To ask the Solicitor-General if she will make a statement about the circumstances surrounding the letter from Mrs. Elizabeth Wilmshurst and the Attorney-General's change of opinion on the legality of military action in Iraq?

Let me take the two parts of the question in turn: first, the circumstances surrounding Ms Wilmshurst's letter to the Foreign and Commonwealth Office's legal adviser of 18 March 2003.

Elizabeth Wilmshurst was one of the deputy legal advisers at the Foreign and Commonwealth Office. As is now well known, she submitted her resignation on 18 March 2003 because she disagreed—I quote from her minute of that date—that it was

"lawful to use force against Iraq without a second Security Council resolution to revive the authorisation given in SCR 678".

Given that difference of views, her resignation was an honourable course to take and in accordance with the civil service code.

The Foreign and Commonwealth Office has received a number of requests for the text of Ms Wilmshurst's letter under the Freedom of Information Act, which came into force on 1 January this year. These requests were initially refused, mainly because much of the content of Ms Wilmshurst's letter contained personal data, the disclosure of which would have contravened the first data protection principle under section 40 of the Act.

Following the publication in The Guardian on 23 February of a number of quotations from the letter, however, we took the view that disclosure of this information would no longer contravene the first data protection principle. We therefore disclosed the letter yesterday. Two sentences were however omitted by the Foreign and Commonwealth Office from the document because their content concerned the provision of legal advice in relation to the use of force against Iraq. Regardless of whether these references were accurate, this information was covered by exemptions in the Act that apply to confidential legal advice and the formulation or development of Government policy. Some were also covered by exemptions for ministerial communications and for Law Officers' advice.

It was entirely proper for the Government to withhold information under the provisions of this Act. Indeed, as the Minister who was responsible for taking what was then the Freedom of Information Bill through Parliament, I can recall no suggestion from any party in the House that the Government's legal advice should not be exempt from such disclosure.

Let me now turn to the second aspect of the question: the Attorney-General's opinion on the legality of military action in Iraq. This whole question is covered extensively in Lord Butler's report on intelligence on weapons of mass destruction at paragraphs 366 to 387, and I commend those paragraphs to the House. Ms Wilmshurst gave evidence to the Butler inquiry, and the substance of her position, then as now, is covered in paragraph 376 of the report.

In the light of Saddam's failure to comply with his very clear obligations, set out in United Nations Security Council resolution 1441 of November 2002, the United Kingdom, United States and Spain tabled in February 2003 a further draft resolution in the Security Council, posing tough but attainable tests for Iraq. That gave Saddam Hussein the final opportunity to comply, which was offered by resolution 1441.

I attended a series of ministerial Security Council meetings in the early months of 2003, the last of which was on 7 March 2003. As I said in my speech to the Security Council on that day, not a single member of the Security Council disputed that Saddam was in material breach of his obligations under resolution 1441 and preceding resolutions. He had not fully complied with the clear obligations set out in 1441 and the preceding resolutions.

The Attorney-General, in his written answer of 17 March 2003, gave what he has described as his genuinely and independently held view that military action in Iraq was lawful on the basis of Saddam's breach of the then existing UN resolutions. As he then said, authority to use force against Iraq derived from the combined effect of resolutions 678, 687 and 1441. A large majority of the House supported on 18 March 2003 the Government's motion before the House to take military action in respect of Iraq, in view of Saddam Hussein's continued failure to comply with his clear obligations, imposed by the Security Council.

May I say that I am intrigued and a little puzzled that the Foreign Secretary is replying to this question, which was directed to the Law Officers?

Will the Foreign Secretary confirm that the censored paragraph removed from Ms Wilmshurst's letter of resignation, and shown on Channel 4 yesterday, has now been revealed? Why was it covered up? Does he agree that it shows clearly that until 7 March, the Attorney-General held identical views to those of the Foreign Office legal team that the use of force against Iraq required a further UN resolution or it would be unlawful, irrespective of whatever previous resolutions there had been? What, then, made the Attorney-General change his mind? What change of law or fact enabled him to alter his stance?

Ms Wilmshurst's note further makes clear that the Attorney-General's position changed twice. Why did that happen? Why did his continuing doubts, which we now know were present in his letter of 7 March, as he believed that a decision to go to war might be challenged in the courts, change into complete certainty of legality, apparently following his meeting with Lord Falconer and Baroness Morgan on 13 March? What was said in the intervening period? What happened to enable him to alter his position?

Does the Foreign Secretary not realise how corrosive the entire episode is to trust in Government? It would be far better were the entire paper trail to be published, to reassure the public that the Attorney-General was neither leant on to change his views for party political reasons, nor deceived by the Prime Minister on the facts on which war might be justified.

Let me deal with the hon. Gentleman's points in turn. First, on why we refused to publish those two sentences, I have set out the reasons. The issue for the whole House, and not least the shadow Attorney-General, is whether he and his party are now moving from a clear position that Law Officers' advice should not be published to proposing that Law Officers' advice, and that which contributes to it, should be published.

I draw the House's attention to the fact that when a similar issue arose, albeit in respect of a different subject—legal advice in respect of the ratification of the Maastricht treaty—the then Attorney-General set out clearly that he could not recall any occasion when the Law Officers' advice had been disclosed, and would not break precedent.

When we discussed the issue of the Freedom of Information Bill in the House, the House as a whole was absolutely clear that legal advice, and the background to that legal advice, should not be disclosed, for very good reasons. If the hon. Gentleman is now saying, on behalf of his party, that that should change, he had better say so; but the implications for good government are very grave indeed.

The hon. Gentleman then made a wholly tendentious claim based on his reading of Ms Wilmshurst's letter. He said that it showed clearly that the Attorney-General had one view on 7 March and a different view later. He asked what change of law or fact had taken place. The letter showed nothing of the kind—but yes, there was a change of fact, which was before the House on 18 March. I am astonished that the hon. Gentleman, who voted for the resolution in favour of military action on 18 March, seems to have forgotten that.

Throughout the period following the passage of resolution 1441, my right hon. Friend the Prime Minister and I, every other member of this Government and, indeed, all the Governments who later formed the coalition were seeking to ensure that there was clear compliance by Saddam with the obligations imposed on him by resolution 1441 and the resolutions that preceded it. When it became clear that that was not the case, we worked night and day for a second resolution. We did not work night and day for a second resolution because it was required by the terms of resolution 1441: it was not. I can go into the negotiating history of resolution 1441 in very great detail. I can point out to the House that France proposed at one stage that there should indeed be a lock requiring a second resolution in resolution 1441, but backed off from that proposal. Everyone who knows the text of resolution 1441, and that of operative paragraphs 4, 12 and 13 in particular, will know that there was no requirement whatever for a second resolution. We sought a second resolution because we sought a consensus in the Security Council, and what changed between 7 and 17 March was this: it became very clear that that consensus was not possible.

