future development of the European Union, taking account of the need for further enlargement. This was the first such wide-ranging discussion I can recall, and it was very welcome.
I emphasised the Community's achievement in helping to bring 50 years of peace and prosperity to western Europe. In squabbles over other matters, that priceless achievement is often overlooked. I also commented on the fact that 40 years ago, the founders of the Community had a broad vision of their objectives many years ahead, and that those objectives had already been exceeded.
Within a few years, we shall have around 20 members and, some time later, perhaps as many as 27 members of the European Union. The Union is changing beyond recognition. I said that it was time to rethink the Union's 615 future constructively and I set out the need for realism in the period ahead. That is essential if the European Union is to regain popular support.
I do not underestimate the difficult tasks the Union faces, but I was greatly encouraged by the general acceptance of the need for flexibility and for substantial changes so that the European Union can successfully meet the challenges that lie ahead.

§ Mr. Tony Blair (Sedgefield)
I thank the Prime Minister for his statement. I welcome the £240 million economic aid package for Northern Ireland, which was announced last week and agreed at the summit. It is another significant step on the road to peace and a recognition across the entirety of Europe of the historic opportunity to bury old hatreds.
On Bosnia, while no one can fully understand or understate the magnitude and complexity of the problems, no one can be proud of the European Union's record in dealing with the break-up in the former Yugoslavia. The inability of the west to agree or enforce clear aims and objectives for its role in Bosnia has contributed to a situation today where our troops are vulnerable, civilians are murdered, undemocratic and violent forces are in command and war crimes are, as yet, unpunished. It is particularly important that the European Union now acts in a concerted way. Will the Prime Minister insist that the economic blockade and political isolation of Serbia will not end until the Bosnian Serbs withdraw from the territory allocated to the Muslim community?
The security of our troops, whose bravery we greatly commend—I entirely agree with what the Prime Minister said about that—must come first and foremost. With that said, will he continue to impress on all our allies the disastrous consequences of a withdrawal of United Nations troops without a viable peace plan in place, not merely for Bosnia, but for the authority of the UN generally?
On the economy, may I thank the Prime Minister first for his effusive praise of Mr. Delors at the summit—something that is welcome at least on the Opposition side of the House? In particular, may I congratulate him on his welcome for the Delors paper on job creation? We agree unreservedly with the new emphasis that it places on tackling long-term unemployment and other measures, including intensive education and training; an active re-employment service; flexibility in the organisation of work, to balance family and employment responsibilities; tax rebates and other measures to counter long-term unemployment; equal rights for part-time employees; and special measures to attack youth unemployment.
I am extremely surprised, however, that the Prime Minister should represent that paper as a success for his views, as it bears out many of the points that we have been making for some time. While the document rightly stresses reducing unnecessary costs and a flexible and adaptable work force, is not the principal difference between the Conservative Government and our European partners, whether Labour or Conservative, that they see such a modern work force resulting from investment in people and technology and view it as entirely compatible with decent standards and fair treatment at the work place?
If he continues to claim that the rest of Europe is moving his way, why is his Secretary of State for Employment still having to go to the Council of Ministers 616 to veto social legislation? Why does he alone out of all Heads of Government, whether Conservative or Labour, veto the social chapter of fair treatment and work for people in Britain?
As the Prime Minister made such a play of that, may I raise one aspect of economic and monetary union? The presidency conclusions, which I assume he fully endorsed, say this about such a union: The new instruments of the Maastricht Treaty for strengthening the convergence of our economies are being consistently used in order energetically to advance the European unification process in the economic and monetary fields". What is the role of the Government in relation to that statement? What steps are they taking, energetic or otherwise? I am sure that that will be of interest to the Opposition parties not merely on this side of the House, but on the other side, too.
On subsidiarity, may I again welcome the communiqué's endorsement of that as the key to democratic legitimacy? Would not the Prime Minister's support for that principle abroad be more credible if he acted in accordance with it at home in the United Kingdom, instead of centralising power?
On enlargement, there is no doubt that the actual, and potential, enlargement of the Union is changing the context in which its future develops. As the right hon. Gentleman knows, we fully support the concept of enlargement. Is not the single biggest handicap to widening the European Union and including the eastern European countries, however, the existence of the tariff barriers that keep their goods out and, above all, of the common agricultural policy? Does not the process of enlargement make wholesale and fundamental change to the common agricultural policy not merely desirable but essential to its future progress? Will he confirm that the CAP still adds around £20 a week, or £1,000 a year, to the average family's food bill?
Indeed, does not that bear on the issue of fraud? Is not the CAP the main focus for such fraud? While we can all agree with the right hon. Gentleman's general sentiments and the measures he suggested on fraud, would those not carry greater weight if the Government had not recently and for the second year in succession voted for cuts in the Union's anti-fraud budget?
Although the summit was, of course, not without its successes, does the Prime Minister accept that it was low key and uncontroversial in part at least because it identified problems rather than resolved them? The big questions confronting Europe's future remain. Does he agree that, for those of us who genuinely believe in Europe and Britain's place at the heart of it, a precondition for further European co-operation is that it is decided through a debate involving the people of Europe, not merely their political elite? The debate about Europe's future should be open and the Government and other Governments within Europe should be candid about their views. They should seek to explain and justify further progress, rather than simply demand it. In short, is it not the case that the next stages of the development of Europe will come through persuasion, or not at all?

