Skip to main content

Balance of Competences

Volume 548: debated on Thursday 12 July 2012

With permission, Mr Speaker, I will make a statement on the review of the balance of competences of the EU as it affects the United Kingdom.

Membership of the EU is in the UK’s national interests. The Government are committed to playing a leading role in the EU and protecting the UK’s national democracy, but the EU needs to reform to meet the challenges of competitiveness, a stable eurozone and greater democratic legitimacy. The crisis in the eurozone will almost certainly mean great changes for the European Union over the course of this decade. We understand the case for eurozone countries to take steps towards closer fiscal and economic integration as a logical consequence of monetary union. Given the UK’s place outside the euro, it is right that we have said we will not be part of that closer integration. We support the existence already of multiple forms of EU membership. This flexibility is in the interest of both the EU and UK. The EU is not and should not become a matter of everything or nothing.

As the European Union continues to develop, however, we need to be absolutely clear when it is most appropriate to take decisions at the national or local level—closer to the people affected—and in other cases when it is best to take action at the EU or global level. It would be rash to predict with certainty how the eurozone crisis will end, what solutions will be agreed upon and found to be workable and sustainable, and what choices other countries will make. Until we have a better idea of the answer to those questions, we will not know the decisions that all EU countries will be facing.

The crisis in the eurozone has intensified the debate in every country on the future of Europe, and there is no exception to that here. Equally, it is essential for the long-term success of any institution that its members are vigilant in reforming it so that it remains modern, effective, efficient and legitimate. The EU is no exception to that, either, but our national debate and the broader European debate must be thorough and informed.

Today, I have published a Command Paper that sets out in detail how we will deliver our undertaking in the coalition programme for government to

“examine the balance of the EU’s existing competences”.

The review will be an audit of what the EU does and how it affects us in the United Kingdom. It will look at where competence lies, how the EU’s competences, whether exclusive, shared or supporting, are used and what that means for our national interest. These are issues that affect all EU member states and could have a bearing on the future shape of the EU as a whole.

The review will be a valuable exercise for deepening understanding in Britain of the nature of our relationship with the European Union and how it has evolved over time, and will provide a constructive and serious British contribution to the public debate across Europe about how the EU can be reformed, modernised and improved. The review will be taken forward in a comprehensive and analytical way, jointly co-ordinated by the Foreign and Commonwealth Office and the Cabinet Office, and the Minister for Europe and I will answer to Parliament for it.

Government Departments will undertake the review for the areas of EU competence for which they are responsible. For example, the Department for Environment, Food and Rural Affairs will be responsible for conducting the review on the EU’s competence on fisheries, and will be jointly responsible with the Department of Energy and Climate Change for the EU’s competence on the environment. The review will be an outward-facing exercise, both domestically and internationally, and Departments will be tasked with consulting and inviting evidence from everyone with a knowledge of and interest in the exercise of the EU’s competences, including not only Committees of Parliament and the devolved Administrations but businesses, civil society, other interested parties and individuals with expertise in and experience of each area.

We will be as interested to hear from car manufacturers about EU product standards as from non-governmental organisations about environmental policies or security experts about combating organised crime. We will also invite our European and G20 partners, as well as the EU institutions and other international bodies, to contribute evidence if they wish. The review should be seen as a necessary and positive part of reforming Europe. Unless there is a good reason to the contrary, we expect to make all evidence submitted publicly available.

To do justice to the complexity of the issues and the interests at stake, it will be important to allow enough time for this process to cover the necessary ground. Departments will begin substantive consultation this autumn, and reports informed by evidence received on individual areas of competence will be published as the review progresses. The review will conclude in 2014.

The end result will be the most thorough and detailed analysis possible of what the exercise of the EU’s powers does and what it means for the United Kingdom. The review will present the evidence and analysis, and of course it will be for political parties to decide on their own policy recommendations. Such a comprehensive piece of work has never been undertaken before, but it is long overdue. It will ensure that our national debate is grounded in knowledge of the facts and it will be a valuable aid for policy makers in the future. Of course, this country is not alone in giving thought to the future evolution of the EU. Work is also being undertaken by, for example, my colleague the German Foreign Minister, Guido Westerwelle, and a number of my EU colleagues on the future of Europe. Our exercise will inform that wider debate.

