1995 - Mr Major’s Commons Statement on the 1995 European Council at Cannes

Below is Mr Major's statement on the European Council held at Cannes from the 28th June 1995.

 

PRIME MINISTER:

The Prime Minister (Mr. John Major): With permission, Madam Speaker, I shall make a statement on the meeting of the European Council in Cannes, which I attended with my right hon. Friend the Foreign Secretary, my right hon. and learned Friend the Chancellor of the Exchequer and my hon. Friend the Minister of State responsible for Europe, the hon. Member for Boothferry (Mr. Davis).

The Council rightly gave priority to the need to promote growth and employment. It called for flexible job markets and rigorous budgetary policies to keep inflation and deficits down. These are the policies that we have been advocating for years.

We need to create a Europe of enterprise. Seventy per cent. of the jobs in the European Union are in small companies, and I welcome the Council's focus on the need to free these businesses from red tape. We have promoted work in Europe on deregulation designed to stimulate employment and innovation, and the Council has now called for specific proposals from the Commission this year.

At the summit, the Heads of Government discussed a single currency. As I have made clear to the House, I believe that a single currency carries significant economic, political and constitutional implications. That is why at Maastricht I fought for our right to keep the pound.

At the summit, other Heads of Government showed a growing awareness of the difficulties of the plan for economic and monetary union. It was agreed that there can be no question of any member states moving to stage 3 in 1997. I am equally clear that there is not the remotest prospect of all 15 states meeting the convergence criteria by 1999, although it is probable that a small number will do so.

At this Council, for the first time, it was acknowledged that a move to a single currency by some member states and not others would have serious practical and economic consequences for the future operations of the Union. Finance Ministers have now been asked to look at this problem and report further.

A number of questions need to be addressed. What would a move to a single currency mean for those who did not participate? Would those bound into monetary union benefit, or would those remaining outside the union gain advantage? What are the implications for the single market? What would be the impact on resource transfers?

Many questions arise as we approach stage 3. I have long believed that it is vitally necessary to examine these problems in detail, and it should lead to a much more realistic and informed debate. Any decision to move to a single currency will be the most far-reaching structural change for the whole European Union--vital, of course, for those that participate in it, but it will be equally vital for those who choose not to participate in it. At the very least, it will change the union profoundly, perhaps in ways that are unexpected.

I believe that it is essential for this country to participate fully in that debate. Here, above all, we must make our practical views count and stand up for our interests in Europe, yet our ability to influence the debate on a single currency now, when it matters, would be destroyed if we exercised our opt-out now. We would forfeit our influence over the most crucial current issue affecting Europe's future. That would not be in our interests. We should seek to influence the debate before we finally decide our position.

Agreement was reached on Europol and the customs information system, which will reinforce the fight against cross-border crime and drug trafficking. Agreement on Europol had been held up because some member states insisted that the European Court of Justice must have jurisdiction. I would not agree to give the European Court a role in such a sensitive area involving our police and criminal intelligence activities. After a prolonged debate, the question of possible European Court of Justice involvement in the dispute settlement procedure for Europol was set to one side, while, in the meantime, the convention was agreed.

The European Council will examine the dispute settlement procedure again in June 1996, but I have made it emphatically clear that I do not anticipate that the United Kingdom will take a different position then. As a result, the European Court of Justice will not be the arbiter in any case relating to Europol which involves the United Kingdom Government or arises in the courts of the United Kingdom. The United Kingdom has also led the fight to combat fraud in the Community. The last European Council at Essen agreed the plan of action that we proposed. The Cannes Council confirmed agreement on a regulation and convention providing tools for the task, and at Madrid in December, we shall review the action that member states are taking to crack down on fraud.

The European Council took stock of the earlier preparations for next year's intergovernmental conference. It agreed that the preparatory study group should consider how the European Union could better respond to its citizens' expectations. At the heart of this, of course, is the need for effective and rigorous application of subsidiarity.

In 1990, the Commission proposed 185 pieces of primary legislation. In the first half of this year, it has proposed not 185 but 11. At Cannes, the Commission was instructed to complete its two-year review of subsidiarity applied to existing legislation in time for consideration at Madrid this December.

The prospect of further enlargement was highlighted by the meeting yesterday between the 15 members of the European Union and the Heads of Government of 11 prospective member states. These 11 will benefit from the programmes agreed for help to central and eastern Europe and the Mediterranean.

The Council decided that the next European development fund would provide 13.3 billion ecu, or about £11 billion, to the African, Caribbean and Pacific countries. The United Kingdom also provides high-quality bilateral aid to many of these countries. I intend to ensure that multilateral contributions do not swallow up our bilateral aid.

Our contribution to the eighth EDF--worth 1.63 billion ecu, or about £1.35 billion, over five years from the year 2000--will be very substantial, but we are taking a smaller share than under the seventh European development fund and, as a result, placing less pressure on our direct bilateral programme to countries with whom we have a long relationship.

