The Prime Minister, alas, seems more focused on the UK Independence party’s numbers than on the gross domestic product figures. When the priority should

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have been stability, investment and jobs, as Friday’s figures confirmed, he delivered a glorified handling strategy for Conservative Back Benchers, confirming that he is more interested in securing stability in the Conservative party than in securing stability in the economy.

Andrea Leadsom: Does the right hon. Gentleman not accept that the EU is changing, and that the eurozone crisis has led to the point at which Britain simply cannot continue in the same way? Does he agree that, in order to safeguard our current interests, we must adopt change?

Mr Alexander: Of course change is coming to the EU and we want to see it. The tragedy is that Conservative Back Benchers prevent the Prime Minister from addressing those changes in a sensible, serious way and from advancing Britain’s national interest.

Mr John Redwood (Wokingham) (Con): I heard very clearly the Opposition rule out an in/out referendum at any time, but I have also heard the right hon. Gentleman’s reluctance to say never. Will he explain in what circumstances he will go to his party leader and say, “Things have changed. We need an in/out referendum”?

Mr Alexander: The right hon. Gentleman missed the “Today” programme on Saturday morning, of which the Foreign Secretary spoke. The position I set out last week in the studios reflected the fact that we could not sensibly and should not make a judgment now. As I have said, Europe is changing. The timing, character and impact on Britain and our national interests of those changes is as yet unclear. That is not a party political position but simply the reality. I do not start from a prejudiced view towards the EU. The right hon. Member for Wokingham (Mr Redwood) published a book called “The Death of Britain?” in 1999. As far as I am aware, Britain still exists. In that sense, I am not sure that his concerns—[Interruption.] He seems uncertain because he is adopting the shadow Chancellor’s hand gestures. I hope he soon adopts the shadow Chancellor’s economics as well.

On economics, senior British figures, including Sir Richard Branson and Sir Martin Sorrell, warned that the Prime Minister’s approach risked creating damaging uncertainty for British business. The Foreign Secretary did his very best to use the expertly drawn-up brief from the Foreign Office to suggest that British business was rushing to endorse the Prime Minister’s approach last week, but he was careful to give a series of quotes that endorsed a process of reform—not a single quote welcomed the prospect of a referendum, which is the basis on which economic stability has been put at risk. The Foreign Secretary does not need to take my word for that. On 24 October 2011, he himself claimed that an in/out referendum

“would create additional economic uncertainty in this country at a difficult economic time.”

For the record, since the Foreign Secretary made those remarks, it has been confirmed that the UK economy has shrunk by 0.3%, so perhaps he will take this opportunity to enlighten the House on how calling for an immediate in/out referendum creates, as he suggests, “additional economic uncertainty”, but committing to an in/out referendum years from now does not. The

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sound of silence speaks volumes. For all his best efforts today, we know that the origins, timing and content of the Prime Minister’s speech on the EU lay in the politics of the Conservative party much more than they lay in the foreign policy of the country.

Ian Murray (Edinburgh South) (Lab): My right hon. Friend highlights the Conservative party’s difficulties, but does he agree with Ian Birrell, the Prime Minister’s former speech writer, who has said that the Prime Minister’s speech was the biggest gamble of his career? He also said that the Prime Minister is not only throwing a block of meat to the Conservative right, but giving them the keys to the abattoir.

Mr Alexander: Ian Birrell is an engaging and illuminating columnist, and his point on the lack of specificity in the Prime Minister’s speech is an important one. Of course, it is important to recognise that the Prime Minister did not wake up last Wednesday morning suddenly filled with a new-found democratic impulse; he woke up with the same headache he has had for years—a set of Conservative Back Benchers banging on about Europe. He used to oppose that.

Sir James Paice rose

George Freeman (Mid Norfolk) (Con) rose

Mr Douglas Alexander: I shall make a little progress before giving way.

The Prime Minister’s speech last week disregarded the greatest concern—I would argue—of the British people, namely the need for stability, growth and jobs. In truth, it was a speech that the Prime Minister did not want to give, on a subject he prefers not to talk about, at a time when no decision was required. Its primary aim was to try to deliver unity through the device of obscurity. That is why the Foreign Secretary’s speech was so illuminating.

Alas, I calculate that the Prime Minister’s speech managed to unite the Conservative party for less than 96 hours, at which point the papers were once again full of new plans and plots against him from within the Conservative ranks. Who can blame them?

Henry Smith (Crawley) (Con): Will the right hon. Gentleman give way?

Mr Alexander: I will make a little more progress.

Far from resolving the issue of Europe, the Prime Minister’s speech ended up prompting more questions than it answered. Those questions, alas, were singularly avoided by the Foreign Secretary in his speech today. Instead of setting out red lines for the negotiations or detailing the powers he wants to repatriate, the Prime Minister instead described five principles, about which we have heard more today, with which few hon. Members could disagree. I am happy to confirm for the Foreign Secretary—this might discombobulate Conservative Back Benchers—that the Opposition are happy to endorse the five principles. Foreign Secretaries have been advocating them for many years.

Mr Peter Lilley (Hitchin and Harpenden) (Con): Which powers would the right hon. Gentleman like to be returned from Europe to this country?

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Mr Alexander: The Opposition have said that reform rather than repatriation is how to achieve the change in Europe we want—[Interruption.] Will the right hon. Gentleman allow me to finish? We have said that we will judge on a case-by-case basis the merits or demerits of where those powers reside. With respect, I should point out to him that the only power identified by the Prime Minister in his long and much trailed speech last week was a change to the working time directive. Is the Prime Minister honestly suggesting that the right of British doctors not to treat a patient when they have not been to bed for two days is the only power he is seeking to repatriate? Is he suggesting that, if he fails to secure that repatriation, he will recommend a no vote for the EU? That is the idiocy we were left with after the Prime Minister’s speech last week.

Sir James Paice rose

George Freeman rose

Mr Douglas Alexander: I will make a little more progress before giving way.

Let me read the principles so that the House can know just how crystal clear they are. The principles are competitiveness, flexibility, that power must be able to flow back to member states and not just away from them, democratic accountability and fairness. As I have said, the Opposition agree with those principles—I hope that does not cause great discomfort on the Conservative Benches. Indeed, to be fair, there is a degree of common ground between the Prime Minister and the Opposition on the need for change in Europe.

Andrea Leadsom: Will the right hon. Gentleman give way?

Mr Alexander: I have already let the hon. Lady intervene. As I have suggested to her, the real tragedy is that Conservative Back Benchers will not let the Prime Minister sensibly deliver the changes that we agree are needed in Europe.

Chris Bryant: Is there not an irony in the fact that the Government are able to come up with only one line on a power they would like to repatriate—namely, the working time directive? The working time directive can be changed. The Prime Minister could be fighting to change it, because it is a directive and a matter of qualified majority voting. If he wants to repatriate that power, he must get every single country in Europe to agree to the change. Is there not hypocrisy at the centre of the Government policy?

Mr Alexander: The Labour Government secured an opt-out on the working time directive, and that process of change can be advanced now rather than in many years ahead. It is significant that the Foreign Secretary, for all his skill as a parliamentarian, singularly avoided giving a single additional detail in his lengthy remarks today on what the Prime Minister was talking about.

George Freeman rose

Ben Gummer rose

Mr Douglas Alexander: Let me make a little more progress.

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The Prime Minister has repeatedly talked about bringing back EU social and employment laws. On 15 November 2005, he said:

“I want, as a strategic imperative, to take back from the European Union social and employment legislation.”

He gave no qualification of that statement. The Foreign Secretary has often singled out the EU’s fisheries policy. He has said he “deplored” it, but was rather more measured in his response to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). The Foreign Secretary has also said that he has

“long argued that far greater control over fisheries should pass back to national and regional bodies.”—[Official Report, 16 June 2009; Vol. 494, c. 199.]

He has been equally explicit on justice and home affairs. On 16 June 2008, he said:

“The whole area of justice and home affairs…should be matters for individual nations.”

However, the Prime Minister seems to have misplaced his shopping list on the way to delivering his speech last week. All he said on the matter was this:

“we need to examine whether the balance is right in so many areas where the European Union has legislated including on the environment, social affairs and crime.”

The words “employment law” did not feature in his speech; fisheries were mentioned only in passing; there was not a single reference to the common agricultural policy or agriculture; the word “repatriation” was never mentioned; and he did not even utter the term “opt-out”. He promised his Back Benchers chunks of red meat and instead delivered a text full of tofu. The reason he chose only to serve up the vegetarian option last Wednesday is that before, during and after the Prime Minister’s speech a couple of truths endure: the impression of unity can only be achieved through the device of obscurity, and the gap between what the Conservative Back Benchers will demand and what the European Union can deliver remains simply unbridgeable.

Ben Gummer: The right hon. Gentleman is proceeding elegantly, which is characteristic, but this is a general debate on the matter of Europe. We have a settled position on the Conservative Benches—[Laughter.] Well, we do, and we are still waiting and looking forward to hearing the opinion of Her Majesty’s Opposition, were they to come into government in two years’ time.

Mr Alexander: The hon. Gentleman did his best to read the Whips’ brief with a degree of conviction, but the idea that there is a settled position is risible. The only attempt to try and find common ground is on the basis of obscurity. The Prime Minister cannot level with his Back Benchers, and he cannot level with European leaders. That is why he has tried to avoid making the speech for the past year. It is not that he does not have talented speechwriters, it is that he did not know what to say. He does not know how to reconcile the demands of his Back Benchers with the needs of the country, and the Foreign Secretary demonstrated the same thing today.

Gloria De Piero (Ashfield) (Lab): Does my right hon. Friend agree with the managing director of Abacus Lighting in my constituency, who told me that if the UK was to leave the EU

“this would make it increasingly difficult for Abacus to compete”?

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Does he also agree with another MD in my constituency, from R and D/Leverage, who said:

“My belief is we should take a more active role in Europe…not as happens today, sit on the side lines and point out the shortcomings of the EU, thus irritating all of our EU member states”?

Mr Alexander: I have a great deal of sympathy with what my hon. Friend says. She offers two views that are an authentic expression of the real concerns of British businesses. They are exactly the kind of businesses that are struggling to deliver orders and to secure the economic growth that the country desperately needs. The Foreign Secretary’s attempt to offer a credible account of how the prospect of a referendum will assist such firms was an abject failure.

Mr MacNeil: The right hon. Gentleman railed against obscurity, and with that in mind will he inform the House what he would like to see happen with the common fisheries policy?

Mr Alexander: We want to see some of the changes that the hon. Gentleman mentioned today, as distinct from what he has said on previous occasions, which was to suggest that the abolition of the common fisheries policy was the way forward. Incidentally, it is a great pleasure to be responding to a Scottish National party Member today, and not simply because we now have agreement on that issue. I was fascinated by his party’s response to the Prime Minister’s speech, because the hon. Gentleman will be aware—he knows the figures as well as I do—that Scottish exports to the European Union are worth approximately £9 billion. Scottish exports to the rest of the United Kingdom—including from his constituency, so he should listen—are worth approximately £45 billion. What was the response of the Deputy First Minister in her ill-fated speech in Dublin? She suggested that a referendum could cause instability and threaten growth. Why would a referendum on Europe, affecting an export market worth £9 billion, cause instability and threaten growth, but a referendum affecting an export market worth £45 billion not be a cause of instability? I have to say that when I heard the Deputy First Minister speak, I thought irony had left the building.

George Freeman rose

Mr Alexander: I will make a little more progress and then I will give way.