The hon. Gentleman's last point concerned the effect of refusing to disclose the Attorney-General's advice. The Attorney-General's advice was before the Butler inquiry. The Attorney-General gave advice to the Butler inquiry, and so, as I have said, did Ms Wilmshurst. That was the appropriate setting in which to examine the advice in detail. Lord Butler concluded that the Attorney-General had given clear and categorical advice to the Cabinet, and that in his judgment it was lawful under resolution 1441 to use force without a further United Nations Security Council resolution. That was the position after full examination, and that is the position now.

The Secretary-General of the United Nations himself has said that the war in Iraq was illegal, so it is hardly a surprise that the Attorney-General started from that point as well. It would not be the first occasion in history when a lawyer had changed his mind and his advice, but there was no change in the legal position during the period before the country went to war; nor was there a material change in the facts, such as evidence of the existence of weapons of mass destruction.

Can the Foreign Secretary tell us whether there is a formal written justification documenting the shift in the Attorney-General's position, which occurred not once but twice? Can he tell us whether the final advice of the Attorney-General was consistent with the independent external advice that the Government received? If not, is it not the case that the full text of Elizabeth Wilmshurst's resignation letter has now completely undermined the Government's position on the war in Iraq?

We are all aware of what the Secretary-General of the United Nations said. It emphasises the fact that on this issue there were disagreements about the legal position. That is well known—but the truth is that there are often disagreements about legal positions and legal advice. There are disagreements in respect of matters of domestic law, on which the law is always more certain; still more are there disagreements in respect of matters of international law. These judgments were held independently, they were held honourably, and they were well known in advance of the debate on 18 March and the House's decision to take military action. With great respect to Ms Wilmshurst, what she has said in the letter and in the evidence that she gave to Lord Butler does not change that position one iota. It was a matter of debate. But, while I respect those people who took a different view, the truth is that the view of the British Attorney-General was widely shared across the world—not just by the Law Officers' equivalent in the United States, but by many other Governments. There was just a genuine difference of opinion.

That answers the hon. Gentleman's first and third points. He also said that there was no material change in the facts. I am sorry, but he was not at the Security Council five times between January and March 2003, and I was. There was a significant change in the facts. We had hoped in early January was that there was going to be full compliance by Saddam with the terms of the resolution. He was given a very clear obligation to do so. It became clear, however, not least on 7 March in the 173-page document submitted to the Security Council at the end of that meeting by Dr. Hans Blix, with 29 separate respects, talking about unanswered disarmament issues. I put this before the House on 18 March. It spelled out in detail, if any were needed, why Saddam was failing to comply with his clear obligations. Those facts were on the record and they have never been contradicted since. That was the judgment of UNMOVIC, the United Nations Monitoring, Verification and Inspection Commission. We did not need intelligence to make our judgment before the House on 18 March; we could see for ourselves that Saddam was in further material breach, and, as I pointed out to the Security Council on 7 March, there was not a single Minister around the table at the Security Council at that stage—even on 7 March—who was denying that Saddam was not fully in compliance with his obligations.

What also changed between 7 and 17 March, as I pointed out to the hon. Member for Beaconsfield (Mr. Grieve) a moment ago, was that we were hoping against hope for a second resolution and we did not get one. We still judged that Saddam was in material breach, and that was the basis on which the House came to its view on 18 March.

The Attorney-General said on 23 February this year that, in his parliamentary reply of 17 March, he had explained his "genuinely held, independent view" that military action was lawful, and that he had not been leant on in any way. If the critics are now saying that he was lying—a very serious charge to make against any Minister, particularly the Attorney-General—that his view was not independent or genuinely held and, indeed, that he had been leant on, let them say so openly.

I agree entirely with my right hon. Friend about that. All of us have every respect for Members of all parties on both sides of the House who took a different view on the rightness of taking military action and who voted against the Government on 18 March. What is far less impressive is the position into which the official Opposition now appear to be manoeuvring themselves. They are using this entirely spurious issue as a smokescreen to avoid their own responsibility for the fact that they voted for this military action. They voted openly for it, and they voted on the basis of the clear and public information before the House that Saddam was in clear, fundamental material breach of his obligations. They might not like it, but it happens to be true.

As one of those who did not vote for the war on Iraq, may I sincerely ask the Foreign Secretary whether he thinks that this disclosure will have a dreadful effect on the parents and relatives of those who have lost their lives in this conflict? Does not he genuinely believe that this problem of credibility will go on and on, unless the Government are prepared to publish all the documents involved? Would not that be the right way to deal with the problem, instead of letting it go on and on, as it inevitably will?

No, I do not, for this reason. The Attorney-General's legal advice was clear. It was known. It was reflected in the view of his advice, which he put before the House of Lords on 17 March, and which I repeated in this House, along with a longer explanation of the basis of his view in respect of the legality. His view was that it was lawful for us to take military action in respect of Iraq. That was the view that he came to at that stage. He was examined in very great detail by Lord Butler, and Lord Butler confirms his view. There is a very much wider issue about whether the House should go down the road of requiring the advice of Attorneys-General to be made public. As I have said, when the matter was debated by the House, and for very, very good reasons, not one Member of this House ever suggested that the exemption for legal advice proposed in the Freedom of Information Act 2000 should be removed. It is there for very good reasons and nothing material has changed. Indeed, just to underline the paucity of the view taken by the shadow Attorney-General, in this particular case, unusually, what was made known to the House was the view of the Attorney-General set out in that written answer of 17 March. When Lord Butler examined the Attorney-General in detail, he also confirmed that that was his view.

Does my right hon. Friend accept that no Attorney-General from either party will barter their integrity, and least of all this Attorney-General, who was a leader of the Bar, on such an important matter for purely party political purposes? Does he recall what the Bar Council of England and Wales said about this matter at the time: that the advice and the working papers should not be published because it would severely undermine legal professional privilege?

I am grateful to my hon. and learned Friend for that. The Attorney-General is a man who all of us know is of the greatest integrity and also a very good lawyer. He came to his view for sound reasons. It was independent and it was genuinely held. My hon. and learned Friend is also right to draw attention to the fact that the requirement to protect the confidentiality of legal advice has been supported not only by successive Governments—I would be astonished if the shadow Attorney-General is now departing from that; if he is, perhaps he or his colleagues should say so—but by the Law Lords in a series of judgments, as well as by working barristers represented by the Bar Council. There is every reason for it, and it is good government that would suffer were we to remove that requirement.

After five years as a Parliamentary Private Secretary in the Law Office, I am of course very aware that there is a convention that the Law Officers' advice should never be revealed. However, it is open to the Government to waive that convention if they wish, and the facts in this case are unique. Do the Government realise that if they do not make full disclosure, they will have only themselves to blame if people continue to believe the worst of the Government?

I do not accept that, and the Butler inquiry set out in some detail the very rare circumstances in which, in the last 100 years, the advice of Attorneys-General has been released. I think that it pointed out that it has happened on only three occasions: two in respect of legal action and one, as it happened, in respect of the Westland affair where the whole of the advice was leaked by a divided Cabinet and it was made public in any case.

