12/07/2012 10:00 BST | Updated 12/07/2012 10:37 BST

William Hague: EU Powers Review 'Not About Referendum'

The government is to conduct a review of how European Union powers impact the UK, William Hague said today, but he denied it was laying the groundwork for a referendum.

In a statement to the Commons on Thursday afternoon, the foreign secretary said Whitehall departments would conduct investigations into the "balance of competences" after ministers pledged to look at how powers could be clawed back from Brussels to Britain.

He told MPs he hoped the inquiry would lead to "less cost, less bureaucracy and less meddling" in British life.

However Labour questioned the timing of the review, which is due to report back in 2014.

Shadow Europe minister Wayne David noted 2014 was "suspiciously close to the next election" and suggested it was designed to set the Tories up to include a pledge to hold a referendum in its next manifesto.

But Hague said the Whitehall review was a separate issue from the debate on whether there should be a referendum on membership of the EU.

"This work will help inform decisions on Britain's future path in Europe. It is not a consultation about disengaging or withdrawing from the EU," he said.

"We remain committed to our membership of the EU and to a strong and stable Europe," he said.

"This is not about a referendum," he added. However he acknowledged that the exercise, having been conducted, would be "immensely useful" if there were to be a referendum.

SEE ALSO: Nigel Farage: You Can Smell the Fear in Barroso's Nostrils

The plan will be seen by some attempt to appease the eurosceptic wing of the Conservative Party that wants powers brought back to Westminster from Brussels.

Backbencher Bill Cash told Hague that it was necessary for a referendum on Britain's membership "as soon as it can possibly take place".

And Philip Hollobone said government should ask "whether or not the UK would be better off in, or better of out, of the whole thing all together".

Writing for The Huffington Post on Thursday, Europe minister David Lidington said being part of the EU was central to how the UK creates jobs, expands trade and protects it's interests around the world.

"It allows us to be in a single market of some 500 million people, with a combined GDP of £11trillion (Euros), in which we can trade, travel and work freely," he says.

Last year David Cameron suffered a embarrassing rebellion when 81 Tory MPs voted in favour of holding a public vote on Britain's membership of the EU.

SEE ALSO: Ben Bradshaw: When Euro-Phobes Lash Out It’s Because A Nerve Has Been Touched

More recently the prime minister attempted to placate the rebels by indicating he would be prepared to hold a referendum in future, although ruled out holding one immediately.

Hague's statement to MPs came after Jose Manuel Barroso, the president of the European Commission warned that Britain would become like "Norway or Switzerland" if it withdrew from the EU.

In an interview with the New Statesman magazine published on Thursday, he said the UK's power was reliant on its membership of the union.

"I find it a litle bit ironic that some people are suggesting for Britain a role comparable to that of say Norway or Switzerland," he said.

"Norway or Switzerland are two marvellous countries, I very much admire, the most advanced countries in the world in fact with great qualities of life. But I think Britain is expecting a bigger role in the world than small countries."

Barroso's remarks were dismissed as "delusional vapouring" by the leader of Ukip, Nigel Farage.

Writing on The Huffington Post on Thursday afternoon he said: "If Britain wants to hold its head up high, if we want to trade with the world and prosper, we can do so better without the drear suffocation provided by the Brussels establishment."

SEE ALSO: David Lidington: The EU Can Seem Remote From Ordinary People

But former Labour minister Ben Bradshaw said it would be "a tragedy and a gross betrayal of our national interest if at this very time of crisis and uncertainty for Europe, we were to relegate ourselves to the margins".

"Usually when the Euro-phobes lash out like this, it’s because a nerve has been touched where they feel vulnerable. That would certainly appear to be the case here," he said in a blog post for The Huffington Post.