The Foreign Secretary had his fun today on the matter of clarity, but within moments of the Prime Minister ending his speech it emerged that he could not tell the country how he will vote in his anticipated referendum. He cannot tell us what people will be choosing to stay in or to stay out of. Crucially—this reflects the point I have just answered—he cannot tell investors whether the United Kingdom will be part of the world’s largest single market in four years’ time. I am sure that even the Government Front-Bench team would accept that in any negotiation, European or otherwise, there has to be give and take. However, the Foreign Secretary cannot or will not tell us whether his party would advocate a yes vote or a no vote at the time of any potential in/out referendum if they had secured only 50% of the negotiating objectives—or indeed 60%, 70%, or perhaps even 80%. That is partly because we do

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not know what the negotiating objectives are, and partly because the Prime Minister simply cannot answer, as his party would not tolerate his answer.

George Freeman: I am extremely grateful to the shadow Foreign Secretary for giving way on that point. We all know that business needs certainty, and we live in uncertain times. Will he take this opportunity to be tough on uncertainty and tough on the causes of uncertainty, and tell us whether Her Majesty’s Opposition support the Government’s proposal to renegotiate and to put the solution to the British people in an in/out referendum?

Mr Alexander: We do not support the Government’s approach. We do not support the idea, when we have seen a 0.3% shrinkage in the British economy in the last quarter, that now is the time to call for an in/out referendum. We listen to the voices of businesses in communities across the country. If the hon. Gentleman suggests that economic stability should not be the priority, I fear that he falls into exactly the area that the Prime Minister used to define his leadership by opposing. Does anyone remember the days when the Prime Minister talked about modernisation? He used to say that the Tories were going to have a different approach to the health service, and then they delivered the biggest reorganisation that the NHS has ever seen—one that the chief executive said could be seen from space. Does anyone remember the time when the Prime Minister said, “We’re going to be a different kind of Conservative party. We’re not going to be the nasty party anymore. We’re all in this together”? Then they delivered a millionaires’ top-rate tax cut. Does anyone remember the time when the Prime Minister said, “We’re going to stop banging on about Europe.” Well, that is exactly what we have now from those on the Government Benches.

Huw Irranca-Davies (Ogmore) (Lab): The progress towards regional management of our seas under the common fisheries policy is a good example of an initiative taken forward by this Government that was started under the Labour Government. It is very progressive and shows that it is not necessary to withdraw from the EU to achieve reform. May I appeal to my right hon. Friend on behalf of one of the strongest constituencies—the farming and food production sector? They want strong leadership; they do not want uncertainty. They want us in the European Union not for the food or farming subsidies, but for entry to the European market, good standards of animal welfare and good standards right across the food sector. That is what I have been told, having just come from a reception with the Farmers Union of Wales and others.

Mr Alexander: My hon. Friend speaks a great deal of sense. The point he makes about the conditions in which British farms want to compete and succeed extends beyond the agricultural sector—a more general point I will come on to make in relation to the single market.

Sir James Paice: I am grateful to the shadow Foreign Secretary for giving way. He has made it clear several times during his speech that not only does he foresee change in the EU, but he wants it and believes it is happening—I am sure that is a common view. However, he is giving us the clear impression that he will accept that change, whatever it may be. The position of my

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right hon. Friend the Foreign Secretary, which I wholly support, is that, yes, we want that change, and we want to direct and be involved in negotiating that change, but that we cannot at this stage say that we will accept the results of that change whatever it may be. If he wants to stop uncertainty, surely he should be making it clear that either the Labour party will accept the evolution of change regardless of what it throws up in the next few years and that we will still be in the EU whatever it may be, or that there may be a stage where he has to say, “We don’t like that, we’ll ask the people.”

Mr Alexander: Modesty aside, may I suggest that the right hon. Gentleman has a look at the speech I gave at Chatham House? Frankly, it set out far more details of specific changes that we would like to see in the European Union than the Prime Minister was able to manage in his speech. We do not suggest that the status quo is what we will or should advocate. We want to see change in Europe. We also recognise that change is coming to Europe. However, there is a fundamental disagreement between this side of the House and that side of the House on how best to achieve the objective of change within the European Union.

Henry Smith: Will the right hon. Gentleman give way?

Mr Alexander: I am keen to make a little more progress.

Of course there are differences between our parties’ approaches on what those changes should include. My judgment is that the reason the Prime Minister was unable last week to set out the changes he wanted to see, beyond the change in working hours for junior doctors, was that the brittle façade of unity to which he is aspiring will crack—indeed, will disintegrate—as soon as he starts to get into the specifics, whether on employment law, social policy, fisheries policy, or a wide range of other issues. I commend the speech I gave, because it details changes in policy. We want to see Europe moving towards growth, and specific policies within the Commission to advance growth, rather than the approach taken in recent years. We see some institutional changes that are required. Of course there are other areas that we will look at, and they are set out in the speech. It is a matter of regret, however, that the Prime Minister felt unable even to match the shadow Foreign Secretary in the level of detail he could provide in his much-trailed speech last week.

One other point on which there was only obscurity last week was that of timing. The Prime Minister seemed unable to be clear on the most basic issue, because it remains uncertain whether treaty change will even happen on the time scale he suggested. At present, no intergovernmental conference is planned for 2015 and most EU Governments now claim there is no need for a big treaty revision for years to come. The only certainty, therefore, is more uncertainty delivered by the Prime Minister.

After both the Prime Minister’s speech and the Foreign Secretary’s speech today, we have been left with a commitment to an in/out referendum on a repatriation agenda that is unknown, within a time frame that is uncertain and towards an end goal that remains wholly

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undefined. In the debate in the House in 2011—when, incidentally, the Foreign Secretary voted alongside me in the Division Lobby—we argued that to announce an in/out referendum in these circumstances would not serve Britain’s national interest. Our position remains: reform of Europe, not exit from Europe.

Labour recognises, as I have sought to suggest, that the need for EU reform did not begin with the eurozone crisis, which is why our agenda for change must address the need for institutional, as well as policy, reform. That means tackling issues such as how to give national Parliaments more of a say over the making of EU legislation and delivering credible proposals for reform of the free movement directive and family-related entitlements at EU level.

The most immediate focus, however, must be on changes that promote and create jobs and growth. That is why we have consistently called not just for restraint, but for reform of the EU budget. The budget might be only 1% of GDP, but it could be better used, with a greater focus on securing growth and continued reform of the CAP. Alongside reform of the budget, we have argued for a new position of EU growth commissioner and a new mechanism better to assess the impact of every new piece of EU legislation to promote growth across the EU.

Protections for the single market and revival of the prospects for growth should be Europe’s priority for change, but to support and defend the single market—this was the point I was alluding to earlier—we must first understand how the market works. The internal market involves more than simply the absence of tariffs and trade quotas at the border. Common regulatory standards covering issues such as consumer rights, environmental standards and health and safety rules are not simply additions to the workings of the single market, but the basis on which it is built.

That means that a credible growth strategy for the UK as part of the EU cannot, and should not, be pursued on the basis of cheap labour, poor labour standards, poor safety standards and environmentally shoddy goods. If European partners, such as the Germans and the Dutch, can compete in global markets with high European standards, why do some Government Members claim that Britain cannot do so? The Opposition understand that the real agenda on certain Government Benches is not only to bring powers back, but to take rights away.

The Government’s approach threatens the directives on parental leave and agency workers and could mean that they no longer apply in the UK. On the working time directive, it is right that we have the opt-out negotiated by the last Labour Government, but what is the Government’s position? They cannot tell us whether they oppose every aspect of the working time directive. Perhaps the Foreign Secretary will nod or shake his head. Does he support the maintenance of four weeks’ paid holiday entitlement?

Mr Hague: Finish the speech.

Mr Alexander: What a revealing answer.

Mr Redwood: Are there any powers or changes that the EU is currently seeking or likely to seek in the future that the right hon. Gentleman’s party would regard as unacceptable?

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Mr Alexander: First, that would be a matter for negotiation, and secondly the changes we can envisage to the eurozone in particular do not involve significant additional transfers of powers from the UK to the EU. Indeed, as we heard at length from the Foreign Secretary, if there were a significant transfer of power in the future, it would trigger the referendum lock legislated for in this Parliament. I hope that that offers some comfort to the right hon. Gentleman that, in any circumstances, if there were a significant transfer of power, the referendum lock would be considered. Frankly, however, it is far from clear that the changes envisaged at the moment—on the deepening of the eurozone—would involve any significant transfer of sovereignty from the UK to Brussels.

Michael Connarty (Linlithgow and East Falkirk) (Lab): I am reluctant to interrupt my right hon. Friend, because he is making such salient points, but obviously one of the meat-eaters on the Government Benches wanted to interrupt him. My right hon. Friend’s analysis should have been done by the Foreign Secretary. Is it not a matter of deep sadness that the Foreign Secretary, who knows about Europe and its significance to this country, has been driven into a corner by the ultra-right in his party? Is it not time he stood up to them, as we would, and challenged them over their idea of breaking away from Europe and bringing down the nation?

Mr Alexander: I yield to no one in my admiration for the Foreign Secretary, but he is in a difficult position: he is trading on his past Euroscepticism. In order to maintain his position with his Back Benchers, he has to effect the same persona that suggested we had nine days left to save the pound about 4,000 days ago. He is an intelligent man, however, and he has learned in office that Britain’s interests are served by being part of the EU. He cannot be too explicit about the changes he wants to see, however, because it would compromise the support on his own Back Benches. Nevertheless, I fully endorse my hon. Friend’s point; the right hon. Gentleman has learned in office, and that is why his points about Britain standing taller in the world as part of the EU are probably heartfelt.

Mr Cash: Does the shadow Foreign Secretary agree with the Barroso blueprint that the European Parliament, and only that, is the Parliament of the European Union?

Mr Alexander: We were clear during the passage of the Lisbon treaty that there should be an enhanced role for national Parliaments—indeed, in my speech last week, I contemplated whether we could strengthen the yellow card procedure with a red card procedure. I see a greater role for national Parliaments being contemplated in the future, therefore; it is certainly one of the negotiations that the Foreign Secretary might be minded to articulate, if he felt able to be explicit, but alas he has taken a Trappist vow of silence.

The debate about Britain’s place in Europe, for all the importance of talking about the economy, stability and jobs and growth, is about more than economics and labour markets. Fundamentally, it is about the kind of country we are and the kind we aspire to be. In a century that many have taken to calling the Asian century, the Labour party is clear that the case for EU membership remains strong. Indeed, if the mechanisms

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for co-ordinating approaches at EU level did not exist, there would be significant calls for them to be created in today’s world.

Over the past 50 years, the case for Britain’s place in Europe has been based on its ability to deliver peace and prosperity. Today, the EU is also an indispensible vehicle and instrument for amplifying our power. That is certainly true economically, but it is also true in trade. We have discussed today the EU free trade agreement. Is it not ironic that the Prime Minister’s No. 1 ambition for his presidency of the G8 this year is an EU-US free trade area? What could more eloquently speak to the fact that, in any of these international organisations, we stand taller and speak with a louder voice as part of the EU than we would outside it?

Whether in economics, trade, defence, foreign policy or the global challenges around development and climate change, Britain’s interests are strengthened by being part of the EU. It gives us a weight collectively that on our own we would lack. It is not a matter of outdated sentiment or even of party ideology; it is a matter of simple arithmetic. In an age when countries are the size of continents, our membership gives us access to, and influence over, the world’s biggest trading bloc, prising open new frontiers that would otherwise be unreachable by the UK. In an age of common threats that permeate national borders, membership gives us the power of collective action and pooled resources.

