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I welcome the review of the single market and the efforts to strengthen internal competitiveness. Does the Prime Minister agree that those are a necessary response to the challenges of globalisation and, in particular, the challenges of emerging economies such as India and China? I, too welcome support for a new transatlantic economic partnership, not least because it may be able to create a better political relationship
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across the Atlantic than the one we have had in recent years. There will be agreement on both sides that reducing the administrative burden of EU legislation by 25 per cent. by 2012 will be welcome, but does the Prime Minister agree that that needs to be matched by Whitehall with resistance to gold-plating and over-interpretation of EU legislation here in the United Kingdom?

In the discussion of the Mecca agreement and a Palestinian Government of national unity, can the Prime Minister tell us what practical steps, if any, were considered to maintain the momentum of that agreement as a contribution to the middle east peace process?

It is clear from the Prime Minister’s statement that the agreement on the environment was the most significant outcome of the Council. Does he agree that the real test lies not in the fact of the agreement, but in whether it is fully implemented? That leads me to ask him what additional measures the United Kingdom will adopt to meet those targets. I hope it is not too late for him to draw to the attention of the Chancellor of the Exchequer the advantages of using the tax system to encourage environmentally friendly behaviour. Can the Prime Minister tell us whether there is any greater role for the European Union than promoting energy efficiency, and whether he sees any opportunity for the United Kingdom to promote industrial development in renewables such as tidal and solar power?

Finally, what is the Prime Minister’s response to the Council’s research and development target of 3 per cent. of gross domestic product by 2010?

The Prime Minister: On the latter point, we are, through the research and development tax credit, improving the amount of support we give to industry in increasing its R and D, and the big increase in the science budget has made a difference too.

In relation to Whitehall, we have made it clear that gold-plating is no longer on the agenda—indeed, we are going back. We have a whole series of mechanisms in place now to prevent it. Occasionally it still crops up, and I assure the right hon. and learned Gentleman that we are vigilant in ensuring that it should not and does not, as there is no point in our over-interpreting European legislation.

In respect of the national unity Government and the Mecca agreement, what is important is that any such Government, if we are able to support them, are consistent with the Quartet principles in the position that they adopt vis- -vis Israel. We wait to see whether that takes place.

As for the United Kingdom, the single most important thing that the UK can do is to be part of a progressively strong European emissions trading system. That is the best thing for us to do and, as I said to the Leader of the Opposition, we have to be careful; we have to strike a balance. We must be careful not to punish our own business and consumers, without ensuring that the measures are also taken at European level.

On China and India, it is important, of course, to do what we can to encourage them to be part of this wider agreement, but there is another point that is very important indeed. The latest figures from China indicate that it is
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building a new coal-fired power station every four days. China on its own, incidentally, is also due to build something in the region of 40 airports over the next few years. The single most important thing is to develop the science and technology and then to have the proper method of transferring that technology to the Chinese and the Indians. That is why we need to get an international agreement involving China, India and America that incentivises, through a carbon price and a stabilisation goal, the right science and technology, and then to share that. I am sure that China and India want to grow sustainably, but they will not put at risk their determination to reduce the poverty of their population. That is a reasonable position, which is why the G8 summit in June will be so important.

Mr. Elliot Morley (Scunthorpe) (Lab): This is a good outcome that demonstrates the value of full engagement with the European Union, and one of the EU’s strengths. At last month’s meeting of the Washington legislators forum, there was a real willingness among legislators from the G8 plus 5 to sign up to the idea of stabilisation goals and global carbon markets. Does the Prime Minister think that that will be reflected by the leaders of China, India and the US at the forthcoming G8 plus 5 meeting, because that will be an important way of building support for a proper outcome post-2012?

The Prime Minister: First, may I pay tribute to the work that my right hon. Friend has done on this issue, especially at the recent meeting in Washington, in which he made an outstanding contribution, for which I thank him? Yes, that is precisely how we ensure that China and India come into this. As I was saying to the leader of the Liberal Democrats, China and India want to play a big part and we have to encourage them. However, they will not take action unless America is part of this—as is the case vice versa. We will not get further than this at the G8 summit in June, but if we get that far, agreeing the principles of a new deal will be a very big achievement. Part of that will be the technology transfer that those countries crave.

