With permission, Mr. Speaker, I shall make a statement on the European Council that took place in Brussels on 4 and 5 November.

I should like to thank Prime Minister Balkenende and the Dutch Government for their arrangements for the summit, and for the way in which they have conducted their presidency to date. The Council was inevitably dominated by Iraq, given the presence of Dr. Allawi, the Iraqi Prime Minister.

First, let me express what I know will be the sentiments of the entire House in sending our profound condolences to the families of the Black Watch soldiers killed by a terrorist bomb in Iraq last week and our sympathy to those soldiers injured yesterday in another terrorist attack. We salute their dedication, professionalism and, above all, sheer and undaunted courage. They are an example to us all and we can and should be very proud of them.

Let us also be very clear about the fundamental importance to Britain's security of what the Black Watch and, indeed, the British armed forces in the south of Iraq are doing. Defeat of terrorism in Iraq is defeat for this new and virulent form of global terrorism everywhere. A democratic Iraq is the last thing the terrorists want to see. It is precisely for that reason—because victory for the terrorists would damage security around the world, including here in Britain—that we have to hold firm, be resolute and see this through, including in Falluja.

The action by allied and Iraqi forces under way in Falluja would cease now, immediately, if the terrorists and insurgents who are using Falluja as a base for terrorism laid down their weapons and agreed to participate in the elections. Over the past few months, as he explained today, Prime Minister Allawi has tried to persuade them to do so. They have refused, not because they are fighting a foreign occupation—if the terrorism stopped, American, British and other troops would leave Iraq—but because they are fighting democracy. They are fighting to stop democratic elections, supervised by the UN and due to take place in January. They know that while Falluja remains outside the control of the UN-endorsed Government, they can use it to wreck elections. Why do the terrorists fear elections? Because they know that given the chance to vote for their own Government, Iraqis would reject the extremism and fanaticism these terrorists represent.

The powerful speech made by Dr. Allawi to the European Council made precisely those points. He appealed for Europe's help. Some promised support of a military nature; others promised only financial support. But all of the Council agreed that it was in the interests of global security for Iraqi elections to take place. The Council also agreed a comprehensive package of EU assistance for Iraq, including a further programme of financial and logistical support for the elections, and financing for the UN protection force. This is on top of €300 million of humanitarian and reconstruction support from the EU over the past two years.

Following the re-election of President Bush, the Council also agreed that a close transatlantic partnership was fundamental to building international peace, security and prosperity, and that we now need to strengthen that alliance so that we can intensify our work together in addressing the main international threats and challenges of the moment, including regional conflicts, terrorism and the proliferation of weapons of mass destruction.

The Council also heard a presentation from the former Prime Minister of the Netherlands, Wim Kok, on his mid-term review of the Lisbon strategy on European economic competitiveness. He rightly concluded that Europe has to do far more to improve its underlying economic performance if it is to respond to the challenges of Asia and the United States, and he sensibly highlighted the importance of completing the single market, developing flexible labour markets, and promoting sustainable growth. The Council adopted a new five-year work programme of measures in the area of justice and home affairs. There are great benefits for the UK in co-operation with our European partners on these issues. Illegal immigration affects all member states. However, the opt-in protocol for Britain—[Interruption.]

Order. Mr. Bellingham, you had better be quiet, otherwise I will put you out of the Chamber.

The opt-in protocol for Britain, negotiated in Amsterdam in 1997, remains. It is also enshrined in the new constitutional treaty. We have used it successfully over the past five years to opt in to new measures on asylum and combating illegal immigration, and to opt out of measures on legal migration, frontiers and visas. The protocol gives us the right to decide whether to participate in each item of the EU work programme and makes nonsense of claims that Britain has given up the right to control its own borders. If, of course, we opt in because we want a particular measure, it is in our interests that in a Europe of 25 and soon 27 or 28 countries the use of a veto by another country cannot block the measure.

Finally, the President-designate of the Commission, José Manuel Barroso, briefed us on his proposals for restructuring the new Commission. He has reacted decisively to resolve the dispute with the European Parliament, and I am confident that as a result the new Commission will be able to take office soon. In summary, the meeting once again underlined the importance to Britain of maintaining both a strong relationship with the United States of America and a strong place in the Councils of the European Union. Both partnerships are vital to the British national interest and it will remain the policy of this Government at least to nurture both.

I join the Prime Minister in expressing our deepest sympathy to the families of the soldiers of the Black Watch who have lost their lives and our good wishes for a speedy recovery to those who have been injured. I join, too, in the tribute that the Prime Minister paid to the outstanding dedication, professionalism and courage of the Black Watch.

I welcome both the European Council's discussions with Prime Minister Allawi and the financial contribution towards elections in Iraq. I support everything that the Prime Minister said about the importance of defeating terrorism in Iraq and elsewhere. Events in Samarra have shown that bringing an area under ostensible control does not, sadly, always mean an end to insurgency. Can the Prime Minister tell the House as much as he can about the coalition's plans to deal with the situation that is likely to arise in Iraq after the battle for Falluja?

I welcome the Council's agreement on the importance of a close transatlantic partnership and on the need to strengthen the alliance. What specific proposals does the Prime Minister have to bring that about? The communiqué emphasises the middle east peace process, although his statement was silent on the subject. Is it not time to turn again to the road map? Should we not now seize the moment to make real progress on the ground towards a secure Israel within internationally recognised borders and a viable Palestinian state?

The European Council also discussed Iran's nuclear programme. Has preliminary agreement been reached on that issue with Iran? In the past, Iran has not complied with the undertakings that it has given, so what measures are proposed to make sure that it does so this time? The communiqué also expresses grave concern about Darfur. Has not the time come for immediate United Nations action, including automatic sanctions, to ensure that the Sudanese Government reign in the militias? Should not the African Union forces be given the mission to keep the peace, rather than just monitor the situation, to put an end to the dreadful attacks on civilians that still continue in that area?

The Prime Minister has boasted endlessly about progress on economic reform in Europe. In 1998, he said

"We have to reform Europe and we are winning that battle".

In 2000, he said that there had been

"a sea change in European economic thinking . . . away from heavy-handed intervention and regulation, towards a new approach based on enterprise, innovation and competition."—[Official Report, 27 March 2000; Vol. 347, c. 21.]

But is not that all talk? Has not Romano Prodi admitted that economic reform in Europe has been a "big failure"? Has not the director general of the CBI said that Europe has got to change? Has not Wim Kok said that

"too many targets will be seriously missed"?

The aim of the Lisbon agenda was to make Europe the most dynamic economy in the world by 2010. Is not that just a pipe dream? Will not we all pay the price in terms of lower productivity, lower living standards and fewer jobs?

Promises on economic reform are not the only areas where the Prime Minister has been all talk. Four years ago, he said that he did not want a

"single, legally binding document called a Constitution"

yet that is exactly what he signed a week ago. The director general of the CBI has said that the constitution will not help business. The Prime Minister's own former chief economic adviser has said that it will

"entrench Europe's economic failings and drag Britain down too".

[Interruption.] Well, this was someone to whom the Prime Minister listened for six and a half years, so I think that his views might be entitled to a modicum of respect. Is not it the case that the constitution will make Europe's economy even less flexible, even less competitive and even more sluggish than it is today?

Earlier this year, the Prime Minister promised that

"we will retain completely our control over our asylum policy".

But was not that promise all talk? At the summit, a "common European asylum system" was agreed. The communiqué that the Prime Minister signed says:

"the Constitutional Treaty greatly increases the powers of the European Court of Justice in that area".

Does not that mean in plain English that more and more decisions on asylum and immigration will no longer be taken in this elected Parliament, but will in future be taken by the unelected judges of the European Court? It is no good the Prime Minister's talking about opt-outs when he has chosen to opt into all the major measures on asylum.

