European Community (Developments)

HC Deb 06 December 1990 vol 182 cc475-553

[Relevant documents: Minutes of Evidence taken by the Foreign Affairs Committee on 5th December ( House of Commons Paper No. 77-i); European Community Documents Nos. 5749/90 and 9258/90 on implementation of the Single Market.]

Mr. Speaker

I must now make a rather sad statement. In view of the number of hon. Members who wish to participate in the next debate, I shall have to put a limit of 10 minutes on speeches between 7 and 9 o'clock.

I have selected the amendment in the name of the Leader of the Opposition.

4.48 pm

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd)

I beg to move, That this House takes note of—

1. (a) developments in the European Community, in particular in view of the forthcoming European Council in Rome on 14th–15th December, with reference also to the White Paper on Developments in the European Community January-June 1990 (Cm. 1234); and
2. (b) European Community Document No. 9431/90, the European Commission's opinion on the calling of the Inter-Governmental Conference on Political Union which was issued in accordance with Article 236 of the Treaty.

The main purpose of the debate is to look forward to the summit, the meeting of the European Council, at the end of next week and to the start of the two intergovernmental conferences that will begin on Saturday 15 December, one of them on economic and monetary union, in which my right hon. Friend the Chancellor of the Exchequer will take the lead, and the other on institutional change in the Community, in which I will take the lead.

I do not intend to speak about economic and monetary union today, because I understand that there will be a debate on it before long. I do not believe that there will be detailed discussion of the subject at the summit at the end of next week. There has been no change in the Government's policy on the matter. I should like a little later to say something about the other intergovernmental conference on institutional change, sometimes called political union.

I will run quickly through what I think will be the main items on the agenda of the European Council. The Prime Minister and I will be carrying to that Council the central message from this Government and country that we want and intend to play a full, central and positive part in all debates on the future of the Community to which we belong. We want to preserve and promote the national interest and to build an open, confident, outward-looking European Community with influence in the world.

Mr. Christopher Gill (Ludlow)

rose——

Mr. Hurd

I will make a little progress with my speech before giving way.

I wish to add a word to our continental partners about recent events in this country. My right hon. Friend the Member for Finchley (Mrs. Thatcher) represented this country at 31 European summits, and not many among those present at Rome next week will be able to remember any other Prime Minister speaking for Britain. My right hon. Friend had her own manner of dealing with Community issues—[Interruption.]—which was often controversial, often effective and always distinctive. I know for certain that many who crossed swords with her on those occasions are feeling sad now that she is no longer there.

It would be a mistake for anyone to suppose that, because the leader of the Government has changed, the policy will be reversed. For the last year, my right hon. Friend the Member for Finchley, my right hon. Friend the present Prime Minister and I have, with other colleagues, worked out and elaborated the policies for Britain in the Community which we believe to be in the national interest as well as in the interests of Europe.

Of course, the style will change—because the choice of words will change; those are personal things—but we shall enter the IGCs, the inter-governmental conferences, intending to make a success of both of them, equipped with our ideas for bringing about that success, and they will still be the main means by which, in the next year or so, the Community will evolve.

Dame Elaine Kellett-Bowman (Lancaster)

Does my right hon. Friend agree that, now that my right hon. Friend the Member for Finchley (Mrs. Thatcher) has gone, that may already be happening—that other Foreign Ministers and Prime Ministers know that they will have to come out and insist on more detail, when previously they could rely on her to do it?

Mr. Hurd

That may well be true. The present Prime Minister will be no less energetic in advancing Britain's ideas, as he was as Chancellor of the Exchequer. His views will not change because he has been promoted, and my views will not change because I have not been promoted.

I would hate there to be any misunderstanding on that point. If our partners go to Rome expecting consistency and continuity in British policy, they will not be disappointed—continuity in the line we take and consistency in our ultimate objectives. The interests of this nation and of the House are paramount, and our policy will be based on a clear appreciation of those interests.

I come to what I know will be the main items before the summit. I shall not say much about the Gulf, except that it is certain that the Community, the summit, will need to have a full discussion on the Gulf. The House will have an opportunity next week to go into the substance of the matter, and hon. Members had an exchange today about the hostages.

It is clear from my discussions at the Foreign Affairs Council on Monday that the whole Community, all 12, is united behind the Security Council resolutions, including the last one for which Britain and France voted in New York last week, No. 678, authorising the use of force. I am sure that the European summit will want to make that point clear in Rome at the end of next week.

Another item that will be prominent is the position of the Soviet Union and the extent to which the Community should help that country. We see President Gorbachev and his colleagues striving now—it is not an exaggeration—to save the Soviet Union. In part, they are still using the traditional apparatus of command, and in part they are bringing forward reforms, both political and economic.

I do not think we should pretend that our sympathy and help will be decisive. We cannot solve the problems of the republics and their relationship with Moscow. We cannot ourselves rescue from disintegration the command economy to which the Soviet Union was accustomed. We cannot ourselves replace that command economy with a lively free market. Those are all things that they must work out for themselves.

If we can give useful help—I underline the word "useful"—it is in our interest to do so, because it is not in our interest that the Soviet Union should dissolve into rival warring republics or lapse back into some form of dangerous tyranny. But untargeted help would not have a great impact. Indeed, it might even help to prop up the crumbling structures.

Mr. Bernie Grant (Tottenham)

rose——

Mr. Hurd

I will give way to the hon. Gentleman shortly.

What we must try to do—in what Britain and the Community does—is help the Russians to mobilise their own huge resources. That means that the Community should agree practical measures of technical assistance to help provide western know-how in key sectors of the economy. One obvious example is energy, about which the Dutch Prime Minister, Mr. Lubbers, put forward an interesting plan which I hope the summit will help to carry forward.

We want to help create an active private sector in the Soviet Union, and in the long run that country will need private sector investment from the west. But that requires a degree of certainty and confidence—a framework within which investors can work—and that is why we are pressing the Commission to bring forward ideas in that sphere.

The most pressing need is on the food side. The best available evidence we have suggests that, after a record grain harvest, there exists sufficient food for all. It exists and it is there, but problems of hoarding and distribution prevent it from getting to the places where there are shortages. The full picture is far from clear. Anecdotal evidence contradicts itself to some extent, and I hope that the summit will receive—we have asked for it—a clear and expert assessment of identifiable needs and of ways in which the Community could respond usefully.

Mr. Grant

It is rumoured that the Soviet Union has tremendous gold reserves and billions of dollars in western banks. Is it reasonable for the European Community to give food and monetary aid to the Soviet Union when it already has substantial sums of money and, as the right hon. Gentleman told us, food, when there are starving people in third world countries who could use that money and aid?

Mr. Hurd

I think the hon. Gentleman will agree that, when people are starving, it is right that humanitarian aid should be given. That applies in the horn of Africa and in the Soviet Union—provided that the food will reach the people in need, and that is a big proviso.

As for the bigger questions of financial help—balance of payments help and so on—I sympathise with the hon. Gentleman, and I was coming to that point. I do not think it is sensible to rush into giving that kind of help, at least not without a proper assessment, not just by the European Commission but by the International Monetary Fund—something with which African countries are familiar. One must respect the position of the Soviet Union, its history and its sensitivities, but I believe that there is a clear distinction between what we can do in terms of food and technical assistance—the case for technical assistance is overwhelming—and the longer-term, larger-scale balance of payments help, which must be carefully considered.

Mr. David Tredinnick (Bosworth)

Given the success of the Red Cross in distributing German supplies in the Soviet Union, might there be a case for having an arrangement to encourage British transportation to distribute Russian food?

Mr. Hurd

There might be. The question of the distribution of food is crucial, and when I announced the British know-how fund for the Soviet Union a few weeks ago, I listed food distribution as an area in which Britain could be of particular help, and projects of that type can be among the first calls on the know-how fund.

Mr. Max Madden (Bradford, West)

Will the right hon. Gentleman take this opportunity, following the welcome resignation of General Ershad as President of Bangladesh, to make clear to the Bangladesh military that, if it was unwise enough to stage a coup d'etat at this time in an effort to stop free and fair elections being held in Bangladesh——

Mr. Deputy Speaker (Mr. Harold Walker)

Order.

Mr. Madden

—to elect a president and parliament that the British Government and the international community——

Mr. Deputy Speaker

Order. The hon. Gentleman should not persist in ignoring the Chair. I fail to see what relevance his intervention has to the matter before us.

Mr. Hurd

I cannot reward the hon. Member for Bradford, West (Mr. Madden) for that. I would rather prepare and choose my words carefully on the subject of Bangledesh before discussing it.

I shall move on to a related issue that will certainly be on the summit's agenda, eastern Europe as a whole——

Mr. Robin Maxwell-Hyslop (Tiverton)

rose——

Mr. Hurd

I shall proceed for a little longer, and then I shall give way to my hon. Friend if he wishes to intervene.

The countries of eastern Europe rely to a substantial extent on the Community and the western world for help in bringing forward their reforms. Britain, particularly my right hon. Friend the Member for Finchley, took the lead in encouraging reform in eastern Europe and stimulating international support for it. We recognise that the new democracies need trade as much as aid. That is why we have proposed, and the Community has endorsed, association agreements between the Community and Hungary, Poland and Czechoslovakia. They will provide a framework for the sort of wide-ranging co-operation we want, with the eventual goals of free trade arrangements and a clear link with the Community.

The newly democratic countries face a serious economic problem as a result of the Gulf crisis and the rise in oil price. That subject is being, and will need to be, discussed. Without going into it in detail, I would simply say that we are clear that those new, pressing needs of Poland, Hungary, Czechoslovakia and other such countries cannot be tackled simply by using the Community's resources. It will be necessary to bring in the resources of the entire Group of 24, including the United States, Canada and Japan. I think we should also bring in the resources of some of the Gulf countries which benefited substantially from the same process.

