I beg to move,

That leave be given to bring in a Bill to require local authorities and the Government to agree on the infrastructure to be provided for large scale housing developments; and to determine the allocation of costs in advance of the commencement of building work.

The general practitioner's surgery in Whiteley in my constituency is still housed in a portakabin. The primary school serving that community is too small, so five and six-year-olds turned away from it are bussed to another school on the other side of a busy motorway junction. There is only one road in and out of Whiteley.

Residents living in the 3,000 homes in Whiteley see for themselves what happens when large-scale housing development takes place without adequate infrastructure. Thankfully, a new GP's surgery and a one-form-entry primary school will be built shortly, but more needs to be done to tackle the community's traffic problems.

The quality of life for Whiteley residents would be much better if the infrastructure issues had been tackled up front, rather than on a piecemeal basis. After what has happened in Whiteley, it is clear to me that we cannot embark on large-scale building without looking again at how infrastructure development is provided.

In addition, we need to address the concerns of residents, who are anxious that existing services cannot cope with the demands and pressures that come from large-scale house building. When faced with development, it is a natural reaction for people to look at the congestion on their roads, at the queues at their GPs' surgeries and at the problems of getting their children into local schools, and to challenge those plans. They also start to question the willingness of the Government to pay their share of the bill for tackling some of those issues.

In south Hampshire, one of the challenges that we face relates to the transport infrastructure. The main route that links Portsmouth and Southampton—the M27—is struggling with increased demand. The A32 between Fareham and Gosport is already heavily congested. Hampshire county council and Portsmouth city council worked together to design a light rapid transit system to link Fareham, Gosport and Portsmouth, to tackle the growing traffic problems that arise from existing and planned development. Two weeks ago, the Government rejected those plans as being too expensive, but they did not say that fewer houses should be built or that development plans should be put on hold until an alternative transport solution is agreed.

The rejection of the rapid transit system is illustrative—as, indeed, is the delay in getting an extra primary school for Whiteley—of the problems of failing to tackle the infrastructure needs of development at the outset, rather than waiting until a problem emerges to tackle. If the resolution of the issues is delayed, developers' contributions run out, even if they were ever adequate to tackle the infrastructure needs, and other priorities for expenditure become more pressing.

We need to learn from those experiences, when looking at the plans that are being put together at the moment by regional assemblies, and to take a fresh look at infrastructure provision and its funding. If we are to meet the needs of new residents and address the concerns of local people, we need to tackle infrastructure in a new way. We cannot simply allow decisions about infrastructure to be taken once houses are built.

We can forecast what issues will arise from large-scale housing development, and we should plan how to tackle them now, rather than simply waiting for them to happen and trying to find a solution then. By infrastructure, I do not simply mean the estate roads around new developments and shops, but the major infrastructure investment that is needed to fund large-scale development in areas such as south Hampshire, where the plan is to build 80,000 houses over 20 years, 20,000 of which will be in two strategic development areas, one of which is in my constituency.

If we are to proceed with development on that scale in Hampshire and on a greater scale in the Thames Gateway, Buckinghamshire, Bedford, Essex, Kent, Hertfordshire, Milton Keynes, Northamptonshire and elsewhere, there must be a serious commitment to infrastructure investment.

My Bill proposes three steps to tackle the infrastructure problems. The Government and the local authority should work together to identify the infrastructure needs related to large-scale housing development. Those needs should be costed. Agreement should be reached about who foots the bill before development can start. Those steps need to be completed, not when it is too late—not when schools are overcrowded, roads are clogged up and water and drainage systems are overloaded—but before work starts, so that local authorities know what support is there and local people understand what the solutions to those issues will be, so that everyone involved in the development knows what their share of the bill is.

The partnership for urban south Hampshire has already started to assess the infrastructure needs and costs associated with the 80,000 new homes that are planned for the area and recognises, too, the need for measures to tackle the existing infrastructure deficit. It has estimated that the cost of tackling the existing infrastructure problems and meeting future needs that relate to transport alone is £1.6 billion, before taking into account the other needs of those new developments. It estimates that new primary schools will cost about £80 million and that secondary schools will cost a similar amount.

We will need one GP per 1,800 to 2,500 people. The capital cost associated with a new surgery is about £500,000 per GP. We will need new primary care facilities, enhanced water supplies, new or extended sewage treatment services and community centres. The list is long and is not exclusive to south Hampshire—other areas will need the same facilities—but the crucial issue, once the level of need is identified, is who should pay for it?

The partnership for urban south Hampshire estimates that each house in the strategic development area will generate developers' contributions of £10,000. So an SDA of the size planned for Fareham will produce £100 million. That sounds a lot, but let us remember that a secondary school can cost about £20 million, so it will not take too long for those contributions to become exhausted. So the cost of infrastructure must be met from elsewhere—whether from council tax payers in the area or from taxpayers.

The Office of the Deputy Prime Minister has recognised the cost of infrastructure and has set up the community infrastructure fund, but there is only £200 million in that pot—not enough for south Hampshire, let alone areas elsewhere in the country. The position is complicated by the allocation of resources across government. Will the Department for Transport be prepared to pay its share of the bill for road, rail and public transport improvements? Our experience of the rapid transit system is that while one arm of the Government—the Office of the Deputy Prime Minister—is urging us to build more houses, another arm is not prepared to meet the cost of tackling the traffic congestion that housing development has created.

If the Government want new houses built, priorities need to be realigned across existing Departments, so that funds are available in the Department for Education and Skills, the Department of Health and the Department for Transport to meet the cost of infrastructure provision. This is not a plea for more money to be spent, but an argument that existing resources be directed at tackling the issues that will arise from housing development. I hope that the cross-cutting review announced in the pre-Budget report will help in the provision of infrastructure in the areas most affected by new developments.

The essential lock in the process is the requirement that the needs are assessed and agreed, and that before work starts the Government and local authorities decide who picks up the bill. As the people of Whiteley know, it is all too easy to put off those decisions until the housing is built. Other priorities become more pressing and urgent, and it is all the harder to tackle existing problems.

If the Government want more houses to be built, they need to play their part by ensuring that the money is available to provide the roads, schools, public transport and GP surgeries that an expanding population needs. If they are not prepared to meet their share of the bill, they should not be forcing councils to allow more and more houses to be built, putting a greater and greater strain on an infrastructure originally designed to meet the needs of a much smaller population.

I ask Members on both sides of the House to recognise the important issues that arise from housing development and to see the Bill, and the principles it sets out for reaching an agreement on infrastructure needs and costs and payment before work starts, as an essential way of guaranteeing for our constituents a means of securing the services that they need. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Mark Hoban, Mr. Mark Prisk, Mr. David Lidington, Andrew Selous, Mr. Brian Binley, Mr. Mark Francois, Mrs. Maria Miller, Mr. Mark Lancaster, Mr. David Gauke and Peter Viggers.

Housing Development (Infrastructure Requirements)

Mr. Hoban accordingly presented a Bill to require local authorities and the Government to agree on the infrastructure to be provided for large scale housing developments; and to determine the allocation of costs in advance of the commencement of building work: And the same was read the First time; and ordered to be read a Second time on Friday 12 May, and to be printed [Bill 104].

The debate is about prospects for the European Council, but I begin by welcoming back to the Opposition Front Bench the right hon. Member for Richmond, Yorks (Mr. Hague). We remember some excellent parliamentary performances from him—if I may say that, at the risk of damaging his reputation—from the Front Bench, when he was Leader of the Opposition, and some fine speeches from the Back Benches over the past four years, including a notable one on Iraq and a notable but less noticed one in our last debate, in June, on prospects for the European Council.

Having seen 10 Leaders of the Opposition during my time in this place, I am in no doubt of the truth of the old saw that it is the worst job in British politics—[Laughter.] I am glad that the right hon. Gentleman agrees. I hope that it is of some comfort to him when I say that, in my judgment, being shadow Foreign Secretary is probably one of the best jobs in British politics: many trips abroad and few decisions.

As an avid reader of the Darlington and Stockton Times, I noticed how long the right hon. Gentleman has been prepared for his role. From my researches, I saw that in the issue for December 1988 he said:

"I believe that knowing what is going on in the world is a vital qualification for political office."

That is indeed true and only a few months later he was elected for Richmond.

Most of us remember with great affection the right hon. Gentleman's clarion call at the last election, "Two days to save the pound". I am deeply grateful to him for that call, because my electors heeded it; they voted for me and the pound has indeed been saved—[Hon. Members: "Ah."]—as long as the five tests remain unfulfilled. I am pleased to say that whatever else we are talking about tomorrow and on Friday, and perhaps Saturday and Sunday, or Monday, we are not discussing the euro at the European Council.

