With permission, Mr. Speaker, I shall make a statement about the outcome of the European Council in Brussels on 21 and 22 June.

I congratulate the German Chancellor, Angela Merkel, on concluding successfully an exceptionally difficult negotiation and on an outstanding presidency of the European Union.

Before the European Council, I made it clear that the concept of a constitutional treaty for Europe had to be abandoned and that we should agree instead a conventional amending treaty like the Nice, Amsterdam and Maastricht treaties and the Single European Act. I also made it clear that the UK had four central demands which had to be met. First, on the charter of fundamental rights, we secured a legally binding protocol, specific to the UK, and applicable both to the British courts and to the European Court of Justice. Let me read the terms. The protocol states that

“the Charter does not extend the ability of the Court of Justice, or any court or tribunal of the United Kingdom, to find that the laws, regulations or administrative provisions, practices or action of the United Kingdom are inconsistent with the fundamental rights, freedoms and principles that”

the Charter

“reaffirms.

In particular, and for the avoidance of doubt, nothing in the Charter creates justiciable rights applicable to the United Kingdom except in so far as the United Kingdom has provided for such rights in its national law.”

In respect of our criminal law system and police and judicial processes, we obtained an extension of the opt-in rights that we secured in an earlier treaty on migration, asylum and immigration issues. This means that we have the sovereign right to opt in on individual measures, where we consider it would be in the British interest to do so, but also to stay out, if we want to. It is precisely the pick and choose policy often advocated. It gives us complete freedom to protect our common law system, but it also allows us to participate in areas where co-operation advances British interests. In asylum and immigration, for example, we have opted in on measures dealing with illegal immigration, and in measures allowing us to return asylum seekers to other European countries—both unquestionably in Britain’s interests. But it will be within our exclusive power to decide on a case-by-case basis, which is exactly what we wanted.

In respect of social security, we negotiated a provision which allows us to insist on unanimity in any case where we—that is, Britain—declare that any proposal from the Commission would affect important aspects of our social security system, including its scope, cost, or financial structure or balance. Our social security and benefits system is therefore completely protected.

As for the common foreign and security policy, the basis of this will now remain unchanged in a separate treaty, and a separate pillar, from the first pillar Community method. The essential features of the CFSP remain as they were. Unanimity voting is the rule. There is no sole right of initiative for the Commission. There is no role for the European Parliament in decision taking. There is no jurisdiction for the European Court of Justice, except in the particular case of safeguarding the rights of individuals subject to EU sanctions. The two jobs of Commissioner for External Relations and High Representative which, of course, exist already, will be amalgamated in a single job. But this reform does not extend the EU’s substantive powers to act in foreign policy. In particular, the Union Representative, when working on common foreign and security policy issues, will operate within a policy framework set by the European Union Foreign Ministers, by unanimity.

All these guarantees not merely remain in the new treaty, but are reinforced in a new overview article that reaffirms them and has full legal force. For the avoidance of doubt, we also obtained a declaration that sets out the unanimous view of all member states about the meaning of those guarantees. That declaration, which then informs the detailed negotiation of the intergovernmental conference, states that the common and foreign security policies of the treaty, including in respect of the office of Union Representative and the external action service,

“will not affect the existing legal basis, responsibilities, and powers of each Member State in relation to the formulation and conduct of its foreign policy, its national diplomatic service, relations with third countries, and participation in international organisations, including a Member State’s membership of the Security Council of the UN.”

There was also a discussion at the Council about competition. The treaties have always made it clear that competition in the internal market should not be distorted. The now defunct constitutional treaty’s objectives would have included new wording about “free and undistorted competition”. When the treaty was set aside, that provision was lost, but we agreed on a new and legally binding protocol to be annexed to the treaties, which reaffirms the commitment to ensuring that competition is not distorted, and the other references to competition in the existing treaties will remain: for example, articles 4, 27, 34, 81 to 89, 96, 98, 105 and 157 from the European Community treaty. The legal position in relation to competition therefore remains unchanged.

Alongside meeting our four essential requirements, we secured a number of further improvements. The new treaty will confirm for the first time, explicitly, that national security is the sole responsibility of member states. The Union already signs international agreements, but the treaty formalises its legal personality. However, we have now agreed a declaration by all countries for this intergovernmental conference confirming that the fact of this legal personality does not authorise the Union in any way to legislate or act beyond the powers conferred on it by member states in the treaties. There are also new powers for national Parliaments to object to Commission proposals on subsidiarity grounds.

There are a number of extensions of qualified majority voting. In the most sensitive areas of QMV—justice and home affairs, and social security—we obtained the right either not to participate or to insist on unanimity. In addition, a number of other QMV measures—for example, those about rules within the eurozone, or those in justice and home affairs—do not apply to us. As for the rest, we have agreed them, because qualified majority voting is often in Britain’s interest. The biggest move to qualified majority voting in Europe’s history was the Single European Act, but this allowed the creation of one of Europe’s greatest achievements: the single European market. More recently, we have secured reforms such as the services directive and other liberalising measures through QMV, including the lifting of the beef ban, when they would almost certainly have been blocked through unanimity. Among the QMV provisions in the treaty is one that provides a new legal base and QMV for energy market liberalisation, and another that provides QMV for decisions on emergency humanitarian aid to third countries—both of them manifestly in the UK’s national interest.

The other main reform is the fixed term, two-and-a-half-year presidency of the European Council, replacing the current rotating six-monthly arrangements. This is necessary for the Union’s efficiency, but does not involve any extension of presidency powers. The President of the European Council will remain the servant of the leaders of the member states.

