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European Council

Volume 512: debated on Monday 21 June 2010

I am sure that the whole House will join me in paying tribute to Trooper Ashley Smith from the Royal Dragoon Guards, who was killed in Afghanistan last week. He died serving our country, and our thoughts are with his family and friends. We have also heard news this morning that a member of 40 Commando Royal Marines has died from his injuries. He is the 300th member of the British armed forces to lose his life as a result of the conflict in Afghanistan.

When such a tragic milestone is reached, we should re-emphasise our support for our armed forces and for all that they do. Inevitably, some will use this moment to question our mission and our purpose there. We are paying a high price, but let me be clear: we are in Afghanistan because the Afghans are not yet capable of securing their own country from terrorists. It is for our own national security that we help them. When they can do it alone, we will leave. In the meantime, we must give our armed forces everything they need to get the job done, and that includes our unequivocal support right across the country.

With permission, I should like to make a statement on last Thursday’s European Council. It was rightly focused on securing the economic recovery, and it was unanimous that this required early action on budget deficits. The Council also dealt with Europe’s growth strategy, the need to sort out the problems in the eurozone and our approach to the G20. It also delivered important progress on Iran. I would like to take each point in turn.

On deficits, the conclusions from the Council could not be clearer. Delaying action would entail “major risks”, and the Council called on member states to meet budgetary targets “without delay”. Since the last European Council, the problems in Greece and the scale of the sovereign debt crisis have become apparent to almost everyone. That is why there is such unanimity across the EU for early action. It is also why President Barroso paid tribute to the efforts the UK Government, saying:

“Consolidation is necessary for confidence and without confidence there will be no growth.”

On growth, the Council agreed a new strategy called Europe 2020. This follows on from the Lisbon agenda, the aim of which was to make Europe the most competitive market in the world. The document has some worthwhile objectives, including raising the level of research and development and improving education. This should not interfere with national competencies, so I secured explicit agreement that the new strategy must be

“fully in line with the relevant Treaty provisions and EU rules and shall not alter Member States’ competences”.

We should be clear that all the strategies in the world cannot conceal the fact that EU countries all need to get to grips with the real problems that harm our competitiveness—not by endlessly setting targets, but by taking action. This includes action on the extent of our debts, on the affordability of our pensions and on the scale of our welfare dependency. Europe has never lacked strategies, but European countries have frequently failed to deliver them.

We will also continue to press for the real stimulus that European economies need—that is, more trade, more international investment and more action to break down the barriers to business. This means pushing for agreement on Doha, reforming and completing the single market and making the process of trade easier. Even without Doha, there is a huge amount that countries across the world can do to facilitate trade. I want Britain to be one of the driving forces in helping to bring this about.

Next is the eurozone. Britain is not in the euro, and, let me be clear: we are not going to join the euro—[Hon. Members: “Hear, hear.”]—but a strong and successful eurozone is vital for the British national interest. Already, about half our exports go to the EU, four fifths of them to the eurozone. As this House is aware, however, with the situation in Greece and the need for a support package from the other eurozone members, there is no doubt that the eurozone as a whole faces real challenges. So I was generally supportive of the Council’s efforts to strengthen the eurozone governance arrangements, but I was equally determined to ensure our national interests are protected.

On budget surveillance, let me be clear: the UK Budget will be shown to this House first and not to the Commission. Of course, we will share projections and forecasts, just as we do with the International Monetary Fund and other international bodies: so, co-ordination and consultation, yes; clearance, no, never.

On sanctions, for those who breach their economic obligations, the Council agreed that

“Member States’ respective obligations under the Treaties will be fully respected”.

Because of this, and because of the special opt-out negotiated by the last Conservative Government, sanctions cannot be applied to the UK under the current framework.

