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Lord Harmar-Nicholls: My Lords, the noble Lord has made a strong point. Before we talk about subsidiarity, should we not agree on a definition which everyone can accept so that we are working towards the same aim?

Lord Clinton-Davis: My Lords, the noble Lord would have heard some interesting observations about subsidiarity if he had been present in the Chamber this afternoon. However, he was not and I do not propose to go into that issue.

I shall deal later with an issue raised by the noble Lord, Lord Elis-Thomas, who is not now in the Chamber. It is a point that I particularly wanted to make. However, in the meantime, I return to the point raised earlier in the debate; namely, the importance of not compartmentalising such issues. I believe that it is wrong to say that there should be no changes in the treaty. There should, perhaps, not be radical changes, but some changes are needed. I believe that the Government's minimalist approach to the matter is a prescription for sterility.

The issue of enlargement, which will affect Malta, Cyprus and central and eastern European countries, will attract a very sharp focus because those countries will make their applications within the next 12 months or so. What strategy will the Government pursue on this? Will these countries enter collectively or separately? With 27 member states, or something of that nature, how can the existing institutions cope?

Employment is rather an important issue, particularly long-term employment and youth employment. How do we go about training people for new jobs and promoting Europe's competitiveness and prosperity? Do we go down the route which is prescribed by the Government of this country of a low wage, low skill economy, or do we look for ways of making social systems sustainable and therefore society sustainable? Should we align ourselves rather with the Swedish Government's proposal for a new priority for employment policy in the treaty and the institutions of the Union? A European-wide strategy for co-ordinating action on unemployment was called for by President Delors in the document Growth, Competitiveness and Employment. These are important issues which affect the lives of ordinary people in the Community. They are not all that interested in the arcane arguments about the institutions per se. Should we in the United Kingdom be at the heart of Europe, as the Prime Minister proclaimed proudly some years ago, rather than seeking, as the reality depicts, to tear the heart out of Europe, which seems to be the role preferred by the Conservative sceptics and some on this side too, and which appears to be driving the Government with their romanticised notions of the extraordinary value of isolationism? The interests of Britain have nothing to do with those considerations

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which pivot purely and simply on the survival of a discredited government and their cohorts on their Back Benches.

The reform of the common agricultural policy and the structural funds has been dealt with during the debate. I agree that this is not a matter which ought to be dealt with by changes in the treaty. There I would agree with the Government. But, above all, we have to involve people--the ordinary people of all the countries of the European Union--whose concerns are much wider than institutional change, by developing policies which tackle unemployment, improve the environment, extend rights at work, tackle waste and promote peace and security. Those are European not just national issues. The development of the trans-European networks, transport, telecommunications and energy are vitally necessary to improve the competitiveness of Europe's economy and to promote industrial recovery. I believe that that really goes to the heart of the success of the internal market.

As regards the environment, I believe that we need a new European environment charter providing a common approach for tackling pollution, waste and resource degradation within Europe. It should not just set minimum standards but develop comprehensive strategies linking environmental concerns with economic and industrial policy. I believe we have to help the countries of eastern and central Europe to overcome the environmental degradation which they have suffered over years. That is a legacy which they drew, of course, from their Soviet masters over many years. They must be able to build new environmental standards and they need our help to do so. We also need a global strategy to confront the ecological threat to the planet. That is why we need to have a European environment charter.

On social issues we and the Government totally disagree. Protection socially and at the workplace without discrimination, strengthening employment rights and giving British employees comparable legal rights enjoyed by their colleagues elsewhere in Europe is, in my view, absolutely critical. We need to promote a more consensual approach in industry not drive down wages and conditions and create insecurity at the workplace as has been happening. Therefore, there is a fundamental divide between us on this issue. I do not believe that fairer competition is helped by this sort of promotion of those ideas by the Government. We have to avoid unfair competitive advantage, and that is also a critical element of our social policies.

Adhering to the social chapter, therefore, will not be a panacea but it is an advance towards an objective of a decent Europe with decent standards. The mere fact that we believe that a more positive attitude towards Europe is vital does not mean that we will subscribe to everything, as the Prime Minister and his friends say so often. I have seen the most federalist governments argue their case vehemently inside the Council. The noble Lord, Lord Tebbit, knows that well. They argue their case because they have a case to put. We shall put the case for Britain wherever we consider that to be desirable.

