Mr. David Lidington:

Absolutely, I understand.

Another factor is that we receive some 26% - the largest share of any member state - of third country foreign direct investment in the European Union. In addition, my view is that we have a greater chance of achieving important bilateral free trade deals within the Union, in the absence of a Doha process, than if we were operating on our own. One cannot, therefore, deny that there are definite advantages to the United Kingdom in being part of the European project. At the same time, I could talk about foreign policy aspects where we are helping to shape and lead issues, including the European response to changes in the Arab world and the common European approach to the Iranian nuclear programme.

Where British citizens bridle is when they contrast the lack of financial self-discipline in the European institutions with what people are having to endure at home. From talking to Irish politicians, it seems that what Ireland has had to go through is worse than what the United Kingdom has endured in terms of austerity. In addition, we can look at particular examples where, to use European language, the principles of subsidiarity and proportionality which are supposed to lie at the heart of the treaties and the European political process are simply not being followed in practice. It is crazy, for instance, that the number of hours British hospital doctors work is determined by rules set in Brussels. We are now seeing, at the edges of the freedom of movement debate, the Commission sometimes seeking to interpret its role as edging towards competence in social security matters, even though they are very much matters for individual member states and reflect the different conditions therein. We would like to see the Commission being less meddlesome. There should not always be a requirement for harmonisation; mutual recognition is sometimes adequate and preferable. That was the principle underlying the Cassis de Dijon judgment in the European Court of Justice many years ago.

Senator Healy Eames made a number of points about having a greater parliamentary role. There are many ideas in this regard that we are keen to discuss and develop further. For example, should COSAC have the power to summon Commissioners rather than merely requesting their presence? Should the yellow card procedure be available for use in cases where a draft proposal breaches proportionality as well as subsidiarity? Should the yellow card, in certain circumstances, be turned into an outright red card, with a given number of national parliaments having the power to block a Commission initiative rather than simply triggering the need for a review? There are many ways in which we could seek to strengthen the role of national parliaments.

The Senator also inquired about the services directive. We welcome Commissioner Barnier's initiative to take three countries to the European Court of Justice for failure to implement properly. We continue to raise this issue at meetings of the European Council, COREPER, etc. One of Britain's frustrations with regard to where the European Union stands relates to the way in which the euro crisis has absorbed so much top-level political energy, attention and time for the past three years or more. Everything else is squeezed into the time left over and we are being obliged to continue to work hard to have the issues of competitiveness, the Single Market, trade and smarter regulation pushed up the agenda and not just reflected in conclusions but also delivered in practice. The Prime Minister, Mr. Cameron, feels frustration in this matter.

On Deputy Durkan's other point, flexibility means getting the relationship between the 17 member states of the eurozone and that between the 27 member states of the European Union right. It also means accepting that differentiated integration is here to stay. I disagree with the Deputy on his assertion that the European Union is about the amalgamation of nations. I simply do not see it in that way at all. It is about a way in which nation states can work more closely together and, in some respects, integrate their policies for mutual advantage. We could engage in a long discussion on the single currency. It is not just in the United Kingdom that there is enormous public opposition to a member state entering the eurozone, there is enormous public opposition even in countries where it is a requirement of the relevant accession treaty. Public opinion is an immovable obstacle. I simply note - without further comment - that it took a civil war for the United States to put in place a proper single currency and fiscal union.

The issue which worries me most about the eurozone is the tension between the economic logic of greater fiscal and economic integration and what is happening politically. If one is to integrate such policies, the question arises as to how these decisions and the people making them can be held democratically accountable. This touches on deeply sensitive issues. We have seen tensions reflected in countries with a triple A rating and programme countries. It is not for a British politician to give lectures on how those matters should be addressed; I will merely state there are hugely sensitive political questions which arise from the creation of a stable currency union.

Deputy Eric Byrne inquired about the impact on our relationship and about engagement with citizens. Regardless of whether the United Kingdom is inside or outside the European Union, the currency difference within the island of Ireland remains. At various times, this has meant a trading advantage for companies on one or other side of the Border. In practice, retailers have adapted their tills and can accept either currency. The balance of competencies review is one way of trying to engage with citizens. Detailed evidence will be assembled and all of this material will be published and made available to particular businesses. Instead, therefore, of having a debate conducted by means of sloganeering and people shouting through megaphones, we will start to develop an informed assessment of where the balance of advantage and disadvantage lies, the areas in which people believe we have major advantages and whether we can change particular directives or treaty articles. That will be a valuable step in increasing public understanding.

The Deputy also inquired about the position on Bulgaria and Romania. The reason there is public concern relates to the precedent set in 2004 when the previous British Government - it was almost alone in this regard - did not introduce transitional controls in respect of what were known as the A8 countries. Its' estimate of the number of people who would come to the United Kingdom proved to be a woeful underestimate. The British public was then shocked by the number came to the United Kingdom from Poland, Lithuania and elsewhere. This was because that number was very much at odds with what the then Government had led it to expect. In the past ten years there has been a very large increase in EU and non-EU migration into the United Kingdom. This has had an impact, for example, on schools, many of which have been obliged to deal with large numbers of children whose first language is not English. This is a real political issue.

It is very interesting that polling of UKIP voters shows that the European Union is not the prime issue in determining their votes. It is, in part, a protest vote because for the past 40 years the Liberal Democrats have been the protest vehicle when the Conservative Party has been in office. On this occasion, for obvious reasons, the Liberal Democrats cannot play that role; therefore, the protest vehicle had to come from somewhere else. The UKIP vote reflects public anxiety about economic difficulties, the consequences of austerity, uncertainty about career prospects and living standards and concerns about immigration. These concerns about immigration came through very strongly on the doorsteps.