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Informal European Council

Volume 539: debated on Tuesday 31 January 2012

With permission, Mr Speaker, I should like to make a statement on yesterday’s informal European Council.

Countries right across Europe need bold action to recover their economic dynamism, to get to grips with their debts and to secure growth and jobs for the future, and that was rightly the focus of this Council. So, first, we agreed important measures needed to restore Europe’s competitiveness; next, we discussed the separate intergovernmental treaty on fiscal discipline in the eurozone; and, finally, we issued a statement on Iran, Syria and Burma. I am going to take each in turn.

Britain’s agenda in Europe is to promote growth, competitiveness and jobs. We have said repeatedly that the best way in which the EU can drive growth and create jobs is to complete the single market, establish trade deals with the fastest growing parts of the world and cut the regulatory burdens on business. At this Council we made important progress on all those issues.

We agreed to establish a fully functioning single market in services, where there are still 4,700 professions across Europe for which access is regulated by Government, and in digital, where there are more than a dozen copyright regimes in what should be one single market. We will take action to secure what should be a fast-growing area right across Europe. The changes on services and digital alone could add more than 6% to EU GDP within a decade. We also agreed to complete the energy single market, which has the potential to cut costs for businesses and consumers across Europe.

On free trade, we said that 2012 should be a “decisive year” in which to move ahead on trade agreements with major partners such as Japan, India, Canada and the United States. On regulation, we agreed to a growth test, for the first time, to ensure

“that all actions at the European Union level fully support economic growth and job creation.”

We also agreed to reduce regulatory burdens, especially for small and medium-sized enterprises and micro-enterprises, and to complete a patent package to support innovation. That has been discussed in Europe for more than a decade and finally we are making decisive progress.

We want the eurozone to sort out its problems, which are having a chilling effect on our economy. Tackling them is one of the best ways in which we can help to secure growth in Britain and right across Europe. As I have said repeatedly, short-term steps—the so-called October package—must be taken, and taken properly. Europe’s banks must be recapitalised properly, the uncertainty in Greece must be brought to a decisive end, and the firewall that needs to be constructed must be big enough to deal with the full scale of the crisis and the potential contagion. In the longer term, proper fiscal discipline in the eurozone is clearly an important part of the solution. Britain recognises that that is necessary. The question has never been whether there should be greater fiscal discipline in the eurozone, but how it should be achieved.

I went to the European Council last December prepared to agree a treaty of all 27 countries, but only if there were proper safeguards for Britain. I did not get those safeguards, so I vetoed the treaty. As a result, eurozone countries and others are now making separate arrangements outside the EU treaties for strengthening budgetary discipline, including by ensuring that there are much tougher rules on deficits. At this Council, 25 EU member states agreed a new treaty outside the EU. Britain and the Czech Republic have not signed up and we will not be taking part.

Let me deal directly with the issue of the institutions. The new agreement sets out roles for the European Commission and the European Court of Justice. Although some of those roles are permitted through existing treaties, there are legal questions about what is planned. As I have said, it is in Britain’s interests that the eurozone sorts out its problems. It is also in our interests that the new agreement outside the EU is restricted to issues of fiscal union and does not encroach on the single market. The new intergovernmental agreement is absolutely explicit and clear that it cannot encroach on the competences of the European Union and that measures must not be taken that in any way undermine the EU single market. Nevertheless, I made it clear that we will watch this matter closely and that, if necessary, we will take action, including legal action, if our national interests are threatened by the misuse of the institutions. [Interruption.]

Order. There is a fine line between jollity and hysteria. I fear that the hon. Member for Rhondda (Chris Bryant) is in danger of having crossed it. He must calm himself, by whatever means necessary.

The principle that the EU institutions should act only with the explicit authorisation of all member states remains. Let me be clear: this is a treaty outside the EU. We are not signing it, we are not ratifying it, we are not part of it and it places no obligations on the UK. It does not have the force of EU law for us, nor does it for the EU institutions or for the countries that have signed it, and there will be no inner group of European countries distorting the single market from inside the EU treaty. That is the fundamental protection that we secured with our veto in December, and that protection remains.

We also made an important statement on developments in Iran, Burma and Syria. Britain has played a leading role in getting Europe to act together on each of those issues. On Iran, last week all EU countries agreed an unprecedented oil embargo, which shows our determination to keep up the pressure on the regime to turn away from any plans to develop nuclear weapons.

In Burma, for years Aung Sang Suu Kyi has been an inspiration to her people and to the world. Britain has supported her at every stage and has been at the forefront of EU sanctions. Now there are signs of a new moment of opportunity for democracy, and we should be prepared to relax those sanctions, but only in stages and only in response to reforms. When I spoke to Aung Sang Suu Kyi on Saturday, she emphasised the importance of credible and free by-elections in April. I can assure the House we will be watching that very closely.

On Syria, the Council condemned the continuing violence and the repression of the Syrian people. Reports suggest that more than 60 people were killed on the streets of Syria last week alone. In total, more than 5,000 people have been killed, 400 children murdered and tens of thousands of people detained. Today, the Foreign Secretary is in New York to support the Arab League’s call for Security Council action condemning repression and supporting a transition of power. All 27 EU member states backed that call for UN action, and if the violence does not end, we agreed that we would tighten EU sanctions further. Our message is clear: we will stand with the Syrian people. It is time for all members of the UN Security Council to live up to their responsibilities instead of shielding those who have blood on their hands. The killing must stop, and President Assad must stand aside.

This was an important Council for Britain. On competitiveness, the single market and trade, Britain is setting the agenda. On action to face down dictators and dangerous regimes in Iran and Syria, Britain is leading the way, and by saying no to a new EU treaty we have protected Britain’s interests. I commend this statement to the House.

I thank the Prime Minister for his statement and associate myself with his remarks about Iran, Syria and Burma. On those issues there has been a bipartisan approach, and the Government have our full support in the effort they are making.

Having heard the Prime Minister’s statement on Europe, the whole House now knows the truth—that with this Prime Minister, a veto is not for life, it is just for Christmas. He said—[Interruption.] Calm down, dear, calm down. He said that it was a real veto on the use of European institutions, and his Back Benchers believed him. Even his Cabinet believed him. What did the welfare Secretary—where is he?—say just this weekend? He could not have been clearer. He said:

“The fact is the Prime Minister vetoed them using the institutions”.

There was not a glimmer of doubt in his mind. He was asked whether the structures of the EU would be used for the fiscal compact, and he said:

“The Prime Minister has already made it clear…he vetoed any such possibility of that happening.”

It is no wonder the welfare Secretary said that, because it was what the Chancellor said the day after the summit. He said on the Saturday morning:

“If we had signed this treaty…we would have found the full force of the…European court, the European Commission, all of those institutions enforcing those treaties using that opportunity to undermine Britain’s interests…We were not prepared to let that happen.”

Can the Prime Minister now confirm that the treaty will be ruled on by the European Court of Justice? Article 8 of the treaty says yes. Can he tell us whether the European Commission will implement the treaty? Article 8 says yes.

What about the Prime Minister’s line in the sand? We know that at 4 am on that fateful Friday morning, he laid down the law to his fellow European leaders and said, “You won’t be able to use the buildings.” So can he now tell us whether the buildings of the European institutions will be used? Apparently, the answer to that is yes, too. On the European Court, the Commission and the buildings, the phantom veto of December is now exposed.

