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3 Jun 2010 : Column 604

Mr Hague: It is in the nature of trade that we all benefit from each other. The hon. Gentleman is right: if 49% of our exports go to the eurozone, the other half do not. However, I would not want to do without the 49% that go to the eurozone. All trade is very important to the future of the country.

Several hon. Members rose -

Mr Hague: A lot of hon. Members want to intervene, so I will try to fit them in. We will go to Glasgow first, because the hon. Member for Glasgow South West (Mr Davidson) has made great contributions to such debates in the past.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): I congratulate the Foreign Secretary on his new appointment. There is undoubtedly a crisis within the eurozone, but does he not agree that there is a danger that those in Brussels will simply see this as an opportunity to accrete more power to themselves, centralise still further, and that their analysis will be that the solution to the problem is more Europe, not less. What steps will the Government take to ensure that that does not happen, and that Britain is not sucked into the black hole of the eurozone?

Mr Hague: The hon. Gentleman is right about that. I am about to come to that point in my speech, so I will address the matter in a moment.

Mr Nigel Dodds (Belfast North) (DUP): I too welcome the Foreign Secretary to his post. He has a reputation for blunt speaking, so will he tell the House whether he regrets his and his party's decision not to proceed with a referendum on the Lisbon treaty, which was something that the people of Britain and the United Kingdom desperately wanted?

Mr Hague: I shall also deal with referendums later in my speech. I explained yesterday that the edge is taken off blunt speaking by becoming Foreign Secretary of the United Kingdom, and it is probably in our national interest that the edge is taken off. Of course, I regret that there was no referendum on the Lisbon treaty-I campaigned for one for years-but the treaty was ratified. As the Prime Minister and I explained in opposition a few months ago, we cannot make up a referendum. The Lisbon treaty is now one of the treaties of the European Union. However, we will provide for referendums in future-I will deal with that point shortly.

John Mann (Bassetlaw) (Lab): I was listening carefully to the Foreign Secretary's comments on labour market flexibility. May I give him the chance to elaborate slightly on that? Does he have any proposals to avoid the situation that arose at East Lindsey and Staythorpe, whereby, in the case of Staythorpe, skilled British workers were unable to apply for jobs to build new power stations precisely because of the lack of regulation in Europe? How will he address the Staythorpe situation?

Mr Hague: I do not have proposals at this moment to address that, but the hon. Gentleman raises a legitimate point, so I will note it as something that the new Government will look at. From what I remember, it is not an easy problem to solve, but the point is legitimate and we can have further discussions about it.

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The hon. Member for Glasgow South West has gone-I was about to address his point. So much for his enthusiasm for an answer! As I was explaining, the major issue is the difficulties facing the eurozone. Given the extent of our exports to the eurozone, of course we will support our partners in their efforts to deal with the current difficulties, but without being drawn further into the eurozone. For example, while we recognise the importance of maintaining a dialogue on deficit reduction across the eurozone and the wider EU, we are firm in our view that our national budget must always be presented first to our national Parliament.

We are listening to member states that are discussing institutional reforms to the eurozone-that is an ongoing debate-but I assure the House that the Government will maintain our position that there should be no further transfer of sovereignty or powers from Britain to the EU over the course of the Parliament. Sanctions for breaches of the stability and growth pact may be the right way forward for our partners in the euro area, but they should never apply to countries that retain their own currencies, and this country will retain its currency.

The next question for all members of the European Union is, "From where will the growth that we need come?" The Government, working with our European partners, mean to address that question with vigour. We know that spending our way further into dangerous levels of debt is not the answer. We need to get Europe back to work, create jobs, attract investment and deal with the erosion of our long-term competitiveness. Those issues concern every member of the European Union, not just the eurozone. We will urgently make the case for the extension of the single market, better regulation that can lighten the burdens on businesses, and seizing opportunities to create freer and fairer trade between the European Union and third countries. In that context, we will particularly encourage greater economic engagement between the European Union and new, rising economic powers.

Kelvin Hopkins rose-

Mr Hague: The hon. Gentleman wants to intervene for a third time. I will let him do so once again.

Kelvin Hopkins: I will try to make this the last intervention, but it is on an important point. Squeezing deficits and introducing labour regulation, which would depress wages, will simply drive the European Union further into depression and deflation. Is not that the real danger that we face?

Mr Hague: I do not think that that is the danger that we face. Deficits unaddressed or regulation that prices people out of work in some European nations are the real dangers to economic growth in the long term. When we consider the position of the countries in the eurozone that face the most severe fiscal difficulties, their problem is not insufficient state spending or insufficient regulation, but very much the opposite. I am sorry-the hon. Gentleman and I agree on so many aspects of European policy, but we will have to disagree on that one.

