HC Deb 15 December 1997 vol 303 cc19-36 3.30 pm
The Prime Minister (Mr. Tony Blair)

With permission, Madam Speaker, I shall make a statement about the European Council in Luxembourg on 12 and 13 December, which I attended with my right hon. Friends the Foreign Secretary and the Chancellor of the Exchequer, and the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Manchester, Central (Mr. Lloyd). I have placed a copy of the conclusions in the Library.

The main business of this European Council was the historic decision to launch the enlargement process for Cyprus and the countries of central and eastern Europe. We also discussed monetary union, and I will deal with that first.

The question before the Luxembourg Council was how to give effect to the remit from Amsterdam to improve the processes of economic co-ordination in Stage 3 of economic and monetary union consistent with the principles and practices of the Treaty". Most of this was straightforward, but there was a proposal for the establishment of a body of members of the single currency area only—the so-called Euro X group—to discuss not only specific questions about the management of the euro, but a wide range of economic issues of common concern to all 15 member states, including tax reform and the labour market.

Our concern was to avoid a role for this body which would undermine the role of the ECOFIN Council and cut across the treaty provision that economic policies are a matter of common concern to all member states. This would have created quite unnecessary divisions in the European Union.

The outcome at Luxembourg has confirmed that the ECOFIN Council is the sole decision-making body on economic co-ordination, and that the remit of the informal body of euro participants will be limited. Whenever matters of common interest to all member states are to be discussed, all 15 are entitled to be there, wherever the discussions take place. What is more, in the event of any dispute over what is of common interest, the issue can be tabled at ECOFIN, which is the only place where decisions can be taken. This is a reasonable and sensible agreement.

The European Council also agreed to intensify further efforts to complete the internal market; to give priority to the computer problems arising from the millennium date change, the so-called millennium bug; and to ensure that environmental protection requirements are integrated into the Community's policies and activities. We also issued statements on the middle east peace process, food safety, and the 50th anniversary of the universal declaration of human rights.

On enlargement, we took a series of important decisions. First, we agreed to establish a European conference for the 15 European Union member states and those European countries aspiring to join. It will cover co-operation on foreign and security policy, justice and home affairs, and other matters of common concern, particularly economic issues and regional co-operation. Countries respecting certain fundamental principles and values will be invited to take part. Such offers will be made to the 10 central and eastern European applicant countries, to Cyprus and to Turkey. The first meeting will take place under the UK presidency in London in March, at Head of Government level.

Secondly, an inclusive enlargement process for all 10 central and east European applicant countries and Cyprus will be launched by a meeting at Foreign Minister level on 30 March. The process will involve accession partnerships with each of the 11 countries and pre-accession aid, which will be increased substantially.

Thirdly, on the basis of the Commission's recommendations on readiness for membership, formal accession negotiations will open in spring with Poland, Hungary, the Czech Republic, Slovenia, Estonia and Cyprus. Each negotiation will be conducted separately, at its own pace. The accession negotiations for Cyprus should contribute to a political settlement of the intercommunal problem. The Council made it clear that representatives of the Turkish Cypriot community should be part of the Cypriot delegation.

Preparations for the opening of accession negotiations for the other five central and east European countries— Bulgaria, Romania, Lithuania, Latvia and Slovakia—will be speeded up. The readiness of all 11 applicants will be reviewed regularly. There is no predetermined order of accession. Individual countries can catch up or be caught up.

Fourthly, the Council agreed on the importance of a special strategy to prepare Turkey for future accession once the necessary political and economic conditions have been satisfied, according to the same criteria used for other candidates. Turkey recognises that time and changes are needed before actual accession negotiations can be envisaged, but full recognition of its eligibility for accession is a marked step forward for Turkey, and I welcome it.

I wrote immediately to Prime Minister Yilmaz to encourage him to take full advantage of that opportunity. I understand Turkish disappointment at being treated in an apparently different way from others, but I continue to hope the Turks will come to see the advantages of participation in the European conference as a further step towards eventual membership.

The House will recognise the significance of the decisions. A giant step has been taken towards the elimination of the divisions in Europe left by the cold war. Although the negotiations will inevitably take some years, we have an historic opportunity to secure freedom and prosperity across our continent. That has been a long-standing British objective. I am delighted that the process will be launched during the British presidency. We shall ensure that it gets off to a flying start. I know that the whole House will welcome that.

Reform of European Union policies will, of course, also be essential if enlargement is to be successful. In July the Commission circulated its proposals for such reform and for the future financial framework. The proposals envisage further desperately needed reform of the common agricultural policy, reform of the structural and cohesion funds and maintenance of the current 1.27 per cent. ceiling on own resources. The European Council agreed that those ideas represented a good working basis and called for formal legislative proposals from the Commission as soon as possible. We shall push that vital work as far as we can during our presidency, although the timetable for final decisions is necessarily longer than that.

The European Council meeting was important. We agreed to launch enlargement negotiations and set a strong framework for all the potential candidates, including Turkey. We gave real impetus to the process of CAP reform. We ensured that the position of the UK in economic policy co-ordination is fully safeguarded. That is an excellent launch pad for our presidency in the first half of next year. Our priorities will be those that can help transform ordinary people's lives—above all, employment and jobs.

The Luxembourg summit showed again that the Government are positively engaged in Europe as a leading and influential player and resolute in the defence of our interests and what is right. I commend the outcome of the summit to the House as good for Britain, good for the European Union and good for the wider interests of Europe too.