On the former Yugoslavia, the new European Union mediator, Mr. Bildt, reported on his first visit to the region. We asked him to concentrate urgently on ways to reopen talks with all the parties on the basis of the contact group plan, and to continue efforts to secure recognition of Bosnia by the Federal Republic of Yugoslavia. During the Council, my right hon. Friend the Foreign Secretary and I met the Irish Prime Minister and Deputy Prime Minister for bilateral talks. We commissioned a joint report on how the paramilitaries could decommission weapons and explosives. The Taoiseach and I will discuss this report in due course.

We can take considerable satisfaction in this summit. On economic issues, in the fight against cross-border crime, on Community fraud, in the emphasis on enlargement, in the sensible balance reached in the allocation of external funds, and in the support given to Mr. Bildt's diplomatic efforts over Bosnia, the Council has followed courses which the United Kingdom advocated. On other areas of vital national interest, we have influenced the debate while retaining our own rights of decision.

I would not pretend that these results were invariably easy to achieve. But, as this Council again showed, the debate within Europe has evolved significantly in our direction over recent years. I am confident that we can carry this evolution a great deal further by robust advocacy, by patient negotiations, and by standing by our belief in a commonsense Europe.

I have made it clear that I believe that the way forward for Europe is as a Europe of nation states built upon co-operation. Key decisions affecting this nation must be taken here in this House. My guiding principle is to do what I believe is in our national interest--to argue for Britain's interests in Europe, and to build a Europe which carries the trust of the British people. That I will continue to do.

I should like to add one further point. My right hon. Friend the Foreign Secretary has devoted 43 years to unbroken public service-- [Hon. Members:-- "Hear, hear."]--as a diplomat, a politician and a Minister. This was the 16th European Council that he has attended as Foreign Secretary. His huge contribution to foreign policy co-ordination among European Governments was recognised at the summit in a moving tribute by his colleagues. His contribution to our relations outside Europe has been equally important.

At this summit, as throughout the past five and a half years, his deep knowledge and calm authority have earned great credit for this country. My right hon. Friend has justly earned respect on both sides of the House, and I believe that this country owes him her thanks.

Mr. Tony Blair (Sedgefield): I thank the Prime Minister for his statement. I am delighted to join in the tribute to his right hon. Friend. Whatever our political differences, I believe that he has always represented this country with honour and ability. That will be respected on both sides of the House.

I obviously agree entirely with what the Prime Minister said about Northern Ireland. I shall deal with some of the main issues that he raised in relation to the summit.

On Bosnia, we welcome the support that was given to the rapid reaction force. The communique said that the task was to help UNPROFOR both act and react. Will the Prime Minister amplify what that means? Is the force there for protection primarily, or will it be used in a more active way--for example, in preventing the bombardment of the safe areas?

While we welcome again the renewed commitment to Sarajevo, which was shelled again this morning, can we have the assurance repeated that no deals were done with the Bosnians in exchange for the release of hostages, and that we continue to reserve every means at our disposal to enforce the United Nations mandate?

On enlargement of the European Union to the countries of central and eastern Europe, there will be support for the broad principles that were outlined. We welcome the participation of the 11 potential future members of the European Union in the summit. Is not one of the main barriers to enlargement the common agricultural policy? Is it not time for a far more fundamental reform of the CAP, which has become an unreasonable burden on European consumers?

While we agree with the aim expressed in the presidency conclusions, which call for a comprehensive nuclear test ban treaty by the end of 1996, can the Prime Minister explain how, for example, the French decision to resume nuclear testing is consistent with that aim? We support the strong statement that was made on tackling racism across Europe, and on crime and fraud. On jobs, we welcome the clear emphasis on measures to help the long- term unemployed. But how can the Prime Minister agree with his European partners that more needs to be done, when his Government and Cabinet are initiating a massive 30 per cent. cut in spending on the long-term unemployed and their programmes? Is not that a serious-- [Hon. Members:- - "Where will the money come from?"] Conservative Members ask where the money will come from. We have heard the former Secretary of State for Wales's opinion. He says that there is £5 billion-worth of waste just waiting to be gathered up. We could have a programme for the long-term unemployed, finance the royal yacht and have enough left over for a new prime ministerial spaceship to help him in his bilaterals with the planet Portillo.

On monetary union, how can the Prime Minister reconcile his position today with what has been said recently? The President of the Board of Trade has said that a single market needs a single currency; the Chief Secretary to the Treasury says that he does not want a single currency, period; the Chancellor of the Exchequer says that it is not a threat to the nation state; the Employment Secretary says that it is. Does the Prime Minister know that, this morning, the President of the Board of Trade has said that a referendum is inconsistent with parliamentary sovereignty, although the Foreign Secretary days earlier said that there was a case for one? The Prime Minister, who once said that he supported the principle of a single currency and was opposed to referendums, now says that he wants to keep his options open on both. Is it not the case that there are now at least nine different positions on record stated by members of the Cabinet, and that the Prime Minister is responsible for three of them? I notice that the Employment Secretary and the President of the Board of Trade are not here-- they are probably putting in the telephone lines.

If the divisions are so deep and irreconcilable that the Conservatives cannot govern themselves, why on earth should they be trusted to govern the country? Did not the Foreign Secretary get it right in Cannes during the summit, when he said that those divisions were damaging Britain?

