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Mr. Clegg: The hon. Gentleman makes an articulate case for his allegation that the terms of accession impose a neo-liberal economic philosophy on countries that join. He will be aware that, for other critics of the EU, many of whom can be found on the Conservative Benches, there is not enough imposition of neo-liberal economics. For them, the EU is a hotbed of over-regulated, social democratic, wishy-washy economic
 
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mismanagement. Does he accept that both allegations cannot be right and that it is conceivable that both are equally wrong?

Kelvin Hopkins: The hon. Gentleman makes an interesting point. There is a serious debate both in the EU as a whole and in its member states. I hope that I am participating in that debate and making a strong point for the social democratic systems that worked so well after the second world war, which are being systematically dismantled. That is a great mistake. Opposition Members may choose a neo-liberal approach. We might choose a social democratic approach, but we should be able to choose democratically in our own countries. We should not be told, or even advised, by the bureaucracy of the EU to operate in a particular way.

I finish by referring to corruption, which seems to be almost endemic in the EU. The European Court of Auditors has failed to approve the EU's accounts for 10 or 11 years running. The European aid system is inefficient and corrupt and the aid does not go to the right places. The Department for International Development does a much better job, and we have made that point many times as well. The EU must look hard to itself if we want to stop corruption developing or even getting worse in countries such as Romania and Bulgaria, which are much weaker.

1.30 pm

It is significant that corruption in the poorer world is almost endemic. It is only when countries become relatively egalitarian and rich that corruption can be addressed seriously. However, we have those things in western European countries, and we still have corruption, so there is a problem. The best way to avoid corruption is when countries have to look after their own economies. If they are spending someone else's money, they will be much more casual about how they spend it and what they do with it.

I urge the House to support the entry of Bulgaria and Romanian into the EU, but we should allow them to develop their economies as they see fit—subject, of course, to proper human rights, as my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) said, and employment rights, environmental conditions and all those other things that are beneficial to the whole world. However, we should allow them to run their own economies, not force them into a particular mould.

Mr. Cash: I am very glad to follow the hon. Member for Luton, North (Kelvin Hopkins), partly because we have tracked each other's thoughts on these subjects for the best part of 10 years or so, but also because this is a critical time at which to consider the accession of new countries. I have repeatedly stated that I am in favour of enlargement, but I have asked as a rider to that argument what kind of Europe we want and what kind of Europe we should have. The problem is exacerbated or illustrated by, for example, what has been going on in France and the Netherlands. The rejection of the referendums in those two countries illustrates the political divorce that has emerged between the people and the elites, whether in individual countries or the EU as a whole.
 
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I told my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) that I thought an element of cloud cuckoo land was apparent. I was referring not specifically to what he was saying, but to the inability of Opposition or Government Front-Benchers to grapple with the vacuum that has emerged between the realities of what is going on in Europe and the aspirations that,   for example, are contained in the European constitution. We are still waiting for the Government to announce what they will do having secured the Second Reading of the European Union Bill, which dealt with the constitution. [Interruption.] I do not know what the Minister is chuntering about—perhaps he would like to intervene.

Mr. Douglas Alexander: I was just observing to my colleague the Under-Secretary of State for the Home Department, my hon. Friend the Member for Leigh (Andy Burnham), that the words "Bulgaria" and "Romania" had not yet been uttered by the hon. Gentleman and was pointing out the fact that we have debated the Bill on Second Reading, when hon. Members had the opportunity to range widely in their remarks.

Mr. Cash: I regard that as a pretty irrelevant comment. The nature and form of the EU will be affected by these accession arrangements. For example, the Organisation for Economic Co-operation and Development says that the current gross domestic product per capita of the 25 member states is $21,800. That figure happens to be half that of Norway and Switzerland, and it will inevitably decrease when Bulgaria and Romania join. The important point is that we have a regressive, declining EU economy, which will be made worse by bringing in countries that will inevitably drag that figure further down. We could avoid a lot of those difficulties if we were to have a different kind of Europe.