Mr Cash: Does my right hon. Friend accept that the objectives that he would try to achieve by negotiation, in particular on some of the economic proposals that
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are coming forward, will be subject to majority voting? If and when he is outvoted in that context, what is his fall-back position? Will he introduce and enact a sovereignty Bill so that he can underpin those negotiations with a firm opportunity for the House to override European regulation in our vital national interests?

Mr Hague: My hon. Friend has a long-standing campaign for such a measure. We are examining the case for a sovereignty Bill in the coalition, for the reasons that I explained to him earlier. It was part of the Conservative party's election manifesto, but not part of the Liberal Democrats' manifesto. We must therefore examine that together, and that examination has already begun. Of course, we will come back to the House with our conclusions.

I was making a point about the importance of extending the single market, where we think there are real opportunities to boost growth by further opening up energy and services sectors and moving forward on patents. There are many helpful proposals in Mario Monti's recent report about relaunching the single market, on which we want to build. All that is germane to the Europe 2020 strategy, which will be the main formal item of discussion at the forthcoming European Council. It is the successor to the Lisbon strategy, which is widely acknowledged to have been well intentioned but disappointing in its results.

The current crisis in the eurozone demonstrates that it is vital that the EU has a coherent strategy for growth and jobs, but it must fully respect the balance of competence between member states and Community action. We will work with our partners on the Commission's proposals for a Europe 2020 strategy to promote growth. The strategy is intended to drive growth in the next decade and secure jobs, and those are, of course, the right objectives, but we will want to pay close attention to the detail.

At the spring European Council, five EU-level target areas were identified: employment; research and development; energy and climate change; education; and social inclusion. We are concerned that some, while not legally binding, may stray into the competences of member states. Some are inappropriate for the different systems and models that various member states use. That variety must be respected in creating a meaningful strategy that addresses the economic issues faced across Europe.

We are clear that the EU has a role to play, for example, through providing a deeper and stronger single market, with smarter regulation, a more strategic approach to trade and a framework for innovation. The 2020 strategy faces two other immediate problems that need resolution. First, the next financial perspective-the seven-year EU budgetary framework-needs to cohere with it. In our view, its priorities should be aligned with the strategy. It is deeply unfortunate that the budget review has been so long delayed that linking the two is more difficult than it should be. Secondly, the 2020 strategy is a long-term strategy-it is meant to be-but recent events require a more immediate response to drive growth now. As I said, that response will be the Government's priority. If we can get the 2020 strategy to be more coherent with the financial framework, and link its long-term nature with the immediate action that is needed, perhaps we can avoid the risk of a strategy again proving disappointing in the benefits that it brings to European nations.

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Mr Davidson: Will the Foreign Secretary give way?

Mr Hague: The hon. Gentleman has returned. I will give way to him so that he can nip out again while I answer his question.

Mr Davidson: In my defence, I came back. I had to leave because I had visitors-I apologise to the right hon. Gentleman for that. I explained to them that the joys of listening to him were greater than those of meeting them. They are not voters in my constituency, which makes it a great deal easier to say that.

On the coherence of Government policy on Europe, given that financial cuts are being made across the Government's budget, will the Foreign Secretary give us a guarantee that a cut will also be applied to the contribution that the EU receives from this country? Otherwise, there will be inconsistency.

Mr Hague: There may well be inconsistency. The hon. Gentleman knows that I cannot give him such a guarantee, which is why he enjoyed coming back into the Chamber to ask the question. The contribution is not immediately under the Government's control, but is the product of differences in agricultural payments, VAT payments and so on. It is regrettable, as I said earlier, that the Government whom he largely supported-his Front Benchers do not recognise that description of him; perhaps I should say, "the Government he was elected to support in the past"-gave away £7 billion of our rebate while securing nothing in return. He can be assured that we will not do that, and that will help keep the payments down, but it is not possible to vary them by unilateral Executive action.

Philip Davies (Shipley) (Con): Following the very good point made by the hon. Member for Glasgow South West (Mr Davidson), who asked why people in this country should take the pain when more and more money is going into the EU, will my right hon. Friend say why the Government think it right that this country should give increasing amounts of money to the EU when it does not have its accounts signed off? If the Government are serious about getting the EU to reform its budget, why does he not go there and say, "We're not prepared to give any more money to the EU until it gets its accounts properly audited and signed off, which is what we would expect from any other organisation to which we give money"?

Mr Hague: My hon. Friend makes a very powerful point. Like him, I have often complained vociferously about our inability to sign off the accounts of the European Commission. It is true that most of the problems that arise are now within member states rather than with the Commission, but nevertheless, the new Government will certainly re-examine that and want to put some energy into sorting that out. I feel very strongly about it, as does my hon. Friend.