§ The Prime Minister
I can agree with a great deal of what the right hon. Gentleman had to say—not least because much of it was what I have been saying for most 617 of the past two years. I am glad to see the attention to detail which the right hon. Gentleman gives to so many of my speeches.
Let me pick up on the many points which the right hon. Gentleman raised, starting with his welcome for the £240 million over three years for Northern Ireland, which is a welcome gesture. This is additional money for Northern Ireland which is likely to be extended beyond three years provided that progress is made in the peace process during that period, as I passionately hope it will. It is a remarkable contribution which was unanimously agreed without difficulty at the European Union summit. I am delighted at the Union's support for the process in Northern Ireland, which has been evident for some time.
On Bosnia, the right hon. Gentleman was right to say that there has been an inability to enforce peace. When the whole imbroglio started, I sought advice immediately as to what would be necessary to enforce peace. The military advice which I received right at the outset—long before troops of any sort went in—was that to go in and enforce peace, we would need several hundred thousand troops who would perhaps have to be there for a very long period. Even if peace was enforced, there would be no certainty that peace without a political settlement would continue once the troops had left.
There was a possibility of huge troop commitments in the most alien territory imaginable, with the troops having to stay there even after peace had been enforced unless a political settlement had been reached. It is not possible to enforce peace, and no sensible political or military strategist ever thought that that would be possible. As far as the blockade is concerned, there will certainly be no further sanctions relief, and I can give the right hon. Gentleman that assurance.
As for the right hon. Gentleman's remarks on the economy, he would have seen—if he had been present at the debate—the extent to which the debate has changed during the past two or three years. Many of the fashionable shibboleths of two or three years ago have been utterly and completely ditched. The European Union knows that, increasingly in many parts of the Union, it is becoming less competitive compared with the rest of the world. That is less true of this country than others, but it is true across the European Union as a whole. That is becoming increasingly apparent to political leaders, not only with regard to their own economies but to their own unemployment figures as well.
That is why the Union is turning towards more liberal approaches in terms of economic management and generally greater competitiveness. The whole thrust of what was said—the right hon. Gentleman picks out little bits here and there—was an endorsement of what we have been arguing for in the European Union for many years with increasing success.

§ Mr. Terry Lewis (Worsley)
They will not be voting for you in Dudley.

§ The Prime Minister
Not a lot of people out there say that—certainly not with regard to the policies which the hon. Gentleman and his colleagues advocate.
On economic and monetary union and the convergence criteria, the right hon. Gentleman may not know that the convergence criteria were originally put in the Maastricht 618 treaty at the insistence of the British Government—not least because they are sensible economic criteria in any event, quite apart from convergence. Convergence is necessary before economic and monetary union could be a practical economic step, apart from its political or other desirability. As of today, there are probably only three nations—of which this is one—which are likely, in the foreseeable future, to meet the economic criteria set out in the Maastricht treaty. Luxembourg already does, and we are one of two others which are likely to. Those criteria are correct in their own right, not just as a means of moving towards economic and monetary union.
I welcome the right hon. Gentleman's conversion to subsidiarity. [HON. MEMBERS: "Oh!"] I see the hon. Member for Nottingham, North (Mr. Allen), who is squatting in the aisle, scoffing again at subsidiarity. That is consistent behaviour, because when I first raised the issue of subsidiarity, scoffing was precisely the reaction of the Opposition. They said that we would never get it; that it would never happen; and that it was not desirable. We have got it; it is desirable; it is central to what the Community is doing and every other nation has signed up to it. The Leader of the Opposition has signed up to it, but, alas, there seems to be a split between leader and led on the question of subsidiarity.
I share the right hon. Gentleman's view about the desirability of enlargement, not just for economic reasons, but for security and other reasons. He will know that we were the first to advocate enlargement at the Edinburgh summit. That is true of enlargement to include the EFTA countries and enlargement to include central and east Europeans. He will also know that I have repeatedly made clear my belief that the common agricultural policy was under sentence of death, provided that we enlarged to the east, so he did not have to press me on that today. I welcome him on to my ground, yet again, on that issue.
On the question of anti-fraud measures across the union, the right hon. Gentleman claimed that the budget to combat fraud had been cut. If he looks carefully at that budget, however, he will see that certain capital items that were put there last year have been paid. The revenue to deal with fraud continues at a satisfactory level and it has been agreed across the Community for that purpose.
I have a great deal of sympathy for the right hon. Gentleman's final point about the elite and Governments being out of touch with the views of the electorates across Europe. I pressed that precise view on my fellow Heads of Government in the discussion that we had on Friday evening in Essen. That remoteness has been shown by the difficulties experienced with referendums across Europe and in a raft of other ways. I agree with the right hon. Gentleman that further development of the European Union will have to carry with it the support of people across the Union.

