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Lord Hunt of Kings Heath: I am grateful to the noble Baroness, but I must confess that I find myself somewhat confused. Last Thursday the Government were accused by the Liberal Democrat Benches of taking a far too prescriptive, centralist approach; yet, in the debates this afternoon, I am being invited to take

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a centralist, prescriptive approach by those very same Benches. It would be interesting to know which hat the Liberal Democrat Benches are now wearing.

Baroness Northover: I have heard this argument before. What the Minister has said, however, is that he will be laying down guidelines from the department as to how PCTs should play their full part; that decisions should follow on from that. What he has not done, therefore, is to devolve this to local level. He has not set down the framework within which PCTs have then to carry forward that duty.

I would consider it appropriate that this should be part and parcel of drawing up the guidelines for PCTs. PCTs then have a duty to implement and carry that out; not the Department of Health, if they feel like it, advising that they might.

The very fact that extra money has gone to some PCTs in order to take this forward shows that the Government do not have the confidence that, without it, research and teaching would be taken forward. That seems to belie what the Minister has said about this happening automatically.

I agree, as I think everyone does, that teaching and research are vital for the NHS and that the future of the NHS depends upon them. Just wishing that to be the case, however, is surely not sufficient. More needs to be done to ensure that PCTs play their full part in this matter and that it is therefore given to them as a duty to carry this out, not simply as a power.

I have listened to what the Minister has said. I am sure that we can revisit this matter and we undoubtedly need to do so, in order to draw up something which would gain some consensus. At present, I beg leave to withdraw this amendment.

Amendment, by leave, withdrawn.

Lord Filkin: I beg to move that the House be now resumed.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

European Council, Barcelona

4.35 p.m.

Lord Williams of Mostyn: My Lords, with the leave of the House, I shall now repeat a Statement made earlier in another place by my right honourable friend the Prime Minister. The Statement is as follows:

    "With permission, Mr Speaker, I should like to make a Statement about the European Council which took place in Barcelona on 15th and 16th March.

    "Two years ago at Lisbon the European Union set out to become the world's most competitive and dynamic economy by 2010. Since that date the European Union has created five million new jobs. There are now nearly three million more women in work. Tax rates on low wage earners have

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    been falling. We have agreed a new framework for competitive telecoms markets. Telecoms liberalisation has cut the price of calls across the EU by almost a half. As a result of the EU Action Plan, Internet access has doubled across the EU.

    We have cut red tape for small firms so that a private limited company can now be set up in under two weeks in 10 EU member states. We have recently agreed proposals to deliver a single EU securities market and cheaper capital for small firms.

    "The recent difficulties faced by the world economy mean we cannot rely on cyclical growth to deliver the employment Europe's citizens need. We must push ahead with the structural reforms to Europe's economies.

    "At Stockholm a year ago, progress stalled. Barcelona had to recover momentum. There is no doubt that, after Barcelona, we are moving again, though there is still much ground to be made up by 2010. Such progress as there is is a tribute to the Commission and the leadership of the Spanish presidency, and I pay tribute to the excellent chairmanship of Prime Minister Aznar.

    "Here is what was achieved. We set a timetable under majority voting to complete the single market in financial services, itself capable of boosting EU GDP by half a percentage point. No fewer than 25 different liberalising measures have already been agreed. Seven more key measures will be agreed by the end of the year. Most of all, we made a breakthrough in opening up the European energy market. All member states have now agreed fully to open up the non-domestic market by 2004 with free and fair competition. This represents over 60 per cent of the total market in gas and electricity. In addition, it is clear that the overriding majority of EU countries are now ready to open up their domestic markets as well. We agreed that a decision on the relevant directives will be taken by majority vote, at the latest by the end of 2002. This means that a single market in energy is now attainable.

    "We agreed to deliver broadband technology across the European Union by 2005. That means Internet access at 10 times the present speed. We agreed to boost our commitment to research and development towards a target of 3 per cent of GDP by 2010. The new Research Framework programme will spend 17.5 billion euros to this end. New industries, like the growing biotech market, will benefit significantly.

    "We have agreed to implement by the end of 2002 proposals to reduce regulation on business and a new system for consultation with business before new regulation is introduced.

    "These steps go hand in hand with a social policy which seeks to encourage more and better jobs for all. The record of the British Government is strong. We have guaranteed fair rights at work. We have a national minimum wage. Our disability, gender and race equality legislation is among the most advanced

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    in Europe. We have introduced a new system of tax credits to make work pay. Our New Deal has got over 300,000 young people into work.