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I want to end on the note--

Lord Tebbit: My Lords, will the noble Lord give way?

Lord Clinton-Davis: No, my Lords, I must not because I have been speaking for some 19 minutes and it would not be fair to give way.

I want to deal with the question of racism. This was a point raised by the noble Lord, Lord Elis-Thomas. Black and Asian British citizens suffer discrimination and harassment in European Union countries. They suffer on entry and when trying to obtain accommodation. That must stop throughout the European Union. I believe that persons who are resident in a member state should be protected against discrimination on grounds of race. It makes no sense for the first pillar of the treaty to outlaw workplace discrimination on grounds of sex but not on grounds of race, colour or creed. We should eliminate that anomaly. We need to amend the first pillar of the treaty to provide the peoples of Europe with similar protection against discrimination on grounds of race, colour or creed as is currently enjoyed on the grounds of sex.

The Council of Ministers decided to accept the recommendation of the consultative committee to put the issues of racism and xenophobia on the agenda for the IGC because of growing concern about Right wing nationalist extremism in Europe and Holocaust denial. Those are important issues which cross boundaries and they should be dealt with appropriately. There are, therefore, fundamental differences between us and the Government on a number of issues. I have not dealt with those issues where there is not a fundamental disagreement--the second and third pillars--but I congratulate once again the noble Lord, Lord Tordoff, and his colleagues on stimulating such an interesting debate.

Lord Willoughby de Broke: My Lords, before the noble Lord sits down, I just wanted to--

8.27 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we have already been in debate for some five-and-a-half hours. I believe it would be in the best interests of this House and the debate that follows to proceed without more cross-questioning if possible. I hope that the House will so agree.

The whole House is grateful to the noble Lord, Lord Tordoff, for launching this debate on the future inter-governmental conference. We are grateful to him and to his European Communities Select Committee for its thorough report. There is no doubt about the excellence of the report. As is usual on these occasions, we have had a wide range of topics aired in the debate. We were all sad not to hear from my noble friend Lord Cockfield and we all wish him a speedy return to full health. I was particularly pleased to hear my noble friend Lord Kingsland take a long view of what is needed in the Community. I shall study his eloquent speech with great care. We should consider his suggestions, especially as regards delegated powers and dispersing some of the European Commission's powers. I think that would be in the best interests of the whole European Community.

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Europe is the most complex nexus of issues that Parliament debates. It demands of us simultaneously a long-term, cool strategic vision--as the noble Lord, Lord Thomson of Monifieth said--and a deep knowledge of the detail of institutions, law, politicians and states. At this hour of the night I cannot hope to do justice to every question which was asked but I shall as usual write to those to whom I am not able to reply in the time available.

The sub-committee's report demonstrated not only that it had taken that long-term, cool strategic view but had also dealt with much of the detail. The fact that we have a European Union and that countries as diverse as Britain, Greece, Finland and Portugal work successfully together is a tribute to the flexibility and power of nation states to respond to and shape a rapidly changing world. For the European Union is primarily about nation states working together. Unless that continues to be so it will certainly not have the future that I believe moderate pro-Europeans want to see it have, and even perhaps a few of the anti-Europeans.

The coming period will be a momentous one for Europe. The United Kingdom will play a constructive and central role in the series of negotiations which will establish Europe's future shape and direction. We certainly intend to play a positive role on future enlargement. I certainly agree, as did the noble Lord, Lord Richard, with the Reflection Group's view that we need an improvement of our existing work and preparation for enlargement.

This IGC is the first step, but it is by no means the be-all and end-all of change. The signs are that this IGC will be a more modest and practical affair than the great leap forward that some have predicted for far too long. Therefore, I believe that it will meet the views of many in your Lordships' House, and particularly the views of your Lordships' sub-committee.

We shall seek changes to the treaty in line with government policy, making sure that the European Union can act well where necessary, but that it acts only when necessary. There is much to play for. The Government's approach is hard-headed, clear in its long-term vision and practical. Most important, the Government will argue for the people of Britain, reflecting their distinctive point of view, and it is clear that changes planned at the IGC will only occur if the British Parliament concurs.

