---

European Council

My Lords, I begin by thanking the noble Baroness for the tribute she paid to the people of Libya who have fought so bravely over the course of the last seven months, and some for far longer, against the tyranny and dictatorship represented by Colonel Gaddafi. I also thank the noble Baroness for what she said about our Armed Forces and for commending the Prime Minister. I very much agree with what she said. I also agree that embedding change will take time and that the process will be long and difficult. We, the European Union and many others will be involved in that. Libya is an important country and we have been much involved with it. It is right that we should continue to help and support the National Transitional Council and the new regime, whenever that comes, for as long as they want us. On the European Union, the noble Baroness began by saying there was no need for this House to replicate the debate happening today in the House of Commons. I agree with that, although I am sure that there will be an opportunity in the next 20 minutes or so of Back-Bench time to deal with some of these issues. The noble Baroness reminded us that the Labour Party is opposed to leaving the EU. She did not tell us about its line on joining the euro, but I am sure that that was an omission. The noble Baroness shakes her head, so I presume that means the Labour Party would not join at the moment. That is a good thing indeed. The noble Baroness said that we needed to act together. I agree with that. It is the same reason why we are opposed to an in/out referendum. We need to act together. Major decisions are being taken about the single market—both this weekend and again on Wednesday—which is something that successive British Governments and British Prime Ministers have been championing since the days of Margaret Thatcher. The single market is an immensely important mechanism for us. The fact that the single market is not yet complete is something that should concern us; the fact that the European Commission now wishes to complete it is something that we should welcome enormously. I also agree that these decisions should be taken by the 27 member countries and not by a small group. The noble Baroness fears that we may be sidelined during the course of this process if there is a core eurozone caucus, for want of a better word. We would very much like to avoid that, and we are doing everything we can to bring that about. The noble Baroness asked some specific questions, particularly about the amount of recapitalisation that has taken place in the banks and whether it is enough to ensure future stability. That was exactly what the ECOFIN meeting was about on Saturday. The Chancellor of the Exchequer spent 10 hours in the meeting to ensure that the system in place was proper and correct. As far as whether lessons have been learnt from previous bailouts, decisive action has been taken and it was right to do so. Where I agree most with the noble Baroness is on growth. This has slowed in Europe and there are a number of structural reasons for that, such as bureaucratic centralisation. We will not get to grips with many of the financial problems without addressing the growth issues. That is why we support what the European Commission is doing on growth, particularly on completing the single market. What is also required is real political leadership. I am pleased that in this country at least, in the Prime Minister and Deputy Prime Minister, the Foreign Secretary and the Chancellor, we have a united leadership developing the way forward. I will not join the noble Baroness in her praise of the Social Chapter. I take the view that all those things that the noble Baroness thinks are important are important, too, but they could just as well be decided in a British Parliament by British Members of Parliament and, indeed, British Peers. The noble Baroness finished by saying that these are serious questions, which is right. The issue of Europe is always taken immensely seriously, not least in this House. I like to think that we always put the national interest first; that is one of the reasons why I am a member of this Government. These are extremely difficult and complicated times, and it is vital that we put the national interest first to get the solutions that we need.