    "Since we came to power unemployment in Britain has fallen to its lowest level for 25 years. We have one of the highest employment rates in Europe overall, including for women and for older workers. Europe agreed that the enlargement agenda must focus on measures targeted at jobs, enterprise and moving people off benefit into work, rather than heavy-handed regulation—the British approach and increasingly the European one. As the Barcelona conclusions say,

    "employment is the best guarantee against social exclusion".

    "The enlargement countries came to Barcelona and, for the first time, participated in policy debates. We also discussed how to make our decision-making more streamlined and efficient once we become a European Union of 25, 27, and more. I welcome the proposals of the Secretary General of the Council, Javier Solana, which will now be taken forward by the Spanish presidency. In many respects, these echo the ideas that Chancellor Schroeder of Germany and I put forward in a recent paper on Council reform.

    "The Council also addressed a range of pressing international issues. The EU committed to increase its average development aid to 0.39 per cent of GDP by 2006. This achievement owes a lot to the lead given by my right honourable friends the Chancellor of the Exchequer and the Development Secretary. It is worth an extra 7 billion dollars a year. If delivered, it means another 80 million children in Africa and elsewhere in schooling—up for the first time.

    "On the Middle East, we underlined the extreme gravity of the present situation and called on both sides to take action to stop the bloodshed. We welcomed the resolution adopted by the UN Security Council last week and the initiative taken by Crown Prince Abdullah of Saudi Arabia offering full normalisation of relations with Israel in return for full withdrawal from Occupied Territories. There must be an immediate ceasefire all round to give the peace process a chance to work again.

    "On Zimbabwe, the European Council accepted our judgment that these elections were neither free nor fair. It agreed to take forward specific measures through Foreign Ministers.

    "On the Balkans, the Council warmly welcomed the agreement brokered by the EU's High Representative Javier Solana between the authorities in Serbia and Montenegro for a new relationship within a single state. This agreement underlines just how far the countries of south east Europe have come in the past four years. A democratic government is in place in Belgrade. Milosevic is on trial in The Hague, and Kosovo has held successful elections for its provisional government. Moderates are in power in Croatia and Bosnia. The noose is tightening around Karadzic. In Macedonia, active diplomacy last year stopped what could have become another Balkan war.

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    "All this progress came about in large part through Britain acting in alliance with others. Prior to the summit, we took initiatives with no fewer than seven different countries—the Netherlands, Germany, Sweden, Denmark, Italy, Belgium and Poland. Five years ago, such alliances would have been unthinkable. Under the previous Conservative government, Britain was marginalised, without influence appropriate to our weight and size, in the isolation room. Now, from the economy to defence to institutional reform, Britain is in there shaping Europe's future, making Europe work in a way that is better for Britain and Europe. The policy of constructive engagement is right. Britain's proper role is as a leader and partner in Europe. We shall continue to get the best for Britain in Europe. Under this Government, the days of weakness and isolation will not return". My Lords, that concludes the Statement.

4.43 p.m.

Lord Howell of Guildford: My Lords, I am most grateful to the noble and learned Lord the Leader of the House for repeating the Statement. As I believe the noble and learned Lord is aware, I have been asked to respond to the Statement due to the unavoidable absence of my noble friend Lord Strathclyde.

To begin with, putting aside the party political cadences in the final paragraph of the Statement, is it not the objective view of most observers that the Barcelona meeting has been a bit of a disappointment? I suppose that that is not really surprising because previous EU summits in recent times have also been disappointing. Indeed, no one could claim that it matched the hype and the rather extravagant claims that it would be a "make or break" affair, which would determine whether or not the momentum for modernising Europe was going forward.

We certainly support the rather modest liberalisation of energy trading that was achieved. It is very minor, but we support it. It still leaves Electricité de France in a complete monopoly position, both inside France and in its operations on this side of the Channel. However, it is better than nothing. We strongly support the Prime Minister and the Chancellor of the Exchequer in their firm rejection of the protestations of Mr John Monks, and others. Protecting workers' rights is very important, but when that is really a code for protecting the rights of those in jobs at the expense of those who are unemployed, and when it really means promoting unemployment, we believe that the Prime Minister and the Chancellor are right. Those who argue another line are totally wrong, unfeeling and selfish.

Having said that, it is the universal view—one that appears to be shared by the Prime Minister—that the Barcelona event was not very entertaining. In fact, the Prime Minister came very near to saying that it was a bit of a bore, and that he would rather have been elsewhere. One can see his point. The Government recently produced a vast White Paper on the subject of realising Europe's potential, which set out all sorts of

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high hopes; but these do not seem to have reached Barcelona. In practice, as we learnt from the Statement, the results that emerged are very thin. Indeed, if one is to judge by what was actually achieved, it looks as though the reform process is running into the ground throughout the euro zone.