Tomorrow and Friday, European Heads of State and Government and Foreign Ministers meet in Brussels for the December summit. The agenda is wide, covering many aspects of the UK's presidency. I will deal briefly with these items towards the end of my speech, but the Council will be dominated by negotiations on the EU budget, so let me come to that first.

The House will recall that six months ago, five nations, including the United Kingdom, had to veto budget proposals that were put forward by the then Luxembourg presidency. We took over the presidency 10 days later and since then we have consulted widely about the changes needed to the budget. Last Monday—5 December—we formally published our own proposals.

In summary, our proposals put forward a budget set at €847 billion for the seven-year budget period of 2007–13, which is 1.03 per cent. of the national incomes of member states. That compares with the 1.06 per cent., or €870 billion, Luxembourg proposal, and the massive 1.24 per cent., or €1,025 billion, Commission proposal. Under our proposals, Britain's net contribution would be an estimated €58 billion over the seven years of the budget. The rebate would rise from an annual average in the current budget period of €5 billion to an annual average of €7 billion, but it would be around €1 billion less a year than its default setting so that we would make a fair contribution to the costs of enlargement. I will deal with that in more detail shortly.

Since the publication of the proposals last week, there has been an intensive round of formal and informal discussions. For the convenience of the House in the debate, I published earlier today a written ministerial statement outlining revised proposals following those discussions. Full details have been in the Vote Office since 11 am.

I apologise in advance for the fact that I will be unable to stay to hear all my right hon. Friend's remarks, although I hope to return later. Does he accept that while the great majority of hon. Members support the Government's position that we should not give up our existing rebate until substantial changes are made to the common agricultural policy, most of us—on this side of the House, at least—would not want Britain to rip off the poorer countries that have just joined by insisting on every pound of flesh that we can get out of them as well?

My hon. Friend's view is implicit in the support of hon. Members on both sides of the House for enlargement over many years.

Budget negotiations have never been easy. The equivalent European Council seven years ago failed to reach an agreement. We in the UK are working extremely hard for a deal this time, but I believe that no deal is preferable to a bad one. The negotiations are especially complex this time for three reasons: the impact on the budget of the massive enlargement of the EU that took place last May; the consequences of any budget changes on the UK rebate; and the need for fundamental long-term reform of EU policies and spending priorities. Let me deal with each of those in turn.

First, I will address enlargement. Two months ago, on 3 October, the European Union took the historic decision to open negotiations for accession with its nearest and largest Muslim neighbour, Turkey. When I came to report that to the House a week later, I was struck by the way in which the decision was welcomed across the political spectrum. Such an all-party approach to Turkey's membership of the European Union represents something of a long-standing and happy paradox about Britain's relationship with Europe. While the question of our overall relationship with the European Union has often been highly divisive, both among and within parties, enlargement of the Union has always been the subject of a strong and positive consensus. We have all recognised that one of the best ways to further the security and prosperity of the United Kingdom is to ensure that there is an ever-widening circle in Europe of open democracies and thriving economies.

My right hon. Friend is apparently considering the accession of Bulgaria to the European Union. Does he consider that the state of Bulgaria's judicial system, as shown in the treatment of Michael Shields, makes it an appropriate candidate for agreement to accession at this time?

Ultimately, the judgment on whether Bulgaria is fully ready for accession will take place at the end of this year or on 1 January 2007, or subsequently. It is a judgment that will have to be made by the European Union as a whole on the basis of recommendations by the Commission. The Commission has raised reservations about the quality of Bulgaria's justice system. My hon. Friend spoke powerfully during the Report stage of the European Union (Accessions) Bill of her concerns about Bulgaria's justice system, as illustrated, in her view, by the treatment of Michael Shields. As my right hon. Friend the Minister for Europe told my hon. Friend, we are making, and will continue to make, strong representations to the Government of Bulgaria. I have done so myself, both to the Foreign Minister and to the Prime Minister, and I stand ready to do so again.

We have actively pushed enlargement since taking office in 1997. To the great credit of the Opposition, it was the previous Conservative Administration who prodded and prompted the EU to enter into association agreements with each of the eastern European applicant states to prepare them for membership. In 1995, the then Prime Minister, John Major, described enlargement as

"the most important task facing the European Union".—[Official Report, 18 December 1995; Vol. 268, c. 1222.]

Two years later, the right hon. Member for Richmond, Yorks, when Leader of the Opposition, promised the Government his "full support" for this "long-standing", "British objective", which has been regularly repeated from the Opposition Front Bench ever since.

More than that, the Conservative party has understood the need to back up words with action. John Major's Administration, in the early 1990s, spent hundreds of millions of pounds, quite rightly, via the know-how-fund, on the reconstruction and regeneration of eastern Europe.

When, two years ago, we debated the accession Bills which brought the 10 new states into EU membership, the then shadow Foreign Secretary, the right hon. and learned Member for Devizes (Mr. Ancram), was very clear on the need to invest on enlargement. He said:

"Successful enlargement will require commitment and courage from the applicant countries as well as those who are already members."—[Official Report, 21 May 2003, Vol. 405, c. 1036.]

He also said, quite rightly:

"Countries such as Poland are crying out for investment in their infrastructure, and wise use of structural funds could be crucial in helping their economies to prosper."—[Official Report, 5 June 2003, Vol. 406, c. 372.]

So I believe that there is unity across the parties about the policy of enlargement, and about the need for us to help pay for it. That means helping to build up the economic and social infrastructure of these east and central European societies, so long neglected under Soviet control. It also means constructing better roads, railways and industrial estates, regenerating run-down areas, developing the social housing stock, and so on. That sort of investment directly benefits us too.

Last Tuesday, I attended the summit of the European Union's small business organisations here at the Palace of Westminster. At that meeting I was struck by the overwhelming view of the small businesses of the new entrants to the EU that under the British presidency of the EU the Lisbon agenda has not progressed one whit. What has gone wrong?

I do not accept that for a second.

First, just yesterday, we were able to gain political agreement in the European Council on the chemicals directive, which could have affected very adversely small and large businesses alike throughout Europe in the chemicals industry, including many British businesses. We now have unanimous agreement on what is called REACH—the chemicals directive—which will ensure higher environmental standards without damaging British business.

Secondly, we in the United Kingdom have led what has been called the four presidency engagement to secure deregulation across the Union. The result of that is tangible: at long last the Commission has grasped this agenda—like turning round a tanker. Commissioner Günter Verheugen, who is in charge of deregulation, announced at a conference in Edinburgh not long ago that 68 key sets of regulations would be turned back, and that many others will be revised. In addition, with the Netherlands, we co-chaired a meeting on rolling back the powers of the EU centrally so that much more power was delegated and devolved to individual member states.

Yes, progress on Lisbon has been frustrating for all parties and for all Governments who are committed to seeing an open economy in Europe. That has been because of the difficulties faced by some Governments—not the United Kingdom and not some others—who failed to take account of the fact that the world is changing. We are now subject to serious open competition from countries such as India and China, and the EU must change, or it will not survive. We have done a great deal on that.

Do not all the reports indicate that Britain has done better on the five-year plan set out in the Lisbon agenda than other EU countries? Under our presidency there has been progress, but will my right hon. Friend assure the House that when our presidency has ended we will push that agenda forward so that other European countries and the Commission are able to co-operate in order to reach the rest of the benchmarks?

My hon. Friend talks simply about progress within the United Kingdom. We have done extremely well and met almost all the Lisbon targets. The problem has been other EU member states.

I return to the issue of enlargement. The budget that we have tabled proposes that, given the need to pay towards the cost of enlargement, the EU spends about €150 billion on structural and cohesion fund projects in the new member accession states. That is a very significant increase—more than five times the support that they have been receiving up to now. Because relative prosperity and priorities have changed, there is a corresponding and significant drop in structural and cohesion fund receipts for every western European member state. Amounts and proportions vary, but, for example, Spain will receive just over half in the next financial perspective of what it received last time and Ireland will receive less than a quarter.

Significantly, even if there were no change in any of the budget arrangements, our net contribution would stand to rise by €11 billion from €39 billion in the current financial perspective to €50 billion in 2007–13, mainly because of enlargement. I have heard no one from any party in the House say that it should not stand to rise. I therefore suggest that the question before the House is not whether we should pay a fair contribution towards enlargement, but what that contribution should be.

As part of its recommended budget, the Luxembourg presidency proposed back in June that our contribution should rise by €36 billion, or 93 per cent., from €39 billion in this financial perspective to €75 billion—€25 billion above that default setting of €50 billion. We told the Luxembourg presidency emphatically that that was totally unacceptable.

Under our proposals, we have proposed a total net contribution of €58 billion—an increase of €8 billion above the €50 billion floor. We judge that to be a fair contribution. Were we not to make an offer of such magnitude, our contribution would not fairly reflect our position as one of the most prosperous nations in the EU. On the other hand, countries such as the Netherlands, Sweden and Germany would be making contributions way out of line with their prosperity, and that would not be fair either.