I am sure that my right hon. Friend would wish to agree with me that Elizabeth Wilmshurst was a distinguished legal adviser who did very valuable work in the international criminal court. Would my right hon. Friend confirm that, unlike those on the Opposition Front Bench, she was always consistent in her view that invasion of Iraq would require a second resolution? Would he further confirm that the Attorney-General shared that opinion, an opinion that he no doubt held genuinely and independently, from September 2002 until March 2003, when he changed that opinion? May I put it to my right hon. Friend, who is an experienced Member of the House, that perhaps the time has come for him to reflect on whether there is so much in the public domain that it would be better for the Government to let out the whole truth? The Government have published one opinion from the Attorney-General. Surely the less damaging course for the Government now is to publish both opinions and explain exactly what it was that persuaded the Attorney-General to change his opinion in-between.

On my right hon. Friend's first point, yes I accept, and I always have done—I have made this very clear very publicly—that Elizabeth Wilmshurst was a very fine legal adviser in the Foreign Office, she has acted honourably throughout, and it is certainly the case that her view about the potential legality of any military action without a second resolution after 1441 was well known to me, and I think to others within the Government. But as I have said, that was her view, and I think she accepted—certainly it has to be accepted—that the final arbiter of the Government's legal position is the Attorney-General and not any individual legal adviser, however distinguished.

On the second point that my right hon. Friend invites me to discuss, what is the case is that before the passage of resolution 1441, there was a widespread view that military action would at the very best be wholly ill-advised without what became the first UN resolution in 2002, and could be unlawful, but that was changed by the passage of resolution 1441. I simply invite my right hon. Friend to refresh his memory about the terms of resolution 1441, which set out clear obligations on Saddam Hussein. Operative paragraph 4 set out the terms of a further material breach; operative paragraphs 11 and 12 set out how any further material breach should be reported and considered by the Security Council; and operative paragraph 13 made it very clear to Saddam Hussein that "serious consequences" would follow in respect of a further material breach.

It was the judgment of the Attorney-General—and I may say, although I am not the Government legal adviser, it was my judgment based on my intense knowledge of the negotiating history of resolution 1441—that the effect of 1441 was to revive the authority of resolutions 678 and 687 and—[Interruption.] Well, we did not get a second resolution because it was not possible, but it was never needed legally, and I made that very clear to the House—crystal clear, on the record—when I reported the passage of 1441 to the House on 24 November 2002. [Interruption.] As someone behind me says from a sedentary position, the resolution is worthy of re-reading. It sets out clearly the position. The Attorney-General was in no doubt by the middle of March that Saddam, on the basis of evidence that we provided, was in clear further material breach, and that military action was justified.

The right hon. Gentleman, in justifying the legality of war, is resting his case on the three resolutions that he has cited. He has been reminded that the Secretary-General of the United Nations said that the war was unlawful. Would not the right hon. Gentleman accept that the Secretary-General is singularly well placed to advise as to the legal impact of Security Council resolutions? Is not the truth this: the Attorney-General, as a good House lawyer, came to give the best argument that he could in order to provide legal cover for a decision already taken when war was then inevitable and in order to provide the best justification that he could for a war that was being prosecuted for reasons outside those publicly stated by the Prime Minister?

That allegation is completely untrue. It is unworthy of the right hon. and learned Gentleman, and he knows it. I made it clear, and so did the Prime Minister, repeatedly, that we wanted to see the issue of Saddam Hussein's clear breach of United Nations Security Council resolutions resolved peacefully. The phrase that I used repeatedly, in the Security Council and outside, was that we would of course take yes for an answer. Had there been any evidence of compliance with resolution 1441 in those Security Council resolutions, it would not have lain in my mouth to say to my colleagues, without demur from any of them, in the Security Council on 7 March, that not one had claimed that Saddam was in compliance with the Security Council, nor would it have been remotely possible to have come before this House on 17 and 18 March and make the case for military action. The case for military action, I remind the House, was on the basis of a breach of Security Council resolutions rather than on any matter of intelligence. The evidence was put before the House in two successive Command Papers and, I add, the Iraq Survey Group has confirmed that it ascertained a clear and continuing breach by Saddam of those disarmament obligations.

Should we not keep reminding everyone that there was a very large majority in favour of taking military action at the time? Those who voted for such action presumably did so on the basis that it was legal—otherwise they would not have voted accordingly. Does my right hon. Friend agree that it is pretty grubby to see those who voted for and enthusiastically backed the war now jumping on the anti-war bandwagon? What sort of respect can anyone have for the official Opposition?

I agree with my hon. Friend and I commend him and other colleagues on both sides of the House who have been consistent on this matter. If only we had seen similar consistency from the Opposition Front Bench. If I recall correctly, all the Conservative Front Benchers voted in favour of the resolution of 18 March, yet from July last year, we have seen the extraordinary spectacle of the Leader of the Opposition trying to have it both ways. In The Sunday Times of 18 July last year, he made two wholly contradictory statements. First, he said:

"If I knew then what I know now, that would have caused a difficulty. I couldn't have voted for that resolution."

He then went on to say:

"I think I would have voted for a differently worded resolution that would have authorised the war",

adding that he was

"still in favour of the war".

Well, it is time for the Opposition to put up or shut up on this matter of the military action.

The Foreign Secretary will know that the Attorney-General has a duty to provide legal advice to Parliament in addition to his duties in relation to the Executive. Was not his written answer of 17 March 2003 effectively the provision of such advice to Parliament? In that case, should not Members of Parliament be entitled to see the background papers, setting out the detailed considerations relating to the legal issues on which the Attorney-General's published view was based?

With great respect to the hon. Gentleman, the requirement on the Attorney-General to provide legal advice to Parliament is very limited indeed and it is a wholly separate duty from the clear and continuing requirement to provide legal advice to the Government internally. Such advice is very clearly protected by the long-standing principle of legal professional privilege, confirmed by the Law Lords and many other courts. It is protected by the ministerial code. As recently as four years ago, the House had every opportunity during the passage of the Freedom of Information Bill to disagree with that. As I have already said, not a single Member on either side of the House ever proposed that the advice of the Attorney-General should be made public in the way that is now being suggested.

Does my right hon. Friend agree that the failure to circulate the Attorney-General's background documents to the Cabinet was a failure to comply with the ministerial code? Having asked the Prime Minister for an undertaking relating to factual matters, the Attorney-General clearly changed his mind. Keeping all that secret was done to mislead the Cabinet, and the publication of only partial legal advice from the Attorney-General was done to mislead Parliament. These are terribly serious matters, which can be cleared up only by putting everything openly on the record. Otherwise, the very institution of the Attorney-General as a reliable part of our constitutional arrangements will be brought into doubt.

I am sorry to say that I do not accept any part of what my right hon. Friend said. There has been not the slightest evidence of providing anything other than the straightforward facts of the matter both to this House and to the other place. There is no secret about the fact that the Attorney-General sought the view of the Prime Minister as to whether Iraq was in further material breach. That was set out clearly in the Butler inquiry's report.