Sorting out the eurozone and adding to its governance arrangements is clearly vital for Europe. There may well be significant changes coming down the track. Whether they require treaty changes or not, our position will be the same: we will back measures that will help sort out the eurozone; we will not back measures that pass power from the UK to Brussels. As we are not members of the euro, we will not back measures that draw Britain further into financial support for the euro area.

On the G20, the EU Council discussed our priorities for the upcoming meeting. As well as taking action on the deficit, the Council also agreed about the importance of reforming the financial system. It is vital that the meeting in Canada back the right action on reserves and on capital.

On the issue of a banking levy, the European conclusions were helpful. We wanted the Council to endorse the idea of countries introducing a levy on financial institutions to ensure they make a contribution to rebuilding public finances. We did not want the Council to mandate a particular form of levy or how the money raised should be used. I am pleased to say the Council conclusions reflect that approach.

On Iran, we argued that it is time for action, not just words. The Council conclusion refers to measures, including restrictions on trade, banking, transport and the oil and gas industry. Final agreement will be reached at the Foreign Ministers’ meeting.

The Council also reached important conclusions on Iceland’s application to join the EU. This country should be a good friend to Iceland and a strong supporter of continued EU enlargement. But Iceland does owe the UK £2.3 billion in respect of the compensation paid by the Government to UK investors, following the collapse of its banking sector. We will use the application process to make sure that Iceland meets its obligations, because we want that money back.

Finally, it is important that even in difficult times we support people in the poorest countries who suffer from the most severe poverty. The European Council reaffirmed its commitment to achieving development aid targets by 2015 and, supported by the UK, to review that annually.

The Council delivered good outcomes for Britain. Our citizens do not want new structures to talk about things, but a new resolve to do things, such as getting a grip of our massive budget deficit, developing the single market and building the conditions for strong, sustainable and balanced growth. That is what the Council was all about. I commend the statement to the House.

May I join the Prime Minister in paying tribute to the two soldiers who have lost their lives: Trooper Ashley Smith from the Royal Dragoon Guards; and a Royal Marine from 40 Commando Royal Marines. As the Prime Minister has said, 300 members of our forces have now given their lives in Afghanistan in the service of our country. We pay tribute to their bravery and honour their sacrifice, and our thoughts are with their families. I strongly agree with the Prime Minister about the cause for which our soldiers are fighting in Afghanistan: they are fighting there to keep our streets safe here. That is why the Opposition join the Government in support of our troops and their mission. As we approach Armed Forces day, let us remember all our servicemen and women, whether they are stationed abroad or at home. Their skill and courage are unsurpassed.

I thank the Prime Minister for his statement. First, may I endorse his support for the summit’s declaration on Iran, which again shows that on issues of international concern, we who are EU member states have a bigger impact when we combine our efforts? Does he agree that while the threat of a nuclear-armed Iran remains a matter of the utmost concern, the international community is now more united than ever before in searching for a peaceful solution, and that the active EU diplomacy we have seen in recent years has played an important part in that? Will he tell us whether there is a timetable for further EU action on Iran? Will he confirm the importance not only of sanctions and diplomatic pressure, but of international engagement with the people of Iran? Will he therefore give an undertaking that the BBC Farsi service will be protected from any threats to the budget of the BBC World Service?

Secondly, may I also welcome the EU summit’s strong commitment to meeting the millennium development goals by 2015 and the Prime Minister’s endorsement of that? The terrible crisis of drought, food shortages and starvation in Niger is a vivid reason why we must have international action on development. Will he not be a stronger voice in the EU, for the whole of the EU to make development a priority, if his Government continue to prioritise development? Following the Labour Government’s commitment, the European Commission recommended that all EU member states should consider legislating to enshrine the 0.7% aid target, which the Labour Government established. Will the Prime Minister take forward in this Session of Parliament the Bill that we introduced to make that target legally binding?