Does the Prime Minister--who at least is behaving with some semblance of honour and integrity throughout this--know what was happening while he was trying to represent Britain abroad? The friends of the Employment Secretary and the friends of the President of the Board of Trade were twisting the knife, striking deals and briefing the papers in a way that would have made Mr. Francis Urquhart blush. That is what happened while the Prime Minister was in Cannes.

Has not the last week exposed the real Conservative party, in all its deceit and squalor? It is an ungovernable party that is unfit to govern, and the sooner that this country is rid of the Conservatives--all of them--the better for Britain.

The Prime Minister: That was all very entertaining--all that "twisting the knife" stuff. I can tell the right hon. Gentleman that I am remarkably unbloodied, and I will stay that way. As far as the European summit was concerned, I can assure the right hon. Gentleman that that was not on the agenda and was not discussed.

Let me deal with the earlier points the right hon. Gentleman made, when he touched loosely on the statement that I made. The right hon. Gentleman graciously supported my remarks about my right hon. Friend the Foreign Secretary, and I am grateful to him for that. I am also grateful for his continued support for our proposals in Northern Ireland.

As far as Bosnia is concerned, I can first give the right hon. Gentleman a complete assurance that no deals will be done with the Bosnian Serbs, and that assurance stands now and for the future. As for helping UNPROFOR to act and to react, the intention is to give greater protection, and to give UN commanders more choice and options as to what action they may deem necessary in the interests of the safety of their men who are on duty there in the service of the UN. On the subject of enlargement, it was encouraging to see the 11 potential new members at the summit. I agree with the right hon. Gentleman about the need for further movement on the common agricultural policy; indeed, I have been saying just that for some years.

It is clear that, as the European Union enlarges, the CAP in its present form will be unsustainable, for cost and other reasons, and will necessarily need to be significantly re-examined and reformed as part of the enlargement process. We have been advocating that for some time. There is no doubt about the need for further reform, and I assure the right hon. Gentleman that that has long been our view. On the point about a comprehensive nuclear test ban treaty, the French President can best speak for himself. However, he told the summit that he proposed to end his series of tests in, I think, May of next year, so that he would be in a position to sign the test ban treaty later in the year, together with the other potential signatories.

In answer to the right hon. Gentleman's remarks about employment and jobs, we have done a great deal more than many other country, which is why our unemployment has fallen by 600,000 from its peak--a better record than any of our European partners. It is why, I think perhaps with the solitary exception of Holland, we have the lowest unemployment rate anywhere in the European Union.

The right hon. Gentleman referred to expenditure on creating jobs. A significant part of creating jobs is not just expenditure, but removing from employers costs that inhibit them from taking on workers because it is no longer cost-effective to do so. That is the position that we have taken for a number of years--and it is significantly because of that that unemployment has fallen so much. That position is now accepted by our European Union partners, and was fully agreed to during our discussions.

The right hon. Gentleman referred at some length to economic and monetary union, and what he described as differences and confusion. I hope that he can clear up some of his confusion. The deputy Labour leader, who sits beside the right hon. Gentleman, said, "Yes, we are against a single currency." The right hon. Member for Copeland (Dr. Cunningham) has said, "Personally, I am in favour of a single currency."

Labour MEPs have voted in favour of a single currency, and within the time limits and timetables that have been set. The hon. Member for Livingston (Mr. Cook) has said in the past that setting such timetables would be irresponsible. Last week, Labour's spokesman on monetary affairs in Europe wrote:

"A single currency is crucial to consolidating the single European market . . . Britain can no longer forge an independent monetary policy."

I do not know whether the right hon. Member for Sedgefield agrees with that, or whether it is the latest illustration of one of his MEPs being infantile.

Mr. David Howell (Guildford): On the matter of a single currency, will my right hon. Friend confirm that, whereas previously it was argued that countries that stayed outside the single currency zone would somehow be weakened, disadvantaged and marginalised, it is now being argued that those countries that stay outside will be too competitive and too strong and will have an unfair advantage, and that barriers must be raised against them? Will my right hon. Friend also confirm that he utterly rejects that ridiculous argument, and that any attempt to divide Europe by raising barriers against non-participating countries would be highly divisive, and indeed illegal?

The Prime Minister: My right hon. Friend is right to draw attention to the changing nature of the debate. No specific proposals have yet been made by those most likely to go into a single currency about what inhibitions they might wish to place on those who remain outside to ensure that they do not gain a competitive advantage. We can be clear about the direction in which the debate is moving--and, as my right hon. Friend said, that is unlikely to be acceptable to many countries that do not enter a single currency.

Mr. Paddy Ashdown (Yeovil): The Prime Minister was right to say that his right hon. Friend the Foreign Secretary enjoys a wide circle of respect, on both sides of the House and way beyond it. His retirement marks the end of a long and distinguished career in the service of this House and this country.

The Prime Minister's statement shows that he did the best job he could to represent Britain's interests as he saw them, given the impossible position in which his own party has put him. Is it not absolutely clear that a Government who are so divided on Europe cannot represent Britain's best interests in Europe? Is it not also absolutely clear that the Prime Minister must come off the fence on the issues of a single currency, political co-operation and the granting of a referendum, to give the people of this country a chance to have their say? So long as he ducks that, he or any of his successors will be a lame duck Prime Minister presiding over a broken-backed Government, incapable of representing this country in Europe or anywhere else.