What does the Prime Minister cling to? What did he say at the press conference yesterday? He said:

“There isn’t an EU treaty because I vetoed it; it doesn’t exist.”

The agreement involves the European Court of Justice, the European Commission, the European buildings, 25 out of 27 countries, and he says that it is not really a treaty. [Interruption.] Here is the treaty. It talks like a European treaty, it walks like a European treaty—it is a European treaty.

For Britain, the Prime Minister has secured no protections at all. He says that he has secured protections about discussions on the single market, but the treaty says that the contracting parties shall take actions in the following areas:

“Fostering competitiveness. Promoting employment. Reinforcing financial stability.”

It sounds like the single market to me. Can he confirm that the United Kingdom will not even have observer status at the regular meetings of the 25 to find out what is going on and whether the single market is being discussed? The Prime Minister needs to answer the question: who will protect the British national interest at those meetings? I think his Back Benchers will be interested in that. [Interruption.] It is all right, Mr Speaker, Britain will not be represented at those meetings, but the Prime Minister has a last line of defence—the European Commission. You could not make it up: the Prime Minister reduced to relying on the people he calls “the bureaucrats from Brussels” to represent him at the meetings. In the Prime Minister’s topsy turvy world, that is all he has left: his thin blue line against the 25 countries exceeding their mandate.

Instead of ending up in that position, the Prime Minister should not have walked out of the meeting in December. [Interruption.] No, he should not. [Interruption.]

Order. I apologise for interrupting the Leader of the Opposition. I exhorted the Opposition Benches to some calm; I now do so to the Government Benches. I say to the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) in the nicest, kindest and most public-spirited way possible that if he insists on gesticulating, which he should not, it is pretty silly to do it when he is standing next to me.

Instead of constructing phantom vetoes, the Prime Minister should have been getting a solution to the problems of the eurozone—our largest export market. Of course, he cannot do that. He is committed to failing austerity at home, so he cannot oppose collective austerity abroad. There are growing fears that the scale of austerity required under the treaty will not work. Will the Prime Minister therefore tell us whether the economic strategy in the fiscal compact will work? If he does not believe that it will work, why is he not arguing for change?

The summit has been bad for Britain. There is still no solution to the problems of growth in Europe. In the cold light of day, the Prime Minister’s veto that never was has been exposed. He made a grand promise, which turned out to be worthless. No wonder that even his Back Benchers say that they cannot believe a word he says.

Britain stands with less influence than we have had for a generation. It is bad for business, bad for jobs and bad for families. Britain deserves better.

Order. Mr Ellis, you were apologising to me yesterday for losing your cool. You should not be a recidivist. I want to hear the Prime Minister even if you do not.

Thank you, Mr Speaker.

Let me say to the Leader of the Opposition that there are two problems with the approach he is taking. The first is that he cannot actually tell us whether he is in favour of this treaty or against it. The Government are clear: we are not signing it and we do not agree with it. That is why we vetoed it being within the EU treaties. That is our position. What is his position? He has had all of his Christmas to make up his mind about whether he would sign the treaty or not.

Last night—[Interruption.] This is very important, so let me explain. Last night at the meeting of the European Council, every European country had to say whether it would sign up to the treaty or not. Britain and the Czech Republic said we would not. Everyone has to make a decision, but the right hon. Gentleman cannot do so. He has had 53 days to make up his mind.

The right hon. Gentleman’s second problem is that he keeps saying this is an EU treaty, but it is not an EU treaty. There was a treaty of Maastricht, a treaty of Nice, a treaty of Amsterdam and a treaty of Lisbon. On each occasion, the Labour party was in favour. There will be no EU treaty of Brussels because we vetoed it.

The right hon. Gentleman asked specifically what effect this treaty could have on the EU single market. The treaty is clear. Article 2 states:

“The provisions of this Treaty shall apply”

only “insofar”—[Interruption.]

Order. The House must now calm itself. With all that gesticulation and hand-waving from the shadow Chancellor, I thought he was playing with his cooking utensils—[Interruption.] Well, he was pointing somewhere. Like the House and the country, I genuinely want to hear the Prime Minister, as I hope they also wanted to hear the Leader of the Opposition. Let us hear the Prime Minister.

Thank you, Mr Speaker. We know why the Opposition Benches are so depleted—Opposition Members have been eating the shadow Chancellor’s lasagne and are recovering. The point is absolutely clear in article 2, which states that the provisions

“shall not encroach upon the competences of the Union to act in the area of the economic union.”

The fact is that Labour always fails to stand up for Britain. That is what we know. The previous Labour Government gave away the EU rebate. What did they get in return? Nothing. They signed up to the bail-out mechanism. What did they get in return? [Hon. Members: “Nothing.”] They signed up to the social chapter. What did we get for that? [Hon. Members: “Nothing.”] The Opposition opposed our referendum lock, and even now they are telling us that Brussels does not have too much power, and that if the Leader of the Opposition were Prime Minister for long enough, he would join the single currency. He has had 53 days to make up his mind whether he wants to sign this treaty or not. As usual, he cannot make up his mind whether he is muddled or weak. The fact is he is both.

Order. There is enormous interest and I am keen to accommodate it. What is required is brevity, of which the right hon. and learned Member for North East Fife (Sir Menzies Campbell) is a past master.

We will see whether your prediction is justified, Mr Speaker.

I begin by praising the pragmatism of the Prime Minister, although I confess to being somewhat surprised that my support for it is not shared throughout the Government Benches. It is especially welcome that he pursued over the weekend a policy of re-engagement with our European partners, which is essential to his long-term objectives of the promotion of growth and the extension of the single market.

My right hon. and learned Friend is entirely right. We must ask a simple question: what is in the interests of the UK? It is in our interests to let the eurozone get on with the job of sorting out its problems, and to ensure that this new treaty is restricted to the issues of fiscal union. It is therefore in our interests to use leverage over the institutions and the legal issues to keep them focused on fiscal union. That is the approach we have taken and it is entirely right.

Every single article bar one of the treaty, which I have read, refers to institutions of the European Union, including the Commission and the Court of Justice. Leaving aside its form, how can the Prime Minister possibly say that, in substance, the treaty is not equivalent to a European Union treaty? Given the provisions of article 12—it provides for non-euro contracting parties to participate in discussions on competitiveness, but not those outside the treaty—what has been achieved by his veto except that we are outside the door?

It is not an EU treaty, because it does not amend EU law; it is not a treaty within all of the treaties of the EU, and that is very important, because it would have been wrong to sign up for that without the safeguards for the single market, financial services and the other things that I set out. Let me just explain how important article 2 is in this agreement of the other countries. Let me read it in full:

“The provisions of this Treaty shall apply insofar as they are compatible with the Treaties on which the Union is founded and with European Union law. They shall not encroach upon the competences of the Union to act in the area of the economic union”—

that is, this treaty is outside EU law. Why is it outside EU law? It is because I made it outside EU law.

My right hon. Friend will know that the European Scrutiny Committee is making an inquiry into the nature and lawfulness of the agreement otherwise known as this non-EU treaty. Will he accept that the problem we have in European policy making is that it is on a slippery slope towards a more coercive, more federal and less democratic Europe? Will he give us his assurance that never, while he is Prime Minister, will we fold this non-EU treaty into the treaties as a whole?