Is it not the case that we can only be effective in Europe if what we say and do there is matched by what we say and do at home? In that regard, may I commend the Prime Minister on his reference in his pre-summit article to what he describes as the

“shocking inequality of women in many parts of Europe”

and what he says is the “urgent need for change”? If he recognises the “shocking inequality” of women elsewhere in Europe, can he act on it here? Will he show Europe that he means at home what he says in Brussels by committing himself to implementing the Equality Act 2010 as soon as possible and to pressing on with the plan to make employers publish the gender pay gap?

What will the Prime Minister do about his Tory MEPs who clearly have not got the message at all and abstained in the vote on the millennium development goals, and who voted against measures to combat gender inequality only last week? He thinks it is “shocking”, but they seem to be all in favour of it.

The Council focused on economic growth, and I welcome the summit’s adoption of the Europe 2020 strategy for growth, which stated that

“priority should be given to growth-friendly budgetary consolidation strategies”

and that

“increasing the growth potential should be seen as paramount to ease fiscal adjustment in the long run.”

In other words, it said, “Don’t undermine growth when you’re cutting borrowing”, and, “You need growth to be able to bring borrowing down.” According to the official summit conclusions, one of its main objectives is

“to unlock the EU’s growth potential, starting with innovation and energy policies”.

We agree with that. That is what the Prime Minister signed up to in Brussels. However, he is doing something very different here at home. How does it help growth to cut business investment support, and how does it

“unlock the EU’s growth… starting with… energy”

to cancel the loan to Sheffield Forgemasters allowing it to build the next generation of nuclear power stations? Does this not mean that Europe, as well as the United Kingdom, will lose out as South Korea and Japan proceed with that work?

Let me turn to the important question of financial services. We welcome the intention to implement a new system of levies and taxes on financial institutions, and to explore an international approach. May I ask the Prime Minister to say more about the progress report on the work of the taskforce on economic governance? There is a British representative on it, and the taskforce has implications for the United Kingdom as well as for eurozone countries. Which, if any, aspects of enhanced economic governance might be applied to the United Kingdom?

This was the Prime Minister’s first European Council. He is now representing our country in Europe. So is it not time for him to have a sensible rethink about the wisdom of continuing to exclude himself from the grouping of centre-right political leaders? The European People’s party includes President Sarkozy, Chancellor Merkel, and the Prime Ministers of Sweden, Italy, Poland and many other countries; but instead of meeting them to prepare for the summit, the Prime Minister has a meeting with one Polish MEP to prepare for Britain’s contribution.

The general election is over. The right hon. Gentleman is Prime Minister now. Will he put aside his pandering to his Europhobic Back Benchers and agree with his Liberal Democrat coalition partners on this point? That is what would be in Britain’s interests.

Well, the right hon. and learned Lady is right about one thing: the general election is over.

The right hon. and learned Lady is absolutely right about Iran. We do need great unity on this issue; and Europe forging ahead together with a very strong statement about sanctions, then introducing sanctions, is right. She asked when it would be finalised. That will happen on 26 July, at the Foreign Affairs Council, and the sanctions should come into effect in October.

The right hon. and learned Lady asked about the BBC service in Farsi. I can confirm that it will continue to be funded well, because it is important. We should be looking at all the elements of soft power and how we project our influence in the world, and that is clearly one of them.

The right hon. and learned Lady mentioned the millennium development goals and the importance of prioritising development. We agree with her about that. It was on the insistence of the British, among others, that we put the annual review of development assistance into the Council conclusions, partly so that we could ensure that other countries are living up to the obligations under which they place themselves. We will continue to do that, although we are clearing up the most almighty financial mess at home. As for making it legally binding, we agree with that, and will produce plans to make it happen.

The right hon. and learned Lady spoke about consistency, and about the importance of recognising the gross inequality of women. We will set out measures for greater transparency, including transparency in pay. We are in favour of that.

The right hon. and learned Lady mentioned our MEPs at great length. I can tell her that I will be keeping a careful watch on what Labour MEPs vote for, because they do not always vote in a sensible way.

We will be having a look at them too.

