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The Prime Minister: First, let me thank the right hon. and learned Gentleman for his initial comments when he said that he agreed with much of the position that we have taken. Despite that, I still think it is the right position. However, the right hon. and learned Gentleman put his points in a perfectly reasonable manner, so I shall respond to them in kind.

The right hon. and learned Gentleman spoke about my statement on Britain paying more for enlargement, but we must be very clear about this matter. As the EU enlarges and takes in countries that are much poorer than ours and as the budget is placed on a sensible basis, the wealthy countries will clearly have to pay more and the poorer countries less. I personally think that that is entirely justifiable as long as the EU budget is spent on sensible things. People will then understand it, but what they will not understand is Britain paying more in respect of a budget that is completely distorted by the injustices of the past. As to the CAP reform of 2002, others had the veto in those circumstances, but in this case, we had to give our agreement in order for a deal to be done.

I do not disagree with some of the right hon. and learned Gentleman's remarks about the difference between the Laeken declaration and the subsequent debate. Indeed, that point has often been made. In respect of the constitution, however, let me make one thing very clear to the right hon. and learned Gentleman. Some of the reasons why people voted no, particularly in France, were not reasons that either he or I would support—among them was opposition to Turkish membership of the EU, for example. So we need to be careful, in discussing the no votes in France and Holland, that we do not assume that every person who voted no was somehow endorsing a particularly British view of Europe. It is not as simple as that.

There is a real debate in Europe now, which is not limited to just two simple positions. Some are opposed to Europe on grounds that might recommend themselves to some of the right hon. and learned Gentleman's party but not to him—people who are against enlargement, against immigration and against the very concept of the EU—and then there are some who want a federalist superstate. However, most people in Europe recognise that the EU has an important role and want to see it strengthened, but also want Europe and its institutions focused on the issues that concern them now rather than on issues that rightly
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concerned people in Europe 50 years ago. The issues are not the same in the Europe of today. Enlargement provides a tremendous opportunity in that regard.

Let me make one final point to the right hon. and learned Gentleman. Our approach to Europe over the last couple of years has allowed us to be in a position whereby, despite the attacks from some quarters over the last few days, we went to the European summit with allies and we went out of it with allies—[Interruption.] Well, four countries joined Britain in voting against, but many more countries expressed their dissatisfaction. It is important to keep those alliances going forward. Many of the new countries in the enlarged Europe would have preferred a deal last Friday—let us be clear about that—and we have to explain to them why our opposition to the deal last Friday was not an opposition to enlargement or to Britain paying its fair share, but an attempt to put Europe on a more rational footing. In doing so, diplomacy as well as strength will be required: we will need both.

Mr. Charles Kennedy (Ross, Skye and Lochaber) (LD): Naturally, those of us in the fundamentally pro-European camp feel a degree of pessimism about the present state of affairs. However, as Britain takes on the presidency of Europe it is our responsibility, as the Prime Minister will undoubtedly agree, to try to build a new consensus and a new sense of optimism about the European project. Surely, the Council was right to call for a much broader debate among member states during this "period of reflection" over what happens to the constitutional treaty. Does the Prime Minister agree that being pro-European in no sense precludes being pro the reform of European institutions for the better, and that the two in fact go hand in hand?

On Thursday, when the Prime Minister addresses the European Parliament, he will be required to set out his vision of how Europe will develop. Can he give us some more detail this afternoon about what that vision will be? In that regard, does he agree that, especially in the Balkans, the prospect of EU membership is a great driver for positive change as well as for regional stability? Will he ensure that under his presidency Britain maintains the momentum for that enlargement?

The Prime Minister was undoubtedly correct over the past few days not to agree to a fudged deal over the budget. There is still time to agree a new package before 2007. But the Prime Minister did not begin to make the public case for reform, especially of the common agricultural policy itself, until it became clear that the United Kingdom rebate was under threat. In retrospect, surely that was a mistake. Why did he wait so long to make that coherent case for reform? What are the prospects for a deal on the budget under the British presidency, and will he bring forward specific proposals, during our presidency, for a reformed budget?

Despite all the difficulties, however, the agreements made on international development at the summit, especially the increase in aid to Africa, were welcome. Will the Prime Minister take this opportunity to confirm that the UK will meet the United Nations target on aid of 0.7 per cent. of gross domestic product before the EU deadline of 2015?
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The Prime Minister: On the latter point the answer is yes. We have set a target of 2013 on international development. The arrangement by EU Development Ministers—the agreement to double aid and increase it by $40 billion—is an indication of Europe working well together, and one should not lose sight of that.

The important thing is to present the case for reform in Europe from a pro-European perspective. The Leader of the Opposition did not do a great deal of this when he spoke earlier—and that was the right thing for him to do—but if we were to make the case for change in Europe simply on a traditional Eurosceptic basis, it would carry no conviction at all. It is important to realise that it would not carry conviction with the new countries that are our allies on that. Towards the end of the evening, at one point there were offers by east European countries to pay even more into the budget if that would help to get a deal, but I made the point then—and I repeat it publicly—that there was no way that Britain was asking the east European countries to stump up more money. That was not the issue, and it is important that people in Europe understand that. The issue was the distribution of wealth among the wealthy countries and how it was divided up on a fair basis, with a proper budget.

Let me just make this point to the right hon. Gentleman finally: it has again been said that we never made the case for the reform of the common agricultural policy until a couple of weeks ago. I do not have to hand all the times that I have made that case at the Dispatch Box, but I think Britain has been arguing the case for CAP reform for a very long time. We should not allow those people who are opposed to our position in Europe somehow to put away the idea and have it running throughout the European Union that we only raised the CAP a couple of weeks ago. We have never stopped raising the CAP, but if people wanted to make changes to the British rebate, it is obviously right that we deal with the underlying reasons for that. It is true that the amount spent on the CAP has come down significantly over the past 20 years. It was well over 65 per cent.; it is now just over 40 per cent., but that is still far too much for a policy that, in today's world, does not really correspond with the needs of the European economy.

Let me just make this point as well: we do not and did not say either, as was being said by some other countries, that somehow, last Friday, we thought we could renegotiate the entire change in the CAP. That is not what we were asking for. What we are asking for is a fundamental reassessment that allows us to change this coming financial perspective. If we do not do that, it will be 2014 before we get any proper change in the European Union, and that is too long to wait.

Mr. Dennis Skinner (Bolsover) (Lab): Is the Prime Minister aware that, notwithstanding the many reasons that he advanced for the no vote particularly in France and in Holland, there is a growing political vacuum in every one of the 25 nation states in the European Union? That is exemplified here as well as anywhere else. For 30 years, there has been a tendency, both in the Common Market and the European Union, to race ahead of its people, and for most of that time, they have been able to get away with it. My view is now that there are no political certainties any more in this growing political vacuum. The halcyon days are over, and if the
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Prime Minister wants to have six months of a presidency that will be marked, it had better not any longer be one of any grand gestures that race ahead of the people. It must be in line with what can be sold. If the Prime Minister does that, he may be able to find a way forward to reduce the burden of the CAP and all the rest, and it will need a lot of luck to go with him.

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