With the European Union Act 2011, this coalition Government have already made an historic change to how we handle EU matters in this country, with new powers for Parliament and a referendum lock, so that no future treaty change that transfers powers from the UK to the EU can happen without the express consent of the British people. The work that I am announcing today will help to inform decisions on Britain’s future path in Europe. It is not a consultation about disengaging or withdrawing from the EU. The coalition Government’s policy on Europe has not changed. We remain committed to our membership of the EU and to a strong and stable Europe. [Interruption.] I am smiling: I am amused by one of my hon. Friends behind me. I also believe that the EU’s future lies in continued variable geometry, in different layers of integration. Britain will choose not to take part in some layers, such as Schengen or the euro, but will continue to play a leading part in completing the single market, championing free trade and enlargement, as well as in foreign policy and new areas, such as the unitary patent, which benefits British business.

It is my view, as it is the Prime Minister’s, that in future we must take the opportunities for Britain to shape its relationship with Europe in ways that advance our national interest in free trade, open markets and co-operation. That should involve less cost, less bureaucracy and less meddling in the issues that belong to nation states. This analytical exercise will help to inform political parties and the British public, as they consider how the United Kingdom’s democracy, prosperity and security are best advanced in Europe—and in the world at large —and what kind of Europe it should become.

I thank the Foreign Secretary for his remarks today and for advance sight of the statement.

The Opposition have no objection to a proper, thorough and factual analysis of what the EU does and how it affects us in the United Kingdom, and we welcome the involvement of a wide range of external stakeholders in the exercise announced today. We are also clear, however, that we support a future for Britain within the EU. To cut ourselves off from a market of 500 million customers would imply not just that we had lost faith in Europe, but that we had lost faith in the ability of British companies to out-compete their European rivals. In an era of billion-person countries and trillion-pound economies, we need to find ways to amplify Britain’s voice on the world stage. Where we have shared goals—from climate change negotiations to tackling cross-border crime and human trafficking—working together in Europe makes global agreements more likely.

However, committed as we are to a future within Europe, we also recognise the need for reform of Europe. The Foreign Secretary made only passing reference today to the eurozone crisis, which is still afflicting Europe, so in many ways this was a curiously contextless and rather ahistorical statement, the announcement of which, I fear, owed more to enduring political problems than to immediate policy challenges. Let us remember that President Van Rompuy stated at the European Council just a couple of weeks ago that his plan was to

“submit to the December 2012 European Council detailed proposals for a stage-based process towards a genuine Economic and Monetary Union”.

Given that that timetable is much shorter than the one the Foreign Secretary has set out today for full publication of the internal Government audit, will he confirm that the work initiated today will not be completed and so will not inform the Government’s negotiating position in the critical weeks and months ahead? Given the broad terms of the Foreign Secretary’s statement, will he take the opportunity of his reply to set out more clearly to the House what the Government’s specific negotiating objectives are in the crucial six months ahead?

Every Member of the House knows that it has not exactly been a great week for coalition unity. That is perhaps reflected in the strength of support from the Liberal Democrats Benches for the Foreign Secretary’s statement today—

I am glad to say that what is missing in quantity is indeed made up for by quality on the Liberal Democrat Benches. There are still some true and honourable Liberal Democrats, I am glad to acknowledge.

The statement we have just heard from the Foreign Secretary will do little to create a greater sense of consensus between the coalition parties, I fear—indeed, the project is not even under way yet and already cracks are emerging. The Foreign Secretary’s Liberal Democrat colleagues, including the Deputy Prime Minister’s advisers, have reportedly been claiming that the audit is a small, low-key affair and largely a technical exercise. The Foreign Secretary today makes grand claims about the scale and scope of the project, but the hon. Member for Cheltenham (Martin Horwood), co-chair of the Liberal Democrat parliamentary committee on international affairs, has already said:

“The call for a long list of demands for unilateral repatriation and carve-outs is neither achievable nor desirable.”

Indeed, the Deputy Prime Minister is reported in the newspapers to have already warned that the review must not simply provide a turbulent backdrop to what is already a tense relationship between Britain and its EU partners. Given that the Deputy Prime Minister knows a thing or two about tense relationships, what assurances can the Foreign Secretary give his colleague today that that scenario will not come to pass?