For the past 50 years, Britain’s foreign policy has rested on two key pillars—a leading role in Europe and a powerful partnership with the US. Let us be honest: both those foundations are at risk, with a US Administration increasingly pivoting towards Asia, and an EU in which the UK could potentially marginalise its future role. It is a time when Britain must navigate a careful course, and the priority must be to make Britain a leading force within Europe as part of an increasingly multi-polar world. Rather than seeing power and decision making contracting to the G2, in a world where all the decisions are taken in Washington or Beijing, Europe, with Britain leading within it, can work to build a G3 world. Instead of focusing on a future agenda for Europe, the Prime Minister has sadly chosen to push a familiar but vague agenda: to bring back powers and roll back protections. At a time when the rest of Europe is preoccupied with future reforms on the big questions—about currency, continued pacification of the European neighbourhood and the projection of European power globally—the British Government have chosen to focus their efforts on looking back rather than looking ahead.

Even after the much delayed speech last week, the truth remains that—as we have seen again today—on the issue of Britain’s membership of the European Union, the gap between the minimum that Conservative Back Benchers will accept and the maximum that the EU can deliver remains unbridgeable. With a divided Government—and, indeed, a divided Conservative party —it therefore falls to Labour to make the hard-headed, patriotic case, founded on the national interest, both for Britain in Europe and for change in Europe, and that is what we will do.

Several hon. Members rose

Mr Speaker: Order. I remind the House that there is a seven-minute limit on Back-Bench speeches, with immediate effect.

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2 pm

Richard Ottaway (Croydon South) (Con): Time does not permit me to analyse the shadow Foreign Secretary’s speech, except to say that I think that he has misjudged the mood not just of the House, but of the whole country.

A lot can change in a day in politics. The Prime Minister’s EU speech, given in his capacity as leader of the Conservative party, was a landmark speech that has resonated far and wide. It was probably the most cogent argument for the European Union that most of us have heard in recent times. Of course it will have its critics, but leadership always does. The House should be in no doubt: this was leadership not just of Britain, but of Europe as a whole. Some of Britain’s fiercest critics, on both sides of the in/out fence, are now congratulating the Prime Minister on leading the agenda.

Just a few weeks ago, the Select Committee on Foreign Affairs had what it thought was a private meeting in Berlin with the political editor of Die Welt—a leading German newspaper. A few days later, we were slightly surprised to find a full account of the meeting in The Times, under the headline “Gone is the time when David Cameron had new ideas for Europe”, in which that journalist said:

“Turkey is becoming more relevant to discussions on the future of Europe than Britain.”

However, after last week’s speech, the same journalist wrote:

“Mr Cameron has staked out an excellent position…Britain is setting the European agenda.”

German journalists have much in common with their British counterparts.

Jane Ellison (Battersea) (Con): Given what my hon. Friend the Chairman of the Foreign Affairs Committee has just said and having reflected on the shadow Foreign Secretary’s speech, does he share my surprise that the right hon. Gentleman is not willing to put what he clearly believes is a compelling argument for Britain’s place in a reformed Europe to the British people?

Richard Ottaway: I quite agree. My hon. Friend makes her point well.

For far too long, the debate about the EU has been polarised. Now we have a course of action that recognises British Eurosceptism, but keeps us at the table using our influence. Of course Britain continues to have its detractors. The French Foreign Minister said:

“You join the football club, but once you are in, you cannot say, ‘Let’s play rugby’”,

but he misses the point. We are not saying that we want to do a Webb Ellis, picking up the ball and running with it; we are simply asking whether the offside rule is working properly. Also, we have allies. Like us, the Dutch want to reform the EU. They are shortly to produce a report on the repatriation of powers—a document that has a familiar ring to it. Reform will be tough, but it is necessary. There is now a widespread recognition that the EU is not working as it should. That was admitted in an excellent piece in The Times today by Guido Westerwelle, the German Foreign Minister. He clearly expresses his support for reform across the board, arguing that it should be on an EU-wide basis. I agree.

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Mr Redwood: Is not the problem that we thought we were joining a football club and now there is mandatory synchronised swimming?

Richard Ottaway: Yes, but my point is that it is an exaggeration to say that we are trying to play a different sport. We are trying to take a fresh approach. It is the multi-tiered approach that I think is most likely to win the day.

Michael Connarty: Will the hon. Gentleman give way?

Richard Ottaway: I will not give way. I have had my two shots, and I do not get a third.

Clearly, we need different arrangements for those countries in the euro, those that are out and those in transition—a group that I suspect will be around for a long time. Call it multi-tiered or an inner and outer group, or whatever, but we have long been at the point where a one-size-fits-all approach is over, and Europe knows it.

The case for sticking with the EU hinges on three main plus points—trade, the single market and diplomacy—and another often forgotten aspect: peace and security. Britain’s trade with the EU is a major success story. Almost half the UK’s exports go to the EU and 51% of imports come from the EU. We export more to Ireland than to Brazil, Russia, India and China put together. Global success is to be found in single markets. Let us look at the economies of the USA, China, Brazil and India—all single markets with a common currency and common language. The EU single market—a British invention of Margaret Thatcher—has significantly increased EU prosperity since its inception in 1987. We need to be part of it.

Then there is the diplomatic clout that membership of the EU brings. In trade, combating crime and terror, fighting fundamentalism, liberating markets and addressing climate change, we have a strong voice at the table. Within the EU, the UK, together with France, leads Europe’s defence policy. I am proud that our intervention in Mali shows that, when the going gets rough, Europe can count on Britain to step up to the mark.

Some people have called for us to have the same status as Norway, as a member of the European economic area. I do not accept this. If it means stepping to one side and letting others dictate the terms of trade, that is not gaining sovereignty but losing it. We have to be difficult, but stay in.

It is interesting to reflect on Mrs Thatcher’s defining Bruges speech of 1988, in which she rejected the centralised, unaccountable, federal Europe of Jacques Delors. She said:

“The European Community…must reflect the traditions and aspirations of all its members.”

Far more importantly, she went on to say:

“Britain does not dream of some cosy, isolated existence on the fringes of the European Community. Our destiny is in Europe, as part of the Community.”

I could not put it better myself. Indeed, her words seem rather tame compared with some of the language that we hear today. But the peace dividend that Europe brings still remains uppermost in my mind.

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At last week’s Chatham House seminar, the French commentator pointed out that between 1870 and the second world war, France and Germany fought each other three times. In the same period, Britain fought two devastating world wars. In the period since, we have lived in peace. I was born in May 1945, as Europe lay in smouldering ruins. I am part of a generation that has rebuilt that Europe. I have enjoyed a life of unparalleled peace and prosperity. Now is not the time to jeopardise all that we have achieved. The stakes are high, but I believe that we can reach a new agreement with our European partners, and I believe that the people of Britain will back it.

2.8 pm

Julie Elliott (Sunderland Central) (Lab): Thank you for allowing me to speak in this important debate, Mr Deputy Speaker.

I want to focus on the important impact that the European Union has on growth, investment and jobs in the north-east of England and my constituency of Sunderland Central. I was extremely concerned last week to hear the Prime Minister stating his support for an in/out referendum on our membership of the European Union. His announcement weakens our negotiating position and creates uncertainty in the markets and in industry, which will impede investment and thus jobs and growth. The timing of his announcement could not be worse. Last month in my constituency there were just under 4,000 people unemployed, 34% of whom had been unemployed for over 12 months. As the threat of a triple-dip recession looms large over our country, the Government’s priority should be ensuring stability, investment and growth.

This is a crucial time for areas such as Sunderland, yet with his speech the Prime Minister is creating volatility and undermining investment in the region. His announcement will mean years of economic uncertainty, deterring potential investors and destabilising the vital economic recovery that is critical for areas such as mine. The Prime Minister’s focus should, and must, be on our economy, rather than on pandering to his Back Benchers.

Nissan is a great success story for Sunderland. The plant there employs almost 7,000 people, and for every person directly employed by the company, another four are employed throughout the UK. The Sunderland plant is the company’s most productive factory in Europe. Nissan has invested a huge amount in Sunderland: some £3.6 billion since 1984. Only in December, it committed to building another car at the Sunderland plant, involving £250 million of extra investment and creating 280 new jobs. I worry about whether a multinational company such as Nissan would have made the same decision if the future of the UK’s trade relationship with the EU looked set to change.

Mr Redwood: Does the hon. Lady remember all the forecasts that her constituency would lose all that investment if we did not join the euro? We did not join the euro, and Nissan has put more in.

Julie Elliott: That is not the same point. We are not discussing the euro. We are discussing something far more fundamental to our country: the continuation of our membership of the EU.

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The business stability needed to invest in car manufacturing is about long-term business planning. How can a company such as Nissan make long-term assessments of where to base its operation when access to its major market is put at risk by the threat of withdrawal from that market? Pulling out of the EU could result in a 10% tariff on car imports into the EU market, which would severely damage the UK car manufacturing industry and might prompt it to relocate. Across the north-east, 140,000 jobs depend on EU trade, of which more than 60,000 in Tyne and Wear and more than 8,000 in the city of Sunderland are EU-dependent. It would be misleading to suggest that all those jobs would disappear overnight if Britain withdrew from the European Union, but many of them would be lost over time, because the area would be at a competitive disadvantage.

In addition to jobs supported directly by the single market, there has been a substantial amount of investment in the north-east from structural funds to support employment and job creation. Between 2007 and 2013, £196 million was invested in the north-east through the European social fund to promote skills and employment, as well as €375 million through the European regional development fund to support regional competitiveness. Our involvement in the EU has delivered proven jobs and growth. That is something that we should be proud of and that we should protect.

Let us not forget the benefits that our EU membership has brought to British workers. Our membership has introduced employment rights, through the working time directive and other measures. The directive has delivered the right to at least one day off a week, the right to four weeks’ paid holiday a year, the right not to work more than 48 hours a week if a person does not wish to do so, and the right to a 20-minute break if they work more than six hours. Before I came to the House, I worked for almost 20 years negotiating with employers on behalf of the members I represented. I learned that we get the best deals when we negotiate from a position of strength. That is a simple principle, but it is an important one.

The Prime Minister’s announcement has seriously weakened the UK’s bargaining position. I agree that the European Union requires some reforms, but the Prime Minister cannot demand reforms while he is hovering in the doorway and threatening departure. Our EU neighbours will not be blackmailed, and as their allies and friends, we should not attempt to do that to them. When Labour was in government, we were able to negotiate flexibilities in the Lisbon treaty by working with our fellow member states and assuring them that our future lay in the Union.

The Prime Minister has said that he wants to remain in the EU, but with this announcement he is leading us even closer to the exit. This uncertainty for businesses, for markets and for investment opportunities will be extremely damaging for our country and for regions such as mine that rely, to an extent, on the EU for jobs and growth. His policy of wait and see is just not good enough; it is a wait that we simply cannot afford.

2.15 pm

Mr William Cash (Stone) (Con): The ultimate question that lies at the heart of the five principles that the Prime Minister set out in his speech is about our democracy,

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because everything ultimately depends on the fact that we agreed, in the European Communities Act 1972, on a voluntary basis, to accept the legislation that came out of the Council of Ministers when it made decisions. Those decisions are increasingly made by qualified majority vote now.

The 1971 White Paper—the basis on which the legislation went through, albeit by only six votes—categorically stated that there would be no erosion of British sovereignty in this House, and that it was vital that we retained the veto, not only in our national interest but in the interests of the European Community as a whole. That remains fundamental because, in a democratic nation faced with the pressures for federalism that people are seeking to impose from outside, it has to be right that the Prime Minister has taken the decision to challenge the nature of the structure of the European Union. He went to the heart of the issue when he rejected the notion of ever-closer union, and I commend him for that. I also believe profoundly that we must bring this programme forward rather than waiting until 2017. For reasons of uncertainty, of practicality and of principle, we should have a decision during this Parliament, not during the next one.

