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European Council

Volume 473: debated on Monday 17 March 2008

With permission, Mr. Speaker, I would like to make a statement about the European Council held in Brussels, which I attended with the Foreign Secretary on 13 and 14 March.

I begin with the most important concern that the Council addressed: the need to ensure that, faced with global financial turbulence and what the Council identified as a deteriorating global economic outlook, high global oil and commodity prices and volatility in exchange rates, we continue to do all we can, with co-ordinated action at European and global level, to maintain stability and growth.

All European member states agreed to measures for greater financial market transparency: first, prompt and full disclosure of exposures to structured products and off balance sheet activities; secondly, more rigour in credit ratings; thirdly, improvements in valuation standards, particularly for illiquid assets; and fourthly, a strengthening of risk management under the capital requirements directive.

Given the globally transmitted nature of the risks, it is clear that many of those recommendations—the changes to credit rating agency operations and assessments; risk management and disclosure by global financial institutions; changes to capital adequacy rules; and arrangements for valuing financial instruments—which have also been proposed as measures for change by the American Administration, can best be implemented at a global level.

In welcoming that international dialogue as the first step in reform, I can tell the House that the Chancellor of the Exchequer is today writing to the G7, the International Monetary Fund and the Financial Stability Forum to call for co-ordinated international action on transparency and disclosure, better risk management and action on credit rating agencies to be agreed when the G7 and the IMF meet from 10 to 12 April.

In line with the approach of other major central banks, the Bank of England has this morning announced a further £5 billion liquidity support to financial institutions, and a new group has been set up to improve liquidity in the mortgage market.

At the European Council I made it clear that, while our economy is resilient and fundamentally strong, we will at all times remain vigilant and, especially at this time of global uncertainty, continue to take whatever action is necessary to maintain economic stability and growth.

The Council also discussed a new approach to the rising number and economic power of sovereign wealth funds. I strongly welcome the conclusions. Sovereign wealth funds are now worth $2 trillion, but may soon potentially be worth $10 trillion. Our new approach—calling for a voluntary code of conduct based on best practice, openness, transparency and corporate governance—is one that will enable funds to show that they are commercial in their operations.

The Council also discussed food and energy price inflation, and agreed further steps to monitor worldwide inflationary pressures. We agreed that the current global financial turbulence was not a reason to postpone fundamental economic reforms that are essential to building a more competitive European economy. We agreed that we should now press ahead with the liberalisation of markets and with new investment in knowledge and innovation. That includes further liberalisation in the energy, post and telecoms markets, which could generate up to 360,000 new jobs.

We discussed the need also for an economic reform strategy that looks beyond Lisbon—a comprehensive strategy to improve the business environment, strengthen relations with China and India, put our creative and knowledge industries at the forefront of the world economy, and make European universities leading global players, in particular through increasing their contacts with business. So the next stage of the Lisbon agenda will include a review of human capital and skills in Europe, and a renewed focus on competition policy in the single market.

The second major issue discussed by the Council was climate change, and it is essential that we achieve our ambitions of a comprehensive post-2012 agreement to reduce greenhouse gas emissions and of Europe leading the world in a low-carbon economy.

In December, the united European front at the climate change negotiations in Bali played an important part in the historic breakthrough that agreed the need to make large cuts in emissions and achieve a new climate deal within two years. Only a common European approach—a Europe with Britain not at the margins but at the centre, leading the world—can ensure a global low-carbon economy founded on our proposal of a global carbon market.

Building on this commitment, the Council agreed an ambitious schedule for adopting a package of measures to cut emissions by 20 per cent. by 2020 or by 30 per cent. as part of an international agreement. The Council also agreed with the UK on the need for an effective EU emissions trading scheme to provide the incentives to drive carbon reductions in the most cost-effective way and for a cap on emissions set centrally, with a clear emissions reductions trajectory to give investors the predictability that they now need.

The Council also considered a report from the EU high representative on the security implications of climate change and, at our request, agreed to submit recommendations on follow-up action—including intensifying co-operation with countries outside Europe—by the end of the year.

