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Mr. John Burnett (Torridge and West Devon) (LD): Unfortunately, the situation is not one of paralysis. The European Union produces policies that actively undermine our economy and people. It is hatching a policy that will undermine and destroy the trust industry in this country. What could be worse for our economy? Can no one understand that such initiatives are deeply destructive and that no one will vote for closer integration in such circumstances—it is inimical to us?

Mr. Hague: The hon. Gentleman is quite right to correct me. I am glad that there are Liberal Democrats who are unlikely to vote for the European constitution—that is something of a revelation in itself. He is right to correct me because the situation is not quite one of paralysis. Unfortunately, there are some detectable movements, and although they are pretty small given the scale of such world events, they are certainly not positive.
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There were supposed to be many more such movements rather than a situation approaching anything like paralysis. The Lisbon Council was held in 2000, and the Prime Minister came to the House— I remember it well because I was opposite him at the time—to tell us that it marked a

He said that it was a "fundamental reorientation" and that it would bring

He said that it would lead to the adoption of

He said, with great flowing rhetoric, that it represented

He said that it meant—how about this in Europe?—that we could

All that was on the cards after the Lisbon Council five years ago, but what has happened since? Mr. Wim Kok's report examined what has happened, but he concluded that most of the things that should have been embarked upon after the summit have not been embarked upon. Although several have been adopted, such as the recently agreed merger directive, they represent only a small advance. The directive is not so much a concrete measure as a piece of mud. It retains co-determination within companies and means that if companies merge and more than one third of the work force are from Germany, the new company must adopt the German rules. That will not promote a market for corporate control in Europe that will discipline management and improve competitiveness. While the world changes, the EU is still concerned with an integrationist agenda that is reducing the confidence of the people of this country in most of its branches—governmental institutions, the Commission, the Council of Ministers and the European Court of Justice.

Mr. Cash: My right hon. Friend is making an exceptionally interesting, articulate and intelligent speech. Will he acknowledge that many of the criticisms that he is citing are of course consequences of not the new European constitution, but the treaties? When he speaks of paralysis, does he agree that there is a paralysis not only in the thinking of Europe and the Government, but, I say with regret, among some of our colleagues because they are unable to appreciate that the only way to get round the problems that he is accurately defining is by addressing the existing treaties along the lines of the poll that I mentioned a little earlier.

Mr. Hague: If I followed my hon. Friend all the way down that road, there would be paralysis in my speech, as well as in the European institutions. The poll that he mentioned is important, as it is in line with many other published polls, which show that young people in Britain are even more dissatisfied with the operation of European institutions than older people. That may seem counter-intuitive, but when one talks to young people around the country and looks at every survey, one realises that it is certainly the case. Among women under the age of 25 who were surveyed a few weeks ago, seven
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out of 10 did not want to be members of the EU at all. That is a reflex reaction from people who have seen too many decisions taken out of their control.

Whichever institution one looks at, it is getting further and further away from the real concerns of real people around Europe, and from the major forces affecting the world economy. On tax, for instance, we see judgments of the European Court of Justice increasingly intruding into national decision making, which was not meant to happen. It has not been commonly understood that that is happening. The Prime Minister often stands at the Dispatch Box and says that our veto on tax is safe, yet now there are judgments of the European Court of Justice about foreign subsidiaries of companies and cross-border transactions, such as dividend payments within the EU, that affect tens of billions of pounds of revenue, which the Treasury is struggling with and fears. The rights of the nation to control its own tax affairs are being eroded.

Ms Stuart : I wish to ask the right hon. Gentleman a question, rather than make a party political point. In respect of judgments in the European Court of Justice, other countries have protection because they have a written constitution, which the European Court never challenges if it comes to a stand-off. Does that not strengthen the case for the United Kingdom having a written domestic constitution?

Mr. Hague: Presumably, the hon. Lady is advocating that the United Kingdom pass a certain set of laws that protect it in some way, as that should have the same effect as a written constitution. It ought to have the same effect, of course. What is a constitution? It is a set of laws that are a framework for government passed by the country concerned. She raises an important and legitimate point. I favour alternative solutions, such as the European Court of Justice not pushing forward the boundaries of European competence, but she raises an entirely fair point.

The right of the House to set taxation for this country is fundamental. Our ancestors in this place hundreds of years ago brought about a civil war in order to secure that right. The loss of the ability of the representatives of the people of this country to control taxation will further damage the standing of the European Union and its long-term future. The same can be said, and has been mentioned today, of the fisheries policy. In the interests of time, I will not go into detail about the biological and economic catastrophe that that has brought about—

Mr. Bercow: Go on.

Mr. Hague: —despite the encouragement of my hon. Friend. We need only consider the recent efforts, for which we should give the Government credit, to change the practices of fishing for sea bass, which lead to the deaths of thousands of dolphins in European waters, and the frustration created by the difficulty of getting any European agreement about that. Even on these ecological and environmental matters, the European Union is failing its citizens.

The Commission, too, has been mentioned in the debate. Looking into the finances of an organisation is often the boring bit—the nitty-gritty—but it is always
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important because it usually tells us most of the things we need to know about an organisation—about accountability, about its integrity and about the quality of its management. The views of people such as the famous whistleblower, Mrs. Andreasen, and the refusal of the European Court of Auditors to sign off the accounts of the Commission tell us some pretty damning things about accountability, integrity and quality of management.

We in the House would not tolerate a Government agency 93 per cent. of whose payments were judged to be unsafe or riddled with errors, yet that is the position with the European Commission. We would not tolerate an institution where spot checks had found 25 per cent. of the farm aid in Italy, 23 per cent. in Greece and 21 per cent in Spain subject to fraud or error, or an agency that had not been able to have its accounts signed off for 10 years. It is an outrage that money is raised from the hard-working people of this country and all the countries of the European Union, yet there is such scandalous inattention to the use of that money in the European Commission.

I cannot understand why Ministers do not go to a European Council, bang on the table about such an issue, say that the people of this country will not tolerate such things and ask when the European Commission will clean up its act. That is not a difficult thing to do. It is done in companies throughout the country and in Governments throughout the world. Why can it not be done in the European Commission?

The Minister for Europe shakes his head as though that were a hopeless exercise, and the raising of the possibility of fraud and corruption was just one of those tedious things that the founders of the great European future must put up with. If nothing is done, the culture of complacency and arrogance in European institutions will continue. The result of economic structures being unreformed and political institutions being unresponsive will be that the outlook for Europe is far darker than it currently is.

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