Is not all this a huge lost opportunity? Are not there practical policies that would turn some of the Prime Minister's rhetoric into action? If the Prime Minister means what he says about listening to people on Europe, why will not he match our pledge to set a date next year for the referendum on the constitution so that the people can have their say? If he means what he says about a modern Europe, why does not he put the case for greater flexibility, including the return of powers from Brussels to Britain so that we are no longer forced to accept so many new regulations that we do not support?

In 1997, the Prime Minister promised to

"lead a campaign for reform in Europe".

Seven and a half years later, in a diverse Union of 25, and in a fiercely competitive world, is not the need for a modern, flexible, reformed European Union more urgent than ever and under this Prime Minister, despite all his talk, are not we further away from it than we have ever been before?

First, let me deal with the questions on Iraq. In respect of Samarra, Najaf, Tal Afar and other places that have been taken back into the control of the Iraqi Government and Iraqi forces, it is of course true that terrorists will carry on actions in those places, as they did in Samarra just a few days ago.

There are a couple of interesting points, however. When those terrorists have been cleared out of these cities, it has become very obvious, contrary to what we were told beforehand, that they did not enjoy the support of local people; on the contrary, local people were all too glad to get rid of them so that they could get back to the lives that they wanted to lead.

Let us be clear that the purpose of the action in Falluja is to stop it being used as a base for terrorists and insurgents who are killing innocent people in Iraq and anybody who tries to make the country better. If and when we take back control of Falluja so that it is in the control of the Iraqi Government, a process of reconstruction will follow, as happened in Samarra and Najaf, where literally hundreds of millions of dollars are being spent on reconstruction projects. The people can then participate fully in the elections. I do not minimise the difficulties but it is essential for the holding of democratic, free and fair elections that the power and grip of the terrorists and insurgents in some parts of Iraq be broken. That is why Prime Minister Allawi has authorised the operations.

It is extremely important that we make progress on the middle east now. Progress must be towards a two-state solution; an Israel confident about its security and a viable, independent Palestinian state. It is essential to take measures to make progress on that. I hope that we shall do that as soon as possible. As I said when I congratulated President Bush on his re-election, it is the single most pressing political challenge of the moment.

We are still at the point of negotiation on Iran. A series of issues has been agreed at political director level, but not yet at intergovernmental level between the European three—France, Germany and the United Kingdom—and the Iranian Government but we are hopeful that we will be able to make some progress in the next few days.

On Sudan, it is important to make it clear that not only the Sudanese Government should exercise restraint; some of the Sudanese rebel groups must do so. A series of measures has been laid down for the Sudanese Government and they must follow them. If they do not, there has to be reference to the Security Council and necessary measures must be taken.

I agree with the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) that the African Union should not only increase the number of troops available there but make it clear that, if possible, it can keep the peace as well as monitor what is happening there. However, it is a difficult and delicate situation for the troops that are going into it. We are watching the situation carefully. My right hon. Friends the Foreign Secretary and the Secretary of State for International Development are in constant touch with their opposite numbers in other capitals and with the Sudanese Government. However, the situation remains serious. If anything, it has got worse rather than better in the past few weeks. If we do not get obedience and compliance with the measures that the international community laid down, we will have to revert to the matter at Security Council level and take action.

It is worth pointing out that, since 1999, some 6 million jobs have been created in Europe and liberalisation has taken place in many sectors under the Lisbon strategy process. I agree that it is important that we do more but the right hon. and learned Gentleman's policy of being a semi-marginalised player in Europe will not help to get economic reform. As for the woeful things that he claims will happen if the EU constitution is passed, I merely point out that he used to make the same predictions when he was Secretary of State for Employment in the previous Government about the social chapter. I think I remember his saying that 500,000 jobs would desert Britain if we signed the social chapter. We signed it and 2 million extra jobs have been created since. His powers of prediction are not good.

I am surprised that the right hon. and learned Gentleman opposes our opt-in on asylum. A few months ago, he made a speech in which he said that a process whereby countries decided whether to opt in to specific measures was precisely the direction in which Europe wanted to go. We have delivered that, but the moment that we do so, he switches around 180°, in his usual opportunistic fashion, and says that it is a disaster for the country.

The right hon. and learned Gentleman mentioned the charter of rights. Let me read part of our protocol to him. It states:

"No decision of the Court of Justice interpreting any such provision"—

to do with asylum and immigration—

"shall be binding upon or applicable in the United Kingdom."

That destroys the effect of the right hon. and learned Gentleman's point. As for his view that we should have a bold strategy of renegotiating the existing membership of the European Union, it is, as some his hon. Friends have pointed out, simply not on the table. He would have to get the agreement of every one of the other members to renegotiate that. How many members have agreed? [Hon. Members: "Norway."] I think we are back to the Norway issue.

Following the right hon. and learned Gentleman's comments at the weekend, it is extraordinary that, in his first year as Conservative leader, he has managed to achieve a foreign policy position that would make us a marginalised member of the European Union and not welcome in the White House either. Only his leadership could have brought the Conservative conception of foreign policy to such a pass.

I thank the Prime Minister for his statement. May I join him, on behalf of my right hon. and hon. Friends, in extending our condolences to the families of the Black Watch personnel who have been killed or injured, as well as to those of the very brave civilians who are giving their support and assistance to the Black Watch in their extremely dangerous job? The families not only of serving Black Watch personnel but of the Scots Guards, who have reportedly been placed on replacement standby, would welcome some clarification of the Government's position on possible replacement forces, given that they are clearly adhering to their view that the Black Watch will be home by Christmas. The House and the families concerned would welcome any clarification that the Prime Minister can give them on that issue, not least because there were contradictory reports in the media this weekend on whether replacement forces would be deployed at the end of this period.

Whatever the original principled disagreements over the basis for the war, and, indeed, the more recent divergences of view over what many of us regarded as a strategic political and military shift over the Black Watch deployment, there is obviously consensus on wanting to see the democratic timetable and an independent Iraq achieved, and on our having no truck with terrorism. I am sure that the Prime Minister will acknowledge, however, that the real concerns over this American-led assault on Falluja—not least in terms of the civilian casualties involved—give rise to fair and legitimate questions. These questions have been raised on the international stage by Kofi Annan, the Secretary-General of the United Nations, and they are also arising within the Iraqi interim Government, not least in the different viewpoints now being expressed by the Prime Minister and the President there.

Does the Prime Minister agree that, whatever the events of the next few days and weeks in Falluja, it is essential that the Americans' conduct does not squander any moral capital or undermine the legitimacy of the democratic process, especially if that were to result in a Sunni boycott of any elections taking place in January? On a practical as well as moral level, will the Prime Minister address the question of what contingency plans have been put in place to deal with those insurgents who have already fled Falluja, or who will in due course be flushed out of the city and move to other parts of the country, perhaps to carry on their notorious activities there? Formal hostilities in Falluja are commencing as we speak, so I am sure that the Prime Minister will acknowledge that these are responsible questions to which the House will genuinely want to return in due course.

On the allied issue of Iran, the Prime Minister has already responded to some of the discussions that have taken place. He has an important summit meeting coming up later this week with President Bush, which is surely welcome, given the agenda that will be in front of them. If, as he suggested a moment ago, further discussions among the three European powers—the United Kingdom, France and Germany—will be taking place over the next few days, is he hopeful that he will be in a position to ask the President to endorse the strategy of these three countries in regard to Iran later this week in Washington? On completion of that summit meeting, does he intend to return to the House with a further statement of this kind, perhaps this time next week, to enable further discussions to take place?

On the issue of the eventual composition of the European Commission, does the Prime Minister agree that the way in which the European Parliament, as the directly elected representative body of all the member states, was able to have an impact on the President of the Commission should encourage one and all of a Eurosceptic disposition or otherwise that it is the proper forum in which proper European parliamentary pressure can be exerted to achieve a healthier, more desirable outcome? Does he also agree that this recent crisis, so-called, in fact redoubles the argument for a smaller Commission—ultimately—of precisely the type that the constitution puts forward?