The most important aspect of the new treaty is that it allows the European Union to move on to the issues that really matter. For too many years, we have been bogged down in a debate about institutions. With the increase from 15 to 27 member states, change is essential, but with this agreement, we can now concentrate on issues that really matter: energy security, organised crime and terrorism, globalisation, further enlargement and making Europe’s voice more effective internationally.

This agenda is surely quintessentially one in Britain’s interests. Over the past 10 years, Britain has moved from the margins of European debate to the centre. This is absolutely right for Britain. Whether in defence or economic reform or in energy policy or the environment, or of course most particularly in enlargement and the appointment of the new Commission President, Britain has for a decade been in a leadership position in Europe. That is exactly where we should stay. I commend this agreement to the House.

I congratulate the new leader and deputy leader of the Labour party. Both of them were elected—one had a slightly stiffer contest than the other—on the ground of listening to people, which is what I want to talk about today. In his final days in office, the Prime Minister has concluded negotiations for which after this week he can never be held accountable, and he has agreed to a transfer of power from Britain to Brussels without the permission of the British people. That will be remembered as one of the most flagrant breaches of any of the promises that he has made.

The Prime Minister stood at the Dispatch Box and said this about a referendum:

“Let the issue be put and let the battle be joined.”—[Official Report, 20 April 2004; Vol. 420, c. 157.]

However, his statement today did not include even a mention of the word “referendum”. It is the promise that dare not speak its name.

The Prime Minister said this about the constitution:

“What you can’t do is have a situation where you get a rejection of the treaty and then you just bring it back with a few amendments and say we will have another go.’”

Is that not exactly what he has done? That was a promise clearly made and a promise clearly broken.

The Prime Minister has made three claims in rejecting a referendum. First, he has said that the substance of the treaty is different from the constitution. Secondly, he has said that we do not need a referendum, because the red lines were met. Thirdly, he has said that there is no significant transfer of power from Britain to Brussels. He is wrong on all three counts.

Let us take the issue of the treaty being different from the constitution. The constitution had an EU president, a single legal personality, a Foreign Minister and the loss of the veto; the treaty has an EU president, a single legal personality, a Foreign Minister and the loss of the veto in 60 areas. Far from being dead, the constitution has been resuscitated. [Interruption.] Was not the German Chancellor telling the truth when she said that

“much of the substance has been maintained”? [Interruption]

Order. Mr. Bryant, you must be quiet.

The hon. Gentleman is much better on the internet.

Was not the author of the constitution himself, Giscard d’Estaing, telling the truth when he said that

“the public is being led to adopt, without knowing it, the proposals that we dare not present to them directly.”?

Above all, was not the Irish Prime Minister telling the truth when he said that 90 per cent. of the substance of the constitution is still there?

Indeed, the treaty itself states that it is bringing back the constitution. Clause 1 of the mandate for the forthcoming intergovernmental conference states:

“The Reform Treaty will introduce…the innovations resulting from the 2004”

intergovernmental conference

“as set out below in a detailed fashion”.

If it looks, reads and feels like the constitution, that is because it largely is the constitution, which is why there should be a referendum.

Now let us have a look at the red lines, which do not include the EU President, the single legal entity or the vetoes, and even the areas that they cover are falling apart. The Prime Minister has said that British foreign policy is not being displaced, but we find that that red line is only in a declaration, which is not legally binding. The Prime Minister has said that the charter of fundamental rights could not change British law, but that red line has already been challenged by senior judges. In any event, his whole argument is bogus, because at the time of the constitution he said that the same red lines were met, but he offered the people a referendum. He said that the constitution

“does not and will not alter the fundamental nature of the relationship between member states and the European Union.”

However, he went on to say:

“Parliament should debate it in detail and decide upon it. Then, let the people have the final say.”—[Official Report, 20 April 2004; Vol. 420, c. 155-57.]

What has changed?

The Prime Minister’s third claim is that the treaty does not mean a significant transfer of powers from Britain to Brussels. That is simply wrong. Will the Prime Minister confirm that power is being transferred in 60 areas as the veto is abolished? Far from their all being minor areas, they include energy, transport, employment law and the new EU diplomatic service. The new treaty even gives up some powers which members of his own Government have warned against. Two weeks ago, the Foreign Secretary said that putting criminal justice under the control of the European Court would be a “major change” and a “matter of some controversy”. So why did he sign up to it?

The Prime Minister himself said that the EU being given a legal personality across all the areas of its work would be “potentially damaging”. So why did he sign up to that? The Leader of the House––the once and future Foreign Secretary––described the Foreign Minister and the EU President as central elements of a constitutional treaty, which could not be introduced without a referendum. So where is the referendum?

With this treaty, something is being done that was not included in any previous treaty. It does not just transfer specific power from Westminster to Brussels; it also includes a new ratchet clause that allows many of the vetoes that survive to be abolished without a new treaty. The Prime Minister shakes his head. He obviously does not know what he signed up to. This can happen without an intergovernmental conference and without the British people being allowed a say. Is not that another reason why we need a referendum?

This summit could have been about free trade, climate change and a trade deal to help Africa. Those things do not require a single extra central power in Brussels. They simply require political will and a sense of purpose.

All three main parties in the House signed up to a referendum at the last election. The Prime Minister has broken that promise, but within two days he will be gone. We will have a new Prime Minister, one who has promised, unlike his predecessor, to be humble, to be a servant of the people and to listen. If that new Prime Minister, like us, really believes in power to the people, he must hold a referendum and let the people decide.

