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Mr. Iain Duncan Smith (Chingford and Woodford Green): I thank the Prime Minister for his statement and congratulate the Greek Government on their hard work. I welcome the recent signing of the accession treaty in Athens. I also welcome the statement of support for the middle east road map for peace.

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There were, however, three failures arising from Thessaloniki. First, yet another European summit has passed with no commitment to, or even discussion of, real reform of the common agricultural policy, despite the Prime Minister's QMV. Secondly, the Prime Minister failed to obtain EU backing for his offshore asylum centres; his pilot projects will not hide his failure. Thirdly, we got the European constitution.

The Government have claimed that the proposed European constitution is just "a tidying-up exercise"; yet is it not the case that the constitution will set up a European president, transfer asylum and immigration policy to Brussels, establish a binding charter of fundamental rights and create an overarching constitutional settlement in which the EU can expand its powers without the approval of national Parliaments? The Government have completely understated the all-embracing nature of that constitution.

Recently, the German Foreign Minister said that the constitution is

At the same time, our Prime Minister says that the constitution

What nonsense! The constitution will fundamentally change the way in which every country in Europe is governed. Everybody else sees that.

The Prime Minister always talks about his red lines in the debate on the constitution, so will he tell us why they keep moving? Will he tell us why he opposed a binding charter of fundamental rights, but now accepts it; why he opposed an EU Foreign Minister, but now supports one; why he wanted to limit QMV, but now, apparently, wants even more of it; and why he rejected the need for a written EU constitution, but now embraces it?

The Laeken declaration rightly stated that

Is it not the case, however, that the constitution is top down and even more centralising?

The Prime Minister wants to hide his Government's failure by setting up a false debate about staying in the EU or leaving it. The real debate is not about staying or leaving. The Conservative party does not want Britain to leave the EU; we want to make it work. I remind the Prime Minister that he is the one who wants to make Europe a superpower—that is his policy. That is the real debate and he will do absolutely anything to avoid it.

The President of the Convention, whom the Prime Minister was lauding during his statement, said that

A growing number of European countries are committing to a referendum on the matter, and 88 per cent. of the British people say that they want a referendum. So, if the Prime Minister believes that he is doing the right thing, why does he not hold a referendum and let the British people decide?

The Prime Minister: First, let us deal with the common agricultural policy. The right hon. Gentleman says that it was a great failure that the policy was not dealt with at the Council—[Interruption.] Let me deal

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with the CAP first. The reason why we did not deal with the CAP at the European Council is simple: it would have been quite disastrous to have transferred discussion of the CAP from the Agriculture Council, where there is QMV, to the European Council, where there is unanimity.

For that very reason, everyone who was in favour of common agricultural reform asked us not to take it at the European Council, but to leave it at the Agriculture Council.

The right hon. Gentleman is right to say that other member states objected to the pilot projects and that, because of the unanimity requirement, we cannot get them through on the basis that we originally anticipated. However, because the United Nations High Commissioner for Refugees supports the projects, we are able to undertake them and the Council agreed that the European Commission should report back on those issues.

The full-time president of the Council, whom the right hon. Gentleman mentioned, is good for this country because it allows us to make sure that we have the Council with an agenda that is driven through, rather than 25 nation states having a rotating six-monthly presidency.

Mr. Duncan Smith: You were against it.

The Prime Minister: I am sorry; it was our proposal. Our proposal is to replace the rotating six-monthly president with a full-time chairman; otherwise, we will not be able to get a consistent agenda, driven by the Council—the intergovernmental body that covers all the work of Europe.

The right hon. Gentleman mentioned QMV, on which our position is that if it is in our interests, we accept it; if it is not, we do not. It is quite wrong to say that every extension of QMV is always hostile to Britain. May I simply remind him that, under the Single European Act and the Maastricht treaty, there were massive extensions of qualified majority voting, for entirely sensible reasons to do with the British national interest? Indeed, most of those on his Front Bench, though not him, voted in favour of those extensions.

The right hon. Gentleman is right to say, however, that the divide between the parties is very clear. The right hon. Member for Wells (Mr. Heathcoat-Amory) has published his alternative convention document, which the Conservatives say is very good and effective.

Mr. John Bercow (Buckingham): It is first class.

The Prime Minister: Thank you. That is now the Conservatives' policy, but let me tell them what it says. Let us look at the document that is now being endorsed by those on the Conservative Front Bench. It says:

[Interruption.] Fine: they are all in agreement with that. It goes on to say:

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So that is an end to any concept of any issue being driven through by Europe in that way. The right hon. Member for Wells may be right, he may be wrong—many Members are nodding and saying that he is right—but let us be quite clear that that is effectively redrawing Britain's membership of the European Union.