The right hon. and learned Lady also spoke at great length about borrowing. She mentioned the dangers of falling behind South Korea. I have to say that if we followed her advice, I think we would be falling behind North Korea, but let me say this to her about the issue of borrowing. The Council’s conclusion could not be clearer. It said:

“We reaffirm our collective determination to ensure fiscal sustainability, including by accelerating plans for fiscal consolidation where warranted”.

Where is it more warranted than in Britain, where Labour left us with a £155 billion public sector deficit?

It is interesting that, following the sovereign debt crisis and what has happened in Greece, the Labour party is completely isolated in Europe in not believing that we need to take early action on the deficit. Every other country is having to take this sort of action, including painful action. The right hon. and learned Lady does not have to talk nonsense because she is not taking part in the Labour leadership election, so she should talk some sense and recognise that we have to get our deficit in order, we have to take action and it is the right thing to do.

The Council called on the Foreign Ministers at their next meeting to implement the United Nations sanctions against Iran. Does the Prime Minister agree that that is a big step in the twin-track strategy of combining sanctions with engagement and assistance, and does he have in mind any event or date that would trigger a definitive assessment of whether or not the twin-track strategy against Iran is actually working?

I am grateful for my hon. Friend’s question. The key is to try to get the maximum number of countries behind the most specific list of sanctions possible. I think that what we have had in recent years is a lot of talk about sanctions and a lot of commitments to sanctions. Now is the time for countries actually to come up with what they are specifically going to target in terms of bank accounts, trade finance, oil and gas works and the rest. That is what should happen. My hon. Friend asked for a specific date as to when this should be assessed; I think it is an ongoing process. What we are trying to do here is tip the balance in the mind of Iran in terms of making progressing with a nuclear weapon more expensive, in order to get it to think again. There is no one date for that; it should be continually assessed.

May I join the Prime Minister in paying tribute to the 300th member of the British armed forces who lost his life, not least because he lost it in my constituency of Birmingham, Edgbaston, where the Royal Centre for Defence Medicine and the medical facilities are located?

On the European Council meeting and the Prime Minister’s response, he was very positive about the 2020 agenda. Given that the 2010 Lisbon agenda was vacuous, useless and did not deliver anything, why does he think the 2020 agenda, which is going to build on that, will produce anything more useful?

First of all, may I agree with what the hon. Lady says about the medical facilities in her constituency? Like her, I have been to the Selly Oak hospital and what is done there is incredibly impressive, as is the fact that our returning servicemen and women have access to all the many excellent hospitals in Birmingham, so that all the specialities can be dealt with.

On the 2020 document, I did not think that I did sound that enthusiastic about it, because like the hon. Lady—I suspect we agree about this quite a lot—I am rather suspicious of these strategies, as what really needs to be done is greater action within each European Union country to deal with the problems of our lack of competitiveness. That is about welfare dependency, the scale of our pensions obligations and our uncompetitive tax rates. Sitting around and strategising is one thing, but what we really need to do is roll up our sleeves and get on with the work of making our economies more competitive; otherwise, 2020 will join Lisbon in being dreams that are unfulfilled.

Can the Prime Minister tell us whether there was any discussion at the Council about the European security and defence and policy, and in particular whether, either at the Council or later, he had any discussion with President Sarkozy about the possibility of closer defence co-operation between the United Kingdom and France? Would that not be a very good memorial to General de Gaulle?

The right hon. and learned Gentleman is absolutely right in raising this issue. It was not specifically discussed at the European Council, but I discussed it over lunch with President Sarkozy when he was here for the de Gaulle commemoration. There are some real opportunities, because when we look at the defence needs of Britain and France, we see that we both have effective armed forces, we both have a nuclear deterrent and we both have important naval forces. There is room for more collaboration and co-operation. This has fallen down in the past because we have often talked a big game, but nothing has happened. What we should do is start with some smaller projects, where we begin to collaborate and work together and show this makes sense, and then we can take the work forward. But I think this is good for both of us when we want to maintain strong defences, yet we know that we both face—if I can put it like this—issues of affordability.