Let me deal with each point in turn. First, I should point out that when the right hon. Gentleman quoted from the draft mandate for the IGC from the German presidency, he missed out the succeeding sentence, which is:

“The constitutional concept, which consisted in repealing all existing Treaties and replacing them with a single text called ‘Constitution’ is abandoned.”

Let me go through the 49 articles that create QMV. Thirteen of them do not apply to the UK because they are about the eurozone or judicial and home affairs, which we have opted out of. Six involve issues such as allowing a group of citizens to propose initiatives; the negotiation of a withdrawal agreement—I should have thought that the Opposition would want QMV on that; two relate to ending special state aid provisions for Germany post-reunification and to diplomatic and consular protection measures, which are not about the service, but about protection. Nine are minor and technical, including such extraordinary matters as the Council review of general rules on the composition of the Committee of the Regions, and the Comitology Committee, whatever that might be. Nine of them relate simply to new legal bases, but powers already exist.

There are nine articles of genuine substance on matters such as the implementation of own resources decisions, which it is in Britain’s interests to have QMV on, because it allows us to ensure that countries cannot block that; on the authorisation, co-ordination and supervision of intellectual property rights protection, which, again, it is absolutely in Britain’s interests to have; and on matters such as urgent aid to third countries and humanitarian aid operations.

The idea that this involves some vast transfer of powers from the UK to Brussels is completely and utterly absurd. But do not take my word for it, take the word of the right hon. and learned Gentleman who heads up the Opposition’s constitutional committee.

Who is that?

The former Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who is very wise on this subject. He said:

“some of the Eurosceptics will have demanded a referendum just about the date on the top of the piece of paper, but they are flogging away, I think, at a dead horse.”

Not that that discombobulated him for a moment.

The Single European Act and Maastricht involved far more QMV transfers than anything that we have agreed. As for the external action service of the EU, because it comes under one person—it is sensible to merge both posts—the Commission offices will break down the barriers with the Council offices, so that they can all be in the same place. Are we to have a referendum on an open-plan office? It is absurd.

The question that I have for the right hon. Gentleman is this. If this is so important, if this is the one thing that requires a referendum, sucking away the country’s political energy for months, why did he not go to the meeting on Thursday morning of the European People’s party to which he was invited by the German Chancellor? What did he say when he was asked to go to the meeting? He said that he was too busy to attend. So this is a fundamental question requiring a referendum, yet he cannot even turn up to the meeting.

Incidentally, if the right hon. Gentleman thinks that he will get some salvation from the new grouping that his party is joining, which includes the Czech Prime Minister, let me tell him what his friend the Czech Prime Minister has said about the deal. He said:

“it was very difficult but in the end very successful. The result is considerably better than the European Constitution”,

and that he did not think that a referendum should be held. The truth of the matter is that the Conservative party has not got a serious policy on Europe. This is no doubt the reason why the right hon. Gentleman did not raise the matter at Prime Minister’s questions last week or attend the European People’s party meeting and, to be fair to him, I think that he is going through the motions a bit today. If the Conservative party wants to be a serious party of government, it should have a serious policy on Europe. The fact that it does not have one means that it is not a serious party of government.

Are any of the issues contained in the mandate to the IGC capable of being reopened, or is the mandate the final word on what can be discussed at the IGC? The Prime Minister has said that the legal position in relation to competition remains unchanged, but does he understand the anxiety of the CBI that competition policy has been substantially weakened? How will the ability of the European Union to facilitate the internal market be achieved if protectionism begins to rise again? In particular, how will the European Union be able to deal properly with the challenges of globalisation if there is further protectionism? What specific rights did the Prime Minister find so objectionable as to justify a United Kingdom opt-out from the charter of fundamental rights? What flexibility does the EU Trade Commissioner now have in relation to agriculture for the purpose of achieving a successful outcome to the Doha round? Finally, what decisions were taken on the role that the European Union should play in alleviating the desperate humanitarian conditions in Gaza?

The detail of what was agreed obviously has to be negotiated at the intergovernmental conference, but the key elements have been agreed. In relation to the language in the constitutional treaty about free and undistorted competition, it was somewhat bizarre to meet people who said that they wanted the whole constitutional treaty to be scrapped, but that we should have preserved these particular words. I am afraid that, once vetoes went down from us in a whole series of areas, vetoes went down for others, but that is exactly why we had the legal protocol. The Commission lawyers have made it quite clear that they believe that their ability to act in the internal market is unfettered, unrestricted and unchanged as a result of this; that is important.

In respect of the charter, it is not that we are against any of the fundamental rights. Indeed, we have such rights in UK law. We wanted to ensure, however, that there would be no question whatever of our being in a position where either the European Court of Justice or our own UK courts could use the charter of fundamental rights to extend or expand UK law, particularly in the labour market or the social sphere. I do not believe that that is the intention, but we need to bolt this down very clearly. We are able to do our own laws in our own way here, and that is the right thing. I understand why people are now asking whether we are against people’s fundamental rights. Of course we are not, but we believe that, in respect of the charter, it is better that those things are decided here.

The Prime Minister and all those involved in the process are to be congratulated on coming up with an agreement that will not require a referendum. However, may I have his assurance that there will be proper parliamentary scrutiny of the whole process, clause by clause? Given that the House will go into recess in July, will he assure us that there will be proper procedures to enable us, through our Select Committees and through other means, to have proper scrutiny of all these proposals?

