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Noble Lords: Hear, hear!

Lord Strathclyde: My Lords, I thank the noble Baroness the Leader of the House for repeating the Statement and for returning to the practice of making a Statement on the interim summits of EU leaders. There have been occasions in the past when this Government have not made a Statement to Parliament on interim summits. I greatly welcome her intervention and thank her for giving us the opportunity of a short debate.

Perhaps I may also say at the outset that we welcome the sympathy expressed by EU leaders over foot and mouth disease and the strong and swift action taken by some nations in response to the daily, ever more grave situation now facing our farmers. This is a subject to which I shall return in a few moments.

We note that the Council spent much of its time discussing international matters, including with President Putin. While there is no doubt that that has a useful place in such meetings, does the noble Baroness agree that the first priority at such summits should not be searching for a common EU foreign policy, but searching for greater EU prosperity?

Of course we welcome the clear statement of support for Macedonia and for the integrity of its borders. However, will the noble Baroness accept that the problem of violence against the integrity of Macedonia will not be dealt with by EU statements or missions but by robust action by NATO? Does that not reinforce the importance of no EU initiative on defence either competing with or confusing the central position and purpose of NATO?

Can the noble Baroness tell us whether evidence was presented in Stockholm as to whether any of the terrorists responsible for attacks within Macedonia have originated from Kosovo or have used arms supplied from Kosovo? Did President Putin express any concern on this point? What was our response to him?

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Was there any discussion of the future status of Kosovo? What is the Government's policy on the future status of Kosovo? Will our judgment on this be affected in any way by the actions of those seeking to promote a greater Albania in the Balkans?

Is not the illusory nature of a common foreign policy shown up by the recent actions of President Chirac in putting out a red carpet for President Mugabe and by French opposition to continuing sanctions in Iraq? Did the Prime Minister have an opportunity to discuss some of those matters with the French? Did he press EU leaders to support sanctions against Saddam Hussein and end financial and political support for the racist and dictatorial Mugabe regime?

The declared purpose of the summit was to enhance the EU's competitiveness. Does the noble Baroness agree that in this light it was a conspicuous disappointment? Is she aware that we welcome those aspects of the summit's conclusions which genuinely move on the Lisbon agenda, including progress made on financial services liberalisation? While acknowledging the welcome statement by member states that they will push for a single market in financial services by the end of 2003, does the noble Baroness believe that that has any implications for current levels of stamp duty imposed by the Chancellor on sales of equity in the London market?

Noting the lengthy appendix to the conclusions on moves towards what is described as,

    "further convergence of supervisory practices and regulatory standards",

in EU financial markets, can the noble Baroness tell the House of the UK Government's key objectives in these negotiations?

I see that the summit discussed the so-called demographic challenge of an ageing population. It noted the increasing pressure on pensions. Will the noble Baroness say whether any EU leaders expressed support in these discussions for the British Government's policy of forcing pensioners in retirement to buy annuities or for increasing taxation of pension savings by 5 billion a year in order to reduce incomes in old age? Is not that one example of pious words at the summit being completely undermined by misguided action at home?

Will the noble Baroness acknowledge that the high hopes of many in the Government after Lisbon a year ago have largely been dashed? Does she recall promising the House last March that, and I quote the Prime Minister, there had been a "sea change" in European economic thinking,

    "away from heavy-handed intervention and regulation, towards a new approach based on enterprise, innovation and competition"?--[Official Report, Commons, 27/3/00; col. 210.]

Does not such rhetoric make the reality since then all the more disappointing? Why has there been so little progress on the liberalisation of energy markets, an issue of vital importance to British business, with all mention of clear deadlines blocked and removed from the communique?

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Is it not worrying but predictable, as President Prodi said, that virtually the only movement made since Lisbon has been on what is called "the social agenda", with many key liberalisation measures still subject to delay?

As regards the proposed EU legislation on the application of VAT to e-commerce, described in paragraph 36 of the conclusions, can the noble Baroness assure the House that all elements of that policy will be subject to a national veto? As regards the broader economic scene, is it not striking that with the Japanese economy stalled and the US economy under serious threat, the euro is still receiving no vote of confidence from the markets?

Finally, does the noble Baroness accept that while the principles set out in the Stockholm communique on foot and mouth are the right ones--solidarity with farmers and others in rural communities and determination to contain and ultimately eradicate foot and mouth disease--the best way to meet those objectives in Britain would be to start to implement those measure for which the Opposition and many others have been calling for some weeks?

I look forward to hearing the noble Baroness's answers and I thank her for the confirmation that there will be a further Statement on foot and mouth disease tomorrow.

3.50 p.m.

Baroness Williams of Crosby: My Lords, I also thank the Leader of the House for repeating the Statement made in another place and giving this House an opportunity to ask questions about the outcome of the summit. First, from these Benches I repeat our sorrow at the unexpected and sudden death of Lord Cocks who could be regarded as a monument to freedom of expression. In this House he never spoke without believing deeply in what he said. He was never concerned to be in fashion or simply to repeat conventional opinions. We shall miss his exciting, imaginative and often quite unexpected interventions in our affairs.