Europe has a great deal on its plate in the next few years: the enlargement to the east and the south; the sharpening of our global competitiveness; and creating jobs. Those are the very issues, as my noble friend Lord Tebbit said, which are so vital for the countries of central and eastern Europe. We have some hard decisions to take about a single currency and developing a pan-European security architecture.

So why, as the committee report rightly asks, should we complicate the agenda with another review of treaties barely two years after ratification of the results of the last one? That must be a question we should all have examined. I believe that if the IGC were to attempt another massive reappraisal of the relative powers of the

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European Union and the nation states or of the EU's institutions then Europe's governments would rightly be accused of not listening to what people want of the European Union nor concentrating on the real challenges which face the Union. However, that is not what we or others have in mind.

As the report of the Reflection Group says, the IGC should focus on necessary changes without embarking on a complete revision of the treaty. So the IGC is about servicing the car we have, not about designing a new one. It is about making the Union work better with a particular view to future enlargement, making it more relevant and acceptable to the people of Europe and improving the practical European co-operation in areas where that makes sense. If we can make progress in those areas we shall emerge with a Union better able to face the major tasks for the next few years ahead. It is on that basis that Britain will be putting forward a range of constructive ideas at the IGC.

Many questions have been asked in this debate, but my noble friend Lady Park made a point in her contribution about more British representation in European Union institutions. That is an absolutely vital point. We continue to place a high priority on maintaining adequate British representation in the European Union institutions and, additionally, helping through our European fast-stream staffing programme. That is the way in which the European Union can be made more realistic--by having practitioners who know what they are doing as, I am glad to say, those fast-stream staff do.

We have warmly welcomed the sub-committee's report, as I hope our response shows. The view of many of your Lordships here today is that this IGC will not be about major treaty reform. It must be seen in the context of that real change--prosperity, security, enlargement and popular support. Therefore, we shall argue that the IGC must confine itself to what it can do to meet those challenges.

We shall argue for seven areas: stronger co-operation in areas where people see that as necessary to fight against drugs and international crime and to form foreign and defence policy; further entrenchment of subsidiarity; better quality and reduced quantity of European legislation; democratic legitimacy, with a fairer voting system (which may not be the one that the Liberal Democrats would like, but it would involve an enhanced role for national parliaments, which is exactly what the sub-committee asked for, and greater Commission accountability); better financial discipline and effective action against fraud, which was requested by my noble friend Lord Shaw of Northstead and many others; a flexible and efficient institutional framework ready for enlargement; and a greater role for national parliaments.

We shall not accept the erosion of the right of veto. It would be easy to have a fun political debate across the Dispatch Box tonight, but I do not believe that, even if there were one day to be a Labour Government, when it came to it they would abandon the right of veto in the end. They may think that they would now, but they would change their minds again, as they have five times in 30 years.

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I do not believe that the extension of new European Parliament powers would be a good thing, because we cannot see yet that the European Parliament is using the powers that it has already been granted. Nor could we accept a greater Community competence.

That brings me to the very important question of enlargement. My noble friend Lord Tebbit was absolutely right that it is most important that central and eastern European countries joining the European Union should have improved full market access for their products. That is why the United Kingdom is working hard to create conditions in which enlargement can take place successfully. That is why we need policy reform. We need also to extend eastwards the security and prosperity that we have always taken for granted. That is a fundamental task for the Europe of tomorrow.

However, our focus on practical problems should not be misinterpreted as a coolness towards enlargement. Far from it. We want to remove the obstacles to enlargement so that it is not delayed. I agree totally with the point of my noble friend Lord Tebbit, that swallowing all current policies would be difficult, if not impossible, for those countries seeking membership. That is why we want Madrid to call for further work on policy reform. That is why we want Union members to face up to the need for reform. Those are the matters which will pave the way for successful future enlargement. A botched enlargement would be in no one's interest, least of all that of the central and eastern European countries that want to join.

The European Union will consider institutional arrangements in preparation for enlargement in the IGC, but we see no need for the IGC itself to consider the policy of enlargement. That is already decided, and the European Union is fully committed to it. Policy reform does not necessarily require treaty amendment.