The timing of today’s announcement seems to have more to do with managing the fallout from the recent weekend of referendum shambles than with promoting Britain’s national interest, because the splits on Europe are not just between the coalition partners, but within the Conservative party. The timing seems to reflect growing rumblings from those on the Conservative Benches, many of whom will see today’s announcement as merely another step on the ramp towards an inevitable EU referendum. [Hon. Members: “Hear, hear.”] Right on cue, and from the Conservative Front Bench. Let me therefore take this opportunity to ask the Foreign Secretary an important question that the Prime Minister failed to answer when he returned from last month’s EU summit. If the Conservative party were to propose a referendum premised on a package of powers being repatriated—a list that would probably be drawn from the audit announced today—but the Foreign Secretary was unable to secure such an outcome in his negotiations with members of the EU, would he contemplate advocating withdrawal in a subsequent referendum? I invite him to desist from warning about defeatism and simply to answer the question.

In conclusion, the Prime Minister himself said recently that it is vital for our country

“that we get our relationship with Europe right.”

Much that determines that relationship could well be decided before the Government’s review is completed. The truth is that Britain urgently needs an effective Europe strategy, and an audit, although worth while, is not a substitute for a strategy.

Stripping away one or two of the remarks about political parties, I think that amounted to a welcome for the announcement, as the right hon. Gentleman said that he had “no objection”. That is as near as we get to enthusiasm from Opposition Front Benchers on this subject, so I am grateful to him for what counts as a very strong welcome and I look forward to the Labour party submitting its evidence to the review in due course.

Given that the right hon. Gentleman got into party political matters, let me say that it is a pity that Labour never conducted such a review. It might have helped the Labour Government when they were handing over so many competences without understanding what they were doing, without subjecting them to proper scrutiny in this House and without having a referendum. We remember—[Interruption.] Opposition Members are talking about particular treaties, but it was in the Nice treaty that Labour gave up the veto, which ended up with our being implicated in eurozone bail-outs under qualified majority voting—something from which this Government have now extracted the United Kingdom. The Opposition will therefore benefit enormously—and could have benefited in the past—from this kind of analysis, and I am glad that they have no objection today to its being undertaken.

The right hon. Gentleman asked about our priorities in the coming months. They are, of course, to protect the integrity of the single market. There is much talk about banking union, for instance, although different countries and different commentators mean different things by the term. We will protect the integrity of the single market, but above all our priority is to support measures that will really bring growth to the EU. They include removing barriers to business and pursuing free trade agreements with countries such as Canada and Singapore. Much of that agenda was endorsed at the June European Council.

The right hon. Gentleman went on to ask other questions about the future, and to suggest that the timetables were somehow amiss, but he himself said in an article in The Guardian on 1 July that

“there are also those within the Labour party who have speculated about the possibility of a referendum… We should not decide now because the pressing priority…is…securing Britain’s interests and protecting the single market”.

That is exactly what I have been saying. He went on:

“And we cannot sensibly decide now because none of us can fully predict where Europe will be in a few months, never mind a few years.”

So he does not want to answer the questions that he has just been putting to me about the longer-term future. What we do know is that, whatever happens, we will be in a better position if we have undertaken this work. It should have been undertaken before. It will inform our negotiations, improve our discussions with our partners and allow the public to be engaged in the process. Perhaps it will also lead to Governments undertaking more successful negotiations than the one that he will remember from his time as Minister for Europe, when he gave away £7 billion of our rebate. There is much to learn if we are to avoid negotiations that are so memorably, comprehensively and disastrously unsuccessful as those.

Naturally, we all welcome this initiative. Does my right hon. Friend agree, however, that it is not only about specific powers but about democratic power as a whole, and that that raises the question of the sovereignty of Parliament, and of the wording of the European Communities Act 1972 and its impact on the daily lives of the people of this country? Does he also agree that it is essential to incorporate all those questions in the review, as well as on the necessity of holding a referendum as soon as one can possibly take place?

It will be a wide-ranging review and I am expecting a substantial contribution to it from my hon. Friend, given his knowledge of and long-standing opinions on so many aspects of EU competences. We are not restricting what people can submit in their evidence or what subjects can be addressed. The review will involve the majority of Government Departments, and, of course, all the analysis of the competences taken together will prompt major questions about how democracy works and about the appropriate levels at which decisions should be made. It is not a review about a referendum. We passed legislation last year that deals with the circumstances in which referendums will be held, and it is for each political party to explain the circumstances in which they would hold a referendum. My right hon. Friend the Prime Minister and I have recently discussed that matter, as my hon. Friend knows.

