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Mr. Speaker: Order. Mr. Bellingham, you are out of order, and you are not the only one. After the Prime Minister has finished, I shall seek to protect the Leader of the Opposition, and I cannot do that if hon. Members are shouting at the Prime Minister.

The Prime Minister: And we have delivered an EU budget deal that is €160 billion cheaper than the original Commission proposals, provides for a huge transfer of spending from the original 15 to the new member states of eastern Europe, and preserves the British rebate in full on the CAP and all spending in the   EU 15. I commend all this to the House.

Mr. David Cameron (Witney) (Con): This was the year that Europe needed to change direction; this was the year that the people of Europe rejected the constitution; and this was the year that people called for the end of the obscenity of protectionism that damages the developing world. The Prime Minister rightly talked at the time of a crisis in European leadership, so the question for him is whether the British presidency and the new budget even begin to measure up to those challenges.
 
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We warmly welcome the accession talks with Turkey and Croatia. We welcome what the Prime Minister said about Macedonia and the EU partnership with Africa, but has not progress elsewhere been desperately slow?

On the budget, does the Prime Minister remember having three clear objectives: first, to limit its size, when almost every country in Europe is taxing and borrowing too much; secondly, to ensure fundamental reform of the CAP; and, thirdly, to keep the British rebate unless such reform occurs? Is it not now clear that he failed in every single one?

First, the Prime Minister said that he wanted the size of the budget to be set at 1 per cent. of Europe's income. Can he confirm that the budget that he has just agreed is higher than that, higher than the compromise that he tabled and will mean £25 billion in extra spending? The Prime Minister says that that is intended to pay for enlargement, so will he confirm that Ireland, which is richer per capita than Britain, is getting more per head than Lithuania, Slovakia and Poland?

Secondly, the Prime Minister wanted to change the things that the budget was spent on. Is it not clear that he has failed to do that as well? Is it not the case that CAP spending will be higher next year, the year after that and in every year up to 2013? The Chancellor said that CAP reform was necessary to make poverty history. The Prime Minister told the House in June that he wanted to   get rid of the CAP. Will he confirm that, four months later, his own Europe Minister said that the Government had not made any detailed proposals to reform the CAP? Is it not the case that the entire Government spent four years doing nothing about something that the Prime Minister thought was essential?

Will the Prime Minister be clear about what he has secured on the CAP? It is a review and it takes place in 2008. Can he confirm that, in that year, the presidency will be held by France? Is he aware that the French Foreign Minister has said that Jacques Chirac has secured that there will be no reform to the common agricultural policy before 2014? Is that not the opposite of what the Prime Minister actually wanted? In other words, he has completely failed to deliver CAP reform.

What about the Prime Minister's third objective: if all else fails, keep the rebate? All else did fail, and the Prime Minister's position was clear. He used to say the rebate was non-negotiable. He said at that Dispatch Box in June:

"The UK rebate will remain and we will not negotiate it away. Period."—[Official Report, 8 June 2005; Vol. 434, c. 1234.]

The Chancellor said that it was non-negotiable and fully justified. Then the Prime Minister changed his mind. The rebate could be negotiated, he said, provided that there was fundamental reform of the CAP. So it was clear that the only circumstances in which the rebate would be given up was if there were a commensurate and equal giving up of farm subsidies.

That is not an unreasonable position and, at that time, he knew all about the other considerations he   mentioned today, including the importance of supporting enlargement. But what happened? The farm subsidies remain and £7 billion of the rebate has been negotiated away. If that was always the Government's plan, why was not any reduction in the rebate in the Chancellor's pre-Budget report? We are told that
 
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the   Chancellor did not even know about the final deal. Normally, it is the Chancellor who does not tell the Prime Minister about what is in the Budget; this time the   Prime Minister did not tell the Chancellor.

Can the Prime Minister confirm that, by 2011, the UK will be losing £2 billion a year and that that will be the baseline from which we negotiate? Will he confirm that the amount he has given up from the rebate is almost double our entire overseas aid budget this year?

In June, the Prime Minister told the House that no deal was better than a bad deal. He said:

"Europe's credibility demands the right deal—not the usual cobbled-together compromise in the early hours of the morning."—[Official Report, 20 June 2005; Vol. 435, c. 524.]

Did he remember that when he was cobbling together this compromise in the early hours of the morning? Why did he give up £7 billion for next to nothing? Vitally, how is the Chancellor going to pay for it—more taxes, more borrowing or cuts in spending? Which is it?

