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MG Rover Pensioners

18. Peter Luff (Mid-Worcestershire) (Con): What representations he has received on behalf of MG Rover pensioners about the security of their pensions. [5090]

The Minister for Pensions Reform (Mr. Stephen Timms): We have received a number of representations and, as I said earlier, I recognise that this is a worrying time for MG Rover pensioners. Existing pensioners are receiving their pensions in full. We believe that it
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remains a question of when, not if, an assessment period under the pension protection fund will start for the MG Rover scheme.

Peter Luff: I thank the hon. Gentleman for his sensitive reply to that question and to earlier questions on the subject during Question Time, which contrasted with the gross insensitivity of the Minister for Employment and Welfare Reform, who said that skilled engineers should go and work at Tesco.

What mechanisms will be used to introduce the amendments that the Minister for Pensions Reform proposes for the pension protection fund, and what will be the likely time scale for those amendments?

Mr. Timms: I hope that we will be able to come forward quite quickly with our amendments. As I said earlier, we have been looking for some time at the way in which the regulations have been working in their early months. We have identified a number of issues that we need to deal with. I hope that we will be able to come forward with those changes very soon.

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European Council

3.30 pm

The Prime Minister (Mr. Tony Blair): With permission, Mr. Speaker, I shall make a statement about the European Council held in Brussels on 16–17 June.

This European Council was essentially about two subjects: the consequences of the no votes in the referendums in France and the Netherlands; and the financial perspectives, the budget ceilings for the European Union for 2007–13.

In respect of the constitutional treaty, the 10 member states that had ratified were anxious that ratification continue. But realistically, given the no votes in France and the Netherlands, ratification cannot succeed unless and until those votes change. Moreover, the Dutch Prime Minister, rightly and inevitably, said frankly that there was no prospect of his bringing back the treaty for any sort of new decision in this Dutch Parliament. As a result, whatever words are used in the Council conclusions, standing the results of the French and Dutch referendums, the treaty cannot proceed. It is therefore sensible instead to have a period of reflection, in which the critical questions as to Europe's future direction are debated.

On the future financing package, the UK approached the negotiations with several objectives. First, we wanted an overall budget which demonstrated a responsible and prudent approach to spending, at a time when national budgets across Europe are under strain. Secondly, we wanted a commitment to a comprehensive reassessment of the structure of the EU budget.

Europe faces an immense global competitive challenge. Quite apart from the established economies of America and Japan, the rise of China, India and the other Asian economies is creating a wholly new economic environment. It simply does not make sense, in this new world, for Europe to spend over 40 per cent. of its budget on the common agricultural policy, representing 5 per cent. of the EU population producing less than 2 per cent. of Europe's output. Indeed, we are spending seven times as much on agriculture as on research and development, science, technology, education and support for innovation combined. This is not a budget fit for purpose in the 21st century. Even at the end of the next financial period—by the beginning of 2014—we would be spending 40 per cent. of the budget on the CAP. Europe just cannot wait 10 years or more for the change that is necessary.

It is in that context that the issue of the British rebate must be examined. The rebate arises because of the distortion of the budget. Over the 10 years to 2003, France's net contribution to the European Union was €18.8 billion; Britain's was €42.4 billion. Without the rebate, it would have been €78.7 billion. In the next financial period—2007–13—even with the rebate, Britain would be paying around €13 billion more. Without it, Britain would pay nearly two and a half times as much as France, and slightly more even in money terms than Germany. But it is also true that the rebate is merely a correction mechanism, designed to address an underlying imbalance in the budget. As the European Union has expanded and Britain has become more wealthy than countries such as France, it is right that it changes.
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Our position, therefore, was not to refuse any change to the rebate, to rule out a discussion, or to disown our responsibility to pay for the enlargement of Europe—an enlargement that we passionately support.

On the contrary, I made it clear that we should deal with both anomalies; the rebate and the CAP. I proposed that we have a fundamental review of the EU budget, reporting in time for us to be able—midway through the next financial period—to alter fundamentally the structure of the budget, dealing both with the rebate and the CAP. In the meantime, of course, we would ensure that we paid our fair share of enlargement.

The presidency proposal from Luxembourg fell way short of such a solution. The terms of the review were expressed in language so vague as to be meaningless. In addition, the words meant, effectively, endorsing the 2002 common agricultural policy package up to 2013. It has been said frequently in the past week that this 2002 agreement ruled out further CAP changes, and that therefore it was unfair of the UK to try to reopen it. But in October 2002, it was expressly stated that this agreement was without prejudice to the future financing arrangements and, at that time, the UK made it clear that on the basis of such a package there could be no change to the rebate.

So the review offered was inadequate. What is more, the cost to the UK of the Luxembourg proposal would be over €25 billion, meaning over the next financial period that instead of parity with similar sized countries, we would have been back to, for example, a €23 billion deficit with France. That money, incidentally, would not have gone to poorest countries, but would have been redistributed among the wealthy ones.

This is a deal I simply could not have recommended to the House. It was not the right deal for Britain. It was not the right deal for Europe. Four other countries rejected it, and several more made clear their dissatisfaction.

I fully understand the concerns of the new European countries. They want an agreement. We will do our best to secure such an agreement and to make sure it is one that meets their needs. Britain championed enlargement; Britain will continue to do so. But let us not forget that, on any basis, around 80 per cent. of CAP funds and almost 50 per cent. of structural and cohesion funds will continue to go to the original 15 countries, not to the new accession countries.