Meeting the EU’s climate change targets requires not just action to reduce carbon emissions from energy suppliers and industry, but incentives to change individual behaviour. The Council will now invite the Commission, in bringing forward its legislative proposals on VAT rates, due in the summer, and working with member states, to examine areas where economic instruments, including VAT rates, can play a role in increasing the use of energy-efficient goods and energy-saving materials, from, as the UK has proposed, insulation and household materials to energy-efficient electrical goods, where VAT is cut.

The Council also agreed on the importance of achieving a fully functioning and joined-up internal energy market, as an essential condition for the secure, sustainable and competitive supply of energy across Europe. We also committed to an energy agreement by June this year. It is clear that energy security is strengthened by a policy that takes a collective approach to third-country producers, notably Russia.

Europe can also play a part in ensuring stability beyond its borders. The Council agreed to build on existing co-operation to establish a “Union for the Mediterranean”, to promote security and stability in the wider region and to provide a framework for co-operation between the EU27 and other Mediterranean coastal states on political and security issues, as well as economic, social and cultural affairs. That new union will be launched during the French presidency in July this year.

We also agreed that international development issues and the achievement of the millennium development goals, as well as Europe’s continuing leadership as the biggest contributor of aid in the world, will be the subject of a major discussion at the European Council in June.

The outcome of the Council and the preparations that are being made for June affirm the conclusions of the debate that we have had in the House over the past nine weeks: they demonstrate that, with the completion of the Lisbon treaty, we now have an opportunity to move beyond institutional issues to create a more outward-looking, flexible and global Europe, and to address the challenges that matter most to the citizens of Europe.

With three quarters of a million businesses, 3.5 million jobs and 60 per cent. of British trade dependent on our relationship with Europe, we should do nothing to put the stability of that relationship at risk. It is only by working constructively and remaining fully engaged with our European partners that we properly address the challenges ahead.

As we prepare for the European Council in June and the French presidency later this year, our aim is that European countries working together can lead the way on climate change, on security, on international development and on the response to global financial turbulence. I will be discussing with President Sarkozy when he visits Britain next week how we can take all these challenges forward during the French presidency. I commend this statement to the House.

I welcome the focus of this Council: global competitiveness, global poverty and global climate change. This is the right agenda. On climate change, the first thing that Governments should do is get their own house in order. The draft communiqué included specific targets to reduce energy use in Government buildings, offices and cars. Will the Prime Minister explain why those specific targets were removed from the final text agreed at the weekend? Looking at our own record here in the UK, does the Prime Minister accept that 14 Government Departments are less energy-efficient than they were eight years ago, and that 15 Government Departments have actually increased their carbon emissions during that time—[Interruption.] He asks what this has got to do with Europe. I think we should be leading by example. In a similar context, will he confirm that, despite the fine words in the Budget about plastic bags, the Government have bought 1.2 million Whitehall-branded single-use plastic bags in the past two years?

The Prime Minister is right to say that the success of the emissions trading scheme is vital. Will he acknowledge, however, that the Lisbon treaty is completely irrelevant to making that happen? There are six words on climate change in the treaty and, as the House of Lords Committee pointed out last week, they have no legal significance. Is it not the case that we do not need a new constitution or a new treaty to deal with climate change at EU level?

Everyone will welcome the Prime Minister’s intention to use indirect taxes, including VAT, as incentives for green behaviour. That is something that we have put forward in our own quality of life policy group report. The Commission said that it had doubts about whether the proposal was workable. One EU diplomat said that the agreed wording was

“a polite way of saying no”,


“a way of saving face”.

In regard to the outcome that we all want, is the Prime Minister sure that he is right and that that EU diplomat was wrong?

On the economy, Ministers discussed the recent turbulence in the financial markets. Clearly, proper co-ordination by central banks is going to be essential. Will the Prime Minister guarantee that his approach of putting the Financial Services Authority, rather than the Bank of England, in the lead to rescue British banks in distress will not make the process more difficult?

The final communiqué from Brussels warns Governments across Europe about the dangers of high deficits. Will the Prime Minister confirm that Spain’s budget is in balance, and that Germany, the Netherlands, Denmark and Sweden all have budget surpluses, while Britain has the largest budget deficit in western Europe? Does he now regret the fact that we are the one country that failed to prepare for the downturn by putting money aside in the good years?

