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On the 2020 document, I did not think that I did sound that enthusiastic about it, because like the hon. Lady-I suspect we agree about this quite a lot-I am rather suspicious of these strategies, as what really needs to be done is greater action within each European Union country to deal with the problems of our lack of competitiveness. That is about welfare dependency, the scale of our pensions obligations and our uncompetitive
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tax rates. Sitting around and strategising is one thing, but what we really need to do is roll up our sleeves and get on with the work of making our economies more competitive; otherwise, 2020 will join Lisbon in being dreams that are unfulfilled.

Sir Menzies Campbell (North East Fife) (LD): Can the Prime Minister tell us whether there was any discussion at the Council about the European security and defence and policy, and in particular whether, either at the Council or later, he had any discussion with President Sarkozy about the possibility of closer defence co-operation between the United Kingdom and France? Would that not be a very good memorial to General de Gaulle?

The Prime Minister: The right hon. and learned Gentleman is absolutely right in raising this issue. It was not specifically discussed at the European Council, but I discussed it over lunch with President Sarkozy when he was here for the de Gaulle commemoration. There are some real opportunities, because when we look at the defence needs of Britain and France, we see that we both have effective armed forces, we both have a nuclear deterrent and we both have important naval forces. There is room for more collaboration and co-operation. This has fallen down in the past because we have often talked a big game, but nothing has happened. What we should do is start with some smaller projects, where we begin to collaborate and work together and show this makes sense, and then we can take the work forward. But I think this is good for both of us when we want to maintain strong defences, yet we know that we both face-if I can put it like this-issues of affordability.

Mike Gapes (Ilford South) (Lab/Co-op): The Prime Minister referred to enlargement of the European Union only in the context of Iceland, but was there any discussion about what is happening in the western Balkans in relation to membership of the EU not just for Croatia, but for the other states of former Yugoslavia?

The Prime Minister: My right hon. Friend the Foreign Secretary was in Sarajevo recently. The hon. Gentleman will find that there is great enthusiasm on the Government side of the House for further enlargement of the European Union. Obviously, Macedonia is a candidate country, and, obviously, we want Croatia-and, in time, others-to join the EU. It struck me, at my first European Council, just what a positive difference enlargement has made, particularly in relation to members from central and eastern Europe, who, on many issues, take a similar view to us and can be very useful allies. This is an agenda that we want to push forward. In terms of maintaining stability and peace in the western Balkans, anchoring those countries into the European Union is a thoroughly positive thing to do.

Mr William Cash (Stone) (Con): The Prime Minister referred to economic recovery. There are currently as many as 30 European directives in the pipeline which will deeply affect our financial regulation and economic governance, nearly all of which are by qualified majority voting and co-decision. There is also the issue of European social and employment legislation. How will my right hon. Friend-and, of course, the Chancellor tomorrow-regain and retain control over those economic issues?

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The Prime Minister: My hon. Friend makes a very good and reasonable point. There are threats to our competitive position coming from the European Commission and, more particularly, from the co-decision procedure and the great strength that had been given to the European Parliament under the Lisbon treaty. It makes our work harder, I have to be frank. In relation to the de Larosière package on financial regulation, a reasonable compromise was reached, but the European Parliament has unpicked that and made it much more burdensome from the British point of view. Now, there is no alternative to having to fight back to the compromise that we left. It is not a satisfactory situation. One thing on which my hon. Friend and I agree is that the Lisbon treaty was not a step forward.

Angus Robertson (Moray) (SNP): I join the Prime Minister in paying tribute to service personnel. These tributes resonate especially in my constituency, which has suffered the single biggest loss of UK service personnel aboard Nimrod XV230 in Afghanistan.

While he was in Brussels, did the Prime Minister have the opportunity to congratulate Mr Bart De Wever, the winner of last week's Belgian general election? Does the Prime Minister join me in wishing both Flanders and Wallonia well as neighbours and partners within the European Union?

The Prime Minister: Getting involved in potential grief between Flemings and Walloons is an area that I do not want to head into, if the hon. Gentleman will forgive me.

Nicholas Soames (Mid Sussex) (Con): I join my right hon. Friend in paying tribute to the fallen, and I warmly congratulate him on the judicious way in which he balanced British and European interests at the European Council. Did he have an opportunity to discuss the accession of Turkey to the European Union? Will he confirm that, not least because Turkey continues to play a very important role in world affairs, that continues to be a cardinal act of British policy?

The Prime Minister: My hon. Friend is absolutely right about supporting Turkish membership of the European Union. I think that we should back it wholeheartedly. It is very important for the future of Europe and for the future of Turkey. It was not specifically discussed at the European Council, but we should all be concerned by the signs that Turkey is beginning to look in other directions, and we should be doing all we can to anchor her into the European Union. The decision that the Turks have taken regarding Iran is depressing from that point of view, so it should continue to be our policy to support Turkish membership wholeheartedly and to try to persuade others to do the same.