Mr. William Hague (Richmond, Yorks)

I thank the Prime Minister for his statement, and I welcome a number of the conclusions of the Council, especially the support that the Council gave to the middle east peace process; and the commitment to completing the single market, which is long overdue. I also welcome the historic decision to press ahead with the enlargement of the Union, to include certain countries of central and eastern Europe, and Cyprus. The Government will have the full support of the Opposition in achieving that goal which, as the right hon. Gentleman says, is a long-standing British objective.

I also welcome what the Prime Minister has said about accession partnerships with each of the 11 countries, as it is important that the countries not included in the first wave of accession should not feel that their applications are on the back burner.

The Prime Minister has said that reform of the common agricultural policy is desperately needed, and he is right. But will he ensure that proposals for CAP reform do not hit the British farmer disproportionately, since the farming community is now facing intense and mounting difficulties, partly as a result of the actions of the Government—[HON. MEMBERS: "NO."] When the Government cut the bovine spongiform encephalopathy support price and take away hill livestock payments, it is indeed partly as a result of the actions of the Government.

Did the other Heads of Government tell the right hon. Gentleman during the summit that their representatives on the EU Veterinary Committee would vote today to postpone the food safety measures which he believes are essential? We shall support the Government's restrictions on imports; but how confident is the Prime Minister that the United Kingdom will not now face legal action from the Commission for adopting this measure?

Does the Prime Minister agree that European Union costs will escalate as a result of enlargement; and can he outline what plans he has to deal with those costs? Will he guarantee that the budget rebate won by a Conservative Government, and worth about £18 billion since it was introduced, will not be forfeited? Will the right hon. Gentleman guarantee that the reference in the presidency conclusions to "discouraging harmful tax competition" will not herald measures to erode the advantage that this country enjoys from our low tax rates?

When the right hon. Gentleman discusses tax reform, will he involve the Paymaster General who, after all, has wide experience of different tax regimes throughout the EU? Or better still, will he not do so, so as to improve the credibility of the Government?

Turning from what was happily agreed at the Council to what was not happily agreed, does the right hon. Gentleman recall that, in the days leading up to Luxembourg, all his talk was of not backing down on the issue of British membership of the Euro X committee? Does he remember the Government saying that Britain should take part in single currency decisions and be a member of the committee as a matter of right? Does he believe that it was wise to advertise in advance that he would not give way on the issue, and then, when he arrived at the summit, to give way on it? Would he accept that the cack-handled way the Government have handled these negotiations has damaged their credibility in Europe and caused considerable resentment and anger, on the part not just of the French Government but of the German Government and other states?

Will the right hon. Gentleman learn his lesson from this summit and, in future, if he is going to make demands, will he stick to them? If he is not going to stick to them, will he not make them in the first place?

Will the Prime Minister give a straightforward answer to the question: is Britain in or out of the key single currency meetings which the Government were adamant they would be in? What is the precise nature of the so-called informal meetings among the single currency member states? Can a meeting that includes 11 European Governments, the European Commission and the European central bank properly be described as informal?

The 11 Governments promised to consult Britain on matters of common interest. Who will decide what those matters of common interest might be—Britain or the 11 states? Can the Prime Minister give us examples of what might be considered matters of common interest— and what might not be?

The Prime Minister will be aware that the behaviour of the Government's spin doctors, which came in for much criticism from other Governments at the Commonwealth conference, has again been the cause of much complaint. Has he seen the report in The Times today which states: At Luxembourg and other Euro-gatherings since the Government took power, the Prime Minister's team have alienated foreign journalists with a spin-doctor style that varies between aggressive and contemptuous"? Will the right hon. Gentleman help our foreign relations by keeping these people away from future international gatherings, as we all want Britain's presidency of the EU to be a success?

We want genuine progress to be made on enlargement, the completion of the single market, CAP reform and job creation, but will the right hon. Gentleman assure the House that, at next year's important Councils, he and other Ministers will concentrate less on image and more on substance?

The Prime Minister

I could not work out which direction the right hon. Gentleman was coming from on that one; however, I shall deal with his points in the order in which he raised them.

We are agreed on enlargement and the accession partnerships. As for reform of the common agricultural policy, I have no doubt at all that it is massively in Britain's interests and in the interests of our farming community. The worst thing that has happened to our farmers is the BSE fiasco visited upon them by the previous Government. Not merely did the previous Government refuse to take any responsibility for it, but, in relation to the livestock allowances and the payments to farmers, we have been carrying on precisely the regime that we inherited. Indeed, we have been trying to do better for the farmers than the previous Government did.

In relation to the specified risk materials, we have made it absolutely clear that, as there has been some delay in introducing the measure in the European Union, we shall introduce it ourselves. That was made clear some months ago, when my right hon. Friend the Minister of Agriculture insisted upon it. Particularly after what happened recently in respect of the United States and European beef, it is important for the rest of Europe to realise that BSE is not simply a British problem. It is now in the interests of all Europe to get it sorted out.

We have before the European Commission both the export certified herds scheme and the date-based scheme. We are making progress on both, and I hope that we can report more substantial progress in the not too distant future. It is extremely important that there is some movement on that. Otherwise, the ludicrous predicament will continue whereby people eat British beef here, but we are not allowed to export it.