Several hon. Members rose

Mr Cash: I will make one further point before I give way.

I have just come back from Dublin, where, in my capacity as Chairman of the European Scrutiny Committee, I met the other 27 national chairmen. There was no doubt whatever in the statement made by the chairman of the Bundestag’s European affairs committee that, as far as he and Germany were concerned, delay was unacceptable. We also know, from listening to him and to the German ambassador, that there will be no cherry-picking and no negotiations of the kind that are being contemplated. The French take a similar view; I have had meetings with them, too. The reality is, therefore, that there is a serious requirement to make the decisions earlier rather than later.

Mr Redwood: I quite agree with my hon. Friend’s central point. Does he agree that the reason that we have this tragedy in Britain over our relationship with Europe is that more than 100 vetoes in important policy areas were given away at Nice, Amsterdam and Lisbon, against the wishes of the loyal Opposition in this House and probably against the wishes of the overwhelming majority of the British people, who were never consulted about the way in which their democracy was taken away and trashed?

Mr Cash: I absolutely agree with my right hon. Friend, and I will add another point. The recent analysis by VoteWatch Europe, which has been through every decision taken by the Council of Ministers in the past three years, demonstrates that in 91.7% of votes taken in that forum, the UK Government—under the aegis of UKRep and through the Council of Ministers itself—have voted in favour of the proposals in question. That is effectively a forced consensus, because we have only 8% of the votes in the Council of Ministers. When I hear Ministers and others talking about the degree of influence that we exercise in relation to qualified majority

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voting, I say yes, we have to have alliances, but we know that if others are not going to be in alliance with us, we will not get the kind of result that the British people deserve.

Ultimately, this is about one fundamental question. It is not just about the word “democracy”; it is about democracy in action and its impact on the daily lives of the people of this country. The reality is that someone goes into the ballot station, votes in secret and casts his or her vote based on a manifesto in which they are told what the party in question is offering them in a general election; that is what democracy is all about. When they cast their vote, they expect the legislation to follow what they have been promised. The reality is that, under this system, the whole of Europe is becoming increasingly dysfunctional, with riots, unemployment and the rise of the far right. Let us face it: we have to get real. The fact is that it is not working. That is why our debate is so important.

Michael Connarty: I am grateful to the Chair of the European Scrutiny Committee. I have always wanted to ask him this question, so that he can put his answer on the record rather than provide it in a private conversation with me. Is he likely to campaign to come out of the European Union and, if so, on what terms? I want to know, and I think the Foreign Secretary wants to know, on what basis the hon. Gentleman will campaign and vote to come out of the European Union.

Mr Cash: I am grateful for that intervention for a very good reason. One of the reasons why I believe it is right for the Prime Minister to insist on the “in or out” question is that now, after all the agonising over all these years—including the Maastricht rebellion, for example, which I was able to participate in and lead at the time—all these things have culminated in this referendum. We have fought for a referendum. Precisely because the question is “in or out?”, it raises the question of the European Communities Act 1972 and whether the British people, having voted in the ballot box, should be expected to receive legislation that comes automatically into law when they might not in fact agree with it. That is the problem: that is why I believe we must have the right question, but it must also be at the right time. As far as I am concerned, if that democratic principle is not upheld, I will vote to come out, because the democratic principle is the fundamental issue for the British people, many of whom fought and died for this country.

I heard my hon. Friend the Member for Croydon South (Richard Ottaway) refer to the fact that he was born in May 1945. I was born on 10 May 1940. That was the day on which Churchill became Prime Minister, and it was over the question of whether or not Britain would be able to govern itself—and much more besides. I follow the line Churchill took about being “associated but not absorbed” with Europe. That is the fundamental question.

In addition, on the economic front, let me make this point. My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) and I wrote a pamphlet about a positive way forward for the single market. We believe that there is a positive way forward for Europe, but that what is happening at the moment is that Europe is creating instability by this concentration on a compression

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chamber when there are all these diverse countries. As my hon. Friend the Member for Croydon South said, “one size fits all” does not work. We must have an association of nation states. I appreciate that that challenges the centralisation that has gone on for so long in Europe, and I appreciate that it challenges the democratic deficit. I appreciate, too, if I may say so, that this would increase trade, increase opportunities and help to liberalise the rest of the world in the global marketplace. All these things have to be examined, as we move forward in the debate that has now started.

Given the dysfunctionality of the European Union, the determination to repudiate the idea that we should have a referendum is astonishing. The French had two referendums—I took part in both of them in France—and we did incredibly well in Denmark, too, where there were several referendums. There was a referendum in Ireland and in Holland. Who on earth are these people to turn round to us in this country and say, “We can have referendums, but you can’t”? It is beyond belief.

Wayne David: Just so we can be absolutely clear, when would the hon. Gentleman like to see the referendum in this country being held?

Mr Cash: I would like to see it before the European elections. I believe that that is where the focus on the European question will be at its best. Then we can expose the position of the Liberal Democrats, UKIP and the Labour Opposition at the same time. The reality is that the British people deserve to have that vote.

2.25 pm

Phil Wilson (Sedgefield) (Lab): Thank you, Mr. Speaker.

“The eurozone is clearly in crisis, and to pile on that uncertainty the further uncertainty of a referendum on leaving the European Union, when half the foreign direct investment into Britain comes from the rest of the European Union, and half our exports go out to the rest of the European Union, would not be a responsible action for Her Majesty’s Government to take.”—[Official Report, 24 October 2011; Vol. 534, c. 55.]

Those are not my words. Those are the words of the Foreign Secretary in a debate on Europe in October 2011. What has happened since then to change Her Majesty’s Government’s mind?

Change in the Government’s mindset was accelerated on that evening at the end of that debate because 81 Conservative Members of Parliament voted against their own party. That created the kind of uncertainty with which the Prime Minister cannot live—uncertainty in his own position and uncertainty in his ability to keep his leadership in place and his party together. That kind of uncertainty has taken priority over any concerns about the uncertainty over the economy that the Foreign Secretary mentioned in his speech a couple of years ago.

Party management over national interest is now the Prime Minister’s priority, because he knows that there are three parties forming the coalition: the Lib Dems, the Conservatives and the Eurosceptic wing of his own party. We end up with a commitment to a referendum in four or five years’ time. We do not know what the question will be because we do not know what the Prime Minister will be able to renegotiate with the EU.

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Nick de Bois: Will the hon. Gentleman set the record straight, since his Front-Bench team still leave me confused? Will he let his constituents know: does he or does he not support giving the British people a choice in a referendum?

Phil Wilson: As I carry on, the hon. Gentleman will find out exactly what my position is; I will answer his question in due course.

With the Prime Minister being the arch-negotiator he is, he has decided to put in the next Conservative manifesto the terms he will be seeking, thus revealing to the entire world his negotiating position before the negotiations actually start. The Prime Minister has said that he will put his heart and soul into achieving a yes vote to stay in the EU, but will he still do that if he does not achieve what he has laid out in that Conservative manifesto at the next election? Will he then push for a no vote, or will there be an arbitrary threshold that says the Prime Minister will push for a yes vote only if he achieves 80% of what he wants, or 60% or 20% or whatever? All this because the Prime Minister faces the uncertainty of what his Back Benchers will do on the EU. It has become a kind of fetish that skews reality and it will not be sated until we leave the EU—without any regard to the consequences for the UK.

The Prime Minister believes his speech will soothe his truculent Back Benchers, but I’ve got news for him: his Back Benchers can see the EU exit door ajar, and they will push and push at that door until it is fully open and they can march through.

Mr Robert Walter (North Dorset) (Con): Will the hon. Gentleman give way?

Phil Wilson: I do not have much more to say, but I need to cover the earlier point and I know this debate is oversubscribed.

We are left with a Prime Minister whose renegotiating position is “If I can’t get what I want; I’ll stop playing and take my ball home”. If he does that, he will be isolated in his negotiations. While this is being played out, the economic uncertainty faced by millions of families up and down the country continues. About 3.5 million jobs rely on the EU, 6,500 of them in Sedgefield, 28,000 in County Durham and 141,000 in the north-east. Companies such as Nissan are big exporters to Europe.

Mr Douglas Carswell (Clacton) (Con) rose

Phil Wilson: I want to continue.

Hitachi Rail Europe is to build a train-building factory in Newton Aycliffe. It is called “Hitachi Rail Europe” for a reason: it wants to export trains and rolling stock to Europe. I would have thought that it wanted not uncertainty but clarity going forward.

No party is opposed to the principle of a referendum, but I do not believe we should undermine British investment and British jobs for years to come just to satisfy the needs of the Tory party. Offering a referendum in five years’ time when we do not know the question, do not know the result of negotiations and do not know whether those negotiations will be completed in that time is like a general telling his troops “We will launch a surprise attack in five years, but we do not know where and we do not know when.”

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Uncertainty is the enemy of investment. I do not believe that this is right, at a time when the economy may fall into a third recession in two and a half years. The Government’s position will not lead to a Great Britain if we continue in this way; indeed, we are going down the road towards achieving nothing more than a little Britain.

2.30 pm

Andrew Selous (South West Bedfordshire) (Con): It was Winston Churchill who said that we should learn to trust the people. For far too long, the British people have believed that European matters are decided by a cosy political elite from which they feel completely excluded.

Let me say to Labour and Liberal Members that they have nothing to fear from putting their arguments to the British people. Listening to some of the speeches made by Labour Members today, I wondered whether they lived in the same country as I do. I hear what the British people are saying, and they have said to us regularly, for a very long time, that they want their say on European matters.

I have enormous trust in the good sense and wisdom of the British people, and in their ability to know what is in the British national interest. Conservative Members are proud to be sending this question back to the people, because we think that the people are grown up enough, wise enough and sensible enough to make a decision that is in the British national interest.

Mr Kevan Jones (North Durham) (Lab): It is a matter of fact that every increase in our integration with Europe has come about under a Conservative Government. We joined under a Conservative Government, and we signed the Single European Act under Margaret Thatcher. What has changed in the Conservative party in terms of giving the people a say, which it clearly has not done in the past? The hon. Gentleman may recall that the Single European Act was the key piece of legislation that took powers away from Britain and transferred them to Brussels.

Andrew Selous: Treaty signing took place under a Labour Government. It was a Labour Government who promised the British people a referendum on the constitution—as did the Liberal Democrats—but transformed it into the Lisbon treaty, which they signed into law before the general election, thus denying the British public a choice. The then Conservative Opposition were drawing up legislation to offer the people a referendum, which could have taken place had the Lisbon treaty not been signed into law before the election. Conservative Members have been consistent in wanting to allow the British people to have their say on these matters.

We believe that the changes the Government want to see in Europe are in the United Kingdom’s interests, but—and this is vital—we also believe that they are in the interests of the European Union. We should bear it in mind that 47% of our trade is with the European Union, and that the ability to trade with a market of 500 million people, with a GDP of £11 trillion, is not an insignificant matter.

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Car manufacturers are free from paying tariffs of £900 million because we are in the European Union. Every Range Rover that we exported to the EU would carry a tariff of £6,000 if we were outside it. One in 10 jobs—3.5 million—depend on trade with the European Union. Of course those jobs would not disappear completely if we left, but the fact remains that there are significant economic interests of which we need to be very mindful. The United Kingdom is the largest recipient of foreign investment in the European Union, and the Foreign Office believes that in 2011-12 about 111,000 jobs were either created or safeguarded because of investment in this country.