As to the matter of the ministerial code, that charge, which my right hon. Friend has made in the past, was fully dealt with by Sir Andrew Turnbull, the Cabinet Secretary. Paragraph 23 of the code, which I happen to have in front of me, is much more narrowly drawn than she suggests. The Attorney-General was actually present in the Cabinet—I re-examined the minutes this morning—and offered the clear view that military action in respect of Iraq, as of 17 March, was lawful. I recall that my right hon. Friend was there and voted in favour of military action—and I am glad that she did. The Attorney-General was there to take questions. [Interruption.]

Order.

Does the Foreign Secretary recall that it was my question to the Prime Minister on 14 March that gave rise to the subsequent publication of the Attorney-General's opinion in the House of Lords? My question asked about the basis on which it was proposed that we should go to war. More and more facts, and more and more contradictions have emerged. Indeed, I recall that in her resignation speech, the right hon. Member for Birmingham, Ladywood (Clare Short) accused the Prime Minister of misleading both her and Parliament—and she has repeated much the same today.

Does the Foreign Secretary accept that, under the rules and conventions of the House and under the rules of ministerial conduct, it is the Prime Minister—I see him in his place now—who is responsible for deciding on the disclosure of the Attorney-General's advice and for rectifying any misleading statements that may have been made? I tabled a question to the Prime Minister—[Interruption.] Will the Foreign Secretary now answer the charge whether the Prime Minister—

Order.

With apologies to the hon. Gentleman, his question to the Prime Minister of 14 March 2003 did not immediately come to mind. The House wished to be informed of the Attorney-General's legal advice and that was what happened. My noble Friend the Attorney-General answered a question in the House of Lords, which was repeated in this House, and I published a detailed explanation of the background. There is nothing odd about the view that we took. Anyone who knows the history of what happened in Iraq and of what happened after achieving resolution 1441, knows that the evidence was overwhelming—no one contradicted it at the time—that Saddam was in clear further material breach of his obligations. He was given a final opportunity under the first paragraph of resolution 1441 and he was told specifically what would amount to a "further material breach". There was no requirement whatever in 1441 for a second resolution. I am as comfortable as I was on 18 March in being absolutely clear that the military action that we took was justified—and it remains justified in the light of what we now know.

With permission, Mr. Speaker, I shall make a statement about the European Council that took place in Brussels on 22 and 23 March. It was the fifth in a series of summits about the Lisbon agenda on economic reform in Europe.

It is the British case that economic reform is not going as far or as fast as it must. Nevertheless, over the past five years, 6 million extra jobs have been created in Europe. We have opened up the telecommunications market, and the gas and electricity markets have been liberalised, bringing new choice to consumers. Air travel has also been opened up, bringing cheaper air tickets. In the recent World Economic Forum study of international competitiveness, six EU states were among the 15 most competitive nations in the world. Britain is one of them and has risen a number of places in the last year.

Some progress has been made, but the truth is that there used to be eight EU countries in the top 15. There are still far too many unemployed people in Europe and too many businesses unable to compete as they should. That provides the EU's challenge.

The European Council rightly decided yesterday to support the Barroso Commission's emphasis on growth and jobs as the first-order priorities. There was also strong support for the Commission's proposals for improving and simplifying its approach to regulation.

However, the services directive is at the heart of this next phase of the Lisbon programme. Services account for 70 per cent. of both the UK and EU economies. The directive is intended to liberalise that market. It does this by requiring national Governments to make it easier for European service companies to establish on their territory, so regulatory regimes must be simplified and made accessible. It also facilitates temporary, cross-border trade in services.

The directive is unquestionably an ambitious measure. Authoritative studies show that it could bring at least 600,000 new jobs to Europe, and add some €37 billion to the European economy. Also, many of the accusations made about it are unfounded or overstated. It does not mean that workers from a low-cost member state can work permanently under their country of origin wages and conditions in another member state. The posted workers directive already prevents that. Neither does it mean that consumer protection and health and safety legislation will be circumvented or abandoned. Again, there are complementary measures that cover those areas.

It is true that there are some genuine concerns about the implications of the proposals—for example, for us there is their impact on the national health service—that need to be addressed in the negotiations. The directive, inevitably and rightly, will be amended as it goes through its legislative process. The Commission signalled that several weeks ago, and confirmed as much again at the European Council. However, the changes will be part of the normal legislative and negotiating process and, fortunately, the final decision will be by qualified majority voting. None of that has changed as a result of this European Council, whose conclusions were of course subject to the unanimity rule, so any member state had a veto over them.

However, to have withdrawn the directive, as some wished, would have been a grave injustice and error for Europe's economy. President Barroso is therefore absolutely right to maintain it. The Commission remains committed to the main principles of the directive, as do we and many other EU Governments, notably those from the new member states. Its adoption will be a key test of Europe's seriousness about reform.

The issue, however, that underlies the debate about the services directive is the future of the European social model. Some, notably France, believe that that model should remain in its existing form. Some, like Britain, believe firmly in Europe's social dimension but wanted it updated to take account of modern economic reality.

Fortunately, in this debate—which will dominate discussion of Europe's economic future over the coming years, just as the debate over the transatlantic alliance will dominate debate on foreign policy—we have the benefit of some empirical evidence. The UK has shown that it is possible to have flexible labour markets combined with a minimum wage, tax credits to help families into work, family-friendly policies to help the work-life balance, the new deal for the unemployed, record investment in education and skills, and a strong economy. I believe that that is the modern social model for Europe, and that it is recognised as such by many of our partners. The result has been higher growth, higher employment and lower unemployment for the UK. Those successes can be replicated across Europe, with the right policies.

It is worth adding that the UK has also benefited from its decision, unique amongst the larger member states, to open its labour markets to workers from the new member states. Far from disrupting our labour markets, they have, for the most part, made a positive contribution to the British economy. If we want Europe to compete not just with the USA but with China and India in the future, this type of open and flexible economy is precisely what we need.

I should report briefly to the House on four other issues covered during this European Council. We endorsed the deal reached in ECOFIN on reform of the stability and growth pact. That introduces a more sophisticated system for implementing the rules, taking account of issues such as the level of debt, investment, and the impact of the economic cycle, all in line with UK objectives, while maintaining financial prudence.

On climate change, we discussed a long-term strategy for the EU, including progressive targets for reducing emissions. We shall take that process forward in the context of our G8 and EU presidencies later this year.

On Africa, the European Council noted the Commission for Africa's report and agreed that we had to step up our support for that continent. There is now unanimous support inside Europe for the policies that can confront the challenge—indeed, the scandal—of thousands of African children who die needlessly every day and, where they survive, live lives of unimaginable poverty and deprivation: 2005 must be, and should be, Africa's year.