The Prime Minister: I am grateful to the right hon. Gentleman for his generous remarks about my right hon. Friend the Foreign Secretary, which are well deserved and will be echoed in many quarters. On representing this country in Europe, as I told the House just a few moments ago, the conclusions reached at the European summit by all the participants were conclusions which, as the right hon. Gentleman well knows, I have been advocating from this Dispatch Box for the past five years. So the suggestion that we are unable to represent Britain's interest in Europe is utterly rejected, not just by me but by those Heads of Government in Europe who now take the position that we have advocated for a very long time.

What they would not have accepted, of course, is the proposition that is so often advanced by the right hon. Gentleman. Were he to go to Europe, he would find himself taking part in the debate on the basis of what most people in Europe thought in 1992 rather than what they think today in 1995.

Dame Jill Knight (Birmingham, Edgbaston): May I suggest to my right hon. Friend that many people outside this House will commend his firm stand, leading to a universal acceptance by Ministers from the European Community that Britain could not, would not, shall not and cannot ever give over the jurisdiction of our courts to the European Court of Human Rights in Strasbourg? [Interruption.] May I suggest that many people outside care very much about the right to make decisions in our own courts?

The Prime Minister: As my hon. Friend says, I think that there are some areas in which it would not be acceptable to the House for rulings to be made outside the United Kingdom by the European Court of Justice. It was precisely for that reason that I declined to accept European Court of Justice rulings in the very sensitive intelligence area that will be covered by Europol.

There are some areas in which, in the interests of dispute management and dispute settlement, the European Court of Justice has had a long involvement in our affairs for the past 25 years or so. As my hon. Friend says, there are some areas that would not be acceptable to the House. This weekend, we touched on one of those areas, and I made our position clear.

Sir Peter Hordern (Horsham): Was there not a proposal that a council of wise men be formed to consider the consequences of those countries that had not signed up to a single currency? Was there not also a proposal to extend the powers of the European court? Will my right hon. Friend confirm that those countries that may decide to form a single currency knew very well what they were doing when they signed the Maastricht treaty, and that there can be no consequences for the single market proposals as a result of any arrangement that they may come to?

The Prime Minister: They were certainly aware of what they were about when they committed themselves--I think, unwisely--to firmly entering on a particular timetable. It would be unacceptable to many people in the European Union if they were now to see an impact on the single market, which was separately agreed, as a result of the decisions they took in the Maastricht treaty on a single currency. I agree with my right hon. Friend about that. A large number of member states across the European Union will do so as well.

There was, at one stage in the summit, a suggestion that some wise men should gather together--a small number of wise men-- [Interruption.] --nominated by Heads of Government, to consider the implications of a single currency on those nations that did not join. The debate advanced, and it was suggested that a wise man be appointed. I was not in favour of that, and the idea did not proceed. It was decided that we would return the matter to the wise men who sit regularly on the ECOFIN Council.

Mr. Peter Shore (Bethnal Green and Stepney): On a single currency, the communique makes it clear that the leaders of the European Council express their firm resolve to get through the transition period towards a single currency by 1 January 1999 at the latest. They further went on to say that there must be strict observance of the convergence criteria in the Maastricht treaty.

Given the fact that one of those criteria is that members should also be members of the exchange rate mechanism for a period of two years before the decision is made, and within a 2.5 per cent. band of parity, is it not clear that the Prime Minister will have to make that decision, if he is going to keep his options open, by 1 January 1997? Is it not time that he started thinking about what debate should take place in the House in preparation for that decision?

The Prime Minister: I have already said to the House on occasions in the past that I do not anticipate the United Kingdom rejoining the exchange rate mechanism in this Parliament, and I reiterate that point for the right hon. Gentleman.

The convergence criteria are, of course, important criteria, which were actually put in the Maastricht treaty at the request of the United Kingdom, because they are sensible economic guidelines. Quite apart from the fact that they are likely to lead to a convergence of inflation and growth performance, they are sensible economic guidelines on their own.

What the right hon. Gentleman left out of his question when he referred to 1 January 1999 and the communique was that it actually refers to that date and also refers to the protocol--our protocol, the United Kingdom protocol, which gives us an option not to join. As for joining the exchange rate mechanism at 2.5 per cent. bands, there are, of course, no 2.5 per cent. narrow bands at the moment in the exchange rate mechanism for any nation in Europe. There are much wider bands at the moment, and nobody is talking about narrowing the bands. That is one of the reasons, but by no means the only reason, why I have expressed some doubt on a number of occasions about whether that date, 1 January 1999, is a date that will be met. I should say that the date is there, but the date is always subject to the convergence criteria.

There is no possibility whatsoever that very large numbers of the European Union members will meet those convergence criteria. Some members, a minority of member states, will do so, but by no means all of them. Then the European Union will have to face the fundamental decision of what is the impact on the Union as a whole, its operation and effectiveness in the future--the whole flavour of the Union--if a small group of countries go ahead and create a dividing line between those within a single currency and those beyond. We have been arguing for further detailed discussions in order to examine that, and they were finally agreed to at the summit.