Mr. Maxwell-Hyslop

It is important for my right hon. Friend to clarify one aspect of what he said about Government policy. Sustaining President Gorbachev in keeping the USSR cohesive is one thing, but will my right hon. Friend confirm that that does not prejudice the position of the three Baltic republics, Latvia, Lithuania and Estonia, the overrunning of which by Soviet Russia the United Kingdom has never recognised as an extension of Soviet territory to include those republics? We must not betray them merely because there are other difficulties within the Soviet Union.

Mr. Hurd

My hon. Friend is entirely right——

Mr. Dennis Skinner (Bolsover)

I suppose all that is in order.

Mr. Hurd

Of course it is in order, because I have been talking about the Soviet Union. It is not for me to say, but I should have thought that it was naturally in order.

My hon. Friend the Member for Tiverton (Mr. Maxwell-Hislop) is right—we have constantly made it clear to the Soviet Government that we regard the three Baltic republics as being in a different position, legally and historically, from the other republics of the Soviet Union.

The subject of the negotiations between the Community and the European Free Trade Association, and the enlargement of the Community may come up at the summit and is, anyway, of interest to the House. We believe that the Community should be open to new membership for those who satisfy the obligations of membership and to increased and more liberal trade with third world countries. At present, the EFTA countries are negotiating with us to extend the Community's internal market to encompass them, and we strongly support those negotiations because it is important that they should succeed. That may or may not lead eventually to full membership of the Community by the EFTA countries.

Dr. Norman A. Godman (Greenock and Port Glasgow)

rose——

Mr. Hurd

I should like to get on.

We have received an application from one of the EFTA countries, Austria. As the decade goes on, there may well be other applications for full membership from some of the newly democratic countries of central and eastern Europe that I mentioned. If so, the association agreements to which I referred, which we strongly support, will be seen as a bridge to full membership. Negotiations on when and how full membership of those countries can be achieved will be necessary. We must not say to countries that apply, "You may be European and democratic and have a free market, but we think that 12 is a good number, so goodbye."

Mr. Alfred Morris (Manchester, Wythenshawe)

The right hon. Gentleman appears to be reviewing priorities for next week's talks. In that regard, what can he tell the House today about the Community's posture on the Uruguay round negotiations? Is he aware of the deep concern about that issue in New Zealand, Australia and many of the poorest developing Commonwealth countries?

Mr. Hurd

Indeed: that was to be my next topic, which shows the wisdom of trying to make progress in a speech before giving way. It may be useful to discuss that subject at the European summit, although that depends slightly on what happens in the negotiations in Brussels in the next few days. Today, the Ministers are continuing the meeting in Brussels, but the position changes almost every hour.

Overnight, the Uruguayan chairman proposed that the five key subjects in the negotiations—agriculture, services, textiles, intellectual property and the general agreement on tariffs and trade rules—should be taken together. When I last touched base with Brussels, it was not clear whether that proposal would go forward or talks had broken down or been suspended. The crisis was triggered by the American rejection of the Uruguayan chairman's approach, because the Americans were insisting on separate Community concessions on agriculture first. Today, the Community has indicated that it is willing to be flexible on that issue, but the Americans also need to make concessions, particularly on services.

The aim of GATT is that everyone should gain, which will require everyone making concessions in order to achieve the desired overall gain. There is a sense of crisis—which may have been necessary to jolt people out of their entrenched positions. I agree with the right hon. Member for Manchester, Wythenshawe (Mr. Morris) that there now has to be genuine negotiation.

Another item on the summit's agenda will be the Commission's report on progress towards a single market. I hope that the House will not lose sight of what has been, and continues to be for this country, one of the main objectives of the Community over recent years—we are in sight of a single market of 340 million people, a unique achievement in history. It will be dynamic because, as the Scrutiny Committee well knows, beneath the simplicity of abolishing the trade barriers lies a complex programme of legislation.

The Common Market programme is about two thirds complete, and the summit will review progress on the basis of a report from President Delors. Britain will have to set the priorities for the next phase and ensure that enforcement of measures already agreed is adequate. The key sectors where we want to see quick progress include public procurement, financial services and liberalisation of transport.

The intergovernmental conference on institutional reform is called political union, although that is a somewhat misleading phrase. During recent weeks, our concern has been to ensure that there will be no attempt at the second summit in Rome at the end of next week to pre-empt that conference by laying down what it should or should not decide before it has even met. We have been anxious to avoid a repetition of what occurred at the first Rome summit in October in relation to economic and monetary union. I was reasonably encouraged by the discussions that we had in the Foreign Affairs Council—[Interruption.] May I hold the attention of the right hon. Member for Manchester, Gorton (Mr. Kaufman) for a few minutes longer?

Mr. Gerald Kaufman (Manchester, Gorton)

Does the right hon. Gentleman accept that, when he said that he did not want a repeat of the events of October, I was merely reflecting the fact that I agree with him? Having lost the then Prime Minister, we certainly do not want to lose the present one.

Mr. Hurd

The right hon. Gentleman was not reflecting—he was chatting, which put me off my stride. I am grateful that he has got his not particularly pertinent point off his chest.

I was reasonably encouraged by the discussion on the subject at the Foreign Affairs Council on Monday. It seemed that a genuine effort was being made for the summit to consider the matter on the basis of the different opinions so far expressed, rather than try to create, on Friday and Saturday morning, a mandate for a conference that starts on Saturday afternoon. I hope that there will be no last-minute surprises on that front. We will go into the intergovernmental conference with our ideas and proposals. Others will put forward their ideas, which we do not find convincing.

Mr. Spencer Batiste (Elmet)

Does my right hon. Friend agree that one of the basic problems is that there is no clear definition of the principle of subsidiarity or of how it can be implemented practically as an ever wider range of measures comes from the Commission? So will one of the ideas that my right hon. Friend takes forward be a clear definition and method of enforcement of this principle?

Mr. Hurd

I agree with my hon. Friend, and I shall come to his point shortly.

We will put forward our ideas and others will put forward ideas that we do not find convincing—that is the nature of discussion in the Community and in this House. We are not persuaded by the case that some people make for an extension of the competence of the Commission, or of the case for the wholesale extension of qualified majority voting, or of the case for adding again to the legislative powers of the European Parliament. To make any of these changes, a convincing case would be necessary, but it has not been made.

We do not see the Community to which we belong as a river or glacier that moves inexorably in a preordained direction. That is not how it works or how it should work. The Community evolves, but that evolution takes place by working out what its needs are, not by some inevitable law of gravity or some movement in the stars. That means that we should not say "never" to any change in these matters. What we can say and what we have been saying under the last Prime Minister and under the present one is that we are not persuaded of the case for such changes.

Because we are not persuaded of the case for a change in the three respects that I have mentioned, that does not mean that our stance in this conference will be negative.

Mr. Gill

I invite my right hon. Friend to comment on subsidiarity, which no doubt will form part of the conference agenda. Will he bear in mind when discussing it how imperfectly the principle of subsidiarity is applied even in our country? Many Members of this House would like to think that the powers ceded to the higher authority will be agreed by the lower tier rather than the other way round. We do not want crumbs from the Commission's table.

Mr. Hurd

Of course, my hon. Friend's second point is right. A large part of discussion within the Community is about whether it is sensible for nation states which have their powers to yield competence in certain spheres. It should not be a question of the Community sitting on high and doling out powers to nation states; it is the other way around.

I move now from the areas of which we must say that we are not persuaded of the need for change to the areas about which we have specific and positive ideas. We want to make the Community more efficient and effective. Part of that means making sure that it operates only where it needs to. We want to improve enforcement and compliance—carrying out in practice what is talked about and agreed in principle. We want to strengthen the voice of Europe on the world stage, and we want to reinforce the democratic accountability of the Community.

Mr. William Cash (Stafford)

My right hon. Friend will be interested to know that I have with me the draft statutes for the European central bank, supplied to me this afternoon by the Bank of England. They state: The statute—as the Treaty itself—will have the status of primary Community law and therefore any amendment to the statute would normally be subjected to the procedure applied to EEC Treaty changes. Given the importance of democracy here and in Europe, would I be right in thinking that we will not accept that point?

Mr. Hurd

That is a matter for the Chancellor and for the debate that we shall have on economic and monetary union. As we do not accept the principle of the proposal illustrated in those statutes, I think that my right hon. Friend the Chancellor will feel fairly robustly about what my hon. Friend has just said.

We want, as I have said, to make the Community more effective, operating only where it needs to but operating fairly and well where it does. We want to improve compliance with the rulings of the European Court. My hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) nodded when I made that point earlier. She will probably know that, at the end of last year, there were 80 outstanding judgments by the European Court against European member states, and that only one was against this country. We have an excellent record of compliance. We should like the conference to consider sanctions in cases of prolonged failure to comply. We want the Council to look at implementation of decisions by the Council through the passage of national legislation.

The Government are sometimes criticised for their record in social matters in the Community, but we are the only country to have implemented all Community directives on social matters. We are the only country to have carried through completely what we said we would do. That is a distinction that we must draw continually in the Community.

I am afraid that the Opposition Front Bench spokesmen are increasingly seduced by declarations such as the social charter, and so are not watching what is happening and the extent to which other countries carry through what they say they are in favour of.

Two of my hon. Friends have asked me to comment on subsidiarity. We want the conference to determine whether this principle can be brought into the treaties in a useful way. That could be done if we can properly define subsidiarity. It would help the Community to decide before setting out what it should do whether it is necessary for it to do anything, or whether the subject concerned is best left to member states.