We have already heard about the Chinese, American, Japanese and Indian car manufacturers that have been moving to the United Kingdom. We also know from an analysis of 147 decisions made by finance firms that 47% of those firms said that they came here because of access to the European market. It is beyond question that half our trade is with Europe, and we recognise that that trade is vital for the UK economy.

Of course the Government are rightly determined to increase our trade with the growing markets in Asia, Africa and South America, and we have experienced some success. So far we have increased our trade with India by a third, and our trade with China by a fifth. The EU South Korean free trade agreement that we negotiated has already increased our trade with South Korea by 32%. Dorset Cereals, for instance, has experienced a sixfold increase in its trade with that country. We need to put all those developments on the record, so that the British people can make a dispassionate decision about what is in the British national interest.

The Vauxhall van factory is in Luton, very close to my constituency, and some of my constituents work there. The factory recently secured a 12-year contract with Renault to extend production of the Vivaro van. I do not believe that General Motors would have given it that contract if the United Kingdom had been outside the European Union. There are other van factories in Europe to which it could have given the business.

That is the positive side of the argument, and people need to hear it, but we also need to recognise that European regulation is hurting British business. For instance, a firm in Leighton Buzzard called ProEconomy, which does highly effective work in eradicating legionella throughout hospitals in the United Kingdom, recently experienced enormous difficulty in obtaining European Union authorisation and approval for copper and silver ionisation. The science is perfectly safe and the Health and Safety Executive is entirely happy with it, but because of the cost of obtaining EU approval and the length of time that it has taken, ProEconomy, along with a similar firm in High Wycombe, was almost put out of business. I am very grateful to the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban), for the action that he has taken to help those firms.

That is one example of European Union interference going too far and causing difficulties to firms. Another involves a small haulier in Leighton Buzzard who used to transport two vehicles on his trailer up and down the country, but who has been put out of business because of a transport regulation that this country did not want and the Department for Transport opposed.

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I have raised both those issues with my right hon. Friend Minister for Europe, and I am grateful for his help, but I wanted to put them on the record to demonstrate that we need a balance. We must realise that there are instances in which we should say to Europe, “You are hurting business, not helping it. Your regulation is heavy-handed, and it is causing us difficulties.”

Mr John Denham (Southampton, Itchen) (Lab): The hon. Gentleman is clearly raising some serious points, but the question that will be posed by the Prime Minister in the referendum is an in/out question. If the hon. Gentleman failed to secure change in regard to any of the issues that he has listed, would that lead him to vote no?

Andrew Selous: What I have been saying—I hope that the House has followed the logic of my argument— is that of course there are powerful reasons for our membership of the European Union which are connected with trade, jobs and investment, but there are also some negatives, and there is a massive democratic deficit about which the British people are speaking very loudly to their elected representatives.

We have embarked on the beginning of a process. My right hon. Friend the Minister for Europe is conducting a “balance of competencies” review, a cost-benefit analysis which I think could have been given a slightly snappier title, but which is examining all the areas of EU business with the United Kingdom. I have tried to set out the economic case. I have spoken positively about jobs in my constituency, and I have also spoken about some European Union regulation that is harmful to business in my constituency.

I want the best possible deal for the United Kingdom, but also for Europe. I want us to be able to compete with Asia, Africa and the growing markets in the middle east and South America, which are forging ahead in a more competitive manner, and are leaving European business behind. We are starting out with a series of negotiations: we are starting out by trying to put right things that the Government, and many of our constituents, believe are wrong.

I end my remarks by returning to what I said at the beginning. I say this to Labour Members: “I understand your concerns, but you must have confidence in the British people. Trust your constituents.” They are absolutely capable of deciding what is in the British national interest, and they are saying to us very loudly and clearly that they are fed up with being excluded from this debate, whether by Labour or Conservative Governments. They want their say, and they are entitled to it, and I am proud and pleased that under my party and this Government they will be offered that choice.

2.40 pm

Mark Hendrick (Preston) (Lab/Co-op): The Prime Minister’s much anticipated and delayed Europe speech of last week, announcing an in/out referendum after the next election, was an unnecessary gamble. It was a Machiavellian gesture, seeking to placate the increasingly frustrated Tory Back Benchers, as the Front-Bench team tries to manage party disquiet over Europe and the realities of coalition government. At best, it is a diversion and kicks Europe into the long grass; at worst, it will undermine investment into the UK, creating

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uncertainty and weakening our relationships with other EU member states. That is not a desirable place for the Government to be in if they are serious about renegotiating competences.

What we need is a clear vision and policy on the UK’s role in Europe and what sort of Europe the UK should be fully involved in. In general, I believe it is the role of politicians to make informed judgments and generate policies that are in the interests of our constituents and the general public, and I am therefore generally opposed to the use of referendums, except on strictly constitutional issues.

Mr Andrew Turner (Isle of Wight) (Con): Is sovereignty such an issue?

Mark Hendrick: The hon. Gentleman anticipates what I am about to say.

It is conceivable that any Government, either Labour or Conservative, would be drawn into negotiating a new treaty some time after the next general election in 2015. There may well be an inter-governmental conference at that time, especially given the state of the eurozone, and it may be necessary to have an agreement on fiscal rules, in particular between Germany and France, written into a treaty. Such a treaty would therefore be likely to come after any IGC. Given our experience in respect of the Lisbon treaty and the clamour from the popular media and the general public to hold a referendum, I believe it would be difficult for any political party to go into that election without committing to a referendum if there is to be treaty change.

The Opposition clearly accept the possibility of a referendum, given our commitment not to repeal the referendum lock legislation, which will trigger a referendum in the case of any attempt to transfer powers from the UK to the European Union or, indeed, to move to a position of enhanced co-operation in any one of a number of areas. I welcome the fact that we have not ruled out the possibility of having a referendum as part of our policy mix for the next election. Given that the Government have not made clear what their negotiating positions will be, and on what issues they would wish to push in the unlikely event of a Conservative victory at the next general election, our position is sustainable. It is a reasonable, measured response to an unreasonable movement in the Conservative-led Government’s policy.

I envisage the EU developing in such a way that there will be a hard core of countries that form the eurozone and an outer layer of countries, some of which will want to go into the eurozone and others, like the UK, that do not. Talking about the repatriation of powers to the UK does not serve the interests of people in the UK, as co-operation in Europe is more beneficial. Therefore, a future Labour Government should look at having powers of enhanced co-operation in new areas, so that an EU of 27 states can progress without the deadlock that the need for unanimity can bring. We should also look at how we might apply that to the outer layer of countries, one of which would be Britain, so that those countries that wish to go ahead with initiatives could do so without being held back by others.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Does the hon. Gentleman share my concern that if the Tories get their way, the electorate will be faced

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with a loaded question? There will not be a status quo option on the referendum ballot paper; instead, the choice will be between less Europe and no Europe.

Mark Hendrick: In the unlikely event of the Conservatives winning the next general election, it is not clear that they would succeed in getting any of their shopping list of demands. They will want change in much of the social legislation. The working time directive has been mentioned, as have holiday pay and health and safety at work, and they might also wish to focus on measures such as the European arrest warrant and some justice and home affairs issues. There will be a long shopping list to placate Tory Back Benchers, therefore, but if, by some chance, the Tories win the next election, there will be huge disappointment. The situation will be the same as the Labour party faced under Harold Wilson in the 1970s: there will be a huge split in the Conservative party, leading to its being out of office for a long time—after all, it took Labour 18 years to be re-elected to office following that split in our party.

Mr Redwood: Does the hon. Gentleman think it was more damaging to run out of money and go to the International Monetary Fund or to offer people a referendum, as that Labour 1970s Government did?

Mark Hendrick: The right hon. Gentleman knows that none of the money offered by the IMF was used by that Labour Government. It was there as a back-up.

The Conservatives do not want a social Europe, with working time protection, holiday rights and health and safety regulation. The single market is about the free movement of goods, capital, services and labour. The right of workers to move around freely in the European Union is as important as the rights of capital, goods and services to do so. I have always supported the free movement of people whose countries are members of the EU. With the imminent accession of Romania and Bulgaria, we should seek to extend full rights to workers and not object to their having equal freedoms to other Europeans. Some 50% of the Polish people who originally moved to the UK following their country’s accession have now returned, because of the economic condition of our country under the current Government. The rest are making a valuable contribution to the British economy.

We know that every country’s economic fortunes are cyclical. Our economy is bad at present, in part because of the irresponsible policies of the current Government, but it will get better at some time in the future. Therefore, it is important that we continue to take workers from other countries; after all, 2 million Britons work elsewhere in the EU.

Mike Gapes: My hon. Friend mentioned people returning to Poland. In part, that is because, as a consequence of Poland’s membership of the EU, its economy has been growing much faster than ours.

Mark Hendrick: That is right. Many Poles are returning to Poland with money in their pockets and are growing businesses there. The Poles will be customers for many

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goods and services produced in this country, so these events are mutually beneficial; there is not one-way traffic in respect of who benefits.

The European Union is not simply a one-way transfer of sovereign powers; it is about pooling sovereignty, so the sovereignty that resides centrally is worth more than the sum of the constituent parts. That gives the European Union power in what is a global economy, so we can ensure that we get the best deals in trade and can project our influence in a world increasingly dominated by economic powerhouses such as the United States and China.

As 50% of our trade is with the EU, exiting the single market would have devastating consequences for our economy. In other areas, such as justice and home affairs, we have had great success; the European arrest warrant is one example of that. When the current Government or a future Government set out their shopping list for renegotiating competences and our relationship with Europe, Labour Members need to put our case for a social Europe and a Europe of security, where justice and home affairs measures play a crucial role in ensuring international co-operation to fight common enemies, such as drug trafficking and terrorism.

My right hon. Friend the shadow Foreign Secretary says this is about arithmetic. That is true, but it is about much more than that. It is about geography, too—after all, Britain is in Europe—and it is about culture and history, because we are a European nation. Let us play our role in strengthening a united Europe for all the peoples of Europe.

2.49 pm

Mr Brian Binley (Northampton South) (Con): I welcome this debate, allowing us to reflect on the Prime Minister’s speech of last week. I also welcome not only what he said, but the considered and direct way in which he said it. He is to be congratulated on his straight and direct approach. Politicians must be clear; they are the architects of their own downfall when they are not. Whatever people’s view of the content of that speech, there can be little ambiguity regarding the Government’s approach to Europe in the future. For too long there has been a tendency for politicians to hedge with supposedly clever words, enabling a later get-out, almost as though they wish to be all things to all men. By golly, we had a wonderful example of that today from the Opposition Front-Bench spokesman.

Mr Kevan Jones: Will the hon. Gentleman give way?

Mr Binley: I would like to make a little progress, and then I will come back to the hon. Gentleman.

No wonder the political classes are held in such low esteem, when politicians prevaricate and refuse to give straight answers in meaningful English.

Albert Owen: I do not think the Prime Minister could have been any clearer when he said he was going to give a cast-iron guarantee on the Lisbon treaty—and he failed to do so. Was the hon. Gentleman alluding to the Prime Minister?

Mr Binley: In keeping with a tradition first established by Labour—so we will not go too deeply into that question.

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I am delighted that the Prime Minister rejected the ploy of not straight-talking last week, and spoke directly to the British people in terms they could understand. He also dealt plainly with the “R” word, and he was right to do so.