As I have said before to the right hon. Gentleman, some of the tax competition measures are helpful to British companies. In respect of the cost of enlargement, we are keen to maintain the own resources ceiling precisely because we want to ensure proper budgetary discipline. At Britain's behest, some strong words were included in the Council's conclusion on that.

As for Euro X, I could not work out whether the right hon. Gentleman was saying that we should have simply conceded the point, or whether we should have fought even harder. The idea that countries inside the euro should discuss certain issues and that other issues should be set apart from that is set out in the Maastricht treaty that was negotiated by the previous Government, so it is absurd for the right hon. Gentleman to criticise us for accepting that distinction when it is in the treaty that was negotiated by the previous Conservative Government.

What was vitally important about the discussion on Euro X is that that informal body is no longer in danger of becoming an economic government body for Europe, taking decisions on matters such as tax reform and the labour market, and Britain being excluded from it. That will not happen now, as is absolutely clear from the Council's conclusions. As for damaging relations with France and Germany, I do not believe that they have been damaged at all.

The Government will stand up for British interests whatever the circumstances. That position has always been urged upon us by the Conservatives. Then, when we stand up for British interests, they tell us that we should have given way in the interests of being better members of the Community. It is absurd.

The right hon. Gentleman asked who would decide which were matters of common interest. Again, thanks to the position that we have adopted, that will now be decided by ECOFIN—the Finance Ministers of all 15 countries. It is absolutely clear that, from now on, the Euro X informal grouping will be able to discuss matters of specific sole interest to those inside the euro, but anything of common interest to all has to be discussed by all 15. That is the position won by the Government. Apparently it would not even have been fought for had the Conservatives still been in power.

Mr. Paddy Ashdown (Yeovil)

Mr. George Parker, writing in the Financial Times today, said that we have been used over the past 18 years to communiques and press reports on summits in Europe falling into one of two categories—triumphant isolation or humiliating defeat. I congratulate the Prime Minister on having at least broken that pattern. It seems that we have achieved one or two useful things.

First, I join the Leader of the Opposition in welcoming the move towards what the Prime Minister described as the "historic launching"—not continuation—of the move towards enlargement. That is very welcome, especially since it will be done on an inclusive basis.

Secondly, I welcome the commitment made at the summit to substantial reform of the common agricultural policy. It is right to say that that is in the interests of Europe and its consumers in particularly, although I agree with the leader of the Conservative party that "You ain't seen nothing yet" when it comes to the lobbying that we are likely to get from farmers when the process starts. It is very easy to give—indeed, our recent history is littered with—commitments to reform the CAP. It will be judged in the end by actions not words.

Since it seems that we are using this statement as a peg on which to hang comments on BSE, I recommend to the Prime Minister four actions, which I hope he will consider. First, I recommend that he reconsiders the ban on bone-in beef. I know of the legal advice that he has received, but it would be quite adequate to advise the public of the risk and let them make their own judgment.

Secondly, I recommend that we exercise as rigorous control on beef coming into this country as we do on British beef consumed in this country. Thirdly, I recommend that the Prime Minister reconsiders compensation. I know that that requires some Government commitment, but the state of farming is such at present that that is necessary. Finally, let the Government use their influence on supermarkets in particular, so that country of origin is labelled on beef.

As for the rest, the Euro X, as the Prime Minister has said, is the key element of the decision. I am bound to say that the Prime Minister has made the best of a very weak hand, although the fact that his hand is weak is of his own choosing. He dealt the hand to himself; his own Government did so.

We have consistently said that, although we welcome the apparent decision in principle that a European single currency is a good idea and Britain should be part of it if the British people agree in a referendum, the Government have not yet made a clear declaration of policy on their intention to join, with a target date and policies consistent with it. We have consistently said that, unless and until the Government do that, their own bargaining hand and influence in Europe will be weaker, and the consequences will be felt in investment and jobs in due course.

If the Prime Minister is to respond by saying that this is just a typical example of the Liberal Democrats' overblown enthusiasm for Europe, I would remind him— [HON. MEMBERS: "Yes, it is."] I remind the Prime Minister and Conservative Members that such a view is now the overwhelming view of the CBI, the TUC, many Labour Members and very many sensible and senior Conservatives.

Until and unless the Government do what they say they should be doing—setting a lead on Europe—the consequence for Britain in lost influence, investment and, ultimately, jobs will be greater than the Prime Minister wants it to be. I repeat what I have said before: I believe that the Government will be driven down the course by events rather than leading them, which is what they should be doing.

The Prime Minister

I was going to start not by criticising the right hon. Gentleman but by thanking him for his support, on certain issues at least.

On Euro X and the battle over it, it is important that we get beyond the idea that, whenever there is a dispute in Europe, there is a choice between isolation and surrender. That is absurd. All countries fight for their interests in the EU.

The day after the dispute on Euro X—in which, I may say, many countries were on Britain's side, because they were concerned about the nature of the body—we had lengthy disputes on other issues, such as own resources, issues in relation to Turkey and other matters, in which Britain was on the same side as, for example, France. It is part of maturity of opposition in Europe that we should accept that there will be certain times when we fight on certain issues, as all countries do to defend their interests.

It was very important that Euro X was kept strictly to areas set out in the Maastricht treaty. Despite what was said earlier, if we had allowed the proposal to go forward on its original basis, it could effectively have become ECOFIN mark 2. We did not want that, and it is absolutely plain that that is not what it will be.