To answer my hon. Friend’s second question first, obviously this treaty cannot be folded back into the EU without the agreement of every EU member state. We did not sign this treaty, because we did not get the safeguards that we wanted, and that position absolutely remains. My hon. Friend is right to make the point about the danger of a slippery slope that can be created by signing EU treaties and the use of the EU institutions. The whole point is that because this is not an EU treaty—because it is outside EU law—we are not in danger of that happening.

So, basically, the Prime Minister was afraid that if he went to the European Court of Justice and asked the European Court of Justice whether the European Court of Justice should have power to adjudicate on the so-called non-EU treaty, he would lose? That is basically the sum and total of it, is it not?

Let me explain again, because I know the hon. Gentleman takes great interest in European affairs. The point is that it is in our interest that these eurozone countries get on with the job they need to do. It is absolutely important that they stick to the fiscal union and do not encroach on the single market. Clearly, there are uses for the institutions they have set out in this treaty, some of which are legal under existing EU law and some of which are highly questionable. We are going to use that leverage and that legal position to make them stick to the position of sticking to the fiscal union. That is the most sensible thing to do, and I would have thought that, with all his experience in European politics, he understood that.

May I welcome the Prime Minister’s confirmation that there is no provision in the treaty that allows the single market to be undermined? However, he will be aware that the President of France has been driven to impose a financial transaction tax on France alone. Does he agree that the dismay with which that was met by the financial services sector in Paris illustrates exactly why such a tax is a bad idea?

One does not need to look any further than the European Commission itself, which actually carried out an investigation into a financial transactions tax and found that it could cost 500,000 jobs in the European Union. That is why the whole idea of pursuing this at the moment is completely wrong. Of course, it would be different if the whole world was going to accept a financial transactions tax, but that is extremely unlikely to happen. That is why I do not think it is the right approach. But let us be clear: in this country, we do get our financial services to make a proper contribution. For instance, we have stamp duty on share transactions, which actually raises considerably more than the French are planning to raise with their early foray into this area.

Will the Prime Minister confirm what I think the Chancellor has said over the past couple of days, which is that when more money is required by the IMF, Britain will not fall short?

The Chancellor said that we are founder members of the IMF and strong supporters of it as an institution, but that the IMF must always lend to countries, not currencies; that we would not be part of an EU bail-out fund; that we would take part only if other countries came forward too; and that that would happen only after eurozone countries and eurozone institutions had done what they needed to do to stand up and support their currency. That is the position, and I think that it is right.

Will the Prime Minister say something about the nature of the EU of which we are now a member, given that a subset of member states can bypass a veto and hijack the institutions for their own purposes without the consent of the dissenting member states? He is entirely right to maintain a reservation to ensure that that does not happen.

The point is that, as my hon. Friend knows, there are organisations within the EU, such as the eurozone group and the Schengen group, of which we are not a part, that use the European institutions. The fact is that this treaty is outside the EU treaties, which gives us that extra protection. Furthermore, we have the ability to exercise leverage to ensure that they stick to fiscal union, rather than getting into the single market, which is what we want to protect. That is absolutely important and the approach that we should take.

The Greek writer Aristophanes gave us the concept of cloud cuckoo land. I wonder whether some European leaders visited that mythical country on Monday. Will the Prime Minister tell us how on earth he thinks that a country such as Greece will regain competitiveness if it cannot devalue, which it cannot do within the euro?

The hon. Lady makes a serious point. I have read the agreement that these countries have come to, and I completely understand the need for fiscal discipline within the eurozone. Clearly, we cannot have countries building up excessive deficits year after year, and one can understand the concern of Germany and other northern countries, but on the text of the treaty, it is actually very concerning that some countries will struggle to meet it. Of course, Europe needs not only arrangements for fiscal discipline but, above all, arrangements for additional competitiveness, for opening up markets and for getting economies growing. That was the subject of the first half of the EU meeting, in which we were major participants, and we are very much driving that agenda to help Greece, Spain and other countries in the south of Europe.

The eurozone crisis has now become a major global risk, but the member countries seem wholly incapable of addressing it and its root causes properly. Will the need for IMF intervention and direction of the crisis be discussed at the G20 summit that the Prime Minister will be attending on 25 February, and was it discussed at the summit from which he has just come?

There was not a discussion about IMF resources at the informal EU Council. To be fair to eurozone members, what they need to do is difficult for countries to do: they need to contribute huge amounts of money to a firewall to prevent contagion; they need to put capital into their banks to strengthen them at this time of stress; and they have to give up large areas of sovereignty to make sense of the eurozone. Those are all reasons we stayed out of the eurozone, and why I believe that we should not join the single currency. It is only fair, however, to explain that they have taken quite a few steps down that road. The argument that I made in Davos was that, as well as the short-term things that they need to do, they need a set-up that makes sense for the long term of the eurozone.

The Prime Minister said that he will watch closely and, if necessary, take action, including legal action, if our national interests are threatened by the treaty. Will that legal action be taken through the European Court of Justice, and how does that marry with his next statement that EU institutions should only act with the explicit authorisation of all member states? Will not other states refuse to allow that?

I do not think that the hon. Gentleman understands how these institutions work. The point is simple: it is clearly in our national interests to maintain the single market at the level of the 27 to make it work for us. As long as this treaty stays out of that area, and instead focuses on fiscal union and discusses the things that the hon. Member for Birmingham, Edgbaston (Ms Stuart) mentioned, it will not be a problem for Britain. If it encroaches on our national interests, however, we will have the ability to take action and the case to do so.

After what was clearly a much more successful and satisfactory summit than the one in December—the Prime Minister came back with clear EU commitments to democracy around the world, and to the single market and the extra jobs that it can sustain, particularly in the energy industry at home—will he agree that his constituents, like mine, want the Government to concentrate, as Europe appears to be united in doing, on jobs, growth, training and skills, instead of obsessing about constitutional and treaty niceties? Those are not important.

I think the right hon. Gentleman is entirely right, and the refreshing thing about this Council is how much time was spent on the nitty-gritty of the single market—on digital, on services, on education and on energy markets. Having Mario Monti, the new Greek Prime Minister and others there with a real focus on the single market, including the new Spanish Prime Minister, gives us a much better prospect for making progress on this agenda than we have had for many years.

Is not the truth of the matter that throughout 2011 the Prime Minister marched his troops to the top of the anti-European hill, and now, like John Major before him, and with the help of the Deputy Prime Minister, he has marched them down again? I think there is a word for it: it is called appeasement. If this meeting had been held in Munich, the Prime Minister would have been coming back waving a piece of paper.

I always wonder whether practice is going to make perfect with the hon. Gentleman. At least he has been consistent: he has always voted against all EU treaties, and I am giving him the rare pleasure of not having an EU treaty to vote against.

The Prime Minister has referred to the five European countries that are now less competitive than Iran. On competitiveness, his announcement today is welcome, but how quickly will those steps be taken to increase the competitiveness of the single market?

My hon. Friend is entirely right to raise the issue in this way. We have tended in the past in the European Union to sign up to Council conclusions or informal statements, like the one agreed late last night, that are full of good words about taking such steps but do not contain enough concrete dates. The difference last night is that dates have started to appear for when specific things should be done, whether it be completing EU free trade arrangements with other countries or completing deregulation or single market programmes. That is very welcome.