The Foreign Secretary will undoubtedly be aware that many regions in the United Kingdom, such as the highlands and islands, for example, have benefited greatly from EU structural funding. I am grateful to see in the latest budget proposals that the Government have given up on proposals for repatriating European funds entirely to countries such as the United Kingdom. Will the right hon. Gentleman assure the House that structural funding for regions such as the highlands and islands will not be negotiated away in the small hours during the final round of talks, and that we can be sure that such places will continue to benefit substantially from EU structural funding into the future?

My right hon. Friend the Chancellor set out in—I think—December 2003 his approach and our approach towards structural and cohesion funding in the new financial perspective. I do not know whether a deal will be struck tomorrow, the next day or the next. I cannot say precisely what its conditions will be. I can say that the area for negotiation is narrow. Of course we take account of the needs of regions such as the highlands and islands, which will continue, or should continue, to qualify for structural and cohesion funds. The hon. Gentleman will excuse me if I do not give him an exact guarantee at the moment, because that would be to anticipate the negotiations.

I thank the Secretary of State for giving away. [Laughter.] I am sorry, I meant giving way. Giving up all or part of our rebate causes my constituents a great deal of concern. It is difficult to sell it to them as a positive, bearing in mind that they face the closure of their accident and emergency department because of a £16 million shortfall in funding. They would much rather that some, if not all, of the money that is to be given up remained in the UK to be invested in the health service.

I apologise to the hon. Gentleman, as his constituency does not spring immediately to mind.

It is Broxbourne.

Indeed. The hon. Gentleman's party has long supported enlargement, and Conservative Front and Back Benchers have called for money to be put into structural and cohesion funds for eastern European countries. That money must come from somewhere, and it can only come from the more prosperous western European member states.

It should be taken from funds for the common agricultural policy.

We have sought to reform the CAP, and we have done a great deal more than the previous Government did under John Major and Margaret Thatcher, when there was virtually no reform year after year. We want more reform, but I do not believe that the Poles, Czechs and Hungarians should be punished for the obduracy of a number of western European member states that have benefited unjustifiably from the CAP.

People in my constituency, which is not very different from Broxbourne, have benefited directly from the money that we have already put into structural and cohesion fund projects in, for example, Ireland and Spain. In the 15 years from 1988 to 2003, we contributed about £500 million towards structural cohesion fund projects in those two member states. In return, there has been a £27 billion annual increase in trade with those countries, which has certainly benefited firms in my constituency and, I suggest, in Broxbourne. We are not beggaring ourselves by offering that money—we are helping ourselves directly. Building up the economies of eastern Europe provides economic benefits and increases the political stability and the overall happiness of those societies.

rose—

rose—

I always give way to the hon. Member for Stone (Mr. Cash), but first I shall give way to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd).

I fully accept the logic that the more prosperous states should assist the newcomers, but I remind the right hon. Gentleman that west Wales and the valleys, which constitute a large part of Wales, benefit from objective 1 status. Will he assure the House that whatever deal is struck—hopefully in the next three days—will not affect the amount of assistance that is available, as the gross domestic product of west Wales and the valleys is still, unfortunately, less than 75 per cent. of the average EU GDP?

I accept the point that the hon. Gentleman makes. My hon. Friend the Minister for the Middle East will provide more details for him and the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander). We are conscious of the needs of areas such as west Wales, the highland and islands and Cornwall, which qualify for objective 1 status, and we want to ensure that, as far as possible, they are protected.

After the rejection of the European constitution by France and Holland there was a period that was described as a "pause for reflection". That was about six months ago. Have the Government been reflecting, and why have we not heard anything in today's debate about the fact that the constitution is dead but certainly not buried? Exactly how does the right hon. Gentleman respond to the recent statement by the German Chancellor that her coalition would reintroduce the constitution in the first months of the German presidency, which starts at the beginning of 2007? [Interruption.]

Yes, I shall take my time, and reflect on my reply.

The blunt truth is that we have had rather more important things to do in the real world than try to revive the constitution. If the hon. Gentleman has abandoned the habits of a lifetime to suggest that he wants the document to be revived, I will listen carefully.

I want to know what the right hon. Gentleman thinks.

I have just explained what I think. The hon. Gentleman knows what I think anyway, so I am not entirely sure why he asked the question. Chancellor Merkel is the new leader of the centre right party in Germany, just as there is a new leader of the British Conservative party which, apparently, is a centre right party, although I shall come to that later. New leaders say new and interesting things, and perhaps it would be appropriate to have a period of reflection to consider them.

The Foreign Secretary intimated that Britain may be prepared to give up about £1 billion a year of anticipated income from the rebate to try to achieve a deal later this week. Will he confirm that that is not included in the pre-Budget report figures that were published by the Chancellor on 5 December—so there would be a hole of £6 billion if that money were subsequently given up?

I think that the hon. Gentleman is correct to say—[Interruption.] Well, the figures could not have been included, because they have not been decided yet. In a column in the world's most important newspaper, the Lancashire Evening Telegraph, which I hope Members read, because it is even more important than the Darlington and Stockton Times—

Surely not.

That is our first disagreement.

In a column to be published tomorrow morning, I have told my constituents that if they are thinking about putting a bet on the outcome of the negotiations tomorrow and Friday they should place it on a horse instead, as I am not predicting the outcome. The pre-Budget report necessarily includes firm estimates of firm commitments, and the Chancellor will naturally seek to adjust it in the light of any negotiations that are concluded.

rose—

If my hon. Friend will allow me, I should like to make some progress before giving way.

The rebate was designed to deal with the unfair treatment of western European states of comparable prosperity. It was never intended to be a means of redirecting money from much poorer states to the United Kingdom. Indeed, in the early 1980s, when the rebate was negotiated, there was no serious expectation that the European Union could or would expand eastwards into the Soviet empire. I have been unable to find any occasion on which an hon. Member on either side of the House said that the new and poorer accession states should pay, directly or indirectly, the rebate in full. In any event, as I have already told the House, the rebate will rise from an average of €5 billion per annum in this period to €7 billion per annum in the next. It cannot therefore be said that we are giving it up. Our offer on enlargement involves a reduction of about €1 billion per annum in what the rebate would otherwise be. However, the rebate remains on every penny and cent of spending on the common agricultural policy anywhere in the 25 member states of the European Union, and on all spending in the 15 western European states.

When Baroness Thatcher made her statement on the Fontainebleau summit in 1984, you and I will remember, Mr. Speaker, because we were both in the House, that it did not quite receive the rapturous reception that is now written up for it. I asked the right hon. Lady why she had failed in her stated intention of achieving a broad balance between the United Kingdom's contributions and the amount that we got back. I pointed out that in the following year, and the year after, despite the rebates, Britain's net contribution would be more than it had been in the previous three years.

As it turned out, I underestimated the scale of the problem that Mrs. Thatcher was describing, for over the following 20 years the United Kingdom paid—after the rebate—twice as much net into the European Union compared with similar sized economies such as those of France and Italy. Under our proposals, we will for the first time achieve broad parity. For the first time in the 30 years of our membership and for the first time in the 21 years since the rebate was agreed, we will be making a net contribution broadly equivalent to those of France and Italy.

Mrs. Thatcher was unsuccessful in another respect too: she did not constrain the growth of the European Union's budget as a share of the European Union's economy. Under successive Conservative Administrations, it rose by 50 per cent. It is this Government who have led the way to budget discipline—an average of 1.03 per cent. of gross national income over the next financial period and falling to below 1 per cent. on a commitments basis by 2013. Finally, the previous Administration failed to sustain reforms which dealt with the inequalities underlying the rebate—the imbalances of their spending on the common agricultural policy.

That leads me briefly to my third point: the case that we are making for reform. Reform in the European Union is necessary if the Union and its member states are to compete effectively in a world economy that has changed beyond recognition over the past 20 years. We are pushing for parallel reforms in the World Trade Organisation negotiations, which got under way yesterday. We are proposing in our budget a full-scale review of expenditure and revenue, including agriculture, and the right of the EU to make further decisions in this financial period, rather than having to wait until 2014.

When Mrs. Thatcher returned from Fontainebleau she admitted to the House that because her Government had taken so much time on the problems of the budget, they had not been able to turn as much attention as they should have done to some other vital problems in Europe. We have done better. Away from the headlines, the Government have been getting on, successfully, with the vast majority of the business of a presidency.

In pursuing our agenda we have worked closely with the European Parliament. British Ministers have visited the European Parliament on more than 50 occasions. My right hon. Friend the Minister for Europe sends his apologies to the House. He is at the European Parliament today—we have an able substitute in my hon. Friend the Minister for the Middle East—and my right hon. Friend the Prime Minister will be at the European Parliament tomorrow. This engagement with the European Parliament has been particularly worth while in our discussions with British MEPs. Indeed, I am heartened to say that we have been greatly assisted by British MEPs of all parties.