Mr. Patrick Nicholls (Teignbridge)

Is my right hon. Friend aware that we recently held the conference of the Parliaments of the European Community? I quote from the preamble to its final declaration: While seeking to remodel the Community into a European Union on a federal basis". The conference's idea of subsidiarity was that it comes from the top down; it was content to delegate powers downwards to sovereign states. We want sovereign states which might, perhaps, be prepared to delegate powers to European institutions—unlike the declaration that I have cited. With the best will in the world, we are not talking the same language as our European partners.

Mr. Hurd

In the IGC, we will discuss treaty changes that can be achieved only by unanimity. It will not be like a parliamentary debate, ending in a majority vote. I am setting out the sort of improvements in Community institutions that we think are sensible. We shall argue our case, others will argue theirs, and we shall see at the end how we get on. There is no question of the British Government agreeing to proposals that reflect the declaration that my hon. Friend has just quoted.

Mr. Ron Leighton (Newham, North-East)

rose——

Mr. Hurd

I shall give way for the last time.

Mr. Leighton

Will the principle of subsidiarity be spelt out clearly in the treaties, and will it be justiciable before the court?

Mr. Hurd

Those are the two very issues that the conference will have to tackle. We shall have to look for a way of spelling out subsidiarity in the treaty; then we need to find a way of enforcing it. It will not necessarily have to be enforced by the European Court of Justice: there are other ways of enforcing it. I am glad now that I gave way to the hon. Gentleman because he put his finger on two practical questions to which we shall have to find positive answers. If we cannot find them, we shall have had a useful debate but we will not have found a practical way of including the principle in the treaties.

We should like national Parliaments to work singly and together to improve their influence over the Council of Ministers. We would like the European Parliament to direct fresh energy not at increasing its legislative powers, but at strengthening financial accountability by reinforcing the role of the Budgetary Control Committee and the Court of Auditors. We hope that national Parliaments will be more effective in controlling the Council of Ministers, whereas the European Parliament would be more effective at doing what the House cannot do, which is monitoring and strengthening the financial accountability of the Commission.

Mr. Nigel Spearing (Newham, South)

Will the right hon. Gentleman give way?

Mr. Hurd

No. I know the hon. Gentleman's interest in this matter, and I have tried to meet what I know is his point.

Our third objective in the intergovernmental conference will be to strengthen the voice of the Community in the world. As the House knows, the Community already co-ordinates foreign policy by consensus. We think that that should continue and we have made modest but specific proposals for improving that co-ordination. We think that the conference should define more clearly security questions, which are also dealt with by consensus. The Twelve have edged forward to discussing certain security questions, despite the reserve of the Irish, and those discussions can be defined and strengthened.

I shall give two examples of security questions which we think that the Twelve can reasonably consider. They can consider all that is carried forward from the conference on security and co-operation in Europe, the confidence building schemes, the conciliation of disputes and the conflict prevention centre. Those matters can rightly be co-ordinated in the Twelve, although they also need to be discussed with the United States and Canada. Another example is the export of arms and weapons technology, in which the Opposition are traditionally interested. Such subjects come under the heading of security questions which we think the Twelve can usefully consider.

Defence is a distinct matter. The collective guarantees under which we live in safety, the integrated command and the deployment of forces and weapons are regarded as a separate matter under the heading of defence. I see a clear need to build up the European pillar of the North Atlantic Alliance, and I think that that will be one of the main debates and needs of 1991. However, I do not think that the Twelve are the right instrument for that, although the Italians have ideas in this field. The Twelve will not be intimately concerned with defence as I have defined it.

The Western European Union is a more fitting instrument for building up the European pillar of the alliance. In the coming months, we hope to develop our ideas on that, not just at the intergovernmental conference but in the WEU and at the NATO review, which is a rejuvenating, a changing, of NATO to meet new circumstances.

I have tried to cover the main ideas which I foresee on the summit agenda. I have tried to give the House some fresh information about the line that we shall take in the intergovernmental conference on political union and the institution of the Community.

Mr. Skinner

Cotton wool.

Mr. Hurd

The Community and the House evolve by discussion and argument, and even the hon. Member for Bolsover (Mr. Skinner) is anxious to take part in such debate. His participation in this debate has been almost continuous.

Mr. Skinner

I have listened to the Secretary of State for the last half hour. His background is that of a diplomat. He is supposed to be telling us about what will happen and about the Government's position at this international government conference. He has wrapped the whole thing in cotton wool and he does not have the guts to tell the House why. It is because some of his hon. Friends are against the Common Market and some, such as the hon. Member for Harrow, East (Mr. Dykes), are Euro-fanatics. By trying to placate both factions, the right hon. Gentleman tells us exactly nothing. That is his game; but he does not con me.

Mr. Hurd

The hon. Gentleman has been talking all the time, and I can therefore accuse him of not listening. Plainly, he has not listened to a word of my clear and distinctive speech about Government policy. I am delighted that I have been able to expose the hon. Gentleman in this way.

The policies which I have outlined and those which my right hon. Friend the Chancellor will outline in the debate on economic and monetary union command overwhelming support in the House. Those positive ideas will preserve and advance the national interest by making a success of our membership of the Community.

5.24 pm

Mr. Gerald Kaufman (Manchester, Gorton)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: condemns Her Majesty's Government for its neglect of British interests in the European Community and its failure to produce a coherent policy towards the Inter-Governmental Conferences due to be held next week.". Anyone listening to the Secretary of State's placid not to say soporifc account of events in the Community would never think that that issue has caused such upheavals in the Government. It has cost them the resignation of six Cabinet Ministers in the past five years, including the deputy Prime Minister last month and the Prime Minister a couple of weeks ago. I am not sure to what extent the right hon. Member for Finchley (Mrs. Thatcher) would welcome the somewhat morbid obituary notice that the right hon. Gentleman has delivered on her. Regardless of the quaint remarks with which the right hon. Gentleman finished his speech, if the Government go on in the same way as before, more resignations may well be expected before they are done.

We really must hand it to the Foreign Secretary. Four weeks ago he spoke about the European Community in the debate on the Queen's Speech and said: One thing that has emerged clearly from our exchanges yesterday was that there was a great deal more light and sweetness on this side of the House than there was on the other side. Our view has been expressed with admirable clarity and coherence."—[Official Report, 8 November 1990; Vol. 180, c. 152.] Within five days of the Foreign Secretary saying that, the right hon. and learned Member for Surrey, East (Sir G. Howe) tore the veil aside and showed that the Cabinet was a snakepit of dissension and backbiting on the issue of Europe. No one would have thought from the Foreign Secretary's speech today that in this area of policy the Government have been isolated time and again on the wrong side of the debate within the Community. The new Prime Minister has once again declared his opposition to the social charter.

Mr. Tony Favell (Stockport)

rose——

Mr. Kaufman

The hon. Member for Stockport (Mr. Favell) should not intervene. If he had sensibly kept his mouth shut, he would now be with the Prime Minister and Mr. Shamir instead of on the tundra of the Back Benches.

Mr. Favell

Does the right hon. Gentleman have the support of the hon. Member for Bolsover (Mr. Skinner) in his approach to Europe?

Mr. Kaufman

I always have the idiosyncratic support of my hon. Friend on every matter to which I refer. I know the size of the majority of the hon. Member for Stockport. After the general election he will not be able to give support to anybody from Stockport.

The Government have been on the wrong side of every European Community debate. They have been on the wrong side of the debate on the social charter, on employment practices, and on carbon dioxide emissions, on which the United Kingdom had to be given a special dispensation for a five-year delay. That was an issue on which the Government blew loud trumpets that turned out to be raspberries.

The style has now changed dramatically and the change was signalled by the new Prime Minister in one of a never-ending series of interviews that he gave during the Tory leadership campaign. The text and transcripts of those interviews provide a rich goldmine of quotational nuggets that will be used to our satisfaction and benefit for some time. In an interview with Brian Walden the new Prime Minister spoke approvingly of compromise within the Community, or what he called fudging things. Fudge is certainly on the menu today.

Under the previous Prime Minister, we and Europe knew exactly where we were. Ministers, led by her, went into meetings and conferences simply saying no to whatever was proposed. Now, there has been a dramatic reversal. From a policy of no, the Government have moved to a policy of no policy. We got the first remarkable example yesterday, when the Secretary of State for the Environment, having fought his leadership campaign on a manifesto of changing the poll tax, came to the House with the dramatic news that he had no policy on the matter, and was installing a suggestions box next to the letter board in the Members' Lobby. That is a mess that the new Government have created for themselves, and in which they now wallow uncomfortably.

The policy of no policy on the European Community is, however, a far graver matter, for it means that next week the Prime Minister, the Foreign Secretary and the Chancellor of the Exchequer go to Italy for three meetings crucial to the political, economic, industrial and social future of the country with next to nothing to say. Perhaps the new Prime Minister's approach was symbolised by what happened to his speech at the Altrincham and Sale Conservative party dinner last Thursday. The text of the speech got lost. Perhaps it was cleared away by sensible waitresses, along with the dirty crockery and the soiled serviettes. This is what he said: It means that we must put forward our own ideas for a liberal and open Community … That will be easier to achieve if our partners in the Community are convinced that we are whole-heartedly engaged with them in the great enterprise of building, shaping and developing Europe. I want Britain to play a leadership role in that enterprise". It is not clear what those words mean.

During the leadership election campaign, the Foreign Secretary proposed, as part of his platform, drafting a Cabinet paper on Europe, as if it were some revolutionary proposal, which I suppose that it was for this Government. He said: concern about Europe runs very high and I would like to see the publication, quite openly, of more of the information that would go to the Cabinet so the House and the public can be well informed of the choices facing the Government.

Mr. Phillip Oppenheim (Amber Valley)

Will the right hon. Gentleman give way?