§ Mr. Graham Allen (Nottingham, North)
And their Parliaments.

§ The Prime Minister
Of course, self-evidently with the support of their Parliaments.

§ Mr. Allen
Not here, though.

§ Madam Speaker
Order. This is wasting time.

§ The Prime Minister
It is not practical for some enthusiasts across Europe to believe that, because they happen to think it right, everyone else is necessarily going 619 to follow them. There are increasing signs that that is not the case. It should not be the case and I share the right hon. Gentleman's view about that.

§ Sir Peter Hordern (Horsham)
Will my right hon. Friend accept advice from the Comptroller and Auditor General on the question of fraud in the European Union? Will he especially consider the proposition that no money should be given from Community funds until any funds from a proven case of fraud have been fully restored and restitution has taken place? Does my right hon. Friend also accept that if there are to be as many as 22 nations, or one day 27, in the European Union, a profound change must take place and that any notion of political union must become ever more distant? Is not it important that national Parliaments, which are the closest to the grass roots of democracy, should remain the natural form of democratic expression so far as we can see?

§ The Prime Minister
I agree entirely with my right hon. Friend. On fraud, I shall certainly look at the proposal that my right hon. and learned Friend has made. It is, of course, a first cousin to the proposal agreed at Essen that all the member states will have to report back to the ECOFIN Council on the measures that they are taking in their countries to deal with the problems of fraud. Those measures should cover fraud prevention in the first place and dealing with fraud that arises.
I see political development in the form of co-operation on an intergovernmental basis, not development in the sense of there being a political union, with political decisions centrally taken.

§ Mr. Paddy Ashdown (Yeovil)
I welcome the Prime Minister's statement and, in particular, the progress made in Essen in respect of Northern Ireland and widening the Community. However, does he accept that those people who favour widening European Union also understand, as it seems that he does not, the need to strengthen Europe's institutions and make them more democratic and flexible if that is to be coped with effectively? In that case, does he realise how welcome it is that the Government should be taking, albeit tentative, steps towards defence integration, especially with the French? Do not the failures in Bosnia, and more recently the worrying situation in Chechnya, make that even more urgent? Will he assure the House that he puts that at the front of the Government's agenda for the 1996 intergovernmental conference?
Finally, the Prime Minister has said, rightly, that Britain's policy on Europe should depend on a widespread debate that involves the people of Britain and the people of Europe. It should not depend on the untidy outcome of an unseemly spat led by rebels in his divided party. It will be greatly welcomed that he is now changing his mind on the issue of a referendum. He has said that there might be circumstances in which a referendum would be appropriate. Will he now tell us what those circumstances would be?

§ The Prime Minister
I am grateful to the right hon. Gentleman for his support on Northern Ireland and enlargement. He is also right about the European Union itself becoming more democratic, although many people may mean different things when they say it. I certainly 620 think that there needs to be more accountability by the Commission to the European Council. That is the primary democratic focus of the European Union.

§ Mr. Derek Enright (Hemsworth)
The European Parliament.

The Prime. Minister
If the hon. Member for Hemsworth (Mr. Enright) would do me the courtesy of listening to what I have to say, he might not have had to shout. He could have saved himself some breath.
The European Council is made up of members from the individual democratic domestic Parliaments. The European Parliament is not the primary focus for democracy throughout the European Union. As Labour Members were shouting at me a moment ago, not least from below the Gangway, it is here that the primary democratic institution lies, and not the European Parliament. I am interested to see an apparent divergence between the hon. Gentleman and his hon. Friends on that matter.
On defence, I think that there is scope for more defence co-operation across Europe. I think that there is a great deal to commend that. It is an aspect that we have been examining for some time, and that we shall continue to examine for some time. I think that it is right on its merits, right for the defence of Europe and right for other reasons. I suspect that that will be an issue in the intergovernmental conference in 1996, although much of it has been developing for some time. We have not generally recognised the fact that we probably have more joint defence co-operation with France than we have had with any other nation in Europe, and perhaps any other nation anywhere, for very many years.
I made it clear that I did not rule out a referendum. One will have to wait and see precisely what the circumstances are. I think that it is wise to wait and see precisely what the circumstances are. The right hon. Member for Yeovil (Mr. Ashdown) does not know what will happen in the future, and his past projections of what might have happened today have proved that he does not know what will happen in future. So I have indicated that the circumstances might be appropriate to have a referendum, and if they are, we will.

