---

European Council

I thank the Prime Minister for his statement. I want to ask him about three issues: the agreement on the European budget, the treaty change, and the wider but perhaps most fundamental question of all, European growth. First, on the budget, I welcome the call for restraint in the European budget in the years ahead. On the budget for this year, we heard from the Prime Minister after this Council, in his own modest way, rather what we heard after the previous Council: he applauded the outcome because he said that it avoided the ultimate sin of European negotiations—simply ““splitting the difference”” between positions. But that rather depends on whose positions we are talking about. Let me remind the Prime Minister of some rather inconvenient facts. He originally wanted a freeze in the budget, whereas the European Parliament wanted a 5.9% increase. He did not just want a freeze back in August; he was still arguing for one days before the previous European Council in October. Perhaps he can tell the House what figure splits the difference between 0 and 5.9%. By my reckoning it is about 2.9%, which is the outcome we ended up with after his negotiations. So after all his rhetoric, his grandstanding and his description of this as a ““victory for common sense””, we have ended up splitting the difference. I congratulate him on his heroic achievement. We welcome the Prime Minister's support for the treaty change agreed at the Council. It is right that the eurozone should replace its ad hoc arrangements with a more permanent mechanism, but we have to ask why the Prime Minister has to fall over himself to try to justify accepting a fairly minor change. He is simply showing—I congratulate him on this—a sensible piece of what might be called ““Europragmatism””. Of course, his problem is that, before the election, he claimed not to be the Europragmatist but the great Eurosceptic. We all remember his cast-iron guarantee, and his promise that if there was any chance at all of a reopening of the treaty and a referendum on Lisbon he personally would make it happen. The Foreign Secretary admitted in November that this treaty change offers a pretext for a referendum, but it would clearly be absurd to use it to try to derail the whole of Lisbon. That is the problem—the Prime Minister's absurd position before the election, and the fact that he was believed. The Prime Minister also used to say that he would take the first opportunity to repatriate powers over employment and social legislation to Britain, but we heard nothing of that in his statement. It is no wonder that his Back Benchers are not very happy with him on Europe, because he led them up the garden path. He said, ““I am one of you. I feel your pain. I am the great Eurosceptic.”” Can he explain, most of all for the benefit of his Back Benchers, why he has abandoned those pre-election commitments? We know that he has broken his promise to parents on child benefit and to young people on education maintenance allowance, but things have got so bad that he is even breaking his promises to his own Eurosceptics. Let me turn to the economy. The agreement on a permanent crisis mechanism for the eurozone after 2013 does not address the challenges faced by Europe's economy right now. I think that he and I would agree on that. Does he agree that eurozone members should do more to promote stability in the eurozone before 2013? Does he also agree that we need European action to promote growth for there to be any chance of serious export growth in the United Kingdom? The Prime Minister's plans, with VAT set to rise and spending cuts kicking in, rely on an extra £100 billion of exports to the UK over five years. More than 50% of exports, as he said, are to Europe, but the European Commission forecasts slowing growth next year. In our view, the Prime Minister should be doing more to work with colleagues in Europe to improve prospects for growth. He should do three things in particular: first, he should argue that all countries engaging in fiscal consolidation, including Germany and the UK, should do so at a pace that supports economic growth domestically and across Europe as a whole; secondly, he should ensure that those countries facing problems, including Ireland, are not locked into repeated rounds of austerity measures, with higher taxes and lower spending hitting the growth those countries need to pay down their debts and recover; and, thirdly, he should ensure that Europe's voice in the G20 argues for a growth-oriented strategy. Given the nature of his statement, people will wonder whether he sees the connection between his optimistic forecast about exports and growth and the summit he attended this weekend. The Prime Minister's problems on Europe reflect his wider domestic approach. He breaks his promises and thinks one can reduce an economic policy to a pure deficit reduction policy with no focus on growth and jobs. In 2011, he needs to stop spending his time in Europe trying to grandstand and start engaging on a growth agenda for Europe and Britain that can help us here at home.