Mr. Nicholls

Will the right hon. Gentleman give way?

Mr. Kaufman

I shall give way later, but I wish to deal with what the Foreign Secretary proposed, and what has come of his proposal, because that is important. What has become of the paper? Was it discussed at today's Cabinet meeting? It seems not because, according to The Guardian today, the Foreign Secretary, at the meeting of the Select Committee on Foreign Affairs yesterday, hinted that the government had shelved its plan to issue a broad-brush policy paper on Europe before the Rome summit. Instead, it was concentrating on refining its proposals for the intergovernmental conference on political union, which would be launched then. Today, The Times puts the situation more bleakly. It says: The government has delayed or shelved plans to produce a white paper … on Europe amid hints that a cabinet consensus may be harder to reach than expected. A senior"—

Mr. Oppenheim

Will the right hon. Gentleman give way?

Mr. Kaufman

I shall in a moment, but I am quoting from The Times and one must not interrupt that. The Times says: A senior source"— to our delight, no longer Mr. Bernard Ingham— said that the cabinet did not want such a paper at this time, and was uncertain that it would ever be produced. Where are we on this? If the Cabinet is not even discussing the matter, if it has not got a paper, if it has no idea of what is to go before the intergovernmental conference next week, how can anybody else comment on the Government's policies? How can our partners in Europe respond? How can the House of Commons comment and how can the British people, who may be said to have some justified interest in the matter, comment?

Mr. Oppenheim

The right hon. Gentleman accused the Government of having no policy on Europe. Perhaps he can enlighten the House by telling us whether the Opposition have a policy on a single currency. Are the Opposition in favour of a single currency, yes or no?

Mr. Kaufman

I shall come to those very matters.

Mr. Oppenheim

Yes or no?

Mr. Kaufman

I do not know which way the hon. Gentleman voted last week, but I had better advise him to stop asking for yes or no answers because I have some quotations from the new Prime Minister on the matter that do not add up to yes or no. I shall come to that.

The Labour party conference, two months ago, passed a detailed policy on political union and political progress. On economic and monetary union, our national executive will publish a detailed policy next week, which I shall gladly send to the hon. Gentleman. My hon. Friend the Member for Bolsover (Mr. Skinner), to whom reference has been made, is aware of that because he was the only person to vote against the policy.

Mr. Skinner

I should have been in a minority of two but the chair would not accept the Baghdad proxy. My right hon. Friend the Member for Chesterfield (Mr. Benn) was in the Gulf.

Mr. Kaufman

My right hon. Friend the Member for Chesterfield (Mr. Benn) was not in the Gulf; he was in Mesopotamia. The Gulf is a bit further south-east. My right hon. Friend was carrying out his mission and was not able to vote.

Mr. Skinner

He did a good job.

Mr. Kaufman

He did a job. My hon. Friend the Member for Bolsover must be relieved and satisfied that he upheld that minority view in the national executive, but he has confirmed that the Labour party has a detailed policy of economic and monetary union, on which only a tiny minority of the party has stated its reservations. That is completely different from the deep split in the Tory party.

The Foreign Secretary said this afternoon that the Government will go into the intergovernmental conference with their own ideas and proposals. Given what he said, you could have fooled me, Mr. Deputy Speaker. Six months after signing up at Dublin to full union before the end of 1992—that is what the right hon. Member for Finchley, with the Foreign Secretary, did, and she did not deny that when asked about it in the Chamber—the Government have no idea about what they mean to do, apart from the farce of the hard ecu.

Mr. Nicholls

Will the right hon. Gentleman give way?

Mr. Kaufman

I shall give way to the hon. Gentleman, but when I have done that, I shall not give way again because many hon. Members wish to speak in the debate.

Mr. Nicholls

The right hon. Gentleman mentioned the speech made by my right hon. Friend the Prime Minister at Altrincham. That speech says: It doesn't mean that we have to accept a federal Europe: certainly not. There is no question of that. The hon. Member for Hamilton (Mr. Robertson) is fresh back from Rome where he voted in favour of a declaration containing an undertaking to seek to remodel the Community into a European union on a federal basis. We know that that is not the policy of Her Majesty's Government because we have heard what my right hon. Friend the Prime Minister said. Will the right hon. Member for Manchester, Gorton (Mr. Kaufman) now tell us whether that is Labour policy?

Mr. Kaufman

I understand that the hon. Gentleman left early, so I am not sure about the basis of his comments. We also know that the Conservative delegation, if one can call it that, was split not just down the middle but into several fragments at the assizes.

We have the very great advantage, indeed the enticing prospect, that my hon. Friend the Member for Hamilton (Mr. Robertson) hopes to catch Mr. Speaker's eye to wind up the debate for the Opposition. Having been there all the time, he will speak with great authority on the matter.

Mr. Cash

Will the right hon. Gentleman give way?

Mr. Kaufman

No. If the hon. Gentleman wants to ask about the document, my hon. Friend the Member for Hamilton will deal with it with his customary suavity and competence.

Mr. Cash

rose——

Mr. Kaufman

No, I have explained what will happen with regard to that document.

There are some issues on which the Government's confusion has become even worse. For example, we thought that we knew roughly where the Government stood on defence—that is, that they were against a defence role for the Community. But now, suddenly, all that seems to be in the melting pot.

In Brussels, the Foreign Secretary was quoted as saying that there were now compelling arguments for much closer EC co-operation over defence and security. The correspondent from The Guardian in Brussels made a further report on the matter, in which he said: In a first sign of a softening in the Government's line on Europe since John Major became Prime Minister, the Foreign Secretary, Douglas Hurd, signalled yesterday that Britain may support giving the European Community a formal role in foreign policy and security. We had another variation of what the Foreign Secretary is proposing when he was questioned by the Select Committee on Foreign Affairs yesterday. We had yet another variation today. Will the right hon. Gentleman tell the House with great clarity whether the Government support and advocate, or do not support and advocate, a defence role for the Community? If the right hon. Gentleman does not support and advocate a defence role, but does support and advocate a security role, will he explain the difference between the two, and will he then also explain how that fits in with our commitments to NATO?

Mr. Hurd

I said exactly the same in my press conference in Brussels and to the Select Committee. I do not believe that the 12 should have a defence role, and I draw a distinction between the defence role and security matters; a distinction that I explained in some detail 10 minutes ago.

Mr. Kaufman

The right hon. Gentleman may have sought to explain it, but he did not explain it in a wa y that was clear to the House. He talked about co-operation on the Gulf and he reproved members of the Community for what he claimed to be their inadequate response to the Gulf crisis. Does the right hon. Gentleman see the Community co-ordinating a military response in the Gulf? Does he see it co-ordinating a naval blockade in the Gulf? Does he see it co-ordinating an air blockade in the Gulf? If so, what was he up to talking about the Community's response on Gulf issues? Hostages are clearly an important matter, but is that a security matter? We need to know what the Government mean by security as distinct from defence.

Those are important matters, on which the Government may come to the House with legislation at a future date and we need to know exactly what they propose. After all the right hon. Gentleman's statements in Brussels, his statement to the Select Committee and his further statement this afternoon, what he is proposing is not at all clear and could be dangerous.

The right hon. Gentleman spoke this afternoon, as he has on other occasions, about majority voting. But nobody has any clear idea where he, and therefore the Government, stands on majority voting. Speaking to the House of Lords Select Committee on the European Communities on 25 July 1990 he said: Undoubtedly, this country has quite substantially gained from the Single European Act, in that many of the decisions leading to the Single Market are to be taken by qualified majority. We and the Commission would not be nearly so successful in demolishing protectionism in the Community had it not been for qualified majority voting, and that is a point I ought to make from the point of view of those who approach qualified majority voting with some suspicion. That appears to me to be something of an encomium for qualified majority voting.

Three months later the right hon. Gentleman appeared to change his mind. In the debate on the Queen's Speech on 8 November, four weeks ago today, he said: We do not want … significantly extending qualified majority voting. Does that mean more majority voting or not? What is the significance of the word "significantly"? Does he mean that he is opposed to any more qualified majority voting, or that he is ready to see some more qualified majority voting? If so, in what areas?

That is an important issue for the political intergovernmental conference, yet there has not been a word of clarification today, just a repetition of the fuzzy words on the matter that the right hon. Gentleman has been saying all along, except, as I say, for his encomium for qualified majority voting at the House of Lords Select Committee three months ago. If he cannot sort out his own mind, how on earth will he make a clear, positive and useful contribution at the intergovernmental conference?

What about the issue of sovereignty? In his interview with Mr. Walden on 25 November, the new Prime Minister—not then the Prime Minister but about to become so—seemed very firm. He said: At the moment I can foresee no chance of pooling any more sovereignty. He also said: I see no circumstances at the moment in which we could or would present legislation to the House of Commons to surrender more sovereignty. That seemed pretty clear until one read it, when one saw that repeated phrase, "at the moment". That gave the Prime Minister a let-out should he decide to change his mind. The chances of his changing his mind seem quite strong.

In yet another campaign interview published two days later on 27 November in the Financial Times the Prime Minister said: I have no doubt that when we go through this conference"— that is, the intergovernmental conference— it is possible to negotiate a treaty that will be acceptable to the House of Commons that will move Europe forward and keep it forward together. What will there be a new treaty for if we are not going to sacrifice, as the right hon. Member for Finchley would put it, some sovereignty?

The Prime Minister acknowledged in that interview that a new treaty would have to come to the House, and a new treaty will mean, in the Prime Minister's own words, pooling more sovereignty; surrendering more sovereignty. Where do the Government stand on the issue of sovereignty? Where do they stand on a new treaty? Do they accept that they may have to bring this new legislation, pooling or surrendering sovereignty, to the House, and that if they meet opposition, they may have to guillotine it through the House as they did the Single European Act?