I turn to the summit and ask the noble Baroness about foot and mouth disease. Is the Leader of the House able to say anything more about how far we are trying to follow the experience of other European countries which have adopted vaccination rather than slaughter as their major effort to deal with the disease? In particular, how far are we monitoring what Holland is doing, and what the Republic of Ireland plans to do, in this respect?

I turn specifically to the outcome of the Stockholm summit. I congratulate the Government on the steps forward they have taken on employment policy, particularly in relation to discrimination on the grounds of age and disability. We believe that to be a useful contribution to the work of the European Union. We also congratulate the noble Baroness on the liberalisation of financial services. In that context, can she tell the House the extent of progress in resolving the dispute with the European Parliament given that, as I understand it, the Parliament insists

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upon a securities committee and greater transparency and many European banks are used for money-laundering as a result of organised crime and, in some cases, the deposit of looted state funds from developing world countries? Can the noble Baroness tell us more about the attitude of Her Majesty's Government to the European Parliament's emphasis on transparency in this field?

We on these Benches believe that the proposed unified system of air traffic control is a very useful step forward. However, will safety be considered in addition to the importance of liberalisation of the market, given discussion in this country on changes in air traffic control? Can the noble Baroness also say whether intensive negotiations will start on the issue of Gibraltar airport? As I understand it, that matter is holding up any further move towards integration of air traffic control which, as the Statement says, would clearly be of immense benefit to millions of passengers within Europe.

As to energy markets, there is perhaps some ambivalence in the response of the noble Lord the Leader of the Opposition. Clearly, the differences in energy markets stem from countries which cling to their national vetoes regardless of the greater benefit to the European Union. Perhaps I may suggest politely that one cannot really have it both ways. On the one hand, one cannot insist on the separateness of all the member states with each wielding the veto in every possible situation, and, on the other hand, condemn them because they take such a position. It seems to me that Stockholm shows the independent national positions of member states as clearly as any drive towards integration.

In that context, perhaps I may ask the Leader of the House about discussions with regard to Macedonia. Almost nothing could exemplify more clearly the necessity of the move towards a rapid reaction force and a common foreign policy within the borders of Europe. It beggars description to consider what would happen if there was no European reaction to these events, and I commend the Government on strengthening the border by placing 400 troops within the structures and enhancing our patrols.

The excellent move at the Stockholm summit to induce the legal Albanian authorities in Kosovo to condemn terrorist activity by other Albanians on the Macedonia/Kosovo border is an extremely important step forward. Can the noble Baroness say whether the legal authorities will now try to make representations to those who lead the guerrilla activities to cease them immediately? Such action endangers the whole position of the Kosovo Albanians themselves.

Finally, can the noble Baroness tell us something about the common letter, as I understand it, from Romano Prodi and Commissioner Christopher Patten with regard to consideration by the United States of withdrawing from the commitments of the Kyoto summit? Did the leaders at the Stockholm summit make it plain that they wanted to appeal to the United States to reconsider that extremely far-reaching and very disturbing decision, given the growing evidence

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about global warming and the extreme dangers of a leading, powerful and influential country deciding to take no further steps to try to deal with that critical position?

3.55 p.m.

Baroness Jay of Paddington: My Lords, I am grateful to both the noble Lord and the noble Baroness for their broad welcome of the Statement and the outcome of the Stockholm summit. First, on behalf of my colleagues on these Benches--in this case I believe that I speak also for my colleagues in the other place where Lord Cocks of Hartcliffe had a very distinguished career before he came to this place--we very much value the sympathy that has been expressed and wish the condolences of everybody in this House to be conveyed to Lord Cocks's family. The noble Baroness spoke about Lord Cocks's reputation in this House for freedom of expression, which I am sure we all support. I know from talking to many of those involved in his actions as Government Chief Whip in another place that tightness of discipline was perhaps another characteristic for which he was well known and admired throughout the parliamentary process. We shall all miss him very much.

I turn to the comments of the noble Lord, Lord Strathclyde, and the noble Baroness, Lady Williams, on the outcome of the Stockholm summit. The noble Lord, Lord Strathclyde, referred to his opposition to the formation of a common European foreign policy and the steps that might have been perceived to have been taken to that end at Stockholm. I remind the noble Lord that it was the explicit concern of the Swedish presidency to concentrate on what it described as the "three Es"--employment, enlargement and environment--and this summit was devoted specifically to employment as a very clear follow-up to the Lisbon summit of the previous year. In that respect I should like to put down a marker in case there should ever again be a procedural question about informal summits. It had been said in advance in connection with the Lisbon summit that the work being done on employment in the EU would be responsive to annual assessments by the European Council. This meeting was the first of the assessments, and I believe that another is already planned in Barcelona next spring. I should be amazed if there was not a government Statement forthcoming on that process.