In respect of enlargement and reform of the CAP, such reform will be a big battle; we will have to do battle again. In my view, there will be a pro-European battle for reform of the CAP. It is absurd that the consumer in Europe ends up with vast sums of money spent on the common agricultural policy—over half the money spent in the European Union is spent in that way. Reform is right, for Britain and for British farmers. On BSE, I will carefully consider the points that the right hon. Gentleman has made, and he will have heard what I said about the specified risk materials.

On monetary union as a whole, it would be a mistake if we were to set some arbitrary date. It is important to get it right and to have the principles clearly set out. Those principles are clear—the date will be determined by a hard-headed look at our national economic interests. That is the best and most sensible test, and it is well understood by other European countries.

Mr. Stuart Bell (Middlesbrough)

The House will welcome the statement by my right hon. Friend about the successful outcome to the debate about the membership of the Euro X club in relation to ECOFIN. Given that the lines of communication are now clear, can we look forward to a successful launch of the euro on 1 May next year?

The Prime Minister

The discussions and decisions on the launch of the euro will take place during our presidency, and it is important that the launch is handled constructively and well. It is in Britain's interests, in or out, for the euro to succeed, and it will be an important part of our presidency next year. However, it is also important to make it clear throughout that general matters of economic co-ordination are matters for all 15 European countries.

Mr. John Wilkinson (Ruislip-Northwood)

Is it not the case that the members of Euro X will talk about whatever they choose to talk about, and the Prime Minister and the Government have no gagging order or power to direct or curb those discussions? Inasmuch as the members will talk about monetary union, they will be within the terms and provisions of the treaty of the European Union signed in Maastricht, which sought to achieve, in effect, a single state by virtue of economic and monetary union. Can the right hon. Gentleman please spare the House and the country further such exercises in futility?

The Prime Minister

I find it extraordinary that people who are supposed to be so-called Euro-sceptics should say that that battle was not worth fighting. It would be easier to say that if one wanted Britain to join monetary union immediately, since we would then be part of the informal Euro X. It is absurd if Conservative Members' position is that they do not want monetary union at any price, because it is vital that any body that discusses the issues is properly defined and that main economic decision making is kept to all 15.

The hon. Gentleman says that we have no means of limiting the Euro X—he is wrong. The very purpose of having the battle was to make it clear and have it reaffirmed that ECOFIN—including all 15—is the only decision-making body. In the event of any dispute over what is in the common interests of all, we have the ability to table the issue and have it decided by all 15. If the Conservative party thinks that that is not a battle worth fighting, it has no strategic sense at all.

Mr. Mike Gapes (Ilford, South)

Does the Prime Minister recognise that the agreement that has just been reached in Luxembourg would not have been possible without the Amsterdam treaty, and that the position adopted by the former Government would have made the Amsterdam treaty impossible? Therefore, enlargement could not be beginning now, and the welcome statements about the future enlargement of the European Union would not have been possible without the change of Government.

The Prime Minister

What my hon. Friend says is right. First, the Tories had a negotiating position at Amsterdam that was absurd and untenable; secondly, they would have held a referendum, and no doubt we would still have been in the middle of the campaign.

Sir Teddy Taylor (Rochford and Southend, East)

Will Euro X submit its agenda to the Prime Minister before each meeting so that he can make representations on what is appropriate for it to discuss and what is appropriate for the larger Council? Does the right hon. Gentleman appreciate that there is genuine concern that the Government do not appear to have any effective battering rams on the matter, apart from appealing to the group of 15, where they would be outvoted? Would the right hon. Gentleman support any enlargement without a fundamental reform of the CAP having happened and not merely being a hope for the future?

The Prime Minister

On the first point, it is envisaged that the agenda will be circulated to all the countries so that we can see which are the matters of common interest and which are not. That is one reason why it was important to have the dispute resolved. I repeat to the hon. Gentleman what I have said to others—it is important to recognise that Britain had huge support for the position that we took, but we will get these disputes in Europe, and we should have the maturity to resolve them, reach agreement and move on.

In relation to enlargement and the common agricultural policy, I cannot see how there can be successful enlargement without reform of the CAP. It seems to me that the one is absolutely essential to make the other work.

Mr. Tam Dalyell (Linlithgow)

Is it or is it not true— as reported in the public prints—that, at one stage in the negotiations relating to Euro X, Chancellor Kohl said, "Look, Tony: we are trying to help you as much as we can, but I like this less and less"? If that is true, what was the context?

Do the Government recognise the concern of many in the electronics industry in particular—an industry that the Foreign Secretary and I represent—that we should be at the heart of Europe?

The Prime Minister

I cannot recall that conversation at all. Some of what I have read in terms of what Chancellor Kohl is supposed to have said during the meeting seems to be complete fantasy. Of course, people recognise that it is important to define the Euro X body properly. As for the interests of industry in monetary union, it depends on whether it is in the national economic interest as a whole. That is the test we have set; I am sure that it is the right test.

The reason we have said it is not possible for Britain to go in at the moment is that—quite apart from anything else—there is not economic convergence between our economy and others. Therefore, if we were to go in at the present time, we would find our position in the economic cycle greatly dislocated. We would have to lower interest rates at an inappropriate time, and that would have fiscal implications. There are genuine economic reasons for being extremely cautious.