As the House knows, each of the main British political parties is able to magnify its influence in the European Parliament through membership of the mainstream European political groupings. My party does so through the party of European Socialists, the Liberal Democrats do so through the Alliance of Liberals and Democrats for Europe, and the Conservatives do so through the European People's party and European Democrats or EPP, which covers the centre right. Who joins which group is a matter for MEPs and their parent British political party and not for the House, but the consequence of those decisions can directly affect the national interest. The House therefore has an interest in that.

All those groupings are loose confederations. There cannot be a single party which agrees with every item on the European political agenda. National party groups are free to depart from the groupings' line where they wish. That right was enshrined, as far as the EPP is concerned, by the right hon. Member for Richmond, Yorks when he was Leader of the Opposition in the agreement that he made with the European People's party in 1999. However, there is real practical value for the UK in these groupings. In particular, there is practical value in the Conservative party's membership of the EPP, because the EPP is the largest grouping in the Parliament and has crucial positions on many of the key committees. It holds such positions on five of the key committees, and I am grateful for the support that we have received from those co-ordinators.

The right hon. Gentleman recognised the importance of that when he was Leader of the Opposition. Indeed, as I said, he negotiated an agreement in 1999. When he signed that deal, he said that Tory MEPs would be joining

"an enlarged coalition with centre right parties and will work alongside allies old and new".

He went on to say:

"Conservatives will stick to their principles and have influence".

His predecessor continued the link, as did his two successors. Now we read that the right hon. Member for Richmond, Yorks is being pushed by his new leader, the hon. Member for Witney (Mr. Cameron), to leave the EPP

"in a matter of months"

and to form a new grouping.

Who will sit in this new grouping? The right hon. and learned Member for Rushcliffe (Mr. Clarke) thinks the Tory MEPs will have to sit alongside "ultra-nationalists". The Conservative MEP, Mr. Struan Stevenson, says that they are

"the MEPs whom no other group will tolerate, and include people like Jean-Marie Le Pen, Alessandra Mussolini and"—

even worse—

"Robert Kilroy-Silk".

In a later article he describes them even more succinctly as

"fascists and nutters that nobody else will sit with".

The hon. Member for Grantham and Stamford (Mr. Davies) has asked whether the Conservatives really want to sit with

"the barmy-army of obscure right-wing continental politicians".

The deputy leader of the Conservatives in the European Parliament who used to sit in the House, Sir Robert Atkins, thinks his new bedfellows will be

"a pretty unappealing ragbag of fringe politicians".

He gives further details:

"We would find ourselves in the company of The League of Polish Families (racist and Europhobic), the Danish People's Party (Ian Duncan Smith banned us from even talking to them!), the Italian Fascist Party, and, of course, UKIP".

Indeed, he quotes the right hon. Member for Richmond, Yorks as saying in 1999:

"I simply cannot afford to have my political opponents in the House of Commons suggesting I am isolated from the mainstream Conservative parties on the continent of Europe."

That is exactly what his new leader is proposing.

I am therefore not surprised that when the right hon. Gentleman was interviewed about that on the "Today" programme he was plainly extremely uncomfortable. After all, it showed that the promised unity of the Tory party had lasted for all of 36 hours. But it also shows that the Conservative leader, the hon. Member for Witney, is prepared to tear up solemn manifesto commitments, for the Conservative election manifesto in 2004 stated that

"Conservative MEPs will remain allied members of the EPP-ED parliamentary group for the duration of the 2004–2009 legislature."

In the right hon. Gentleman's argument with his new leader he has our full support and our full backing in fighting for what is right and for the national interest, and in fighting for a Conservative party that at least on one thing sticks to the principles on which it was elected only 18 months ago.

Having been a Member of the European Parliament I agree with the thrust of the Foreign Secretary's remarks and pay tribute, too, to Conservative MEPs. Does the right hon. Gentleman agree that this is a particularly futile gesture, given that the Conservative party's objection, as I understand it, is to the commitment of the EPP to ever closer union, which will of course be determined in treaty negotiation between the member states, and Members of the European Parliament will have no influence over that matter?

Indeed. The Labour party is a member of the party of European Socialists. No one is suggesting that those are wholly disciplined parties or that we have to agree to every last jot and tittle of what is said, and we do not. All of us accept that ultimately it is for the national group to determine its approach. I make the point seriously, and the right hon. Member for Richmond, Yorks agrees with it, because that has been his position consistently over many years: the European Parliament exists and it has certain powers. It is important that we work with it in the national interest. There is nothing disingenuous in my saying that I applaud the way in which Conservative MEPs have worked with those on the Liberal Democrat Benches and on ours in the national interest. Much of that influence will be lost if they go the way not of the right hon. Gentleman, but of the hon. Member for Witney.

I turn briefly to the wider progress that has been made in the European Union during the UK presidency. I mentioned the accession negotiations with Turkey. We have also opened accession negotiations with Croatia. The arrest last week of Ante Gotovina, the indicted war criminal, underlined the importance—in this, again, we had all-party support—of sticking very firmly to clear conditionality with Croatia, unless and until it assured its co-operation in delivering up Gotovina. That has been achieved.

We have reached agreement on reform of the European Union sugar regime, which will save between €3.5 billion and €4 billion each year. We have embedded the principles of better regulation, which I dealt with earlier. We have agreed REACH, the directive on the registration, evaluation and authorisation of chemicals.

In the field of justice and home affairs, Ministers have agreed a new Europe-wide counter-terrorism strategy and to manage migration and illegal immigration better. We have pursued an active common foreign and security policy, aid commitments have been doubled and a strategy for Africa has been introduced. We have also launched the international finance facility for immunisation.

We have done a huge amount on Sudan, Aceh and the middle east peace process. At the beginning of our presidency, we inherited a Union coping with the Dutch and French rejection of the constitutional treaty and the failure of the Luxembourg budget proposals. We have used our presidency to help set a pathway for a modern, competitive Europe, and we have taken practical and measurable steps along that path. Now we want to secure a fair budget. In the negotiations, which start tomorrow, the Prime Minister and I are determined to do everything that we can to secure a deal that is good for Britain and good for Europe—building a stronger, wider, more prosperous Union in which our citizens, British and European, can thrive.

I am grateful to the Foreign Secretary for the kind remarks with which he began his speech and for his welcoming me back to the Front Bench. He attaches an importance to the Darlington & Stockton Times that is appropriate for any Foreign Secretary of this country.

I am delighted that my mere presence on the Front Bench has produced the radical reinterpretation of the Government's policy on the euro so that the pound has now been saved. When the Foreign Secretary discusses that reinterpretation of policy with the Chancellor and the Prime Minister, he may be carrying out a job rather like the one that he described for me, which involved doing a lot of travel but taking very few decisions.

I am sure that we will have some vigorous debates across the Dispatch Box. My comments to the Foreign Secretary will be entirely free of personal abuse. According to the new convention in the Foreign Office, we can leave that to retiring ambassadors, who will no doubt continue to dish it out, so there is no need for the Opposition to indulge in such things.

As there will inevitably be much disagreement, I shall start on a note of concord and congratulation to the Foreign Secretary. The negotiations on Turkish accession were protracted—they must have been very difficult and undoubtedly required hard work and skill—and he successfully steered them to the conclusion that we all wanted. I have no inhibitions in congratulating him on that achievement and hope that future blockages in the process of admitting Turkey to the European Union can similarly be overcome.

There may be other areas of agreement across the Floor of the House and it is entirely possible that one of them is the fate of the European constitution. In addition to his role at the last hour in saving the pound, the Foreign Secretary played a key role on the European constitution, because if, as was reported, he persuaded the Prime Minister to commit the Government to holding a referendum in Britain, and if, as was reported, the British commitment prompted President Chirac to make the same commitment in France, then the Foreign Secretary did more than any other individual to ensure that the constitution was wrecked in May and June by voters in France. Although he is careful not to show any pleasure about that outcome, I cannot recall him issuing any words of regret, and even now there is no sign that it is causing him undue distress.

If the Prime Minister and the Foreign Secretary were happy to see the deeply flawed constitution collapse, why were they prepared to recommend it to the British people in the first place? That they should keep their quiet satisfaction quiet is understandable. What is not understandable—my hon. Friend the Member for Stone (Mr. Cash) has made this point—is that they should make no use of the impasse on the constitution to take the initiative, to show leadership in Europe and to put forward ideas of their own.