Mr Kevan Jones: The hon. Gentleman says that the Prime Minister has been straight-talking, but he will not say what the red lines are in the negotiations and how he will handle them. He also will not give a commitment on how he will vote in a referendum if he does not get what he actually wants. What is straight about that? Is it just a political fudge for the Back Benchers in the Tory party?

Mr Binley: I am not sure whether the hon. Gentleman has ever been involved in business negotiations. Business people start by saying they will negotiate, then think about how they will negotiate, and then undertake those negotiations. That process is occurring at this very moment, I hope. I hope the hon. Gentleman is satisfied with my answer, and that I can make some progress.

The starting point for this debate, on which almost everybody is agreed, is that the present arrangements are going to have to change. The pressures within the eurozone will require a greater convergence than the current sticking-plaster approach allows. Increased integration among eurozone member states will require a new settlement, and that will include a new settlement for those outside the zone, too.

It may not be necessary to create a new treaty, although I would put money on the fact that the Germans will want one, but another quick political “fix” is no way to put right the fundamental issues that have confronted the single currency. There may be a need for a more centralised fiscal eurozone, and that means there is no place for Britain. It means at least a two-tier Europe, and that could raise its head before the next election. We need to be doing the contingency work now, to be prepared for that possible outcome. I assume that such contingency work is under way, but I look appealingly to the Minister for Europe to assure us on that point.

When Europe looks to achieve that new settlement, it is right that we should present a positive vision for our own future. The Prime Minister has outlined the principles which will underpin the approach to those discussions, and the outcome of the negotiations will determine his approach to the referendum—which, incidentally, I quite look forward to. This debate is an opportunity for the House to provide some further detail on what we want the Prime Minister to achieve in those deliberations.

Damian Collins (Folkestone and Hythe) (Con): Does my hon. Friend agree that the reason the Prime Minister is right to set out the referendum commitment is that no attempt to renegotiate will be taken seriously unless that sanction is clearly in place?

Mr Binley: I am most grateful to my hon. Friend and, of course, he is absolutely right. One clearly does not enter into renegotiating a relationship without giving a bottom line. That seems to me to be eminently sensible. [Interruption.] I again point out to Opposition Members who know so little about business that it is a business practice.

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It is right to attempt to create a new settlement, and I share the Prime Minister’s view that the overriding purpose of the European Union now is to secure prosperity. I have heard a lot about Nissan. Sadly, Nissan got it wrong. It built motor cars for the European Union, and what has happened to the European market? That is one of the problems we face when we cannot trade globally, and that is why we want to create a new situation, allowing us to talk to the wider trading world.

The shift of economic power over the last decade or so has been immense. New consumer markets have emerged in many parts of the world, and Europe’s demographics and regulatory posture are not configured in our favour. One of the most important priorities in these negotiations —I again look appealingly to the Minister—is that they deal mainly with economic and trade matters, because that is where we started with Europe. The fact that we have allowed such discussions to proliferate is one of the problems we face.

I also want to confront those who argue about uncertainty. The eurozone is facing an existential challenge, and unprecedented levels of uncertainty still abound. The relationship between eurozone and non-eurozone member states is in a considerable state of flux. Trends in popular opinion in this country show increasing frustration at the nature of our existing arrangements with the institutions of Europe. Maintaining the status quo without any regard to what needs to change in future will create far greater levels of uncertainty than anything else. In his speech last week, the Prime Minister acknowledged that point. He said that we need to move forward, and I welcome that view.

The Prime Minister was right to state:

“The future shape of Europe is being forged.”

The challenge of a new world of eurozone and non-eurozone member states needs adequately to be addressed —for the sake of both sets of parties. We need to do more to position ourselves to succeed in the global village, with a proactive and helpful approach to global trade.

Today, Europe is not working. The Prime Minister wants to put it right, and to engage the consent—thank the Almighty!—of the British people. If he succeeds, then we will have arrangements that suit our needs and interests, and that serve the wider ambitions of the wider continent. I believe that this will be a compelling message across Europe. I look forward to the Minister’s assurances on the matters I have raised, which are important in this unfolding debate.

2.58 pm

Kate Hoey (Vauxhall) (Lab): I am delighted that my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) referred on a number of occasions to the UK and not to Britain. I am afraid that the Foreign Secretary, who talks about “Britain, Britain, Britain”, seems to have forgotten that we are part of the United Kingdom. So I thank my right hon. Friend, but that is probably as much as I am going to be thanking him for. I am here to say on behalf, I believe, of many Labour voters, the majority of the British public and the majority of my constituents that what the Prime Minister said about a referendum, our changing relationship with Europe and the need to bring back powers from Europe is absolutely right, and those comments have been welcomed by the country. I am genuinely disappointed

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that my party is going to take a little bit of time before, inevitably, it comes round to saying that we want a referendum.

Normally, it is just a few of us who put forward the “Eurorealistic” case in such debates, but it is great to see that today quite a number have come along to put forward that view, which I welcome. I remember when there were just a few of us here and we were supporting the Government in putting in place their EU lock. We said it was right that we should be saying that if any more powers were going back to Europe we should have a referendum. I am sorry that Labour Front Benchers were not in favour of that at the time, but I am delighted that we have changed our mind and are now supporting that.

I know that before the European elections my party will without doubt be saying that it wants us to have a referendum, because that is a basic tenet of democracy. We know that the European Union—the Common Market to which we signed up all those years ago—has changed so much. We have seen many changes and the British public never got the chance to say what they thought about them. We had promises from Members on both sides of the House that there would be a referendum, but we never got that referendum.

Mr Kevan Jones: Does my hon. Friend agree that the major change in our relationship with Europe was the signing of the Single European Act in 1986 by Margaret Thatcher?

Kate Hoey: I perhaps differ in that I do not take that tribal attitude to the matter—I want to do what is best for our country. I do not care who made those decisions; my party made terrible decisions, as did the Conservatives, and the Liberal Democrats always make terrible decisions on Europe. I do not care who did it—it was wrong. I voted against the Maastricht treaty, as did many of us way back then. We were right in everything we said at that time and everything we said about joining the euro, which of course my Front Benchers did have the right view on, and our Government rightly did not join it.

Let us remember something about the people who are now all doom and gloom about what would happen if we had a referendum, and we did not get enough powers back and voted to come out of the European Union. These people are saying that that would be the most catastrophic thing that could happen, but they are the very same people who were wrong earlier—the Richard Bransons of this world and the other top business leaders who, for their own particular interests, have always been in favour of more integration. They were wrong then and they are wrong now, and the British public know that.

Christopher Pincher (Tamworth) (Con): The hon. Lady is making a very good point. I wonder whether, like me, she is an aficionado of the Danish political drama “Borgen”. The first episode of the second series just a few weeks ago had that memorable line, “In Brussels, no one can hear you scream.” Does she think that it is not only in Brussels, but in the office of the hon. Member for North Durham (Mr Jones) that nobody can hear the British people scream?

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Kate Hoey: The reason I support the lancing of the boil, as many people have described getting this matter out in the open, is that we need to have that debate; we need to be able to listen to people and we need to deal with the arguments from Members on both sides of the House about whether it is crucial that we stay in the EU. It would not be such a terrible thing if we came out of the European Union; we would have a much more confident future looking to Asia and the rest of the world, and looking back to our heritage of the Commonwealth. We could do that, but until now the ordinary person in this country has felt that nobody has listened to them.

We have now begun that debate, and I would like it enshrined in legislation in this Parliament that whatever happens and whoever is in government—I hope that my party will be in power after the election—the referendum will go ahead. The only way we are going to get these powers back—the only way we will get the fisheries policies and the common agricultural policy changed—is by showing that we mean we want the power back and by being confident enough to say to our European allies and our European friends, “We do not like the structure of the European Union. We do not like the way it has shaped up. We want to change it.”

I was reading an article today that I suggest all hon. Members should read, even those who do not normally read the Daily Mail. It was written by Andrew Alexander and it goes through the details of how we got to where we were when we joined the Common Market and how our leaders—Ted Heath, the former Prime Minister, and all our negotiators—gave in, gave in and gave in. What Mr Alexander is saying, as I am, is that we should have the confidence to say, “No, we are not giving in, as they want us almost more than we want them. They need us more than we need them.” If we were able to go out and make that case, we would be able to get a huge amount of those powers back.

If those powers are not going to give us the feeling that we have taken things back into our country and if we were out of the European Union, we would still be able to have all the social policies that we have opted for. We could have our own social chapter—we could do it here. We do not have to be told that we have to do it in Europe. This Chamber is where we should be making the laws for this country and this is where I believe we will ultimately win back that power.

Although it may take just a little longer than I would have liked and we will not get the referendum for a few more years, I am pleased that we have finally reached a position where, between now and then, we will be able to ensure that the case is heard and that people will be listened to. We are actually here to promote democratic views in this country, and people will now be listened to. I believe that my party will go into the next election making sure that it trusts the British people; if we did not trust the British people to have their say on the future of this country and of our relationship with Europe, that would be quite disgraceful. I have confidence that my party will change its view, just as it has changed its view on a number of other issues on Europe.

3.5 pm

Mr Andrew Turner (Isle of Wight) (Con): First, may I commend the Prime Minister on his fine speech in London last Wednesday? After signing the treaty of accession in 1972, Edward Heath said that the ceremony marked

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“an end and a beginning”.

Now, our Prime Minister’s speech must mark the beginning of the end of our current relationship with Europe—it is a promise that, if we win the next election, the British people will decide whether we remain part of a reformed European Union, and it is long overdue. I hope that the Leader of the Opposition will reconsider his position. Instead of rubbishing a referendum, he should listen to many of his Back Benchers, who actually welcomed such a measure.

Alex Cunningham (Stockton North) (Lab): More than 4,300 people are on jobseeker’s allowance in my constituency, which is 300 more than last year. More jobs than that—some 5,000 in my constituency and 32,000 across Teesside—depend on EU markets, so surely the Government should be concentrating on protecting and promoting jobs, instead of blighting our country with talk of an in/out referendum.

Mr Turner: We should do both—that is the point.

Of course, the Liberals, once again, find themselves on the wrong side of public opinion. Their reason for dodging the Lisbon referendum in 2008 was that they were in favour—so they said—of an in/out vote. Their leader said:

“It’s...time for a referendum on the big question. Do we want to be in or out?”

That was their attempt to persuade the public that they wanted a referendum, but by 2010 they had changed their minds yet again. The fact is that they believe in giving more powers to Brussels, rather than fewer. Why are the Liberals afraid of asking the people what they think?

In 1975, we were asked:

“Do you think the UK should stay in the European Community (Common Market)?”

I was in the minority, as I voted no. However, I believe that if the British people had known what the Common Market was to become, almost everyone would have voted no.

Alison McGovern (Wirral South) (Lab): Would the hon. Gentleman be so good as to explain to the House the evidence for the assertion he just made?

Mr Turner: It is only my guess—that is all it is—but it is a guess that I will explain to hon. Members. Since that vote, the European experiment has taken on a life of its own, consistently demanding more and more from the UK. We must reverse that trend or leave. I fully support the measures already taken by this Government in cutting an ever-expanding European budget. Previous Governments have given more and more money that belongs to British taxpayers—and for what in return? Was it to be told that we do not have the right to protect our natural fishing stocks against Spanish trawlers that ignore the rules, or that we must be left vulnerable to unrestricted migration from across Europe, including the expected influx from Bulgaria and Romania at the end of this year? The EU says we can do nothing to stop it. To quote Lord Denning, Europe is

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“like a tidal wave bringing down our sea walls and flowing inland over our fields and houses”.