I welcome the Foreign Secretary’s statement, but does he agree with this time line? In July 2009, he leads the Conservative party out of the family of centre right parties in Europe. In July 2012, the Prime Minister announces that he envisages a referendum, and the Foreign Secretary announces today that every green-ink EU obsessive may write to him with their ideas on what needs to be done—I hope that the Foreign Office has a big enough warehouse for all the mail. Does he agree that we will have a referendum in July 2015 or 2016, and that he will arrive at his long wished for moment, when Britain separates itself from the rest of Europe?

When a letter in green ink arrives from an obsessive, I shall check to see whether it has come from Rotherham. I suspect that there is a fair chance that it will have done. The time line that I remember is not far off the right hon. Gentleman’s period as Minister for Europe. In 2004, the Labour Government promised a referendum on the European constitution. In 2005, they failed to hold it. In 2007, they signed the Lisbon treaty, which was very similar to that constitution, without holding a referendum. In 2008, they passed many competences away from this country without understanding what the consequences would be. Now, in 2012, we are ensuring that there will be a proper understanding of the issues. That process will no doubt be informative for the right hon. Gentleman as well.

Together at last.

This has been a memorable parliamentary week, and the Foreign Secretary is topping it off with a moment of history. He has made a statement on matters European that can, at one and the same time, be welcomed by the most arch-Eurosceptic as well as by those of us who are quite relaxed about being described as European federalists. I congratulate him on the squaring of that circle, and I wish him well in his endeavours.

Is it significant that the word “repatriation” did not appear in the right hon. Gentleman’s statement today? Will he confirm that this calm, methodical, thorough review is going to be wisely led by civil servants and that it will not lead to policy prescriptions, which will be left to the wilder elements of individual political parties?

On behalf of all of us who argue for a more decentralised, transparent and democratic European future, I want to say with an element of affection and nostalgia that, today, my mind goes back to the general election in which he led his party and I led mine. He led his on a Save the Pound campaign. [Hon. Members: “We were right!”] He might have been right, but he resigned as leader the day after the general election. None the less, I knew then that, one day, he would come good on Europe. Today is that day, and it would be churlish of me to deny him his moment in the Mediterranean sun.

I am grateful to the right hon. Gentleman for some parts of his question. I well remember that general election, in which, I have to say, I got a lot more votes than he did—but not so many that I did not want to resign the following day. I am grateful for his endorsement of the statement, following the ringing endorsement—“no objection”—from the Opposition. We now have the enthusiastic support even of the Euro-federalist members of the Liberal Democrats. This exercise will therefore begin with strong cross-party support.

I cannot confirm that the review will be led by civil servants, because it is the job of Ministers to lead in Government, but there will of course be many assiduous officials engaged in the process and answering to Ministers, through whom the Government are accountable to Parliament. I can confirm that it will be an analytical exercise. I would not join the right hon. Gentleman in describing those in political parties who will draw policy conclusions from it as the “wilder elements”, as those parties are an important part of the functioning of our democracy. I am sure that the exercise will inform the functioning of our democracy, for which the right hon. Gentleman is a great enthusiast.

The Joint Ministerial Committee’s memorandum of understanding on EU policy states:

“Ministers and officials of the devolved administrations should be fully involved in discussions within the UK Government about the formulation of the UK’s policy position on all issues which touch on matters which fall within the responsibility of the devolved administrations.”

I want to ask the Foreign Secretary two questions. First, was there any discussion at all with the devolved Administrations on the formulation of this review policy? Secondly, does he really think it adequate that Cardiff, Belfast and Edinburgh should be invited to submit evidence to the review? Does that meet the terms of the MOU, which states that the devolved Administrations should be “fully involved” in discussions on policies in which we have competence? He mentioned agriculture, fisheries and the environment: many of those matters are devolved.

They will of course be involved in determining policy. I stress again that this is a review to establish a proper understanding of the use of EU competences and the balance of those competences with the powers of the United Kingdom. It will then be a matter for the political parties or the devolved Administrations to draw their policy conclusions from it. They will be involved in the way that has been set out in the memorandum. The commitment to undertake this exercise is in the coalition agreement; it is part of what the coalition Government said they would do at the beginning. That agreement is not qualified by, and cannot be diluted by, consultations with the devolved Administrations; we are empowered to do this as a coalition. Of course the devolved Administrations will be involved in determining policy, and I look forward to the representations that they make as part of the review.

As the Foreign Secretary rightly says, Europe is changing, perhaps faster than we realise. Our relationship with Europe will change. In debating that, we must be well informed; there is no substitute in politics for being well briefed. Once the information has been analysed, however, what will be the process of drawing it together to reach a conclusion?