We have a right to know about those matters, but the Foreign Secretary told us nothing about them this afternoon. It may be that there is a good reason for that. Perhaps he does not know himself. Perhaps, in the immortal words of the Secretary of State for the Environment, the Government are ruling nothing in and ruling nothing out. We do not know. The Foreign Secretary did not tell us. The only hint that he has given about proposals for the political intergovernmental conference, before his extremely woolly words this afternoon, was provided in his speech to the House on 8 November when he said: we would like to see a more prominent role for the European Parliament, not by giving it more legislative powers but in monitoring Community expenditure."—[Official Report, 8 November 1990; Vol. 180, c. 152–53.] What on earth does that mean? What does it mean in terms of providing powers or not providing powers for the European Parliament? It cannot be given a greater role without being given more powers and that may need legislation in this House and in the other areas of the Community.

Mr. Cash

Will the right hon. Gentleman give way?

Mr. Kaufman

I have already told the hon. Gentleman that, because of the pressure on time, I shall not give way again.

Whatever the Foreign Secretary means by monitoring by the European Parliament of Community expenditure, will he propose such an innovation at the intergovernmental conference next week?

What about the widening of the Community? Austria's application for membership has been lodged, and Labour thinks that it should be accepted right away. There is no good reason for delaying Austrian accession to the Community until 1992 or any other year. The Foreign Secretary made a brief reference this afternoon to widening the Community, but he did not say whether the Government are in favour of immediate Austrian membership. He spoke again about negotiations on the European Free Trade Area. Will the right hon. Gentleman propose in Rome not only that Austria be admitted immediately, but that applications be invited from Sweden, whose Government have shown great and positive interest, and from the remaining EFTA countries? We should welcome all the EFTA countries into the Community as soon as they positively want to join.

The Government have failed to state their policy clearly and without equivocation—and having heard the Foreign Secretary's speech, I am not even sure that the Government have a policy. Like the former Prime Minister, the Foreign Secretary has spoken at length about the accession of eastern European countries—and when the necessary conditions are fulfilled, we should welcome their membership as well. However, the Government do not appear to have a clear policy on the accession of other western European countries.

The Government's confusion in relation to political progress is as nothing compared with their total disarray over economic and monetary union. The Government promised a debate at some stage, but it is disgraceful that the House will not have that opportunity before the Chancellor of the Exchequer goes to the intergovernmental conference next week. The Foreign Secretary says, "I shall not refer to that aspect, because the House is to debate it." However, that will be after the intergovernmental conference, at which the Government may have made unequivocal commitments or even threats—and that could be very dangerous.

Mr. Spearing

On a point of order, Mr. Deputy Speaker. Will you confirm that, although there may be a debate on economic and monetary union, it will not be arranged for next week—and that because there will be one of two conferences next weekend, today is the last opportunity to debate economic and monetary union before that conference? Does not it follow, Mr. Deputy Speaker, that any speeches about, or references to, that aspect will be not only in order but central to the subject of this debate?

Mr. Deputy Speaker

It will be for the Chair to make a ruling when that question arises.

Mr. Kaufman

Perhaps I, too, may respond to my hon. Friend's point of order. The Opposition amendment, which Mr. Speaker selected, makes specific reference to the Government's failure to produce a coherent policy towards the Inter-Governmental Conferences"— plural— due to be held next week. Therefore, any of my right hon. and hon. Friends who want to address the economic and monetary aspects will surely be in order.

Mr. Teddy Taylor (Southend, East)

Further to the point of order raised by the hon. Member for Newham, South (Mr. Spearing), could not we resolve the issue and reach a specific conclusion on economic and monetary union by the right hon. Member for Manchester, Gorton (Mr. Kaufman) withdrawing the Opposition amendment to allow debate of the alternative amendment concerning constitutional, political and economic significance of the proposals?

Mr. Deputy Speaker

Order. The House cannot consider altering now the business of the day. I have heard nothing so far that is out of order.

Mr. Kaufman

On the face of it, the new Prime Minister seems to be maintaining the uncompromising attitude displayed by his predecessor. Replying to my hon. Friend the Member for Nottingham, North (Mr. Allen), the Prime Minister said, in a written answer: The Government remain opposed to the imposition of a single monetary policy managed by a European Central Bank as prescribed in stage 3 of the Delors report."—[Official Report, 3 December 1990; Vol. 182, c 45.] That answers a question that was not put, but it nevertheless states the Prime Minister's position. Like most of the right hon. Gentleman's remarks on that and other issues, it is meaningless. The Prime Minister asserts that the Government remain opposed to the imposition of a single monetary policy". However, no one organisation can impose a central bank or a single currency on the United Kingdom. The question is whether a British Conservative Government would accept either or both. The answer is far from clear.

In the rewarding interview that he gave to Mr. Walden, the new Prime Minister himself posed the question: Could we accept an independent, non-elected central bank with external control over our domestic monetary situation? The right hon. Gentleman provided the answer to his own question: My answer to that is that the House of Commons will not accept that at the moment, and I do not think we should concede that at the moment. Will there be a moment when the Government will concede either or both? We have not received an answer this afternoon.

Mr. Cash

Will the right hon. Gentleman give way on that specific point?

Mr. Kaufman

No, I have said that I shall not give way again. However, if the Foreign Secretary sought to intervene, I should naturally feel obliged to give way.

The outgoing Prime Minister certainly had an answer to that question. Asked whether she would veto any arrangement that jeopardised the pound sterling, she replied simply, yes. In that fatal exchange on 30 October that led to the resignation of the deputy Prime Minister, the then Prime Minister was questioned by the right hon. Member for Plymouth, Devonport (Dr. Owen)—a former Euro-fanatic who is now a Euro-negativist.

Mr. David Shaw (Dover)

That was nasty.

Mr. Kaufman

Nasty, but accurate.

The right hon. Member for Devonport has become a kind of clone of the hon. Member for Halesowen and Stourbridge (Sir J. Stokes)—though happily not yet Cheltenham. His whole vision of the future of British politics to the turn of the century is governed by the burning question of whether Labour will have a candidate running for the Woolwich and Greenwich constituencies at the next general election. The answer to that question is clearly yes.

During questions on the former Prime Minister's statement about the Rome summit, the right hon. Member for Devonport asked whether Britain, if faced with the imposition by treaty of a single currency, would be en titled and right to use the veto. The right hon. Lady replied: I totally agree with the right hon. Gentleman."—[Official Report, 30 October 1990; Vol, 178, c. 877.] Will the Foreign Secretary tell the House what is the Government's position under their new management?

Mr. Quentin Davies (Stamford and Spalding)

The Government's policy remains unchanged.

Mr. Kaufman

No, I am talking about the latest Government—who will be in power for a short period yet, and whose Ministers will be attending intergovernmental conferences next week with no policy having been put to the Cabinet, let alone approved by it.

For a little while longer—longer than we hoped, in view of the poll tax time scale offered by the new Secretary of State for the Environment—we have to consider the policies of the present Government. The problem remains that we still do not know what they are. Will the Government use their veto against the imposition of a central bank or a single currency? Answer from the Foreign Secretary comes there none.

That is hardly surprising, because the Government have already accepted the principle of a central bank. Last Sunday, in Monza, the Governor of the Bank of England, Robin Leigh-Pemberton, signed draft statutes for the proposed central bank. He is a Government servant, and it is a nationalised organisation. There was no need for him to do that, yet he did it. In any case, the Government have already made it clear that they do not, in principle, oppose a single currency. As we all know, they have proposed the hard ecu—common currency.

Mr. Cash

The right hon. Gentleman should be accurate. He avoids saying that there is a reserve by the Governor of the Bank of England on those statutes. He is misleading the House.

Mr. Deputy Speaker

Order. We have had a lot of bogus points of order. Many hon. Members seek to take part in the debate, and that process is not helped by interventions and bogus points of order.

Mr. Kaufman

The hon. Member for Stafford (Mr. Cash) has a copy of the statutes. It has been reported in the press—and not denied—that Robin Leigh-Pemberton, as Governor of the Bank of England, signed the statutes. The question is why did he do so, if the Government are not yet committed to a central bank. In any case, the Government have already made it clear that they do not oppose a central currency in principle. They proposed the hard ecu, what they call the common currency—a half-baked nonsense with no future, as was shown by the meeting of Finance Ministers at Monza.

The new Chancellor of the Exchequer was quoted in The Daily Telegraph after that meeting as follows: Mr. Lamont claimed that one other country had shown `interest' in the British alternative. How pathetic. I am sure that the Minister of State, Foreign and Commonwealth Office would be in favour, because that country is Spain and he has a great affection and affinity with Spain. A little interest by one out of 11 countries is not exactly encouraging. If Britain is almost entirely alone in espousing the cause of the hard ecu, there is no doubt about how Ministers see its future. In his Mansion house speech as Chancellor, the new Prime Minister said: The hard ecu could ultimately evolve towards a single currency. In an interview with Mr. Jonathan Dimbleby on 25 November, the Prime Minister said: The hard ecu could develop into a single currency. The Financial Secretary to the Treasury—whose survival as a Treasury Minister must have some significance—has gone even further. A couple of months ago he said: The hard ecu could easily develop into a single currency. Speaking to the House of Lords Select Committee a couple of months ago, the Financial Secretary said of the hard ecru policy: The next stage of having a single currency could actually happen more quickly by going down this path"— the path of the hard ecu.

Earlier this year the Foreign Secretary said that the hard ecu plan does not rule out a single currency in the longer term". As for the new Secretary of State for the Environment, he said: At last we have recognised that a new central institution is inevitable and that a European currency is likely to come". Perhaps he would like to talk with the Opposition parties about that.