The position taken on Iran at the summit was clearly the right one. However, as the Prime Minister knows, there are 73,000 Iranians living in London. What provisions have been made to nominate a third country, so that British Iranians can go to visit Tehran, and their friends and relatives can come and visit here?

The right hon. Gentleman asks an important question. Perhaps I can write to him about that. What I would say is that, in a move that may have surprised some people, the EU has been decisive—for instance, in creating the oil embargo when some members of the EU have been quite reliant on Iranian oil, which is a real step forward. However, on the issue of third countries and travel, perhaps I can write to the right hon. Gentleman.

We have learned today that in Britain’s national interest the Prime Minister is prepared to use a veto to allow national agreements and to rule out for ever Britain’s membership of the euro. Does he or anyone else in this room have any idea what the Leader of the Opposition stands for?

It is going to be interesting. We are now going to have a period of days when the Leader of the Opposition is finally going to have to get off the fence and tell us: would he sign up to this treaty or not? The treaty is right here—I can give him a copy. It is a treaty that we will not be signing; he now has to make up his mind whether he is going to sign it or not.

How does the Prime Minister feel about attending a European Council of a supposedly democratic EU when the leaders of two of the countries not only have not been elected, but were more or less imposed by the bureaucracy in Brussels? Does he not feel seriously that we are moving more and more away from a democratic Europe, and that this is why the people of this country, ultimately, will have to decide on our future?

The difference between the situation in this country, where we face great economic challenges, and countries in the eurozone is that we have been able to adopt a policy stance that, yes, combines a very tight fiscal policy with difficult public spending reductions, but can also be accompanied by a loose monetary policy, with the Bank of England standing behind the economy. The problem for many eurozone countries is that they do not have that policy mix. That is making life difficult for them, and I fully understand that. They want to stay in the euro; they want to make the euro work. Whatever our private views about the euro, we should do what we can to help them get on with the job of sorting out the single currency and its arrangements, because it is currently having such a bad effect on our economy.

Can the Prime Minister reassure the House that in exercising his veto, exhorting the eurozone to sort out its financial crisis and promoting growth through the single market, he is acting in Britain’s national interests? Does he also share my concern that the Leader of the Opposition does not seem to know where Britain’s interests lie?

My hon. Friend is right. At the end of the day, we have to decide whether we are going to agree to this treaty or not. The fact is that every European country had to make that decision, and we have made ours. I repeat that it is in our national interest for the eurozone to deal with its problems, to keep this treaty focused on fiscal union and then to maximise the potential of the single market. I think that Britain should be relaxed about being in those parts of Europe where we want action—just as we are a leading member of NATO, and just as we led that action in Libya—but that we should quite happily stay out of areas that we do not feel are in our interests, such as the Schengen no-borders agreement or the euro.

Given that Germany grew 3% last year, and has its lowest unemployment for 20 years and more manufacturing and a smaller pay gap than Britain, why is the Prime Minister so against the practice of worker representation on company boards?

One of the points about Germany is that it did not spend the last decade making its economy unbalanced with a massive boom and a massive bust. The right hon. Gentleman is right to raise the IMF forecasts, however, because they are very instructive about what is happening in Europe this year. They are actually forecasting higher growth for Britain than for almost any other country in the European Union, but they have made very chilling forecasts for countries such as Spain and Italy, for which they are forecasting quite a steep decline.

I have vetoed Britain’s involvement in a treaty. As a result, it is not an EU treaty. We had in front of this House the Maastricht EU treaty and the Lisbon EU treaty; we had Amsterdam and we had Nice. All of those were treaties that Britain was involved in as a member of the EU, and they were EU treaties with the full force of the law. This is not like that; this is outside the European Union. It is an arrangement that has been reached by 25 other countries and we are not involved. As a result, we have safeguarded Britain’s interests, which could have been put at risk by a new EU treaty.

What indications did the Prime Minister receive from the German Government that if they want their political project of fiscal and monetary union in the eurozone to succeed, they will finally have to face the sad fact that they will have to put in the necessary resources, rather than just imposing greater austerity on countries that have been steadily stripped of their democracy?

I tried to set out what I think is the sensible view in my speech to the Davos summit. Look, I do understand the German concern. It sees countries across Europe that have run up huge debts and huge deficits, putting at risk the stability of the single currency. It does not want that to happen again, so it wants these assurances for the future. Just as everyone needs to understand the German position, however, we also need to show some understanding of those countries that are going to struggle in the years ahead. They are going to need extra help and assistance, and there is going to have to be solidarity across the eurozone, because the single currency requires that, as I explained in my Davos speech. We manage a single currency across the United Kingdom because we show solidarity with different areas of the country, and the eurozone has to understand that similar solidarity will be required there, to make the single currency work in the long run.

I was encouraged to see reference in the communiqué to this year being a decisive year for free trade agreements. Will my right hon. Friend do all that he can to move ahead with the free trade agreement with Japan, which is vital to large parts of our motor manufacturing industry?

I will certainly do that. I have discussed this issue with the Japanese Prime Minister and with the European Union. One of the issues with Japan is non-tariff barriers, in regard to the access to Japanese markets that British goods and services want. There is a particular advantage for us, in an economy with such a high level of services and branded goods, in ensuring that we really secure progress on the free trade agreement, not only with Japan but with India. The Indian economy is fairly closed off to services, and we want to see it opened up.

The Prime Minister has talked about competitiveness, growth and jobs, but he skated over the fiscal compact and its fiscal consolidation, which could have a severe effect on jobs and growth. Further to the question from my right hon. Friend the Member for Blackburn (Mr Straw), and given that the Prime Minister thinks the eurozone is so important to us, what influence does he think he can bring to bear, as he is not part of the 25?

The hon. Gentleman seems to be having his cake and eating it. On the one hand, he says that the treaty is tough in terms of fiscal discipline and consolidation, while on the other hand he is worried about the fact that we have not signed it and are not subject to it. I think it is right for this country to take measures to consolidate our fiscal position. These are difficult measures, but we can at least look the British people in the eye and say we are doing it for our own benefit and our own good. We are not doing it because we are instructed by some foreign body to get our budget under control; we are doing it in our own national interest.

The Prime Minister will well remember that nearly 20 years ago, the United Kingdom, Italy, Spain and the Irish Republic left the exchange rate mechanism—the precursor of the euro. There was an exit strategy. Now the crisis facing Europe seems to be one of solvency in some of these countries, there is no exit strategy and it appears that there is no money. Will the Prime Minister reassure the British public that no funds will be given to the IMF and that we will give no more money to the European Union?

I obviously remember very well the exchange rate mechanism experience. Indeed, it is that experience that makes me so passionate about not joining the single currency or the euro—because it is so difficult to exit from it if it does suit our needs or our arrangements. I believe that Britain is a big enough economy to have its own interest rates and its own monetary policy to suit our needs. My hon. Friend asks for guarantees. What we have done is already to have got out of the bail-out mechanism to which the last Government signed us up and, as I clarified a few moments ago, we have set out very clearly our conditions to the IMF.

The Prime Minister says that his veto has left the European Commission in the room to protect against encroachment on single market issues and competitiveness. Will he remind us of the name of the noble baroness who represents the UK on that Commission and of which party will therefore represent Britain’s last line of defence?