Mr. Thomas McAvoy (Glasgow, Rutherglen): The Prime Minister claims that he wishes that Britain were at the heart of Europe. Is he aware that the President of the European Parliament has stated that affairs in Europe were in paralysis at Cannes, because of the state of the Tory party in Great Britain? Is he not ashamed that his machinations and the machinations of his party have damaged our country's interests?

The Prime Minister: No, I do not think that the hon. Gentleman is entirely right. There was a time some 10 or 12 years ago when many people felt that the development of the European Union was in what was then known as Euro-sclerosis. I do not accept that quote from the President of the European Parliament, nor have I seen it. Even if he did say that, I do not agree with it, and it is wrong.

Mr. William Cash (Stafford): In view of the fact that my right hon. Friend did not answer the question put to him by the right hon. Member for Bethnal Green and Stepney (Mr. Shore) with respect to the firm resolve that is confirmed in the conclusions, signed by Government, on behalf of the Union, would my right hon. Friend agree that the firm resolve that is contained in the statement is completely and utterly in line with his refusal to allow the Danes to have their way in the referendum they held a few years ago, and, furthermore, the U-turn that my right hon. Friend made with respect to majority voting last year?

The Prime Minister: With great respect, my hon. Friend is talking through the back of his head.

Dr. Tony Wright (Cannock and Burntwood): You have lost that vote.

Mr. Dennis Skinner (Bolsover) rose --

The Prime Minister: I must invite the hon. Member for Bolsover to calm down. I know that he offered to help at Cowley street recently and was rebuffed, and I hope that he is not too hurt.

The treaty I signed had a protocol to which I referred in reply to the right hon. Member for Bethnal Green and Stepney (Mr. Shore), which meant that this country was not bound to enter into a single currency and that we would make our own decision at the same time.

As far as a refusal to accept the result of the Danish referendum is concerned, I have to say to my hon. Friend that I have never heard such claptrap in my life. It was the Danish Government who wished to make further arrangements following the Danish referendum to see how they should proceed, and the United Kingdom had the presidency of the European Union at that time and assisted the Danish Government in the policy directive that they, the Danish Government, wanted. There is no question whatsoever, now or in the past, of the British Government seeking to put pressure on the Danish Government to do something that the Danish Government did not wish to do.

If my hon. Friend reads again the answer that I gave to the right hon. Member for Bethnal Green and Stepney, he will see that I did respond to his question.

Mr. Calum Macdonald (Western Isles): The Prime Minister referred to pressure being brought to bear on the Government of Serbia to recognise Bosnia. Does he mean by that that they would be asked to recognise the Government of Bosnia-Herzegovina, which is what is normally meant by recognition? If he does not mean that, what is this Bosnia that they will be asked to recognise?

The Prime Minister: We recognise states, not Governments. I am sure that that is what the hon. Gentleman meant, but of course there is a clear distinction between the two. We are talking about Bosnia within the framework set out by the contact group.

Mr. Hugh Dykes (Harrow, East): Does my right hon. Friend agree that, in the longer-term future, the European Union needs to be dominated not by the successful deutschmark but by its own new unified European currency? Bearing in mind the fact that most of the other member states subject to convergence, who are proud of their history and their national sovereignty, very much want to join that single currency, should we not have the same self-confidence and seek to do the same thing?

The Prime Minister: I do not wish to see the European Union dominated at any stage, in any way, by any nation. That is undesirable. It is a collection of nation states within the European Union.

I find, on many occasions, when I attend the European Union summit, that there is a tendency among a number of the larger states expressly to ensure that they take account of the wishes and activities of the smaller states which have a smaller voting power, precisely to avoid that general question of domination. Were that to change in any way, I believe that it would do structural damage to the broad relationship that at present exists throughout the European Union. It is for that reason that I have always believed that we need to approach these matters with consensus as far as is possible.

Mr. David Trimble (Upper Bann): The Prime Minister referred to his meeting with John Bruton, the Taoiseach of the Irish Republic, for the purpose of discussing the surrender and the destruction of terrorist weapons. Can he confirm the reports in the Dublin press this morning that, during that meeting, Mr. Bruton urged on him the early release of prisoners convicted of terrorist offences, and can the Prime Minister tell us what response he made on that point?

The Prime Minister: No, there was no discussion about early release of prisoners. The position that the Irish Government have held for a long time has been known about that matter. As I have said in the past, that is a matter for the British judicial system and for no one else.

Mr. William Powell (Corby): Is my right hon. Friend aware that the generous and handsome tribute that he paid to my right hon. Friend the Foreign Secretary was widely applauded by Conservative Members? Further, would my right hon. Friend be prepared to accept that the task that my right hon. Friend the Foreign Secretary has faced in the past four and a half years has been made easier because he has worked in partnership with my right hon. Friend?

The Prime Minister: I am extremely grateful to my hon. Friend for his generous words about our right hon. Friend. I can certainly confirm that I have greatly enjoyed the working relationship that I have had with my right hon. Friend the Foreign Secretary, and I very much hope that his decision to retire has nothing to do with his working relationship with me.