It directly affects the sovereignty of our nation and it is time to turn back the tide.

Mark Tami (Alyn and Deeside) (Lab): Does the hon. Gentleman accept that even in the unlikely event that his party wins the next election, we will still have a period of four years or so of uncertainty when investors will not know whether they should invest in this country?

Mr Turner: Of course it would be better if these things were done more quickly, but we must persuade Europe to change. If it does, okay; we must offer it that chance.

I am never very biddable when it comes to voting for further controls or regulations from Europe; neither are some of my esteemed colleagues on the Government Benches—nor, indeed, are some on the Opposition Benches. We do not vote against the Prime Minister to be awkward, but because we sincerely believe that our relationship with Europe must change and because we know that many of those whom we represent agree with us. If that change does not happen, the people must be asked whether we should be in or out.

Mr Redwood: Does my hon. Friend agree that the fundamentally undemocratic point is that if we legislate through Europe, we cannot reverse it on our own, whereas if we legislate in this House and get it wrong, or if the Government were to change, it could be repealed the next day?

Mr Turner: My right hon. Friend has made the exact point that I was about to reach. I sincerely hope that the Prime Minister can renegotiate our membership and come to an agreement where we do not have to contribute so much and get so little. We need only one fundamental change in our relationship with Europe: full sovereignty must lie with the United Kingdom. That would mean those of us elected to this House would be truly answerable to our constituents. I know that the Prime Minister will keep his promise on a referendum. If renegotiation does not mean that sovereignty will be returned to Britain’s shores—I am sorry, to the United Kingdom’s shores—a referendum is the only option left. The issue is sovereignty.

3.12 pm

Mr John Denham (Southampton, Itchen) (Lab): The Foreign Secretary is a fine orator but today, apart from quite an amusing bit at the end of his speech, he gave the impression that he would rather have been anywhere other than here. He certainly gave no clue why this issue has driven such passions in politics over a long time.

Let me make one or two fundamental points. There is a fundamental truth: the driving forces of anti-Europeanism are fear and pessimism—fear of meeting the challenges of the 21st century and pessimism about our country’s role in the world. Many Eurosceptics would like us to believe that they are patriots, but their actions tell a different story and show a deep belief that Britain’s future is inevitably one of decline, lowered ambitions and a downgrading of our role in the world. I do not think, based on the same evidence as that used by the

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hon. Member for Isle of Wight (Mr Turner), that most British people want to share that pessimism about our future.

When Eurosceptics talk of being free from the drag of co-operation, from shared obligations and from any common purpose, and when they talk about Britain going it alone, they think that that is a proud statement of intent. It is not. It is an admission that they have lost faith in the future of our country. Those who say, “Go it alone” do not believe that we can succeed, as any modern nation must, in collaboration with others. They think that if Britain tries to work with others we must inevitably be losers—that it will always be them bossing us, rather than us influencing them. The debate does not divide Europhiles from Europhobes; it divides pessimists from optimists.

Andrea Leadsom: Does the right hon. Gentleman not think that the Prime Minister’s speech last week was incredibly optimistic about Britain’s positive future at the heart of a newly globally competitive reformed European Union? Surely it was the definition of an optimistic speech.

Mr Denham: None of us is against competitive success, but the Prime Minister gave no clue about how he thought that should be achieved or about which failures to achieve it in the EU would lead him to a no vote. It was all motherhood and apple pie, as my right hon. Friend the leader of the Labour party said last Wednesday. We can always sign up to those five principles, but the speech took us no further forward.

Mr Redwood: Will the right hon. Gentleman give way?

Mr Denham: I shall do so a little later.

On the one hand, we have those who believe Britain can never again be a nation of power and influence; on the other, we have those of us who have few doubts about the capacity of our country and our people to succeed, our ability to have an influence that exceeds our economic power and our capacity to create a stronger economy in the future.

Some of the pessimists are the traditional Eurosceptics —that is, the UK Independence party and its allies in the Tory party. They still wear the flapping white coats that caused so much harm to the previous Conservative Prime Minister. Those defeatists have been joined today by a new group who are perhaps a bit sensitive to the taint of the past. Those new Eurosceptics—perhaps we should call them neurosceptics—enjoy a much more nuanced and subtle lunacy. Let us stay in the EU, they say, but only if we can act as though we were not part of it, by pulling out of agreement after agreement until there is no meaningful relationship left. Of course, the end game is the same: years of uncertainty and declining influence, which make it more likely to end in a British exit.

Mr Carswell: The right hon. Gentleman makes a powerful case for remaining in, and I am sure that when the “in” campaign starts it will draw heavily on his powers of advocacy. Is he against allowing the people

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who voted for him to be an MP having the final say? If so, why does he believe that the political elite alone should decide these points? Why not allow everyone in the country their say?

Mr Denham: A year ago, I voted with the Prime Minister of the hon. Gentleman’s party to say that an in/out referendum at that point would be damaging to Britain. Nothing I heard last week made the case that an uncertain referendum in five years’ time is not equally damaging. We never say never, but on the two issues that we are considering today, I think that the Prime Minister was right a year ago and wrong on Wednesday.

Mr Redwood rose

Mr Denham: I will not give way, as I have done so twice already.

The Eurosceptics and the neurosceptics have made the Conservative party ungovernable. The Prime Minister, who lacks the will, ability or interest to lead his party, was forced into last week’s speech. That pessimism is in their language. Historians will surely puzzle over how the party of Winston Churchill—indeed, that of Margaret Thatcher—became the party that sees Britain’s future in Norway and Switzerland and how a country with all our history, all the capabilities of our people and, notwithstanding our current difficulties, all our strengths should consider countries a 10th our size and with little of our influence as role models.

The pessimism is there in the Eurosceptics’ policy and in the call to withdraw from most of the provisions of the social chapter. They will say that it is about sovereignty, but it reflects a deeper belief that the creation of wealth is incompatible with ensuring that wealth is fairly shared among all the people who help to create it. They want us to turn our back on a broadly shared European value that we helped to create, which is that economic growth and social justice can go hand in hand. That is what leads neurosceptics like the Mayor of London to speak against serious banking reform, despite the damage done to the global economy and our own by the excesses and distortions of the past.

The debate is often clouded by concerns, sometimes quite legitimate, about this regulation or that regulatory threat, but those concerns are the cover for a much bigger and more pessimistic view of Britain’s future. Those who express them believe that we must give up on a fair sharing of wealth, on decent protection at work from exploitation and danger and on the shared obligation to protect our environment, which the Prime Minister attacked last week. That is the pessimist vision: a Britain that can compete only by offering ourselves to the worst regulated, most unstable and least committed global economic forces. That is, indeed, a possible vision of Britain’s future, but true patriots will say that it is not the best.

The real future that is possible—the best vision for Britain—will have sustained, committed private investment that builds on the research, the innovation and the skills that we have to offer, that understands that real success is based not on the quickest profit but on the creation of lasting value and that sees the potential to build strong companies, whether British or foreign, rooted in this

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country whose business success depends on our country’s success. That is the way to compete and pay our way in the world.

Although their economic prescriptions are founded on pessimism, much of the rest of the Eurosceptics’ and neurosceptics’ agenda is either fanciful or dangerous. On what basis should we believe that an isolated Britain will be able to negotiate more preferential trade terms than a large trading bloc; that an isolated Britain would have more diplomatic influence with the USA or with China and the rest of the BRICs than as an influential part of the EU; or that our constituents would be safer if we tried to tear up co-operation on justice, as though the drugs smugglers, the weapons dealers, the terrorists and the paedophiles will think, “Oh, Britain’s leaving the EU. We won’t go there any more.”? Evil people do not target the strong and the confident; they target the weak and the pessimistic. That leaves our constituents—the people of Britain—more vulnerable, not less.

That is not to say that everything is perfect. It is not. Change is coming and change is needed, so had the Prime Minister come to the House last week and said, “Let’s bring regional aid policy back to member states,” he would not only have united the House but won many friends in Europe. Had he come to the House and said, “Let’s change the state aid rules so that countries that want to develop an active industrial policy can do so within the single market,” he would, I think, have united the House and won many friends in Europe. Had he said, “Let’s change the rules on the movement of people so that benefits are only for those who have contributed through work and taxation, even if they aren’t members of a formal contributory scheme,” I believe that he would have united the House and won more friends in Europe than he thinks.

We have no idea what the Prime Minister wants to achieve, though. The Europe Minister tells us that we will have to wait for the Tory manifesto in 2015 to find out, and tells us nothing about what our Prime Minister wants to achieve in the next two years. That is the truth: it is not about British interests; it is about Tories and the next election. Our hapless Prime Minister dare not say whether he is with the optimists or the pessimists, and the price that our country pays is five years of paralysis, indecision and uncertainty. Britain deserves better than that.

3.22 pm

David Rutley (Macclesfield) (Con): We have heard from John the optimist, but I am not sure about his approach. I speak as a sceptic and a definite, confirmed optimist.

Being the MP for the wonderful constituency of Macclesfield, I have little incentive to leave these shores, but in the two parliamentary overseas trips that I have made, my world view has changed quite fundamentally. The first trip, led by the hon. Member for Preston (Mark Hendrick) and with the hon. Member for Blaenau Gwent (Nick Smith) accompanying us, was to China. There I saw for the first time the rapid changes going on in the world economy—the opportunities and the challenges of increasingly competitive, dynamic and globalised marketplaces.

The second trip was a visit to Brussels with the all-party group for European reform, led by my hon. Friend the Member for South Northamptonshire (Andrea

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Leadsom). It was another eye-opening visit, but one that told a very different story about the challenges and opportunities of globalisation. Of course Europe’s economic interests were discussed, but the participants in that discussion got lost in the fog of political point scoring and diplomatic manoeuvres to patch up the eurozone. That sort of howling at the moon is rendering the EU an increasingly uncompetitive, increasingly undynamic and increasingly parochial place, and it is something that Conservative Members are determined to address.

Mark Hendrick: I remember our visit to China, but does the hon. Gentleman not think that the UK has far more influence around the world through its membership of the EU and the weight that that adds, so we should stay in the EU? Given that there are countries—Germany, for example—that do far more trade with China than we do, is it not important that we stay within the EU?

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. We need shorter interventions. The hon. Gentleman has already spoken—[Interruption.] He should know better. I do not mind interventions, but they must be short.

David Rutley: There is an opportunity for Europe to respond, but it is not responding—in fact, it has been caught completely flat-footed by the economic crisis and is not responding properly. We want that to change.

Mr Redwood: Is not the true pessimism the Labour pessimism that says that Britain is not big enough and strong enough to have a strong presence in the world and that we have to kowtow to Germany and France to achieve that?

David Rutley: As so often, I agree with my right hon. Friend. I hope to build on that thought.

The reality of the world economy is shifting patterns of trade and emerging markets. They have been tapping us on the shoulder for some time and are now tapping even harder. Some hon. Members in the Chamber today may remember John Major pointing out to Peter Mandelson that if we do not notice when reality taps us on the shoulder, one day reality will grab us by the throat. Yet it is sadly clear that the EU has become divorced from reality—from real people and from real lives. When the British people voted to stay in the European Economic Community in 1975, it was for real world reasons—for jobs, for growth and for the common market—and at that time the EEC gave every impression that that was its purpose. The EU needs to give us and our constituents similar cause for optimism today. There is an urgent need for reform and a fundamental resettlement in the UK’s relationship with Europe.