On Croatia, we discussed follow-up to the recent decision by European Foreign Ministers to postpone accession negotiations, but to start as soon as there is full co-operation by the Croatian Government with the International Criminal Tribunal for the Former Yugoslavia. The British Government, in principle, strongly support Croatian membership of the EU. The next step is likely to be EU discussions with Croatia, led by the present and future presidencies, about how to achieve full co-operation with the tribunal. I should add that we also supported democracy in Lebanon.

As was obvious from this Council, and from recent NATO-EU summits, there is a big debate going on in Europe today. It is vital to Europe's future, and to the future of Britain. In this debate, we know where we stand: in favour of the transatlantic alliance as the bedrock of our security; in favour of adapting Europe's economy to the future as the path to our prosperity. It is a debate in which we have allies. It is a debate that we can win. But to win we have to participate, fully, wholeheartedly, with self-confidence and belief; we must not marginalise Britain, reducing it to the role of spectator. The policy of this Government is clear: to be at the centre of the debate, not the margins.

I commend this statement to the House.

I start by thanking the Prime Minister for advance sight of his statement. We welcome some items in the communiqué, such as the commitment to sustainable development and the Kyoto protocol. However, will the Prime Minister explain why new figures published this week show that carbon dioxide emissions in Britain have risen since 1997?

The Council rightly emphasised the importance of development issues, but was there not a grievous failure to match words with deeds when it came to helping the world's poor and depressed? Should not the EU demonstrate its belief in the right values with its trade policy? Is not free and fair trade the best way to lift people out of poverty? Would not dropping EU tariffs on their goods be the ideal way to help people in those countries devastated by the tsunami? Is not it indefensible and immoral to impose punitive duties on struggling nations and suffering people? Is not it also imprudent, as well as unethical, to press ahead with plans to sell arms to China? Does the Prime Minister think that it was right for Javier Solana to say yesterday that the EU was moving towards a "political decision" to end the arms embargo? Should not the Prime Minister instead listen to the human rights groups, Britain's Defence Manufacturers Association, the four Select Committees that have studied this matter, and our allies in Japan and the US, all of whom are urging him to maintain the embargo?

If the Council is serious about human rights, can I ask the Prime Minister whether the situation in Darfur was discussed? He just said that 2005 must be Africa's year, but the tragedy in Sudan is getting daily more horrific. The UN now says that 180,000 people have died. Why is not the Prime Minister demanding a UN resolution that would impose arms and oil sanctions on the Sudanese Government, and give the African Union peacekeepers the mandate and support that they need to protect the civilian population?

This summit came at an appropriate time, being the last one before the election—if we are to believe what we are told, not least by the Deputy Prime Minister yesterday. It discussed a wide range of issues, and it encapsulated the Prime Minister's complete failure on Europe over the past eight years.

Why on earth is the British rebate being discussed? The justification for it is as strong now as it was when it was won. The EU's financial problems are not caused by the rebate but by policies such as the common agricultural policy that are in real need of further reform. So why is not the reform agenda being given pride of place?

The Prime Minister assures us that he will not give way on the rebate. He says that his mind is made up. However, as we have discovered again this morning, members of this Government have a curious tendency to change their minds, and their advice, when they come under pressure.

And it is not just Ministers who cave in at the last moment. The Prime Minister himself changed his position when he came under pressure at the Council. Before he went abroad, his Government were all in favour of the services directive. Only last month the Foreign Secretary said:

"Creating a true single market in"

services

"would boost growth in the EU and improve the price, choice and quality of services on offer to businesses and consumers."

But when it came to standing up for the services directive against President Chirac's objections, the Prime Minister surrendered. He put the interests of the French President before those of British workers and consumers, so how can we trust his promises on the rebate? Last time the Prime Minister fell out with President Chirac, he gave him a fountain pen. Next time, if he is still there, will he give him the cheque book?

In 2000, the Prime Minister said that there had been a sea change in European thinking away from heavy-handed intervention and regulation towards a new approach based on enterprise, innovation and competition. The last President of the Commission, Mr. Prodi, described the agenda as a big failure and the current President said that the Lisbon goals were too ambitious. Is not the European Union doing what the Prime Minister does when he fails all his targets—abandoning them and calling it a relaunch? Is not that failure a tragedy for Europe's 19 million unemployed? Does not it show that making promises is not enough and that Governments that are not prepared to turn talk into action never achieve anything?

The Council discussed reform of the euro stability and growth pact which Europe says is needed because a European Union of 25 countries is characterised by considerable diversity. Does not that diversity mean that a one-size-fits-all interest rate does not work? Is not that precisely why membership of the single currency would harm jobs and prosperity in Britain?

The Prime Minister boasted that Britain's place in the recent World Economic Forum's study of international competitiveness has improved during the past year. What he did not say is that today we are 11th in that league, but in 1998 we were fourth. Does not that say all we need to know about the economic performance and record of this Government?

Does not the Prime Minister believe that a European Union of 25 countries, characterised by considerable diversity, should be reforming and modernising in other ways also? Is not that his biggest failure of all? Why is not he putting the case for a more diverse and flexible Europe, for a live-and-let-live Europe of co-operating nation states? Why is not he putting the case for powers to be returned to the nation states, such as those we now discover he surrendered on asylum? Even the Dutch Government are asking for powers to be returned on social policy. Was not Germany's Europe Minister right when he recently described the constitution as

"the birth certificate of the United States of Europe"?

Is not that precisely the wrong direction for a modern Europe, characterised by considerable diversity, to take? Was not the Prime Minister's former economic adviser right when he said that the constitution will

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

Will not there be a clear choice at the next election between a Labour Government handing over ever more power to Brussels and a Conservative Government who will bring powers back to member states and closer to the people, and work for a flexible and diverse Europe fit for the 21st century? Is not there now a unique opportunity to settle Britain's relationship with Europe in Britain's national interest? Is not it time for an end to the Government's failures on Europe?

There certainly is a clear choice, not least on the economy, which the right hon. and learned Gentleman mentioned. I seem to remember that when he was a Minister in the last Conservative Government unemployment rose to 3 million, interest rates were at 10 per cent. for four years and there were two recessions during which people lost their jobs, their homes and their livelihoods. Yes, there is a clear choice between the right hon. and learned Gentleman's boom and bust and cuts in investment and our economic stability and investment in public services.

I shall deal with one or two of the specific issues that the right hon. and learned Gentleman raised. On climate change, it is absolutely important to meet our Kyoto targets and we will. It is correct that there has been a rise in CO 2 emissions and one way of dealing with that is the climate change levy, which his party voted against. Carbon dioxide emissions have risen because of the strength of the economy but, overall, we shall meet our Kyoto targets in a way that will probably single us out from most other countries in the world.

On the European Union and the China arms embargo, it is important in any discussion of the matter to recognise that that cannot be done without a proper code of conduct to govern any arms sales to China. It is a sensitive issue because of recent events and the European Union has made it clear that there cannot be a qualitative or quantitative increase in arms sales.