The other main issue for Europe to focus on is global poverty and the urgent need to make rapid progress on the Doha round. Will the Prime Minister tell us why the EU seems to be showing so little urgency in getting the deal moving again? The commissioner in charge of those negotiations is Peter Mandelson. Whatever any of us may think of him, I have always had very helpful briefing from him on trade and, I have to say, on other issues, too—[Laughter.] The Leader of the House should not laugh; she might put herself in jeopardy. What matters is that there should be a clear decision on whether he is going to serve another term. It cannot be in anyone’s interests for the commissioner’s future to be the subject of endless speculation. Will the Prime Minister tell us today whether Peter Mandelson is going to go on doing his job, or whether that decision is to be the subject of further dithering?

While Ministers were in Brussels, there was violence—[Interruption.] Look, I thought the boot boy had been told to calm down. I read in a Sunday newspaper that he was actually the soon-to-get-the-boot boy. Soon, he might have to go and sit in another part of the House. I see that the Prime Minister is laughing. I think your career—you will be on the same conveyor belt as the Leader of the House.

While Ministers were meeting in Brussels, there was violence on the streets of Tibet. An EU statement on Tibet has been issued today, which I am sure the whole House will welcome. Britain rightly works closely with China and we very much welcome the way it has opened up its economy, but is it not vital that the Chinese Government understand that with the greater role they play in the world comes greater responsibility? Does the Prime Minister agree that the strong relationship we all want with China requires us to be candid and frank, even on issues where we disagree?

I will deal with each point, but is it not remarkable when 3.5 million jobs are dependent on our membership of the European Union and when European co-operation on the environment was crucial to what happened at Bali that the right hon. Gentleman can say so little about the advantages of co-operation in Europe, and that he should spend his time attacking the European Union rather than seeing the benefits in it?

The right hon. Gentleman says that the environment is nothing to do with the European reform treaty, but it is the first time we have set down as a strategic objective that the environment is an important issue and it is there in the treaty. All the other parties in Europe believe it is important that the environment be at the centre of Europe’s work and if I may say so, if we are to lead the world on the environment, we will need to co-operate with our European partners.

The right hon. Gentleman also raised the question of how we as a country are cutting emissions. We are one of the few countries meeting our Kyoto targets and we will continue to do so. One of the reasons why we are meeting them is that we implemented early on in our Government the climate change levy, which the Conservatives continue to oppose.

I find it very strange for the right hon. Gentleman to be raising issues that compare us with the rest of Europe in terms of economic progress. We have lower inflation than the rest of Europe and we have a history of stability and growth. He will find, during the course of this year, that the American deficit will be higher than the British one because people are taking the right action to deal with the global financial turbulence. I am sorry that the right hon. Gentleman has so little to say in support of the action that the European Union and, indeed, all international authorities are taking on the economic issues confronting them. If the Conservatives want to be a serious party, perhaps they could actually address the serious issues of economic progress.

As far as the issues about Tibet are concerned, the right hon. Gentleman is absolutely right that, although it was not discussed at the European Council, all of us are concerned about what is happening there. We have made our views known to the Chinese authority: we believe that there should be restraint and an end to violence; and we believe that there should be a dialogue between the different authorities, which should happen soon. It is very important to recognise that at this time the whole world is looking to China to see what the reaction will be.

The right hon. Gentleman also raised the issue of trade and may I say that we, too, have been pushing the rest of the world because we believe it important to use this window of opportunity to get a trade deal? That is why we are working as we are with the European Trade Commissioner and why it is essential to move other countries forward to see if we can get a deal.

One of the people who was at the European Council during the course of the weekend was the Czech Prime Minister. Until recently, he was the Conservative party’s only supporter in Europe. What he is saying now, however, is that failure to support the reform treaty will leave the Czechoslovakian people isolated in Europe. That is exactly what would happen to this country if we ever listened to Conservative advice.

I am grateful to the Prime Minister for his statement. As European summits go, the conclusions were workmanlike; largely welcome, but fairly unremarkable. I wonder whether that is in part because of the issues that were omitted. Notwithstanding the Prime Minister’s words about Tibet today, will he explain why there was no discussion among EU Heads of State last week on Tibet? Does he not think that it is precisely the actions of the Chinese authorities in Tibet that should be the subject of discussion between European leaders?