It is six months since both France and the Netherlands gave the constitution a resounding no. Within days, the Foreign Secretary announced a "pause for reflection". We have been having the pause for six months, but where is the reflection? He was unable to enlighten us on that point in his speech. Is this not the time, buttressed by grave anxieties about the remoteness and unresponsiveness of EU institutions revealed by the referendums, to champion fresh ideas about a more flexible Europe with a stronger role for national Parliaments, which many hon. Members on both sides would be happy to support?

Was not that six months the time to speak the much needed truth that ever mightier central institutions in a tightly integrated bloc are an idea whose time has gone? Instead, in the absence of any alternative, the new German Government say that they will "seek to advance progress" on actually adopting the constitution once Germany takes the presidency in 2007.

I agree with the right hon. Gentleman's comments. Does he remember that the first attempt to promote the constitution collapsed because of the resistance of Spain and Poland? At that time, the press reported that the champagne corks could be heard popping in Downing street. This time, the Government were more modest in their reaction to the collapse of the constitution, which is welcome.

I do not know about welcoming the Government's modesty—we would welcome a bit of vigour in saying what they would do instead of the constitution. However, I am glad that the hon. Gentleman and I agree about the Government's policy.

Perhaps the Minister for the Middle East, who is winding up for the Government, will tell us how long the pause for reflection will last. Is it a pause or has it become a way of life? Are the Government content to see those democratic verdicts one day ignored and the whole process revived? Would it not be a great shame if the Foreign Secretary's excellent work in doing such damage to the constitution were of no avail in the end? If the Government are not happy to leave a vacuum in which others will insert their own ideas, when will they propose something different of their own?

Do the accession negotiations with Turkey indicate the future viability of the constitution? The constitution would have entrenched a relationship between small and large states that would be unsustainable if Turkey were ever to enter the EU.

Having served on the European Convention, the hon. Lady learned a lot, which appears to have reinforced her hostility to many of the ways in which Europe is developing or trying to develop.

Is the Foreign Secretary content to see the charter of fundamental rights, a document which, in the hilarious but notorious phrase of the hon. Member for Leicester, East (Keith Vaz)—we cannot debate these matters without mentioning it—has the legal status of The Beano incorporated into new EU laws? The famous Beano document has even been cited in the European Court of Justice, although it is part of the constitutional treaty, which has been rejected.

Why did the Government not raise more than a whisper of protest when the ECJ created the power to introduce harmonised criminal law across the EU, a judgment that was fought by 11 Governments, including ours, but which brought forth from the Government only the response that

"We believed it was inappropriate to harmonise criminal law at EU level."?

Is that it? Are they going to say that it was "inappropriate" and leave it at that, without any attempt to put right in the future the relentless extension of EU competence by the ECJ that has been taking place in recent years? Are the Government entirely happy to see the steady loss of their own power to govern this country in its own best interests? Is it not time to stop going neatly along with an orthodoxy of integration that is not only out of favour with the peoples of Europe, but seriously out of date in the 21st century?

I, too, congratulate the right hon. Gentleman on his elevation to the Front Bench yet again. He has spent eight minutes discussing the constitution and other such matters, which are not the concern of the crucial discussions that will take place this week. When will we hear about Conservative party policy on those issues?

The hon. Gentleman will hear plenty, but as the Foreign Secretary spent the last eight or nine minutes of his speech discussing Conservative MEPs in the European Parliament, the hon. Gentleman cannot lecture us about discussing matters that are relevant to the EU summit. These debates provide an opportunity to raise all issues about Europe.

rose—

We cannot go through these debates without giving way regularly to my hon. Friend.

Following the remarks by the hon. Member for Leicester, East (Keith Vaz), is my right hon. Friend aware that the European reform forum has been taking evidence from not only the hon. Member for Leicester, East, but the right hon. Member for Rotherham (Mr. MacShane), my right hon. Friend the Member for Wokingham (Mr. Redwood), Will Hutton, Lord Owen and others with a view to achieving a reasonable analysis of what has been going wrong with the existing treaties, in order to form a clear basis on which to make policies that produce constructive answers to the questions that my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) is rightly asking but which, regrettably, the Foreign Secretary simply ducked?

I am delighted that the hon. Member for Leicester, East (Keith Vaz) is playing a more constructive role outside the House than he played a few moments ago inside it—that is wonderful news.

It is common ground across the House that Europe faces a crisis—the Prime Minister used the word "crisis" in his address to the European Parliament in June—and massive demographic social and economic challenges. I believe that it is also common ground that the EU has so far shown few signs of being able to meet those challenges. When the Prime Minister came to this House to trumpet the Lisbon summit, he announced

"a sea change in European economic thinking"

along with a "fundamental reorientation" that would bring

"concrete measures with clear deadlines"

and

"urgent measures to make the European economy as a whole more competitive".—[Official Report, 27 March 2000; Vol. 347, c. 21.]

Five years after all that, we find the Government calling plaintively for the implementation of the Lisbon agenda. The terrible truth of it all was laid bare by the report last year by Mr. Wim Kok and his distinguished colleagues, which pointed out that most of Lisbon had never been implemented, that as a result Europe was losing ground more quickly to the United States and Asia, that

"its societies are under strain"

and, as he ominously summed up:

"What is at risk in the medium to long run is nothing less than the sustainability of the society Europe has built, and to that extent, the viability of its civilisation."

The goal of the Lisbon agreement was to make Europe into the world's foremost knowledge-based economy by 2010. Now that we are halfway there, we can see that there is no prospect of being able to make such a claim in five years' time—far from it. Two studies in the past week have shown that European spending on research and development is falling further behind target and the gap with the United States and Japan is widening. Such figures are deeply disturbing, because it is obvious that, as European economies will not be able to compete with China and India on price or have a larger available work force, it is self-evidently vital that their capital must be used more intensively and productively if they are not to suffer severe economic consequences.

It is impossible to envisage Europe competing effectively without high levels of investment in R and D and the highest possible standards of higher education. Yet the United States is striding ahead in higher education-based research and now has 17 of the world's top 20 universities. The Prime Minister raised higher education as a matter of serious concern in his second speech to the European Parliament on 26 October and asked the Commission to prepare a report on it. But the Government must realise that, as the success of higher education in the United States relies on the use of much private capital, deregulation, and the use of the English language, we are as likely to find the answer to these issues in the European Commission as on the moon.

Anyone looking at the EU from outside, dispassionately and objectively, would think that tackling these issues at this and every summit would be the almost daily preoccupation of European leaders. Even according to the Commission's own forecasts, the European share of world economic output is set to be virtually halved in our lifetimes. The absence of any sense of urgency is remarkable and it is hard to see it as anything other than a collective dereliction of duty by Europe's leaders. Faced with a massive loss of relative economic strength, with profound consequences for the future of employment, prosperity and social cohesion and justice, the general response is indistinguishable from inertia and indifference.

On leadership in Europe, what would the right hon. Gentleman say to the right hon. and learned Member for Rushcliffe (Mr. Clarke), who described his new leader's policy on Europe as "head banging"? What would he say to the Tory MEPs who said that it showed "bad judgment", would "create disunity", is "cloud cuckoo land", "absolute madness", "very curious", "barking", and "silly", and shows that he "knows nothing about it"?

It is interesting that when we try to discuss some of the greatest issues that will affect Europe in the future, the hon. Gentleman can only read out a party brief about Conservative MEPs in the European Parliament. I assure him that nothing will be more encouraging to my right hon. Friend the Leader of the Opposition and me in carrying out the policy than that great concern is expressed about it by Members from other parties in the House of Commons.

It is only fair to acknowledge—the Foreign Secretary made this point in his speech—that the Commission under Mr. Barroso has shown an increasing consciousness of such issues and, in a first tiny sign of hope, has managed to withdraw 68 pending proposals for legislation as part of a deregulation initiative. However, we must not get overexcited about that, as it turned out that one third of those withdrawn regulations were defunct association agreements with countries that have now joined the EU, and the total of 68 regulations withdrawn has to be set against the net increase of 4,806 regulations and directives over the past eight years alone.

To be fair to the Prime Minister, his speech to the European Parliament in June did call for a change of direction. He said there was

"a crisis of political leadership".

He is right. He questioned whether Lisbon was being implemented and whether the EU was in any way

"reconnecting Europe to the people".

He was clear that

"we cannot agree a new financial perspective that does not at least set out a process that leads to a more rational budget",

and he said in ringing tones at the end that the people of Europe

"are wanting our leadership. It is time we gave it to them."

Subsequently, there has been astonishment in Europe that such bold rhetoric has been followed by so little initiative. While to us in Britain it is entirely normal to hear a brave speech by the Prime Minister that bears no resemblance to what follows, it comes as a shock to people in other countries. As the former President of Poland put it,

"When I read what Tony Blair said in front of the European Parliament, I harboured the hope that the Brits would arrive in the Presidency with a new momentum . . . since then the weeks pass and scepticism grows."