Mr. Skinner: Does the Prime Minister think that it is a good idea to go travelling round the world every other week? Last week it was Nova Scotia; this week it was Cannes. He has left the house empty, and the door unlocked. Does he, in hindsight, agree with the lines of the song,

"It's very nice to go travelling,

But it's oh so nice to come home"?

The Prime Minister: It is always a very great pleasure to come home, Madam Speaker. One has the inevitable delights, not only of being in this country, but of being able to answer questions from the hon. Gentleman about the summit that one has just attended.

Mr. Michael Jopling (Westmorland and Lonsdale): Following the Prime Minister's great success in securing an opt-out from the social chapter, does he recall that Mr. Delors said that that would make Britain a paradise for inward investment in Europe? Is he aware that 40 per cent. of United States investment in Europe comes to Britain, and that that is more than its investment in France, Germany and Italy combined? Did any of the Prime Minister's colleagues in Cannes admit that they wished that they had been sufficiently on the ball to get the same deal for their countries?

The Prime Minister: I am most grateful to my right hon. Friend. He quotes the former President of the Commission accurately; that is indeed what Mr. Delors said, and I agree entirely with his sentiments on that occasion. There is a remarkable amount of inward investment into the United Kingdom, partly because we are not part of the social chapter, and for other reasons as well. That investment goes notably to Scotland, Wales and parts of the north-east and north-west. A number of our European Union partners are keen to see the United Kingdom join the social chapter. One of the reasons why they are so keen to see that happen is that it would destroy some of the competitive advantage that this country enjoys at present by not having additional social costs imposed on our employers at the cost of jobs for our work force. The fact that unemployment in this country has fallen more rapidly than elsewhere is not unconnected to the fact that we are not a member of the social chapter.

Mr. Barry Sheerman (Huddersfield): Will the Prime Minister inform the House what progress the summit made in dealing with the item about combating racism and xenophobia? I think that he will agree that that is a very important item. Is it not about time that Conservative Members started dealing with the rampant xenophobia that became even more apparent while the Prime Minister was away?

The Prime Minister: As to the European summit, the hon. Gentleman will see that there is a paragraph about racism and xenophobia that was mentioned a number of times. The Foreign Ministers discussed it, and it was also discussed in Heads of Government. We are seeking to monitor precisely what occurs.

The general problem is evident in a number of European countries and it is a problem that I take extremely seriously in this country. I do not think that we should ignore it or brush it to one side. I do not do that, and I assure the hon. Gentleman, on the basis of our discussions in the past day or so, that neither do my European partners.

Mr. Iain Duncan Smith (Chingford): Is my right hon. Friend aware that many hon. Members on both sides of the House feel very relieved that the Heads of Government have recognised that 1997 at last is not going to go ahead--[Laughter.] Does he also agree that his previous answer with regard to the single currency makes it quite clear that we did not believe that we would join the single currency in 1999? Is that now the clear position of Her Majesty's Government as a result of his previous answer?

Mr. Skinner: The end of the world is nigh.

The Prime Minister: As I have said to the House on a number of occasions, I am very dubious about whether any of our European partners will be in a position to go ahead in 1999. The right hon. Member for Sedgefield (Mr. Blair) referred to the present requirement that member states should join the exchange rate mechanism two years before on narrow bands if they are to proceed in 1999. I think that there is an element of doubt about the rigidity of that particular element of the convergence criteria, so I do not think that it would prove to be an absolute bar.

However, I reiterate my very strong doubts about whether a significant number of nation states will be ready and prepared to go ahead in 1999. I cannot be absolutely certain that that will be the case; if it is, the House will have to make its own decision on the basis of the protocol that I signed at Maastricht.

Mr. Alex Salmond (Banff and Buchan): On the question of a single currency, during preparations for the Council meeting, did any member of the Prime Minister's Cabinet express reservations, doubts, opposition or scepticism about the tactics that he was pursuing--or were they all right behind him as usual?

The Prime Minister: The hon. Gentleman will be extremely pleased to know that they agreed entirely with my tactics.

Mr. Tim Renton (Mid-Sussex): May I congratulate my right hon. Friend and the Foreign Secretary on the success of the summit? I note with pleasure the totality of his remarks about the single currency. However, has he noticed that in his absence there have been some scary remarks about the abolition of the pound--a sound bite if ever there was? Given the brilliant option that my right hon. Friend secured for sterling at Maastricht, can he tell the House whether any European leader at Cannes suggested to him the early abolition of the pound or any ill consequences for Britain if we decided not to join a single currency?

The Prime Minister: No. I can confirm that no pressure in respect of either of those points was directed at me by my European partners at the Cannes summit or at any previous summit. People are now examining with great care the detailed implications of proceeding. I welcome that debate because, even for people who have looked at the matter carefully, many of the operational matters that will necessarily follow are not yet clear and require careful examination.