The Prime Minister referred to enlargement of the European Union only in the context of Iceland, but was there any discussion about what is happening in the western Balkans in relation to membership of the EU not just for Croatia, but for the other states of former Yugoslavia?

My right hon. Friend the Foreign Secretary was in Sarajevo recently. The hon. Gentleman will find that there is great enthusiasm on the Government side of the House for further enlargement of the European Union. Obviously, Macedonia is a candidate country, and, obviously, we want Croatia—and, in time, others—to join the EU. It struck me, at my first European Council, just what a positive difference enlargement has made, particularly in relation to members from central and eastern Europe, who, on many issues, take a similar view to us and can be very useful allies. This is an agenda that we want to push forward. In terms of maintaining stability and peace in the western Balkans, anchoring those countries into the European Union is a thoroughly positive thing to do.

The Prime Minister referred to economic recovery. There are currently as many as 30 European directives in the pipeline which will deeply affect our financial regulation and economic governance, nearly all of which are by qualified majority voting and co-decision. There is also the issue of European social and employment legislation. How will my right hon. Friend—and, of course, the Chancellor tomorrow—regain and retain control over those economic issues?

My hon. Friend makes a very good and reasonable point. There are threats to our competitive position coming from the European Commission and, more particularly, from the co-decision procedure and the great strength that had been given to the European Parliament under the Lisbon treaty. It makes our work harder, I have to be frank. In relation to the de Larosière package on financial regulation, a reasonable compromise was reached, but the European Parliament has unpicked that and made it much more burdensome from the British point of view. Now, there is no alternative to having to fight back to the compromise that we left. It is not a satisfactory situation. One thing on which my hon. Friend and I agree is that the Lisbon treaty was not a step forward.

I join the Prime Minister in paying tribute to service personnel. These tributes resonate especially in my constituency, which has suffered the single biggest loss of UK service personnel aboard Nimrod XV230 in Afghanistan.

While he was in Brussels, did the Prime Minister have the opportunity to congratulate Mr Bart De Wever, the winner of last week’s Belgian general election? Does the Prime Minister join me in wishing both Flanders and Wallonia well as neighbours and partners within the European Union?

Getting involved in potential grief between Flemings and Walloons is an area that I do not want to head into, if the hon. Gentleman will forgive me.

I join my right hon. Friend in paying tribute to the fallen, and I warmly congratulate him on the judicious way in which he balanced British and European interests at the European Council. Did he have an opportunity to discuss the accession of Turkey to the European Union? Will he confirm that, not least because Turkey continues to play a very important role in world affairs, that continues to be a cardinal act of British policy?

My hon. Friend is absolutely right about supporting Turkish membership of the European Union. I think that we should back it wholeheartedly. It is very important for the future of Europe and for the future of Turkey. It was not specifically discussed at the European Council, but we should all be concerned by the signs that Turkey is beginning to look in other directions, and we should be doing all we can to anchor her into the European Union. The decision that the Turks have taken regarding Iran is depressing from that point of view, so it should continue to be our policy to support Turkish membership wholeheartedly and to try to persuade others to do the same.

On tackling the deficit in pensions obligations, did the Prime Minister discuss his review of state pensions in the UK, and can he confirm that that extends to the armed forces pensions schemes?

What I can confirm is that the former Member for Barrow and Furness, John Hutton, is going to lead this review, which is looking at pensions within the state sector. It is a very important piece of work and I am sure that its terms of reference will, in time, be placed in the House of Commons for the hon. Gentleman to look at.

Does my right hon. Friend agree that the striking unanimity on urgent deficit reduction shows how right the Government are to get on with it? May we take it from his statement that Britain’s liability towards future eurozone stability will not extend beyond the measures agreed by the former Chancellor on 9 May?

