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Rev. Ian Paisley: May I remind the right hon. Gentleman that, during a debate in the House on 18 May, I asked him a specific question on this matter? I said:

The Minister replied that

Has he now lost that common ground?

Mr. Alexander: The quotation that the hon. Gentleman reads out reflected the assumption that the process of ratification would be taken forward. What we have established in recent days, in the light of the decisive vote by the French and Dutch people, is that the treaty is in a period of uncertainty ahead of the European Council. European leaders need to come to terms with where the process of ratification now lies, not least in the Netherlands and France, in the light of the decisive recent results about which the hon. Gentleman indicated concern in his original question in the House.

John Bercow (Buckingham) (Con): The Minister was sniffily dismissive of the intervention by my hon. Friend the Member for Tiverton and Honiton (Angela Browning), but the point stands that the burden of regulation is excessive, remorseless, disproportionate to need and beyond the capacity of member states to pay for, without damaging competitiveness. I ask the Minister in all sincerity—I sign up to the principle of economic reform—whether he accepts that a powerful argument can be made within the EU for the adoption of the principle of sunset regulation so that the process is not always one way and is not a continuing ratchet in favour of greater regulation without regard to the interests of business and the workplace.

Mr. Alexander: That is an important point, and it is well taken. However, the use of sunset clauses depends on circumstances. For example, we would not want the changes that we support in respect of economic reform to be sunsetted, as we want that reform process to go forward. I shall expand on some of the specific matters involved in better regulation in the remarks that I am about to make.

Twelve European countries, including the UK, have signed up to the better regulation agenda. The legislation must be properly tested for both potential
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benefits and costs. During our presidency, therefore, we intend to focus on improving the policy-making process through better consultation and the assessment of the impact of proposed legislation on business and on the EU's international competitiveness. Our fundamental goal is to reduce the volume and complexity of EU legislation and to review the impact and outcomes of existing legislation. I think that there is common ground in the House on that at least.

Kelvin Hopkins (Luton, North) (Lab): Much has been made of regulation and deregulation in this debate so far, but does my right hon. Friend agree that deflation is the big problem in the eurozone at present? There is a black hole in economic demand at a time when it should be high. The most successful period in European economics was in the post-war era, when economies were highly regulated but there was high consumer demand.

Mr. Alexander: It would not be appropriate for me to comment in this debate on the macro-economic strategies being adopted by other European countries, but I take issue with my hon. Friend's suggestion that the European economy in the 1960s and 1970s offers a model for the way forward in the 21st century. In the period to which he refers, the global economy was relatively closed, whereas it is much more globalised now. We must recognise that Europe faces particular challenges and that they are as significant as was the challenge of developing peace and stability in the second half of the 20th century. For example, the rise of China and India was never anticipated in the era that he describes with such enthusiasm.

During our presidency, we also want to make progress on the services directive. That directive has a strong focus on better regulation and aims to cut excessive bureaucracy that prevents businesses from offering services across borders or opening premises in other members states. Extending the internal market to the services sector, which represents around 70 per cent. of EU GDP, will be of enormous benefit to businesses and consumers alike.

Mr. Robert Walter (North Dorset) (Con): The Minister referred to the decisions that he hopes will be taken under the British presidency. One provision of the constitution that no doubt he would have promoted in a referendum is that the Council of Ministers should take its decisions in public. That does not require a treaty or any legislation. Will the British presidency meet in public?

Mr. Alexander: I am intrigued to hear Opposition Members doing what the Government were accused of in a debate in this Chamber only a couple of days ago. I would have no objection to the European Council considering legislation in public, but it is for the shadow Foreign Secretary to explain whether Opposition Members commonly hold that view or whether a referendum on the matter is required.

In the financial services sector, our focus will be on completing the financial services action plan in a way that protects and promotes the competitiveness of the UK and EU.
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Adam Afriyie (Windsor) (Con): Will the Minister give way?

Mr. Alexander: No, as I have been generous and want to make some progress.

We will also take forward the Commission's excellent Green Paper on the post-financial services action plan agenda to ensure better implementation and enforcement of measures affecting the financial sector, the use of alternatives to regulation and a clearer recognition of the global nature of financial services. [Interruption.] Although the shadow Foreign Secretary was not generous in giving way to newer hon. Members, I shall not make the same error. I therefore give way to the hon. Member for Windsor (Adam Afriyie).

Adam Afriyie: I thank the Minister for giving way. My question is fairly simple. A promise was made that a referendum would be held so that the British people could have their say on the EU constitution: will the Government apologise for not providing that referendum?

Mr. Alexander: I am not entirely clear that that intervention was worth waiting for. I hope that the hon. Gentleman has been listening to my remarks, and that he will also attend the debate that will take place in this House ahead of the European Council in just seven days' time.

Strengthening economic co-operation between the EU and the US is also a priority for the UK, as was made clear at Prime Minister's Question Time today. We will want to build on the work under way in the context of this month's EU-US summit and demonstrate clear progress in breaking down barriers to trade and investment in key areas.

The European Council next week will look at the EU budget for the period 2007 to 2013. That debate is part of the wider debate on how Europe responds to globalisation. Where can EU spending bring the greatest added value? That is the question. We think that the answer is clear, and it is that we must reduce the income gap between old and new member states and provide Europe with the means to strengthen research and development in the most competitive sectors of the global economy. We are convinced that the EU can do that within a budget of 1 per cent. of EU gross national income.

Of course, there is a lot of talk across Europe at present about the UK rebate. The rebate exists because of the particularly low level of UK receipts from the EU and our above average contributions to the EU budget. That situation has not changed since the Fontainebleau summit of 1984, to which reference has been made already in this debate. It will not change in the next decade either. That is why the rebate remains justified and why we will use the veto, as is our right, to defend our national interest.

As I have said, the EU's future prosperity depends on being able to compete in a global world. That requires strong economic performance, but it also means having strong political partnerships across the globe.

Mr. Paul Goodman (Wycombe) (Con): Will the Minister give way?

Mr. Alexander: No, as I have been generous and want to make progress.
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During our presidency, we will take forward work to build up the EU's partnerships with its neighbours in the middle east and north Africa and in eastern Europe, not least with those countries aspiring to EU membership. Last December's European Council agreed to open accession negotiations with Turkey on 3 October this year. The prospect of EU membership has been one of the most significant spurs to political and economic reform in Turkey—a matter that I am glad to say has found cross-party consensus in this House. A stable and prosperous Turkey demonstrating that Islam, democracy and a respect for human rights and the rule of law are fully compatible would have a huge impact on regional peace and stability.

During our presidency, the UK will also lead the EU's efforts to help tackle poverty in Africa, in line with our objectives for the UK presidency of the G8 and the recommendations of the Commission for Africa. Part of that will be pressing ahead with the reform of the common agricultural policy. The next big issue is reform of the archaic sugar regime, which will fall to our presidency. Getting that right is an important part of delivering a broader agenda and a broader agreement at the World Trade Organisation ministerial meeting in Hong Kong in December, which will bring greater development through freer and fairer trade.

We will also work with our EU partners to ensure that the EU continues to play a leading role in reinvigorating the international negotiations on climate change. That will include engaging countries such as China and India. We will explore options for a post-Kyoto strategy and try to develop stronger co-operation and real dialogue with key international partners on ways of securing low-cost emissions reductions.

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