Of course, all the usual legislative scrutiny will take place, as the proposals will require legislation through the House. My hon. Friend is right that the work of both the German presidency and others to get an agreement is important. I did not pick up this point when the leader of the Conservative party was speaking, but he wrote an article the other day about what Europe should concentrate on, and that it should not be navel gazing. In a sense, that is absolutely right. The important thing, however, is that it did need to change its rules. The move from 15 to 27 countries, particularly when the majority of the new countries are very small, requires us to change our rules to make them effective. Now that the key elements have been agreed, we can put the matter to one side and get on with the more important issues that really affect citizens in Europe.

Does the Prime Minister agree that, following the successful enlargement of the Union, which was supported by everybody in the House, it was inevitable that the treaties would have to be amended to improve the decision making of a larger Community, and that he has achieved the maximum necessary to do that? Does he realise that he has adopted one of the recommendations of the Conservative party’s democracy taskforce in rescuing from the wreckage of the Giscardian constitution the enhanced role for national Parliaments in future legislation? Now that we can put a line under institutional debate and get on with the real business of the Union, however, does he agree that, in addition to the subjects that my right hon. Friend the Leader of the Opposition and he mentioned, we need to develop on an inter- governmental basis some foreign and security policy that will enable Europe to take a collective line on the problems of the middle east, relations with Russia and our role in the Atlantic alliance, and that we are now clear that we can go ahead with our own sovereign right to participate quite untarnished?

I agree entirely with what the right hon. and learned Gentleman says about the efficiency of the European Union and the need for the rules to change. It is important that people understand that the expansion to 27 countries is not just a question of another 12 countries being there. Because some of those countries—no disrespect to them—happen to be small, carrying the burden of a full-time presidency will be difficult for them. The national Parliaments point is absolutely right. I had not realised that it was a Conservative party taskforce recommendation; despite that, I am still in favour of it. His last point is important, because even though I am a very strong supporter of the American alliance, I also believe that it is important that Europe has a common foreign and security policy—[Interruption.] Well, I do believe that. I remind Conservative Members that those words were first used in the Single European Act and the Maastricht treaty. They were negotiated originally by Margaret Thatcher, and quite right too. That should not be against the American alliance, but in relation to Iran, Kosovo or how we make progress in the middle east, for example, it should allow us to have a European position. That is sensible and in the interests of this country.

As the Prime Minister will recall, he went to St. Malo in 1998, met President Chirac and set down the basis of a common foreign and security policy. Building on his references to asylum and immigration, energy policy, enlargement and globalisation, can we add climate change and the environment? With 27 member states and proper institutional arrangements, is it possible for us now to give world leadership on those issues, which will be to the utmost benefit of Europe and the British people.

My hon. Friend is absolutely right. Incidentally, at the time that I concluded the St. Malo defence agreement in 1998, Conservative Members in particular said that it would effectively abolish our right to act independently, that, in particular, we would not be able to go into military alliance with America, and that we would end up with a European army superseding the UK Army. All those points have turned out to be nonsense. Europe does some very worthwhile missions in different parts of the world, and co-operating in European defence is entirely sensible. The European Union should definitely work together on climate change. If Europe makes its voice heard on climate change in a collective way, there is no doubt that it will be far stronger than any individual country, including Britain.

Does the Prime Minister recall that he gave a clear assurance in the House at the beginning of last week that he would not agree to something that displaced the role of British foreign policy? Is it not clear from the declaration to which he referred in his statement that that declaration has no legal binding force whatever? Is it not the case, therefore, that the Prime Minister ended up at the end of last week by conceding the very thing that at the beginning of last week he said he would not?

Absolutely not. It is not merely the political declaration, which of course is binding on the IGC political negotiation, but it is also what I described as the overview article. I suggest that the right hon. Gentleman sit down and read it, because he will see that there is no question whatever of any country wanting to give up its independent foreign policy. A country like France—quite apart from ourselves—is not going to sign away its right to act independently. However, there are areas where it is important that we co-operate. For example, we are surely stronger as Britain, Germany and France negotiating together in respect of Iran, representing a common European position, than we are individually and on our own. That is why it is sensible for us to do that in certain areas, but nothing obliges us to give up any foreign policy rights or interfere with our own diplomatic service in any way whatever. It does allow us, however, to operate more effectively.

Does the Prime Minister think that his successor will be able to maintain his line against a referendum? Let us suppose that the Leader of the Opposition decided to give a pledge that, should he be elected at the next election, he would give the British people a vote on the treaty. As such a move would probably be very popular, particularly among Labour voters, does the Prime Minister believe that his successor would go into a general election leaving this issue for the voters to decide then, rather than in a referendum? In those circumstances, would not his advice to his successor be that he ought to separate the issues, have a referendum and then separately have a vote at the general election?

Obviously, I cannot agree with my right hon. Friend on that. We have never, on conventional amending treaties, had referendums. We did not on the Single European Act; we did not on Maastricht; we did not on Amsterdam; we did not on Nice. We accepted that the constitutional treaty was in a different bracket precisely because it purported to be a constitution that governed all the various items in Europe. As a result of the changes that we have made, it is impossible to say that. This treaty transfers less power than any of the four previous treaties in the past 20 years. In respect of the politics of it—I say this as much to the Conservative party as I do to my right hon. Friend, for whom, as he knows, I have a lot of respect—the Conservative party has fought three elections on Euroscepticism: a fat lot of good it did them.

In welcoming the good and, overall, constructive outcome to the summit, with a view to the future, and in terms of his own engagement in these issues, will the Prime Minister use whatever career opportunities are open to him to put the pro-European case here in Britain, persuasively and constructively, as it has been seen over the past weekend? That would be much welcomed.