Several hon. Members
roseߞ

§ Madam Speaker
Order. Those initial exchanges have now taken something like half an hour. I am now insisting that Members restrict the length of their questions to the Prime Minister. I am sure that, for his part, the Prime Minister will respond briskly, so that I can call as many Members as possible.

§ Mr. John Biffen (Shropshire, North)
May I congratulate my right hon. Friend on the part that he played in keeping the Council meeting in a low key. May I ask one question? In the discussions that took place at the dinner meeting, and which touched on the complexities and challenges of enlargement, how many Heads of State expressed the opinion that the single currency would impede rather than facilitate enlargement?

§ The Prime Minister
Most Heads of Government pitched their remarks to what was likely to happen in the next 20 or 30 years, rather than looking at each individual item, so no one directly either supported the necessity for 621 a single currency or specifically objected to a single currency. The debate ranged a good deal wider and a good deal further than that.
However, I think that my right hon. Friend knows the Government's position on a single currency. We sought in the Maastricht treaty to retain a freedom for the House to decide at a later date whether it was in the interests of this country to join. I am sure that that is the right position for the House to maintain.
It is clear that one of the reasons why a single currency has tended to fall away from the standard European debate that we have known so much over the past couple of years is that there is now no doubt in anyone's mind that the original timetable for a single currency is not remotely likely to be met—it will be a good deal later. Although some people are still flirting with the possibility of a single currency among some countries by the turn of the century, others have their doubts about the desirability of that.
What is clear now is that, whereas before the Maastricht treaty many people had in mind the concept of a single currency right across membership of the European Union, that is plainly fatuous if the Union is to be extended to 27 members. It will be almost totally unlikely if it has 20 members and extremely unlikely for 15 members. Most people are concentrating on a small core who may or may not decide to proceed. That carries a good deal more with it than simply an economic judgment. If a small core went ahead without the others, it would materially change relationships within the European Union.
I apologise to you, Madam Speaker, for that lengthy reply and shall try to obey your injunctions in future.

§ Mr. Peter Shore (Bethnal Green and Stepney)
We can all welcome the steps towards extending the European Union towards central and eastern Europe, but it is a rather different matter when we turn to the institutional changes or conditions that are referred to as a prerequisite for extending the Union. Is not a phrase such as "institutional conditions" just a code for the further tightening and centralising of the decision-making process inside the European Union?

§ The Prime Minister
Coming from where he does on the issue, I understand why the right hon. Gentleman thinks that. But I would say to him that, no, that is not the case. I shall give but one illustration of the sort of thing that we have in mind. Every time nations have joined the European Community in the past, one or two extra Commissioners have been added, which is patently absurd and cannot continue. There are too many Commissioners now and we should cut the number. I fervently hope that that will happen in 1996. Clearly, we shall have to have a smaller number. One of the institutional changes to be discussed is a change of that sort, which I think that the right hon. Gentleman would welcome. I think that he would welcome many others, too.

§ Sir Terence Higgins (Worthing)
Is it not absurd for those who argue that the authority of the House is being undermined by Brussels to argue for a referendum—an alien concept that is incompatible with a representative parliamentary democracy? In that context, would it not be particularly absurd to have a referendum on a single currency when most people do not know the difference 622 between a single currency and a common currency? In addition, as my right hon. Friend has said, because of enlargement, that is not likely to be an issue for many years.

§ The Prime Minister
It is certainly not likely to be an issue for many years. As my right hon. Friend will know, I advocated the principle of a common, as opposed to a single, currency some time ago, and I still believe that that would have been the best way forward. It would benefit business and industry—the prime beneficiaries in terms of the economic advantages of a single currency—without the disruption, both politically and historically, to the domestic currency that has become so familiar and beloved of people across the European Union. I remain of the view that, if it is possible to persuade others, a parallel currency is the right way ahead—I am sure that that is right.

§ Mr. Tam Dalyell (Linlithgow)
Was anything said about sanctions against Libya by either the Germans or the Italians, who do not observe them, in view of the fact that 5,000 British nationals work there and British industry is greatly disadvantaged?

§ The Prime Minister
That was certainly not discussed by the Heads of Government and, to the best of my knowledge, it was not discussed by the Foreign Ministers in their meetings.

§ Mr. William Cash (Stafford)
Will my right hon. Friend say no now to a single currency, given the fact that, under section 2 of the European Communities (Amendment) Act passed last year, if there were a Labour Government with a massive majority, they would put into effect a single currency through the mechanism already provided? Therefore, when my right hon. Friend considers whether there should be a referendum, will he ensure that the referendum takes place before the next intergovernmental conference so that we can ensure that we preserve the very rights that my right hon. Friend mentioned in his opening remarks?