Mr. William Cash (Stone)

Does the Prime Minister accept the inherent contradiction in the position he has presented to the House today? On the one hand, he has signed the Amsterdam treaty—which contained arrangements for flexibility—while, on the other hand, he appears to be trying to exclude that principle when considering questions related to the Euro X committee on monetary union. Does he accept that he has led himself into a trap— and has sold the pass for the British people—in respect of the stability pact, to which he agreed in June, and the principle of monetary union, which was conceded in a statement by the Chancellor?

The Prime Minister

I do not accept that at all—unless I accept the hon. Gentleman's view of what is in the British national economic interest. In my view, it would be very foolish for Britain to rule out, as a matter of principle, monetary union. That is his position, and it is a perfectly honourable one. However, I believe that that would be mistaken. [Interruption.] Well, it all depends on one's view of Britain's national interest. His view is that it is to rule out monetary union; my view is that it is not.

Mr. Donald Anderson (Swansea, East)

May I press my right hon. Friend a little more on Cyprus, where, on the face of it, we have gained all we set out to achieve? How will the representatives of the Turkish Cypriot community in the joint negotiating team be selected? Will he confirm that the negotiations with Cyprus should start in March, that there will be no preconditions in relation to a political settlement before the agreement, and that, during Britain's presidency of the Union, we will do all we can to ensure that it will be full steam ahead with the Cypriot application?

The Prime Minister

There are no preconditions—that was made clear. Obviously, we want to get the accession negotiations under way as quickly as possible. In the Council conclusions, we asked the President to work in the Commission for the proper inclusion of representatives of the Turkish Cypriot community in the delegation to the accession talks. Quite how they are to be selected is not a matter upon which we should comment—certainly not at this stage. We want to do this as quickly as possible.

I still say, and I think that it is accepted by all those involved, that accession will be easier if we can get a settlement to the Cyprus problem—that is a statement of the obvious—but there are no preconditions in the accession negotiations.

Mr. David Curry (Skipton and Ripon)

Does not the Prime Minister's encounter with Euro X demonstrate the inevitable costs of remaining outside European developments? Those costs are likely to get greater the longer that that persists. Would it not make sense to set out with greater clarity Britain's proposed timetable towards membership of the single currency, in terms both of political decision making and of economic convergence?

The Prime Minister

It is true that, if one is outside monetary union, one has less influence on what happens inside it, but one must also balance the costs on the other side. We have set out what are the only sensible principles. We have resolved the questions whether there is a constitutional barrier to monetary union and whether we want to be part of a successful single currency, and we have decided the economic tests of national interest that we have to assess.

We have also begun proper preparations with British industry, in case the country should want to exercise its choice to join monetary union. That is the most sensible strategy, deciding all the questions of principle without locking us into a specific, precise timetable that might end up being arbitrary and not the one that we want to engage in.

Mr. Dennis Skinner (Bolsover)

Does my right hon. Friend agree that enlargement also has its difficulties? Does he accept that the new agrarian economies would present even greater difficulties for reform of the common agricultural policy? As the Tories, and the Liberal Democrats in particular, are very keen on reforming the CAP, let me enter this caveat: I would bet on it now that, when a specific proposal is made for reform of the CAP, with enlargement happening at the same time, every single one of them, including the Liberal Democrats, will oppose it. It will make welfare to work look like a tea party.

The Prime Minister

It is certainly a most welcome tea party.

My hon. Friend makes a shrewd observation: enlargement will be a lot more difficult to deliver in practice than in principle. It will be one of our main functions in our presidency to start putting in place some of the practical reforms necessary to get enlargement under way. I have a real concern that, although everyone pays lip service to the principle of enlargement, when people come face to face with the reforms that are necessary to make it work, we will find that it is a battle in which Britain will have to secure allies to carry it through.

Mrs. Margaret Ewing (Moray)

The Prime Minister referred to structural funds. As the Commission has been asked to make legislative proposals, what specific ideas will the Government propound on eligibility and the criteria for access to structural funds? What proposals does the Prime Minister have for monitoring the effective use of those funds, which have been vital to areas such as mine in the highlands and islands of Scotland? Will he confirm that structural funds will become the responsibility of the Welsh Assembly and the Scottish Parliament?

The Prime Minister

On the highlands and islands, we successfully argued for specific reference to sparsely populated areas. On structural funds more generally, there will undoubtedly be change, and it would be dishonest to pretend otherwise, but we will of course fight hard for the fairest deal possible for Britain. It is important to recognise that, if we are to keep the ceiling on own resources and maintain tight budgetary control on structural funds, there is bound to be some form of change. We must get the best possible deal for our country, without erecting a barrier to the enlargement that we all want.

Mr. Giles Radice (North Durham)

I congratulate my right hon. Friend on asserting the primacy of ECOFIN and on ensuring access to the informal grouping known as Euro X, but does he agree that, the sooner we join the single currency, the sooner we will be able to enjoy the benefits of full membership?

The Prime Minister

Obviously, the sooner we join, the sooner we are members. The question is, at what point is it right to decide to join? We should set that out according to our economic interests. On Euro X, I repeat the importance of the primacy of ECOFIN and, indeed, it was clearly stated that it is the sole decision-making body. If we consider the difference between the original proposals made by our French colleagues and what has actually happened, it is important to recognise that all those things have been set in their proper context. In time, that will be of even greater importance than it appears to be now.