Sir Malcolm Rifkind (Kensington and Chelsea) (Con): Was the Prime Minister personally involved in the drafting of the presidency conclusion on Palestine, which says that the European Union would deal with a Palestinian Government who

Does he accept that that is, in a characteristically European way, a fudge, and will he give a clear assurance that the British Government will not deal with Hamas as long as it continues to support suicide bombing and the complete destruction of the state of Israel—which is, indeed, what it reaffirmed in a statement this morning?

The Prime Minister: The position certainly has not changed at all. All sorts of words are used in respect of the national unity Government, but they all amount to the same thing: that such a Government must be in line with the Quartet principles, which means that they must accept the right of Israel to exist, and that the way to pursue a settlement is through negotiation, not violence. That will remain our position. The issue for us is whether, in this national unity Government, it is
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possible to get Hamas to understand that we cannot support people who attempt to achieve their aims through terrorism and that we cannot, in particular, take forward negotiations on two states if Hamas is saying that one of those states does not have the right to exist. That is our position, it has been our position, and it will remain so.

Sir Stuart Bell (Middlesbrough) (Lab): The Prime Minister mentioned leadership in his statement. Is this not an example of the European Union showing world leadership before the G8 plus 5 and the United Nations conference of Kyoto protocol states in December? The Leader of the Opposition mentioned the European emissions trading scheme. Is that not the appropriate mechanism through which to ensure that, by 2020, we reach the 20 per cent. reduction target without penalising or interfering with our manufacturing industry?

The Prime Minister: I entirely agree with my hon. Friend—that is exactly the way to do it. If the European trading scheme develops in the right way over time, it is perfectly possible that we can get other countries or states in the United States to join. For example, the state of California has not ruled out the possibility of joining the system at a later time, and given that it has the sixth or seventh largest economy in the world, that would be of huge benefit.

Mr. David Heathcoat-Amory (Wells) (Con): It is reported that the most important decision taken at the summit’s Friday night dinner was to remove the word “constitution” from the European constitution. If the EU wants to earn a more important description as a democracy, will the Prime Minister insist that it respects the clear verdict on the substance of the constitution by the French and Dutch electors, who said no? Will he ensure that the European Council does not smuggle through bits of the constitution by changing its name? If he wants to put the matter beyond doubt, will he hold the promised referendum in this country, to give the people a final say?

The Prime Minister: I am afraid that, not for the first time in our deliberations about European summits, the right hon. Gentleman has been somewhat misinformed. That was certainly not the purport of the dinner on Thursday night. We agreed that it was important that the Berlin declaration did not get tangled up with issues to do with the constitutional treaty, which will come up at the June summit. In respect of the French and Dutch no votes, I can assure the right hon. Gentleman that the European Union as a whole is well aware of the implications of those verdicts.

John McFall (West Dunbartonshire) (Lab/Co-op): May I congratulate the Prime Minister on the part that he played in securing an environmental agenda and agreement, but does he accept that a unilateral imposition of tax on fuel by the UK would make us a laughing stock, as airlines could import the oil from countries that do not pay the tax? Does he agree that a global agreement is necessary? I welcome the fact that aviation will be covered by the EU emissions trading scheme by 2011, but will the Prime Minister take it
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from me that there will be a bit of ducking and diving by the airlines when it comes to reaching a realistic price for carbon emissions, and will he assure colleagues and me that he will be firm in achieving that realistic price?

The Prime Minister: My right hon. Friend is absolutely right. As I say, we have to strike a balance, which is why I think it is very important that we do not take measures that harm our own industry or our own consumers, but at the same time ensure that we play our full part. He is right again in his implication that it is through the trading system that we will be able to do most, because that is on a common basis.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): I welcome the statement as a positive step forward, and I welcome the reference to clean coal technology. The Prime Minister rightly said that much will depend on the wider international agreements that are reached through future debates. How well placed is Britain to take full advantage of clean coal technology and, importantly, to be able to transfer that technology to people in India and China?