Mr. Malcolm Wicks (Croydon, North-West): Given the Prime Minister's assurance that no deal was done with the Karadzic Serbs about UN hostages, how does he square that with United Nations sources in Bosnia that confirmed that a deal was done? Is it purely a coincidence that, despite the slaughter of Bosnian citizens, including children, there have been no further air strikes, even though NATO asked for them? Will he absolutely confirm to the House that no deal was done by any Government, the United Nations or any United Nations official that there would be no air strikes if the hostages were released?

The Prime Minister: Yes, I can give the hon. Gentleman an assurance on both points. No deal was done of which I, my right hon. Friend the Foreign Secretary or any other heads of Government to whom I have spoken are aware, to secure the release of the hostages. Nor has any undertaking been given by member Governments or commanders on the ground about future air strikes.

Mr. Wicks: Not by the UN?

The Prime Minister: No. No deal was given. As I indicated earlier and on previous occasions, we have not entered into those deals. I do not know what has been said or what the hon. Gentleman heard, but his comments do not remotely accord with the information that I have.

Sir Patrick Cormack (Staffordshire, South): Does my right hon. Friend accept that almost everyone who wants Britain to continue to play a constructive part in the European union of nation states will want our country to be led by a skilful, tough and experienced negotiator? Is he aware that most people believe that we have such a person at the moment?

The Prime Minister: I am extremely grateful to my hon. Friend, who has put his point most generously. I look forward to carrying out that task.

Mr. Geoffrey Hoon (Ashfield): Does the Prime Minister agree with the Foreign Secretary that the right hon. Member for Wokingham (Mr. Redwood) has damaged the effectiveness of Britain?

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): I did not say anything of the kind

The Prime Minister: The hon. Gentleman may have heard the sotto voce interruption, almost for the first time in his many years in the House, by my right hon. Friend. If I heard him right, he said no such thing. "What rubbish," he said. At least, I think that is what he said.

Mr. Ray Whitney (Wycombe): Does my right hon. Friend agree that the progress made at the summit on job creation, more subsidiarity and better clarification of all the issues involved in the introduction of a single currency demonstrates once again the crucial importance to Britain of continuing to be involved in a positive and constructive way with our 14 partners in the European Union?

The Prime Minister: Yes, I do agree. It is often quoted at me that I have said that the United Kingdom should be at the heart of Europe, and I believe that we should. Unless we are at the heart of Europe advocating what we believe is right for Europe, we will not have influence in Europe. That does not mean that we must accept everything that our European partners say, do or think, and every direction in which they wish to go. By being at the heart of Europe, we can influence the direction of the European Union, and I intend that we should do that.

Mr. Clive Soley (Hammersmith): The Prime Minister said that some problems relating to a single currency will be referred to the Finance Council for further consideration. Will not Finance Ministers have to consider that matter in the context of the Maastricht treaty, which calls for a single currency--albeit with a British opt-out? Is it not a fact that the British Government's "Shall we, shan't we?" policy has not helped the Prime Minister or his party, and cannot possibly help Britain?

The Prime Minister: When my right hon. Friend and his partners in ECOFIN look at it, it will not be within the confines of the treaty but against its backcloth. But the treaty says nothing at all about the problems that are about to be examined. I shall not list them all again, because I set out some of them in answering questions and in my statement. Those matters require to be examined in detail. The Maastricht treaty set out the objectives, subject, of course, to the convergence criteria and other matters, but it is essential that these issues are examined. When they are, the reality of what occurs from that examination will have to be taken into account by all the Heads of Government. The aspiration, the wish, for a single currency, has always been based upon the right economic criteria. That was the reason for the convergence criteria. My right hon. Friend and his colleagues will be examining many matters that will be absolutely material to that.

Mr. John Wilkinson (Ruislip-Northwood): At the Cannes summit, the European Heads of Government agreed to the disbursement of no less than 24.7 billion ecu to the countries of eastern Europe, the Mediterranean, the Caribbean, Africa and the Pacific. For the Mediterranean, the amount was 10 per cent. less than previously anticipated. None the less, there is more in real terms. Does my right hon. Friend think that such vast expenditure on countries that are fairly far from home are in the best interests of the British people? Are they in accordance with our party's principles of trying to reduce public expenditure in real terms?

The Prime Minister: Aid has always been part of our public expenditure pattern. As I showed in my statement, the British contribution to what is now known as EDF8 is 24 to 25 per cent. below the British contribution to EDF7. That is because we do not want to ransack our bilateral aid programme, first, for many countries which are very poor and to which the majority of our aid is directed, and secondly, for those with which we have a long historical relationship and an obligation. We do not wish to move too many of the funds away from that.

I think that I would defend, in this country's interests, help to the countries of eastern Europe. We have removed the military iron curtain from across the middle of Europe, and I would not wish to replace it with an economic iron curtain. For that reason, it is in our security interests as well as our economic interests to try to help those countries that are emerging from 50 years of isolation and communism into the sort of free- market system that my hon. Friend and I are in the House to protect.

Dr. Tony Wright (Cannock and Burntwood): May I offer the Prime Minister honest congratulations on the dignity of his conduct through the Cannes summit? It contrasted vividly with the shabby antics of many of those he left behind.