I know that the Prime Minister is extraordinarily reluctant to do anything, it seems, to annoy the authorities in Beijing, but will he none the less confirm today that he will follow the lead of President George Bush and of Chancellor Angela Merkel and meet the Dalai Lama on his forthcoming visit to London to express solidarity with the Tibetan people? [Interruption.] As the Prime Minister knows, I have written to him about that on two occasions and still not had a clear answer—[Interruption.]

I congratulate the Prime Minister on inserting, at the last minute, a reference in the conclusions to his laudable aim of reducing VAT rates on environmentally friendly goods, but why did he apparently go about that in such a bizarre fashion? Why did he spring it on his colleagues—if reports are to be believed—at the last minute through a letter with President Sarkozy? Is that really the best way to show leadership and do business in the EU? My worry is that the manner in which the proposal was spun in the press had as much to do with obscuring the Government’s woeful record on the environment, compared with that of other EU countries.

We are now 25th—25th—out of the 27 EU member states on the use of renewables, and more than 25 per cent. of our carbon emissions come from our housing stock, compared with 5 per cent. in Sweden, which is a much colder country. We have a recycling rate well behind that of France, Germany, Spain and other countries. The go-ahead is being given to Kingsnorth power station—the first in a new generation of coal-fired power stations—without any effort being made to use carbon capture technology, and the go-ahead is being given to a third runway at Heathrow. The list goes on.

Does the Prime Minister not accept that he can make all the noise he wants about his VAT proposal, but our green credentials in the EU will never be strong unless real action is taken across a much broader range of issues? For instance, will he commit today to giving support to a new draft directive on the geological storage of carbon, which is being drafted in the European Parliament and which would oblige all member states to accelerate the use of carbon capture technology at all the coal-burning power stations?

I strongly agree with the Prime Minister that there is a pressing need to move towards a fully integrated and competitive energy market in the single market. In particular, the EU needs the powers to take action against monopoly energy providers in markets such as France and Germany. Does he agree that the new Lisbon treaty would give the EU precisely those powers further to liberalise the EU energy market, and that that is just another example of the benefits that the treaty would bring the British economy, which the Conservative party is so keen to deny the British people?

I warmly welcome the Prime Minister’s remarks about co-ordinated action at European level to ensure stability and greater transparency in the financial markets. The reverberations around the global markets today, caused by the news that the US investment bank Bear Stearns is to be taken over at just 2 per cent. of its share value compared with 12 months ago, show how timely the EU’s Council statements are.

It is critical, at a time when liquidity remains so tight for the world’s banks, that steps are now taken to ensure that this does not create an environment where credit is being withdrawn for millions of ordinary people. That is why we must also now pioneer reforms to the system of lending to ensure that we do not find ourselves in a similar position in years to come.

Does the Prime Minister agree that while it is critical that the capital requirements directive be reviewed if we are to prevent a further boom-and-bust cycle in the credit markets, we must be prepared to use levers to control supply as well as demand for credit?

I am grateful to the right hon. Gentleman. First, may I correct him on VAT? I first raised the issue months ago with our European colleagues; I have been following it up ever since. I am grateful that we now have an agreement to look in detail at whether VAT reductions on matters such as household materials and electrical goods can be beneficial both in encouraging people to use energy-efficient products and in stimulating a market where Europe can benefit in the future. So, he is wrong to say that this was raised only on the day of the Council. We have been pressing our European colleagues on the matter for some time.

I agree with the right hon. Gentleman on the importance that we attach to environmental issues. Again, I have to correct him. Carbon capture and storage is something that we have been pushing right across the EU. There will be 12 demonstration plants, and one of them, we believe, will be in the UK, but we want the European Commission to make it possible for there to be greater incentives so that people will develop carbon capture and storage at a quicker rate.

The right hon. Gentleman is right about energy liberalisation and the importance that we attach to it in the EU. That is one of the reasons why qualified majority voting in energy matters will be beneficial, opening up markets and the creating of jobs, although it was opposed by the Conservative party.