§ The Prime Minister
The IGC will have nothing to do with the single currency—it is not likely to be on the agenda at all.

§ Mr. Robin Cook (Livingston)
Come off it.

§ The Prime Minister
It is not likely to be on the agenda—the shadow Foreign Secretary can be reassured about that.
As for ensuring that a future Labour Government would not take us into a single currency, my hon. Friend's complete support to ensure that there is no future Labour Government would perhaps be the most agreeable way to ensure that that does not happen.
I think it right for us to determine what the circumstances are, in the longer term, when the question of a single currency will arise. That must be in our national economic interest. It is why I think we reached the right conclusion at Maastricht: not to sign up now to something in the unknown future, in unknown economic circumstances, and to keep open the option if it is in the economic interests of this country at the time.

§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)
If the Prime Minister is serious in what he says about power residing in national Parliaments, will he advocate giving 623 the European Committees the power not only to amend suggestions from Ministers but to vote on them on the Floor of the House as a matter of routine?

§ The Prime Minister
If the hon. Lady, or any Government, did that, they would make any discussions or negotiations in the European Union almost an impossibility, the more so given the size of its membership, as it widens, which we all want. Whatever the underlying democratic desirability of what she suggests, it would be impractical. It would effectively be a way to kill any activity and almost any progress in Europe.

§ Mr. Winston Churchill (Davyhulme)
May I congratulate my right hon. Friend on the forthright way in which he fights to defend British interests in the European Union—and on the way in which he survives repeated political assassination attempts by certain quarters of the British media?
If there were a clear prospect of a transfer of sovereignty away from this country to the European Union, would my right hon. Friend ensure a referendum before such a transfer took place?

§ The Prime Minister
I am grateful for my hon. Friend's kind words and for his concern for my physical and political welfare. I am very touched indeed, and I look forward to his thoughts spreading.
Constitutional change is not a matter to be taken lightly or trivially. I have said in the past that I do not traditionally favour referendums in a parliamentary democracy, but I recognise that there may be occasions—Northern Ireland was a recent one—when a referendum would be appropriate.
A referendum has been suggested for two matters: one is the outcome of the IGC; the other is the single currency. We do not yet know the agenda for the IGC, and a single currency is still a long way off, and possibly getting further away. On matters of such exceptional importance, as I have said, a referendum cannot be excluded.

§ Mr. Enright
Is not the Prime Minister aware of how incensed Christian Democrats, as well as socialists. on the continent are at his continued attempts to frustrate directives that seek to treat workers as human beings? Does he not realise that the attempt last week by the Secretary of State for Employment to block the directive on building firms that exploit cheap labour has infuriated the general populace on the continent?

§ The Prime Minister
The hon. Gentleman is talking absolute codswallop. This country has the best health and safety record in Europe, and he should know that. If there is frustration across Europe, it is likely to be found in the countries where unemployment is still rising because they are not following the policies that we are in Britain, where it is falling.

§ Mr. Ray Whitney (Wycombe)
Does my right hon. Friend agree that the successes of the Essen summit underline again the benefits of British membership of the EU? Does he share my hope that the British media, just for once, will report those successes fully and honestly, so that our people can understand that Britain's future does indeed lie at the heart of Europe?

§ The Prime Minister
I travel hopefully on the substantive part of my hon. Friend's question. I wish our 624 membership of the European Union to be a success for this country. Thus far, over the past 20 years or so, economically it has been an immeasurable success. I think that there is no doubt about that, and the European Community, now the European Union, has undoubtedly been a dramatic success for living standards and for security and peace across western Europe. Those are much bigger issues than many of the matters which engage us in trivial and sometimes not so trivial arguments with our European partners. I want our membership to be a success. I intend that to continue, and I have no intention of acting in a way that would damage that.

§ Mr. Dennis Skinner (Bolsover)
How many more summits does the Prime Minister expect to attend? Did he tell them, including the other Prime Ministers who are also teetering on the brink in the Common Market, that if he had not got rid of those eight Members by removing the Whip, there would have been 34 votes against him and he might not even have made that journey?

§ The Prime Minister
Dear, oh dear, oh dear. I think that the hon. Gentleman is aging. I assure him that that was not discussed in the European Union discussions at Essen. To my knowledge the hon. Gentleman has been making remarks like that since before the last general election. Much to his great dismay, no doubt, he has been wrong all the time.

§ Mr. Hugh Dykes (Harrow, East)
May I congratulate my right hon. Friend on defending the legitimate as opposed to the hysterical interests of the United Kingdom in the European Union? If ours is the most competitive economy, why is it that of the big four we are the only one with a trade deficit? As the pound has been repeatedly devalued since the war, what fantasy are we defending?