Mr. Douglas Hogg (Sleaford and North Hykeham)

Does the right hon. Gentleman agree that, as long as Britain stays outside the single currency—for the time being, at least, that policy must be right—it is inevitable that the joining countries will not agree to Britain becoming involved as a key player in those committees that manage the single currency or affect its development? Furthermore, does he agree that those committees are likely to extend their competence over other financial management matters? Should we not be realistic and accept that that is the price we have to pay for retaining control over our currency, rather than pretending that we can have our cake and eat it?

The Prime Minister

If that is an indication of the negotiating position that the right hon. and learned Gentleman would have taken, then he would have yielded far too much ground. Of course, the countries inside the euro zone will discuss matters of specific responsibility, which are, after all, defined in the Maastricht treaty. We have never had any objection to that.

We have objected to informal groupings, supposedly discussing matters relating to the euro, effectively becoming an economic co-ordination body, or body of economic government, that supplants ECOFIN. It is important that we should limit that possibility, and that was what the dispute was about. The argument at the European Council was not merely about getting the right language in the Council conclusions, but about making it absolutely clear that that is what that body would be politically.

Round the table, most countries accepted that they could discuss matters that had been set out as matters of shared responsibility within Maastricht, but that issues such as tax and labour market reform and employment policy—matters that they wanted to discuss and decide in Euro X—could not be discussed informally and had to be taken to the proper body, which is ECOFIN. That will now happen in a way that it would not have happened had we not had the dispute.

Personally, I do not think that we used up much negotiating capital on that matter. One has these disputes, one sets out one's country's interests, and one fights for them. Obviously, a country that is not a member of the euro will have no influence over it—that is clear. We must prevent that informal body from effectively supplanting the formal mechanisms that we have agreed, which are vital to protect our position.

Dr. Lynne Jones (Birmingham, Selly Oak)

Was there any discussion of the practicalities of pressing ahead with the current timetable for monetary union—for example, the coincidence with the millennium and the consequent strain on technical resources? Did my right hon. Friend consider whether the possibility of our joining in the first wave might be in Britain's interests if a slowdown could be agreed, not least because that might help to contain some of the upward pressures on the pound, which are leading to damage to our exports and, potentially, considerable damage to our economy?

The Prime Minister

It would be a mistake if we took a decision as monumental as joining monetary union on the basis of short-term questions about interest rates or the strength of sterling, although I understand the problems that that is causing our exporters and manufacturing industry.

As regards other questions about delaying the single currency, the countries that are most concerned are very set on the timetable they have. It is important to understand that some countries have different economic interests from ours, such as Italy. It is very much in Italy's interests to get into the first wave of monetary union as quickly as possible. A large debt is overhanging its economy, and the interest payments on that debt are very large. If Italy could get its interest rates down by being part of monetary union, it could reduce its debt levels. There are different economic interests. The intelligent way to proceed is to recognise those different interests, and to take the decision on the basis of a hard-headed assessment of our own economic interests.

Rev. Ian Paisley (North Antrim)

Does the Prime Minister agree that the BSE crisis is an urgent agricultural matter? Has he made any progress—either in the talks or outside them—on this matter? He is well aware, because he met a deputation in the House recently from all sides of Northern Ireland opinion on this matter, that although there is a crisis in Wales, England and Scotland, our industry in Northern Ireland is on the verge of catastrophe.

Can the right hon. Gentleman give us any encouragement that, as he promised me in the House when he stopped me on the way in to vote on Wednesday night, he will respond very soon to the delegation he met? Can he give us any timetable for that? He is very well aware that farmers are going on to the streets to take their issues to the public. As soon as we have something from him on this matter it will ease the situation, but the situation in Northern Ireland is desperate. The number of cattle in the fields is growing, and the failure of Europe to give us proper intervention means that the farmers have to feed them. They do not know what to do.

The Prime Minister

I hope that we can make progress on this as quickly as possible, because I understand the problems of the farmers in Northern Ireland—indeed, farmers here on the mainland, too—which the hon. Gentleman set out in a joint delegation to me the other day. We are doing what we can to work with their representatives to get a proper solution.

In respect of BSE, the best progress we can make is the progress that is being made at the moment. We are talking about the certified herds scheme being agreed early in the new year. That is extremely important for us. However, the EU date-based export scheme for the whole of the farming industry is even more important. We have submitted it. We are getting Commission agreement on it, and are negotiating that at the present time. It will take time—we realise that—but we are doing everything we possibly can.

I believe that other countries in Europe are beginning to understand that if they do not start to ease, in an entirely legitimate way, people's fears about BSE and beef, it will hit all European beef. There is something utterly absurd about a situation in which British people are eating British beef—Northern Ireland people are eating Northern Ireland beef—yet it is impossible for us to export it to third countries. [Interruption.]

Opposition Members should not give us any lessons on this, because they caused the problem. The faster we can make progress on this, the better it will be. We understand that. My right hon. Friend the Minister of Agriculture is making every effort—straining every sinew—to get this resolved as quickly as possible.

Mr. Peter L. Pike (Burnley)

I welcome the important change announced by the Prime Minister about enlargement and the second wave of east and central European countries, including Romania. He referred to the conference to which they are to be invited next year. What other steps should be taken to ensure that those five countries know the change that has been made, and the challenge and opportunity that it gives them?

The Prime Minister

Money is being given to increase pre-accession aid in relation to the Poland and Hungary Aid for Reconstruction and the Economy programme, and, indeed, other programmes as well. It is all being kept under regular review.