Finally, on the issue of the constitution and the referendum pertaining to it, the Prime Minister has said that it is the Government's position that there should be a referendum in due course. Will he confirm that the Government, irrespective of what might happen in referendums that may precede one here, will proceed with a referendum, come what may, in this country? If the type of economic liberalism and greater economic flexibility, to which he alluded in his statement and which were discussed at the summit, are achieved, will he perhaps, on a future occasion, see scope for doubling up a referendum on the constitution with one on the single currency?

First, in respect of Iraq, let me say that although we had a disagreement about the war, I accept entirely that the questions the right hon. Gentleman is asking are perfectly legitimate ones to ask in this connection. I have made it clear that the Black Watch deployment will be finished so that the Black Watch is back in time for Christmas. It is not anticipated that the Scots Guards will replace the Black Watch in the job that it is doing at the present time.

I also entirely agree that the important thing is to ensure that the democratic elections in Iraq go ahead. As I think we saw with Afghanistan, what happens in the course of the movement towards democracy is that some of those people who were anti-democratic forces end up on the defensive because people can see that there is a democratic process they can take part in. The power of some warlords in Afghanistan was broken not in the two years after the invasion, but in the few months running up to the democratic elections.

The decision in respect of Falluja was taken by the Iraqi Government. It is really important that people understand this. Prime Minister Allawi made it very clear when he was appointed by the United Nations—endorsed by the United Nations—back in June that decisions of this nature were for him. Anyone who heard his press conference today, including his description of exactly how those terrorists and insurgents are using hospitals, schools, mosques and other places to store explosives and to try to ensure that in removing them there is the maximum damage done, could hear from his statement how passionately he believes that this is important. I understand that the decision has also been endorsed by the National Assembly. The very fear that he and others have is that if these terrorists and insurgents are allowed to carry on effectively making no-go areas in Iraq for the Iraqi Government, the issue of elections will be made more difficult.

That brings me to the UN and the Secretary-General's letter. He said in that letter that the Iraqi elections are what he called, I think, the keystone of progress in Iraq. That is true. It is true also that he went on to express reservations about the action in Falluja, but as Prime Minister Allawi says, without the action in Falluja the keystone of the democratic process may be at risk. That is the important reason for doing it.

I think the Secretary-General is right also in saying it is important that we retain the moral high ground in fighting for elections in Iraq, but I say this to him and to others: part of us doing that is to keep emphasising the whole time to people that if the terrorists and insurgents would stop, elections would go forward. There would be full participation by Sunnis and others in those elections. Everyone wants that to happen. If the terrorism and insurgency stopped, there would be no need for American and British and other countries' troops to help the Iraqi forces before they are able to look after Iraq on their own.

The truth of the matter is that it is the terrorism that keeps troops from America, Britain and elsewhere there. If it stopped, of course, the Iraqi Government would be able to assume control of those areas, the UN-sponsored elections would take place and we would have a democratically elected Government. That is why I say to people that the absolutely critical argument to understand is that these terrorists are not fighting foreign troops because of their presence—they are fighting them because they are an obstacle to preventing democratic elections. They know that if democratic elections happen, people will never give up democracy.

In Afghanistan, turnout was highest among women, and highest in the areas where the Taliban used to hold sway. It is obvious from the past few weeks, I am afraid, that the terrorists have an increasingly sophisticated strategy, in relation to how they operate, what they say and how they play the modern media. They are trying to ensure that they focus attention not on their attempt to prevent democracy but on the presence of foreign forces in Iraq, when they know perfectly well that those forces would leave if only the terrorism stopped.

In respect of Iran, the Americans, France, Germany and the UK take the same line: we have all made it clear that it is not acceptable for Iran to acquire nuclear weapons capability. It should come into compliance with the International Atomic Energy Agency. We are trying to put maximum pressure on it to do that. I am sure that the right hon. Gentleman would endorse that strategy, which we all endorse.

In respect of the European Parliament, I sort of agree with what the right hon. Gentleman says. In respect of a smaller Commission, I entirely agree with what he says—in time, I think that that is important. We have made it clear that we will have a referendum on the EU constitution. As for combining that with one on the euro, we have always made it clear that membership of the single currency must be decided on the basis of the economic tests, and that remains the case.

Was it not churlish of the Prime Minister not to congratulate the Leader of the Opposition on his first anniversary as leader, since the right hon. and learned Gentleman will not be around to celebrate a second anniversary?

Order. The right hon. Gentleman is out of order. I call Sir Stuart Bell.

I am grateful, Mr. Speaker, for the opportunity of answering a question on behalf of the Prime Minister.

However, the Prime Minister, in his statement, referred to our strong relationship with the United States and our strong place in the European Union's Councils. He said that that was Government policy and that it was in our national interest, but were there not siren voices in the Council indicating that competition between the European Union and the United States was a better policy than competition and collaboration? Will he not reiterate that that transatlantic co-operation and closeness to which he referred should also be the policy of the entire European Union?

Obviously, I agree with my hon. Friend. In so far as there are any voices saying that Europe should try to set up a rival pole of power to the United States, I think that it is far better that we co-operate strongly together. Of course, that is another reason why it is important for Britain to stay part of the European Union and a key player in Europe. It cannot be stressed too often that many countries around the table in Europe—let us remember that 12 out of the 25 have troops in Iraq—are strong supporters of the transatlantic alliance and need Britain arguing that case with them.

Will the Prime Minister now answer the core argument in the letter of the Secretary-General of the United Nations, which is that an attack on Sunni-held Falluja by mainly Shi'a militia, under cover of American firepower, far from making it more likely that there will be peaceful elections there in January, will prove dangerously divisive for the future social and political unity of Iraq?

That is simply not the case. It is not the Sunni-held town of Falluja: the town is held hostage by terrorists and insurgents. If they stopped and laid down their weapons, that town would have its own municipal democratic elections, and the town as a whole could participate in the Iraqi elections. Surely what the hon. Gentleman and every democrat should say is, "There is no need to fight; if you believe in what you are doing, stand in the elections." What Prime Minister Allawi would say to him is that the very purpose of the terrorists, many of whom are not Iraqi, never mind from Falluja, is to stop the democratic process. Surely all of us who are democrats, whatever we think about the war, should agree with the Iraqi Government.

Many of us feel that since the American elections there is an even greater need for very close integration with Europeans on our foreign policy. Was my right hon. Friend able to secure the full backing of European Union partners for our aid and development programme, and particularly our concentration on Africa, for when we hold the presidency—we hope—of both the European Union and the G8 next year?

My hon. Friend is right to say that aid and development are an important element of our partnership in the European Union. I believe that there is wholehearted support for that, and I also believe that there is support for it in the United States of America. It is important, therefore, for us to use not just the EU presidency but the G8 presidency to further that agenda. As my hon. Friend will know, we have selected climate change and Africa as the two key subjects for our G8 presidency.

Given widespread concern about the appalling situation in Iraq extending and not being contained, will the Prime Minister and the European Council make it abundantly clear that we are wholly opposed to the bombing or invasion of Iran by America, Israel or anyone else? Will he seek to remind his friend President Bush that it is only a few years since the Americans were supporting, and providing weapons of mass destruction for, their then friend Saddam Hussein so that he could invade Iran?

No one is talking about an invasion of Iran. No one has ever talked about it, to my knowledge. I think it is completely absurd of us to talk in this way. However, it is obviously important for Iran to face up to its obligations under the International Atomic Energy Agency. It should also be recognised that our reasons for taking action against Saddam Hussein—going back over 12 or 13 years—were his invasion of Kuwait, his defiance of United Nations resolutions, and the plain intent that he had to develop weapons that cause immense damage not just to the middle east but to the wider world.