So, the Government are clearly not opposed to the principle of a single currency. How could they be when they see their own pet notion of a hard ecu leading to that? The game was further given away by the Chancellor at Monza on Sunday when, talking about a central bank, he said: We do not see any need for institutions of that kind unless there was a single currency. Once again the Government are entering the intergovernmental conference on EMU next week with no clear idea of what they are in favour of, or against. They will be jeopardising Britain's interests and the economic and political future of our country because of that imprecision and a lack of any clear policy at that crucial conference.

If the United Kingdom has nothing to propose at those meetings, others will make the running. If the United Kingdom does not put forward proposals for others to consider, accept, modify, vary and compromise with—with the aim of reaching ultimate agreement—that will not stop the other countries from agreeing and going forward, leaving the United Kingdom not only isolated but damaged.

If I and my right hon. Friends were taking part in those conferences, we would go there with clear proposals. We would propose the extension of qualified majority voting in the ministerial Council when we went to the political intergovernmental conference, and for a clearly enhanced role for the European Parliament, as specified in our policy document. We would go to the economic and monetary union intergovernmental conference with proposals for sensible conditions for further economic and monetary progress, in a manner that best serves Britain's long-term interests, and those of the Community. We would propose building on the strength of existing, well-tried institutions, such as ECOFIN, the Economic and Finance Council. We would be arguing for progress to be conditioned by progress on economic convergence. The Prime Minister cannot argue with that, because he has repeatedly spoken about the importance of convergence, for example, in his speech on 20 June, when he launched the hard ecu and said: Without greatly increased convergence, monetary union simply would not work. In an interview in the Financial Times a few days ago, he specifically argued for what he called the right form of economic convergence as a condition for proceeding to a single currency.

The Labour party argues for economic convergence as a necessity for progress on all those issues. We would also be arguing for matters for which the Government show no interest whatever—for growth policies; and for enhanced regional and structural funds. I recognise that the Government laugh at growth, having plunged us into a recession under this Prime Minister. Yes, growth is a joke for the Government; but it is a not a joke for our partners in the Community. We should also be arguing for stronger social policies, including the social charter. We would be arguing for Britain. Instead of arguing for Britain, the Government have spent the past 12 years arguing among themselves. As the right hon. and learned Member for Surrey, East pointed out in his resignation speech, the consequence has been grave damage to British interests. Having been Foreign Secretary and Chancellor during that period—until he was humiliated by the right hon. Member for Finchley last year—he should know.

The fact is that, even after the change of Prime Minister, the Government have no idea of where they are going on European issues. They have no idea of what they want to do, and no idea of what they intend to say at the intergovernmental conferences. The Cabinet have not discussed it. The promised Cabinet paper has not been produced, and may not be produced. The present Prime Minister and the former Prime Minister have said that they value the House of Commons so much, that its sovereignty is so important, but we have not had a tittle of information to consider today so that we can give the advice of Parliament to Ministers who are going to the intergovernmental conferences in Rome next week to represent this country. The House has had no opportunity to give the Government any clear advice, based on declared Government policy, because there is no Government policy—all there is, is muddle, temporising, patching-up and trying to keep their split party together for a little longer.

The Government have failed the nation on Europe, as on the poll tax, the national health service, education and the economy. The nation wants a new start. It will not get it from a Prime Minister who merely mouths the same old cliches in less memorable words. Britain will get a new start only with a new Government, and that means a Labour Government.

6.8 pm

Mr. David Howell (Guildford)

I was very glad to hear my right hon. Friend say this afternoon—as he did in the Select Committee on Foreign Affairs hearing yesterday—that there is to be no revolution in Government policy dealing with matters related to the European Community. Indeed, he affirmed that Britain's policy will continue to be based on practical steps towards our proper place in Europe, and proper development in Europe. In short, our policy would be evolutionary rather than revolutionary. I am sure that that is the right approach. Anything else would lead to extremely inadequate developments in the European Community.

You have suggested, Mr. Deputy Speaker, that the question of European monetary union should not be central to the debate, but we cannot avoid discussing it, because monetary union raises fundamental political issues. My right hon. Friends the Foreign Secretary and the Prime Minister, along with others, will discuss those when they go to the European Council, and also at the two intergovernmental conferences that will begin immediately after that.

I do not see the difficulties in which the right hon. Member for Manchester, Gorton (Mr. Kaufman) seemed to be wallowing. A common currency of a sort already exists, with an inadequate ecu; the markets clearly want a more substantial ecu, which is exactly what the so-called hard ecu will be. It will mean a currency that is managed, and a central institution—the European Monetary Fund—will be set up. That is the policy of my right hon. Friend the Chancellor of the Exchequer. Over the next decade or so, we shall be able to see whether markets and people, customers and industry, really want to proceed to a huge, centalised single currency and monetary policy, to be run by an autonomous central bank. Personally, I doubt it very much: that would go entirely against history, leading to more centralism when what we want is more diffusion and decentralisation.

There is no need, however, for the right hon. Member for Gorton to become obsessed with whether that will happen in 10 years' time. The inner deutschmark zone of Germany, Holland, Luxembourg, Belgium, Austria and one or two other countries will probably stick together in a kind of union for many years to come; a sort of "multi-speed" arrangement will probably develop, and I do not think that we need spend too much time worrying about it, because we have proposed our own common currency, managed by the European Monetary Fund. That will give everyone in Europe a decade or so to decide whether they want to move on, and, if so, how.

Mr. Spearing

In view of the importance of economic and monetary union—which he has emphasised, despite its omission from the discussion by the Foreign Secretary—does the right hon. Gentleman agree that, in accordance with our universal desire for more parliamentary input in European Community matters, a special Select Committee should be appointed to look into the potential benefits of EMU, potential methods of organisation and, perhaps, some of the risks. Would that not be a wise step, in view of the fact that past Community treaties have sometimes not turned out quite as they were advertised?

Mr. Howell

The Select Committee on the Treasury and Civil Service has already conducted an inquiry, and will no doubt conduct more: the IGC opening next week is only the beginning of many months—possibly years of—discussion. Existing Select Committees will certainly has the opportunity to look into the matter very closely.

Let me return to the question of political developments in Europe. My party's policy is, very properly, cautious and evolutionary; the Opposition's policy appears, in a sense, to have evolved already. I congratulate them: they have come up with a very clear policy, which some of us had the privilege of glimpsing when we attended the Rome parliamentary conference last week.

I freely confess that, among the Conservatives, there were and remain divided views on how fast and how far we should go with all these complex issues. On the whole, however, we take the view that the calm and common-sense evolutionary approach of my right hon. Friend will allow matters to develop at the right speed. As the hon. Member for Swansea, East (Mr. Anderson) will no doubt confirm and explain to his Back Benchers, the position in the Labour party was very different. Although one Labour Member—the hon. Member for Newham, South (Mr. Spearing), displaying his usual integrity—dissented from the very federalist declaration passed by the parliamentary groups in Rome, I understand that the official Labour party, led by its official spokesman, voted for the full centralised, federalised socialist ticket.

The document to which the party gave full support includes not merely union on a federal basis, but approval for an autonomous central bank, approval for arriving at a single currency, approval for the Commission to become the executive of the entire European union, a vast extension of qualified majority voting, approval for the president of the Commission to be voted in by the European Parliament, approval for the European Parliament's initiation of legislation, a vast extension of the Community's powers over social environmental matters—in fact, the full federal arrangements. Just to ram the point home, the document ends with a call for all those measures to become the official policy of all member Governments and of the forthcoming IGCs. Labour Members voted—openly and, as I appreciate, very bravely—for that as the official policy of their party.

Mr. Donald Anderson (Swansea, East)

The right hon. Gentleman is making rather less than his usual contribution. As he must know very well, he has produced a complete caricature of the Labour document, which is a united document.

Having labelled the resolution "socialistic", the right hon. Gentleman should take account of some people who supported it and who would reject the application of such a term. This is partly why his party is so isolated in the European Parliament, and on Europe generally: it uses labels that are wholly separate from the major course of the current political developments in Europe.

Mr. Howell

With respect, I think that the hon. Gentleman has got that upside down. What concerns me as we advance in European terms—I freely confess to being pro-Europe—is not the difficulties that we encounter in our enormous task, which is forcing us to face many new issues which we seek honestly to face; what concerns me is the uncritical and facile welcome given to a general, massive centralisation of power in a kind of United States of Europe, something that belongs more to the 18th and 19th centuries than to the 21st. I suppose that, in a way, it is no surprise to me that a socialist Labour party should go along with that.

The details—everything that I have said—appear in the document that I have in my hand, which was fully supported, officially, by the Labour party.

Mr. Peter Shore (Bethnal Green and Stepney)

I think that there has been a genuine misunderstanding. It is my clear view that those who went to the so-called assize were speaking entirely for themselves, and could in no way claim to represent either their parties or, even more important, the House of Commons. Responsibility for supporting the shameful propositions listed by the right hon. Gentleman belongs entirely to those people, as individuals.

Mr. Howell

I hate to cross swords with the right hon. Gentleman, for whose views and integrity I have the profoundest respect, but I must regretfully tell him that the picture that he has tried to paint is not the true one. I freely confess that those on my side acted as individuals; indeed, scorn may be poured on us because we did not all go in the same direction. Some were in favour, some were against and some abstained. Labour's official spokesman, however, said that Labour representatives had received word from London that they were authorised to support the document. Let me say in their defence that, when their spokesman supported the document, he expressed some reservations—and, my goodness, reservations are needed, for this is the full, old-fashioned federalist ticket, with no qualifications.