Before I turn to the emphasis of the summit on employment and prosperity, as the Lisbon process had set out, perhaps I may mention briefly the major foreign policy issues which have been raised--Macedonia and Kyoto, to which the noble Baroness, Lady Williams, referred. In reply to the noble Baroness, my briefing on this matter and the conversations that I have had over the weekend and this morning about the outcome of the Stockholm summit did not refer to the Kyoto process, and I am not aware that it was included in the agenda either formally or informally. I suspect that, as the

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Gothenburg summit in June includes the environment as one of the issues, it might be raised at that time. If I learn any more I shall write to the noble Baroness.

As to Macedonia, I can go little further than the words of the Statement, except that the Government support with extreme urgency the democratic process in that part of the world. That is relevant to the matter raised by the noble Baroness, Lady Williams. The Albanian members of the coalition government in Albania are supportive of the action taken against the Albanian nationals within Macedonian borders. As I understand it, the three main parties in Kosovo are supportive of this, although naturally that perhaps does not go quite as far as condemnation of the activity of Albanian nationals that the noble Baroness suggested. But they are very much in support of what is happening in general in Macedonia in the democratic process.

On the broad issues regarding the main themes of the Lisbon summit--trade, prosperity and employment--the noble Lord, Lord Strathclyde, was perhaps slightly sceptical about whether there had been any precise outcomes. Perhaps I may repeat those outcomes mentioned in the Statement and reinforce some of the others. Since last year, 2.5 million new jobs have been created in the European Union. That is one of the achieved targets of the Lisbon agenda. Internet access has doubled within the year. That again is an achieved Lisbon goal. The spreading in the EU of information and communications technology--another very important part of the underpinning of the drive to improve skills across the European Union--has increased so far that last year for the first time as a proportion of GDP it outstripped that of the US. The agreement on common standards of protection against discrimination in the employment markets on the grounds of race, religion, disability, age and sexual orientation have been agreed. It has now been put into practice.

Therefore, there were specific outcomes. The Lisbon process is being taken forward in a way which is described as open co-ordination. The UK Government are certainly very supportive of that method. The attempts to introduce greater regulation to achieve either the social agenda or the goals on employability and employment and improving the skills base have proceeded much more to our liking through the open co-ordination process. We welcome that in terms of EU processes.

I was asked about the situation on financial services--the so-called Lamfalussi agreement. The Council endorsed the recommendations to achieve a target by 2003 of a single securities market. Progress in the financial services was very much part of our agenda on the broader economic issue. Clearly, if those arrangements are put in place and there is greater and more consistent access to capital markets and it is easier for British firms to raise capital for investment, it is likely that that will lead directly to creating more jobs and better growth as well as better choice and lower costs to consumers. That in turn will be very much part of the Lisbon long-term process.

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The noble Baroness asked whether the European Parliament was concerned about the terms for the Lamfalussi deal. The European Parliament believes that these proposals are consistent with the institutional arrangements set out in the treaty. It is prepared to consider the deal within the broad terms of the treaty arrangements because it sees the desire to complete as soon as possible the single market in financial services as a legitimate target.

I confirm that on the "open sky" policy there are issues of safety and reducing the blockages on air traffic lanes and air traffic arrangements within Europe and the reduction in costs to which that will lead. Safety was specifically discussed.

The Prime Minister had a bilateral meeting with Prime Minister Aznar at the summit. Gibraltar and Gibraltar airport were on the agenda. As the noble Baroness and the noble Lord will realise from the Statement, the European Council agreed a position which did not exclude Gibraltar from the single sky policy. That was the concern that we had at the beginning. Indeed, the Prime Minister and Prime Minister Aznar are determined to try to resolve the matter in a bilateral way within the context of the general EU agreement.

On foot and mouth disease, I cannot really improve on the closing remarks of the noble Lord, Lord Strathclyde, when he underlined the fact that the European Union agreed with the position which the UK Government and others are taking to combat this terrible problem. Sympathy was expressed to the farmers in every country. I can confirm that there will be another Statement tomorrow afternoon by my noble friend Lady Hayman, repeating a Statement by my right honourable friend the Minister of Agriculture, Fisheries and Food.

The noble Baroness, Lady Williams, raised the question of the Dutch and vaccinations. It was decided at Stockholm that the EU generally agreed that slaughter was the preferred policy and that vaccination could be contemplated only as a temporary part of containment strategy. The Dutch will be going ahead with vaccinations. They will include animals within a two-kilometre range of any outbreak, although the animals may need to be culled even if they have been vaccinated within two months. The Dutch are going ahead on that basis, but the general agreement was that this was not the best policy to pursue at this stage.

4.5 p.m.

Lord Shore of Stepney: My Lords, I join others in thanking the Minister for that Statement. I also express my own sympathies and regret about the loss of our friend and colleague Lord Cocks.

Perhaps I may ask my noble friend to clarify one point on which there is likely to be some muddle. She referred to the "open sky policy" on one occasion. Can that be the European single sky policy of which we have heard before? Are we in fact welcoming the take-over of the control of British national airspace by a European body which considers there should be not only a Europe without frontiers in land, but a Europe

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without frontiers also in the sky and in the sea? Does the Minister really believe that that should be welcomed? In a country where people fly not only to and from Europe but to the rest of the world, is it not a matter that should be view with great suspicion?

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