On Sudan, we are pressing for UN Security Council measures. The main thing is to ensure that the African Union mission of peacekeepers is built up to its full strength. We can introduce arms sanctions against Sudan, but the only thing that will work is to have a proper peacekeeping force there which is properly able to enforce, as well as to keep peace. Until we do that, we will not bring any hope to that troubled part of Sudan. That is also one of the important aspects of the Commission for Africa. Africa needs its own proper peacekeeping and peace-enforcing contingent, which must be of sufficient strength that it can be sent to different parts of Africa and keep warring people apart so that conflicts can be resolved and peace kept. Until that happens, situations such as that in Sudan will continue.

The right hon. and learned Gentleman talked about a failure of our policy over the past eight years. I remind him that when we came to office we were still living with the aftermath of the beef war, which probably stands out as the epitome of a failed European policy. All he ever did in Europe, and the only position he ever adopted that anyone remembers, was to stand out against the European social chapter, and against paid holidays and decent terms and conditions for British workers—[Interruption.] He may say that people can decide for themselves, but in 18 years of government he never quite got round to doing it, did he?

The right hon. and learned Gentleman raised other points, including the rebate which, incidentally, was not mentioned at the Council, at the dinner or during the conclusions the following day. It was mentioned by the French President, as it always is, but he always gets the same response from me: no. That will continue to happen.

On the reform agenda, I do not think that the right hon. and learned Gentleman listened to what I said. I am passionately in favour of the services directive and we must ensure that it is implemented. We have given nothing away. On the contrary, it will be debated through the legislative process. I agree that there is a big issue with the directive and the reform agenda and that there is a battle going on. There is also a battle over trade policy. What is the right thing to do? It is to get in there and ensure that we win the debates. What is the right hon. and learned Gentleman's alternative? It is to embark on a policy of renegotiating the fundamental existing terms of Britain's membership of the European Union. What will that do? I do not often agree with the spokesman of the UK Independence party but I agreed with him when he said:

"The whole policy of renegotiation is, as far as the Tories are concerned, nothing more than self-delusion—and on the British public it's just a deception".

Dominic Cummings, the right hon. and learned Gentleman's former director of strategy, said a few months ago:

"the party"—

the Conservative party—

"is stuck on the question: 'what would you do if you can't get the new deal you want? . . . The current situation of spasmodic lurches without a clear view . . . is the worst of all worlds. It does not deal with UKIP, it does not change opinion, it does not improve the Conservative Party's reputation for seriousness."

I could not have put it better myself.

The Leader of the Opposition is saying that he will withdraw from the common agricultural policy, the social chapter, overseas aid, fisheries—

indicated dissent.

It is in black and white. Let me tell him what his fisheries spokesman said on Monday. The Conservative party's shadow Minster for Europe, when asked what he would do about the control of fisheries, said, "Let's look at what Iceland has done," and, further afield, "Let's look at what happens in the Falkland Islands."

Order. May I gently say that we are discussing a statement, not the Conservative party's policies?

We are also dealing with choice and the choice is between being at the heart of Europe or on the margins. The idea that we could have the same fisheries policy as the Falklands Islands is an indication only of how utterly unserious the Conservative party is.

The truth of the matter is that there is a very clear choice, between going into the debates on economic reform and trade and fighting Britain's corner, or opting out, as the last Conservative Government did, leaving Britain defenceless and near the exit door. That would betray our true national interest. It is a strategy born of opportunism, it will fail, and the more it comes under scrutiny, so will the right hon. and learned Gentleman's leadership.

I, too, thank the Prime Minister for his statement on the summit. On the issue of the liberalisation of the services market and the services directive, which is important because of its 70 per cent. contribution to European gross domestic product—so reform is clearly in Britain's interests—will the Prime Minister confirm that further steps towards liberalisation would increase standards, lower costs and help generate jobs? He said:

"The directive, inevitably and rightly, will be amended as it goes through its legislative process."

Why would it be right to envisage a watering down of the services directive, since that would reduce the benefits of liberalisation? He must find it a little embarrassing in the historical context that Mrs. Thatcher was much firmer in pushing through the liberalisation of the single market than he has been on this issue. Will he be emboldened in his future endeavours?

On the UK rebate, will the Prime Minister acknowledge that that will always come back to the argument that France would have to accept fundamental reform of the CAP before it could make progress by being critical and carping about the UK rebate? Given the domestic referendum concerns of the President of France, which we all recognise, does the Prime Minister hold out much prospect of being able to be a little more persuasive with him than was obviously the case in the past two or three days?

The Prime Minister did not mention the ongoing troop commitment in Iraq in his statement, but it is unlikely that some discussion of it did not take place, certainly at the margins, with some of his opposite numbers in the EU. Given that several of the allies have either withdrawn their troops or have indicated a willingness or a timetable to withdraw them, did he discuss those matters with any of his counterparts at the summit? In that context, will he take account of yesterday's all-party Defence Committee report, which acknowledges an ongoing British presence in Iraq, perhaps even at present levels, into the next calendar year? Will not withdrawal of further European Union countries maintain that position or indeed require our troop numbers to be increased? Did he discuss those matters with any of his opposite numbers?

In relation to the services directive, of course we support it. The only issue for the European Council, which is a discussion that produces conclusions, was whether we should withdraw the directive. That was firmly rejected by the majority of countries round the table. There will be a legislative process in any event, but the Council agreed that any changes have to be made in the course of that process. There will be some amendments, but they should not touch on the essential nature of the directive, which is right and necessary and will bring benefits.

In relation to CAP reform and the services directive, the point to emphasise is the importance of qualified majority voting. There is no way we would get any of the changes—on the CAP, on the services directive or on the single market—without QMV.

In respect of Iraq, I would point out that other countries—most notably, recently, Australia—have decided to put in troops. I can assure the right hon. Gentleman that the position of myself and other European Union leaders, except those with parliamentary resolutions to which they have to adhere—although they remain fully supportive of the mission in Iraq—is that we stay in Iraq until the job is done. The job is being done. Iraq is on its way to democracy, there is a huge spirit of enthusiasm there for the future, and the security problems are increasingly being dealt with by the Iraqis themselves. However, we must ensure that the security forces are in the proper position to be able to guard the Iraqis against the terrorist threat that they face. We must also ensure that Iraq can continue to make steady progress towards democracy. That is our position and, I assure the right hon. Gentleman, it is the position of the other European countries.

Recognising that the process of enlargement may have had an effect on progress on the Lisbon agenda, the Kok report is clear that Britain has done better than its EU partners in meeting the Lisbon benchmarks. My right hon. Friend will know that this spring marks the third anniversary of the initiative that he started with Chancellor Schröder on the wider reform of the EU. Will he confirm that substantial progress has been made since his letter of 25 February 2002, and that the wider reform agenda will be a theme of the presidency?

Yes, I can assure my hon. Friend of that. There is no doubt that the direction of travel for Europe now is towards reform. There are countries that will act as a brake on that, and that is why it is important that we argue the case and try to ensure that people understand that in the world of globalisation we protect jobs through investment in skills and education and active labour market measures, rather than regulation or protection.