Countries such as Romania, Bulgaria and so on—those that are not in the five plus one category that the European Commission set out—are part of the accession negotiations, and have the ability, through the process that we have agreed, to catch up. We met the 10 countries from central and eastern Europe, in Luxembourg on Saturday, and they are delighted that they have the framework within which they can make faster progress towards accession. That has been a very important part of the conclusions.

Mr. David Maclean (Penrith and The Border)

When the subject of food safety was reached in the discussions, did the other European leaders not tell the Prime Minister how ridiculous he and his Government would look if they went ahead with the ban on beef on the bone as of tonight?

Is the right hon. Gentleman aware that the advice being offered by his own Ministry of Agriculture, Fisheries and Food to consumers who already have joints of beef on the bone in their freezers is that they should exercise their own judgment in deciding whether to eat those joints of beef? To use the Prime Minister's own words, is it not absurd that other consumers are not allowed to exercise the same judgment and eat beef on the bone if they want to, when the Ministry thinks that that is good enough for some consumers?

The Prime Minister

As the right hon. Gentleman knows very well, the chief medical officer gave his advice, and gave it in strong terms. If we had not followed that advice, we would have been subject to equal criticism. [Interruption.] The hon. Gentleman who just shouted, "Three options," should research his facts a little more carefully. It was the scientific committee that gave three options; they were referred to the chief medical officer, in accordance with normal practice, and he advised the option that we took.

Mr. Andrew Mackinlay (Thurrock)

May I add my congratulations to my right hon. Friend and his colleagues, both on maximising Britain's negotiating position in relation to the Euro X and ECOFIN controversy, and on providing the machinery for accession discussions to begin?

Does my right hon. Friend understand that the commencement of accession negotiations with many countries, particularly Poland, will constitute an historic step comparable with that of 1989? In the prosecution of what I believe to be an historic mission under the British presidency, will my right hon. Friend—this should be complementary to and parallel with the initiatives of the European Union and the presidency—encourage British industry to become engaged in central Europe, especially in the banking and finance sector?

The desperately needed modernisation of that sector will be a prerequisite for accession, and the British banking and finance industry could make a much more significant contribution than it is making at present.

The Prime Minister

I entirely agree about the tremendous, historic importance of the decisions that were made at Luxembourg, which it is now our job to take on. For many of those countries, this is the passport to a decent and secure future, so it was indeed an historic event.

My hon. Friend may know that my right hon. Friend the Foreign Secretary recently conducted a highly successful tour of eastern European capitals, and we are making every effort to involve British business. We are already one of the main investors in those countries, but I think that many of them are looking to us for help in precisely the areas that my hon. Friend has mentioned— banking and finance, in particular.

Mr. Tony Baldry (Banbury)

At the summit, did the Prime Minister explain in terms to other Heads of Government that we intend, as from early January, to ban the import of all beef that does not meet the same high standards as British beef? Did he explain how that would be policed? Will the Meat Hygiene Service open every lorry at every port to ensure that beef coming into this country meets the same standards as beef here in the United Kingdom? Did the Prime Minister secure an undertaking from the Commission that, if we take such action, it will not result in infraction proceedings against the United Kingdom?

Did the Prime Minister also take the opportunity to explain to other Heads of Government how disappointed we would all be if the EU Veterinary Committee did not approach beef exports from the United Kingdom simply on the basis of best science?

The Prime Minister

Our position has always been that we must approach that issue on the basis of science— although, as I have said, I personally believe that recent events in the United States will help to focus the Commission's mind on the political dangers that will be posed for other European Union countries if they do not adopt the sensible approach. The certified herds scheme has been with the Commission for a long time, and the date-based scheme is under way, but things could happen much more quickly if other European countries showed real political energy.

As for specified risk material, my right hon. Friend the Minister of Agriculture has made the position clear. We will police the scheme in whatever way is appropriate. Everyone knows our position, and it is plainly right. Any legal proceedings are, of course, matters for the European Commission, but we are sure that we are taking the right action for Britain.

Mr. Norman A. Godman (Greenock and Inverclyde)

I agree whole-heartedly with my right hon. Friend's argument that reform of the common agriculture policy must precede enlargement, but may I make a plea for reform of the common fisheries policy? It affects fewer communities, but it is important, especially given that some would-be member states are maritime nations. If we reform the common fisheries policy, Norway may reapply to join the European Union.

The Prime Minister

I agree that reform is important. We agreed a series of measures at Amsterdam that will take that process forward. I do not know whether my hon. Friend's prediction about Norway is right, but reform of the common fisheries policy is certainly the Government's objective.

Mr. Ieuan Wyn Jones (Ynys Môn)

Does the Prime Minister agree that, although short-term palliatives for the farming industry may be acceptable, bearing in mind the current crisis, what farmers are really looking forward to is a level playing field? They want the export ban lifted so that they can export into Europe. He has made it clear that the Government have proposed a date-based scheme for lifting the ban. Did he raise that issue with his colleagues in Luxembourg, and, if so, what was their response?

The Prime Minister

The matter was raised at the Agriculture Council, and I continually raised the BSE issue with all the other Heads of Government in the European Union.

The date-based scheme is the key that unlocks the door. For Northern Ireland, the certified herds scheme is a huge step forward, but for the whole of the British beef industry, a date-based scheme, once it is agreed, will mean that the lifting of the ban is set in a framework and is only a matter of time. That is why it is so important.