The point the hon. Gentleman has clearly not understood is that the treaty itself sets out that the treaty cannot be used to encroach on the single market; it is there in black and white. As I have said, if that is not the case we have the ability to take action, including legal action, to protect our national interest.

My constituents really appreciate the Prime Minister’s straight talking on this issue, so will he answer the question that they want answering: if asked, will the Prime Minister stump up more money for Greece?

Our answer is very clear. We were not involved in the Greek bail-out, and we will not be involved in European bail-outs of Greece. We have got out of the EU mechanism that the last Government got us into, and we have set out our conditions on the IMF very clearly.

In the last few days, the Greek Government have said that they refuse to have their economic governance taken over by the European Union. Does the Prime Minister support the Greeks in that, and if so, will he say so here and now?

The only way I can answer that question is to say that the Greeks have to decide themselves whether they want to stay in the euro. If they do, they have clearly got to meet some pretty exacting targets for reducing Government deficit, reducing Government debt and accepting a very austere approach. If Greece wants to stay in the euro, those are the conditions it will have to meet. I am not Greek; I am British. We have made our decision to stay out of the euro; this is their decision, and we should not tell them what to do.

It is clear that the Prime Minister has considerable support within Europe in seeking a more adaptable, flexible and competitive economy. Will he reassure businesses in my constituency and elsewhere that the casting of the veto will have done nothing to prevent his ability to drive forward that agenda in Europe?

What last night’s meeting proved is that there is a very strong and growing consensus for action around the European Council table on issues of competitiveness. British Ministers—and, to be fair to Labour, British Ministers for the last 20 years—have been going to Europe arguing for completing the single market, deregulation, lifting the burdens on business and all those issues, and we have always had strong supporters in the northern liberal countries, as it were, but we have come unstuck when it comes to other countries. I think we now see—partly because the centre right is in power in so much of Europe—really strong support for that sort of agenda, and we can certainly drive it forward.

The Joint Ministerial Committee memorandum of understanding on EU policy says that Ministers and officials from all the devolved Administrations should be involved in discussion with the UK Government on the formulation of UK policy. What discussions did the Prime Minister or his officials have with Edinburgh, Cardiff and Belfast before the European Council meeting?

As the hon. Gentleman knows, there are arrangements for these things. Actually, the Government have been very generous in ensuring that the Scottish Administration have been fully involved in, for instance, fishing quota negotiations. However, I thought that the hon. Gentleman wanted to leave the UK altogether. If that is the case, he will have to seek access to the European Union, and seek access to joining the euro as well. I think that he ought to read the treaty and work out whether he wants to sign it. Perhaps when he has made up his mind he will be able to tell the Labour leader what to do.

The Prime Minister said this afternoon that, if necessary, we would take legal action. What would trigger that legal action? Is not the problem for the majority the fact that if they stretch the European institutions to achieve greater compliance, the minority may be tempted to stretch them to achieve greater independence?

I think that the conditions are very straightforward. As I have said, we want those institutions to sort out the problems of the European Union, and we want them to stick to fiscal union and not go into single market issues. If they were to go into single market issues and threaten Britain’s national interests, of course we would act. That seems to me to be a much more sensible approach than taking an alternative path, because all the while we shall be maintaining some leverage over this organisation, outside the European Union, to ensure that it sticks to the job that it is meant to do.

The Prime Minister will be aware that the latest report on Iran by the International Atomic Energy Authority contains no smoking gun whatsoever. Given that the sabre-rattling and sanctions from the west have served only to strengthen the position of the hardliners, and—as is illustrated by the fact that Iran is thinking of bringing forward the deadline for the oil embargo—have failed to date, is this not the time for a fresh approach, which should include ruling out the option of force?

I listened carefully to my hon. Friend’s question, and indeed I listened to him carefully when he made the same case on the radio this morning, I do not read the IAEA report in the same way as he does, and I do not altogether trust Iran’s motives in this area, but the easiest way for Iran to settle the issue is to open up and show everyone just what it is doing. If it is only pursuing nuclear power and is not pursuing nuclear weaponry, the world will be able to move on, but until those assurances are given, the world will not be able to move on. That is the reason for the tough action that we are taking, which shows that there are alternatives to military force. We want to ensure that we maximise the use of all those options before considering anything else.

There is a very important difference. Let us consider what happened with Maastricht, for instance. There was a European Union treaty to which Britain was a full signatory. We opted out of certain parts of it, but we were still subject to a huge amount of additional EU law. That is why there were so many agonised debates in the House about whether it was a good thing or a bad thing. The same can be said of all EU treaties. The difference in this case is that there is no EU treaty. We are not going to put something in front of the House, and nothing will be voted on, so it will not affect the UK.

May I draw my right hon. Friend’s attention to the initiative for a free and prosperous Europe which was launched yesterday with the support of think-tanks and non-governmental organisations across the continent? In a nutshell, it asked the EU to stop centralising power, and instead to build prosperity on liberty and responsibility. There is an appetite throughout Europe for the kind of policies that my right hon. Friend’s Government are advocating. Does he share my hope that the leaders of the European nations may abandon their outdated ideology of centralisation and follow him instead?

I am grateful to my hon. Friend for his comments, and I will certainly look at the report he mentions. We in this House must understand that 17 members of the European Union have opted for a single currency—that was the big moment, when different parts of Europe chose to take a slightly different path—and even in spite of the difficulties, those member states are fully committed to trying to make it work. We have to respect the view they have taken and allow them to go on and do some of the things that can make sense of the eurozone. It is not the choice that we are making; we are making a different choice. We want a competitive Europe, we want a trading Europe, we want an open Europe, but we do not want a more centralised Europe, and not signing this treaty—not having an EU treaty—helps us down that path.

When the Ministers discussed the situation in Iran, was any concern expressed about the bombings and assassinations currently taking place and the military build-up in the area, which clearly leads to much greater tension? Will the Prime Minister think again about the suggestion of the hon. Member for Basildon and Billericay (Mr Baron) that there should be a renewed diplomatic initiative by either Britain or the European Union to try to build relations with all the power structures in Iran, rather than head down this very dangerous road towards a war?

I am afraid I do not agree with the hon. Gentleman for this—reasonable, I hope—reason: Iran has been offered a normal diplomatic relationship. Indeed, it was offered many times by the right hon. Member for Blackburn (Mr Straw) when he was Foreign Secretary. The fact is that that did not move Iran off the path of trying to acquire all it needs for nuclear weapons. So I think the path of sanctions, travel bans and asset freezes, and all the tough measures we are taking right across the EU, is the right path. It is the right alternative to the alternatives that I think the hon. Gentleman does not welcome, and hopefully it will make the Iranian regime change its strategy.

In December, the Minister for Europe said in response to my right hon. Friend the Member for Wokingham (Mr Redwood) that

“we understand why those countries want to use the institutions, but it is new territory and raises important issues that we will need to explore with our colleagues in those other European countries.”—[Official Report, 13 December 2011; Vol. 537, c. 718.]

Further, today my right hon. Friend the Prime Minister has said there are legal implications as a result of the discussions he has had. Does he share my concern that by invoking the institutions we may well end up in a Jarndyce v. Jarndyce-type legal squabble with the European Court of Justice that will not go in our favour?

