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That simply is not right. The forecast last autumn was for recovery in July. This June he said that Britain was

Will he now confirm that he got it completely wrong? While we are still in recession and other countries in the EU grow, will he also confirm that we are forecast to have practically the highest budget deficit in the whole of Europe next year?

The summit conclusions endorse the ECOFIN statement that some countries should start to rebuild their public finances before 2011. As we are forecast to have the largest deficit in the whole of the OECD next year, should that not include us? Is it not the height of irresponsibility to sit there, as the leader of a lame duck Government with deteriorating public finances, making pledge after pledge of further public spending and never saying anything about how he would deal with the crisis that he has created?

The third issue is Lisbon and whether Europe needs a president. Does this debate not tell people all that they need to know about this Government? On the one hand, the Government went round saying that the treaty was just a tidying-up exercise, that there was no threat to national sovereignty and that the constitutional principle had been abandoned. But on the other, now we see the Prime Minister using all his offices to try to foist on Europe an executive president, with every intention of maximising the power of this new office. Is it not the case that the Government have not been straight on the treaty from start to finish?

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The only silver lining is that the bid to make Tony Blair president seems to have got into a bit of difficulty. Just a few days ago it was all going so well-

The Minister for Europe (Chris Bryant): Who's your candidate?

Mr. Cameron: Who is my candidate? Perhaps the hon. Gentleman-never someone to go naked into the conference chamber.

It was all going so well. As the Prime Minister left for Brussels, one British official was quoted as saying:

Shortly afterwards, the Prime Minister gave Tony Blair his personal backing. He threw the weight of the Government spin machine behind the Blair campaign. He broke into his schedule to appear before the Party of European Socialists. He told them all to "get real" and back Tony Blair. Ever since then, Tony Blair's campaign has been in free fall. Does that not demonstrate an eternal truth in British politics: that no cause is truly hopeless until it is endorsed by this Prime Minister?

The Prime Minister: Once again, not one policy from the Opposition-it is all about personalities, never anything about policy. Let us first turn to Afghanistan. I did say earlier that I had talked to President Karzai and I did say to him that it was absolutely essential that he brought forward a unity programme that would include tackling corruption, strengthening the anti-corruption commission and taking action in individual areas, as well as bringing forward measures to strengthen local government. Of course, it is also important to us to build up the army from 90,000 now to 135,000 and to build up the police force, which is under 100,000 at the moment but is not sufficiently effective. So we have made the offer of further troops in Afghanistan conditional on Afghanistan showing that it can deal with its problems by making available new forces to be trained. At the same time, we await the decisions that will be made in other capitals about their contribution to the next stage of Afghanisation, which is increasing the number of Afghan troops but allowing them to be trained by forces from Britain and other countries.

I am also grateful for what the right hon. Gentleman said about climate change. It is absolutely essential that we come together to make sure that we have a deal at Copenhagen, but European leadership and European unity in this are absolutely crucial. The right hon. Gentleman asked whether the 2020 deal was a voluntary one. No, it is not. What is voluntary is the fast-track offer, which is the offer for the first three years according to which different European countries will choose to make their own contributions. But, again, a deal at Copenhagen is possible on finance only because Europe, as a European Union, has led the way in making that finance available.

When it comes to the economy, I just have to say that the Government support fiscal action continuing. The right hon. Gentleman's party wants to withdraw the fiscal stimulus; I found no support in any country in Europe for withdrawing the fiscal stimulus now. His party has refused to back direct action using Government funds against unemployment; I found no party in Europe supporting that action either. His party, of course, has
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rejected many of the proposals that we have brought forward to deal with the recession; I find support for what we are doing in Europe, not support for the Conservative position.

The right hon. Gentleman also mentioned the Lisbon treaty and its ratification. We know the position of the Conservative party. Its leader said:

That is the position of the Conservative party- [ Interruption. ]

Mr. Speaker: Order. Mr. Grayling, contain yourself and try to exercise what self-restraint you can muster.