Is the Prime Minister aware that, now that we have these statements on European summits, no one—with the exception of the leader of the Liberal Democrats—seems to care about the euro or the single currency any more? Are there any long faces when he meets these people? There has been all this talk about our having to join. Seven and a half years have elapsed, and we have kept our promise. I hope everyone understands that. Will the Prime Minister tell them that, at least until the next election, we will not have anything to do with it, and will leave the Liberal Democrats to play with their own little toys?

I will not put it exactly like that, but my hon. Friend makes an important point. For years we have been told, particularly by the Conservatives, that our ability to decide whether we want to join the single currency will somehow be taken away by Europe. The fact is that we have that right—we have it absolutely—and we have made it clear that in the end it is a decision for the British people.

The Prime Minister referred to Wim Kok and his indictment of the way in which Europe has been going. He has also referred to the CBI. He will know that today the president of the CBI issued a similar indictment. He also knows that David Arculus, the head of his own Better Regulation Task Force, has said that this is costing £100 billion a year in over-regulation, much of which emanates from the EU. Does he accept that in the past seven years he and his Government have agreed to a large number of those regulations? Does he also accept that he can therefore do something about it? He can use the powers of this legislative Chamber—this House of Commons—in the interests of British business, which is becoming increasingly angry, to repeal or amend any of the legislation that is having such an impact on British business.

Let me make two points. First, I do not think the director-general of the CBI would agree with the hon. Gentleman's views on Europe, whatever he says about European regulation.

It was the president.

Or indeed the president, for that matter.

Secondly, of course, regulation has been agreed by this Government in the European Union and indeed by the previous Government in the European Union, which I know was not much to the hon. Gentleman's liking either, but it is important to recognise that the only way that we can get Europe to take a better and more sensible view of regulation is to be in there and to be part of it. The alternative is to get out of Europe altogether. I think that he probably would favour that in the end, but it would not be in the interests of British business and British jobs. I do not think that the CBI would opt for that either.

Does not my right hon. Friend agree that the importance of the Lisbon agenda is that, for the first time, it set out benchmarks for economic reform in the EU? The purpose of the Kok report was, rightly, to praise countries such as Britain that have risen to the challenge of economic reform and to criticise others that have failed to do so. It is an opportunity to ensure that those who have not moved forward will do so by the time of the mid-term review next spring and indeed during our presidency.

That is absolutely right. It is worth pointing out that it is not simply Britain that has undertaken economic reform but Spain, Denmark, Holland and other countries. A huge reform programme is under way in Germany, tackling really difficult issues. The purpose of the Wim Kok report was to say not that everything in Europe is hopeless but that, on the contrary, there was a certain amount of progress but there needed to be much more.

As the Prime Minister set out tackling climate change as one of his key international objectives for next year in the G8 and in the EU presidency, can he say what progress was made at the summit on that subject? In particular, can he take the opportunity to defend the reputation of his chief scientific adviser, Sir David King, against the attacks on him last week by the adviser to President Bush on climate change?

I am not sure that the person who made the attacks is an adviser to President Bush, still less a member of the US Administration, but obviously I entirely agree with David King's position on climate change. He is absolutely right. We did not discuss it at the European Council, but the European Union would be broadly supportive of that position. It is important that we try to begin a dialogue with the US, very much based on science and technology, as to how to deal with greenhouse gas emissions in the years to come. I hope that we can take forward that agenda.

If, after another brutal bombardment of Falluja, the Sunni Muslims refuse to participate in the elections, what strategy will the ever decreasing coalition employ to bring democracy and security to Iraq? Will it be bomb a city a month until all that is left in Iraq is rubble and hatred?

No, the strategy is very clear: it is to say that, instead of the government of Iraq and Iraqi towns being decided by terrorists who plant car bombs, kill innocent people and kill contractors who are trying to make the country better, there should be a democratic process in which people stand for election both locally and nationally and get elected on the basis of the ballot box. I cannot understand why people cannot agree with that.

In respect of the figure of 100,000 that has been bandied about as the number of people who have died in Iraq over the past period, I saw today, looking at the figures in greater detail, that the figure is extrapolated from the recorded deaths of 61 people. When one sees that, one can understand how much propaganda is coming through on the issue.

Does the Prime Minister accept that what he has signed up to on immigration is a ratchet mechanism for the one-way transfer of power on making immigration policy away from this country to the supranational authorities in Europe? Can he confirm that, whenever the Government opt in, as he puts it, to immigration measures taken under that procedure, if circumstances subsequently change, or the European Court interprets those measures in ways that we do not anticipate, we will be unable to amend them, or to withdraw from them?

The simple position is that we are entitled to decide whether we opt in to any of these measures. That is the pick and choose Europe, if you like, that I thought the right hon. Gentleman and others supported. It is precisely what we are able to do. Indeed, it is more than that: if at the end of the process we decide not to opt in when the measure is first discussed, after that discussion, we can also decide to opt in.

Of course, once we opt in, we are part of that process. [Hon. Members: "Ah!"] But it is our complete choice as to whether to opt in; we might as well say that about any measure in Europe. I thought that the whole point was that the Conservative party wanted a situation in which, when measures were discussed, we had the decision whether to opt in or not. This gives us that decision. Obviously, once we opt in, that is presumably because we have decided that it is in our interests to do so. Only the Conservative party could say that a decision whether to opt in is somehow a negation of our sovereignty; surely it is the expression of it.

Does my right hon. Friend agree that the best way for people in Scotland, and across the United Kingdom, to show their support for the Black Watch Regiment is by recognising its ability to carry out the task in hand, and the historical importance of that task?

My hon. Friend, who I believe was actually a member of the Black Watch Regiment—

indicated assent.

My hon. Friend speaks with a particular authority, and I hope that people will listen to what he said. I am sure that, as someone who used to serve with the Black Watch, his words will command the attention and support of everyone.

On immigration and asylum, can the Prime Minister confirm the figure extracted from the Home Office in July showing that the United Kingdom has recently agreed to participate in 26 separate measures in that field, including measures defining unauthorised entry, transit and residence, visas, asylum, and the qualification and status of non-EU nationals in seeking entry to this country? Will he confirm that that figure is correct? If it is, does that not show a clear transfer of decision making and authority from this House to the EU, to be decided by majority voting, even if the Government disagree with the eventual decision by that procedure?

We decide our own asylum policy here. The Opposition can make many criticisms of the asylum and immigration policy, but the one sure thing is that it has been decided here. However, with some measures we will want to opt in—for example, those to do with illegal immigration, for which it is important that we get European co-operation. Surely the best thing is for it to be the decision of the Government whether to take part. If we decide to take part, we do take part—presumably because we think that that is in our interest. If we decide not to take part, we do not have to take part. It is beyond me why that does not command the support of the Conservative party.

In the discussions with Dr. Allawi—who, according to the last poll that I saw, represented about 3 per cent. of Iraqi public opinion—was it maintained that the assault on Falluja was being done for the United Nations, as the Prime Minister maintained to my hon. Friend the Member for Halifax (Mrs. Mahon) last week? How can that be so, when the Secretary-General of the United Nations has urged that it should not be undertaken, and said that it would make legitimate elections in Iraq in January less possible?

Surely, in the end, as for the decision whether Dr. Allawi commands support in Iraq—all the polling evidence that I have seen shows that he enjoys considerable support there—my hon. Friend may be right, or I may be right. Put it to the test. Let there be elections in Iraq in January, and let the terrorists and insurgents lay down their weapons so that those elections can take place. I would have thought that the best message—even from people such as my hon. Friend, who, for reasons that I entirely respect, was against the war in Iraq—would be to say, "Whatever we thought about the conflict in Iraq, lay down your weapons, let the United Nations-sponsored elections take place, and then let's see who has the support in Iraq."