The Council will also set the Union's position for the G20 Toronto summit at the end of June, and the Government want to ensure that the position agreed at the Council reflects our views on fiscal consolidation, and on strengthening standards on financial regulations and bank levies. It is hoped that the Council will sign off the EU position for the UN high-level plenary meeting
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on the millennium development goals in September, which will take place just before the UN General Assembly. The Government will encourage other member states to fulfil their aid commitments. I am pleased to report that the United Kingdom is on track to meet both its 2010 target of 0.56% of overseas development assistance and its 2013 target of 0.7%. We can be proud that that is a point of consensus in the House between all three main parties, and I pay tribute to the work of the previous Labour Government.

However, collectively, the EU is not on track to meet its commitments, and we will encourage all member states to reinvigorate their commitments to that end. Tackling global poverty is one of the great causes of our age, and one in which the nations of Europe should play their full part.

Mike Gapes (Ilford South) (Lab/Co-op): Has the Foreign Secretary had any recent discussions with his Italian counterpart on the deplorable position of the Italian Government on international development assistance?

Mr Hague: I have not, but I will be visiting my Italian counterpart on Monday in Rome. While I am having an otherwise enjoyable meeting with him, I will drop that point in. Indeed, I will now be able to say that the matter has been brought up in the House of Commons. It is a valid point, so I will certainly pursue the matter.

The Commission will present a communication on the EU's ambitions for a 30% carbon emissions reduction target, including an analysis of the costs and benefits to the EU economy, and of the impact on energy security, exports and job creation. The Government want the EU to show leadership in tackling international climate change and will support an increase in the EU's emissions reduction target once that has been addressed with proper thoroughness.

Looking ahead, we recognise that there is a serious problem with the lack of proper democratic control in this country over the way in which the EU develops-I have already been asked about our position on the referendum. Beyond this Council meeting, the new Government will introduce a Bill to amend the European Communities Act 1972. We are agreed that there is a profound disconnection between the British people and what has been done in their name by British Governments in the European Union. In the past 13 years under the Labour Government, the percentage of the British public who believe that our membership of the EU is a good thing has, according to surveys, fallen to 31%. That is the previous Government's legacy on Europe: public disenchantment after years of arrogance from Ministers, who did not listen to the people. That lesson should be borne in mind by the shadow Foreign Secretary as he seeks to learn lessons about his party's election defeat.

Both parties that form the coalition are determined to make the Government more accountable to the British people for how the EU develops, so that Bill will be introduced later this year. It will enlarge democratic and parliamentary scrutiny, accountability and control over the decisions that we make in the EU. As the House will know, it will include a referendum lock, so that no future treaty may pass areas of power or competences from the UK to the EU without the British people's consent in a referendum. The Government have already
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agreed that there will be no further transfer of sovereignty or powers in this Parliament in any case. The lock will also cover any proposal for Britain to join the euro. We regard that measure as essential in ensuring that the EU develops in a way that has the British people's consent.

We are also clear that the referendum lock will apply only to any proposed future treaty transfers of power or competences from Britain to the EU. It will not apply to treaties that do not do that, such as treaties that make technical changes or accession treaties. We are now working on that legislation.

Emma Reynolds (Wolverhampton North East) (Lab): I note the Foreign Secretary's renewed enthusiasm for referendums. The Maastricht treaty is second only to the Single European Act in terms of the amount of power transferred to the EU. Will he explain why he voted against a referendum on that?

Mr Hague: There is nothing "renewed" about my enthusiasm for referendums-I am simply setting out exactly what I said in the last Parliament and in the general election campaign. There is great merit in a Minister doing what he said he was going to do before the general election. I voted against a referendum at the time of the Maastricht treaty because I was a member of the Government-[Hon. Members: "Ah!"] The Government had the absolutely correct policy on that. We secured the opt-outs on the euro, for instance, of which we spoke earlier, and built in the commitment to a referendum on the euro if ever there was a proposal to join it, which is exactly the policy that will be encapsulated and legislated for in the Bill that we will introduce.

Mr Cash: I am listening with great interest to my right hon. Friend on this hugely important matter. He referred to the question of further treaty transfers of powers, and as he will know, the coalition agreement states:

before referring to the working time directive. Will he concede-I am sure this is the case in a legal and constitutional sense-that "powers" in that context includes the extension of powers under the Lisbon treaty and the introduction of directives?

Mr Hague: I was just coming to that point. The Bill will ensure that primary legislation will be required before the British Government may authorise the use of ratchet clauses in treaties-as some of us have called them-some of which result from the Lisbon treaty. Such clauses allow for a modification of treaties or provide options for existing EU powers to expand, which is my hon. Friend's point. The proposed use of a major ratchet clause-for example, the abolition of vetoes over foreign policy-would also be subject to a referendum. That will be built into our legislation. Taken together, those measures will ensure that unlike under the Labour Government, the European Union can increase its powers vis-à-vis the United Kingdom only with the agreement of the British people. That is a major step towards rebuilding popular trust in the EU.

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