The Prime Minister: Whenever the word "Europe" is mentioned, the Opposition seem to become both extreme and wild in the actions that they take.

The right hon. Gentleman is demanding a referendum on Lisbon. He is also-I see Back Benchers nodding, but not the Leader of the Opposition-demanding withdrawal from the social chapter and from European Union employment legislation, for which he would need the agreement of every one of the 26 other countries in the European Union. When the challenge is actually to secure growth, a climate change agreement and greater security from the European Union, is it going to be the best use of British influence to fight yesterday's battles the minute that the European Union has moved on from them when there is so much that we have to do to promote jobs, growth and trade? Is it really in the British national interest for the Conservative party to leave aside the alliances that it has had for years with the Christian Democrats in Germany and with President Sarkozy's party in France and to go into an alliance with a small group on the far right of Europe? The only reason the Conservatives are doing that is not in the national interest; they are putting their own party interests first and letting Euroscepticism take over their party. If they had really changed, they would have changed on Europe, and just as they are wrong on the recession, they are wrong on Europe as well.

Mr. Nick Clegg (Sheffield, Hallam) (LD): I should like to thank the Prime Minister for his statement and, of course, join him in sending expressions of sympathy and condolence to the family and friends of Staff Sergeant Olaf Schmid, who tragically lost his life in Afghanistan this week.

On Afghanistan, I note that the Prime Minister has already called President Karzai to congratulate him today on his unopposed continuation as president of that country, but surely the Prime Minister must recognise that Karzai simply cannot lead the dramatic change in direction that Afghanistan needs unless he commits now to work with his opponents, including Dr. Abdullah, to reach across ethnic and tribal divisions, stamp out corruption and start to build the legitimate institutions of central Government that Afghanistan so desperately lacks. The only way to do that is to commit now to a Government of national unity, and not the vaguer "unity programme" to which the Prime Minister just referred. What pressure are the Government bringing to bear on the Karzai Administration to make that happen? Or is the Prime Minister going to ignore the lack of
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legitimacy of the Karzai presidency and so risk failure for our brave troops as they try to prop up a Government in whom no one believes?

Turning to the rest of the weekend's summit, the event was remarkable for two reasons: first, the discussion of the historic negotiations to be held in Copenhagen; secondly, the Government's misguided attempt to install Tony Blair as president of Europe. On Copenhagen, I welcome in principle the agreement on a funding package to help developing countries to fight climate change, but does the Prime Minister not see that the European Union's leadership in this area is in jeopardy while he and other leaders remain silent on how the cost of those proposals for adaptation and mitigation will be met in practice? What consideration has he given, for instance, to funding these commitments, in whole or in part, through a tradeable levy on maritime and aviation fuels? Is it not time we asked the aviation and shipping industries, which currently remain outside any international carbon fuel levy system, to pay for the damage that they cause to our environment by asking them to help to fund the fight against climate change in the developing world?

On the second issue, I congratulate the Prime Minister on what turns out to have been a very cunning plan indeed to block the career aspirations of his predecessor. Does he agree, however, that the outcome of the discussions on Tony Blair has been to strengthen Britain's hand in arguing for the position that we should have been lobbying for in the first place-that of the High Representative? The president will be a glorified chairman, without his own resources, like an admiral without a navy, but the High Representative will have real powers-a general with troops, by comparison. So will the Prime Minister confirm that that is the job that we are now aiming for? Will he also give us an indication of who he would like to see in the role? We all know that he is pushing the right hon. Member for South Shields (David Miliband), but will he also look beyond his party ranks for other candidates-[Hon. Members: "Hurrah!"] No, no, no-that is for another day. I meant other candidates such as Lord Patten, who I am sure would be welcome on these Benches, or indeed Lord Ashdown.