Mr. Anderson

To an extent, the right hon. Gentleman has put the record straight. He should say, however, that his party's representatives—including him—were split three ways; and, having said that we accepted the whole federalist package, he should stress that substantial reservations were expressed by the Labour party spokesman. With the exception of one Member, we spoke with a united voice, while the three-way split among the Conservatives reflected the massive division in the party.

Mr. Howell

This does not bode very well for the future. If a possible Labour Government's approach would be to accept everything, vote for it and then, in one and a half minutes, say that they have some reservations, there is not much hope of them defending the country's interests.

Some of us went to Rome with rather higher hopes than were justified to try to establish and strengthen the role of national Parliaments in the process of European development. That was the real purpose. I am afraid that we did not really get down to that. However, inside the document, among all the generalised federalist aspirations, there are one or two ideas that we should examine further on how this Parliament and other national Parliaments can rightly play their decisive and central role in the future development of Europe and its democratic structure. As I have said, I am afraid that we did not get very far because of the long list of centralising aspirations which had such enthusiastic support from certain quarters.

We need to have a clear way of deciding who does what in the Community, where the powers are to lie and how the people who hold the powers will be accountable. Hon. Members who are trying to focus on the central issue should keep reminding themselves and others that we do not see this as a matter of tiers and pyramids, with the Community institutions being a higher tier and the national Parliaments being a lower tier.

I reject the analysis, even of distinguished people such as commissioners in Brussels, when they grandly talk about subsidiarity meaning that the big strategic issues will be held by something called the Community and that lower levels will manage national affairs. That is the wrong way of seeing things. There is no superior or inferior body in the future structure. Powers and functions may be handled at different levels and that may change over time because nothing is fixed about the arrangements. We must remember, as must our friends in the European Parliament and officials in the Community institutions, that the Community is at our disposal. It is not the master. The nation states are the fundamental units of politics and any question of powers must be settled on that basis.

Sir Ian Lloyd (Havant)

I am listening carefully to my right hon. Friend's interesting speech. He referred to the term "nation state". Is he aware of a remark made not long ago by the recently deceased Andrei Sakharov, who was a great man, a great political leader and one of the greatest scientists? One of his last remarks was that there is no problem facing the modern world that can any longer be solved by the nation state.

Mr. Howell

That is fine, and it diverts me fascinatingly, because that man was a sad child of a gigantic empire that is far too large and is now falling apart. We in Europe are thinking in rather different terms. I shall come back to why the nation state, far from belonging to the 19th century, may be the appropriate administrative unit for the 21st century. I am talking about the nation state as we understand it and not as it was understood by the poor harassed Soviet citizens and the heroes who sought to dissent from the Stalinist empire.

The guiding principle that we are offered to try to sort out who does what at which level has been the matter of subsidiarity. Some of my hon. Friends and people throughout the European Community have rightly pointed out that there are real practical difficulties in pinning that down and defining it. If one tries to put it into the preamble of the treaties, which is proposed in the declaration supported by the Labour party, there will be problems about how it is judged and how it is made justiciable in the courts. There is always the difficulty that, if it is the European Court that makes the judgments, there will be a drift towards the centre, the judgments will be in favour of a central power and we will not have got much further in ensuring that the centralising tendencies of European affairs are countered by proper democratic forces. Therefore, subsidiarity is difficult; we cannot simply say, "Fine, put it in the treaty." We must do much more work, and perhaps Britain can contribute to the work of trying to bring home the enormous practical difficulties of giving it a legal sense and definition.

The central issue for this Parliament must be accountability. It was at the conference in Rome that I and some of my hon. Friends tried to put forward some ideas as to how the affairs of the European Community, the decisions of the Council of Ministers and the activities of the Commission could be made much more accountable and democratic. We have done more in this Parliament through parliamentary scrutiny. The hon. Member for Newham, South has set a towering example of energy and application with his Committee in showing how parliamentary scrutiny can be extended. I greatly admire him for that. We can do that, and other Parliaments throughout Europe should do the same. We can seek to have earlier information and an opportunity to discuss issues before they are, as it were, cooked and baked into policy, so that the sensation of being bounced and having a ready-made policy from Brussels delivered on our plate can be ameliorated.

One suggestion is that, when the presidency changes every six months, it should circulate its intentions to all member Parliaments, so that they can be discussed. Another suggestion is that the Commission should put forward its annual work programme in great detail for member Parliaments to discuss. Another possibility, which we have all analysed, is that the European Parliament and national Parliaments should work much closer together. That is right but, as I have said, the European Parliament is not the centre of all this but merely a part of the democratic procedure. This is not a federal Government, so the European Parliament could not play the sole role in filling the so-called democratic deficit.

I do not feel happy about the idea—again, it is apparently official Labour party policy—that the European Parliament should initiate legislation. I can see all sorts of difficulties in that. We want our colleagues in the European Parliament to be more effective in controlling Community expenditure. They are able and equipped to do that. It may be that a degree of co-decision between the national Parliaments and the European Parliament is desirable, but that is for us to decide here. Perhaps we should seek an inter-parliamentary agreement stipulating minimum standards of scrutiny, control forewarning and advance information required by all national Parliaments in the Community so that there is effective input and control from national level.

Mr. Robert N. Wareing (Liverpool, West Derby)

The right hon. Gentleman mentioned his friends in the European Parliament. Is it not true that the majority of Conservative Members of the European Parliament supported the Rome document which the right hon. Member for Guildford (Mr. Howell) has referred to as socialistic?

Mr. Howell

I said that Conservative Members had different ideas about it; I did not disguise the differences of view. It is a bit of a curate's egg and, like the curate's egg, it is excellent in parts. My judgment remains—it will be shared by many in the Labour party—that it is a pretty hot federalist stew. It remains a matter of amazement that the Opposition Front Bench representives should put their imprimatur upon it. They had their reasons, and no doubt they will be explained later; however, it looks a little odd.

We should be concentrating on seeking to bring true and reassuring democracy to the European process. There is a place in that for the Community institutions and the European Parliament. There is also a vital place for national Parliaments. We are closer to people. I agree with my right hon. Friend the Secretary of State that we need political reform. We need such reform in the United Kingdom as well, and I have no doubt that we will get some. We need reform that spreads and does not centralise power.

We need reform that reverses, not accelerates, the drift to the centre that is bound to go on. Everyone in Brussels can see that it is going on. It needs to embrace and not reject the new democracies of eastern Europe and the new applicants. I agree with the right hon. Member for Gorton about the position of Austria. Above all, we need political reform that refreshes and does not suffocate and stifle national identities and national differences and diversities. Those must be the guiding principles, not those sometimes reflected in the sort of document to which I have referred.

I am sorry if I have taken a long time, but there have been many interruptions. I apologise for detaining the House so long.

Such political reform should be rooted in nation states, not—I emphasise this to my hon. Friend the Member for Havant (Sir I. Lloyd)—because nation states are part of the old order that Mr. Sakharov feared but because they are part of the new order and because they provide a sensible administrative unit—a comfortable size of administrative power—in this age of global generalities and mega-organisations and institutions, which many people feel to be extremely remote from them.

Those are the principles that I believe and offer to my hon. Friends as the ones that we should enshrine in our approach to political reform in Europe. As with monetary reform, to which our evolutionary approach is correct, all we need is the intellectual vigour and power to persuade others who are ready and open to persuasion that this is the sensible way forward.

Several Hon. Members

rose——

Mr. Deputy Speaker

Order. I very much hope that right hon. and hon. Members will exercise more restraint in the length of their speeches; otherwise, some of them will be disappointed.

6.30 pm

Mr. Peter Shore (Bethnal Green and Stepney)

This is one of the most important debates on the European Community that we have held. It comes immediately ahead of the two major conferences—the intergovernmental conferences on economic and monetary union and on political union.

The right hon. Member for Guildford (Mr. Howell), who chairs the Select Committee on Foreign Affairs with such distinction, will recall that earlier this year the Select Committee published a report on what was happening in Europe and the enormous changes that were taking place. We must consider what is happening in some perspective, so I should like to begin my remarks by quoting two short passages from that report. We said: We should not underestimate the continued strength of the momentum for the move towards federal objectives … There may be varying tactical shifts and differences of detail, but the old objective of a federal Europe is being reinforced at the highest official and political levels. The concluding paragraph said: It is clear to us that the Community now developing is very different from the Community that the UK joined in the 1970s. And it is. The Europe that we joined in 1973 was still basically a "Europe des patries"—a Europe of independent nation states determined to co-operate to achieve a common European goal. The Europe that the two intergovernmental conferences wish to create is a supranational quasi-federal union in which major decisions are taken no longer by national Parliaments and Governments but by Community institutions.

Many tributaries of feeling and experience have led to this great and remarkable surge in favour of European union. In Spain and Portugal, the long experience of fascist and authoritarian rule led their people and politicians to believe that their democracies could be made secure only within a larger democratic union. In Italy, the weakness of the state and the extent of public mistrust in the Government in Rome has led most Italian political leaders to the belief that they are likely to be better governed from Brussels than from the capital of their own country. France, which has long been the champion of national independence in the European Community, has radically changed its stance, motivated basically by its fear of a united Germany and its wish to enmesh its great economic power and that of the Bundesbank in European decision-making. No doubt that is what the Lilliputians thought about binding Gulliver with cords. Meanwhile, the Germans are anxious to assure the world that they see their future not in national but in European terms.

A great melee of different sources of inspiration are moving in the same direction. The supranational institutions of the Community—the Commission and the European Parliament have always been supranational—are, as always, anxious to extend their own decision-making powers. Hon. Members, and certainly the Government, have fed those unionist ambitions and created new opportunities by agreeing, in the Single European Act, to a substantial increase in majority voting in the Council of Ministers and to the commitment to European monetary union in a foolishly written preamble from which we are now desperately trying to escape.