This is not about being little Englanders. It is about being big Britons who want to seize the opportunities available in the global marketplace; so do big Germans, big Swedes and big Danes—not to be confused with Great Danes—and we need to work with them, our reformist friends, against those who should be called little Europeans, who would turn our continent’s shoulder to the world. Just as we led Europe to the single market, we can lead in its completion and help our local businesses and our constituents to compete better on the global stage. The channel is little more than 20 miles across,

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but the gulf is huge between the global economic horizons of the big Britons we represent and the continental introversion represented by the little Europeans on the Opposition Benches.

The EU has been caught flat-footed in the economic crisis, and the euro—a political creation—has been caught in an economic straitjacket, yet there remains clear political will among many people in the eurozone for it to succeed. That has already led to calls for deeper, thicker integration and less flexibility at national level, and that is not the Europe that was voted for. We are told that we should not demand a Europe à la carte, yet the eurozone members chose to set up a new club within the club of Europe and—perhaps unsurprisingly, given the problems that the euro has caused—they are now demanding a European fixed price set menu. The Prime Minister is resisting this, quite rightly.

The bottom line for our constituents is this: are we better off in or better off out? Are we more likely to create jobs and economic growth, or are we to be suffocated by excessive regulation and told that our national Parliament cannot do anything about it? Those are important questions that we want answered. We do not want to fudge them. The Government have already taken important action, which the Foreign Secretary told us about. We wanted to ensure that, if transfers of power to the EU were proposed, they would have to be put to the British people first, and we have achieved that by creating the referendum lock. Rightly, no further powers can be transferred to the EU without the British people having their say.

The Government have already taken action to kick-start the debate on the resettlement with Europe. The review of the balance of the EU competencies will provide a national audit of what the EU currently does and what it means for our country, and it will provide us with the information that is needed to take future decisions about our relationship with the EU and in the referendum that now, thank goodness, lies ahead.

The House will not be surprised that I regard myself as a Eurosceptic. As I said at the beginning, in scepticism there is hope, contrary to what the right hon. Member for Southampton, Itchen (Mr Denham) said. On the Government Benches and across the country, Euro- scepticism is on the rise. The Prime Minister and the Foreign Secretary are surely right to press for renegotiation before an in/out referendum and to work with our partners for a more competitive EU and one that is worth considering voting for.

Some people have asked, “What are you considering repatriating?” or “What do you want to renegotiate?” I commend the fantastic work that is being led by my hon. Friends the Members for South Northamptonshire and for Daventry (Chris Heaton-Harris) on the Fresh Start project. A wealth of options is being put forward there—worked through, thought through and analysed carefully. Take a look. I think that Opposition Members will find something to learn there.

This negotiation must be aimed, laser-like, at improving our economic position, cutting through red tape, safeguarding our financial services, delivering government at the lowest possible level and trusting the people to have the final say. That is the Conservative way. But in their heads the Opposition, with a few notable exceptions,

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do not want the British people to have their say. The reality of the Labour Government was the Lisbon treaty, with no promised referendum at the end.

Mr Kevan Jones: Will the hon. Gentleman give way?

David Rutley: I have given way twice already.

The Opposition prefer the top-down, little European approach which I spoke about, where EU membership is a price worth paying and staying in an unreformed EU is worth any price at all. How depressingly pessimistic that is. How unambitiously 20th century of the Labour party. It is here, on the Conservative Benches, where Members are fizzing with ideas for a sustainable, successful and competitive Europe, which I suggest the Opposition should take a look at. The Prime Minister has taken a bold approach. It is the right approach for Britain; it is the right approach for Europe; it is optimistic and reformist; and it is based on reality—the reality of where we are, where we could be and where we should be to compete in the globally competitive marketplaces that we face today.

3.31 pm

Alison McGovern (Wirral South) (Lab): It is a great pleasure to contribute to this important debate. I made my maiden speech in the House in a debate on Europe so people might start to think I have something of an interest. Let me say at the outset that my allegiance, first and foremost, is to my constituents. Our allegiance in this place should be to the people of the United Kingdom. We are here to serve the national interest, not narrow party interests. Our job is to listen to the concerns of our constituents and to try and understand the things they need to make their lives better, not to think about our narrow point of view.

I am in politics because it broke my heart to see people I loved in the place I come from have to leave our city to get a job. That is what motivates me to speak in the debate today. It is not about some kind of philosophical attitude. It is about the practical needs of my constituents. Nor should the debate be about party interests separated from the needs of the British people.

So the Prime Minister makes his great speech and his Tory attack dogs turn into puppies having their tummies tickled—for now. Unfortunately for the Prime Minister, I think there might be a couple of problems ahead for him. That is because his speech might have been a victory of spin over substance. Unfortunately, we are still not quite clear what the Conservative view on Europe is. The Prime Minister cannot tell the public how he would vote in any referendum that we might have. Nor is it clear what concessions or what negotiations he can achieve. I have seen House of Commons Library briefings that say that there are no examples of repatriation without new treaties. As the Deputy Prime Minister told us, it seems unlikely that there would be. The rest of Europe, he said, simply would not have it. The Business Secretary said that the UK should not overestimate its own negotiating position. Oh dear!

Damian Collins: Does not the hon. Lady agree that the end of this process could not be clearer, because there will be an in/out referendum and the people will decide? What is ambiguous about that?

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Alison McGovern: No—the end of this process is the Prime Minister telling us and the British people how he would vote. That is the confusion.

Mr Redwood rose

Alison McGovern: I will make some progress.

Mr Redwood rose

Alison McGovern: I am tempted to give way but I will make some progress before I do.

Let us not forget the real issues. As I said, what matters to my constituents at the moment is the fact that our local authority has been cut to the bone and we are losing hundreds and hundreds of jobs. We are worried about employment and having a well-functioning economy on Merseyside where people have the money in their pockets to afford the prices in the shops. That is what people are really concerned about.

Because my time is limited and I have only four minutes left, I want to focus on a particular problem in Europe that I would have hoped we could all try to work together to deal with. This is timely, I hope, because yesterday a report by the Work Foundation demonstrated not only that youth unemployment is a significant problem on the continent of Europe but that the UK’s unemployment is higher than the European average, third only to Greece and Spain, and that we have youth unemployment that is higher than the OECD average. In yesterday’s Treasury questions, I asked how the Government planned to tackle the fact that their own predictions from the Department for Work and Pensions demonstrate that they have increased by 31,000 the number of young people to whom we will be paying jobseeker’s allowance by the end of this Parliament. We have the wrong economic plans. This problem cuts across the whole continent of Europe, and we ought to work together with our European partners to try to solve it. Considering this question helps to enlighten the debate about what we should do in Europe.

We need to focus on two things in the light of this problem. First, we need to rebalance the economy of Europe.

Richard Drax : (South Dorset): Will the hon. Lady give way?

Alison McGovern: Briefly, if the hon. Gentleman wants to answer the question of what the Government should do about Europe.

Richard Drax: Just as a matter of observation, when talking about losing jobs and all the things the hon. Lady is mentioning, is it not the case that many more millions of people are out of work in Europe because this whole European federalism dream—we can call it what we like—is going horribly wrong? It is not just a UK matter; it is about what we are trying to live with, and we just cannot do it.

Alison McGovern: To help the hon. Gentleman, let me point out that what went horribly wrong was that the financial services industry invested in complicated products that it told us would help to manage risk, but

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it turned out that they made the risks worse. That sparked a financial crisis, and that has led to the problems that I have been describing.

We need a rebalancing of our European economy, and we need to think about how we can address the significant problem of inequality that is being created. In a recent Mansion House speech, the Chancellor of the Exchequer said that he was not in favour of a stimulus because it would lead to leakage in relation to imports. An EU-wide plan therefore makes sense, because we are part of a trading bloc and we should be working together to improve our shared economy. My right hon. Friend the Member for Southampton, Itchen (Mr Denham), who is sadly no longer in his place, mentioned state aid rules to rebalance areas of the economy that use high technology. It makes sense to work with our European colleagues on rebalancing.

Some commentators have advanced the idea of a youth contract whereby we could use unused structural funds for a European youth guarantee. I would argue that in order to tackle youth unemployment we need to learn the lessons of the projects proposed by the best of our town halls in the UK and the best countries around the world that have used active labour markets to tackle these problems. If there are funds available in Europe, we should work together with colleagues to get them to the heart of the problem.

Michael Connarty: My hon. Friend is talking about youth unemployment and employment strategies. Unfortunately, the proposal made by the Irish presidency to have a four-month trigger point at which all young people would have the guarantee of a job, which is better than what is offered in the UK, seems to be getting very short shrift from the UK Government.

Alison McGovern: My hon. Friend makes my point for me. For me, being in politics is not about standing in this Chamber thinking that we have all the answers; it is about listening to and working with colleagues in town halls in this country and across the European Union to solve the problem together.

Finally, there is no doubt that if we want to get people in Europe working, we need to trade. In my view, we should listen to the President of the United States of America.

Mr Carswell: No you can’t.

Alison McGovern: I’m afraid I will. The President of the USA said that it would be better for the UK to remain part of the EU. We really have to listen to that. As other people have said, our future must be in Europe, using its strength to negotiate with the great economies of the future—India, China, the United States of America and, hopefully, Africa.

The question is this: are we prepared to negotiate for the good of the people in the UK? What matters more: our own party interests or the dignity of the people we are supposed to represent? Their ability to work, to have money in their pockets and to have a good family life is what matters to me. That is why this debate on Europe could not be more important.

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3.41 pm

George Freeman (Mid Norfolk) (Con): I want to start by paying tribute to the Foreign Secretary and the Prime Minister. Their leadership on this issue has electrified Europe, the nation and this debate, and not before time.

The context for this debate is that the EU has changed fundamentally and is still changing. The eurozone crisis demands that we rethink our relationship, and the rise of globalisation and new markets require us all, as Europeans, to look to new models of economic growth.

The principal reason why this debate is so important to my constituents is democracy. The British people voted nigh on 40 years ago for a common market. They have been delivered a federal political union that does not have the legitimacy of their support. At the heart of all democratic politics is a golden principle: those who are elected to serve should never give away the power vested in them by the people they serve without their authority.

The electorate are looking to us to build an economic future for them and their families. They demand that we leave no stone unturned in insisting that the European project adjusts to the realities of globalisation and growth. Furthermore, the world economy demands that Europe becomes more enterprising and more prosperous, and that it engages more with the economies of tomorrow.

Mr Kevan Jones: The hon. Gentleman says that we do not have what we signed up for in 1975. I agree with him about that. However, does he not agree that the biggest transfer of power to Brussels and the biggest change in the EU came with the Single European Act, which was signed in 1986 by Margaret Thatcher, who never even considered taking it to the country in a referendum?

George Freeman: I disagree. We could have an interesting debate about how the illegitimate ratcheting of power has happened over the past 30 years. The Lisbon treaty had a big part to play. The previous Government’s promise to hold a referendum and their denial of one played a big part in the destruction of trust.

Twenty-five years ago, the then Conservative Prime Minister, Mrs Thatcher, made a major speech on Europe that became known as the Bruges speech. I think that our Prime Minister’s speech will become known as the Bloomberg speech. I pay tribute to his leadership. He set out some important messages, not least the idea that Europe requires a new model to deal with global growth and that we cannot build a 21st century economy within the constraints of a 20th century political and economic institution. I warmly welcome the five principles that he set out to guide this important renegotiation.

I welcome the Prime Minister’s statement of our belief in a common single market—not a market that is over-regulated by big government and dominated by the big businesses that feed of it, but a single market that is dynamic, entrepreneurial, open, innovative and global. We are, as the Prime Minister said, in a global race. We need a Europe that helps us and itself to cope and compete in that race.