I disagree with the right hon. Gentleman about Britain’s record in relation to other countries. I repeat that we are one of the few countries in the world that is meeting its Kyoto targets, and we will continue to do so.

On the economy, I hope that the right hon. Gentleman will agree that Europe is leading the way on calling for a proper international response. We had a meeting with Chancellor Merkel, President Sarkozy, Mr. Prodi and the President of the European Commission a few weeks ago. We have now put forward proposals in detail. The Chancellor is writing to all members of the IMF, the G7 and the Financial Stability Forum to push these forward. Our proposals are in harmony with those that have just been put forward by the US Treasury Secretary. To ensure confidence in financial markets, we believe that it is important that those proposals are adopted.

Finally, I agree with the right hon. Gentleman when he says that action to express our views on Tibet is important. People around the world are expressing concern. We have made our views known, and there will be an EU statement later today. There is a demand for restraint on the part of the Chinese authorities. These are the most important matters now. We will make other announcements and decisions in due course.

The Prime Minister has stressed the importance of ensuring stability beyond the borders of Europe. Were there any discussions about Burma because, obviously, the UN envoy, Mr. Gambari, has failed in his mission to bring about stability and progress there? If the Prime Minister had no opportunity for discussions on this occasion, will he use the meeting with Mr. Sarkozy later in the week to discuss that matter?

My right hon. Friend is right that Burma is an issue on which we have common cause with many people in the rest of Europe and, indeed, in the rest of the world. Mr. Gambari has just finished his visits to Burma. It is important that we recognise that the Burmese regime’s proposals for a referendum and elections that would exclude Aung San Suu Kyi are totally unacceptable. She should be released from house arrest immediately. Democratic elections should happen, and there should be reconciliation to bring the forces in the country together. I will continue to press that cause with my European colleagues.

Why did the Prime Minister not answer the question about the future of Peter Mandelson as our European Commissioner? Surely he should be putting his right hon. Friend the Member for Leicester, West (Ms Hewitt) out of her misery.

Does my right hon. Friend accept that it was important that he achieved success on getting the Council to consider a reduction in VAT on insulation materials? Will he go further and press the Heads of Government in Europe not only to achieve the target of a 60 per cent. reduction in CO2 emissions by 2050, but to go beyond that towards 80 per cent.?

My hon. Friend is absolutely right that the whole of Europe should consider whether a more ambitious target than a 60 per cent. reduction by 2050 is not only necessary, but desirable and something that we should work for as part of the Bali negotiations that will be held in Copenhagen a year from now. I agree that it is important that we look at that, which is why we are asking our own Committee on Climate Change to report on it. I believe that other countries are ready to follow suit and that a common European policy is possible on this, as on other matters. May I say that it is no good for Conservative Members to call for environmental co-operation in Europe if they are about to renegotiate the whole of the treaty in Europe?

While we are on the subject of European co-operation, did the Prime Minister ask the other 26 Heads of Government at the European Council why none of them is prepared to send fighting troops to support our Army in the Helmand province of Afghanistan?

There are 43 countries involved in Afghanistan. Different countries are making different contributions in different ways. This will be a matter for discussion at the NATO summit in Bucharest, where other countries will be asked to share the burden in Afghanistan in terms of both equipment and troops. The specific location of troops will be a matter for discussion among the different partners in the coalition and we will reach agreement in due course. People ought to remember that, contrary to what was said at the time, 40 countries and more have joined the coalition on Afghanistan because they know that Afghanistan is the front line against the Taliban.

I welcome the Prime Minister’s statement and refer him to paragraph 5 of the conclusions, in which member states are invited to strengthen the involvement of stakeholders in the Lisbon process. Will he tell the House how he intends to make sure that that happens, and that we will stick to the benchmarks that were originally suggested by the Lisbon process?

A range of discussions is taking place with all the social partners on all the issues related to Lisbon, and I know that industrialists and business groups have been called in to consider what the next stage of the Lisbon process might involve. I believe that we should now also consider the post-Lisbon process, so that we can think about how universities and skills can be part of the agenda for the future. A better competition policy may be part of the agenda as well. On all those matters, we will consult and work with not only all 26 of our colleagues in Europe but the various stakeholders who are concerned about the way in which the European economy develops.