§ The Prime Minister
If my hon. Friend looks at the growth pattern and in particular the export growth pattern, he will find that we are doing far better than any other nation in the European Union at the moment. As we came out of the recession the fashionable view was that our balance of payments gap would be very wide. It was often advanced by the shadow Chancellor in his moments of gloom—indeed, he has nothing but moments of gloom—that, as we emerged from recession, the balance of payments gap would widen and widen. It has, of course, narrowed and narrowed, and the reason for that is our competitiveness.

§ Mr. Donald Anderson (Swansea, East)
Is it not an exercise in self-delusion for the Prime Minister to conclude from this inconsequential summit that our partners are moving on to his ground? Surely the reality is that France and Germany and others are moving ahead behind the scenes with economic and monetary union proposals, and that at some stage he will have to choose between pandering to those behind him, whose paternity he has doubted in the past, and the interests of the country.

§ The Prime Minister
If the hon. Gentleman wants to look at self-delusion he should look in the mirror. As for the summit being inconsequential, I refer to the £240 million for Northern Ireland, the fraud commitment, developments on subsidiarity, deregulation and competitiveness, the strategy on enlargement, and the historical impact of having another six nations attending 625 the European Union summit. If those are inconsequential, heaven help us from what the hon. Gentleman thinks would be consequential.
On monetary union, I suggest that the hon. Gentleman compares some of the more recent speeches by European leaders with those of two years ago. He might, for example, look at Mr. Balladur's recent speech and at what President Mitterrand had to say at our joint press conference in Chartres. If he had done that, he would be better informed and would not have asked that question.

§ Sir Teddy Taylor (Southend, East)
In view of the continued uncertainty in the fishing industry, would the Prime Minister care to clarify the statement by Mr. Gonzales in Madrid this morning that he was overjoyed at what he saw as a crucial breakthrough over fishing? Is it true that he forced this issue on to the agenda, that a crucial breakthrough was achieved, and that he got what he came for? Does the Prime Minister accept that, when such statements are made by foreign Prime Ministers, and particularly in the context of our fishing industry, it is helpful to have the issue clarified and a statement made so that the whole House knows what is going on, or whether a statement is a load of rubbish?

§ The Prime Minister
I have not seen that remark by Prime Minister Gonzales, but it is not entirely unknown for Prime Ministers abroad to make statements for domestic reasons—[Interruption.] That does not, of course, apply to British Prime Ministers. It applies occasionally to Prime Ministers elsewhere who do not find themselves subject to the same rigorous questioning in their Parliaments as we do in ours. Indeed, I must say that some of my fellow Heads of Government could scarcely find their way to their Parliaments with a guide dog.
On the point about fishing, it has been agreed that the new rules must lead to no increase in effort, including for the Spanish fleet. There was no great breakthrough, no great change, and the issue will be debated in the House later this week.

§ Mr. Denis MacShane (Rotherham)
That last insult to every Prime Minister in Europe really takes the biscuit. More seriously, if, as we know, the Prime Minister cannot speak for his party but claims that at least he speaks for his Cabinet, why is there not a single Europhobe Cabinet Minister sitting on the Front Bench with him today?

§ The Prime Minister
Dear, oh dear. I am not really sure why the hon. Gentleman bothered to ask that question and it certainly does not merit a reply.

§ Sir Wyn Roberts (Conwy)
Does my right hon. Friend accept that the undoubted successes that he achieved at Essen, which were grudgingly welcomed by the Leader of the Opposition, will be warmly welcomed in many parts of the country? He should be congratulated on his part in achieving them.
On the economic front, is it not a fact that last week Mr. Delors described the policies pursued by my right hon. Friend and his predecessors as ultra-liberal economic policies which he was happy to thwart with socialism? 626 Have not Conservative policies been well and truly vindicated as the only possible policies to be pursued in Europe to reduce unemployment and create jobs?

§ The Prime Minister
Not only do I believe that to be overwhelmingly the case, but I believe that that is the view of most of the people who attended the Essen summit.

§ Mr. Peter Mandelson (Hartlepool)
As the Prime Minister is in candid mood today, will he tell us how he would pitch his enthusiasm for a strengthening of the EU's common foreign and security policy, in view of recent comments by the Foreign Secretary? What institutional changes within the EU would be required to allow such a strengthening?

§ The Prime Minister
A common foreign and security policy in the European Union is a relative novelty, following the Maastricht treaty. It is still in its infancy. We think that it can easily be further developed, but on the basis of co-operation, not qualified majority voting. Therefore, it would continue on an intergovernmental basis, but based on co-operation.

§ Mr. Jacques Arnold (Gravesham)
I welcome the announcement on the trans-European projects, especially the funding for the channel tunnel rail link. Not least, it will fund some of the environmental improvements already agreed. May we have an assurance that European environmental funds will not be excluded from further environmental improvements in Kent?