Incidentally, may I also personally thank the Prime Minister for his courtesy and good will over the period of his premiership, and in our dealings one to one?

First, let me return that compliment to the right hon. Gentleman, with whom I always had a very courteous and friendly relationship. Even when we disagreed, I found him someone of tremendous integrity. I thank him for that.

Of course it is important that we carry on putting the case for Europe. That is partly because it is important simply to understand that in the early 21st century—particularly with China becoming the dominant power in 15 or 20 years, with a population double that of the whole of the European Union and America put together—a country the size of Britain makes its weight and influence felt in alliance with others. That is why I believe in the American alliance, but it is also why I believe that we have to be key players in Europe.

On the subject of further enlargement, can my right hon. Friend tell us about the new tougher criteria that applicant countries will be expected to meet before they can accede to the European Union? Does he agree that although most of us would welcome Turkey into the EU, that can only be after it has improved its human rights record towards the Kurds? Until that happens, people will continue to have doubts about Turkey’s accession.

The provisions for the enlargement criteria are more about making it clear that the existing criteria—the Copenhagen criteria—will be properly adhered to. One has to be practical about it, and when a small country is coming into the European Union, the criteria are still important and legally enforceable, but it is not the same as when a very large country is joining. What Europe is signalling is that after a period of very rapid enlargement, in which 12 new countries joined, it wants to ensure that the essential criteria are kept in future. I happen to be a supporter of Turkey’s membership of the EU and I will continue to support it, but it knows very well that in order for it to join the EU those criteria will have to be met.

Whenever the Prime Minister tries disingenuously to point out our positions in the past, I remind him that both he and his successor as Prime Minister were elected to this House on a manifesto to withdraw from the European Union. If he is so satisfied with and proud of the treaty of last week, why is he so frightened to ask the British people if they agree with his assessment of what he achieved last week?

On the right hon. and learned Gentleman’s first point: yes, and we lost, too—so that rather makes my point for me. I say to the Conservative party: for goodness’ sake get your act together in this area. The Conservatives fought the 1979 and 1983 elections, rightly, as a pro-Europe party. It is since they abandoned that and got this virus in their system that they have been out of power. I am not saying that the two things are completely on the same line, but the fact of the matter is that it has done them no good at all. As for a referendum, it is a bit of a cheek for the right hon. and learned Gentleman to make that point about a referendum on this treaty. He remembers Maastricht, does he not? Which way did he vote on that? He voted against a referendum.

I wonder whether my right hon. Friend can help me. Surely we are talking not about a treaty but about a discussion in the Council of Ministers, which is a treaty organisation and therefore cannot negotiate its own treaties. In fact, a new treaty is the responsibility of the IGC, and that works on the basis of unanimity, not the simple majority voting of the Council of Ministers. So we now have a situation in which we can, and in my view should, still veto the whole unnecessary business. More importantly, can my right hon. Friend tell us how, assuming that the treaty pops up in October, we in this House can discuss it and decide on it before the IGC?

There will of course be ample opportunity, through the ratification process, to have a full debate on it. Why would we want to veto this treaty? It provides the means for a more effective working of the European Union. Let us be clear about this: my hon. Friend, and some Opposition Members, would call for a referendum even if we added a comma to the constitutional treaty, because what they really want is to take us out of Europe, and they might as well be honest about it.

The Prime Minister knows that we have heard all this before. The last time, on the constitutional treaty, he argued that there should not be a referendum, and then eventually changed his mind, with a little bit of help from his friends—who are now sitting next to him—and one or two other people. He had to recognise that in the transitional provisions it was clear that there was fundamental change, and he knows that—

indicated dissent.

He shakes his head, but the Chancellor and the Leader of the House, who are sitting next to him, know perfectly well that that was true. Will the Prime Minister not accept that the presidency conclusions in his statement are misleading? Under these proposals, all the existing treaties will be consolidated and amended, and there will be thereby a collapse of all the pillars, into a union. The consequence of that is a fundamental constitutional change. Even on the Prime Minister’s own terms, therefore, a referendum is essential. He made that decision before; he should do so again—and so should his successor.

The hon. Gentleman is simply wrong about the common foreign and security policy. It remains intergovernmental: that is made absolutely clear in the overview article that I described earlier. He says that he has heard it all from me before— but frankly, I have heard it all from him before. [Interruption.] It is probably greatly to the benefit of both of us that neither of us will have to hear the other again.

I cannot see the right hon. Member for Wokingham (Mr. Redwood) in his place—[Hon. Members: “There he is!] I am sorry, his suit was camouflaging him on the Opposition Benches. About the Amsterdam treaty, the right hon. Gentleman said:

“If we sign the Amsterdam Treaty, we will abolish our country.”

I did not say that.

I know that the hon. Gentleman would never say anything so extreme, but we need a realistic debate. The truth is that he wants us out of the EU whereas I want us at its centre, and in the end, that is the difference between us.

May I join the right hon. and learned Member for Rushcliffe (Mr. Clarke) and others in congratulating the Prime Minister on the outcome of the reform summit? As it is his last summit, it is worth remembering that 10 years ago, we were right out on the margins of Europe, whereas today we are right at the centre of the decision making. Will my right hon. Friend confirm that nothing in the clauses concerning competition will affect Britain’s pursuit of the Lisbon agenda? That was very much the initiative of the British Government, and it has been pursued by the Chancellor and successive Foreign Secretaries, to make Europe the most competitive single market in the world.