I should like to ask about the single currency. Accepting the argument that there is real merit and demerit in Europe moving towards a single currency and the argument about the nature of the opt-out, can the right hon. Gentleman conceive of circumstances in which a core of countries in Europe might move towards a single currency and in which it might be in the British national interest to stand outside? What are those circumstances?

The Prime Minister: Yes, I can conceive of circumstances in which that might occur. Self-evidently, there are both obvious merits and obvious demerits in a single currency, and they have been examined and discussed many times in the past. I shall not weary the House by listing them now.

As I said to the hon. Member for Hammersmith (Mr. Soley), at the moment many of the implications are unknown. The circumstances in which the decision to move to a single currency will come before the European nations and the House are unknown. There are a great many matters in what would be the single most important economic decision that has been taken by European Governments collectively and individually this century. A huge number of matters are simply not possible to know at this moment.

I believe that it is in the British national interest not to commit ourselves to a move of this nature at what, in reality, may prove to be an unknown, uncertain time, in what will certainly be unknown and uncertain conditions. It is doubly the case when at the moment we have not examined what the implications of that move would be, either for those who made the move or for those who decided not to take it. I want the British view, the British opinion, the pragmatic common sense that emanates from this country, its officials and successive Governments, to be in the debate as Europe moves towards a single currency, so that we may influence that debate. That is very important. But when it comes to the time to make the decision, it should be made rationally on the basis only of what it would mean for this country in every way--politically, economically, constitutionally--and of what the circumstances might be in the short term and the long term if we moved forward.

I know that the hon. Gentleman's right hon. Friend the Member for Sedgefield and others have had some amusement at the fact that I will not commit this country at this stage. I understand why people find it politically expedient to invite me to do so, but I say again to the House that it is in the British and the European interest for us to play a full part in the lead-up to this debate, and that it is in the British interest to make the decision when the circumstances are known. I will not commit us to a decision in advance.

Mr. James Couchman (Gillingham): Will my right hon. Friend confirm that, at the forthcoming intergovernmental conference, he will not accept any significant constitutional changes that would impact on this House?

The Prime Minister: I can confirm that to my hon. Friend, and I will tell the House why I am perfectly prepared to say that at this stage. The implications of the Maastricht treaty are taking a long time to settle down. They have not settled down across Europe. It is not just in this country that there is concern about many of the changes that were made in the Maastricht treaty, and they need to settle down. It would not be in the interests of the European Union itself to try to push for significant changes in the intergovernmental conference in 1996-97.

I am certain that it would not be in the interests of this country to accept significant constitutional changes in 1996-97, and I have said so at this early stage to my European colleagues--not in a tone of aggression, but simply so that they are aware of the way in which we view the forthcoming intergovernmental conference, of the way in which we will negotiate in it, and of what we will not accept if other countries advance dramatic plans for change.

It is too early and it would not be in our interests, or in the interests of the European Union as a whole for this to make a dramatic move forward. I have made no secret of the fact that I will not accept such a move.

Mr. Nigel Spearing (Newham, South): On ex-Yugoslavia, did the Prime Minister take the opportunity to point out to his colleagues that, unfortunately, the preamble to the updated treaty of Rome does not incorporate the objectives of the UN charter? Indeed, it forces communities and states to engage in perpetual economic warfare, so risking fanning the flames of aggressive nationalism that that charter seeks to suppress.

Does the Prime Minister not agree with the people who oppose the community treaties on constitutional and international grounds that they are founded on a treaty that, in the middle of the 20th century, put into practice an agreement on iron and steel among six member states which was totally unsuited to achieving the necessary co-operation, harmony and peace between nations in the whole of Europe in the 21st century?

The Prime Minister: Of course, as the hon. Gentleman knows, all the western European countries and all 185 or 186 members of the United Nations are bound by the obligations they entered into when they signed the UN charter. On the European Union and matters political and military, that is dealt with only under the third pillar by intergovernmental agreement, so there is no implication for those elements of policy as a result of the agreements that were signed--like the iron and steel agreements of so many years ago, before we joined the European Community as it then was; any policies that have been formulated since; or any treaties that have been signed since.

Mr. Michael Alison (Selby): Recalling the recent VE day celebrations, does my right hon. Friend agree that an even greater victory in Europe, which is even more worth celebrating, has been the friendship and co-operation of erstwhile enemies, as exemplified in the latest Council meeting in Cannes, to which he contributed so singularly by his negotiating skill and his friendly partnership? Will he continue to keep Britain at the heart of these benign and peaceful negotiating processes?

The Prime Minister: I agree with my right hon. Friend and he put his point in a crisp and worthwhile manner. When one looks at some of the concerns and worries that people have about the European Union it is often forgotten that, quite apart from the economic changes that it has wrought-- many of which are to our benefit and some of which are not liked by some people--and overarching them in many ways is the reality that the European Union, as formed, has extinguished forever any possibility whatsoever that the great nations of western Europe would ever again go to war on opposite sides. In a century that has twice seen a world war and the massacre of millions commence in western and central Europe, I believe that that is a gift beyond price. In many ways, the worries and concerns about economic and other matters pale beside that very great achievement.

Several hon. Members rose --

Madam Speaker: Thank you. That question period is over.