Mr Tom Watson (West Bromwich East) (Lab): On tackling the deficit in pensions obligations, did the Prime Minister discuss his review of state pensions in the UK, and can he confirm that that extends to the armed forces pensions schemes?

The Prime Minister: What I can confirm is that the former Member for Barrow and Furness, John Hutton, is going to lead this review, which is looking at pensions within the state sector. It is a very important piece of
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work and I am sure that its terms of reference will, in time, be placed in the House of Commons for the hon. Gentleman to look at.

Michael Fallon (Sevenoaks) (Con): Does my right hon. Friend agree that the striking unanimity on urgent deficit reduction shows how right the Government are to get on with it? May we take it from his statement that Britain's liability towards future eurozone stability will not extend beyond the measures agreed by the former Chancellor on 9 May?

The Prime Minister: I can give that assurance. It is absolutely our view that we should not go further than the last Government, in our view, mistakenly went. Britain has advantages from staying outside the euro. I have never supported our membership of the euro and never will, because I have always believed that, once we join the euro, the pressures for single economic government get greater and greater, and that is what we are seeing within the eurozone. But it is in our interests for the countries of the eurozone to sort out their problems. We should not stand in their way, as they try to do that. Our conditions should be that we will not support something that transfers power from Britain to Brussels, and we will not support something that takes us further into financial support for the eurozone, but we should be in favour of measures to make sure that that zone works.

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): European investment funds have played a major part in boosting jobs and the economy in Liverpool and other parts of the north-west, with the Northwest Regional Development Agency playing a major role in ensuring that they come to the region. Was there any discussion about how that can be continued?

The Prime Minister: We did not discuss regional policy specifically. It is important that we make sure that investment continues into the regions, and the hon. Lady will know that we have announced plans for how we think we can do even better than the regional development agencies have done. I recently read out a list about some of the very wasteful amounts of spending they have been engaged in. What we want is real money going into our cities to make sure that development takes place. [ Interruption. ] The right hon. Member for Doncaster Central (Ms Winterton) shouts about Sheffield. I ask her to look at the shareholder structure of that organisation to see who would really benefit from that not very well thought through piece of financial engineering.

Mr Julian Brazier (Canterbury) (Con): I welcome my right hon. Friend's comments on progress on Iran, but does he agree that the future of Afghanistan is also important to all members of the European Union? Does he agree that it is time that some of our European partners did more to share in the sacrifices of blood and treasure that our forces are making there?

The Prime Minister: My hon. Friend makes an excellent point, and it is one that we should, and do, make all the time in the EU and NATO. As he knows, one of the things we should push for is the reform of NATO, so that we get a common operational fund so that countries such as Britain that are making such a big contribution
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do not have to pay twice. So we believe in trying to do this. We should also be clear to other countries, which perhaps feel that they cannot do more in the front line, that there is huge amount of logistic support-helicopters, transport and other support-that they can do now and that is incredibly welcome.

Mr Dennis Skinner (Bolsover) (Lab): Did the Prime Minister show a little bit of gratitude for the decisions of the Labour party conference and people such as Labour Members who decided not to join the eurozone many years ago, showing great foresight and calling on the then Chancellor to write out the five conditions that kept us out? There must be a little part of him that is envious of that.

The Prime Minister: I do not want to sound uncharitable, but I remember that the last Conservative Government negotiated the opt-out from the single currency that gave us the ability to stay out of the single currency, and I pay tribute to my right hon. Friend the Foreign Secretary, who, in difficult circumstances, made the argument against the single currency. What I remember, when the hon. Gentleman was sitting on the Government Benches rather than on the Opposition Benches, is the then Government wasted about £30 million on preparations for joining the euro. I could have given them that advice for free: do not join it.

Alec Shelbrooke (Elmet and Rothwell) (Con): May I congratulate the Prime Minister on showing some leadership in Europe once more-Britain is grateful-and will he confirm to the House and the public at large that, having drawn red lines in the sand on our position in this country, he will never give them up just to further his own career after the House?

The Prime Minister: Yes, I can confirm- [ Interruption. ]

Mr Speaker: Order. I do not know what the former Minister for Europe had for breakfast, but perhaps we should be on it-or, alternatively, perhaps we should not.

The Prime Minister: I am not going to go there; neither am I applying for some European supernumerary position and all that, but it is important that we set out clearly what we want to achieve. But I say again that we are not against members of the eurozone sorting out their own affairs. We should not stand in their way. We want a strong eurozone; we just do not want Britain to be part of it in joining the single currency, and we also do not believe that we should give it further financial support. Those are the keys that we must stick to.

Chris Heaton-Harris (Daventry) (Con): In this era of pan-European budget consolidation, will the Prime Minister confirm that he will insist, in the spirit engendered by the words, "We are all in this together", that the continually rising European Commission budget benefits from considerable shrinkage in future?