It seems that there was no summit discussion of the worsening crisis in Burma. Given that the military junta there is guilty of savage violations of human rights every day, including using rape as a weapon of war, forced labour, compulsory relocation, use of child soldiers, use of human minesweepers, bestial destruction of villages and the incarceration of 1,400 political prisoners, does the right hon. Gentleman agree that it is essential that the European Union should adopt not token measures in the form of action against the pineapple juice sector in that country but a robust programme of targeted sanctions against the oil, gas and telecommunications sector, so that we can bring the regime to heel and offer the people of Burma the prospect of the freedom and justice that we have long enjoyed, and they have too long been denied?

The hon. Gentleman makes a very powerful case. It is important that the European Union adopt stronger action, but to be frank, at the moment it is not possible to get that agreement in Europe. I understand that the matter was discussed at the General Affairs Council, but there is another and bigger issue: how the United Nations changes its charter and its rules, so that the way in which a country treats its own people can be a proper and fitting subject of international discussion. It is not only a question of Burma; there are many other countries in which people live in a state of deep repression, and it is only because of the absence of television cameras that no one notices or protests about it.

On the middle east, the Palestinian Cabinet Minister Saeb Erekat said to me that the most useful help being given to the Palestinian Authority by any European Government is the British Government's training of the security forces, and he asked me to pass on his thanks. He also said that the Prime Minister, who has the trust of the Palestinian Authority and of the Israeli Government, is in a unique position to take an initiative to revive the middle east peace process. Will he take up that challenge?

I thank my right hon. Friend for his comments about those who are engaged in the training of the Palestinian Authority's security forces. Britain has undertaken this work over a significant period, as well as work on political reform and governance. Actually, a lot has been happening underneath the surface that is very important, although not much noticed. As I have said before, I will obviously do everything that I can to ensure that this peace process becomes reinvigorated; plainly, that will be a significant part of the discussions that I have later in the week.

But further to that question, given the grave ill health of Yasser Arafat, was any consideration given to the possible succession in Palestine? Does the Prime Minister accept that in a way the whole peace process is on a cusp? If the Palestinian organisation falls into the wrong hands, there could be impasse between Israel and Palestine, whereas if the right people succeed Yasser Arafat, the peace process could have a very real future.

I agree, which is why it is important to proceed with measures that would allow elections in the Palestinian Authority to take place and the drafting of a new constitution. What is important is that we have empowered Ministers who can take decisions on security issues, but I agree with the hon. Gentleman that the situation is very much in the balance. It is important that we ensure that there is a Palestinian leadership that wants to make progress in the middle east. It is then for the international community to give that moderate Palestinian leadership support.

Is the Prime Minister aware that I utterly condemn, and wish to see countered, terrorism in Iraq not only against the Black Watch but against Iraqi citizens? Four railway workers, all of whom were members of the Iraqi Federation of Trade Unions, were murdered on 27 October between Mosul and Baghdad. What measures have been put in place in Falluja to ensure that such people—innocent people who are held hostage, as the Prime Minister himself put it—are not attacked?

My hon. Friend—he was an opponent of the war, but he has taken a very honourable position on these issues all the way through—is right in saying what the dilemma is. The terrorists are trying to cause maximum difficulty, which is why they are taking over places such as hospitals, schools and mosques. That is the reason why the situation in Falluja has not happened before now. I know from my discussions with Prime Minister Allawi and his Government that over the past few months, they have been making every effort to get a peaceful settlement in Falluja. That included making it clear that, provided that Iraqi Government forces came in and took control in Falluja, there would be no need for multinational forces to be in there, and it included ensuring that it was realised that there would be municipal elections in Falluja. The problem that we now have, however, is that unless we take back control of Falluja, ultimately it will be very difficult for ordinary people there to make progress, but we are doing everything that we can to limit civilian casualties in the course of the action that we take, which is why this is being proceeded with in a very careful way. I entirely agree that the important thing is to ensure that the Iraqi people understand that in the end this is not directed at them, but at the people who are preventing them from getting a democratic outcome.

I found myself in profound agreement with what the Prime Minister had to say about Iraq and the transatlantic alliance, but the gloss on the summit coming from the Elysée palace is very different, prompting the question whether the Prime Minister and the President of France attended the same European summit.

It is probably not the first time that that has been said. Of course there are people in Europe who take a different view of what our attitude should be to the transatlantic alliance, but my answer is that we should remain in there, fighting for the right view of how Europe should co-operate with America, not get out and leave the field to those we disagree with.

Does the Prime Minister agree that there would be security benefits as well as environmental advantages if the west, the European Union, the United States and other Organisation for Economic Co-operation and Development countries reduced their dependence on, and consumption of, oil? What will the EU do over the coming months to try to persuade the second-term US Government to take the problem of global warming more seriously and to reduce US consumption of oil?

The emissions trading agreement is obviously an important part of what Europe is trying to do to deal with the problem. Europe as a whole has signed up to the Kyoto protocol. I think that issues connected to security of supply are making people think again, even in the United States of America, albeit from a different perspective. I have made Africa and climate change the key priorities for the G8, so there will be an opportunity to take this agenda forward. It is possible to see how we can do that—probably, when it comes to discussion with the Americans, through the route of science and technology. Long-term issues to do with energy supply, as well as climate change, make that imperative.

Further to that answer, one of the explanations for why our constituents, especially the fuel-poor and large energy-using industries, are threatened with extremely high energy bills this winter is that we have managed to liberalise our energy market quite successfully in the UK, while mainland Europe has dragged its heels. Did the Prime Minister find anything in the summit to encourage any optimism that mainland Europe will eventually address that agenda, open up its own energy markets and decouple the price of gas from oil?

The hon. Gentleman is absolutely right. The Council did discuss the issue of energy liberalisation and why it is important to pursue it. A process of change is now under way, and it will reduce energy prices for our consumers. One of the problems is that we have a liberalised energy market, while other countries in Europe do not, but the movement is definitely towards liberalisation.

Did the Prime Minister have any discussions with other European Heads of State about the attitudes of countries bordering Iraq? Is there any evidence that any of those countries are providing men and equipment to the rebels in Falluja?

A conference taking place in Egypt in the next couple of weeks will discuss that very issue. It is true to say that there are varying reports, but when Dr. Allawi visited Syria recently, he found a willingness to co-operate. I think that it is immensely important for both Syria and Iran in particular to ensure that their borders are not being used as a route for people to cross over and engage in terrorist activity. We are certainly making it very clear to those countries that any such support of terrorism in Iraq is unacceptable. I believe that the conference will play some part in flushing out people's positions and will send out a strong signal that those who support terrorists and insurgents are in breach of their moral obligations to the international community.

The surrender of Britain's veto on asylum and immigration policy in favour of qualified majority voting forms part of the European constitution. That being the case, why is the Prime Minister taking the decision to give up the veto now? Can he not wait for the referendum, when the British people will be able to vote on the constitution?

The hon. Gentleman said, "That being the case", but it is not the case. We are not giving up the absolute right to decide whether to opt in to any asylum or immigration measure, and that is very sensible. There are certain issues—for example, as I said a moment ago, people trafficking and illegal immigration—on which we want to be part of European action. However, we can decide those issues one by one. As my right hon. Friend the Home Secretary rightly said, it is the best of both worlds.

The hon. Gentleman probably represents the mainstream view in the Conservative party today. It is not really about opting in or opting out, or this veto or that veto. What he and his colleagues want is a fundamental restructuring of Britain's existing relationship with the European Union—[Interruption.] Well, one or two Opposition Members shake their heads and many of them nod. Why do they not sort it out between themselves and come back with a proper position?

rose—[Hon. Members: "Hooray!"] Here today, gone tomorrow.

With permission, Mr. Speaker, I should like to report to the House on the regional referendum in the north-east, held last Thursday. May I first congratulate Ged Fitzgerald, the chief counting officer, and his staff across the north-east, who ran such a well-organised poll and count? I also want to thank the police, the Post Office and the Electoral Commission for their co-operation during the referendum.