Why do I make that comment? I do so because energy liberalisation in the larger sense has been blocked, although we have the small concession. We should remember that the Lisbon process was supposed to be a matter of catching up with the United States—admittedly, over a period of years—but we are two years into the system and all the statistics show that the US is still further ahead in per capita income, in technological advance, as well as in other areas. The Lisbon process was supposed to achieve a lighter and more targeted regulation on business. Coming from this Government, that would have been a shade more credible if they had not been the Government who, last year, imposed 4,642 new regulations on small business—which works out at one every 25 minutes of the working day.

Then there is enlargement, which many people believe to be the central ideal of the Union today. But that is bedevilled by disputes about second-class status for the central European applicant states, and there does not seem to be much about that in the communiqué. As for certain defence issues not mentioned in the Statement, but featured in newspaper reports, it seems that EU countries are still at sixes and sevens as to what relationship the rapid reaction force should have with NATO. In the end, I believe that reality will force it back into the NATO pattern as a strong European subsidiary of the organisation, and not as an autonomous force.

Newspaper reports have mentioned the same kind of disagreements over what Europe should do on the second phase of the war on terrorism. We know that there are disagreements rather nearer to home on what to do about Iraq, but none of that was covered in the Statement. Can the noble and learned Lord say whether anything was actually debated at Barcelona in that respect? Was there any discussion on common agricultural policy reform, which is very important? Was anything decided on the blocked take-over directives, or on pension reform, which is now becoming a critical issue for the Italians? Generally, we believe that Barcelona took place under a delusion—a delusion that governments create jobs. They do not.

On the foreign side, there is a hint of firmness as regards Zimbabwe. However, it would be helpful if the noble and learned Lord could tell the House what the Foreign Ministers will now consider, and what their next move might be. Menacing reports have appeared in newspapers about Gibraltar; but, again, nothing was mentioned in the Statement. We need the assurance that the Gibraltarians will not be put under intolerable pressure if they turn down the joint sovereignty deal—which, of course, they will. They must not be forced to renege on their own democratic wishes.

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Noble Lords on this side of the House are constructive Europeans: we want new measures to defeat the euro malaise, and to restore democracy and accountability. We see very little constructive coming out of Barcelona. The Prime Minister said that the achievements were limited and solid. They are limited; indeed, they are so limited that one would almost need to use a microscope to see them. They are so solid that they appear to be on the verge of being immobile. In our view, it is high time for a fresh approach. Nothing that was done or said at Barcelona by this Government seems to reflect that urgent need.

4.50 p.m.

Baroness Williams of Crosby: My Lords, I, too, thank the noble and learned Lord the Leader of the House for repeating the Statement made in another place. I begin by saying that it is perhaps a little churlish not to pay considerable respect to the remarkable achievement of the turnover from national currencies into the euro. Whether or not we are part of that process at present, it has been a remarkable achievement and extraordinarily successfully carried out. Whether one is pro or anti membership of the European monetary union, one should recognise that that has been, and is recognised throughout the world as being, a remarkable achievement.

Perhaps I may mention, with approval from these Benches, two other achievements of the Barcelona summit. One is the impressive resolution to increase development aid and to bring about a more rapid move towards debt relief. In that context we on these Benches congratulate the Chancellor of the Exchequer and the Minister for International Development on what has been a steady and consistent attempt to address the huge inequities in our global economy, for which they deserve considerable praise. We are pleased to see further measures being taken on the environment and moves towards an energy tax, although the dating of that is somewhat distant.

Having said that, and having also said that it is encouraging that there is some move towards liberalisation of the electricity market, we have to agree to a limited extent with the noble Lord, Lord Howell of Guildford, that, even given the extraordinary ability of the Prime Minister to burnish almost anything to a very high glow, this was not a particularly impressive summit. First, as we all know, there was no substantial move towards completing the internal market. Frankly, a figure of 98 per cent for seven countries so long after the Single European Act was passed is not impressive by any standard. To say that it will be another four years before we get anywhere near 100 per cent is to say that we are moving at a tortoise-like pace.

Secondly, to speak of research and development expenditure increasing to 3 per cent by 2010 is slow progress. That is hardly what one might call a wildly ambitious target. We are disappointed by the fact that the financial services action plan, which is vitally important to the development of the European economy, is still mired in indecision, and equally that

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the attempt to create a European patent is still subject to long delays because no one can agree on the languages into which it should be interpreted.