Yes, it is essential that the Lisbon agenda is maintained. Although the new words from the constitutional treaty were removed, it is important to remember that all the articles relating to the Single European Act remain in place, as do the Commission’s powers to act. Of course, that is the other reason why it is important for us to have a strong European Commission. We are lucky, I think, in that the President of the European Commission basically supports our agenda. We will not get the Single European Act completed unless the Commission is able to use the qualified majority voting provisions to complete it.

During his 10 years in office, and despite his undoubted instincts, the Prime Minister has been forced to keep Britain out of the single currency and the Schengen agreement. He has negotiated, with some pride, opt-outs on immigration and asylum, and he has now reported to the House his satisfaction at securing further opt-outs for the UK. Does he now accept that it is clear that an à la carte Europe is, and will continue to be, in the UK’s interests?

Of course, the reinforced co-operation provisions give countries a chance to decide whether to integrate further, but I shall tell the right hon. and learned Gentleman what has changed in the 10 years between 2007 and 1997, when he was in office. When I first came to negotiate the Amsterdam treaty we had been through the beef war, and the absurd thing was that we ended up turning up to meetings and voting against directives that we had proposed. Of course it is important that we are able to protect our own interests. We have done that in respect of the charter and of judicial and home affairs, but it is also important that we protect our interests in a way that allows us to offer leadership on things like climate change, economic reform, defence and enlargement. As a result of what this Government have done over the past 10 years, we have made huge strides forward in those areas.

Does my right hon. Friend agree that the legal position regarding free and undistorted competition must remain unchanged if we are to achieve the Lisbon agenda? However, does he accept that it is free trade that is beneficial to countries in the longer term, and that a reduction in trade barriers, especially for developing countries, is essential if societies are going to accept the merits of globalisation?

I entirely agree with my right hon. Friend. We still have some time in which to make sure that the World Trade Organisation talks succeed. The positions of Europe and America are closer now: there is not a great gap between the main players in the talks, and it is essential that we use the next period of time to get the negotiations completed. I also think there is a big argument to be mounted in Europe as a whole—to show that globalisation is in the end beneficial for European economies and that the right way of protecting people in respect of globalisation today is not over-heavy labour market regulation, but investment in things such as education and skills.

The Prime Minister will know that much of the proposed reform treaty, and therefore the work before the IGC, will be devolved matters, so will he assure the House that the UK Government will meet the Administrations of Wales, Scotland and Northern Ireland before any ultimate treaty is signed off by the IGC?

I am sure that there will be every possibility of discussing that in the joint ministerial committees, and it would be a sensible topic for one of those committees.

I wonder whether the Prime Minister can help me, as I am having trouble understanding something. Back in April 2004, the reasons for granting a referendum and making a manifesto commitment were not about constitutional change but because we should let the people have a say. The Prime Minister’s Foreign Secretary and Minister for Europe now argue that one of the main reasons why we should not have a referendum is that we are a parliamentary democracy—yet the document to which the Prime Minister signed up at the weekend grants the people of Europe a right that neither national Parliaments nor Governments have, which is to petition the Commission for legislative proposals. I find it difficult to reconcile, on the one hand, giving the people of Europe a right that we do not give our Parliament, yet on the other hand, not asking our own people.

I was in favour of the constitutional treaty, and said at the time that I did not believe that it involved fundamental transfer of power, but I obviously had to accept that it is called a constitutional treaty and brings everything together in one place; indeed, it purports to be a constitution for the whole of Europe. Other countries were holding referendums on that basis. The two things that are different are, first, that we have abandoned that position and gone back to a conventional amending treaty—and I know that my hon. Friend would not say that Nice, Amsterdam and so on should have been subject to referendum. Secondly, in respect of the four areas, we have secured real changes. The right hon. Member for Witney (Mr. Cameron) was talking earlier about what the Irish Prime Minister said, but for Britain, justice and home affairs and the charter of fundamental human rights were the two main issues. As ever with the Eurosceptics—I do not include my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) among those—we give them one thing, but they just move on to the next. My hon. Friend is absolutely right to say that we were making those arguments, but in two main areas we now have a position that is completely different—and protected.

Mr. David Heathcoat-Amory (Wells) (Con): Under these proposals, the existing European community of member states is formally replaced by a new and separate Union with its own legal personality, and with much greater powers. Can the Prime Minister not see that denying people a vote on that not only breaks his own promise but also devalues politics? The powers we have here are lent to us by the people, but he is giving them away without the people’s consent, so will he, as his last act, keep his promise on that matter?

The premise of the right hon. Gentleman’s question—that new powers are given to Europe as a result of the single legal personality—is wrong. It is made specifically clear that the single legal personality does not extend the powers of the European Union. That is stated in terms. As for the idea that Europe previously never had a legal personality, the European Union has already concluded scores of treaties; all this does is make sure that there are not two different methods, which sometimes come into conflict, for Europe to conclude treaties.

No group of people knows more about the effectiveness of the Government’s immigration and asylum measures than my constituents in Dover, Deal and the wider east Kent area. They have seen a dramatic reduction in illegal immigration and a huge fall in unfounded asylum claims. Can my right hon. Friend tell them that nothing in the amended treaty will undermine any of those measures and risk returning us to the shambles we inherited from the Tories?

On the judicial and home affairs power, it is important to recognise that we previously negotiated an opt-in—not an opt-out—to asylum and immigration measures. That was hugely important. If we had simply negotiated an opt-out, as the Conservatives did—in my view mistakenly—on the social chapter, it would mean that we either had to stay out of everything or come into everything. Instead, what we negotiated on asylum and immigration was—

A la carte.