I can give that assurance. It is absolutely our view that we should not go further than the last Government, in our view, mistakenly went. Britain has advantages from staying outside the euro. I have never supported our membership of the euro and never will, because I have always believed that, once we join the euro, the pressures for single economic government get greater and greater, and that is what we are seeing within the eurozone. But it is in our interests for the countries of the eurozone to sort out their problems. We should not stand in their way, as they try to do that. Our conditions should be that we will not support something that transfers power from Britain to Brussels, and we will not support something that takes us further into financial support for the eurozone, but we should be in favour of measures to make sure that that zone works.

European investment funds have played a major part in boosting jobs and the economy in Liverpool and other parts of the north-west, with the Northwest Regional Development Agency playing a major role in ensuring that they come to the region. Was there any discussion about how that can be continued?

We did not discuss regional policy specifically. It is important that we make sure that investment continues into the regions, and the hon. Lady will know that we have announced plans for how we think we can do even better than the regional development agencies have done. I recently read out a list about some of the very wasteful amounts of spending they have been engaged in. What we want is real money going into our cities to make sure that development takes place. [Interruption.] The right hon. Member for Doncaster Central (Ms Winterton) shouts about Sheffield. I ask her to look at the shareholder structure of that organisation to see who would really benefit from that not very well thought through piece of financial engineering.

I welcome my right hon. Friend’s comments on progress on Iran, but does he agree that the future of Afghanistan is also important to all members of the European Union? Does he agree that it is time that some of our European partners did more to share in the sacrifices of blood and treasure that our forces are making there?

My hon. Friend makes an excellent point, and it is one that we should, and do, make all the time in the EU and NATO. As he knows, one of the things we should push for is the reform of NATO, so that we get a common operational fund so that countries such as Britain that are making such a big contribution do not have to pay twice. So we believe in trying to do this. We should also be clear to other countries, which perhaps feel that they cannot do more in the front line, that there is huge amount of logistic support—helicopters, transport and other support—that they can do now and that is incredibly welcome.

Did the Prime Minister show a little bit of gratitude for the decisions of the Labour party conference and people such as Labour Members who decided not to join the eurozone many years ago, showing great foresight and calling on the then Chancellor to write out the five conditions that kept us out? There must be a little part of him that is envious of that.

I do not want to sound uncharitable, but I remember that the last Conservative Government negotiated the opt-out from the single currency that gave us the ability to stay out of the single currency, and I pay tribute to my right hon. Friend the Foreign Secretary, who, in difficult circumstances, made the argument against the single currency. What I remember, when the hon. Gentleman was sitting on the Government Benches rather than on the Opposition Benches, is the then Government wasted about £30 million on preparations for joining the euro. I could have given them that advice for free: do not join it.

May I congratulate the Prime Minister on showing some leadership in Europe once more—Britain is grateful—and will he confirm to the House and the public at large that, having drawn red lines in the sand on our position in this country, he will never give them up just to further his own career after the House?

Order. I do not know what the former Minister for Europe had for breakfast, but perhaps we should be on it—or, alternatively, perhaps we should not.

I am not going to go there; neither am I applying for some European supernumerary position and all that, but it is important that we set out clearly what we want to achieve. But I say again that we are not against members of the eurozone sorting out their own affairs. We should not stand in their way. We want a strong eurozone; we just do not want Britain to be part of it in joining the single currency, and we also do not believe that we should give it further financial support. Those are the keys that we must stick to.

In this era of pan-European budget consolidation, will the Prime Minister confirm that he will insist, in the spirit engendered by the words, “We are all in this together”, that the continually rising European Commission budget benefits from considerable shrinkage in future?

Can I say first how glad I am that my hon. Friend decided to quit the European Parliament and to join us here in the Westminster Parliament, although he left the European Parliament just at the moment at which it has given itself a large dollop of extra power? I absolutely agree with him: the next European budget needs to be at worst a freeze and at best a reduction. I do not say that because of any particular ideological animus; I say it because we will be making difficult budget decisions here in the United Kingdom, and our constituents will not understand if we make budget reductions in the UK, but the European budget increases—it just will not wash.