On some of the key areas of creating exactly the kind of modern, information technology-conscious economy of which the Prime Minister and some of his colleagues have spoken on many occasions, we are not making what one might describe as rapid progress. That is a pity because there is no doubt that Europe's potential is much greater than its achievement. In that respect, I ask the Leader of the House three questions. First, can he tell the House more about the financial services action plan, the Lamfalussi proposals, and what prospects there are of that being implemented within the next four or five years in line with some of the reforms that are being made globally? Secondly, can he say something about the European charter for small and medium enterprises, which is again a vital part of modernising the economy of Europe and creating more job opportunities? Finally in this respect, can he say a word or two about the proposals with regard to patents?

I turn to the international annex attached to the Statement. Again, we congratulate the Prime Minister and the Government on the steps that have been taken to create a new federation between Serbia and Montenegro. It is hoped that that will be one which will provide for more autonomy for Montenegro than was the case in the old federation. It is obvious that Montenegro is tugging in the direction of having a greater say in its own future. I have suggested already that we are pleased by some of the steps towards environmental improvements, including at a global level.

However, again I must ask the Leader of the House a serious question. The summit Statement has much more to say about the Middle East than has the Prime Minister's Statement. It is clear from the visits being paid to the Arab states by Vice-President Cheney that the message has come through loud and clear from virtually every moderate Arab capital that it is the war and growing escalation of violence and tension in the Middle East that is perceived by all those governments—Egypt, Jordan, Bahrain, Qatar, and Saudi Arabia—as being the central threat they face. Against that threat they will not get engaged in giving help for an attack on Iraq because they do not believe that that is the first priority in saving the peace of the world. It is interesting that Mr Cheney has begun to change his tune somewhat and, in the past couple of days, speak as if he too thinks that perhaps the Middle East crisis should take priority.

In that context perhaps I may ask the Leader of the House specifically about two matters the Prime Minister did not mention, and welcome one which he did. We welcome the commitment of the Prime Minister and the European Council to call on Israel to withdraw from the occupied territories. However, there were two other things said by the Council which the Prime Minister did not say. The first was to call again on both sides to respect United Nations resolutions, including the most recent resolution 1397,

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calling upon both sides to respect the sovereignty of the other, the ultimate setting up of a Palestinian state and the withdrawal of both sides from violence in the other country.

But, secondly, and perhaps even more important, the European Council called for there to be monitors sent from the European Union to oversee and monitor any attempt to try to create a peace agreement between the two sides. Many of us in this House regard that as being perceived to be more neutral between the two sides than, with great respect, American monitors. It is vitally important that we know the view of our own Prime Minister on that European Union proposal. I therefore conclude my questions by asking the Leader of the House to tell us as precisely as possible whether the Prime Minister supports that conclusion and whether he would agree to co-operate by sending British monitors along with European monitors to supervise the peace process desperately needed in the Middle East.

4.57 p.m.

Lord Williams of Mostyn: My Lords, I am grateful for the contributions of the noble Lord, Lord Howell, and the noble Baroness, Lady Williams. I confirm that the noble Lord was courteous enough to indicate the reason why the noble Lord, Lord Strathclyde, could not be in his place.

I do not believe that it is right to say that Barcelona was a disappointment. It would be deeply disappointing if one thought that one was going to change the world on every such occasion. Such processes are bound to be incremental. We cannot have "big bang" solutions on every occasion, particularly in a community, a union, which is expanding quickly and introducing countries at different levels of economic, political, cultural and social development. In the view of the Government, that is the key to the future of the European Union.

It was said, for instance, that the Prime Minister and the Chancellor had repudiated Mr Monks on the rights of workers. I do not think they did. He is a thoughtful, careful and, if I might say without presumption or appearing to patronise, most intelligent trade union leader. He might well be putting forward the point of view, which I recognise as having legitimacy, that if one is a worker in a company one has certain rights in the same way that one has certain duties to one's employer. He might have had in mind what sometimes strikes some of us as the grossly disproportionate outcomes one has if one is a worker in a firm which fails as opposed, perhaps, to being a director in a firm which fails. That sometimes seems to some of us to be a necessary pre-condition to receiving a multi-million pound payout.

It is right that one cannot have an endlessly static labour market. It is also right in my experience and belief that we will never have a satisfactory labour and employment market unless people who work and thereby contribute to the profit of the company have their rights properly and decently regarded. I believe that the noble Lord, Lord Howell, said that the Prime

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Minister appeared to be bored in Barcelona. In my experience such a thing is not possible. One may go to bed very late but one is certainly not bored.