Certainly enlargement will require the CAP and structural funds to be reformed. In their current format they are unaffordable and unsustainable. It would be a very poor step to extend an unreformed CAP to the countries of central and eastern Europe because it would also risk breaching our commitments under GATT on subsidised agricultural exports.

It has been said that enlargement cannot take place without prior reform of the CAP and structural funds. That is why we need to begin the debate on that policy reform now so as to avoid delaying enlargement.

There are many other aspects of the whole question of enlargement which are of great interest, but the most important point is that the Commission's report to Madrid should be realistic where enlargement means policy change, particularly with respect to the CAP. We hope very much that the Madrid Council will launch the debate in those vital areas.

The noble Lord, Lord Clinton-Davis, asked whether all applicant countries would negotiate and join together. I suspect that that is a near impossibility for the members of the Commission. There will be different waves at different times for accession. However, the important factor is that we should study, as we are doing, the options for how negotiations might begin and who is most ready to forward their application to a

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further stage. Even if we negotiated with all 10 countries of central and eastern Europe together--I doubt that we shall do so--some will make faster progress than others. What is important is to help them all with their reforms.

Before I say a further few words about CAP reform, perhaps I may refer to one issue which became a little twisted once or twice in the debate. It is quite clear that the CAP can be amended, as the noble Lord, Lord Clinton-Davis, noted, by qualified majority voting unless it involves treaty change or an increase in the agricultural budget ceiling. In that case amendment requires unanimity. The treaty sets out the CAP objectives, but not in the detailed provisions set out in the regulations. It is the detailed provisions which could, therefore, be amended by qualified majority voting.

I can assure the noble Lord, Lord Bruce of Donington, and my noble friend Lord Tebbit that we are quite certain that the reform we seek from a change in the CAP is a market oriented policy, with prices much closer to world levels. That would make the supply controls such as quotas and set-aside redundant. In addition, any remaining support could then be better targeted towards the environmental and other specific objectives which the noble Lord, Lord Clinton-Davis, holds very dear.

The IGC study group has not discussed the common agricultural policy. The IGC deals with treaty change and not the adjustment of the detailed content of policy. However, I am quite certain that the problems of the CAP stem from the provisions of the treaty rather than from the policy which has subsequently developed. Therefore we must continue to work in the appropriate fora to have the detail changed.

Whenever we talk about the problems of the CAP we quite quickly refer to the problem of fraud. We have always taken the lead in the fight against fraud and we secured great advances at Maastricht and at the Essen European Conference. However, I can assure my noble friend Lord Shaw of Northstead that reports by member states on future action on fraud which were discussed at ECOFIN in November will be discussed this week at Madrid. We are working for clear conclusions on member states' responsibility and a full programme of further work to bring fraud under control and to make sure that the intentions of the European Union are carried through.

There have been a number of comments on procedures by the noble Lord, Lord Barnett, and others, regarding how the study group, as opposed to the excellent committee report from the noble Lord, Lord Tordoff, will work. It is worth saying that the study group on which my right honourable friend David Davis sat was not just a study group of Ministers. It included the Commission, representatives of the European Parliament and a number of academics. Therefore the report of the study group is not necessarily the agenda which the sovereign states will take up when they are at the Inter-Governmental Conference. Those discussions, I believe, are likely to be more realistic than some of the discussions which were held in the study group about what changes should be made. I am quite sure that my noble friend Lord Willoughby de Broke will be glad

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to know that it was common sense from my right honourable friend David Davis in the study group to which he referred.

What is clear from the study group report which is now finalised is that there is no enthusiasm for that great leap forward. There is no enthusiasm for huge new powers for the Community. It is believed that the IGC should concentrate on issues most relevant to the public and necessary to prepare for enlargement. Therefore we can find ourselves in more agreement than was ever predicted with the views of the study group, although not total agreement, as I indicated.