The Prime Minister referred to the summit's deliberations on banking. When I asked him a couple of weeks ago, he refused even to contemplate splitting up the banks, yet it is now clear that the European Commission is driving forward a process to break them up. Will he explain why, if he is willing to hive off huge divisions of the banks at the behest of Europe, he will not go the whole way and separate retail and investment banking completely? Why will he not split up the banks in the only way that would protect the public interest for good?

The Prime Minister: I do not think that there has ever been a more public application for a European job than what we have heard this afternoon. I could see the sense of opportunity in the eyes of the right hon. Gentleman's colleagues as they thought about his future prospects.

On climate change, we have done more than any continent in the world to put forward proposals to sort out a major problem that has to be addressed-the financing gap. If developing countries are to be persuaded
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to make their use of energy more efficient, and if they are to be given help to deal with adaptation, it is essential that we put an offer on the table. So Europe has done three things: it has put an offer on the table relating to the overall funding required; it has now said what the public amount of that money would be; and it has said that it will be engaged in giving fast-track financing. So the process would start even before the new treaty would come in. We have also made it clear that Europe would pay its fair share of that money. We are therefore further on in pushing this forward than any other continent. We need other continents to respond to this but, most of all, we put this offer last week because we want the developing countries to consider what offers they can make to reduce their carbon emissions by the time they get to Copenhagen. Europe has taken the lead on this matter, and while the right hon. Gentleman wishes us to do more, he would be right if he said that Europe had taken the first steps towards the necessary financial agreement.

On Afghanistan, I made it clear while talking to President Karzai twice this weekend that we are expecting him to take strong action on tackling corruption in his own country. This is what Afghanistan is about: it is not simply a country that requires national Government; it requires good effective local government and good provincial and district governors, and we expect the appointments of those people to be in line with the needs of the country. That includes tackling corruption and getting the economy and social facilities moving. For us, it is also crucial that the Afghan Government agree to train more troops and more police. The way that we will be able to deliver greater security to the Afghan people, to prevent a Taliban Government from returning to power and to prevent al-Qaeda from having a greater foothold in the country is by building up the strength of the Afghan forces.

I hope that the right hon. Gentleman will appreciate that these messages to President Karzai are very clear. He will, of course, make a speech tomorrow and then there will be his inauguration address. I hope that what we have asked him to do and what he has agreed to do-it is also what he wants to do-will be included in that address.

As far as the European Council is concerned, let me be absolutely clear. The Lisbon treaty is not yet ratified. When it is ratified there will have to be a meeting of the European Council, and only at that stage will decisions be made about either the presidency of the Council or the future of the Commission. Unlike some Conservative Members, I hope that the Czech Government will be able to ratify the treaty very soon. I hope that we can see a decision from the Czech constitutional court tomorrow, and were that to be the case, I would expect ratification to proceed very soon afterwards. We will then be able to make decisions on these important positions in the European Union as soon as possible. It is not in anybody's interest to have no Commission re-nominated for the future; we will be electing a president of the Council for the first time.

Several hon. Members rose -

Mr. Speaker: Order. Many Members wish to take part, so I am looking for brief questions and, of course, brief replies.

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Mr. Geoffrey Robinson (Coventry, North-West) (Lab): May I congratulate the Prime Minister on a generally very satisfactory outcome to the European Council's meetings, and may I press him on Afghanistan? How are we going to eliminate corruption there as long as the President-and particularly his brother in Kandahar-remain in office? It is difficult, I know, but this has to be confronted one way or another.

The Prime Minister: I agree with my hon. Friend, who has taken a big interest in this matter. It is very important to appoint district and provincial governors who will take action to build up facilities in health, education and schools in the areas for which they are responsible, but it is also important to prevent drug barons and those who would practise corrupt activities from either seizing power or influencing those who have power. Therefore, part of the programme for Afghanistan must be to match anti-corruption activity at the centre with ensuring that local government is in the hands of those who are responsible to the people and not connected to the country's drug overlords.