I want to take the Prime Minister back to China. It has a terrible record, condemned by almost everybody, on democracy and human rights. Massive abuses take place every day. We also know that it has been hugely involved in the chain of proliferation of technology to North Korea. The Prime Minister knows that the present Government have a strong position on North Korea and are determined that it should rid itself of weapons of mass destruction, but China is behind much of their development. In the past two weeks, China has threatened Taiwan, overtly threatening to invade it if it takes decisions that China disagrees with. Why are the Government not at the very forefront of saying that we should not sell arms to China until major change has come about? We should lead on that and refuse to follow the others in Europe down a ridiculous road that will damage everybody.

It is important to emphasise that the idea in the abstract of lifting the China arms embargo has never been separate from the notion that it should be replaced with a strong code of conduct that should provide for a far more rational method of determining sales to China. I do not put the human rights considerations to the side: on the contrary, I think that they are very important. I would simply underline the fact that the debate in Europe has taken a different turn over the past few weeks. We are in the thick of that debate, trying to ensure that whatever Europe does, it does it with real sensitivity to the values in which we and our American allies believe, and that we introduce a system that is rational in the light of what is happening in China today.

On China, may I draw to my right hon. Friend's attention the Quadripartite Committee's report, published today, in which four Select Committees express strong reservations about any premature lifting of the arms embargo? Was there any discussion in the margins of the meeting? Will my right hon. Friend be reinforced in his view by the unanimous view of all the members of those four Committees, based on our experience of talking to members of the US Congress and other discussions about the damaging impact on British companies of a premature lifting of the embargo?

I can assure my hon. Friend that we shall certainly pay careful attention to what he and his colleagues said. It was not raised either at the summit or at the margins—[Hon. Members: "Why not?"] That is of significance in itself, because there may have been countries that wanted to raise the idea of lifting the embargo at present, but they did not do so. I think that has some significance.

Many British businesses are well placed to take advantage of the services directive, as and when we get it. Can the Prime Minister give an indication of the timetable that he envisages for the adoption of the directive? Does he really think that it will go through under QMV if the French are against it?

In exactly the same way, there was a lot of opposition to reform of the common agricultural policy. The reform has not been as great as we wanted, but the position is different from what it was a few years ago. Yes, I believe that the services directive will go through, but there will be a battle over it. My point to the Conservative party is not that there will not be a battle—there will—but that we must consider what is the best way to win it. My point is that the biggest change that has happened in Europe—I do not think people fully understand it yet—has been the accession of the new member states, which are our allies on both the transatlantic alliance and economic reform. That is why it would be so crazy to marginalise ourselves in Europe. With respect to the Leader of the Opposition, at the very moment when we are fighting those battles for the transatlantic alliance and economic reform, to start a debate about the renegotiation of Britain's membership—I cannot think of a crazier or more misjudged policy.

Does the Prime Minister agree that one of the reasons why Chirac has turned a bit nasty lately is that the French will soon be having a poll on the constitution and it looks as though he might finish up with a headache? In the Prime Minister's quieter moments, does he think that it might not be a bad idea if that happened? It would save us a lot of embarrassment here.

Finally, after eight years of a Labour Government, may I congratulate them on running such a successful economy—unemployment down, employment up and everything else—without joining the euro?

I thank my hon. Friend for his congratulations on our economic management. He asks about my quieter moments. I have to say that I have not yet had any.

On Darfur, the Prime Minister will be aware that the African Union forces in Sudan at present have only a limited monitoring role. Is the House to understand from his earlier comments that the UK and the Security Council will support both a peacekeeping and a peace-enforcing mandate for the African Union? If so, will there also be funds to assist that objective?

We have to try to negotiate that in the Security Council, which is what we are doing at present. I return to the point that I made earlier—because I have looked at the situation in Sudan very carefully—as I did, too, when I visited the country. The Security Council and the resolution we have managed to pass there will be extremely important, but the only thing that will stop what is happening in Sudan is the presence of a sufficient number of well-armed people able to keep the combatants apart and—[Interruption.] Of course their mandate is important. That is why we must secure the right mandate, and we are working to do that, but in the end the most important thing is to ensure that that force goes to Sudan, and we and other countries have already said that we are prepared to help with funding that.

Were there any discussions at the margins about collaborative education projects? My right hon. Friend will be interested to know that there is real excitement at the Whitby high school in my constituency, where we are putting together such a project to form links, through the highest available technology, with a school in Budapest. The teachers are buzzing with excitement. We can do extremely well in that field, because of the importance of the English language to the rest of Europe.

My hon. Friend is right. I know of many such joint partnerships and ventures. They work extremely well, and it is certainly our intention to encourage them.

The Prime Minister rightly referred to the importance of telecommunications market liberalisation in the Lisbon agenda on competitiveness. Does he agree that although the UK market has been opened up effectively with the Communications Act 2003 and the creation of Ofcom, much more progress remains to be made in other EU countries, to the potential disadvantage of British businesses that want to invest in the European market? Will he ensure that telecoms liberalisation is given significant priority in the UK agenda for the EU presidency?

We will certainly do that.

I congratulate the Prime Minister on his statement. Was there any reference at the Council, either formally or informally, to the idea that Britain should have an associate relationship with the European Union? Does he agree that if we were to have such a relationship it would be extremely detrimental to the interests of this country?

It certainly would be, which is why under this Government it will not happen. The result would be that, on trade policy, the services directive and the whole reform agenda, Europe would be without the strong voice of Britain, and Britain would be marginalised in Europe.

Was there any discussion of what is to be done about Kosovo, and if not, why not?

It was discussed in the Foreign Ministers meeting, as I have just been quickly and reliably informed by my right hon. Friend the Foreign Secretary.

Does my right hon. Friend accept that there is deep and growing alarm at the march of neo-liberalism in the European Union? Working people and trade unionists are beginning to wake up to the threat to the welfare state and the worker protection they have enjoyed in the post-war world. That is the underlying cause of the Swedish no in their referendum on the euro, and the probable no vote in France on the constitutional treaty. What happens when the constitutional treaty is rejected? Will we have a fundamental rethink about the economic direction of Europe?

I am afraid that I cannot agree with my hon. Friend. I am not sure that the European economy can be described as marching towards neo-liberalism. It is important to open up the economy. There used to be a view on the right, held by the previous Government—indeed the Leader of the Opposition pioneered the idea—that somehow one had to choose between good, decent terms and conditions for the work force and economic efficiency. That is why the Conservatives opposed the minimum wage and the social chapter. In this country, we have shown that we can combine a minimum wage, the social chapter, help for people to get off benefit and into work and the work-life balance—measures that help people to combine their family life with work—and still have a successful economy. In today's world, it is a deception on our work force and our people to believe that we can isolate ourselves from the emerging economies in Asia—the Chinese economy and the Indian economy—when in fact we have to compete with them. The way to compete is to go higher and higher up the value-added chain, which is why it is so important to invest in skills, technology and education, but to combine that with a flexible and open economy. That is what we have to do. When we consider the difference between this country's economic performance and that of some comparable countries in Europe, I think we are doing extremely well.