There is no surprise about the areas in which the UK is at one end of the spectrum: the extension of QMV, the powers of the European Parliament and the "communitisation" of the third pillar. However, I must ask noble Lords to note one thing. Even in those areas there is no consensus among other member states about what they believe should happen. It is also worth recalling that as regards a number of areas over the years in which the UK has started in a minority--I refer to subsidiarity, national parliaments and the fight against fraud--they have now become part of the mainstream thinking and are what is driving the whole policy forward. However, I assure the noble Lord, Lord Richard, that the Government will be playing a positive and constructive role in the IGC. While we may not agree on all the detail, it will be a positive role.

During our debate, much has been made of the role of national parliaments. The Government are keen to develop the role of national parliaments in European Union decision-making. Your Lordships' European Communities Committee and the European Legislation Committee in another place have come up with some good practical suggestions such as the minimum period for scrutiny of EU documents and a bigger role for the national parliaments in the third pillar. We are carefully considering how those ideas might be put into operation. They were well received in the study group.

In moving this interesting debate, the noble Lord, Lord Tordoff, spoke of the White Paper. We welcome Parliament's interest in the IGC. We want to look at what would happen as the IGC takes shape. We are considering whether we should add to the process of putting out papers, as we have done on previous occasions, and whether it would help information and consultation to have a White Paper as well. However, no decision has yet been taken.

There is one matter on which we are all in accord: that the national parliaments must be more involved in the monitoring, the scrutiny. I greatly sympathise with what the noble Lord, Lord Tordoff, said about the slowness of papers coming forward. The Government suffer as well as Parliament from the long delays, frequently blamed on translation. However, sometimes I believe that they are not so reasoned. The delays are unacceptable. We shall make every effort to reduce them and we shall be glad of the support in Parliament of both Houses in so doing. I understand that out of 800 documents deposited last year, only 20 produced

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complaints from the scrutiny committees. But I still regard those as 20 too many and we shall try to do better.

My noble friend Lord Kingsland asked that the ECJ should be able to review delegated Commission legislation, believing that might help to speed up the whole process. I understand that the ECJ is already able to review delegated Commission legislation and has done so on a number of occasions. However, there may be good reason to use that to a greater extent.

A number of noble Lords spoke of the need for openness. Although the noble Lord, Lord Richard, will probably shake his head--he usually does when I say this--I can assure him that this Government have been in the lead in trying to increase openness in the Community. What has occurred in the past two years is in advance by a long way of what occurred until 1993. As predicted, the noble Lord shakes his head, but for once he is wrong and I am right. I can say that with total confidence.

I regret that the noble Lord, Lord Tordoff, was disappointed at the Government's response to the section of the report on the European Court of Auditors. The issue has been mentioned by a number of noble Lords. I assure him that the Government give the highest priority to ensuring proper budget discipline and budgetary procedures in the Community. However, they do not believe that giving priority to those issues in the IGC would lead in practice to a significant improvement over the present arrangements. Our view is that the most effective way of limiting EC expenditure is to restrain the cost of individual Community policies as and when policy and legal decisions are taken. But we shall keep our eye on the ECA ball, as he wishes us to do.

We want to use the IGC to address the perception that there is too much legislation from Europe, that it is intrusive, over-regulatory and unclear. That is why we will be pressing for a number of improvements, including, first, the further embedding of the principle of subsidiarity to ensure that the Community legislates only where it can really make a contribution. Secondly, we want better prior consultation by the Commission before it introduces important new legislation. The practice of proceeding by means of green papers has developed strongly in recent years and we will continue to encourage that trend. Thirdly, we want the greater use of review clauses in Community legislation and sunset clauses for the withdrawal of Commission proposals not adopted and lying fallow. Finally, we want continued progress on deregulation in parallel with and, if necessary, within the IGC. In other words, we want to work for a more efficient, streamlined and accountable Europe and particularly a more efficient, streamlined and accountable Commission which can concentrate on effective enforcement of EC law, proper financial management and strong action against fraud. I believe that the comments of better financial management and subsidiarity, doing less but doing it better, sum up what we wish to see.

Several speakers have talked about the need to reduce the overall number of commissioners from 20. I believe that we cannot allow the college to continue to expand

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indefinitely as the Union enlarges, but the importance that the smaller member states attach to having their own commissioner means that we must consider possibly teams of commissioners or some other solution. It is clear that the current system of six-monthly rotating presidents is not suited to an enlarged union. There are some attractions in the team presidency but there are practical problems, clearly spelt out in our debate. We are examining whether or not those problems can be satisfactorily addressed, but certainly we are interested in seeing that happen.