The Prime Minister: We can certainly play our part with the rest of Europe in doing that. There is a certain expertise in the technology in Britain, but it is found elsewhere in Europe and the world, too. The hon. Gentleman is right to imply that the single biggest benefit of developing the technology is the possibility of exporting it to India and China—and America as well, of course, which has huge reserves of coal. Clean coal technology could offer a wholly different future for our own coal industry.

Colin Challen (Morley and Rothwell) (Lab): May I add my welcome for the Prime Minister’s statement, and particularly for the introduction of a mandatory 20 per cent. cut in emissions by 2020? However, it follows behind our voluntary target of a 20 per cent. cut by 2010 by a whole decade. Does my right hon. Friend detect any enthusiasm among other European states for voluntary cuts above the baseline—and it should be considered a baseline—of the mandatory target?

The Prime Minister: I think we should take it stage by stage. The targets are very challenging for the European Union; there is no doubt about that at all. The renewable energy target is particularly challenging, which is why I think it is just as well that we are able to take account of different member states’ energy mixes. My hon. Friend is right that once things really get under way, particularly if the European emissions trading system incentivises business and industry to do more, all the evidence is that people can be more bold and more radical than hitherto they thought they could be. The argument has already changed dramatically in the past few years, and I think that it will do so further in the next few years.

Mr. Edward Leigh (Gainsborough) (Con): It makes sense to cut CO2 emissions, but has the Prime Minister had the chance to watch or be briefed on last Thursday’s Channel 4 “Dispatches” programme? There are eminent scientists who dispute the orthodoxy on
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the causes of global warming; one may or may not agree with them, but their voices are out there. Does the Prime Minister agree that before we take steps that might damage economic growth in the third world, where poverty is the main problem, we should ensure, on an ongoing basis, either nationally, or through the Commission or the EU, that all scientists are given a voice, so that we take the right decisions?

The Prime Minister: I have not been the greatest watcher of Channel 4’s “Dispatches”, for pretty obvious reasons, over the years. The hon. Gentleman is right: there are people who still dispute the science on climate change, but there is a problem. In most respects, I am a fan of people who are prepared to be iconoclastic and say things that are unpopular, even if the conventional wisdom is all one way, so I do not dispute his right to raise those issues at all. However, the fact is that all people who advise us say that the science is becoming increasingly clear, not less so, and the fact is that, should we not take action, and it turns out that the warnings of climate change are right, the implications are enormous. Even on a precautionary principle, it is as well to take avoiding action now. The debate will carry on among scientists, but as I have watched it develop in the past few years, the body of opinion has moved very solidly in favour of this threat being real. Therefore, the implications of it being real are so enormous that we would be foolish not to sit down and take action now.

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): May I welcome my right hon. Friend’s statement, which is of potentially huge significance and will be enormously welcomed by British manufacturing industry? Does he agree that crucial to its success are, first, mechanisms to ensure that European countries liberalise their energy markets; secondly, that the Commission is robust in upholding its national allocation plans for emissions trading; and, thirdly, that the Commission consider a sectoral approach to stop certain industries, such as the energy supply industry, hoovering up carbon credits and passing on the extra cost to British manufacturing?

The Prime Minister: My hon. Friend makes some very wise points. The important thing is that the Commission takes, as he says, the necessary robust action on energy liberalisation, and makes sure that the emissions trading scheme works properly. In that regard, another interesting change has taken place. British attitudes towards the European Commission have not always been clothed in the utmost warmth—indeed we have often regarded the Commission in Brussels as the problem. Interestingly, this President of the Commission—we played a part in ensuring that he became President—has provided us with an opportunity on regulation, liberalisation and issues such as climate change, as he has the necessary tough appreciation of what is right for Europe’s competitiveness, and is prepared, too, to take a long-term view on issues such as climate change. We need a robust European Commission to complete the agenda.

Mr. Ian Taylor (Esher and Walton) (Con): I agree with the Prime Minister and with the Leader of the Opposition that the summit shows that British interests can work in harmony with those of the European
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Union, which is another justification for our being fully integrated into the Union. I agree, too, with a remark that the Prime Minister just made about the Commission. It is vital, particularly in competition policy, that energy distribution industries are opened up, which means that the Commission must take tough action that is backed by the European Court. During the summit, did the Prime Minister discuss energy security? There are increasingly worrying signs that the Russians are trying to interfere with our key pipeline—both the distribution networks through the pipeline and the source of the oil itself. That sort of Russian politics is becoming quite worrying for the European Union.

