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Lord Williams of Mostyn: My Lords, I think that there is a good deal of virtue in what the noble Lord says. That is why I was seeking to say that these are incremental processes. We are making quite significant progress towards the conclusions of which the noble Lord speaks. I know that the noble Lord has referred to this matter in your Lordships' House on other occasions. In addition, if we are to make these changes we need to make sure that those who are involved—that is, the citizens of every state in the European Union—fully know what we are doing and the purposes we hope to obtain by bringing them about.

Lord Waddington: My Lords, the noble and learned Lord did not really answer the question put by my noble friend about Gibraltar. What was said at the Council meeting about Gibraltar? Are the press reports correct that money was offered to Gibraltar conditional on it accepting whatever is agreed between Britain and Spain? Surely, the development envisaged is either economically justified or not? If it is economically justified but cannot take place at present because of obstruction by Spain, the duty of the countries in Europe is to tell Spain to stop being obstructive rather than offering a bribe to the people of Gibraltar and telling them that they had better accept any arrangement arrived at between Spain and Britain—whether or not they think it right—because if they do not agree to it they will not get the money.

Lord Williams of Mostyn: My Lords, I am not sure what newspapers the noble Lord is referring to. I enjoy reading newspapers but I do not always accept their entire accuracy on every occasion. What happened at Barcelona was that the Council welcomed the United Kingdom and Spanish efforts under the Brussels process, which I remind the House—I hope not tediously—was a communiqué issued in November 1984 to overcome our differences over Gibraltar. I repeat: any proposals on sovereignty would be put to the people of Gibraltar in a referendum.

I am advised that no sum of money has been agreed. The Commission has been asked to make proposals and we look forward to reading them in due course. There is no question of a "bribe"—to use the noble Lord's word. If agreement can be achieved, it would not be inappropriate to provide some financial underpinning for it. That is not a bribe if—I repeat—

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we make it plain that we will not enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes.

Lord Sheldon: My Lords, my noble and learned friend mentioned discussions on the Middle East. Was any comment made about the danger of our acting against Iraq in the absence of any settlement of the Israeli-Palestinian situation? That is a most dangerous matter. There must surely have been some discussion of that important matter in Barcelona.

Lord Williams of Mostyn: Indeed, my Lords, there was. First, I am happy to tell my noble friend that the Council issued a strong declaration warmly welcoming UN Security Council Resolution 1397, which, as I said—I know that I was paraphrasing it—is not limited to the rights of Israel alone; it also deals with the rights of the Palestinian people.

The Council made perfectly plain that the Palestinian Authority must have full responsibility for fighting terrorism, but that Israel must withdraw its forces from Palestinian-controlled areas, stop extra-judicial killings, lift restrictions and closures and freeze settlements. Both parties—I underline this—must respect international human rights standards. As my right honourable friend the Prime Minister said in the Commons this afternoon, if Israel is exercising a state's undoubted right in law, any response must be proportionate.

I repeat, as the Prime Minister has said on many occasions, no decisions in respect of Iraq have been made. Plainly, no one would seek even to contemplate any action in respect of Iraq without bearing in mind the possible consequences on an already deeply troubled area. On that I agree with my noble friend.

Lord Ezra: My Lords, I should like to ask about the liberalisation of the energy market. It is welcome that the liberalisation of the commercial part of the market has now been agreed. Can we also take it that when the appropriate directives are discussed at the end of the year, they will include extending liberalisation to domestic markets? Furthermore, as the other important issue facing the European Union is security of supply—because of its increasing dependence on imported sources—will that be urgently considered at a future conference?

Lord Williams of Mostyn: My Lords, I cannot give the noble Lord a cast-iron assurance on his second question, although I imagine that all governments will have the concerns that he mentioned well in mind. However, I can give him an assurance on his first question. As he rightly says, the breakthrough at Barcelona deals with more than 60 per cent of the gas and other energy markets, so they will be open to full and fair competition by 2004. The noble Lord's important supplementary question was: what will happen to the remaining part of the market? Within a year, a decision will be taken on full liberalisation, as

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the noble Lord spoke of it. It will be taken by qualified majority voting in the Council of Ministers. Barcelona showed that there was a clear majority in favour—14 to 1—so we should have agreement on the further step described by the noble Lord by about this time next year.

Lord Clinton-Davis: My Lords, does my noble and learned friend agree that there was a marked difference of tone between what the noble Lord, Lord Howell, had to say about the summit and what was said in the House of Commons by the Leader of the Opposition? What was the reaction of other members of the European Union at the Barcelona summit to those positive achievements of the British Government—the national minimum wage, fair rights at work and so on?

Turning to the Middle East, would it not be better if the Palestinian Authority, which controls television and radio, was far more positive about the existence of the state of Israel? Whatever one's views of Prime Minister Sharon, does my noble and learned friend agree that the state of Israel is there to stay?

Lord Williams of Mostyn: My Lords, there is no question in the Government's mind that the state of Israel is there to stay, for all sorts of moral, historical and legal reasons. There is no future for either the state of Israel or the Palestinian people unless they are able to live together. That is a truism, but it none the less needs to be recognised.

As for television coverage of the conflict in the Palestinian media, I imagine that criticism could be made of all sorts of media coverage. It is not for outside governments to seek to interfere with media coverage in other parts of the world, any more than they should seek to interfere with media coverage here, even though sometimes one may regard it as wrong.

The tone of the response of the noble Lord, Lord Howell, was indeed different. Of course, that comes as no surprise to your Lordships, as the quality of debate in this Chamber is normally higher than one finds elsewhere—I did not say in another place. Indeed, the noble Lord is free of mummy in a way that perhaps Mr Duncan Smith is not.

Lord Brooke of Sutton Mandeville: My Lords, why do the Government run the risk of confusing our European colleagues by claiming that the New Deal has generated 300,000 new jobs when the National Audit Office, which is a far from partial witness, states that only 20,000 are attributable to the New Deal?

Lord Williams of Mostyn: My Lords, I know that there are different views about that figure. I do not think that the fact of that extraordinary improvement is itself disputed. Personally, I prefer to accentuate the positive by pointing out that between 250,000 and 300,000 people now have good prospects of settled, long-term employment. That benefits not only them and their families but, critically, the operation of our society, not least in the incidence of youth crime.

Lord Pearson of Rannoch: My Lords, does the noble and learned Lord agree that in at least two important

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areas the Statement is factually incorrect? One is where the Statement claims that proposals are emerging to reduce regulation on business. Does that mean that some existing regulations will be withdrawn? The flood of such regulations continues unabated. One need only consider the vibration and end of life directives, the new regulations on nitrates for farming, the reversal of burden of proof in discrimination cases, the part-time workers directive, dietary requirements for sedentary workers and even the ladders directive, which will make it an offence to climb a ladder unless someone is holding the bottom of it. Surely it is simply untrue to say that we are winning the battle against European regulation.

Nor is it true to say—this is the second prong of my question—that the United Kingdom is winning the argument in Brussels. That is clearly untrue. Did not the European Parliament vote last week to give the European Union legal personality? If that is passed, does not the whole picture fall into place—with the charter of fundamental rights, the army, corpus juris for the legal system and even the anthem and the flag? The flag is not legal at the moment—it is advertising—but it will be when the European Union gets legal personality.

To a Euro-realist such as myself, the Statement simply does not stand up. The Prime Minister himself said that Barcelona would be make or break. Clearly, it is break. So why do not we confess that, or, at least, talk about it at greater length than we can in a debate such as this?

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