MEPs have apparently circulated missing persons notices featuring the Prime Minister's face, one of which said:

"we have lost the President of the Council. From what we hear he is the British Prime Minister Tony Blair, although nobody has seen or heard of him . . . one rhetorically brilliant speech without consequences or follow-ups is simply not enough to secure success."

Everyone in this House should be aware of that, and the Prime Minister above all.

I doubt that Foreign Office Ministers can put their hands on their hearts and say that Britain is now more respected in Europe than six months ago, or that any seasoned commentator or other Government in Europe judges their presidency to have been a success. Indeed, it seems unlikely that even they would judge it a success, given the objectives that they originally set out for themselves.

This debate on Europe in the run-up to this summit is different from those on most previous occasions. We have often engaged in a fairly predictable debate—for and against the constitution, or the social chapter, or the euro, or whatever it may have been—but this time Government and Opposition agree that Europe faces an intensifying crisis, including a crisis of leadership, to use the Prime Minister's own words. The tragedy is that, for whatever reason, and with all the admitted constraints on what can be achieved in a period of a few months, the Government have not shown the consistency, energy and purpose necessary to have any hope of alleviating that crisis or changing prevailing attitudes. They have often claimed to be winning the argument in Europe, but there is little evidence of that.

One deeply depressing example of failing to win the argument is being played out in the world trade talks in Hong Kong. Could not the Government have given a stronger lead towards pushing the European Union into a position more committed to free and fair trade and assisting real progress in a way that would help developing countries? Has not the lack of any reform of the common agricultural policy become a major problem for world trade negotiations, as demonstrated by the statement by Peter Mandelson's spokesman that EU subsidies will not be reduced by "one cent"? Should not the EU be going much further towards reducing tariffs and export subsidies? Is it not depressing and disturbing for the Government when a Commissioner who was until recently one of their own colleagues attacks the idea of liberalisation and states his opposition to

"what the consequences would be if we were simply to do as some in the British government . . . are calling for"?

I hope that when the Minister winds up he can say whether he considers that the Government have used all possible weight to influence the world trade talks in a way that would open up opportunities for developing countries without imposing over-stringent conditions on them and, if they have used such weight, why it has failed. Surely we did not join the EU to stand in the way of trade liberalisation and free trade. The Swedish Trade Minister said:

"The French have been very active, not least in the public debate, while there has really been very little said by the free traders."

Why has so little been said?

As always, my right hon. Friend makes a terrific case. However, is not it the case that, whatever our success in winning the argument, root-and-branch reform is needed to ensure that the people at the rudder and those in the engine room—the Commission—begin to follow the instructions of the skipper, that is, the politicians?

We will run into trouble if we connect the skipper with the rudder by a root and a branch, but I take my hon. Friend's valid point.

The right hon. Gentleman is discussing common agricultural policy reform and I do not believe that a single hon. Member would not like reform as urgently as possible. How much does he believe that British farmers should receive in CAP payments? Last year, they received £1.7 billion. The Duke of Westminster received £448,000, the Duke of Marlborough received £511,000, the Duke of Bedford received £366,000, the Earl of Plymouth received £459,000 and the Marquess of Cholmondeley received £306,000. Are all those payments appropriate?

No, of course they are not. Reform of the CAP would greatly reduce such payments. Huge payments are also made to large farms throughout the rest of Europe.

We agree on the need for reform of the CAP, which brings us naturally to the hot topic of this weekend's summit—the budget and the position of the EU rebate. An elector who participated in this year's general election only seven months ago would have had no doubt where the Government stood on the matter. Their mantra was that the rebate was "non-negotiable and fully justified." Any attempt to reduce Britain's rebate would be vetoed and blocked. It does British politics no credit when a cast-iron, comprehensive commitment, which was so freely given, is rapidly and deliberately abandoned. How Ministers expect any future assurances that they give on such matters to be believed is beyond imagining. Yet only five weeks passed after the general election before the Prime Minister devised a new and fascinating formulation. On 8 June, he said at the Dispatch Box:

"The UK rebate will remain and we will not negotiate it away. Period."—[Official Report, 8 June 2005; Vol. 434, c. 1234.]

For those of us who are connoisseurs of the Prime Minister's extraordinary ability to face several directions simultaneously that statement was a particular treasure.

When the study comes to be written of the Prime Minister's techniques, the statement should have a chapter devoted to it. First, there was the fascinating use of the word "period", which initially seemed to derive from his recent visit to the United States and his habit of starting to imitate any audience that he wants to please. However, he was using it in a more calculated way—to give emphasis to an otherwise meaningless statement. The phrase,

"we will not negotiate it away"

literally meant that the Government would not give away the entire rebate but might give away 10 per cent., 50 per cent. or even 90 per cent. The word "period" was used simply to fool everybody, like thumping the table hard while saying, "I don't know." It is testimony to the Prime Minister's skill in double-speak that he largely got away with that emphatic but meaningless statement.

The statement's meaning soon became clear. The rebate was indeed up for negotiation but only in return for genuine reform of the CAP. As reported on 13 June, the Prime Minister said that the British rebate could not be discussed unless that happened alongside a debate on all EU financing, including the

"40 per cent. of the budget that goes on agriculture, which employs only 5 per cent. of the people".

He said that there had to be fundamental changes

"in particular to the agriculture policy."

That was not the Prime Minister's policy when he ran for election only a few weeks previously. Nevertheless, it was not an unreasonable policy.

Offering to trade part of the rebate for sensible reform of the CAP, with a view to making the EU work more effectively and without additional expense to the British taxpayer, was not an unreasonable negotiating position. The Government were right to stress the urgency of the matter, with the Prime Minister saying,

"Europe just cannot wait 10 years or more for the change that is necessary."—[Official Report, 20 June 2005; Vol. 435, c. 523.]

The Chancellor was applauded at the Labour party conference for saying:

"If we are to make poverty history . . . let us seek to make the excesses of the CAP history."

The Government were in a strong negotiating position. Since the rebate is a legal entitlement, with any changes to it subject to our veto, it is clear that there would be no need to ask the British taxpayer to stump up billions of pounds of extra contribution to the EU, on top of the massive contribution that they already make, without getting something serious in return.

The moral and economic grounds for CAP reform are strong. There are many willing allies on the subject in Europe and serious reform would free resources to help the new and future entrants to the Union. All in all, the position, albeit different from that in the election campaign, had merit and strength. Then the Government came up against the response of President Chirac, whose statement on Bastille day was intransigent:

"I am not willing to make the slightest concession on the Common Agricultural Policy".

It was also bizarre. He said that

"the CAP is the future".

How about that for a perspective different from the Government's?

At some stage after that highly unco-operative response, panic seems to have set in in Whitehall. The talk of firm leadership in June was drowned out by the noise of gears crashing into reverse in November. The Government's position moved from being described by the Deputy Prime Minister on 6 July as one whereby

"the Prime Minister certainly wants to get rid of the present CAP."—[Official Report, 6 July 2005; Vol. 436, c. 299.]

to one of seeking only the vaguest commitment to future reform.

Moreover, no plan for CAP reform seems to have been submitted by the Government. The EU Agriculture Commissioner wondered whether Britain's proposals were

"just a gimmick or game-playing"

and the French Agriculture Minister said two weeks ago:

"Ever since my arrival nearly a year ago there hasn't been a single EU Agriculture Ministers' meeting where reform has come up, including from the British Minister."

The Slovak Prime Minister said in October:

"Silence reigns. We do not have information . . . it is . . . important . . . that we ask our British colleague how he imagines the contours of the reform."

Does not the Foreign Secretary consider that the deployment of powerful arguments for fundamental change and the readiness to sacrifice a rebate of immense financial value to this country required a more serious, informed and diplomatically effective attempt to create some real momentum for reform? How on earth could the Government talk in that way yet come up with no proposals so that even well disposed countries were left muttering in the dark?

Is the right hon. Gentleman genuinely suggesting that Latvia, Estonia, the Czech Republic and Poland, having escaped from the shadow of communism, should now pay a subsidy through the rebate to the UK Treasury as a price for joining the western family of free nations?

As the hon. Gentleman knows, the United Kingdom is one of the largest contributors to the EU. To talk of any other country in the EU subsiding us is therefore not the correct analysis. We already send enormous subsidies to the countries that are entering the EU. It is no good describing my position as unreasonable since it was the Foreign Secretary's position only a few weeks ago. It is right to consider trading part of the rebate in return for genuine reform of the CAP. That is the position from which the Government have now retreated. They have moved from talking about getting rid of the current CAP and showing "firm direction" and "firm leadership", according to the Prime Minister, to a policy of progressive capitulation that will cost British taxpayers at least £5.5 billion with nothing guaranteed in return. That is the equivalent in expenditure of 53,000 nurses or 39,000 teachers.

