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Angus Robertson: I am surprised, because the Scottish Executive seem to have the figures. The Scottish Executive, run by the Labour Government together with the Liberal Democrats, say that the amount is £710 million. The statistical-effect figure is public and confirmed, as is the amount lost to the highlands and islands because of ONS errors. We are talking about something in the order of £1 billion. Perhaps when he sums up the debate the Minister will take the opportunity to confirm that the UK Government will give a minimum guarantee to plug that £1 billion gap.

We must of course accept that structural funds are for the poorest regions. It is absolutely right for us to invest to raise parts of the newer EU states to the same economic standards as exist in the older states, but the transitional arrangements for the poorer regions of the established EU states must also be dealt with properly. The Foreign Secretary has conceded that mechanisms will be available to plug the gap, and I await the Minister's guarantee that the Government will indeed plug a gap in the Scottish economy that amounts to at least £1 billion.
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6.9 pm

Mr. Stephen Dorrell (Charnwood) (Con): I want to be reasonably brief this evening and concentrate my remarks exclusively on the consequences for Britain of the referendum decisions in France and Holland. Before doing so, however, I join my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) in congratulating my hon. Friend the Member for Ruislip-Northwood (Mr. Hurd) on a very distinguished maiden speech. He opened his remarks by saying that another new colleague, my hon. Friend the Member for Croydon, Central (Mr. Pelling) and, indeed, the hon. Member for Belfast, South (Dr. McDonnell) had set a high hurdle for him to jump over, but everyone who heard his speech would conclude that my hon. Friend jumped over that hurdle and made it look easier than we all know it truly was. I congratulate him again on an excellent speech that came over extremely well.

I unreservedly welcome the rejection of the constitution in the referendums of France and Holland and it is important to be clear why. I am not one who thinks that the constitutional treaty was the finishing touch or keystone for a new superstate. Such a presentation of the constitutional treaty is grossly overblown. I welcome its rejection because I have always thought that the treaty that emerged from the process was a major lost opportunity for Europe and I am delighted that the political classes in Europe have a second chance to produce a new constitutional arrangement that addresses the needs of the whole of Europe at the beginning of the 21st century. If we are to achieve that, we must be specific about the nature of the problems that we currently face and how best to take the opportunity to deal with them.

I am not one who believes that the problems that Europe has encountered as the European Union has grown and as the world has become more complex should lead us to the conclusion that we should give up on the European project. I am an unapologetic Europhile and I believe that the motivation that led us first to join and then to develop the EU is still correct, but we must be clear about precisely which objectives are achievable. Some of the objectives that were written into the treaties as we have gone along have proved, in the light of experience, to be over-ambitious, so we should consciously drop them. My hon. Friend the Member for Ruislip-Northwood suggested that we should consciously drop the commitment to build an ever-closer union. He is almost certainly right about that.

As a former Secretary of State, I used to be responsible for health and, from my point of view, there was no reason for that policy area to be included in the various treaties. I would now delete any reference to an EU angle on health from them. I also used to be responsible at one time for what was then called national heritage. There were some minimalist EU functions attached to that, but again I would now drop them because they are over-ambitious and do not focus on the core of the common interest that should, in my view, be at the heart of the European project.

Let us be clear about that. First and foremost, I agree with my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) that the European project has to be about creating a competitive market economy that brings together all the EU member states. Some people
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talk as though that means no more than a commitment to a customs union, but I believe that it runs very much deeper than that. A successful market economy is not a state of nature. It depends on a very intricate collection of regulations and commitments that are enforced on all the participants in that market economy.

The EU was established for a central purpose—to deliver the political objectives of neo-liberalism. That is greatly to the UK's advantage. I fundamentally disagree with the hon. Member for Luton, North (Kelvin Hopkins), who says that we should reject the neo-liberal agenda. I am very strongly in favour of that agenda, and the EU's institutions should be designed to deliver it.

Mr. Nick Clegg (Sheffield, Hallam) (LD): The right hon. Gentleman is offering a plausible and principled case for getting rid of the EU's superfluous power and concentrating on its core business. However, voters in France rejected the constitution for being too minimal and Anglo-Saxon. Would not renegotiation of that text give rise to a document even more shrunken than the one already rejected by French voters?