What have we brought about? It was said that Barcelona was supposed to be make or break. As regards the energy markets, for instance: 60 per cent, non-domestic, to be followed promptly by the remainder of the energy market being opened up, with every prospect that that will be done by this time next year; the progress in telecommunications and broadband by 2005; the research and development budget up to 3 per cent; the Secretary General's proposals for reform on institutional change; the desire to achieve 0.39 per cent of GDP in terms of international aid and development; the communiqué on the Middle East; and the progress on Zimbabwe. None of these could be said to be disappointing. They are not perfect outcomes because, as I said earlier, this is a continuing incremental procedure.

The noble Lord, Lord Howell, asked in particular about CAP and about Iraq, Gibraltar and Zimbabwe. The noble Baroness certainly asked about the Middle East and the war against terrorism. On Gibraltar perhaps I may repeat again—I know that your Lordships are perfectly reasonably concerned about Gibraltar—that the Government's position has not changed at all since a few days ago when my noble friend Lady Symons yet again unambiguously stated the Government's position, which is that there will be no constitutional change in the Gibraltarian context without the consent of the people of Gibraltar.

I shall make plain the Government's precise position yet again because I know that your Lordships are concerned about the matter. We will not enter into arrangements in which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes. I know that the noble Lord, Lord Waddington, has on a number of occasions pressed my colleague. I repeat that formulation which I hope is important to the people of Gibraltar.

Questions were asked about the Middle East. Perhaps I should deal with that matter at more length. I believe that on the Middle East there was significant progress made. We said in terms that we absolutely support the United Nations Security Council's Resolution 1397, to which the noble Baroness, Lady Williams, referred. Your Lordships will know that Resolution 1397 deals with the rights and legitimacies of Israel and the Palestinians.

The Arab summit will take place on 27th March. I entirely take the points which the noble Baroness made about the dangers of the Middle East situation at the moment. We have supported the proposals made by Crown Prince Abdullah. On behalf of the Government I entirely agree with the noble Baroness that there can be no resolution of wider matters without a determined attempt to resolve the Middle Eastern question.

I agree with the noble Baroness that it is necessary that all sides—whoever they are and whatever their historic grievances—should respect UN Security Council Resolution 1397.

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The noble Baroness, Lady Williams, asked a number of questions about the financial services action plan. Its deadline for implementation is 2005. There are about 45 measures needed to complete it. Twenty-five of those have already been agreed. There is a continuing review of the progress of the financial services action plan available on the Internet. It is frequently updated. I have a large number of pieces of paper in my hand. I should be more than happy to circumvent the operation of the Internet, because, on this occasion, I think that the human hand will be quicker than the Internet. I am more than happy to provide the noble Baroness with a copy later today.

The noble Baroness also asked about the small firms charter. That has been agreed. Barcelona called for full implementation of the charter. I know that the conclusions contain quite an amount of material. The reference is paragraph 15 of the conclusions.

The noble Lord, Lord Howell, asked whether there had been any discussion of a takeover directive. In January of this year the high level group of experts on company law produced a report on how to take forward the idea of a takeover directive. The Government welcome that report and hope that the Commission will come forward with a new proposal as soon as possible. That is the up-to-date material that I have on the matter.

It cannot be said that Barcelona was a disappointing conference. I know that the noble Lord very gently chided me about reading out the more "partisan", as he described them, last two paragraphs. I cannot really disagree with that adjectival description. What seems to me absolutely critical is what was said earlier in the Prime Minister's Statement. Five years ago many of these steps would have been inconceivable. It is extremely sobering and humbling to go around Europe and see what hopes are placed on the progress of the United Kingdom in playing a full part in Europe. We are seeing countries now about to enter the European Union which have had a century of dismal history—no democracy, overborne by neighbouring countries, often totalitarian, and with the idea of human rights absent not simply from their constitutions but from their hopes, dreams and thoughts.

We are capable of exercising a substantial moral as well as political energy in the European Union. It will damage the European Union, as well as us, if we do not take our opportunities.

I hope that I have dealt with the specific points that were put to me. I repeat that this has not been a disappointing conference, except among those who believed that two days in Barcelona would change the world.

5.6 p.m.

Lord Tomlinson: My Lords, does my noble and learned friend agree that the Barcelona conclusions contain not only some welcome agreements but also some points of serious warning? Perhaps the most serious warning at a time when we are concentrating on how better to connect Europe to the citizen is not to

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start too many new initiatives until we have completed some of the existing ones. Therefore, should not the now more than 10-year old initiative of completing the single market be put as an absolute priority until we have got the single European securities market, the full completion of the telecommunications markets, a full single market in financial services and a single energy market? Should we not therefore be encouraging an attitude of mind that doing less and doing it better involves a self-denying ordinance on new initiatives until we have completed the agenda that we have already committed ourselves to?

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