I do not wish to speak for too long but I must say to the noble Lord, Lord Hooson, who also spoke of subsidiarity, that it is already in the treaty, under Article 3b. What we would like to see--and many others agree with us--is a further entrenchment of subsidiarity in the IGC and effective implementation of subsidiarity. In that sense I can agree with the noble Lord, Lord Hooson, that it should become a legal principle in every sense and be justiciable. I know that the noble Lord, Lord Clinton-Davis, disagrees.

I was asked by the noble Lord, Lord Elis-Thomas, about Article 126 on education, vocational training and youth. That was inserted at Maastricht, but many of the proposals which the Commission is putting forward under Article 126, including the Commission white paper on education, actually fail the subsidiarity test. That is why we seek an amendment to the proposals. The noble Lord asked a number of other questions. I shall be happy to reply in writing.

We touched on the possibility of qualified majority voting re-weighting. The Government believe that there is a strong democratic case for increasing the relative influence of the larger member states in the qualified majority voting system, both in the current Union and even more so after eventual enlargement. Currently the system gives one vote for every 2 million Belgians but one vote for every 8 million Germans. Without reform, the bias against the larger member states will be exacerbated by the accession of more mainly small states. As my noble friend Lord Reay said, that is a job we have to carry out.

As regards QMV extension, in the study group the United Kingdom was by no means isolated. There is no pressure for QMV in major constitutional areas. There may be a few issues where we are alone, but it is clear from the study group that beneath the rhetoric many member states have serious reservations about extending the scope of qualified majority voting.

It would be wrong for me to leave this subject without saying a further word about EP powers. I have mentioned this already but before any consideration would ever be given by all 15 member countries we would need to know what those powers were to be used for. I mentioned that the European Parliament had not grown into the powers it already has, nor has it learnt to use them effectively in, for example, the fight against fraud. It has not yet built up public respect and support and that is the reason I have a strong view that this should not proceed.

The IGC will give us some good opportunities. I mentioned the European Court of Justice in passing, but let me repeat something we have said before in this

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House in debates. We are committed to a strong independent court without which it would be impossible to ensure even enforcement of single market provisions. Yes, there have been judgments in recent years that have given rise to concern. There have been judgments that have imposed disproportionate costs on governments or business, even when European Union law has been implemented in good faith. We are working up a number of ideas to address those concerns.

I conclude by saying this. Britain has a distinctive voice in Europe. I make no apology for that. We have a long and unique history on this side of the Channel. It is no surprise when we disagree with the political direction some others may wish to take, but the big surprise is how easy it is to forget how much the states of the European Union agree on. That agreement is growing. The ideas that were the preserve of one country in the past--subsidiarity, the fight against fraud, enlargement, competitiveness--are now shared by all. We will continue the process. It is what is meant by working constructively in Europe. That is why our full and active membership of the European Union is so important. It is the fight for the British people's distinctive ideas and interests within the European Union that we will pursue.

The 1996 IGC will be very different from Maastricht. There is no single big issue but a range of sensible changes. We are greatly helped in taking forward our work for that by the report from your Lordships' sub-committee. We want greater public support, a better European Union, equipped to take on the challenges of the coming years. The Prime Minister and the Government will be playing a full and constructive part in delivering that.

8.57 p.m.

Lord Tordoff: My Lords, I am most grateful to the Minister for the time she has taken. She has been in the Chamber for pretty well the whole of the six hours during which the debate has been going on and has made a more than adequate response to the debate. We wish the Government well in Madrid and look forward to having our usual session with the Minister when she returns and when the Select Committee has the opportunity of asking her questions about how proceedings went.

I am grateful to everyone who has taken part in the debate, especially those who stuck to the subject. It has been wide ranging and I hope that if we have done nothing else in producing this report we go into this IGC better informed by both the report and the debate than we went into the Maastricht IGC. With those words, I commend the report.

On Question, Motion agreed to.

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