Exactly. It was a pick-and-choose method, which is absolutely the right thing to have on that. [Interruption.] Then the Opposition should be supporting us. As a result of that, for example, in respect of the immigration measures I think that we are returning about 120 or 130 failed asylum seekers to Europe every month. We could not have done that without the opt-in procedure. That is why it is important that we also have an opt-in procedure in respect of the judicial and criminal law systems. There may well be measures in Europe on which we want to co-operate with other countries, and the procedure gives us the ability to opt in when we want to, and opt out when we want to.

Between 1994 and 1999, the German federal authorities noted that 84 per cent. of their laws were passed in Brussels and only 16 per cent. in Berlin. Former German President Herzog commented, “It has to be asked whether Germany remains unequivocally a parliamentary democracy.” That question must also be asked about the United Kingdom. Does the Prime Minister not recognise that this country, after 30-something years in the European Union, which has developed into a great state, needs a referendum?

First of all, Germany is a parliamentary democracy—I mean, come off it. I have not come across those comments, but if the President made them, I disagree with them, and I suspect that most German people do. I do not think that when there was a German election recently, people thought that it was not a parliamentary democracy. Secondly, with respect—[Interruption.] Well, with the greatest respect to Herzog, too. Let us look at what happened with the Single European Act and reflect for a moment on the things that have caused us most difficulty over the past few years. They are things such as the working time directive, and standardisation and harmonisation. They came out of the Single European Act. We need those provisions, however, because they allow us and our economy to operate on a more effective basis. I would say to the hon. Gentleman, who is absolutely sincere in his view, that in today’s world, it is just not sensible for us to separate ourselves from Europe. None of the big issues that we need to deal with today—globalisation, mass migration, organised crime and terrorism, and the environment—can be dealt with by the nation state on its own. That is the purpose of the European Union.

It is difficult to take entirely seriously the demand for a referendum from people who made the demand even before the treaty existed. The way to resolve all this is simply to say that Parliament will decide—preferably on a free vote. That will maintain parliamentary sovereignty, and enable most of us to follow the right hon. and learned Member for Rushcliffe (Mr. Clarke) into the Lobby of reason and common sense.

With one exception, I agree entirely with what my hon. Friend says. In any event, it is important to recognise that it requires something fundamentally different about a particular treaty in Europe to justify a referendum. Incidentally, that is why not only is Britain saying that this is a conventional amending treaty, but so are the other countries, or many of the other countries that have had referendums. [Hon. Members: “Ireland!”] The reason for that is that Ireland has to have a referendum even on an amending treaty.

I happen to be old-fashioned and believe that matters such as this should enhance parliamentary democracy by being discussed in the House; then we individually account for that at the general election. On the substance, it is all well and good to say that certain actions may be more coherently dealt with at a European level, but is the Prime Minister satisfied that the framework will work effectively? For example, Russia is trying to divide us on energy policy, Iran is taking advantages of divisions in approach and even America, with the “coalition of the willing”, attempted to divide the European Union. It is in Britain’s national interests to work much more collectively on the big issues. Is this the right framework, and does the Prime Minister believe that he is leaving as his legacy a European Union that will work more effectively in our common interest?

I hope that is correct. One of the reasons why we should get off the endless debate about institutional mechanisms is that I have noticed from the European enlargement through which 12 new countries have come in, that Europe today works essentially though political alliances. To be absolutely frank, even under QMV, if our country has a major interest but we cannot assemble a blocking minority—incidentally, I cannot think of an occasion on which we have not been able to do that in the past 10 years—there is something wrong with the way in which we are going about building up political alliances.

The key thing is for Europe to decide its coherent direction. Whether it is on energy policy, the environment or any other issue, the institutional mechanisms will be only as good as the political direction that is using them. If the political direction is right, we have a chance of making Europe work more effectively. It is interesting that most objective observers would say that Europe has tended to move in the direction in which Britain has wanted over the past few years. We should use that and work on it.

In respect of organised crime, was there any particular discussion about people trafficking? Is it not the case that the 27 working together can best deal with that serious problem that faces not just us but countries on the southern borders of Europe such as Malta, which has real difficulties because of the impact on its shores of organised crime from several north African countries?

My hon. Friend is absolutely right. That is another area on which Europe should work more closely and integrate its policy to a greater extent. There is no way in which we can deal with organised crime and illegal immigration except, partly at least, on a Europe-wide basis. Illegal migration into Europe is a major problem for countries such as Malta and, to an extent, Spain. Europe should be using its collective power and strength to demand action by countries that are allowing such migration to spread to ensure that we protect European borders better. That is sensible, because we cannot protect our borders if people are coming into Europe illegally and then becoming migrants who are entitled to move right across Europe.

Is the Prime Minister not aware that the issue of the referendum is ultimately a question of integrity, and of people’s ability to trust their politicians to keep the promises that they made at elections? The issue is not how similar this treaty is to treaties enacted decades ago, but how similar it is to the constitutional treaty on which it is based, and on which the Prime Minister promised the British people a referendum. Is it not clear that the similarities far exceed the differences, and that the German Chancellor, who said that the substance was unchanged and that only the terminology had changed, is more to be trusted than he is?