I agree with the Prime Minister that it makes absolute sense for this country to be fully involved with Europe on environmental policy, and for Europe to be the most important mediator in the presentation of a greener agenda. The EU can achieve much more than any nation state can achieve on its own. Will the Prime Minister emphasise that such an approach would be gravely undermined if this country were to adopt the sheer folly of a process leading to a policy of effective disengagement at European level?

May I draw attention particularly to the Prime Minister’s comment about the strengthening of energy security through a policy that takes a collective approach to third-country producers, notably Russia? Will he flesh out the discussions that took place a few days ago on that specific issue, which is a cause of growing concern throughout Europe?

There was a discussion about energy security and relationships with Russia, which is indeed a serious matter. Although it should not prevent us from trying to secure a partnership agreement with Russia, we should be absolutely clear about where our strategic interests lie, and there is merit in Europe coming together to present a united front in this regard.

The right hon. Gentleman is also right to say that we would be in danger of not being able to make progress on the environment or on other issues if we were again to become isolated in Europe. I repeat that not one other country proposes a referendum on the European Union treaty—[Hon. Members: “Ireland!”]—apart from Ireland, and not one Government of the 27 opposes the treaty, while this Conservative party in this House opposes it. I understand that the only parties that support the Conservative position on the referendum are the Dutch Party for the Animals, the French Hunting, Fishing, Nature, Tradition party, Sinn Fein, and a variety of Trotskyists. Moreover, the Prime Minister of the Czech Republic—I repeat, the Czech Republic—made it absolutely clear not only that he would be isolated in Europe if he opposed the treaty, but that he was totally against the Conservative position on a referendum. In other words, the Conservatives have no allies in Europe.

The Prime Minister rightly referred to the need to co-ordinate energy security across Europe, but, if the climate change scientists are right, it seems likely that in the next few years lack of access to drinking water in north Africa will lead to dramatic changes in patterns of migration into Europe. In the past, that danger has tended to interest only the Mediterranean members of the European Union. Does the Prime Minister agree that it is now vital that the whole European Union take it seriously?

It is true that problems in Africa, whether they involve water shortages, lack of economic development, poverty, disease or migration, can directly affect the whole of Europe. That is why it is important that we have strong relationships with the African Union, and why the proposed union of the Mediterranean—which will involve 27 countries in Europe as well as Mediterranean countries bordering Europe—is such an important development. One of the issues that will be discussed is what help we can give African countries to develop not just their water supply but their infrastructure, so that they can trade with the rest of Europe.

The whole House will welcome the target of a 20 per cent. reduction in emissions by 2020, but which figure will the Prime Minister use in referring to the United Kingdom’s contribution? Will he use the figure that is often quoted to the United Nations, or the figure in the report published today by the National Audit Office, which is some 12 per cent. higher?

It is predicted that greenhouse gas emissions in 2010 will be 23.6 per cent. lower than they were in 1990. The goal is to reduce carbon dioxide emissions to 20 per cent. below 1990 levels as well, and that is obviously part of the Government’s objective. We are now considering the targets for 2020 and 2050.

One of the great advantages of our membership of the European Union is the opportunity it provides to young people to work, study and travel freely across the EU. In the context of the post-Lisbon agenda, the review of human capital and skills and the role of universities, will my right hon. Friend look particularly carefully at the difficulties that we have in encouraging our young people to take advantage of the financial assistance schemes that are available to enable them to study abroad? British young people seem more reluctant to study abroad than young people in similar EU countries. Will he look at that carefully?

The Minister for Europe is here, and he draws my attention to the Erasmus scheme and other schemes that make it possible for people to study in the rest of Europe. We will certainly look at that matter. Co-operation between universities—and, indeed, between all institutions of education—will be very important. We must do everything in our power to deepen those collaborations.

When he was Chancellor of the Exchequer, the Prime Minister was critical of EU structural funding and the waste of that funding and of industrial expenditure. He said that

“there is no better place to start than by bringing regional policy back to Britain”.

If that is still his view, what progress has he made in persuading other member states of that?