Turnout, at nearly 48 per cent., was a great deal more than many people expected and has shown that all-postal voting can be extremely successful when the ground is well prepared. This ballot was conducted successfully, without witness statements, and the turnout has increased considerably. It was higher than the 42 per cent. turnout in the European elections in the north-east, higher than the 34 per cent. in the London referendum and similar to the 50 per cent. in the Welsh referendum. I am sure that the Electoral Commission will want to reflect on that.

Throughout the referendum, the Government have made it absolutely clear that the decision whether to have elected regional government rests with the people. It is their choice and their say. Our policy of devolution, set out in our manifesto, means giving power to people in our nations and regions so that they can set their own priorities and make more decisions that affect their lives. As a result, London now has city-wide government and a Mayor powerful enough to run a global city. The Scottish Parliament enables the people of Scotland to make key decisions without recourse to Westminster for the first time in hundreds of years. The Welsh Assembly has given the Welsh people a powerful new voice to create jobs, prosperity, and social justice. Each of these new bodies was voted for by the people and has since proved to be very popular.

It is worth remembering that proposals for Scottish and Welsh devolution failed to win public support in the first referendum in 1979, only for the situation to be reversed 20 years later in a new referendum. On 4 November, we offered the people of the north-east the chance to benefit from an elected regional assembly. Last Thursday, voters in the north-east decided by a margin of 78 per cent. to 22 per cent. that they did not want that, and of course we abide by their decision.

I confirm to the House that the result of the referendum means that the Regional Assemblies Bill will not be introduced in the coming Session of Parliament; under existing legislation, there can be no further referendum on regional assemblies in the north-east for at least seven years; and—let me make it clear—despite press speculation, there will be no reorganisation of local government in County Durham or Northumberland arising out of this referendum result. Indeed, I hope that the two councils can now get on with delivering effective services for their people.

The decision now raises the question as to whether to proceed, as we previously intended, with referendums in the north-west and in Yorkshire and the Humber. We have reflected on the outcome of the referendum in the north-east, as promised. We have also made it clear that referendums in the north-west and in Yorkshire and the Humber would have to wait until the Electoral Commission had completed its work on the "new foundation model for voting." That is not due to be published until the end of March 2005.

The Electoral Commission has also said that there should be no electoral pilots using the new model until at least September 2005, but in the meantime, under the legislation, our ability to hold referendums based on the current soundings exercise runs out in June 2005. We would, therefore, need to conduct a new soundings exercise and bring orders to call the referendums before both Houses of Parliament under the Regional Assemblies (Preparations) Act 2003. All that would result in a long period of uncertainty for local government in the two regions, and we do not think that is acceptable. I will not, therefore, be bringing forward orders for referendums in either the north-west or Yorkshire and the Humber. If and when, in the future, a region wants to move ahead with a referendum, the House will have plenty of notice of that event.

I do not want to underplay the importance of last week's decision, but the House should remember that elected regional assemblies are just one part of the wider programme of devolution and decentralisation in England. For a decade or more, it has been recognised that there are issues that must be dealt with at regional, rather than national, level, but which need to be co-ordinated over an area larger than any single local authority—[Hon. Members: "Why?"] Members should look at a map if they are in any doubt.

That is why the Conservatives established the Government offices for the regions in 1994, and rightly so. We have since strengthened the Government offices to include more departments. We also created, in 1998, the regional development agencies as economic powerhouses for their regions; the Conservatives opposed them, but I believe that they have now changed their minds.

In the last two years alone, the English RDAs have created or safeguarded more than 160,000 jobs and have played a major part in reshaping our regional economies. The House will be aware that in 1998 every English region was given the choice of having a voluntary regional assembly composed of representatives from local government, business, trade unions and the wider community. All eight regions—all of them—chose to have one of those voluntary regional assemblies. All parties are represented on them, and some are even chaired by Conservative councillors.

Those voluntary assemblies have an important influence on housing, planning, transport, economic development and skills and training in their region. Those regional bodies play a co-ordinating, strategic role with the full involvement of local authorities and other representatives in the regions. The successful northern way initiative, launched in February this year, is a good example of the benefits of that co-operative approach.

The RDAs and their partners in the three northern regions are working together to create more jobs, more prosperity and greater justice. The northern way has been warmly received, and has energised people in the three northern regions—that includes representatives of all political parties. It is one example of how, across the country, regional structures and initiatives will continue to work for the benefit of the regions with the full support of the Government.

Our continuing agenda of reform and devolution to local authorities is equally important. That was evident in July, when we launched our document, "Local Vision", beginning an extensive consultation about the future of local government. It means allowing more decisions to be made in local communities. Along with the modernisation and reform of local government, we have taken several steps to devolve decision making to local authorities. We have removed the restrictive controls on local authority borrowing. We have given local authorities greater power to promote the well-being of their communities and the freedoms and flexibilities to deliver better services, and we are piloting local area agreements that will streamline funding from Whitehall so that spending can better reflect local priorities, determined locally. All those measures—every one of them—have been warmly welcomed by all local authorities.

Our agenda for reform, change and modernisation means that we will continue to decentralise and devolve power wherever we can. We have already done a lot, and there is a lot more to do. We have already brought economic stability, lower unemployment and lower inflation; and our commitment to delivering the best possible future for all the regions remains as strong as ever.

I commend the right hon. Gentleman for coming to the House and making a statement at the first opportunity, and I associate the official Opposition with his thanks to the returning officer and his staff.

Will the Electoral Commission carry out a full evaluation of the referendum? The right hon. Gentleman is on record as having expressed surprise at the scale of the defeat, but how can the result have come as such a surprise? Was he not listening when the Chancellor of the Duchy of Lancaster, the right hon. Member for Darlington (Mr. Milburn), said:

"We will lose because we have failed to get across a coherent message."?

He should know; after all, 90 per cent. of Darlington's voters said no to a regional assembly, the highest proportion in the north-east. People understood, loud and clear, that the assembly would not put one more doctor, teacher, nurse or policeman into service.

As for the Liberal Democrats, they were not surprised by the defeat. No sooner was it clear that they were on the losing side than they withdrew their support for the Bill. They might as well have the slogan, "Never knowingly missing a bandwagon".

It is quite clear that the decisive "No" vote in the north-east has serious consequences for the Government's entire regional agenda. Will the right hon. Gentleman stick to the promise that he made to the people of the north-east on 19 October, when he said:

"If you don't want it, we drop it"?

What exactly did his long statement mean? Will he now say, loud and clear, that the regional agenda is dead? In broader terms, what does this humiliating defeat mean for the Government's whole regional agenda?

What of the powers that have been stripped from local authorities and handed over to expensive, unelected regional chambers? The right hon. Gentleman criticised our participation in regional chambers, but our participation simply reflects the fact that core powers have been stolen from local government. He talks of a choice for the regions to have unelected regional assemblies. That is Hobson's choice. Given that the regional chambers now have no prospect of any democratic mandate, will the right hon. Gentleman abolish them? Will he return the crucial powers of housing, planning fire and rescue services to democratically elected local councils? Why not fill the vacancy in the Queen's Speech where a regional assemblies Bill would otherwise have appeared with a Bill to return the powers that have been stripped from local authorities? Or does he share the view of the Secretary of State for Education and Skills in seeing

"councils as agents of central Government"?

This is an urgent question; it cannot be fudged or kicked into touch. People up and down the land are living under the threat of huge house-building targets proposed by unelected regional housing boards. Is the right hon. Gentleman not duty bound to get rid of those housing boards as well? [Interruption.]

Order. The House listened to the Deputy Prime Minister with politeness; those on the Government Front Bench should do the same for the hon. Member who is speaking for the Opposition.

Thank you, Mr. Deputy Speaker.

