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Mr. Henderson: I am glad that I gave way to the hon. Gentleman, who has reminded me of the divisions that were apparent in the Conservative party three years ago on this very subject. I do not think that the position has changed; if anything, the divisions have become deeper and Conservative Members connect less to the real issues.

I come back to my earlier point: even if there is a proposal that is clearly in Britain's interest, the hon. Gentleman is against any extension of QMV, even if it wipes out an industry in Britain or causes enormous environmental damage to part of our country. He is prepared to lay waste to industry and the environment in defence of his political and ideological position. He is entitled to adopt that position, but the public have a right to know exactly where he and some of his hon. Friends are coming from.

Someone said to me, "The Conservative party is finished if it cannot persuade parts of the financial services industry that it is in their interest to have a Conservative Government in Britain." There is clear evidence of that in some of the attitudes that the Conservative party has struck on QMV, and it is apparent to any operator in the City of London or any British operator elsewhere in the EU or in other parts of Britain.

If a position makes sense and is adopted by consensus in the EU, one country should not be able to block negotiations with other major players in the financial services industry, probably in the United States or the far east. That is tantamount to destroying the Single European Act as it relates to financial services. With the enlargement of the European Union, all sorts of prospects appear on the horizon. Surely one country should not be able to block a sensible proposal.

When EU negotiators enter into talks with other countries on financial services, they should have a clear mandate that has been agreed, after discussion, by QMV. If we adopted the position advanced from the Conservative Front Bench, such negotiations would not take place at all, as there is every likelihood that the proposal would be vetoed by one country that did not stand to gain as much as the others or that would perhaps lose a little. That would undermine the operation of the Single European Act in respect of financial services.

Mr. Mark Francois (Rayleigh): Will the hon. Gentleman give way?

Mr. Henderson: I am happy to give way to the successor to my pair.

Mr. Francois: The ostrich is about to counter-attack. The hon. Gentleman argues that if any matter is subject

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to QMV, negotiations may lead to some agreement, but that if a veto is retained there may never be agreement. Is it not an odd argument that we cannot be involved in negotiations unless QMV operates? Surely we can be involved in negotiations, and if there is a proposal to which we object, we can use our veto, although most of the time we may not choose to do that. His argument is daft.

Mr. Henderson: With all due respect to the hon. Gentleman, I think that the financial services industry in the EU will understand my argument. We will not even get to the starting gate for negotiations with the Americans or the Japanese unless we can firm up a European position. If Latvia or Germany—any country, regardless of size—did not support a particular piece of trade liberalisation, there would be no negotiation whatever. That is the point that I have been trying to establish.

Mr. Hendrick: Will my hon. Friend give way?

Mr. Henderson: I do not want to hog the field.

Mr. Hendrick: I thank my hon. Friend for giving way again. Does he consider, as I do, that the view of the Conservative party is extremely unpatriotic? Under the Conservative Government, markets in this country were liberalised and opened to companies from other countries. We are considering a measure that would push through the liberalisation of financial services across Europe. British banks and financial institutions are vulnerable to those in other countries, but because of the intransigence of one or two member states we cannot push through agreement to ensure that British companies can acquire French or German companies, particularly banks and insurance companies. Is it not unpatriotic of the Opposition to block the mechanisms that would allow that?

Mr. Henderson: I am grateful to my hon. Friend for raising that point. What matters is not what I think, but what the electorate think. The electorate made their judgment in 1997 and in the last general election about which political party was patriotic.

Mr. Graham Brady (Altrincham and Sale, West) rose

Mr. Henderson: I have been more generous than others were towards me when I tried to intervene. I shall see how we go on the next point, then I may be tempted to give way again.

The hon. Member for West Suffolk made a silly and jingoistic point when he said that if the veto was removed in respect of the rules and tasks of the structural and cohesion funds, some of our regions could lose out. That is a misunderstanding of how the structural and cohesion fund industry works. We are not the main recipients, and that will remain the case, quite fairly, because others need more help than we do. Higher aggregate demand in the economies of those other countries encourages our exporters, so it is in our long-term trading interests for countries in the eastern part of the European Union to develop their economies.

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The motivating force for establishing QMV in respect of such funding was the negotiating attitude adopted by the Iberian countries and Greece. They said, "Unless we get our way on structural and cohesion funds, everything else will be disrupted, not only in this negotiation, but in others, whether in Council meetings or in relation to particular treaties." I have been a negotiator in my time, so I know that that card can be played sometimes, but not for ever. Anybody who plays it for too long will be shut out and left without influence.

If one wants to be part of the building of a European ideal and the European economic and political process, one must make a positive contribution. The Iberian countries have understood that, which is why they have been tempted to accept a QMV decision, even though changes are occurring and they will not continue to be the main recipients of such funds. Once enlargement occurs, for the foreseeable future, other countries will receive a substantial part of the funding. The hon. Member for West Suffolk should reconsider the matter before he makes another point about it.

Mr. Spring: Will the hon. Gentleman give way?

Mr. Henderson: I do not see why I should, but I shall be more generous to the hon. Gentleman than he was to me.

Mr. Spring: I apologise if I did not give way to the hon. Gentleman, but I hope that he will agree that I gave way a great deal to many other Labour Members.

The hon. Gentleman may have slightly misunderstood the point that I was trying to make. We are calling for openness in the Government's approach so that the facts can be established. The Library has concluded that, on all available evidence, a significant number of areas in the United Kingdom that currently have objective 1 status would lose out. We should know what the Government's view is, and that is the basis of our proposal. It has nothing to do with jingoism; we merely seek some openness and honesty from the Government for a change.

Mr. Henderson: The precise terms that have been used refer to that aim, but the hon. Gentleman raised this issue: some British areas might lose if the veto is removed. We cannot continue to proceed on that basis. If we want a sensible system to disburse social funding, there must be some fairness and an understanding that fairness must be taken into account. One has to make progress, but one cannot do so if all participants veto every little bit that they do not like. Enlargement would not happen if that attitude prevailed, and anyone who has ever been at such negotiations or acted on behalf of potential recipients in their constituencies knows that that is so. There must be give and take on all such issues.

The hon. Gentleman also suggested that small countries would be discriminated against if QMV were extended, but I do not think that that is correct. If small countries are discriminated against by QMV, discrimination must already be occurring under the Single European Act before extension. He suggested that abolition of the veto means that small countries will be discriminated against. That is not how it works. People in the European Union with common interests put together a proposition, whether

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it is an environmental one from the Scandinavian countries or an industrial one from the French and British. They then try to persuade other countries to accept it. There are big and small countries that have an interest and take part, but others say that the matter does not affect them and that they will flow with the decision that is reached. The idea that this extension discriminates against smaller countries while the 42 extensions to which the Conservative Government agreed do not is silly. The hon. Member for West Suffolk has been coaxed into adopting that stance because of his position.

Mr. William Cash (Stone): The hon. Gentleman draws a distinction between different sorts of treaties without paying heed to their contents. The Single European Act is primarily about increasing trading opportunities and competition. The Maastricht, Amsterdam and Nice treaties are primarily about European government. The Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Rotherham (Mr. MacShane), who has just walked in, again displays his complete ignorance of the treaties' contents by shaking his head. I am glad that the Minister for Europe understands those matters.

Qualified majority voting makes a substantial difference in the context of the Maastricht, Amsterdam and Nice treaties. That is one of the main reasons why the Irish people voted against the Nice treaty, which is about QMV and larger states bulldozing smaller ones.

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