The kind of Europe that I should like would be based on associate status, along the lines of the European Free Trade Association. Some adjustment may be needed, but that is basically the direction in which we should be going. Indeed, a recent ICM poll showed that, when the people of this country were asked what kind of EU they wanted—whether they wanted one as it stands now, or one with associate status along EFTA lines—60 per cent. of all those asked and 68 per cent. of 18 to 24-year-olds said that they wanted the latter. So there is a political problem for the Government.

Mr. Bone: I understand that the Prime Minister stated that enlargement could not take place without a European constitution, so I wonder whether he is beginning to agree with my hon. Friend that we must consider a different form of Europe?

Mr. Cash: Indeed. The Prime Minister's speech to the European Parliament and his and the Chancellor of the Exchequer's speeches on the reform of the EU—all of which will have an impact on Bulgaria and Romania, let alone the other countries in eastern and central Europe and elsewhere—combine to illustrate the fact that, struggling against the elite of Europe, there are apparently glimmerings of Euroscepticism in the future Prime Minister, by which I mean, in immediate terms,
 
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the Chancellor of the Exchequer. Everyone knows that that change will happen in the next 18 months, and anyone who has read the books of people such as Robert Peston and others who provide well sourced, intelligent analyses of what is going on know what elements are involved.

I refer, for example, to the Treasury pamphlet that the Chancellor of Exchequer produced the other day in which he clearly repudiated even the social model for Europe. I should be interested to know whether or not the Minister was party to that pamphlet, which amounted to a repudiation of the existing European economic model. The Chancellor called for more global markets and more competitiveness. He illustrated his concern that the Lisbon agenda was not functioning properly.

Mr. Clegg: Is the hon. Gentleman aware that a man whom I doubt is close in his affections—Jacques Delors, the former President of the European Commission—has also stated on record on a number of occasions his own doubts about the pursuit of an over-integrated EU social model in terms with which the hon. Gentleman would agree? Does he not agree that his stereotype of what it is to be sceptical or pro-European is wildly out of date, when fervent pro-Europeans such as Jacques Delors agree with him, at least in part, on something as crucial as social policy?

Mr. Cash: I am extremely glad that that is taking place. It certainly was not when I met Mr. Delors in the 1980s, since when things have changed significantly and, I am glad to say, in the right direction. Indeed, my point about the Chancellor of the Exchequer and the Prime Minister shows that the glimmerings of realism are coming into the picture. The hon. Gentleman may not know that I was brought up in Hallam. I spent my early childhood there. My parents still live there.

Kelvin Hopkins: Do they vote Liberal Democrat?

Mr. Cash: They certainly do not vote Liberal Democrat.

The Prime Minister himself said in February 2000 that Britain could, of course, survive outside the EU and that we could probably access the single market as Norway and Switzerland do, but think of the changes that have taken place since then. I have strongly urged my party to be realistic about getting reforms under way—whether that is while we are in opposition or, hopefully, when we are in government—before the compression chamber that is being created implodes.

The application of the Maastricht surveillance criteria is about as deadly, boring and tedious a subject as one can possibly imagine, but I was glancing at a book in the Library last night about the impact of EUROSTAT case law. I suspect that no one has the faintest idea that such a book is there to be read, even if they had the time or inclination to do so. However, the application has an extremely serious impact on the way in which the criteria for each member states are collated by the European Union through EUROSTAT. That is the basis on which economic forecasting is made and economic criteria are judged for member states, including—under the Bill—accession states such as Bulgaria and Romania.
 
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It might surprise some hon. Members that Hungary, which has been brought into the loop of member states only recently, is being pursued under the terms of the avowedly failed stability and growth pact. I opposed the pact vigorously when my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was Chancellor of the Exchequer and exchanged strong correspondence with him about it. He wrote to all Members of Parliament to say what a wonderful deal it was, and I wrote to all Conservative Members to tell them not to vote for it because it was going to be a disaster. It was an accident waiting to happen—sure enough, it did.

Due to the failed stability and growth pact, it is suggested that action by Hungary under the excessive deficit procedure is inadequate. The country is being told that it is simply not complying with the rules. The Commission states that in September 2005, the Hungarian authorities submitted a revised excessive deficit procedure notification to announce that it had a 2005 deficit of 6.1 per cent. of GDP instead of the targeted 3.6 per cent.—that is double.

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