That is not my concern; instead, my concern is that although there are uses of the EU institutions that are already sanctioned by existing treaties and to which we could not possibly object, this agreement between the 25 countries goes further than that and raises legal concerns. So we are right to raise them and use the leverage to try to keep this new organisation on the straight and narrow path of fiscal union rather than moving over into the single currency. I do not really fear what my hon. Friend says, because of course people can take cases about what has been signed to the European Court, but that is not going to drag Britain into a treaty that we are not part of. That is another advantage of not having signed the treaty.

The Prime Minister was right to veto the treaty because it was against this country’s interests. The agreement arrived at between the 25 countries is fundamentally deflationary and will not lead to growth—it will lead to mass unemployment across Europe—and is also against this country’s interests. Rather than reneging on his original commitment to stop the 25 using European institutions, should not the Prime Minister now be using all the power of his office to stop them?

I am grateful to the hon. Gentleman, as at least we have at last got a clear Labour view. Clearly he, like me, would not have signed the treaty and thinks Britain is better off outside the treaty. Is that the Labour position? The Leader of the Opposition can just nod. That is not much to ask for. They have had 53 days to make up their minds. There are three options: yes, no or “I don’t know because I’m weak and indecisive.”

I welcome the reduction in regulation on small and medium-sized enterprises set out in the statement. Will my right hon. Friend reassure the constituents of Erewash that the priority throughout negotiations is the protection of jobs and businesses in Britain?

That is absolutely our priority. The more we can get the single market to work, the better it will be for British jobs, including in Derbyshire. There is an important agenda here, and it is not just about getting the European Commission and European Union to do things in terms of completing the single market. It is also, sometimes, about trying to get them not to do things—it is about rolling back some of the bureaucracy that has been placed on business that can cost jobs and mean extra regulation.

Figures released by the EU today reveal that one in 10 people in the EU is out of work, including 16 million people within the eurozone. Why has the Prime Minister not been more vocal about an increased role for the European Central Bank, including the use of eurobonds to help restore confidence to the markets and increase growth?

I always think it is the first sign of madness for a politician to say, “Please go and read one of my speeches,” but on this occasion I will make an exception. If the hon. Gentleman reads my speech at the Davos summit, he will see that that is exactly what I said.

Thank you very much—you are so charitable.

On unemployment, the hon. Member for Glasgow North East (Mr Bain) is absolutely right. There was a very good and strong discussion in the European Council and it is really worth looking in particular at examples of countries that have lower youth unemployment than Britain—there are many with higher youth unemployment —to see what lessons we can learn from them.

Does the Prime Minister agree that the question of European bail-outs would be much less likely to arise if different countries with different economies had different currencies? Will he therefore recommend this tried-and-tested model for the eurozone countries?

We have a very strong view in this country that we should keep our own currency, but that does not let us off the need for fiscal discipline, proper monetary policy and keeping inflation under control. It is not a free lunch or a free ride. We have to take tough decisions, but clearly we have to show some respect for the 17 eurozone countries that want to make the euro work. It is no good wishing away what is there. The responsible thing to do is not to stand in their way when they are trying to put out the fire in their own house, but to ensure that they do so in a way that does not threaten our national interests. That is exactly what I have done.

I still do not know whether the Prime Minister thinks that he did not sign a treaty or just an agreement. Is not his real failure his commitment to austerity and his lack of a plan for jobs and growth either in the EU or in the UK?

In Europe, we have a plan for jobs and growth, which is called completing the single market. The question that the hon. Gentleman and his leader have to answer is about the new treaty being proposed, which 25 countries are going to sign and Britain is not. [Interruption.] I do not care how bad the lasagne is, at some stage the shadow Chancellor and the Leader of the Opposition are going to have to make up their minds. Are they for it, are they against it, or are they weak and indecisive and cannot make up their minds?

Like many others, I welcome the commitment to cut the burden of regulation, but does the Prime Minister agree that there could be potential to revisit the way in which directives were transcribed into UK law by the previous Labour Government, with a view to removing some of the gold-plating that businesses complain about so much?

My hon. Friend makes a very good point. There have been occasions on which EU directives have been added to by Government Departments and implemented with more vigour than in other parts of the European Union. We have tried to put a stop to that under this Government.

Horse passports—that was a good one. I do not think we eat horses in this country, but the previous Government, in their wisdom, decided that every one needed a passport. That is just one example. In future we can ensure that we do only what is absolutely necessary, rather than gold-plating.

Will the Prime Minister share with the House and the country what influence, if any, his Back-Bench Eurosceptics have had on his thinking during these discussions?

I think the Conservative party is entirely united in thinking that Britain is not right to sign this treaty.

I congratulate the Prime Minister on defending Britain’s interests, and I note what he says about Iran and Syria. Does he think that if we had a common EU defence policy, HMS Dauntless would now be readying to sail to the south Atlantic?

The point is this: we should make sure that NATO is the cornerstone of our defence and we should be very clear about our own defence responsibilities—I have spoken about the Falklands. We need to win the argument in Europe that there is no point in having endless competing defence headquarters. What we need throughout NATO, particularly in Europe, is greater defence capacity, and we need to encourage other European partners to invest in that.

Will the Prime Minister explain how he will take action, as he says, if this non-EU treaty under which the 25 nations can take advantage of the full force of the EU institutions, encroached on our national interest and undermined the single market?

Let me explain: there are uses of the EU institutions set out in previous treaties—mostly put through this House by the Labour Government—but this treaty outside the EU goes further than that, and that raises legal issues. We have said very clearly, including in the EU Council last night, that if that were to encroach on the single market and threaten this country’s national interest, we could take action, including legal action.

The UK is fortunate in having many excellent professional bodies—engineers, architects, surveyors, lawyers and so forth—but often they find it difficult to practise within the European Union because of a host of national barriers to professional practice. In the context of the single market, improving competitiveness and creating jobs, has the Council taken steps to remove some of those national barriers to professions being able to practise throughout the EU?

My hon. Friend is entirely right to raise that big gap in the single market. We passed the Single European Act all those years ago—more than 20 years ago—yet the professions and services have still not been properly opened up. The action we are taking is for all Governments to agree to open up those professions, and on this occasion the European Court of Justice may actually be helpful in that the Commission is taking infraction proceedings against a number of member states—Germany included, I think—to make sure that they genuinely open up their professions and complete the single market.

On the radio today, the shadow Foreign Secretary claimed that Britain had lost influence in Europe. In the matters of the single market, competitiveness, Iran and Syria, what does the Prime Minister feel was achieved by the British presence at the European Council?

The specific foreign policy stances taken by the EU are all agreed by unanimity, which proves that agreement by unanimity is possible if there is political will and drive. Almost the entire approach to Iran and Syria and Burma was something that the British requested be discussed at the Council and we requested that there be a statement. I think that shows that with political will, but with unanimity, it is possible to get a lot done.

Does the Prime Minister realise that the more he denies that this is effectively a European treaty, the more he reminds us of comical Ali denying that an invasion had taken place while the tanks rolled by behind him?

The hon. Gentleman is in for a big surprise. When no treaty arrives in the House of Commons, he will have to do a bit of explaining.

On Iran, did the European summit discuss the planned regional conference on non-proliferation of weapons of mass destruction, and does the Prime Minister agree that it might offer a vital pathway out of an increasingly dangerous stand-off?