The Prime Minister made a statement on the formal business at the European Council, but as it was his first Council meeting, would he like to share with us, in the privacy of the Chamber, how he really felt about being there, in terms of his attitude, support and work with other leaders? Did he get a feeling that those leaders understood that the vast majority of people in the United Kingdom do not want any more powers to go to Europe, and indeed want to get some powers back as soon as we can?

I think that there is a good understanding in the European Union of the British position, and an understanding that we are practical, logical, sensible people. We think that the European process of integration has gone too far and should not go further, but we also want to be constructive and positive. The hon. Lady asked for my impressions. One of the things that does strike one is that enlargement has been a success for the United Kingdom, in terms of being able to drive our national interests forward; that is helpful. The other impression is about the primacy of the economic problems that Europe faces. It is a really difficult situation that some European countries face, and grappling with that, with the future of the euro and the eurozone, and with how it will work, will consume an enormous amount of attention in Europe. I thought that there was a general approach—positive, from our point of view—that the organisation should now be about action, substance and political will, rather than endless treaties, processes and institutions. If that could be the case for the coming few years, I, for one, would be very grateful.

After the Prime Minister’s constructive discussions with European leaders, and the European Commission President’s emphasis on fiscal consolidation and structural reform, is he feeling isolated in Europe, as Labour Members suggested he would?

Absolutely the opposite. What is interesting is that, since what has happened in Greece and the problems of sovereign debt, European Union members are pretty much unanimous that one has to take action on budget deficits, and one has to do it now. The risk is falling confidence; that people will not lend us money; and going the same way as Greece. The one group of people who now seem to be completely outside that consensus are those in the British Labour party. They, for reasons of political advantage—or pretend political advantage—are the last people who think that one does not need to deal with the budget deficit. That is very short-sighted and very wrong, and I think that they will come to regret it.

If the Prime Minister is telling us that there is widespread agreement across Europe that deficits need to be cut, can he tell us exactly what progress was made in getting his European partners to agree that the money with which we subsidise the European Union will be cut? I am talking about not just the costs of the bureaucracy, but the subsidy that we give every year to the EU.

I know that the hon. Gentleman takes quite a robust view on this, but I have to say that, from where I stand, the previous Government gave away £7 billion of the British rebate and got nothing in return, in terms of a proper review of the common agricultural policy. As I said, when it comes to financial perspectives for the EU, we have to constrain the spending of the organisation, particularly as we will be constraining the spending of pretty much everything else.

Could the Prime Minister tell the House how he was received in Europe now that we have a British bulldog representing the interests of Britain, instead of the former Prime Minister, who was like a French poodle?

Perhaps when it is a person’s first European Council, they give them a slightly softer ride. If Britain states our positions clearly, and if we work hard, particularly with allies in France and Germany, to put forward our positions and why they matter so much to us, we can meet with success, but we should have a positive agenda. As well as protecting our competences and keeping ourselves out of the single currency, we should have a positive agenda about trade, Doha and completing the single market, because all our economies need the stimulus that trade and investment can bring. There is no money left in the European kitties; one can see that by looking at the other leaders sitting around the table, and at how they are feeling, given their own budget deficits. So the best stimulus that we can have is free trade, Doha and completing the single market.

As a matter of record, will the Prime Minister say that, at the European Council, there was absolutely no discussion whatsoever of the risks to economic growth from cumulative or excessive spending cuts across Europe, or was he just not listening to those bits?

I was focused and listening to every minute of the discussions. We want to get it right in dealing with deficits and encouraging growth, but the conclusions make it clear that those countries with really bad deficit problems have to take action. When one sits at the table and looks at the problems in Greece, and at the difficulties in Spain, one asks oneself who has the biggest budget deficit, and the answer is Britain, because we were left it by the Labour party.