I am grateful to the right hon. Gentleman for raising that matter, because we have made reforms in European Union expenditure. That means that more of the resources are going to the poorest countries, which was the objective of the proposals that I put forward. I wanted more resources to go to the poorest countries in the rest of Europe and I wanted member states such as us to be able to carry out our own regional policy. That is why we have advocated changes in the state aid rules, and why, for example, on venture capital, we have made progress exactly in that area.

I welcome the decisions in the European Council about financial market transparency and today’s boost to the liquidity of financial institutions by the Bank of England, but given that irresponsible lending by those institutions has created real risks for home owners, will the Prime Minister initiate discussions about how to keep people on the home ownership ladder? We have many excellent schemes to get people on the first rung, but existing home owners are at risk of losing their homes because of bad lending. What can he do to help them?

One of the announcements that I made during the statement was that the Government are creating a new group to look at mortgage markets, and that will cover some of the questions that my hon. Friend raises. I agree that it is important at these times that we do everything we can to help those who are finding it difficult to pay their mortgages. However, she will note that the rate of people losing their homes and the rate of people who are in arrears on their mortgages are substantially lower than they were in the last world downturn in the early 1990s, when we had more home repossessions than at any time in our history.

As a director of the Great Britain-China Centre, a body partly funded by the Foreign Office, I was pleased to note in the Prime Minister's statement that he discussed a comprehensive strategy to strengthen the EU’s economic relations with China, but I found his response to my right hon. Friend the Member for Witney (Mr. Cameron) about the influence that the EU should have on China in relation to Tibet somewhat thin. Will the Prime Minister provide us with some practical examples of what his Government will do in the next few days in that regard?

We have made our views known. While there was a discussion among Foreign Ministers about Tibet, it was not at the full European Council. Information was very sketchy on Thursday and Friday about what was happening in Tibet. It is only recently that we have become more aware of the problems that have arisen there. We have made our views known to the Chinese authorities. The Foreign Secretary is in touch with the Foreign Minister of China. We are calling for restraint and we believe that the way forward is a dialogue between the different parties. The hon. and learned Gentleman may know that we have been part of a human rights dialogue with China whereby there were visits to Tibet recently to look at conditions there, so we keep everything in that area under review and we are calling for restraint, for an end to violence and for dialogue between the parties involved.

May I ask the Prime Minister what was agreed at the Council to get better control of EU spending and budgets, so that we do not see a 14th successive failure to get the accounts signed off by the auditors because of major problems in each of the key spending areas?

The hon. Gentleman is right in that we have been pressing for better accountancy procedures in relation to that, but he should betray to us the true nature of his inquiry: he wants Britain out of the European Union altogether.

The very first line of the presidency conclusions from the summit are:

“The fundamentals of the European Union economy remain sound: public deficits have been more than halved since 2005 and public debt has also declined”.

As by 2005 the Prime Minister had been in charge of the economy for eight years, will he explain why in the ensuing period the United Kingdom made such a significant negative contribution to the wider EU position?

When we came to power, debt was 44 per cent. of GDP, but it is now 38 per cent.; it is billions of pounds less than it was. We should not take any lectures from the party that caused the recession of the early ’90s.

As I have said, the priority at present is to deal with the issues in Tibet and to make our representations to the Chinese Government. We will make any further announcements later.

While the Prime Minister was chatting—convivially, I am sure—with his fellow European leaders in Brussels, did any of them congratulate him on pushing the Lisbon treaty through this House, even though that did, of course, involve his breaking his solemn promise on a referendum, contrary to the wishes of the British people?

When it was a constitutional treaty, nine Governments in Europe said there should be a referendum. As it is no longer a constitutional treaty, only one Government—the Irish, who are legally obliged to do so—are having a referendum. This has been through constitutional courts in Denmark and Holland, which agreed that this is not a constitutional treaty. In fact, the first words of the Brussels declaration are that the constitutional concept has been abandoned. The Conservative party would do better to follow us in negotiating better living standards and better deals for the British people than to try to renegotiate past treaties, which is clearly what it will spend all its time doing.

Does the Prime Minister recall that when the Lisbon agenda 2000 was first launched, it promised 3 per cent. annual growth in the European Union until 2010 and that red tape would be cut? The then Prime Minister said that it

“marks a sea change in European economic thinking…away from heavy-handed intervention and regulation”.—[Official Report, 27 March 2000; Vol. 347, c. 21.]