The Prime Minister referred to the relaxation of the growth and stability pact. When he agreed to that at the European Council meeting, had he taken the advice of the Governor of the Bank of England? When the Governor appeared before the Treasury Committee this morning, he was critical of that decision and said that if you want monetary stability you have to have a set of rules and stick to them.

Of course you have to have a set of rules, but you also have to have the right set of rules. We want to see changes in the growth and stability pact as it is now—as it is amended. We made a series of propositions for something much more akin to the British system, which works well for us. Obviously, that has to be agreed among all the European countries, but the greater flexibility in the growth and stability pact that was agreed makes sense.

Did the discussions on the serious and worsening unemployment situation in Germany and France and artificial prosperity in Ireland persuade the Prime Minister that the single currency was not the best idea for Europe or for Britain? Will he condemn or at least deny the appalling story on the front page of The Sunday Telegraph last week that, in the unlikely event of the Government winning the election, he would be getting rid of the Chancellor of the Exchequer solely because of his lack of enthusiasm for the single currency?

On the euro, we have the best position, which is to have the five economic conditions that have to be met if it is right for Britain to join, but to keep the option open. The Conservative position is to close off the option. There is absolutely no sense in that whatever. Keep the option open. We can exercise it if we want it, but we do not have to exercise it if we do not want it. In the meantime, we can ensure that we keep the economic conditions intact. That position has served us well both in Britain and in Europe and we should maintain it.

Given the Prime Minister's belief in Africa and his special efforts in that respect, does he agree that the mass killings in Darfur have gone on for far too long? What discussions did he have at the European Council about sending forces rapidly to deal with the situation? Or is the problem that the French are preventing NATO from going into Africa, because they think it should be a European army? When will the west take action on Darfur?

The hon. Gentleman's obsession with Europe has led him into a rather odd deviation from reality. No, the issue is not whether NATO or Europe sends in forces. We cannot send forces into Darfur. That would not be supported by the surrounding African countries, and it would not be practical. The main thing is to support the African Union in doing that. That is the only way that we will bring some semblance of peace to Darfur, and it is not NATO that will be able to do so, any more than Europe.

Last week, the Chancellor told us that more than 50 per cent. of regulations come from the Commission, yet the Minister for Europe now tells us that that is a myth and the figure is just 9 per cent. Who is right?

There are regulations that come from Europe, and a large part of the regulations—

What percentage?

I am not going to get into percentages, but large amounts of regulation come from Europe. It is important, however, that we do not gold-plate those regulations. That is what my right hon. Friend the Chancellor was talking about when he made it clear that we should not gold-plate the regulations that come from Europe. But surely the most important thing is, again, that if regulations are coming from Europe, we should be part of that debate; we should not be opted out of it. That is why the position adopted by the Conservative party is so foolish.

When not discussing the crucial issue of economic reform, did the Prime Minister take the opportunity in the margins of the European Council to complain to President Chirac that Total Oil's $400 million investment in Burma is propping up the brutal military dictatorship there? Is it not now high time that the European Union resolved that its common position towards oppressive regimes should be driven by respect for human rights and democratic values, not by the pursuit of filthy lucre and narrow, short-term self-interest?

That is not something that I raised with President Chirac. We had other discussions, which we are continuing. However, the basic point that the hon. Gentleman makes is right.

Further to the comments of the Governor of the Bank of England this morning, and given that it is in no one's interest that the euro should be anything other than a hard currency, does the Prime Minister accept that the appearance of altering the stability pact for political rather than economic reasons undermines confidence in financial markets, and indeed much more widely? Can he give us any comfort following the meeting that the pact will not be further watered down when the more dominant nations in the EU feel constrained by it?

The most important thing in my view is to have a stability and growth pact that is actually based on a rational set of rules, and we have proposed changes—we have done so for a long period—to the pact that will allow us to take account, for example, of the need to borrow for investment over the cycle. We think that that is a more rational approach to deficits. We are also pushing for economic reform in Europe. I have to tell the hon. Gentleman that, yes, debates are going about these things the whole time, but the important thing is to be there and be part of them, and to ensure that we are not excluded from them and marginalised. I am sure that he would agree with that, which is why he should perhaps re-educate some of his Front-Bench colleagues.

Does the Prime Minister accept that, in going along with the torpedo that President Chirac has fired at the services directive, he, by caving in, has also fired a torpedo at his own constitution, title III of which clearly reinforces the whole notion of the freedom of services? Does he not accept that, in seeking to renegotiate the stability and growth pact when there is no stability, no growth and no pact, he is in fact engaged in renegotiation? What will he do if there is a no vote in the referendum on renegotiation?

I am trying to unbundle that one. Should I understand the hon. Gentleman to be saying that he thought the constitution gave a big push towards the services directive?

Absolutely.

Okay. I assume that the hon. Gentleman is in favour of the services directive. The European constitution gives a push for the services directive. Is that not a good argument for the constitution? Have we got a bit of a mind change going on here?

No.

Possibly not. The issue at the summit was whether the services directive should be withdrawn, and it was decided that it should not be. There will be a process of amendment through the legislative process in the European Parliament. That will happen in any event, and in a sense the debate was neither advanced nor closed off at the European Council—it was merely transferred, obviously, to the European Parliament. The crucial thing was to prevent any suggestion that the services directive in its entirety should be withdrawn, because that would be disastrous. There will be a battle over it. That is the situation. We must ensure that the services directive survives and goes through, and that is what we will do.

The business for the week after the Easter recess will be:

Monday 4 April—Second Reading of the Public Service Ombudsman (Wales) Bill [Lords], followed by a debate on Welsh Affairs on a motion for the Adjournment of the House.

Tuesday 5 April—Second Reading of the Equality Bill, followed by consideration of Lords amendments to the Mental Capacity Bill.

Wednesday 6 April—Opposition Day [6th Allotted Day]. There will be a debate entitled "Government's failure to control immigration" followed by a debate entitled "Government's failure to tackle crime", both of which arise on an Opposition motion.

Thursday 7 April—A debate on defence in the UK on a motion for the Adjournment of the House.

Friday 8 April—Private Members' Bills.

The provisional business for the following week will be:

Monday 11 April—Second Reading of the Finance Bill.

I should like to inform the House that business in Westminster Hall for April will be:

Thursday 7 April—A debate on the national service framework for coronary heart disease.

Thursday 14 April—A debate on the report from the Northern Ireland Affairs Committee on social housing provision in Northern Ireland.

Thursday 21 April—A debate on the report from the International Development Committee on the Department for International Development's agriculture policy.

I wish you, Madam Deputy Speaker, right hon. and hon. Members, staff of the House and parliamentary clerks in Whitehall a happy Easter.