The Prime Minister: It is interesting that the Baltic states—Estonia, Lithuania and Latvia—are coming together to build a nuclear power station to improve the security of their energy supply. Although it was not the main subject at the summit, there was a great deal of concern and discussion about energy security. The hon. Gentleman’s point about the European Commission is right and true, which is why Britain has an unparalleled opportunity in Europe. First, we have an enlarged European Union—again, the hon. Gentleman’s and then our Government fought for that—so that alliances in Europe are far more fluid than they were before. Secondly, the European Commission is increasingly on all fours with the agenda that we want. Both those things give us big opportunities in Europe.

Mr. David Winnick (Walsall, North) (Lab): I wish to take up a comment that my right hon. Friend made a few moments ago. Although all Palestinian factions should recognise the existence of Israel’s pre-1967 borders, is he aware that while the European Council was meeting many of us saw on television Israeli troops using Palestinian children as human shields, clearly in defiance of international law? What protest will be made by the European Council, the British Government and, I hope, the United States Government about what the Israelis are doing and what we have seen on television, which is totally unacceptable?

The Prime Minister: The only way through is to get negotiations going between the Israelis and the Palestinians. I hope that the meetings that are already taking place between Prime Minister Olmert and President Abbas of the Palestinian Authority continue. I know that the US Secretary of State, Condi Rice, is to go back to the region shortly— [Interruption.] I understand what my hon. Friend says, but the only thing that will put a stop to the grief and hardship on both sides is a negotiated settlement.

Mr. Michael Jack (Fylde) (Con): I warmly welcome the environmental conclusions of the Council. In his discussions with Angela Merkel, did the Prime Minister learn of the fact that in Germany some 200,000 people are employed in the renewable energies industry, largely owing to the much more advantageous terms on which Germans who install renewable systems have their electricity purchased? What plans has he to reconsider how electricity is purchased in this
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country, to make the installation of renewable technology much more attractive?

The Prime Minister: The point that the right hon. Gentleman makes is right. People in Germany who generate energy through microgeneration are able to feed any surplus energy back into the system. These matters are all under active consideration, and he may learn more about this in the next few days.

Keith Vaz (Leicester, East) (Lab): I join the Leader of the Opposition in congratulating my right hon. Friend on achieving his objectives at the Council. The conclusions refer to progress with the Lisbon agenda. Is he confident that the target of 7 million jobs to be created in the next year in the EU will be met? Given his leadership in this area over the past seven years, since Lisbon began, what steps will he take to ensure that our European partners pursue that agenda as vigorously as Great Britain?

The Prime Minister: Europe has generated millions more jobs in the past few years, but we still have levels of unemployment that are far too high. We also need a labour market that is more geared to employability, rather than a more old-fashioned view of the social dimension. It depends to a great extent on the Commission being allowed, and being given support by member states, to take measures on liberalising the European market and on making sure that we support our work force through training, education and skills—active labour market policies, rather than old-style regulation. That is the agenda that we will push. The good news is that the Commission is on the same track. We need to ensure that all member states are on the same track.

David Howarth (Cambridge) (LD): Will not the apparent decision to allow member states to count investment in nuclear power against their renewable energy targets have the effect that the renewable industries have long feared—that encouraging investment in nuclear power will undermine investment in the truly renewable industries?

The Prime Minister: That it not what it does. The overall target for renewable energy is 20 per cent. for the whole of the European Union. It is in the allocation of that 20 per cent. that account can be taken of the energy mix of individual countries. The 20 per cent. target is at the bold end of the spectrum. We will face considerable difficulties in ensuring that all the European Union meets that target. If the energy mix could not take account of the reliance of the UK, France and other countries on nuclear power, it is hard to see how that could be fairly done. So that is necessary to protect the British interest, and it gives Europe more flexibility in how we meet that target. It does not change the target itself.

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