We did not discuss that specific matter. It is entirely right and worth while to try to bring regional neighbours into the debate, but I have to say that it is some of the regional powers that are the most concerned about Iranian activity, not only in their own countries but in stirring up trouble elsewhere, so it is probably only part of what needs to happen, which is to get the Iranian Government to change their strategic direction.

The Prime Minister has highlighted a growth test to ensure that all actions at European Union level fully support growth and job creation. This new “I can’t believe it’s not an EU treaty” will prescribe prolonged and tight austerity for many economies, affecting not only services there but trade and commercial capacity more widely in Europe. Would this non-EU treaty pass any meaningful EU growth test?

If the hon. Gentleman is so against the treaty, I am surprised that he is not praising me for making sure that Britain is not involved in it; I would have thought that would be the first thing that he would say. We have to understand that the countries of the eurozone want to take an approach that prescribes rules on debt and deficit. We can all have our own views about whether it is the right approach or whether it is too tight, and all the rest of it, but that is what they want to do; I do not think that we should stand in their way as it is done, but it is better done outside the European Union.

Order. There is still a very significant number of colleagues seeking to get in. I would like to try to accommodate as many as I can, but if I am to do so, brevity is essential.

My right hon. Friend the Prime Minister outlined in his speech at the Council several criteria needed for a successful monetary union, none of which have really been met by the changes, however welcome, outlined there, so may I urge him to continue to plan, while doing everything that he can to co-operate constructively, for the likely eventual break-up of the eurozone?

We have to plan for all eventualities, but I would make two points. As I have said, I think we have to respect the fact that the countries of the eurozone want to make it work. They have taken quite a number of steps that are painful and difficult for individual sovereign countries to take, and it must be in our interests, because we want the European economy to grow, for them at least to take the short-term measures to take the heat out of the crisis. There were some signs of the crisis easing at the beginning of this year, as Italian and other bond spreads have come down, but we are far from through it.

Will my right hon. Friend expand on the basis on which we were able to find common cause with our good friends in the Czech Republic?

The point came when different countries had to decide whether they wanted to sign up to the treaty or not; it is not a treaty within the EU, so there is no compulsion to do so. The Czechs, on 9 December, were not sure whether they wanted to sign it. They then considered whether they wanted to, and last night they decided what to do, as everyone had to; the only person who cannot seem to make a decision is the leader of the Labour party, who has no idea whether he is against it, in favour of it, or does not know. One day, he will have to decide.

What message does my right hon. Friend have for the great manufacturers of this country, such as DCS Europe in my constituency, given that President Sarkozy says that Britain does not have much manufacturing left?

The point that I would make gently to my friend Nicolas Sarkozy is that, if one looks at the figures, Britain actually has a higher percentage of industry than France does, but we think that we need to rebalance even further; we want to see a growth in manufacturing, technology and aerospace, but we do not believe that we should do that by damaging the financial services industry, which employs many people not just in the City of London, but right across our country.

The overwhelming majority of my constituents, and indeed the country, already believe that the European Union has far too much power over the United Kingdom. Does my right hon. Friend agree with that, and if he does, is he as amazed as me that the leader of any political party in this country that claimed to be in touch with public opinion could argue otherwise?

I think it is briefing note N, and there is plenty in it; it is full. I think the best one in briefing note N is on whether or not the leader of the Labour party would like to join the euro. I know that the House enjoys this, so I might share it one more time: when asked whether he would join the euro, he said,

“It depends how long I'm prime minister for.”

This is the one thing that the shadow Chancellor and I, who often disagree, have in common: we are not going to let it happen.

The German Chancellor was on the radio this morning saying that she firmly expected the fiscal union to be inside the EU treaties within five years. What part of the British veto is giving her such hope and encouragement?

The point is that the countries that have signed the agreement want to fold it into the EU. That cannot happen without the permission of every country, and those people who say that the veto did not have effect perhaps need to explain why they want to fold the treaty back into the European Union. It seems to me that that is a very powerful point.

I welcome the statement because of its focus on competition, the single market, and energy. It is great that the Prime Minister has demonstrated British leadership in those fields, and he has added useful advice to the discussions, but will he ensure that we continue to have dialogue with our European partners? It is absolutely essential that they know and understand where we are coming from and what we can contribute.

My hon. Friend is entirely right. As I have said, last night’s meeting proved that it is perfectly possible to stay out of parts of agreements that other European countries want to go into, but have real influence on the things we care about, such as the single market.

I welcome the fact that the agreement places no new obligations on the UK, but is it not the case that the agreement, whatever its merits or disadvantages, should not distract us or our EU partners from the necessary task of ending the barriers in the single market and reducing regulation?

My hon. Friend makes an important point. Of course the eurozone countries want to see rules on fiscal discipline, but as I have said many times, it is not just fiscal deficits that have to be addressed, but trade deficits, and that is where the single market agenda can help not only countries such as ours, but theirs too.

I welcome the Prime Minister’s commitment to trade deals with fast-growing parts of the world. An ambitious trade deal between the EU and India, which would help us double our trade with India by 2015, has eluded negotiators since 2007. Does he agree that next week’s EU-India summit in Delhi should see a clear timetable for the delivery of an ambitious deal as soon as possible?

My hon. Friend is entirely right, and I know that he has a lot of experience in this sphere. We are totally committed to trying to get this free trade agreement going. I think that there are real opportunities for both sides. I have mentioned the fact that we want to open up retail and services in banking and insurance in India. Frankly, we will have to do quite a lot of work to convince the Indians that that is in their interests too, but I profoundly believe that it is, as they want to be a rapidly growing success story of the future.

I welcome what the Prime Minister said about applying a growth test to everything that the EU does in future. Will he tell my constituents what prospect he thinks there is of applying that test retrospectively to existing EU regulations, which the British Chambers of Commerce says costs business £7.5 billion a year?

It is important to try to look at some of the existing stock of regulations, but I think that one of the things that badly needs to be done in Europe is making sure that it is not just when Economic Affairs Ministers get together that we think about growth, but that when Social Affairs Ministers and Environment Ministers get together we think about the potential costs of what they are signing up to. That does not happen at the moment and badly needs to.

I very much welcome the Prime Minister’s statement. My question relates to the discussions held on Syria. What action will EU member states take to protect civilians if Russia vetoes any UN Security Council resolution on the matter?

My hon. Friend is right to raise this matter. Clearly the Russians have taken a different view up to now and have not supported robust action at the Security Council. My right hon. Friend the Foreign Secretary is trying to build the strongest possible resolution with colleagues at the Security Council and to say to the Russians, “If you go on vetoing or preventing these motions, you will be completely outside not just world public opinion, but the very clearly expressed opinion of the Arab League itself.”

Is not my right hon. Friend’s strategy of rejecting the fiscal union treaty, which would not be in Britain’s economic interests, and at the same time pushing for a free trade agreement with Canada, Japan and India, which has the potential to create thousands of jobs in this country, absolutely the right one?

I am grateful to my hon. Friend. I think that Britain is better off outside the eurozone, but clearly we need to get trade going with parts of the world that are growing faster, which is why these trade deals are so important to us.

The good folk of Brigg and Goole are under no illusions about how hopelessly out of touch this House, and the Opposition side in particular, is on the European Union, but they were heartened by the Prime Minister’s veto. They are similarly under no illusion about what happens in Europe: it is where assurances are given, but ultimately breached, and a whole new set of proposals come back. What can he say to my constituents to assure them that this will not become another treaty that we end up getting sucked into?