As I explained in my statement, the results of this analysis will be published as we go along. There will be many opportunities for individual Departments to do that; then, during 2014, that work will be drawn together. It is then for us all—for Parliament as a whole, for the Government or for political parties—to draw their policy conclusions and base them on that. That process is up to Parliament, up to the Government at the time and up to political parties.

It is important to be fully briefed, but there is plenty of expertise in government and elsewhere. Surely, this audit could be completed by the end of this year, not the end of 2014. That is why many of us are very sceptical about the motivation behind the Government’s timetable. At a time when so many crises face Europe and the world, is it not important to work out what our strategy should be on so many of those important issues, rather than simply having this interminable discussion motivated by political purposes?

It is no good for the Opposition, who never proposed and have never undertaken such a review, now to say that it must all be done in the next few weeks, particularly when they had 13 years in government during which they could have undertaken any such exercise. When this is completed, it will of course be available for political parties to draw on in the next general election campaign and develop in whatever direction—including for the Labour party, if it manages to decide by then what policy it is going to pursue. This will not prevent us in any way from doing the work that we are doing now to protect our national interest. As I mentioned earlier, the Government have already been able to extract the United Kingdom from liability for eurozone bail-outs. We are already working hard, in consultation with the devolved Administrations, on the common fisheries policy and in trying to ensure that the exercise of competence under that policy is used much more at the national or regional level, since the common fisheries policy has been one of the most catastrophic and disastrous of the common policies of the European Union. We are already doing that work in any case; this review comes on top of that work and does not in any way conflict with it.

I wish the Foreign Secretary well in trying to repatriate powers from the EU, but can he explain why he is so unwilling to commit to a referendum on our membership of the EU in the next Parliament, given that this would give us time to have an informed debate, allow the eurozone crisis to play out and fundamentally address the lack of public trust when people hear politicians making promises about matters European?

Again, I am grateful to my hon. Friend for wishing me well on the exercise. This is not about a referendum; questions about a referendum are separate. I believe, however, that for any future public debates or a referendum of any kind about the European Union, this exercise will prove immensely useful—for the public, for Parliament and for all involved in the debate. As I say, my hon. Friend’s question is separate from what I have set out in the statement. My own view is that it is necessary to see how Europe develops, what happens during the eurozone crisis, what structure of Europe we are dealing with and what can be achieved to improve this country’s relationship with Europe before we decide on any such referendum.

Despite our political differences, I have been friends with the Foreign Secretary for over 30 years. In that time, I cannot remember him being a Euro-enthusiast—despite his support for Maastricht. He did say in 1999:

“The British people believe that Britain’s place lies firmly within the European Union”.

Is that still his view?

I was about to call the hon. Gentleman my hon. Friend because we have known each other so long. Indeed, in our days in the Oxford Union, I do not recall him being much of a Euro-enthusiast either. We used to make common cause against the Liberal Democrats, but I am skating over that for obvious reasons today. I do not know whether the hon. Gentleman was in his place at the beginning of my statement, but I did say right at the outset, “Membership of the EU is in the UK’s national interests.” I therefore think that he will find perfect consistency between that and what I said in 1999.

I congratulate my right hon. Friend on embarking on this review. May I query use of the term “competence”, which has a particular legal meaning in European law, particularly regarding fisheries competence, which is now enshrined in the Lisbon treaty? Does he not share my enthusiasm for the direction in which reform of the CFP is heading—to all intents and purposes, to devolve power and decision making back to member states?

I do very much, as I mentioned a few moments ago. The envisaged changes to the common fisheries policy do not amount, of course, to a change in competence—the competence remains with the European Union—but if all goes well, the member states will be accorded much more say in how the measures adopted by the EU are implemented. That, I think, will be immensely beneficial to fisheries policies. That illustrates how the use of competence can be changed. We could, of course, debate whether the competence of the EU in certain areas should exist at all, as well as how it should be exercised. I do not think that we have any problem in using that term, and what is happening in the fisheries policy provides a good example of what can be achieved.

May I press the Foreign Secretary a little on the curious timing of this exercise? To many of us, 2014 sounds suspiciously close to the next general election. Is this not all about preparation for the Tory party manifesto for that election?

The hon. Gentleman is welcome to use this for the Labour party manifesto, and it might make it a much better informed manifesto than previous ones. I do not see any downside to that. This is a democratic country in which election campaigns are meant to be properly and fully informed. There is no disadvantage to the nation in that happening. Moreover, I intend this to be, and it will be, the most comprehensive exercise ever undertaken in this or any country about the competences of the European Union; it is important that it is fully and comprehensively undertaken. As I have said, it is odd that Opposition Members, who never thought of the exercise, never proposed it and were never in favour of it until today, now want it done at greater speed.