My hon. Friend the Member for City of York (Hugh Bayley) asked an important question to which the right hon. Gentleman replied inadequately. We are not giving up a single penny of the rebate in so far as it affects any spending in the 15 western European nations or spending on the CAP. However, we unapologetically believe that we should make a fair contribution to the costs of enlargement and investment in the structural and cohesion funds for the 10 new accession states. That has been the Conservative party's consistent position. Given that, and all the calls for spending on those eastern European states, why does not the right hon. Gentleman have the courage of his convictions and say that the Opposition should support the Government in making that fair contribution?

I have the courage of the Foreign Secretary's convictions only a few weeks ago, when the rebate was not even to be discussed unless that happened alongside genuine reform. He was absolutely right to say in his speech that there was common ground across the Floor of the House on a lot of these matters. The issue is not whether we pay our fair share to help the countries that are joining the EU, but what that contribution should be. He was also right, in his initial negotiating position—a powerful one, given the legal entitlement to the rebate—to insist on reform of the CAP so that other countries as well as ours paid their fair share to those EU entrants. Now, however, the Foreign Secretary's own concrete concessions are being given without any bankable commitment to serious CAP reform for years to come. Rarely in the field of European negotiations has so much been surrendered for so little. That is my criticism of the Government's position.

Could it be that the former ambassador to Washington is right when he refers to

"the dull detail of tough and necessary bargaining: meat and drink to Margaret Thatcher but . . . uncongenial to Tony Blair"?

Have not things come to a sorry state when the Government's position is mercilessly mocked in an e-mail from one of their own ambassadors, our ambassador to Warsaw, who said that

"we all know that the absurdity and hypocrisy of this process are passing any reasonable limit."

He characterised the Government's position by saying:

"I am being asked to give more UK taxpayers' money to an EU which for years cannot produce properly audited accounts. Mon ami Jacques, with the support of most of you, is nagging me to give the EU more money while refusing to surrender an inch or even a centimetre on the CAP—a programme which uses inefficient transfers of taxpayers' money to bloat rich French landowners and so pump up food prices in Europe, thereby creating poverty in Africa, which we then fail to solve through inefficient but expensive aid programmes."

If the Government's own ambassadors do not believe in the Government's new position, who does? The ambassador even advocated setting aside the £5 billion that the Government propose to surrender from the rebate in order to create—I cannot quote every word of this in the House—a special development fund cutting out

"all the [expletive deleted] EU bureaucracy"

and the amount that goes into

"sticky transaction costs, local and Brussels corruption, overhead and other rubbish."

What is this man doing as an ambassador when he should clearly be a European Commissioner?

Will the Minister explain, when he responds to the debate, why the extra concessions on the rebate, announced on Monday last week, were not factored into the budget deficits for the coming years set out by the Chancellor that same afternoon? If he had been a prudent Chancellor, he would, of course, have wanted to take account of, and make provision for, money that the Foreign Secretary was proposing to give away. If not, it seems that the Foreign Secretary has removed a large slice of any remaining margin possessed by the Chancellor to meet his golden rule, even on the new fictionalised basis.

Somehow, from a position of enormous strength, strong domestic support, many potential allies and a good moral case, the Government have managed to emerge in Europe as the villain of the piece, making concessions that are paid for directly by British taxpayers while simultaneously alienating the new entrants to the EU, upsetting almost everyone else, gaining no concessions whatever from the French and failing to achieve even the slightest part of their objective. Is that not a sorry position for a Government to have reached in advance of an important summit? While there is great agreement across the House on the causes of the European crisis, this much-vaunted presidency of the EU has done almost nothing to resolve them.

It is always a pleasure to follow the right hon. Member for Richmond, Yorks (Mr. Hague). May I congratulate him again on his appointment to the Front Bench? His speech was full of witticisms and knock-about stuff. The pantomime season really has begun, but I am not sure whether he is Cinderella or Mother Goose.

The right hon. Gentleman and I have a lot in common. It is not well known that I gave him his first job in the House, when I was chairman of the very important all-party footwear and leather industries group—probably the high point of my career. The right hon. Gentleman was a new Member and I made him my secretary because his footwear was always in a good state of repair. I am glad to see that he has done so well. We have another bit of shared history. When he was the Leader of the Opposition and I was Minister for Europe, we both took a bus tour around the United Kingdom. Mine came first—I had a customised campaign bus, in which I undertook 25 engagements in five days. The truck for his campaign to save the pound was sited in St. Albans. We did not actually meet, but I think that he abandoned his tour shortly after it began, such was the state of the Conservative party at that stage. The other thing, of course, is that we both had more hair at the time.

This is an important debate and I am glad to see that we have three heavyweights on the Front Benches talking about foreign policy. I congratulate my right hon. Friend the Foreign Secretary on winning the Minister of the year award in The House Magazine last week. That award was well deserved, and I did in fact vote for him. I hope that he will remember that. These European debates, which often used to attract only the usual suspects, now gather a much larger audience. That is good, because it is important that we should have strong, vigorous debates on Europe, and it is always good to know what Conservative party policy is on Europe.

My regret, in listening to the right hon. Member for Richmond, Yorks, was that he spent 21 minutes talking about issues that were really not the concern of the forthcoming discussions in Brussels. It is important to have this debate now because we have been calling for a debate on the UK presidency, but it is a pity that he wasted the opportunity to put forward Conservative party policy. He spent his entire speech—eloquently and wittily, as always—attacking the European Union, saying that it was not up to the job, and criticising the Government and officials. That was a waste of an opportunity.

We have a real opportunity to show leadership in Europe, but every time we discuss the European Union in the House, our debates consist of the Opposition attacking everything that the Government are proposing, and criticising Ministers for not standing up for Britain's interests. The right hon. Gentleman knows, as a former member of the Cabinet, that when British Ministers attend these summits in Brussels or wherever, they bat for Britain. They do everything that they possibly can to further Britain's interests. I am really disappointed that every speech from the Conservative Front Bench contains the criticism that we do not act in Britain's interests, because we do. That is what the right hon. Gentleman did when he was a Minister, and that is what our Ministers do when they perform their duties in Brussels.

This has been a good presidency, albeit a low-key one. I would like to have seen much more campaigning on European issues by our Foreign Secretary, because he has real style and panache and he is able to put forward the best of Europe to the British people. Inevitably, however, because of the great difficulties involved in organising a presidency over a six-month period, British Ministers have had to engage in the crucial decision-making processes.

We have had a huge success with Turkey, and it is worth reminding the House of the support that the Opposition have given to enlargement over the years. The Foreign Secretary generously paid tribute to John Major for the steps he took when he was Prime Minister. Certainly, the process was accelerated from 1997 onwards when our Prime Minister became a champion of enlargement. Through the previous Foreign Secretary, the late Robin Cook, and the present Foreign Secretary, Ministers have been fully engaged in the enlargement process. We all look forward to the day when Turkey joins the EU. It will be a different EU by then, but it will be one that truly embraces the whole of Europe. As we started the negotiations on Turkey, it was also important for us to give a green light to Croatia. The entry of the Balkans will also be crucial to the peace and stability of the European Union, and that process rightly started under our presidency.

Does the hon. Gentleman agree that it would be impossible to achieve the result that he would prefer, namely, a different kind of structure in Europe, while hanging on to the past and to the constitution? Are not serious changes needed to return power to the national Parliaments and, as I would prefer, to go down the route of associate status, so that we could address the real question of how to accommodate the proper aspirations of the enlarged European Union and of Turkey?

I do not agree with the hon. Gentleman's conclusions, but I pay tribute to his analysis and the work that he does in this area. What he does with the European Reform Forum in taking evidence on these issues is extremely important, as the House should discuss European issues not just in the Chamber and European Scrutiny Committee but on an all-party basis. In that way, we will find a great deal about which we agree, as well as issues about which we disagree.

Turkey must be admitted as a full member because it seeks that kind of status. I do not agree that we should have a two-class Europe. That is why I supported the Government in the measures that they took to ensure that when the latest enlargement took place, on 1 May 2004, we allowed workers from the 10 new member states to work in our country. What a benefit they have been to the British economy, even though the then leader of the Conservative party—I do not hold the right hon. Member for Richmond, Yorks responsible, as he was not an Opposition spokesman on that occasion—predicted that there would be chaos in our benefits system and huge problems of social cohesion. Those who came in as part of the last wave of enlargement have contributed to the British economy and enabled us to take a leadership role in Europe. While Germany and France did not allow them to work, we did, and that is the right course of action. In relation to Turkey, those are the only issues about which I would be concerned.

I hope that we will get a decision on whether Romanian and Bulgarian workers will be allowed to come here on an equal basis with the rest of European Union citizens before the 2007 deadline, as it would be wrong to leave it until the last minute to be fuelled by hysteria in the tabloid press. I hope that we will get that decision soon, as it is important that we send out a signal to the rest of Europe that we are the champions of enlargement.