A good budget deal would have limited spending; it would have reformed the CAP and it would have helped change Europe's direction. Is it not the case that none of those things happened under the British presidency? Europe needed to be led in a new direction. Are we not simply heading in the same direction but paying a bigger bill?

The Prime Minister: No, we are not, for the very simple reason that the direction of Europe is towards enlargement. That is why we have allowed those 10 new countries to come in.

Let us just see for a moment where we agree and disagree. The hon. Gentleman supports enlargement; yes, he supports enlargement.—[Interruption.] Come on. He supports the wealthy countries paying for the poorer countries. That is right too; isn't it? Although he supports enlargement and he supports the wealthy countries paying for the poorer countries, he does not support Britain paying any money for it. He talks about a crisis in the European Union. What sort of crisis would there be if he were in charge with that policy?

The hon. Gentleman talks about the rebate. Let me tell him that the rebate, as I have just explained, is rising not falling—[Hon. Members: "No, it is not."] Yes, it is, because it remains on all common agricultural policy money. He and his Back Benchers say, "Why is not France paying for this?", but France is getting a bigger net contribution loss than Britain in the next financial   perspective.—[Interruption.] Let me explain to hon.   Members what is actually happening: the structural and cohesion fund budget covers about 35 per cent. of all spending. At the moment, it mainly goes to wealthy countries, but it will mainly go to poorer countries. The wealthy countries will therefore pay to the poorer countries, and we are a wealthy country, which is why we should pay our fair share. People like the hon. Gentleman, who say that they are in favour of enlargement but refuse to follow through on the consequences of that position, are not exercising leadership; they are abdicating leadership.

The hon. Gentleman has said that he would have negotiated something different, but let us work out who his allies would be in such a new European Union.—[Interruption.] One of his first leadership decisions was to withdraw from the EPP, which contains the other
 
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Conservative parties in Europe, and this is what his own Members of the European Parliament have said about it. Mr. Struan Stevenson has said:

"We would have to sit round the table on a weekly basis with these fascists and nutters"—[Interruption.]

Mr. Speaker: Order. If hon. Members stop shouting, I would be able to hear what the Prime Minister has to say.

The Prime Minister: It is actually worse than that. If the Conservatives withdraw from the EPP, Jean-Marie Le Pen will sit there, Mrs. Mussolini will sit here, the Conservative party will sit there and, worst of all, Robert Kilroy-Silk will sit there. [Laughter.] Before the hon. Gentleman attacks my leadership in the European Union, he should start to exercise some himself.

Mr. Charles Kennedy (Ross, Skye and Lochaber) (LD): As the Prime Minister knows, the Liberal Democrat party has consistently supported the enlargement of the EU and welcomes that development, which, following the collapse of the Berlin wall, is good for us in Europe and for the world generally. I acknowledge that that development must come with a financial price tag in order to meet moral, political and economic objectives. Having achieved a degree of expansion, we also welcome the opening of accession talks with Turkey and Croatia and the approval of candidate status for Macedonia in this presidency.

Given the ideals that the Prime Minister properly set out at the beginning of the UK presidency, there is a great deal of disappointment with its conclusion, not least where common agricultural policy reform is concerned. First, is not the truth of the matter that the stitch-up between France and Germany over CAP reform, to which the Prime Minister had to put his name, that took place two years ago is what has made the British position so difficult today?

Secondly, the French managed to call his bluff on the issue at the summit. The Prime Minister has said:

"and then to open up the prospect of a radically reformed Budget midway through the next Budget period."

The French Foreign Minister has said that there will be no reform of CAP before 2013.

Those two statements do not marry up. Will the Prime Minister confirm that when the much-vaunted review takes place, it will consist of a review by the Commission, which will result in a document being submitted to a subsequent Council of Ministers, which will decide the matter? The review carries no more force or persuasiveness than that.

In terms of pursuing long-term British interests, albeit that this has been a somewhat disappointing presidency, does the Prime Minister agree that disengagement within the European Parliament or elsewhere is a recipe for absolute disaster? This at a time when someone is making speeches about pursuing a green environmental agenda; indeed, Europe is a very logical place to pursue that. In the last European Parliament, the British Conservatives held the chairmanship of the Environment Committee. If they pursue their current course of action, they will not hold the chairmanships of any committees. That will be a loss not only for them but for Britain.
 
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The outcomes of this summit are disappointing but   not disastrous. It deserves to be particularly disappointing for those Eurosceptics who want to see Britain fragmented from Europe, rather than Europe succeeding in the longer term.

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