What about the cost of this whole sorry saga? The Government have ploughed tens of millions of pounds into the campaign for a regional assembly that only 20 per cent. of voters wanted. The whole exercise has been humiliating for the Government and expensive for the taxpayer. Is the right hon. Gentleman really serious about more soundings, throwing more money after bad? I am not going to ask him to resign because he will not, but the nation is owed an apology for the tens of millions of pounds wasted in pursuit of a pipedream that is very definitely history now—and, if the House is honest, so is he.

They must be joking.

I thank the hon. Lady for her kind remarks at the beginning of her contribution, which I appreciated, and I can answer some of her questions. It is proper to ask about the Electoral Commission. I think that it has made a statement and there should be an analysis of the postal ballot. The all-postal ballot was very successful, without any talk of witnesses' statements or any problems whatsoever—that should make the Electoral Commission think about things. The commission will analyse the result and publish a report in—I think—the summer.

On people's choice, I shall never apologise for giving people the opportunity to say whether they agree with something on occasions other than the general election—I thought that the Conservative party was demanding referendums on the European constitution and the euro to give people choice. But referendums cost money. People need to be provided with information and leaflets so that they may make proper decisions, but that costs money, albeit not the tens of millions that the hon. Lady was talking about. The actual cost of running the referendum was £2.9 million—[Interruption.] I am just saying that if hon. Members look at the cost per capita of the referendums in London, Scotland and Wales, they will see that the recent referendum was cheaper. I must admit that the cost is a reality, but the alternative would be to do what the Conservative Government did. They abolished 18 councils and the Greater London council without any consideration whatsoever. They held no referendums, and the people eventually had to demand the right for a local authority. I will take no lectures from the Tories about abolishing local authorities.

The hon. Lady put forward the argument that the assembly would have created not one teacher, nurse or doctor more, but that was never the intention—that was never in the White Paper. This Government have produced thousands upon thousands of doctors, teachers and nurses, but that was not the intended role of the assembly, although it does relate to one of the arguments that was put forward during the campaign.

At the end of the day, we must consider the effect on the regional agenda. I said in my statement that I believe there is still a strong argument for a regional dimension, otherwise things will be left to unelected quangos and civil servants.

Scrap them.

The hon. Gentleman shouts, "Scrap them", but he was a member of the Government who set them up. The regional government civil servants were set up in 1994 for one good reason: decisions had to be taken on a regional basis, so the Conservatives set up the regional Government offices. We came along and established the regional development agencies, but the hon. Lady did not say whether the Conservatives are for or against them. Although the hon. Member for North Essex (Mr. Jenkin) says that they have not said that they are against the RDAs, their manifesto made it clear that they would abolish them. They say that they have had a change of heart, so perhaps she will tell us whether they will get rid of the RDAs.

We will keep regional Government offices and regional development agencies, and as for the regional assemblies, we will keep them also. They are not as good as assemblies with directly elected members, but people are directly appointed to them. Elected councillors serve on them, so they can make decisions about regional priorities instead of the unelected members of quangos. I think that that is right. That dimension will continue and we will support it, working with local government.

If the Tories are against regional assemblies, it would be useful to hear why they do not tell all their councillors to resign from them—they joined them voluntarily. If the Tories do not want them, they can get off them. If they want to be honest, that is what they should do. We will keep the regional assemblies, the regional development agencies and regional government. The regional dimension will form an essential part of this Government's policy to correct the economic differential between the north and south of this country. Let us be clear that that is our intention.

I was a bit surprised that the hon. Member for Meriden (Mrs. Spelman) was asking the questions, because we were all waiting for the big man to come in—the hon. Member for North Essex. He was the guy who said that if turnout in the vote got anywhere near 50 per cent., he would eat his hat. I believe that he has eaten it already, so on that he was wrong—just like everything else that the hon. Lady said.

I thank the Deputy Prime Minister for his statement and agree about the professionalism of the officials and police during the process. He knows that Liberal Democrats share his disappointment at the outcome of the referendum, but equally believe that all democrats need to respect the voice of the people, especially when it is spoken so clearly.

Is the Deputy Prime Minister worried that with elected regional assemblies off the immediate political agenda, a growing democratic deficit remains in our regions which needs to be tackled in another way? There are quangos that he inherited from the Conservatives, as he told the House, and quangos that Labour Governments have created and they need to feel the heat of greater accountability. Will he therefore revisit his decision to force through the House and the other place, against Liberal Democrat and Conservative opposition, the taking of strategic planning powers away from county councils? Is not planning one example of powers that can quickly be handed down and given back to local government? Will he set up a cross-departmental review of all elements of Britain's regional bureaucracy to consider how democratic accountability and efficiency can be improved in the absence of directly elected assemblies, especially through stronger local democratic input?

The Deputy Prime Minister knows that from the White Paper on, the Liberal Democrats felt that the regional devolution he was offering was too weak and the package of local government reorganisation too confusing to ensure that the "Yes" vote was maximised. Given that he has come to the House so quickly to discuss the defeat and to tell the House his position, will he at least admit that the Government were wrong on powers and wrong on the linkage with local government reorganisation?

I am grateful for the hon. Gentleman's comments in support of the people who were involved in running the ballot. I am also grateful that he took part in the debate and for the statement and visit by the leader of the Liberal Democrats, the right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy), in support of the regional assembly. I am bound to say, however, that I did not find many more Liberals beyond them who were in favour of it. The others on the ground melted away, so there was no great Liberal support. Interruption.] Well, in the last week of the election you made the statement that you would kill the Bill—

Order. The Deputy Prime Minister must be careful to use the correct parliamentary language.

I am sorry, Mr. Deputy Speaker. I must get my procedure right.

In the last week of the election, the hon. Member for Kingston and Surbiton (Mr. Davey) made the front-page statement:

"We will kill the Bill".

Quite frankly, that is the kind of support I could do without. I had the feeling that the Liberals were with us one moment and against us the next. It is the Liberal flip-flop in British politics, and I should have got used to it by now.

The hon. Gentleman talked about quangos established by us. That is true: the regional development agency is a quango. When I introduced the idea of regional development to the House, I said that we had not yet introduced democratic accountability. That was the purpose of the assembly: to have an elected assembly that subjected those quangos to that accountability.

As for whether there are sufficient powers, those arguments will go on. There has to be an agreement in government about the distribution of powers from Whitehall to the regions. That is inevitable. I gave the best negotiated position that I thought was sufficient. I note that Mayor Livingstone of London came to the area and said that he wished that he had the same powers that we were proposing for the north-east. I just comment on that, him being the mayor of Livingston—I mean Mayor of London.

We will analyse what caused the emphatic defeat, and it was an emphatic defeat, of the idea of a directly elected assembly. Not many Conservatives campaigned against it, however. They were all kept down here, their mouths quiet, and were never involved in the election. I must make it clear that the defeat was not the result of one thing. If one issue did run through the campaign, however, it was that the people felt that it would mean more politicians. I was constantly challenged about that. In fact, there would have been 500 fewer because of the abolition of the councils.

They did not believe you.

I am just giving the facts. The people decided that they did not like the idea of more politicians. Perhaps the council tax played its part in that, even though it would have meant a £12 million saving, with 10 more councils abolished. Interruption.] I accept their decision, but I can have a different view. That is why I introduced the Bill. However, the people have spoken and I am now reacting to that. I accept their decision and I am reporting it to Parliament.

The House will welcome the statement by the Deputy Prime Minister that there will be a continuing agenda of reform and devolution for local government. He referred to powers that we have given back to local authorities to promote the well-being of their communities. Does he recall his visit to Middlesbrough with the Prime Minister, when he saw a community in action at a community council, where the people told him that those powers had given power back to the people, and that their community had been enormously improved as a result? Will he reiterate that there will be a continuing decentralisation and devolution of those powers to local communities so that they can all benefit from the actions of a Labour Government?