As someone present at the launch of the Save the Pound campaign on a wet Tuesday lunchtime at St Albans market—with sizeable public support, as it was market day—I welcome my right hon. Friend’s statement. Does he agree that it should be perfectly possible, alongside this review, to take account of the public’s views and the public demand for a referendum on this subject? The public can see that the power of the European Union is growing day by day, in the exercise of its powers under its existing competences, and that our national democracy and our national sovereignty are being eroded day by day.

Certainly, public disillusionment with the European Union is the greatest that it has ever been. We should be clear about that. I remember my hon. Friend being there on the day we launched the campaign to save the pound; let us be thankful that it was successful. We had precious little help from the other side at that time. [Interruption.] I seem to remember that a certain Prime Minister—the one before the last one—was very keen on joining the euro, so it was important to put him off, which we helped to do. A referendum, however, is a separate question from this exercise. I am not saying that this review is the only thing that will happen in our policy on the European Union. Much else will be happening over the coming months. My attitude towards a referendum is as I expressed it earlier. Discussion about it and the debate within all the political parties about what should be proposed for the future will carry on at the same time as this review.

I welcome my right hon. Friend’s statement, but will he reflect on the fact that some years ago President Giscard d’Estaing himself—a wise European—said that the United Kingdom would need to negotiate for itself a special status in the European Union? I commend my right hon. Friend’s recognition of public opinion, but at least two thirds of public opinion favours a looser trade and co-operation relationship with the EU, rather than this disastrous process of integration. Will he shout from the rooftops that only a Conservative Government will deliver the renegotiation that British people want?

Like my hon. Friend, I remember the statements of President Giscard d’Estaing. I am sure that my hon. Friend will make extensive contributions to the review, and I look forward to them. Although I shall of course be shouting from the rooftops about what a Conservative Government will do, I shall not be doing so from the Dispatch Box now, given that I represent a coalition Government as Foreign Secretary. However, I look forward to doing the shouting at the appropriate time.

In view of the absurd statement this week by Mr Barroso that if we left the EU we would be reduced to the status of a Norway or a Switzerland, perhaps there should be a review of his competence. Incidentally, Norway and Switzerland have the second and fourth highest GDP per capita in the world. Life outside the EU can go on if countries enjoy full trading relations.

I will not stray as widely from the statement as my hon. Friend has asked me to, but I urge him to submit his thoughts to the review. The review can give rise to policy conclusions, and he has given a strong hint of the conclusions that he might draw from it. I look forward to discussing that further in the future.

I warmly welcome the Foreign Secretary’s statement about what will be a very important piece of work, especially since, as we all know, Europe will have to change dramatically following this dreadful eurozone crisis. Does he agree that the debate that follows will need to be conducted in a calm and rational way, given that, as he has said, Britain’s interests lie in full and wholehearted membership of the European Union?

It is important for the debate about Europe to be well informed. Many Members on both sides of the House will cite instances in which European directives or EU competences are used in a way that is unnecessarily meddling or interfering at local or national level, but it is equally important to understand the importance of the single market to the economy of the United Kingdom. I hope that the review will draw out those issues and establish a huge amount of common ground, even among people whose opinions about the European Union differ, so that the debate can then focus on the genuine differences.

At last! I congratulate the Foreign Secretary on the statement and the Command Paper. By the end of this audit, we shall know exactly how the EU has bound its tentacles throughout Government. We shall also know the cost of our membership, and, through the work of the Fresh Start project—that is just a little advertisement—we shall know that we have options for change. Does the Foreign Secretary agree that all this will provide the British public with the information that they require to make a judgment on what any new relationship, post-eurozone crisis, should look like?

I hope that the review will indeed provide that information. Not everyone will think that the right conclusion has been drawn, but it will make the biggest single contribution to the provision of information on which we can base policies in the future. I welcome the work that has already been done by, for instance, the Fresh Start group, of which my hon. Friend is a leading member, because that is exactly the kind of active, positive and constructive thinking about Europe that we need to see and that should feed into the review.

I congratulate the Foreign Secretary on the review. Can he confirm that it will examine the costs of EU regulation, not just in its own context but by comparison with the costs of regulation around the world? It worries me that the UK currently ranks 83rd in the World Economic Forum’s regulation league table.