It is said that the failure to reach a deal has deepened Europe's crisis; that Europe's credibility demanded a deal. No. Europe's credibility demands the right deal—not the usual cobbled-together compromise in the early hours of the morning, but a deal that recognises the nature of the crisis. This crisis is not about the failure of Europe's leaders to reach agreement with each other. The crisis is about the failure of Europe's leaders to reach agreement with the people of Europe about the issues that concern them.

People in Europe see the world changing around them, economically and socially, and want answers to the challenges they face. They worry about globalisation and organised crime and they do not, at present, see Europe giving a credible response. If we answer these concerns, Europe will strengthen. We need a strong Europe to bolster the strength of individual nations. It is those who believe in Europe most who should be the
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most ardent advocates of changing it. The European Budget should not be separate from that debate, but part of it. It is that debate that we will look forward to in our presidency.

Mr. Michael Howard (Folkestone and Hythe) (Con): When the Prime Minister returns from a European Union Council, it is customary to start with those aspects of his statement with which we can agree, and I am grateful to the right hon. Gentleman for giving me advance sight of the statement.

On this occasion, I am delighted to say there are more aspects than usual with which we can agree. As the Prime Minister said on a different occasion, "The kaleidoscope has been shaken." I sense—I hope that I am not mistaken—a real change in the way in which he and some of his Ministers are approaching reform of the EU. If that conversion is genuine, no one would be more delighted than me. Let me first congratulate the Prime Minister on protecting the rebate. He was right to insist that Britain's rebate should remain intact. We fully support him on that. But will he explain to the House what he said to the BBC on Friday: that if he gets the deal that he wants,

Those are his words, not mine. We agree that the CAP needs radical reform, but if the European Union does less, should not the British people also pay less?

With the benefit of hindsight, does the Prime Minister now accept that he was wrong in October 2002 to sign up to the existing CAP arrangements, under which 40 per cent. of the EU budget still goes to an activity that employs just 5 per cent. of the people, as he said? But is there not something even more important than the reform of the CAP? The Prime Minister has talked about a European Union "fit for purpose". I agree. Should not Europe's leaders first decide what that purpose is, and only then how best to deliver it?

The 2001 Laeken declaration, which set up the Convention that led to the constitution, was clear. Europe's citizens

not involve itself in every detail

Is it not true that Laeken asked the right questions, but that the constitution was the wrong answer? As Labour's own representative on the Convention, the hon. Member for Birmingham, Edgbaston (Ms Stuart), said last week,

Does the Prime Minister now accept that he has wasted the last two years trying to sell an outdated vision of the European Union, when he should have been making the case for a more flexible, liberal Europe of nation states?

The no votes in France and Holland provide us with an historic opportunity to have a much wider debate about the future of Europe, but to do that we must put
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the European constitution behind us. Only last week, the Prime Minister was talking in this House of finding a way round the votes in France and Holland. Will he now emphatically renounce such language and reject any such attempt?

For the last two weeks, the Prime Minister has refused to say whether he thinks that the constitution is dead, yet on Friday he signed up to a statement that made it clear that the no votes in France and Holland

If he thinks it still valid to continue with those processes, what does he intend to do about it? Does this mean that we will, after all, proceed with a referendum in this country? If not, what on earth does he mean by that phrase, which he agreed with the other European Union leaders?

Last year, the Prime Minister told this House that opponents of the constitution wanted to

that we would end up having to accept associate membership. So has he sent France and Holland their application forms for associate membership? Does he now accept that he was wrong, and that the constitution would have taken Europe in completely the wrong direction? Why else did the Foreign Secretary say last week that we had reached a "turning point", and that Europe had been "trapped in the past"? Would it not be much better for the Prime Minister openly and honestly to accept that the constitution is dead, and that the European Union should abandon its attempts to smuggle in any further removal of power from the nation states, such as through the creation of a diplomatic service?

The Prime Minister has rightly called for "fundamental change and reform" in the European Union. Will he confirm that during that process of "fundamental change and reform", Britain will continue to support EU enlargement—including sticking to the timetable for Romania and Bulgaria to join, and starting talks on Turkey's future accession? Does he agree that

A year ago, when I put that case in those words to the Prime Minister, he responded by accusing me of "prejudice" and of

But he said on Friday night that he was not now prepared to accept that there is only one view of what Europe is. We welcome that, and we trust that whenever anyone presents a vision of the European Union that differs from his, he will no longer routinely accuse them of wanting to leave the EU.

A recent report for the European Commission concluded that the EU faces the "exit ramp of history". In his new spirit of openness, conceding that there is more than one view of Europe's future, will the Prime Minister now accept that while some member states may want to integrate more closely, it should not mean that
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everyone has to? Does he agree that we will create a truly flexible EU only if Europe's leaders adopt a "live and let live" approach in future? Will he now accept that the status quo is a recipe for certain economic decline and that we need urgently to create a decentralised outward-looking deregulated European Union—a Europe that would be better placed to cope with the competitive challenges of globalisation and the emerging economies of the east? Will he also now accept that people of whatever country want to feel a sense of solidarity with and pride in the institutions that serve them, and that the institution that best provides such solidarity and sense of pride is the nation state?

If the Prime Minister uses Britain's presidency to take a lead in Europe, arguing for a more flexible and more accountable EU with powers returned to the nation states, we will support him every inch of the way.

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