As I said, we have invested an enormous amount of time and energy. The Minister of Agriculture has addressed all the EU institutions, and we are making progress; although not as much as we should, because the case is far stronger than others are prepared to concede.

Mr. Nigel Beard (Bexleyheath and Crayford)

Will the Prime Minister confirm that other European countries accept the British position that enlargement requires the reform of the European Union budget?

The Prime Minister

Yes, they essentially accept that. They accept it in principle, and our job is to ensure that they accept it in practice.

Miss Anne Mcintosh (Vale of York)

Will the Prime Minister tell us who will pay for meat and livestock inspections of foreign meat imports after midnight tonight?

The Prime Minister

It will be paid for in the normal way, according to normal budgetary procedures, as other measures will be.

Mr. Andrew Miller (Ellesmere Port and Neston)

Will the Prime Minister enlarge on his statement about human rights in the context of the conference? Does he agree with me that the position he inherited was extremely weak, given the lamentable attitude and isolationism of the Conservative party?

The Prime Minister

That is absolutely right. One of the annexes to the European Council's conclusions dealt with human rights, and there was an important reaffirmation of the European Union's position. It is worth pointing out that the Copenhagen criteria on human and political rights are an enormous spur to the development of political as well as economic reform in countries wanting to join the European Union, and are one of the EU's great achievements.

Mr. Michael Fallon (Sevenoaks)

Did the Prime Minister read page 13 of the Commission's Agenda 2000 document, which the Council agreed? The Commission proposes to work on harmonising member states' health care systems and on a common regulatory framework for pension funds. Did Britain table any objection?

The Prime Minister

I do not know to what the hon. Gentleman is referring, but if it is to the reforms set out in Agenda 2000, there is no question of harmonising health care systems.

Mr. Hugh Bayley (City of York)

I thank the Prime Minister for something that he has not already been thanked for: the decision to hold the ECOFIN meeting during the United Kingdom presidency in the city of York.

Does my right hon. Friend agree that the primacy of ECOFIN over Euro X will be demonstrated on all the key political and economic decisions facing the Union, such as enlargement and reform of the CAP? Does he also agree that we shall see ECOFIN remain the key economic policy deciding body of the Union when it meets in York early in the new year under the chairmanship of my right hon. Friend the Chancellor of the Exchequer?

The Prime Minister

My hon. Friend is absolutely right: that is precisely what we shall see. It is important that that battle was taken on and successfully completed. As I have said, that is the view of the overwhelming majority of the European Union countries. Not many countries wanted to see ECOFIN supplanted, for obvious reasons.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

The Prime Minister has said that he thought that the European Union code on so-called harmful tax competition in Europe would be helpful. How helpful will that code be to the Gibraltar economy?

The Prime Minister

I am not entirely sure what impact that will have on the Gibraltar economy. [Interruption.] I know that we are supposed to be omniscient. If there are any implications, perhaps I can write to the hon. Gentleman and explain them. He should understand that the tax reform that is being talked about is not mandatory. It is simply to deal with certain circumstances—

Mr. Peter Lilley (Hitchin and Harpenden)

It is mandatory.

The Prime Minister

Perhaps the shadow Chancellor, if that is what he is, would listen for a moment. It is not a mandatory reform, and it is supposed to deal with the situation in which, for example, there could be discriminatory tax practices that harm investment. British companies on the whole are keen to have it, but it is simply permissive, not mandatory. I do not know offhand whether there will be any impact on Gibraltar, but I will let the hon. Gentleman know if there is any problem.

Mr. Keith Simpson (Mid-Norfolk)

May I return the Prime Minister to the question by my hon. Friend the Member for Vale of York (Miss Mcintosh) about the control and inspection of meat imports? If I understood him correctly, our farmers will pay twice over. They are paying now, and they will directly have to pay a second time for the inspection of imported meat.

The Prime Minister

No, that is not right. The very reason for the checks on specified risk material is precisely to help our farmers, and that is important. Of course, it will be monitored and inspected in the normal way.

Mr. Edward Leigh (Gainsborough)

Was it agreed that ECOFIN would retain its primacy over Euro X after 1999?

The Prime Minister

Yes, but not primacy—ECOFIN is to remain the sole decision-making body. As I have said to some of the hon. Gentleman's right hon. and hon. Friends, that is important.

It is somewhat bizarre that those who are anti-monetary union, as I know the hon. Gentleman is, should say that this does not matter. It matters more if one dislikes monetary union than if one likes it. [Interruption.] Of course it does, because, when one is not in monetary union, it is all the more important that the body made up of those countries that are in monetary union has a restricted ambit.

Dr. Julian Lewis (New Forest, East)

The Prime Minister has again said that there is no constitutional bar to our entry into economic and monetary union. Does that mean that no loss, however great, of political sovereignty would deter him and his Government from entering economic and monetary union, provided that what they regard as economic conditions alone were right?

The Prime Minister

No, it simply means that we should judge whether we enter monetary union according to our national interest, and that is defined by the economic tests that we have set.

There are two positions on monetary union. The first is to say that the test is essentially the national economic interest, which is what we have set out; the other is to say that it is ruled out as a matter of principle, which is presumably the hon. Gentleman's position. Those are the two positions, and it is not clear whether Opposition Front-Bench spokesmen are in the first camp or the second. The hon. Gentleman asks for elucidation of the position. He would probably be better off directing his questions to them, not to us.