If Conservative Front Benchers endorse that policy document, their policy is wholly inconsistent with Britain's present membership of the European Union. [Hon. Members: "No, it is not."] Yes, it is, and it would mean that we would have to redraw and renegotiate Britain's membership of the EU. That is now the position of the right hon. Member for Chingford and Wood Green (Mr. Duncan Smith), and it is fundamentally opposed to everything that even the Conservative party has stood for up until now.

Mr. Duncan Smith: What about the referendum?

The Prime Minister: We have already given the reasons why we do not agree with the right hon. Gentleman on the referendum, but let me just say that it is now absolutely clear what the dividing line is. There is no way that that document—signed, I think, by only eight other members of the Convention—is anything other than a plea for a new type of British membership of the EU. That is what it is, and it would mean renegotiating our membership, and that is why the dividing line between our two parties is: this side, constructive engagement in the EU; that side, withdrawal from the EU.

Mr. Charles Kennedy (Ross, Skye and Inverness, West): My right hon. and hon. Friends and I certainly welcome the acceptance of the Convention's proposals in principle, and it is worth reminding ourselves that, not that many years ago, it would have been unthinkable that 15 existing member states and 10 accession countries could reach even this degree of consensus for sensible co-operation over the development of the EU.

There will be an intergovernmental conference later in the year, albeit that we do not know how long it will last, and I gather that the Government now acknowledge that there will be an opportunity for a further debate before the recess on the Convention proposals.

We obviously welcome that, but do the Government acknowledge that it would assist the House's capacity to discuss these matters in even more detail if they were to publish a White Paper outlining with more specific intent their approach to the forthcoming negotiations and their position on the relevant articles?

It was good to hear the Prime Minister make the positive case, where appropriate, for the relevant extensions to qualified majority voting and for the relevant applications of that process, and to begin to destroy some of the myths attached to that by opponents of the process.

The Government have described the proposals as they stand as a "good basis" for discussion. Surely, a dividing line must be drawn between what is a good basis for the ensuing discussion and allowing the unravelling of the basis of the Convention proposals, which is what some of the wreckers want to happen. Does the Prime Minister acknowledge the inherent dangers in that?

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The Prime Minister mentioned the minority report that was issued by the right hon. Member for Wells (Mr. Heathcoat-Amory) and six other members of the Convention. In an article in last week's The Wall Street Journal, the right hon. Gentleman referred to foreign and security policy and mutual solidarity, as it is described. That goes to the central issue, which the Prime Minister may want to address. The right hon. Member for Wells argued:

Does the Prime Minister agree that it is incumbent on him, the Foreign Secretary and all those involved to make the case for a strengthened conduct of EU external relations based on the institutions of the Union, which remain emphatically intergovernmental under these processes? Does he also agree that that will provide sufficient safeguards for independent foreign policy making by member states, including any British Government coming before the House of Commons?

In that respect, the proposed Foreign Minister role is to be welcomed, as is the solidarity shown over Iran and the middle east peace process. Does the Prime Minister agree that if that solidarity could be extended to Iraq it would assist the cause against weapons of mass destruction?

The proposed intergovernmental agency for defence issues, not least research and procurement, is to be welcomed. Many a Committee of the House has examined this area, and we all know about the excessive wastage on procurement measures over the years. Equally welcome is the fact that taxation policy is to remain within the ambit of nation states, Governments and Parliaments.

On asylum, immigration and cross-border crime, not much progress seems to have been made on the first two. The Prime Minister said that the European Commission will report back on the pilot projects that did not command unanimity. What is the time scale for that report back, and what force will it have?

The whole point of a constitution for Europe is to codify the relevant levels of responsibility and competence. That should satisfy Euro-supporters and Eurosceptics alike. In the House and in the debate in Britain, we must identify and make clear the difference between reassuring those who are constructively sceptical about aspects of Europe and those diehards who can never be satisfied. The leader of the Conservative party talks about a false debate. Is it not important that for the first time we have a voluntary exit clause for EU member states, which will place an obligation on each and every political party in British politics to make it clear whether it would ever wish to avail itself of such a clause?

In so far as the Convention moves us forward towards a Europe that is more democratic, more accountable and more transparent, it is to be welcomed. As a country, only inside Europe can we continue to make that case constructively—not increasingly destructively outside it.

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