Mr. John Redwood (Wokingham) (Con): Will any British bank be cancelling bonuses this year in the light of the decision on banking bonuses?

The Prime Minister: The right hon. Gentleman knows the G20 decision on this matter, which is that bonuses can be earned, but only over a three-year period and subject to clawback and to being paid not in cash, but in shares. Those are the issues that we are now debating with the banks in Britain.

Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): Is the Prime Minister aware that many of us who are in favour of a referendum on the Lisbon treaty before it is signed intend to remain in favour of a referendum on it even if it is signed? Does he agree that those who capitulate and decide to change their position simply because the treaty has been signed are, in fact, betraying not only their own principles but the policies of the British people?

The Prime Minister: The Leader of the Opposition has given a "cast-iron guarantee" that he will have a referendum; it is for him to answer to us about what he is now going to do.

Mr. David Heathcoat-Amory (Wells) (Con): Does the Prime Minister recall that at the start of the reform process European leaders were instructed to create a Europe closer to its citizens. Does he think that the spectacle of EU Heads of Government engaging in private bargaining sessions to hand out between themselves the unelected jobs in Europe is more likely to increase or to diminish the public's respect for the European Union? Which is it?

The Prime Minister: We know where the right hon. Gentleman comes from; he is against the European Union altogether. I have to tell him that at the formal sessions, which lasted many hours, we discussed jobs, we discussed growth, we discussed climate change and we discussed foreign policy issues. What the right hon. Gentleman suggests was being discussed in the corridors was not discussed in the Council. We discussed the issues that matter to the people of Europe.

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Mr. Elliot Morley (Scunthorpe) (Lab): I warmly welcome the outcome of the Council's discussions on climate change, and the clear lead that it has given. I also pay tribute to my right hon. Friend's contribution. The funds will constitute an essential part of any agreements resulting from Copenhagen, but there is also real potential for a low-carbon economy in this country and in my region. My right hon. Friend mentioned the trade talks. Has any thought been given to such issues as reducing VAT in the eurozone and reducing tariffs for low-carbon products for the benefit of our country, Europe and developing countries?

The Prime Minister: My right hon. Friend is absolutely right. Huge progress can be made towards a low-carbon economy. In particular, as countries emerge from recession, they can invest in the low-carbon technologies of the future. Europe has agreed to sponsor and help to finance carbon capture and storage. It is important that we have some of the demonstration plants, and we are trying hard to ensure that Britain has a number of them for future years. He is also right to suggest that we should consider how we can do more to promote low-carbon goods and services, and that is certainly one of the items that will be discussed at Copenhagen.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): Will the Prime Minister please confirm that the annual payment of between €22 billion and €50 billion to developing countries will be additional money, and that existing EU budgets will not be raided?

The Prime Minister: We made it clear that the existing level of support for environmental projects in the overseas development aid budget was about 10 per cent., and that we would not go beyond that. The money that we are putting towards climate change is therefore additional. I hope that all parties will feel able to agree to that, because otherwise poor countries will find that what they are doing for development has been cut so that they can finance new investments in the environment. I do not think that all parties have yet reached that view, but I hope that they will reach the same view as us.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): The Prime Minister said that the protocol relating to the charter of fundamental rights for the Czech Republic would be attached to the next accession treaty. Would he like to hazard a guess as to which country will be next to accede, and when that might take place?

The Prime Minister: An accession treaty for Croatia is currently the subject of negotiations. Perhaps the right hon. Member for Witney (Mr. Cameron) will reflect on the fact that he would want that to be put to a referendum as well, because it will include aspects related to the protocol. I understand that he would have to advocate a yes vote, because he is in favour of Croatia's joining the European Union.

Mr. William Cash (Stone) (Con): Does the Prime Minister accept that what he is proposing is effectively to bring the treaty into force on the basis of an unenforceable political deal? Does he accept that that simply adds to the cynicism that people should feel about this entire process, and that we therefore need not only to eradicate the false promises but to have a referendum in any event?

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