The right hon. and learned Member for Camberwell and Peckham (Ms Harman) accused the Prime Minister of pandering. Does the Prime Minister agree that the only people who are behaving like pandas, which have notoriously bad vision, are the Opposition, who have signed away so much over the past 13 years?

My hon. Friend is right. Over the past 13 years, we have had a succession of treaty changes, whether Nice, Amsterdam or Lisbon, but we have not had the action that we needed to complete the single market to make the differences that would help our economy. We should aim for fewer institutional changes—not more treaties—and getting things done in Europe that will benefit the British economy.

Understandably, much of the discussion focused on economics and the financial situation, but may I ask whether, in his discussions with Iceland, and in future discussions at the International Whaling Commission, the Prime Minister will make sure that the previous Government’s long-standing position on a moratorium on whaling is upheld, and that there is no diminution to allow a resumption of commercial whaling?

Yes, I can give the hon. Gentleman that assurance. Two things stand out. First, if Iceland is to join the European Union, which has a ban on whaling in its waters, it must accept that what it does is incompatible with membership, so that would have to change. Secondly—I raised this in my meeting with the President of the European Commission—it is important that, if Europe discusses its position on whaling, countries should be able to vote against any form of resumption of commercial whaling without being in danger of some sort of infraction proceedings. I made that position absolutely clear.

May I ask the Prime Minister how warm a welcome he received in Europe, bearing in mind the fact that he went over there to get commitments on our behalf, whereas his predecessor used to travel over there to concede our powers?

My hon. Friend makes a good point. We must take a clear approach and talk with other European leaders about our concerns, as it is an organisation in which people are fundamentally trying to help one another, rather than do one another down. If we are clear about why we have red lines and what they mean, it is perfectly possible, when we have built up alliances, to get them agreed. This country should always stand up for itself in Europe. We do not aim to be isolated, but there will be occasions when we are on our own. It is important that we are prepared to stand up and say what we think when that happens.

May I press the Prime Minister to say a little more about his discussions in the European Council on the banking levy, and where that leaves those of us who are desperate for action on global poverty and climate change, particularly the introduction of a so-called Robin Hood tax?

I am grateful for that question. There was a long discussion about the issue of a transaction tax, and great support for that within the European Council. I was keen to make sure that countries such as the UK that want to introduce a banking levy, and that would like international agreement but nevertheless want to go ahead in any event, should be able to do so without being bound by the EU to introduce a particular sort of tax or to spend the money in a particular sort of way. That was achieved.

If the hon. Lady looks at the EU Council’s conclusions, she will see that they say that we should continue to explore and develop the case for a transaction tax, which is sensible. However, I must tell her that it will be difficult to get international agreement for such a tax, which is why Britain is right to take the approach that it has taken.

There did not appear to be any agreement on the future shape of the European External Action Service. How can Britain’s best interests be advanced in that respect?

My hon. Friend makes a good point. Obviously, our party did not support the Lisbon treaty or the creation of the European External Action Service. I am very keen that resources are not badly spent or badly used on the service. Not much progress has yet been made. We will work to try to ensure that the service increases nation states’ ability to project themselves in the world, and does not become an expensive bureaucracy.

Will the Prime Minister tell the House the number of countries in Europe that have understood the difference between emergency financial help and structural change of their economy? The only party left to understand the difference is the Opposition.

My hon. Friend makes a good point. All the countries of Europe understand the need for action to reduce budget deficits and have signed up to the 2020 document, which, as I said, has good things in it, but the real action that we all need to take to make sure that the countries of Europe are not stuck in a slow-growth uncompetitive position as against Brazil, Russia, India, China and all the future fast growers, is to look at our real problems—our structural problems, our high costs, our high taxes—and to work out that we will have to take difficult decisions to make Europe more competitive, so that we can pay for the public services and the higher living standards that we all want.