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Dr. Liam Fox (Woodspring) (Con): I am grateful to the Foreign Secretary for his statement and for giving us a copy in advance.

The rejection of the constitution by the French and Dutch voters presented the leaders of the European Union with a chance genuinely to reform how Europe works. This statement today was the British Government's chance to show leadership in that debate.

There are, of course, things in the document that we welcome, such as the pursuit of the services directive, the accession of Bulgaria and Romania, and the talks that have begun with Turkey. We also welcome the process of bringing the Balkan states closer to the EU. However, this presidency was the chance to start real reform. Real reform would mean restructuring existing institutions and changing the distribution of powers. That would include bringing powers back from Brussels to the people of Europe.

Real reform would also mean a radical overhaul of the common agricultural policy, and an end to the assumption that the budget could move only in an upward direction. Real reform requires substance: in contrast, the prospectus set out by the Foreign Secretary is full of rhetoric, contradictions and platitudes. Yet again, the Government are trying to breathe life into the moribund Lisbon agenda. When will they realise that, although the EU can exacerbate economic problems—for example, through the social chapter and over regulation—real reform in the European economy can occur only when member states adopt the sort of supply-side reforms that Conservative Governments in the 1980s introduced in the UK? The Foreign Secretary fought those reforms tooth and nail.
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It is not better regulation that Europe requires, but less regulation. What do we get in the document? Paragraph 26 states:

What does all that mean? Does it mean that our economic performance will be reviewed by those continental member states with 19 million unemployed? Perhaps the Prime Minister looks forward to his pep talk from President Chirac, but we know already what best practice is, and we know what works—lower taxes, and less regulation, legislation and government.

The Foreign Secretary mentioned climate change, and the document's rhetoric continues, stating:

He can say that again, because carbon dioxide emissions in this country have increased since the Government came to power. The document is all talk and posturing.

What about the CAP reform to which the Prime Minister has so recently—and conveniently—been converted? Only the sugar regime gets a mention. So for all the hype we get no idea about the Government's proposals. Do they want to scrap the CAP, or simply move to a rules-based system that is compatible with the World Trade Organisation? Or is it to be a land-management, without production support? Where are the substance and the detail? How much should be funded by national Governments, and how much by the EU, for example?

The position on the rebate is also unclear. Is it on the table, or not? If it is, what level of reform would trigger its discussion?

On foreign policy, we are treated to platitudes. On Zimbabwe, the document states:

Is that all that the Government or the EU can say? Is that what passes for leadership, at a time when the Mugabe regime has all but declared war on its own population? Is that the best that our Government can manage? We must do more to help those who have been left cold, hungry and destitute by a vicious regime.

On China, the document states:

Again, where is the leadership? Does the Foreign Secretary not understand the profound damage that dropping the embargo could do to British defence interests, or American strategic interests, in the Pacific rim?

Far too much of the document is unambitious, complacent, lowest-common-denominator Eurospeak. We have to ask several questions. Are our Government serious about budget reforms? No, because those reforms will end up costing British taxpayers more, not less. Are they serious about economic reform? No,
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because all we get is a reheating of Lisbon, with peer review and best practice. Are they serious about institutional reform? No, because instead of powers coming back from Brussels to member states, we get more new bodies and powers. I am sure that the House will be delighted to know that, on top of the bodies that we have at the moment, the proposals mean that we will get the fundamental rights agency and the European gender institute.

I am afraid that today's document reads like a cut-and-paste exercise. A few new paragraphs make it sound as though the EU has taken notice of what happened in France and the Netherlands, but nothing has really changed. Was the Prime Minister right to say that the constitution represented a sensible set of rules for the future, or was Germany's Europe Minister right to describe it as the birth certificate for the united states of Europe?

Despite all the talk, all we have had today is the same old centralising direction, with a bit of new rhetoric. This is a momentous time for the EU. For all their talk, our Government have failed in the task of leadership. What a wasted opportunity.

Mr. Straw: The hon. Member for Woodspring (Dr. Fox) was obviously unaware of last Thursday's brilliant speech by my right hon. Friend the Prime Minister. It was written up across Europe as providing the leadership for which Europe had waited for very many years. That is also reflected in this document.

The phrase "all talk and posturing" is a very good description of the Opposition spokesman's contribution. He says that the answer to Europe's problems is institutional change, for example in the competences described in the treaty. If we followed what the hon. Member for Woodspring proposes, we would wait years and years for any change whatsoever. The fundamental flaw—not to say deceit—in the Conservative party's position is the insinuation that all that needs to be done to secure the institutional change is for Opposition Front-Bench Members to demand it, and that it will then happen. What the Opposition always fail to notice—and they failed to notice it during the general election campaign—is that such institutional change requires the agreement of 25 independent member states. They have never been able to name even one other member state that supports their position on the EU.

The hon. Member for Woodspring knows that it was hugely difficult to get agreement on the constitutional treaty at the intergovernmental conference, and that that treaty has since been rejected by two member states. If he is interested in staying in the EU and making it operate better, he and his party must apply themselves to the practical realities involved in making the EU work better today. That is exactly what the Government are seeking to do.

On the question of economic reform, a good model does exist—the new Labour model, which we have pursued over the past eight years. That model has cut unemployment by hundreds of thousands from the levels left by the previous Conservative Government. The Labour model extends the idea of social responsibility across the UK, and is now seen as a beacon in the rest of Europe. Yes, progress on the Lisbon agenda has been very disappointing elsewhere in Europe, but the UK has met its targets under that agenda.
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The hon. Member for Woodspring spoke about better regulation. Less regulation may be the answer in many areas, but regulation is needed in some others. For instance, Conservative Front-Bench Members have called for a level playing field in services. That does not require less European regulation; it requires more, but we must make sure that that regulation is effective. Therefore, the hon. Gentleman should not speak with a forked tongue and imply that better regulation is always less regulation.

As for CAP reform, the overall parameters have been set out already by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. We intend to pursue that matter in the course of this presidency.

Finally, the hon. Member for Woodspring asked about the rebate. Before the European Council two weeks ago, we made it clear that the rebate was wholly justified and that we would use the veto, if necessary. We did use the veto: as my right hon. Friend the Prime Minister pointed out at the press conference held in the small hours of 18 June, the rebate is an anomaly, but it is an anomaly on an anomaly. What we are seeking to do is address that anomaly on an anomaly, so that the case for the rebate withers away. Meanwhile, we will maintain our position.

That position was well spelled out in the other place—

That was the position as set out by the former Conservative Chancellor of the Exchequer, Nigel Lawson—now Lord Lawson. I agree with him, and it is more or less exactly our position.

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