Mr. David Lidington:

I will try to deal with those points in sequence. As Deputy Donohoe alluded to, the Prime Minister's speech stated that the UK is stronger through being part of a strong European Union and he went on to say that our friends in Washington and the Commonwealth tell us that this is the case. The Deputy is right in saying that there is a tension - I would say it is a tension rather than a contradictory matter or a conflict - between, on the one hand, the dynamic within the currency union to move towards closer integration over a timescale in a way that is for eurozone members to determine and, on the other, the need to uphold the integrity of institutional and legal arrangements for a bigger group of member states. The Prime Minister went into the December 2011 European Council hoping that agreement could be reached by everybody on something that would then led to a surgical treaty change on the lines that Chancellor Merkel and others were seeking and what came out of that was something that was second best. The Prime Minister's position was that while we could agree to what our eurozone friends wanted, we would need at that time to have something written into the treaties which protected the integrity of the Single Market and the Single Market in financial services in particular. Quite a number of member states around the table were willing to accept that or at least to discuss it further, others were not and that is why the possibility of a deal then fell apart.

What we have seen with the single supervisory mechanism is a more constructive way of approaching this relationship between the 17 and 27 member states. There was a good deal of hard, detailed and complicated negotiation but what we came out with was a compromise, which included things like an explicit commitment against discrimination on the ground of currency, which meant that we were able to say: "Yes, this is something we could live with, we think it is fair to 'ins' and 'outs' alike and we can all move forward on that." I think that progress on a banking union and closer eurozone integration will throw a number of other specific examples where that type of detailed complicated negotiation to get the 17-27 relationship right will be necessary. We have seen some bumps on the road. We have seen some European Central Bank decisions on locations policy, on clearing houses, for example, which we contend is a flagrant breach of Single Market rules and which we are challenging in the European Court of Justice. This is a discussion that will continue and it is important to us not just on the grounds of principle, but because of the questions thrown up by closer integration within a currency union on issues such as banking regulation that touch upon financial services regulation and the Single Market in financial services, which, as the committee knows, is a key national interest for the UK just as much as agriculture is for France.

I would argue, although it is a matter for a separate debate, that having a global financial services centre in the UK is of immense value to Europe as a whole. Due to the proximity of currency union issues to a Single Market in financial services, getting that boundary line right, getting 17-27 relationship right, will require a great deal of political attention and hard work. I draw attention to what other countries are doing, for example, Germany's efforts to ensure that Sparkasse was kept outside the single supervisory mechanism.

If one looks at the way in which some of the Basel requirements in CRD IV were watered down, then I would argue that there are other countries around the table who are pressing their national interests and no one should be surprised if we are doing the same within the European context.

I will give a disappointing answer on what is our shopping list because we are not publishing that, partly because the objective treaty change in the referendum is, as is acknowledged in the question, a Conservative Party commitment, whereas the broader commitment to European reform and to the principles of competitiveness, flexibility and democratic accountability is a coalition government platform. It will depend in part upon how Europe develops and, in particular, what is happening within the eurozone over the next couple of years. I could paint a very optimistic scenario at one end of the spectrum which is that we see the completion of the Single Market in digital, energy and further developments in services. In a scenario where we see the free trade deal is done; a reality made of the efforts to cut European regulatory costs on businesses, in particular SMEs; the 17:27 relationship being sorted out in a way that all sides accept as fair; and budgets being controlled and financial discipline being applied, then to a British audience that will start to look quite attractive. On the other hand, one could paint a black scenario whereby all these things go awry and on top of that one has the eurozone after 2014 exercising its numerical strength to construct qualified majorities and acting as a caucus on Single Market issues and excluding everybody else’s interests. I do not see evidence of that happening. I do not see my Greek and Dutch colleagues coming into the room and voting together automatically because they are both members of the eurozone. That, if one likes, is the nightmare at the other end of the spectrum. Where we end up on the spectrum and how successful we are in achieving reforms that make Europe more democratic, flexible, competitive and wealth-creating will colour the British debate to a considerable extent.

In response to Deputy Kyne’s question on whether the referendum will lead to economic uncertainty, that debate is out there among British public opinion anyway but not just in the United Kingdom. It is worth reminding ourselves that a third of French voters supported Mrs. Le Pen or Mr. Mélenchon in the presidential election last year. Mr. Grillo has held the balance of power in the Italian Parliament. Polls shows Syriza would be the leading party if there were a new Greek election tomorrow. The True Finns are on approximately 20%. The Sweden Democrats are on 10% at the moment. If one looks at Golden Dawn or Jobbick one sees some really dark forces emerging that we had hoped had been banished. Whether they are democratic populists or neo-fascists, they are building support on the basis of what are genuine public grievances not invented ones. The challenge for the mainstream democratic parties throughout Europe is how we ensure we are seen to address what are real and legitimate worries of the electorate.

On the question of whether MEPs are visible, the straight answer is “No”. People like Malcolm Harbour and Sharon Bowles are incredibly influential and most of our MEPs of all parties from the UK are hard-working in what they do but they have a very low profile in British politics and they find that incredibly frustrating. I do not have a magic wand to provide an answer for that.

On the role immigration would play in a referendum campaign, that would be determined in large part by both where the UK is economically – because if one sees economic growth it makes people more optimistic anyway – but also how successful the government has been in bringing down net migration. We brought it down by a third since the general election but we need to go further. Having a situation in which net migration was running into hundreds of thousands every year is simply not politically sustainable.

In response to Ms Prendergast’s question on UKIP, it is not just in the UK, we are seeing a similar populist political phenomenon at work in many other countries. I very much wish her well on the digital signatures initiative. It is crazy that last year roughly 40% of EU citizens bought something online but only about one in ten transactions crossed a national frontier because we do not have a common framework for digital signatures, digital copyright, payments systems or consumer protection.