I certainly can. I well remember my visit and the meeting that I chaired with my hon. Friend, where there was great support for the proposal. The reality is that the decision was still 8:2 against us and, whether I like it or not, I must face up to that. However, I can assure him that decentralisation and reform of local government will continue. The democratic point, albeit important, was only one part of modernisation and reform. I do not know—eventually, people may come round to accepting that unelected individuals should not make decisions for them, and decide that they want elected individuals. However, the people have spoken in the north-east, and at this stage they do not want a regional assembly. If politicians are to be worth anything they must take that into account.

Will the Deputy Prime Minister give the people of the north-east the hearty congratulations of their neighbours in North Yorkshire, who would have voted no in equal or even greater proportions if the referendum there had gone ahead? Does he accept that one reason for the public rejection of those ideas is that, except where whole tiers of government have been abolished without replacement, people's experience of local government reorganisation under successive Governments is one of vast expenditure with very few benefits to show afterwards? Could he not do a great deal for long-term respect for local democracy and civic pride in local institutions, as well as enable councils to get on with the job in the way that he described earlier, by declaring the whole era of local government reorganisation to be well and truly over?

No, I do not accept that for one moment. It was under the previous Administration, who abolished 18 councils, that costs became really extraordinary. Most people who speak about the evidence of reorganisation of local government refer to the way in which it was done under a past Administration, when 18 councils were abolished without any consideration. I therefore do not accept that we have reached an ideal stage in local government. We stand for unitary authorities, as the right hon. Gentleman knows. Interruption.] Well, it is our policy and we believe in unitary authorities. Curiously, the Tories in England say that they do not like unitary authorities—they want to keep the counties—so why did they force them on Scotland without any consultation whatsoever or even leaving the issue to be decided by the Scottish Parliament or an assembly? As for the right hon. Gentleman's point that the vote would be bigger in Yorkshire, I do not know whether that would be the case. However, in the Welsh referendum in 1979, there was an even bigger defeat for people who wanted devolution. Twenty years later, however, they came back and voted for it when they realised its full benefit.

May I thank the Deputy Prime Minister for his statement? Returning to the issue of scrutiny that should be afforded Parliament, the Regional Affairs Committee meets very infrequently. Does he foresee the possibility of looking at arrangements for that Committee, and perhaps extending them to allow Select Committee-type powers for areas such as Yorkshire and the Humber, the north-east, the north-west and other English regions to make sure that Parliament scrutinises those regional bodies?

I understand the point that my hon. Friend is making. I have been a Member of Parliament for over 30 years, although some people want me to go now, and have witnessed demands in the House and the Chamber to set up various regional committees. I have always supported those demands, but the House does not have a very good record of providing much influence or power to Members, and we are told that there is no time for debate. The last regional debate was on the northern way, when one Tory turned up. Despite demands for Parliament to deal with regional affairs, the evidence, I am afraid, is against such a role. I am supportive of my hon. Friend, but the pressure of time on this legislature is one reason why people in the regions should make their own decisions. We have neither the time nor frankly the inclination to debate regional matters in the Chamber.

Does the right hon. Gentleman accept that one of the unbridgeable problems in the referendum was the colossal gap between the rhetoric that was used to describe the proposed devolution and the powers that would have accompanied it? Was not that because the Government—least of all the Deputy Prime Minister and the Prime Minister—never made up their mind on what powers they wanted to devolve, so the Deputy Prime Minister spent the last few days of the campaign scratching around for any powers that he could beg, borrow or steal to make the proposals look substantial? Is not the lesson that, with future policies, the Government as a whole need to make up their mind on what they want and to concede to people substance, not shadows?

The House recognises that the right hon. Gentleman is a fair man in his appraisal of these matters and knows a great deal about local authority and regional issues. In fact, he was one of the few Conservatives to say that, if the assembly had more powers, he would vote for it. That was certainly his position, if not that of his Front Benchers. The powers were clearly set out in the White Paper and the question whether they were enough was constantly debated in the House. We went further than the White Paper on fire, planning arrangements and transport. Some might argue that the assembly should be a parliament with the powers that we have. That is fair enough. We tried to strike a balance between local authorities, Whitehall and Westminster, and that is what we tried to explain to people. However, the question of powers was not the main issue. To be honest, people were mostly concerned about whether they wanted another layer of the decision-making process. The question that constantly came up was, "Does this mean that there will be another tier, that we are going to pay for it and that there will be more politicians?" It did not matter that I could show that that was not so, because they had reached their conclusion and that was it—they thought that it would be a white elephant.

I congratulate the Deputy Prime Minister on his work on this over the years. His quest to extend democracy is an honourable one, and he should be congratulated on it.

Is my right hon. Friend aware that, as recently as this morning, constituents have contacted me to ask for more democratic control of local services privatised by the Conservatives? Is not there still a case for extending democracy to the regions and localities, and can we look for other ways of doing that?

I thank my hon. Friend for his kind personal remarks. I noted that, immediately after the result was announced, even the no campaign was saying, "We still need to find ways to deal with this issue", and that has continued. I have even heard voices calling for national conventions, which is precisely what happened in Scotland and Wales. I do not support that, but I would sooner hear what people have to say about it. The no campaigners have started to wonder whether they have missed an opportunity. They voted against it, but now they are saying, "Can we have something, albeit different, after all?" I have to ask whether they are whistling in the wind.

We will continue to reform the local government structure. We will devolve more powers downwards by strengthening regional development agencies, regional government and assemblies. For the moment, that will have to be the way forward for the north-east.

I am grateful to the Deputy Prime Minister for his statement. Does not he realise that his refusal to rule out completely a referendum in Yorkshire and Humber and his response to my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) on unitary authorities will only prolong the uncertainty as regards local government in North Yorkshire? Most people in North Yorkshire—a county that is almost 100 miles wide—think that they already have regional government through North Yorkshire county council. Will the Deputy Prime Minister get on with the job of devolving powers back to it so that, as my right hon. Friend said, we can get good people elected into the council chamber and get some decisions made locally?

I thought that I had made it clear to the House that changes to the local government structure of, in this case, Northumberland and Durham would fall if the people said no, which is what they clearly did. I made it clear that no changes to the local government structure would arise out of the assembly. Our manifesto stated our belief in establishing unitary local government, but that would require primary legislation.

Wrong—ask the Minister for Local and Regional Government.

I am only passing on the advice that I receive. I do not necessarily agree with the hon. Member for Ryedale (Mr. Greenway). Basically, local government reorganisation would need to go through a proper process. As that is not being proposed, the local government structure that we have at the moment is not affected whatsoever by this decision. Local government as it is, in its county, district and unitary form, will continue.

I thank my right hon. Friend on behalf of the north-east of England for at least giving us a vote. If the Tories had been in power, we would not have got one. People are basically saying that they want more democracy in their areas and their councillors to be more professional but, unfortunately, we lost the vote. We should have some sort of organisation, even if it has to be in Parliament, to tie the north-east together, join the threads and get moving because we are being left behind by the Welsh, the Scots and Londoners.

I am grateful for my hon. Friend's words. I read some of the reports on Friday and Saturday after the results and I have heard the comments that we should do something. I presented one proposal, which the people in the north-east emphatically turned down. I can therefore only say that we shall continue to see what we can do to strengthen the assembly, RDAs and local government generally. Giving people more power to make decisions means devolving some of the decisions from local government to communities. We are doing that; it is embodied in the local vision and we shall continue with the reforms because we want to decentralise decision making.

I am sorry about the decision that the people in the north-east made, but it is their decision and it is our job to recognise that. However, I reassure myself by remembering that a successful conclusion was ultimately reached in Wales and Scotland.

The right hon. Gentleman will acknowledge that his proposal for directly elected regional assemblies was at least a partial answer to the West Lothian question. Given that it has failed, will he consider preventing Members who represent Scottish constituencies from voting on exclusively English business?

No.

I congratulate my right hon. Friend on his decision not to press ahead with a referendum in the north-west of England, which would certainly have been lost. Was the referendum in the north-east lost during or before the campaign?