That leads on to what the Foreign Secretary has said about the rebate and the difficult negotiations that are going ahead, and I wish him and the Prime Minister well in those. I remember sitting round the table and trying to get agreement with other Ministers in an EU of 15. In an EU of 25, however, it must be extraordinarily difficult. I pay tribute to all our Ministers for the way in which they have engaged in discussions, especially with the new member states. The right hon. Member for Richmond, Yorks commented on the Prime Minister, Foreign Secretary and other Ministers not being seen in other parts of Europe over the past six months. That is because they have been dealing with crucial negotiations. In the past week alone, five Prime Ministers—perhaps more—and dozens of Ministers have come to London to have meetings to try to resolve the problem.

My hon. Friend talks about the difficulty of securing agreement between 15 and now 25 member states. Rather than trying to force through decisions that cause difficulties, would not it be easier if we had a much looser arrangement in which each member state had a higher degree of independence?

My hon. Friend keeps saying that, but of course those states have independence. That is why we have discussions. We are not trying to force through these issues, and nobody tries to do so. Ministers do not turn up and try to dragoon people into supporting our view. There must be a process of painful negotiation and agreement, which is why it takes so long. That is why the Foreign Secretary has honestly told the House—the House admires his plain speaking—that if there is no deal, there is no deal. The Government will do their best, however, to ensure that there is a deal.

It is right, of course, that discussion about the rebate needs to be set against reform of the common agricultural policy. We have sought to do that for the past eight years. When the Conservative party was in government—and when the right hon. Member for Richmond, Yorks was a Minister in John Major's Government—I did not see Conservative Ministers coming to the Dispatch Box and telling us about all the work that they were doing to try to reform the common agricultural policy. I did not hear about any campaign by the then Conservative Government to try to put right the iniquities that were present, and are still present, in our system. All we had was silence.

All that I know in respect of the CAP policy is that Ministers have been trying for the past eight years to do something about the iniquities of the CAP. The budget must be set in that context. We cannot have a fundamental reform of the EU budget unless we have a fundamental reform of the CAP. There is agreement on both sides of the House on that. That is why the Prime Minister and Foreign Secretary rightly said that we negotiate about our rebate in terms of a reform of the CAP.

The cost of enlargement is quite different. One cannot be in favour of enlargement and want a wider Europe and then not pay for the costs of a wider Europe. Of course, the 10 new member states are benefiting because of the millions of euros that will be spent on those countries. Why do they need to be spent? Because those countries need to be brought up to speed with the rest of Europe, and because it benefits our country to have countries with which we can trade—which are our partners and with which we can trade on an equal basis. That is why we are spending all that money on the issue.

My hon. Friend talks about our generosity to the new countries coming in from eastern Europe. The amount of money that they receive from the CAP is a tiny fraction of that received by the rich countries in western Europe. It is an absolute nonsense. If there was sincerity about the CAP, those new countries should have the same proportion of CAP spending as other richer nations. Then, of course, the whole thing would break down.

On that point, my hon. Friend is absolutely correct. That is the case that is being made—that there must be a reform of the CAP. It is unfair because it favours France. We should ask the Polish farmers—and the Polish Government when they were seeking to join the European Union—what they think about that. Of course they want a much fairer deal. Until they have that fairer deal, however, it is up to European Union countries, through structural and cohesion funds, to give them a deal that will enable them to do the kinds of things that we want them to do.

As I understand it, that is the basis of the deal currently on offer from the Foreign Secretary. The rebate is to be considered in the context of the common agricultural policy, but we need to find other ways in which we, as a rich nation, can contribute to the new members so that they do not lose out as a result of our rebate. We must therefore give them additional funds to make sure that they can reach the level that we promised them when they joined the European Union. That also means considering the way in which those funds are dispensed. We do not want to see public opinion in the new member states waning since they joined the European Union, which appears to be happening, because they look at the European Union and see an organisation that seems not to be willing to reform.

In the discussions that my right hon. Friend the Foreign Secretary has over the weekend, I hope that he will pursue the reform agenda, as the right hon. Member for Richmond, Yorks said he should be doing. I have raised that matter with the Foreign Secretary on a number of occasions. There is no prospect of the constitution being adopted at this moment—my right hon. Friend the Foreign Secretary has been given credit in that regard, but I know that he is too modest to accept such plaudits—but the fact remains that reform is needed of the structures and practices of the EU.

That was originally set out in the joint letter from the then Chancellor Schröder and our Prime Minister in February 2002. That reform agenda is essential if we are to make the European Union work efficiently, especially in respect of the Lisbon agenda. Of course, the Kok report was damaging, but that was the point of having a report five years after Lisbon—to see what had been achieved. Many benchmarks have not been met—we have done better than other countries, but it is essential that that reform agenda survives beyond our presidency and into the Austrian presidency, and into the discussions and negotiations that we will ensure happen after our presidency has finished.

The world will not end on 31 December. The EU is an ongoing process, and I seek an assurance from my right hon. Friend the Foreign Secretary and my hon. Friend who will wind up the debate that we will pursue the reform agenda in a vigorous way. That does not depend on the constitution, as it is independent of it, but we must get those reforms moving if we are to play a real part in providing leadership for the EU.

This has been a slightly unusual debate in a number of respects. First, the hon. Member for Leicester, East (Keith Vaz) departed from the sanctity of the ballot and revealed that he had voted for the Foreign Secretary—no doubt he had no ulterior motive whatever in doing so. A habit also seems to have arisen, almost like the congressional record in the United States, of making reference to local institutions such as local newspapers. Not to be left out on this occasion, I should like it to be known that I more than value the contribution of the St Andrews Citizen to the great political debates of our time.

There has been a warm and genuine welcome—an affectionate welcome—for the right hon. Member for Richmond, Yorks (Mr. Hague), who demonstrated, in a trenchant speech, the considerable talents that he possesses and of which we hope to hear and see more in future debates. I have been trying to formulate in my mind how the change in personnel effected by his new leader could best be characterised in relation to him. I suppose the best way of putting it is to say that the hon. Member for Witney (Mr. Cameron) shot the fox and gave us the comeback kid.

I shall discuss the issue of the deal in some detail in due course, but let me first point out that at one stage the Foreign Secretary said that no deal was better than a bad deal. The phrase has a certain resonance on occasions such as this, but when we analyse it we must ask what would be the consequences of there being no deal. What would be the political consequences in the European Union, and what would be the consequences for the influence of the United Kingdom? Can we be confident that if the matter were, so to speak, kicked into the arms of the Austrian presidency, a better deal would emerge from those circumstances?

Those are all questions that cannot, I think, be answered in this debate. Although we now have, in the form of a ministerial statement, an up-to-date indication of the Government's position, all the issues will be on the table on Thursday and Friday, Saturday, Sunday and perhaps even Monday, and the truth is that they may well change in material respects. The verdict on the proposals will have to rest until the Government, on Monday or perhaps even Tuesday of next week, return to report on precisely what they have achieved.

To an extent, that makes our debate a little artificial, but it is undoubtedly important because, as the right hon. Member for Richmond, Yorks said, the European Union stands at a very important point in its history and its evolution. It is worth reminding ourselves—and the right hon. Gentleman made some reference to it—that in his speech to the European Parliament on 23 June, the Prime Minister eloquently set out United Kingdom priorities for the presidency. The speech received considerable support from those who heard it in the Parliament: indeed, it brought the Prime Minister an unaccustomed ovation there.

The Prime Minister said in his speech that he believed that the French and Dutch rejections of the constitution constituted

"not a crisis of political institutions, it is a crisis of political leadership. People in Europe are posing hard questions to us."

In that speech, he raised expectations. He raised expectations that the crisis would be met, and that the hard questions being posed by the people of Europe would at least be the subject of an attempt to answer. I am afraid that, despite the Foreign Secretary's brave face on matters, history will judge that—with the exception of the opening negotiations on the accession of Turkey and Croatia—there has been, unhappily, a lack of substantial achievement during the presidency.

Some will say that the Prime Minister has failed his own test: that the political leadership to which he pointed in that eloquent speech has not been on display, and that the hard questions being asked by the European public have not been answered. I suppose one could say that the Prime Minister has been caught between the promise of his own rhetoric on that occasion and the failure of achievement that many will consider to be a characteristic of this period of the United Kingdom's responsibility.

rose—

Like every other Member, I am always happy to give way to the hon. Gentleman.

I am most grateful.

Is it not possible that the real reason why the Prime Minister is having so much difficulty and has failed is that, despite his best efforts to secure an open, competitive Europe, the others are not listening? They do not want to change the acquis, they want to stick to the constitution, and the Prime Minister has pretty well given up banging his head against a brick wall.