§ The Prime Minister
I think that I can give my hon. Friend that assurance. Of course, I cannot guarantee that more funds will necessarily become available. I do not know whether they will or what priorities will emerge, but they will certainly not be artificially excluded.

§ Mr. Llew Smith (Blaenau Gwent)
Has the Prime Minister read the report in The Times today, which states that the summit decided that job security and welfare benefits should be reduced to cut the queue of 17 million unemployed? If the report is true, why did he not mention it? Can he explain how cutting job security and welfare benefits will increase employment?

§ The Prime Minister
I do not know precisely what The Times is referring to—

§ Mr. Smith
Here it is.

§ The Prime Minister
I am not quite that long-sighted. I did not read that report, but I suspect that it is an extrapolation of the argument that unless we are competitive we will lose jobs. That has been happening across the whole EU, where 18 million to 20 million people are unemployed. If the number continues to rise, it will be an extremely serious long-term problem for the EU. The number has been rising almost consistently since the 1950s as we have become progressively less competitive. I suspect that the article which the hon. Gentleman has in mind indicates the need to retain competitiveness across Europe to ensure that more people are put back into work.

Mr. Edward Gamier (Harborough)
May I congratulate my right hon. Friend on what might be described as a dull and businesslike meeting at Essen? 627 Will he confirm that quiet confidence at such meetings will achieve what this country needs: enlargement, competitiveness and subsidiarity?

§ The Prime Minister
I entirely agree with my hon. Friend about that.

§ Mr. David Winnick (Walsall, North)
It was a difficult one, was it not?

§ The Prime Minister
I entirely agree with my hon. Friend's wise words on that subject, and he is right to stress them. The hon. Member for Walsall, North (Mr. Winnick) might have put it differently, but I prefer my hon. Friend's formulation.

§ Mr. Nigel Spearing (Newham, South)
In his reply to my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), the Prime Minister suggested that the institutional conditions before enlargement were largely mathematical—matters such as seats. Has not the presidency, in the form of Chancellor Kohl and his friends, advocated increasing the powers of the European Parliament? Does the Prime Minister agree, therefore, that even if his Government do not believe in increasing those institutions' powers, other members of the reflections group at the 1996 conference probably will?

§ The Prime Minister
Yes, some of them will certainly want more powers, as the hon. Member for Hemsworth (Mr. Enright) said earlier, although I was not entirely sure whether he was in favour of or against them.

§ Mr. Enright
In favour.

§ The Prime Minister
He is in favour of them on this occasion—good. So some people will argue for that in 1996. The illustration that I gave the right hon. Member for Bethnal Green and Stepney (Mr. Shore) was just one example of the sort of matter that will be discussed in 1996. One could give others. I have no doubt that some will argue for changing the powers of the European Parliament. There will be a range of proposals, but whether they will be agreed is a separate matter.

§ Mr. David Harris (St. Ives)
Will my right hon. Friend take the opportunity to refute completely the allegations and suggestions made by the Labour and Liberal Democratic parties that a backstage deal that will do down our fishing industry was stitched up at the summit? Will he assure the House that, at the Fisheries Council meeting next week, which is particularly vital to south-west England, we shall retain our position and robustly defend our fishermen's interests?

§ The Prime Minister
No backstage deal has been done. We have succeeded in setting aside the complex solution put forward by the Commission in September, which was not in the interests of British fishing. Instead, the Council agreed in its conclusions that a non-bureaucratic solution would need to be found. We shall continue to consult the fishing industry. Our objectives remain to ensure the following: that British fishing interests are protected; that only necessary 628 measures are agreed; that fishing effort should not increase; and that the ability to take quotas is uninhibited.

§ Mr. Tony Banks (Newham, North-West)
Before it develops into a story throughout Europe, would the Prime Minister care to rethink the gratuitously insulting words that he offered his colleague Prime Ministers on their inability to know where their Parliaments are, not to mention his insult to guide dogs? Other Prime Ministers may have their Parliaments under greater control than he has his own. Why does he object to the European Parliament having greater democratic powers? Why should it not be the democratic institution for Europe? After all, its members are elected as well, and national Parliaments seem incapable of getting democracy into the European Union.

§ The Prime Minister
I hope that the hon. Gentleman's words will gain wide currency. If he implies that he wants a significant movement of authority from this House to the European Parliament—

§ Mr. Tony Banks
indicated assent.

§ The Prime Minister
I note that the hon. Gentleman is nodding. He therefore wants a significant movement of powers from this House to Europe.

§ Mr. Skinner
No.

§ The Prime Minister
There seems to be slight dissent from other Labour Members.

§ Mr. Skinner
We may disagree, but at least we all have the Labour Whip. [Interruption.]