Of course the review will be able to examine that issue, and my hon. Friend, among others, will be able to make representations about it. Part of the argument about how competence is exercised, and about the level of government at which it should be exercised, relates to the costs that are involved, and it will therefore be wholly legitimate to consider such questions.

I welcome the review, but may I express my regret that it does not go far enough? My right hon. Friend is right about so many things, and indeed I was with him until the second sentence of his statement—[Laughter]—in which he said, “Membership of the EU is in the UK’s national interests.” I do not agree with that, and nor do an increasing number of my constituents. Rather than asking what is the balance of the relationship between Britain and our EU partners, should not the review ask whether the United Kingdom is better off in or better off out of the whole thing?

I appreciate the fact that my hon. Friend was with me until the second sentence of my statement. However, given that in the first sentence I merely said that I was going to make a statement, I will not take that as a ringing endorsement.

Of course my hon. Friend has a strong view, which is different from mine, about membership of the European Union. However, I think that he will concede that reviews of this kind, which spell out in detail how competence is exercised and, in many instances, what the costs are, and which set out properly the facts of how it is exercised in a single market, in directives and in many other contexts, can at least ensure that any debates about that issue, now and in future, are better informed and take place on the basis of a common understanding of the facts that would otherwise be lacking.

I welcome my right hon. Friend’s announcement as a crucial first step towards Britain’s inevitable renegotiation of its membership of the EU. Does he expect the review also to examine the jurisdiction of the European Court of Justice and, in particular, its tendency to widen the scope of certain directives beyond the extent that national Governments originally envisaged?

Yes, it is part of the history of EU competence that it has sometimes been extended, not by treaties and not by the decisions of nation states, but by rulings of the European Court of Justice, or by an expansive interpretation of the treaties by the European Commission. As we go through each of the issues, the way in which competences have developed in the past will be a legitimate factor in the assessment of how competence should be exercised in the future.

Like many of my hon. Friends, I warmly welcome the statement. I am keen to see a fundamental realignment of the UK’s relationship with Europe. Does my right hon. Friend agree that the prospect of a more multi-tier Europe should hold no fears for us, and, in that spirit, can he confirm that the UK will not be part of an EU banking union?

We will not be part of an EU banking union. There are, of course, supervisory arrangements in respect of which we have common arrangements with the rest of the European Union, but the United Kingdom will certainly not become part of a full-scale banking union, participating in the provision of mutualised deposit guarantees. I hope that that, too, is common ground across British politics.

As for my hon. Friend’s question about a multi-tier Europe, I believe that the European Union, however it develops, will have to become more flexible. The unitary patent is an example of that, as is, in a different way, the fisheries policy as it develops. As the EU enlarges, as we hope it will, it is inevitable that it will become more flexible, and essential for it to do so.

I have no objection to the statement, but the Foreign Secretary is being a little coy. Is it not possible that the Conservative party will go into the next election promising a renegotiation and then a referendum, which will lead to a 100-seat Conservative majority followed by the renegotiation and then the referendum, in which the people will be able to choose whether to accept the renegotiation or pull out of the EU?

I am glad my hon. Friend has no objection—which is quite rare when it comes to statements, so I also appreciate that endorsement. He is asking about a party issue, whereas I am speaking as the Foreign Secretary of the coalition Government today. I am sure we will profit in our party meetings from discussing the issues that he raises.

I welcome the statement, but will the audit include a cost-benefit analysis of our relationship with the EU, and will the Foreign Secretary make my constituents of Harlow incredibly happy by saying that it will look at immigration and that we will get back immigration as our area of competence, not the EU’s?

The review will, inevitably, look at costs in most of the areas that I have described, but that is a different exercise from trying to arrive at a single figure for cost and benefit. There are many aspects of our relationship with the EU to which it is difficult to attach a financial benefit or cost. In the work that I do in respect of a common policy towards sanctions on Iran or Syria, for example, it is beneficial to the UK that we act with our partners, but it is hard to attribute a financial benefit to that. So I do not think one can arrive at a single number, which my hon. Friend may be looking for, but it is, of course, possible within this analysis across many different policy areas to look at costs and benefits, and it is absolutely possible in the work the Home Office will do to look at migration responsibilities and issues, and I know that my right hon. Friend the Home Secretary is very keen to do so.