However, the European Commission itself now accepts that even though the single market increases European GDP by €225 billion, the burden of European regulation is €600 billion. Is that why the Lisbon agenda has to be relaunched time and again with the words:

“Launching the new cycle of the renewed Lisbon strategy”?

l We have been making proposals to cut red tape in Europe during our presidency and in recent presidencies. The hon. Gentleman misunderstands the success of the Lisbon process: 10 million new jobs have been created in the EU as a result of it. He should tell us the true nature of his inquiry about Europe. He wants a referendum to oppose the amending treaty. He wants that even if it is ratified. He would force renegotiation of our membership of the EU. No country in Europe supports that, and he would be totally isolated.

The promise of a discussion of the millennium development goals at the June Council sounds somewhat weak. Will the Prime Minister undertake that between now and June, UKREP—the United Kingdom Representative Office—and No. 10 will work with colleagues elsewhere in the EU to try to ensure that at the June Council meeting a process is put in place to implement the MDGs by 2015 and that there is not just further discussion, but that some decisions are made about a process to implement them by then?

I am grateful for that question from the hon. Gentleman, who used to be the Chairman of the International Development Committee. We have called a conference with business leaders and others in May to look at how we can make progress on the MDGs and get a wider coalition of business, voluntary groups, foundations, charities and faith groups, as well as Governments, to pursue them. In June, this matter will be discussed in detail at the European Council as a report is being prepared already by Mr. Barroso, President of the Commission, about the progress that has been made and the progress that has still to be made. That will lead through to September, when there will be a special session of the UN—called by the Secretary-General—to look at what we must do next to achieve the MDGs. All Members should recognise that Europe leads the world: it is the biggest contributor to aid. It has done more than any other continent, but we want to do still more in the future. It is only possible for us to work successfully if we continue to work together. That demands a high level of co-operation in Europe, which I hope all Members will support.

The Prime Minister spoke about Russia’s important role in energy security and made particular reference to Ukraine. Russia also has a very important role to play with its allies in Serbia in connection with the future security and stability of Kosovo. Has the Prime Minister yet managed to speak to President-elect Medvedev, and when does he expect to meet him face to face to discuss the important role that Russia has to play in the future of Europe?

As far as Kosovo is concerned, the violence that is happening now is most regrettable. I hope that the withdrawal of some of the UN forces can be avoided. It is very important to recognise that the policy of supervised independence in Kosovo means that there is a role for all minorities in that country. I am pleased that a large number of countries have now recognised the new Kosovo. Serbia is guaranteed a European future if, of course, it continues to observe democratic rights, which it is doing. I understand its frustrations about what has happened in Kosovo, but it is important that it recognises its responsibilities to the rest of Europe.

The hon. Gentleman knows perfectly well the difficulties in our relationship with Russia that have arisen from what happened in London, where we had an assassination, and, at the same time, as a result of the treatment of the British Council, but we want good relations with Russia. We support a partnership agreement between the European Union and Russia, and we will continue to pursue these objectives.

Following the question from my hon. Friend the Member for Wellingborough (Mr. Bone), does the Prime Minister have any plans, separate from those of the EU, to meet the Dalai Lama?

I have made it clear that we are concerned about recent events in Tibet; we have made our view known. We have called for restraint. We believe that there should be a dialogue between the parties. That is the most important thing at the moment, and any further announcements or any further decisions can come later.

Given that the Prime Minister seems reluctant to meet the Dalai Lama, will he confirm that he will at least have the courtesy to have a conversation on the telephone with him?

I have made my views known. I repeat: this was not discussed at the European Council. A statement is being made by European Union Foreign Ministers this afternoon, and I believe that that will show the unity of Europe in expressing concern about the situation.

Following the Prime Minister’s reference to Czechoslovakia—that far-away place of which he obviously knows little—do we now have evidence that he has been receiving foreign affairs briefing from the President of the United States?

I talk regularly to all my colleagues in Europe, and I made it absolutely clear when I was talking about the Czech Forum that I was talking about the Czech Republic.