§ The Prime Minister
Perhaps the difference is not so slight. There is a fundamental split between not just Opposition Members but left-wing Opposition Members, with Opposition Front-Bench Members no doubt sitting uneasily in the middle. Thank heavens that that sort of thing only happens there.

§ Mr. Michael Spicer (Worcestershire, South)
I agree with the tone of much that my right hon. Friend said, particularly in respect of the European Commission, Parliament and Council. However, I believe that my right hon. Friend said that a single currency is unlikely to come about in the near future. Is not that difficult to square with the treaty, which states that a single currency must come about by 1 January 1999? Was my right hon. Friend implying that the treaty must be amended, so that the timetable will not be fixed?

§ The Prime Minister
Originally, in 1972, there was agreement on a single currency by 1980. That patently did not happen because neither the economic circumstances nor the political will were right. It is certainly the case that the economic circumstances will not be right for 1997. It is extremely improbable that the right economic circumstances will be widespread in the Union in 1999—and they, too, are written into the Maastricht treaty as a necessary precondition for a single currency. That certainly applies to a European Union of 12, 15 or whatever number of states. It is conceivable, though no one yet knows, that a smaller group of member states might be ready by 1999. Even if that were the case, they would need to consider carefully the implications for the whole European Union 629 if they adopted a single currency when the others—whether or not they wanted to go ahead—were not economically in a position to do the same.

§ Mr. Andrew F. Bennett (Denton and Reddish)
The Prime Minister reported that the summit agreed to abandon the proposal for a carbon tax. Did the summit reaffirm commitment to the Rio targets? If so, how will the British Government meet their commitment?

§ The Prime Minister
A European Union conference on environmental matters will be held in Berlin in the near future. The summit touched on environmental matters only in general because it agreed that those matters and the Union's position at the Berlin conference should be discussed at the Environment Council next week.

§ Mr. George Kynoch (Kincardine and Deeside)
I welcome my right hon. Friend's statement. Does not it demonstrate the United Kingdom's great influence on European affairs? Does my right hon. Friend agree that it would be disastrous for all parts of the United Kingdom if that single, strong voice were put at risk—as it surely would be under Labour's proposals for constitutional reform?

§ The Prime Minister
That is undoubtedly the case. I have forcefully expressed my views on that issue in the past. If the United Kingdom did not have a single, unified voice in the European Union, it would not have the same force of argument. That does not apply exclusively to the Union, because it would also be the case in the United Nations, G7 and every other international forum where Britain currently sits at the top table. A divided United Kingdom, perhaps leading to parts of it being separated, would not allow it to retain that position.

§ Mr. Barry Jones (Alyn and Deeside)
Did the Prime Minister raise at the summit the difficulties confronting the British aerospace industry? Did France and Germany raise with him the need for the British Government to purchase the future large aircraft? I hope that they did. Is the right hon. Gentleman aware that my constituents, 630 who manufacture the European Airbus, are terrified that the Government will buy Hercules and not place orders for the FLA?

§ The Prime Minister
No, the British aerospace industry was not discussed—although it is, of course, important. Much of the present Hercules fleet will need either substantial refurbishment or replacement. We must consider whether to go wholly or partly for refurbishment, buy new planes now, or buy some new planes now and develop the future large aircraft. Those matters are under active consideration and no conclusion has yet been reached.

§ Mr. Tim Smith (Beaconsfield)
Is my right hon. Friend aware that there will be a warm welcome for the additional funds destined for Northern Ireland? Did not President Delors take a particular personal interest in the Northern Ireland peace process? Will my right hon. Friend confirm that the funds will genuinely be additional and directed at areas of greatest economic and social need?

§ The Prime Minister
My hon. Friend is entirely right. From the moment of the Downing street declaration, President Delors has been particularly helpful in regard to developments in Northern Ireland. I am very grateful to him for the personal effort that he has put in, and the personal part that he played in ensuring that this substantial package of extra assistance for Northern Ireland and the border counties of the Republic would be made available. It will be used for projects to promote reconciliation, encourage economic growth and expand job opportunities.

§ Mr. Harry Barnes (Derbyshire, North-East)
Is it not disappointing that nothing was done at Essen to tackle the democratic deficit? Should not powers move to the European and national Parliaments, and away from secret bodies such as the Council of Ministers?

§ The Prime Minister
I am not sure that I would describe the Council of Ministers as a secret body. No one who attends its meetings would regard them as at all secret. Given that everyone holds press conferences immediately after the meetings, that conclusions are published, that some of the meetings are open nowadays and I will answer questions about them—as, no doubt, will others—I do not think that they are terribly secret. I am not sure that the hon. Gentleman is on the strongest ground.

Several hon. Members
rose—

§ Madam Speaker
Order. We shall now move on.