We cannot be sucked into this treaty because we are out of it, and we can only go into it if all 27—soon to be 28—EU member states agree. That is the effect of the veto.

I am happy to report that Mrs Bone was singing in the bath yesterday, congratulating the Prime Minister on standing up for British interests and keeping us away from German economic domination of Europe. But she was concerned, because it must be pretty miserable for the Prime Minister to go to Europe when his Deputy Prime Minister forces him to take with him an unelected left-wing Liberal. At the next conference, would it be possible for my right hon. Friend to take a moderate constituent from my constituency—perhaps Mrs Bone?

I am just relieved that my hon. Friend did not ask me what happens if I am run over by a bus, which I gather is the question that he has asked everybody else. I have been warming up for that one for some time. To be fair to the Deputy Prime Minister, I do not know whether there is room in the deposition for Mrs Bone, and I would not want to get her out of her bath.

I welcome the Council’s statement on Iran, but does the Prime Minister agree that the sanctions that the EU has agreed on Iran really need to bite? Iran is in the last chance saloon, so at the European Council what systems and processes were agreed in relation to monitoring the implementation of those sanctions?

My hon. Friend is right to raise that issue. The key part of the sanctions is the oil embargo, which is a very big step for European countries to take. There is a time lag before it comes in, but I believe that it does so in July, and it is a big step, because there are countries, such as Italy, Spain and others, that have been very reliant on Iranian crude in the past. It is an important step. Europe has quite a good record of making sure that the sanctions that it imposes are put in place, but I will make sure that that happens.

My constituents warmly welcome the Prime Minister’s determination to protect our interests in Europe. Will he explain how the United Kingdom will, in practical terms, actually be able to prevent those countries that sign up to the fiscal union treaty utilising the European Commission and the European Court of Justice in a way that damages UK interests?

The guarantee that they will not damage UK interests is this. First, the treaty itself is clear that it has to be in line with EU law; it cannot override it, and it cannot get into areas such as the single market. Secondly, as I have said in answer to previous questions, if the institutions do things that are not permitted, there can be a challenge, including a legal challenge. But, above all, Britain is protected because, although others are going ahead with this treaty outside the European Union, we are not part of it.

I thank my right hon. Friend for his statement and for bringing greater clarity to Britain’s position, because these are complicated issues. My constituents in Dudley South were very grateful for his exercise of the veto last month, but is the ECJ, as an institution of the whole European Union, not now being unjustly used?

As I said, in pre-existing treaties there are ways in which the European institutions can be used by groups of member states. That is a fact, and those treaties, as I said, tend to be passed by the Labour party. But, if member states go beyond that, there are real legal issues, and legal issues that I have set out; and, if that were to happen, we would be able to take action to protect our national interest.

I trust my right hon. Friend the Prime Minister to do what is right for Britain, but I do not necessarily trust his successors. After all, we saw the previous Government give up our hard-fought opt-out from the social chapter and give up our hard-fought budget rebate. What guarantees are there that the UK will not be sucked into this new treaty?

One of the best guarantees is the referendum lock, which we have in place in this country, which this House of Commons passed, which the Labour party opposed and which says that, if we propose any passage of power from Westminster to Brussels, there has to be a referendum. That is absolutely key to protecting our interests and to making sure that future Governments cannot give away powers that they should not.

The Prime Minister has made clear his determination to secure free trade agreements with, among others, India, but will he agree to pursue with equal vigour similar opportunities in the emerging markets of Africa?

My hon. Friend makes a very important point. If we look at which continents are going to grow over the next decade, we find that Africa has a very healthy growth rate and that countries such as Nigeria, South Africa, Ghana and others will grow rapidly. We already have very low tariff access from African countries to the European Union, and one thing we ought to try to encourage and look at is a pan-African free trade area, so that more of their trade can take place within Africa and they can have an effective single market, as we do in the European Union.

Given that EU regulations account for 70% of the regulatory burden on businesses, will my right hon. Friend tell the House what steps are being taken to exempt micro-businesses from EU legislation?

My hon. Friend makes an important point. This is a breakthrough in Europe. We have been arguing for a moratorium on new EU regulations for micro-businesses—those employing fewer than 10 people—and that was agreed to at the European Council. We need to ensure that it is put in place rapidly.

The Prime Minister is to be congratulated on what he and others achieved with the sanctions on Iran. Will he tell the House whether there have been discussions between the European Union and Asian countries so that Iran cannot sell to Asia the oil that it is now not selling to Europe? Otherwise, we will be back to where we were before.

My hon. Friend is right to raise that issue. There are two things that we need to do. First, we must ensure that countries that can increase production, such as Saudi Arabia, sell more oil to the countries in Europe that were reliant on Iranian crude. We then need to persuade Asian countries that might buy Iranian crude not to do the deals that they might otherwise have planned. We need to take action on both fronts.

I strongly welcome the agreement to reduce regulatory burdens on SMEs and micro-enterprises. Although I do not expect the Prime Minister to give us a list today, will he tell the House when we can expect to see more detail on precisely which regulatory burdens small businesses in my constituency might see reduced and when?

The formal European Council on the single market, competitiveness and the economy is in March. This was a special European Council to kick-start progress on the single market. I hope that after the March Council we will have a specific list for my hon. Friend.

I welcome the commitments to bring down trade barriers and encourage trade outside the European Union. Will my right hon. Friend expand on the opportunities that British business will have for increased jobs, trade and commerce throughout the world?

This is an important point. In our trade with India and China over the past couple of years, we have seen increases of more than 20%. As there is a difficult situation in European markets, we have to look to the faster-growing markets of the world to grow our exports. That means great challenges for businesses. They have to get out there and sell. The Government have to get behind them. We need to help by opening up those markets, and particularly by allowing services full access to those markets. That is why the free trade deals are so important.

Will my right hon. Friend say whether there were any discussions about the cost of oil and the geopolitical threats that might increase that cost? Will any action be taken by the EU to reduce the cost of oil and thereby reduce the price at the pump for motorists?

We did not discuss the cost of oil. As I have said, Saudi Arabian production is an important issue. The completion of the energy single market should help to bring energy prices down, because it will make the energy markets in Europe more efficient and ensure that there is a proper networked energy grid around Europe.

More than 1 million people are employed in the financial services sector across the United Kingdom. Does the Prime Minister agree that many of those jobs could have been exposed to a significant degree if he had not used his veto in December and secured the agreement yesterday?

It is important to remember that the financial services industry is not just the City of London; it employs 100,000 people in Birmingham and more than 100,000 people in Scotland. It is important that we stand up for those people. Obviously, there is still the danger of eurozone countries going ahead with financial transactions taxes. However, Britain is making the case strongly that there are ways to ensure that the financial services industry pays its fair share through bank levies and the stamp duty on share transactions, without having a financial transactions tax, which would drive these activities to areas of the world that do not apply it. It does not work and the European Commission has said that it does not work. That is why we should reject it.

I thank the Prime Minister and the House for their succinctness, which enabled 72 Back Benchers to question the Prime Minister in 66 minutes of exclusively Back-Bench time. That shows what we can do when we put our minds to it. I am grateful to colleagues.