Mr. Dorrell: The hon. Gentleman makes an important point, which I shall address later in my remarks. It goes to the heart of what I consider to be the constitutional treaty's failings.

The second policy area in which the EU must engage much more effectively than has been the case so far—the environmental agenda—was also mentioned by my hon. Friend the Member for Ruislip-Northwood and by my right hon. Friend the Member for Skipton and Ripon. As the latter said, the environment is rising up the political agenda very quickly. Member states have a real common interest in it, and there is a real requirement for a common policy. In contrast, the areas in which I am not in favour of deepening co-operation include security, defence and foreign policy. They are outside what I understand to be the common interest among EU states in ensuring an effective delivery mechanism.

Why have the existing constitutional arrangements, and the treaty proposals that we can now consider to be dead, been found wanting in respect of delivering the policy agenda that I have set out? I believe that the answer is that the present system is insufficiently flexible for the world in which we now live. It was consciously designed that way by the people who put the arrangements in place in the 1950s. At that time, the concern was to agree a common purpose and make it difficult for countries to resile from it. Therefore, the EU's designers built in the provision that only the European Commission could initiate new proposals, and they also built in the principle of the acquis communautaire.

However, the dangers that we face today are fundamentally different from the ones that the European institutions were designed to address. In the face of globalisation, those institutions make change too difficult: they slow down the change that is essential to the economic survival and success of the EU's member states. Furthermore, a Europe of 25 states has an institutional resistance to change that makes change more difficult to manage than was the case with the original six member states.
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The balance has therefore shifted fundamentally and we need to ensure that in future the EU's institutions are much more effective drivers for change. As proof of that, one need only list the items on the change agenda about which the liberals among us, at least, broadly agree—excessive social costs, misplaced agricultural expenditure, wasteful expenditure in the rest of the budget, the important elements in the world trade round that were mentioned earlier, and the sensitivity surrounding enlargement, especially as it relates to Turkey. All those hugely sensitive items are on the change agenda.

On the point raised by the hon. Member for Sheffield, Hallam (Mr. Clegg), the second problem with the existing institutions is that they do not allow the process of change to be driven through. Supporters of the constitutional treaty say that that is exactly why they wanted to extend qualified majority voting and make it easier for the EU to reach decisions. Let us consider that. The changes that I have listed are hugely controversial. One need only consider how the French electorate reacted to the introduction of Turkey, the case for the Anglo-Saxon model or liberal change. However, we need to introduce those changes because power is already seen to be remote. If we streamline the institutions and make them more powerful, it might make it easier for the institutions to introduce unpopular and controversial change, but it will divorce them even further from the electorates to whom they are responsible and build up an even bigger bow wave of resistance to the changes that are essential for the success of the societies of the member states.

The central point is that if one wants to introduce change—especially unpopular, difficult change—in a democracy, it has to be based on a public dialogue. We cannot expect our electorates to come with us on a journey that is uncomfortable if, to put it crudely, it is explained to them, literally, in a foreign language. Change requires explanation and a public dialogue, and the institutions of the EU as currently constituted do not allow sufficient dialogue to take place to include—a fashionable word these days—the electorates of Europe in the change process that is essential for our survival.

I support the need for radical change to the institutions of Europe, but the defining characteristics of those changes must be that they allow us to embrace a faster driven change process. If that is to be successful, the changes must be based on a more effective public dialogue and increased accountability by the decision makers to those who elect us. That means that the institutions must be more firmly rooted than the existing ones in the successful democracies based on the nation state, instead of trying to create a European demos. If we have to wait until we have a successful European public dialogue, the Chinese, the Indians and the Americans—indeed, all our competitors around the world—will have left us standing. We do not have time and nor, in my mind, do we have the will to create a European political debate to support that process. That leads to the conclusion, which I find acceptable, that we should engage the member states and their institutions in supporting the change process. If we do not do that, we shall find that our institutions have become dangerously ossified. We shall also come to regard the European Union as like the pre-Reformation Roman Catholic Church, and that is not a world in which I want to live.
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6.23 pm

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