Mr. Dáithí O'Ceallaigh:

I thank the Chairman. I shall first address the question of whether there will be a referendum. It is quite true that the Labour Party leadership is against a referendum. However, there are two things which could bring about a change. The first is political pressure, particularly in the run-up to the election. Rather more importantly, Westminster passed legislation which stated that there would be a referendum were there to be treaty changes in the EU. There is quite a possibility that there will be treaty changes in the EU within the foreseeable future. It is my view, for what it is worth, that there will be a referendum in the UK in the foreseeable future, and that no matter what the wording is, in essence it will be a referendum about whether it stays in the Union or pulls out.

On the question of Switzerland, Norway, Iceland, Turkey and so on, none of the arrangements that those countries have with the European Union would suit the United Kingdom. They all mean that those countries have to accept free movement of people. Free movement of people is at the heart of the British problem - the question of immigration.

It would mean, in effect, that Britain would have to implement all forms of European legislation, without being at the table when that legislation is being negotiated. I do not believe the British would find any of the solutions that Switzerland, Norway, Turkey and Iceland have found acceptable. If there is to be a new agreement with Britain outside the EU, it will have to be something specific to Britain.

Let us presume that the UK has a referendum and it decides to withdraw. I agree that the negotiation will be extremely difficult, as has been said by one or two of the members of the committee. I cannot imagine a member state wishing to give the United Kingdom a better deal outside the Union than it has inside the Union, particularly given the amount of time that the member states have had to spend up to now, not to mind between now and when the negotiation takes place, trying to assuage the British position. The fact is that member states are losing patience with the British. We hear that from all over Europe. They feel that concessions were made to the UK in the Lisbon treaty which it was believed would settle the question of British membership for a considerable period, but that is not what happened. Instead, British membership of the European Union is on the table at practically every meeting that takes place in Brussels or Strasbourg. There is a lack of patience with the British within the Union.

The implications for Britain, should it withdraw, are very deep. The leader of the Scottish National Party has said that she would like to see a majority one way or the other within Scotland, and that it is not sufficient for an overall majority in the United Kingdom to withdraw if there is a majority in Scotland that wishes to remain in the EU. If the Scots take that position, it is quite likely that the Welsh will take the same position. Northern Ireland is even more complex. If the British take a decision to withdraw, there is a serious possibility that the United Kingdom could break up. The unitary state with sovereignty in Westminster could break up in one way or another. The Scottish question has not been settled. The implications for Northern Ireland are enormous, as are the implications for our relationship with Northern Ireland. These are matters we really need to ponder.

What should we do? We should decide whether it is in our interests that the United Kingdom remains in the European Union. If we decide that way, and the Government has made its position very clear, we should examine what we can do to try to ensure that it does remain in the Union. There is one area where the British are not involved and, in my view, are very unlikely to be involved, if ever, and that is within the Eurogroup. As a result of what has happened over the last five to seven years, that Eurogroup is becoming increasingly closer. We might need to think of a relationship, or try to bring about a relationship, in which the United Kingdom remains within the European Union but with some type of special relationship with the Eurogroup. As I said earlier, the special arrangements made with Norway or with Switzerland will not meet that situation.

It is correct, as the Chairman said, that in his Bloomberg speech Mr. Cameron indicated some areas of concern. He also indicated more areas of concern in an article he wrote in The DailyTelegraphabout a year ago. Frankly, I am sure solutions can be found in the seven or eight areas of concern he mentioned, but I believe the problem is much deeper.

As mentioned by Mr. Aiken there is a cultural problem here and a historical sense of British exceptionalism. As stated in our book which will be published shortly, it may be that we have reached the endgame in terms of finding new arrangements which keep the United Kingdom within the European Union without inhibiting the drive within the eurozone to go forward.