I am afraid that I completely disagree with the right hon. Gentleman. It was interesting that he was unable to specify the major areas that require us to have a referendum. We have gone back on the constitutional treaty. For example, the common foreign and security policy now remains in a separate pillar, which is a major change from the constitutional treaty. It is absolutely clear that we have an opt-out from both the charter and judicial and home affairs. Those were the reasons why people like the right hon. Gentleman were saying that they wanted a referendum. As he knows, the truth is that he would demand a referendum in any set of circumstances, so that he could vote no, because he wants this country out of Europe.

For some time, the debate about the future of Europe has been obsessed by rather esoteric institutional issues. Does the Prime Minister agree that this weekend’s agreement provides us with a golden opportunity to focus on the issues about which the people of Europe are concerned, such as the competitiveness of our economy, jobs for our people and enhancing our environment?

My hon. Friend is entirely right. The agreement makes the changes that are necessary for the greater efficiency of the European Union and allows us to protect absolutely the national points of principle that we consider important. He is also right to say that as a result of that, we can move on to the areas of discussion in which the people of Europe are frankly far more interested than they are in the intricacies of the institutions.

Does the Prime Minister recall that when he reported on the G8 summit at the Dispatch Box just a few days ago, he said how optimistic he was about the progress of the world trade talks? Those talks collapsed at Potsdam, so is this not an especially bad time for the European Union to give the impression that it is resiling from its commitment to full competition? If nothing has changed, why have the words changed?

The words have changed, of course, because they were in the constitutional treaty. I am afraid that this is what people will have to accept: I would have preferred to keep the words in, of course, but if I am laying down four vetoes, and red lines and so on, others will lay down their red lines, too. As a matter of fact, I think that we have protected completely the juridical and legal basis for the internal market, and that is extremely important. The right hon. Gentleman is right: I think that Europe must ensure that strong messages are sent out that the Commission’s powers in that area remain unchanged, and that it will use those powers to enforce the internal market. As for the trade talks, it is correct that the Potsdam talks broke up without agreement. However, I still think that there is a possibility of getting this back on track. I have to say that the narrowness of the difference between the main countries now really would make it an act of gross irresponsibility on behalf of all of us if we did not conclude the deal. They are now very close. If we do not do it, we will deal a real blow to the multilateral system, and not merely to world trade.

Does the Prime Minister not understand that no matter what he or anyone else says, the vast majority of the public will see that there has simply been a tweaking of words, and that the treaty is fundamentally no different from the original constitutional treaty? Why is he, and our Government, afraid of a referendum?

The reason that I disagree with my hon. Friend is that it has changed fundamentally. First, it is no longer a constitutional treaty; it does not, for example, collapse the common foreign and security policy pillar, which is a major area. Secondly, in respect of the two areas that people worried about most—the charter of fundamental rights, on which people said, “Well, that is going to apply in British law”, and judicial and home affairs—we have opt-outs. That is what is different. With the greatest respect, it is important that people actually pay some attention to the facts when mounting their argument.

If the Prime Minister is so sure that the treaty is good for the United Kingdom and has the support of the British people, why is he afraid to put it to a referendum of the people, and why did he offer the possibility of a referendum in his last manifesto?

I think I have explained already why I believe this to be completely different—because the constitutional treaty notion has been abandoned. Instead, we have gone back to a conventional amending treaty, and the truth is that we have never had referendums on such treaties. Let us also be very clear that the reason why the hon. Gentleman wants a referendum is to vote no, and he would vote no whatever was in the treaty.

Britain has been trying for many years to get a level playing field in energy policy, so that British people can own French energy companies, just as French people can own British energy companies, and so that we can keep fuel prices low in this country. Is it not vital for us to have qualified majority voting on energy policy, so that we can deal better with our country, and so that we can ensure a more united front when dealing with Russia?

My hon. Friend is absolutely right, and it is one of the reasons why the deal that we have concluded is a good one for this country. Where we have agreed to QMV, we have not reluctantly accepted it; in the area that he is talking about, which is energy market liberalisation, we have advocated it. It is right that we do that. We know perfectly well that there may be countries that will always block energy market liberalisation, and that is why it is absurd to say that any QMV is bad for Britain. The question is in what areas we should have it, and he is right that in that particular aspect it is good for Britain.

Does the right hon. Gentleman deny that his opposition to a referendum on the treaty really stems from his certain knowledge that, given a chance, the British people would always vote, by a large majority, against any increase of foreign power over British self-governing democracy and our national sovereignty?

No, I am afraid that I do not agree with that at all, and the reason why I think it is important that we proceed in the way that I have outlined is that the treaty is a conventional amending treaty. We have never had referendums on them. I might remind the hon. Gentleman that in the one referendum that we did have, we voted to stay in Europe.

Could the Prime Minister explain why, apart from the last seven days before the Council, Britain entered into no pre-Council negotiations and no pre-Council discussions? The rest of Europe were talking to each other; why was Britain silent?

What is he talking about? [Interruption.] We have been talking about this for two years.

indicated dissent.

Can the Prime Minister confirm that by handing over QMV in transport, energy and technology he has made it possible for other European countries to impose a new European institute of technology, of whatever kind they want, at whatever expense they desire, in defiance of the wishes of his Government? Is that the case, and if he does not know, why not?

Actually, I am afraid that I do know. The European institute of technology is a good idea, and we happen to support it—

indicated dissent.

The hon. Gentleman is shaking his head already. I was just about to explain what it does. It allows us, across Europe, to work on technological projects that have a Europe-wide application—but because it has the word “European” in it, he is against it.

rose—

Order.

FINANCE BILL [WAYS AND MEANS]

Resolved,

Expenses of management

That provision may be made in the Finance Bill about expenses of management (and amounts deductible like expense of management).—[John Healey.]