I very much welcome the positioning of this review as an outward-facing exercise. My right hon. Friend states that the relationship between the EU and the member state is a subject of intense debate in many member states, so will he take every opportunity to bring like-minded member states with us in our bid to recast the balance of power, so that the competitiveness of Europe as a whole improves in relation to the growth markets in the world?

We are, of course, already engaged in trying to persuade like-minded member states that we must do the essential things in respect of permitting growth to take place in the European economy. That includes doing everything we can to limit the further application of the working time directive, and it means that directives currently being debated—the pregnant workers directive and the posted workers directive—that are further unnecessary burdens on businesses must be resisted. So we are already engaged in that work, quite separately from this review and analysis.

I welcome the statement. Does the Foreign Secretary agree that, as we are pursuing a radical policy of localism in Britain, decentralising power to local government and local communities, that spirit of localism should also inform our thinking about our future relationship with the EU?

Yes, I very much agree. I have mentioned the common fisheries policy and the decades-overdue changes that are now at least being contemplated, and that would lead to more local, regional or national decision-making. It is certainly my view that we need to go in that direction in more policy areas.

The vast majority of my constituents rightly believe that we have given away too many powers to the EU, and they will never forgive the previous Government for signing us up to the European constitution without the promised referendum. I welcome the statement, but will my right hon. Friend confirm that the review will be very open and transparent and, importantly, that all evidence submitted will be made available to the public?

I agree: it is my view as well that too many powers have been given to the EU. That has certainly happened—and it has happened notably in the past few years under the Lisbon treaty. I therefore think that my hon. Friend’s constituents are right about that. I can confirm that, unless there is some powerful—and at this stage, very unexpected—reason to the contrary, the evidence given will be publicly available.

I welcome the statement—and, with due deference to my hon. Friend the Member for Kettering (Mr Hollobone), may I say that I actually rather liked all of it? I am pleased that the Foreign Secretary mentioned Guido Westerwelle, who, somewhat famously, said at the February 2010 Munich security conference that it was his aspiration to move towards a European army with full parliamentary control. Will my right hon. Friend confirm that this review will look at the European security and defence policy and the so-called EU defence identity?

Yes, the review will, and I shall welcome my hon. Friend’s contribution to the review—as I welcome his endorsement of this statement. My friend and colleague Guido Westerwelle and I have quite different views on such issues. He has talked about a European army. I do not believe that can ever be contemplated, and I will maintain quite a strong difference of view with some of my colleagues about that.

The latest opinion poll recorded that 48% of people wanted to leave the EU and that only 31% wanted to stay in. The Foreign Secretary is in the minority therefore, but would it not be more sensible for him to take that view at the conclusion of his audit, rather than prejudging it before it starts?

As I have said, hon. Members and political parties will be able to draw their policy conclusions from this review, and they will also, no doubt, take into account events that happen in the meantime. I am stating the policy of the coalition Government and pointing out that that has not changed, but in doing so, I do not prejudge the opinion that anybody could come to at the conclusion of this review.

Following on from the last question, if the findings of this review demonstrate that our membership of the EU is damaging the prosperity of UK citizens, does my right hon. Friend not agree that the right and logical thing to do will be to give the British people the option to leave the EU by holding a referendum?

Again, my hon. Friend is, in line with his consistently held views, trying to take me on to a different and further debate. What I am setting out today is a process that will inform the wider debate. It might inform it in different directions, but it will help to ensure that the debate takes place on the basis of established facts, and I am sure that that will be beneficial for all.

One of the many mistakes made by the last Labour Government was the blatant failure to control immigration from new entrant states to the EU. Will my right hon. Friend confirm that the effect of immigration from new entrant states and UK immigration controls will be part of this review, as will the benefits and disbenefits of the policy pursued by the last Labour Government?

As I pointed out in an earlier reply, representations can be made on migration issues. The Home Secretary is keen to look at that area in this review, and I am confident it will be looked at. I look forward to such representations being made.

Thank you, Mr Deputy Speaker; I know my place.

I congratulate my right hon. Friend on this initiative, but does he agree that when the results of the audit are known, thanks to the supine posture struck by previous Governments, the British people will be shocked at the extent to which the EU involves itself unnecessarily in our affairs?

Well, they might be shocked in some areas. I am trying not to prejudge the review, but I cannot exclude the possibility that they will be shocked by some of its findings. I am delighted that there has been such a warm welcome for the review from those who expect to be shocked, those who want to be shocked and those Opposition Members who never seem to have been shocked by the extent of the powers that they handed away.