The Prime Minister: Can I say first how glad I am that my hon. Friend decided to quit the European Parliament and to join us here in the Westminster Parliament, although he left the European Parliament just at the moment at which it has given itself a large
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dollop of extra power? I absolutely agree with him: the next European budget needs to be at worst a freeze and at best a reduction. I do not say that because of any particular ideological animus; I say it because we will be making difficult budget decisions here in the United Kingdom, and our constituents will not understand if we make budget reductions in the UK, but the European budget increases-it just will not wash.

Kate Hoey (Vauxhall) (Lab): The Prime Minister made a statement on the formal business at the European Council, but as it was his first Council meeting, would he like to share with us, in the privacy of the Chamber, how he really felt about being there, in terms of his attitude, support and work with other leaders? Did he get a feeling that those leaders understood that the vast majority of people in the United Kingdom do not want any more powers to go to Europe, and indeed want to get some powers back as soon as we can?

The Prime Minister: I think that there is a good understanding in the European Union of the British position, and an understanding that we are practical, logical, sensible people. We think that the European process of integration has gone too far and should not go further, but we also want to be constructive and positive. The hon. Lady asked for my impressions. One of the things that does strike one is that enlargement has been a success for the United Kingdom, in terms of being able to drive our national interests forward; that is helpful. The other impression is about the primacy of the economic problems that Europe faces. It is a really difficult situation that some European countries face, and grappling with that, with the future of the euro and the eurozone, and with how it will work, will consume an enormous amount of attention in Europe. I thought that there was a general approach-positive, from our point of view-that the organisation should now be about action, substance and political will, rather than endless treaties, processes and institutions. If that could be the case for the coming few years, I, for one, would be very grateful.

Damian Hinds (East Hampshire) (Con): After the Prime Minister's constructive discussions with European leaders, and the European Commission President's emphasis on fiscal consolidation and structural reform, is he feeling isolated in Europe, as Labour Members suggested he would?

The Prime Minister: Absolutely the opposite. What is interesting is that, since what has happened in Greece and the problems of sovereign debt, European Union members are pretty much unanimous that one has to take action on budget deficits, and one has to do it now. The risk is falling confidence; that people will not lend us money; and going the same way as Greece. The one group of people who now seem to be completely outside that consensus are those in the British Labour party. They, for reasons of political advantage-or pretend political advantage-are the last people who think that one does not need to deal with the budget deficit. That is very short-sighted and very wrong, and I think that they will come to regret it.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): If the Prime Minister is telling us that there is widespread agreement across Europe that deficits need to be cut,
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can he tell us exactly what progress was made in getting his European partners to agree that the money with which we subsidise the European Union will be cut? I am talking about not just the costs of the bureaucracy, but the subsidy that we give every year to the EU.

The Prime Minister: I know that the hon. Gentleman takes quite a robust view on this, but I have to say that, from where I stand, the previous Government gave away £7 billion of the British rebate and got nothing in return, in terms of a proper review of the common agricultural policy. As I said, when it comes to financial perspectives for the EU, we have to constrain the spending of the organisation, particularly as we will be constraining the spending of pretty much everything else.

Mr Peter Bone (Wellingborough) (Con): Could the Prime Minister tell the House how he was received in Europe now that we have a British bulldog representing the interests of Britain, instead of the former Prime Minister, who was like a French poodle?

The Prime Minister: Perhaps when it is a person's first European Council, they give them a slightly softer ride. If Britain states our positions clearly, and if we work hard, particularly with allies in France and Germany, to put forward our positions and why they matter so much to us, we can meet with success, but we should have a positive agenda. As well as protecting our competences and keeping ourselves out of the single currency, we should have a positive agenda about trade, Doha and completing the single market, because all our economies need the stimulus that trade and investment can bring. There is no money left in the European kitties; one can see that by looking at the other leaders sitting around the table, and at how they are feeling, given their own budget deficits. So the best stimulus that we can have is free trade, Doha and completing the single market.

Chris Leslie (Nottingham East) (Lab/Co-op): As a matter of record, will the Prime Minister say that, at the European Council, there was absolutely no discussion whatsoever of the risks to economic growth from cumulative or excessive spending cuts across Europe, or was he just not listening to those bits?

The Prime Minister: I was focused and listening to every minute of the discussions. We want to get it right in dealing with deficits and encouraging growth, but the conclusions make it clear that those countries with really bad deficit problems have to take action. When one sits at the table and looks at the problems in Greece, and at the difficulties in Spain, one asks oneself who has the biggest budget deficit, and the answer is Britain, because we were left it by the Labour party.

Guy Opperman (Hexham) (Con): The right hon. and learned Member for Camberwell and Peckham (Ms Harman) accused the Prime Minister of pandering. Does the Prime Minister agree that the only people who are behaving like pandas, which have notoriously bad vision, are the Opposition, who have signed away so much over the past 13 years?

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