We have not been helped by the assize to which the right hon. Member for Guildford referred. I very much fear that Members of Parliament from other countries who attended that assize between 27 and 30 November might have gained a false impression about the position of those who attended it and the extent to which they spoke for Members of Parliament generally. I must draw attention to some of the extraordinary passages in the meeting's final declaration. Paragraph 2 says that it Takes the view that EMU must be achieved on the basis of the timetable and conditions agreed by the European Council in Rome on 27/28 October 1990". They accept that timetable, which as I recall is 1994 for the second stage, and then onwards as quickly as possible to the third stage with a full single currency and economic and monetary union. The declaration continues: Political union comprising a foreign and security policy on matters of common interest must be established and that European Political Cooperation must be incorporated into the Treaty … Takes the view that the Community should be given additional competence in the field of the environment and that decision-making in this area should be by qualified voting … Considers that the time is right to transform the entire complex of relations between the Member States into a European Union on the basis of a proposal for a constitution … Calls for meetings of the Council … to act by majority voting except in connection with amendments to the Treaties, the accession of new member states. That is an extraordinary and outrageous commitment

The Minister of State, Foreign and Commonwealth Office (Mr. Tristan Garel-Jones):

The right hon. Gentleman is right—it is an extraordinary commitment. I assume that he is aware that Conservative Members who attended the assize as individual Members of Parliament representing their constituencies—a perfectly proper thing to do—distinctly heard the Opposition spokesman not only vote for the list that the right hon. Gentleman has just read out but declare that it was Labour party policy. What has he to say to that?

Mr. Shore

I think that I know the answer. The only part that has appeared in a Labour party document is that relating to qualified majority voting on environmental issues. The other propositions cannot be found in any policy document of the Labour party.

Mr. George Robertson (Hamilton)

It would be advisable for my right hon. Friend to have a word with me before jumping to conclusions and accepting some of the propaganda being put out. What the Minister said was entirely untrue and wrong. When I spoke on behalf of some of the Labour Members who attended the meeting, I made it absolutely clear that we had severe reservations about some of the points in the text, which I identified and many of which were made by my right hon. Friend. May I point out—I am as careful as my right hon. Friend about Labour party policy—that a decision has been made subsequent to the policy document which was passed by the conference? The national executive committee endorsed the Dublin declaration made earlier this year by the leaders of the socialist parties. Many of the points that were part of that declaration were part of the Dublin declaration, to which our party is committed.

Mr. Shore

I take seriously what my hon. Friend has to say—except, of course, his remark that I might have consulted him. He might have consulted all of us before he went to Rome and after he came back. I content myself by advising him to read with care the extracts that I quoted. Apart from the environmental issue, they are clearly and definitely not part of Labour policy.

Mr. Michael Lord (Suffolk, Central)

rose——

Mr. Shore

I am sorry; I need to make progress.

All the points so far have been the small change of the debate and we want to get on to the serious subject of what we are facing in Europe. I used the quotations as an illustration of the powerful forces which, in Europe today, are trying to bring about a federal European union. It does not matter how they describe it and we could have a long debate about what federal union is. The aim is, above all, a union which goes far beyond the "Europe des patries" that we thought we had joined 17 years ago.

We should judge the current proposals for European monetary union and for political union against the background of the thrust in Europe towards union. The content of the proposals is aimed not so much at solving the practical problems that have arisen, but at furthering the cause of European union. Let us consider, for example, the argument in favour of economic and monetary union. It is said—by those who advocate it, of course—that it will help currency stability, that it will help to deal with the familiar problems of currency speculation and that it will introduce a strong anti-inflation bias into the economies of the member countries.

Mr. Giles Radice (Durham, North)

Hear, hear.

Mr. Shore

My hon. Friend may say that, but I must point out that the same objectives were followed and the same claims were made on behalf of the exchange rate mechanism. It was said that that would have an impact on inflation and would stop currency speculation. We are entitled to ask what the special virtue of economic and monetary union is over the exchange rate mechanism. The only serious point that I have been able to find is references to the so-called "great savings" in transaction costs. Transaction costs were virtually unknown in the House until the Delors report appeared a year or so ago.

I want to quote from a speech by Karl Otto Pohl, who is something of an authority on banking matters, on transaction costs and on the contribution that European monetary union would make towards a great saving. On 3 September 1990, he said: The repeated references to alleged huge savings in transaction costs for the countries of a single currency area are not in the least convincing. I take it that he has a fairly serious opinion in these matters.

What is the real reason for going beyond the exchange rate mechanism into European monetary union? It was stated by Mr. Andreotti, the President of the Council of Ministers, during the six months of the Italian presidency. He said to the European Parliament on 21 November: for the first time in the history of Europe, we shall confer upon the Community one of the distinctive and essential competencies on which national sovereignty is historically built. That is the prize and that is the objective. European monetary union is not primarily about solving economic problems, but about transferring to the Community something that is central and indispensable to what he calls "national sovereignty" and I call parliamentary democracy and the accountability of Government to the people of this land.

Mr. Quentin Davies

Will the right hon. Gentleman accept that the fact that he had not heard of transactional costs before the Delors report came out shows his remarkable personal ignorance of business and industry? If he had ever tried to import or export anything, he would have known all too well what transactional costs were.

Mr. Shore

This is too small a point about which to bicker. I am very familiar with the phrase "transactional costs", which has become a central argument for the merits—so-called—of joining the European monetary union. That is why I have brought the matter forward for discussion and that is why I quoted Herr Pöhl's comments.

The thrust to European union colours and distorts all judgment on the approach to economic and monetary union. I fear that the Government are in for a difficult time. While they are trying to argue for a rational economic policy, they will find themselves up against that overt thrust, as Andreotti made plain in his address to the European Parliament.

I fear that we shall face the same problem at the conference on political union. We know that the Commission, the European Parliament and the Governments of Italy, of Spain and of Germany are strongly in favour of four objectives. They want a certain concept of subsidiarity to be adopted in the treaties themselves. They do not want from subsidiarity what this House would like from subsidiarity. We want the interpretation of subsidiarity to lead to the minimum of supranational control or intervention in our affairs. They want the concept to be included for the opposite reason, so that they can then argue the case for taking more powers away from national Parliaments and from national democracies. That concept is dangerous and it would be even more dangerous if it were introduced into a treaty which also gave powers of interpretation either to a court or to a majority of the Council. If that were to happen, we should find ourselves wide open to the ever-increasing encroachment of European law on our national life.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Is it not true that the problem with the European Court already is that it is highly political? Its role is to interpret in a political sense whether countries are complying with the treaty. This country is not used to accepting that concept.

Mr. Shore

That is right. The European Court has been an emblem of centralism, as my hon. Friend has suggested. That is part of the reason why we coined the phrase "the creeping competence" of the Community. That comment was based on the extension of the powers of intervention of the Community as a result of rulings in the European Court.

Those who favour political union want to give the European Parliament legislative powers and they want to extend the competence of the treaties into foreign affairs and security, and into a wider and ever-growing area of social policy. However, the heart of the matter is the pressure to extend majority voting in the Council of Ministers. That view has been expressed in the Commission's report, in the European Parliament submission and in the wretched assize. Why are they so keen on that? The reason is that it would disarm the national democracies.

We can influence our Ministers, but if they do not exercise the right of veto through the unanimity rule, they can be constantly outvoted in the Council of Ministers. As an increasing number of areas of policy are brought within majority voting, those who favour such change say, "The democratic deficit is getting bigger and bigger—we must have more and more powers so that we can rectify the loss of democracy which we, in our folly, allowed to take place by transferring the powers to the Europeans in the first place." The right way to deal with the democratic deficit is not to give more decisions to majority voting, but to take some of them back. I hope that that proposal will be given due consideration.

What should we do on 14 December? I wholly accept what the Foreign Secretary said about playing our full part, about seeking to persuade, and about having certain proposals to put forward. They sounded reasonably innocuous, and that is right. I am sure that we should seek to persuade, not just hector and lecture. That would be very much better—in the end it would payoff. We have to face clearly what, after all our best endeavours in respect of EMU and political union, we shall do if we find ourselves either in a minority or alone. We have to be prepared for that. I do not necessarily forecast it—I hope that it will not occur—but if it does, we must stand up.

Some people say that if we opt out from the proposals, either alone or with others, we shall be condemned to a second tier or to a two-speed Europe, or that we shall abandon the high ground. They are intoxicated by their own inaccurate metaphors. The real analogy is far closer. Suppose we did not have a common agricultural policy and that we are to have an intergovernmental conference to establish a CAP this December. The EMU proposals alone are 10 times more damaging to the interests of the British people than the CAP. Would we stand alone and say to the rest of Europe, "Go ahead with your CAP; we do not agree; we are in with the rest of the matters which join us together in the Rome treaty and accession to it, but not with the CAP." We would be very pleased to have stood out and stood our ground. I very much hope that that will be the position not only of the Government but of my right hon. and hon. Friends.

6.51 pm

Mr. Michael Spicer (Worcestershire, South)

In my first speech from the Back Benches for 10 years, I take this opportunity to say what a great privilege it was to serve for so long in the Government of my right hon. Friend the Member for Finchley (Mrs. Thatcher). I am particularly pleased to have been able to play a small part in taking through Parliament the Electricity Bill, which resulted yesterday in an estimated 6 million people applying for shares. That is a huge success by any standards and a shining example for other European countries. [Interruption.] Even my hon. Friend the Member for Wealden (Sir G. Johnson Smith) was queuing for shares.

It is now pretty well common ground in Britain that we should press forward fast with the creation of a single European common market. Well over half our trade is with the European Community, and it is in the direct interest of the jobs and prosperity of our citizens that Britain should thrive within that Community. Indeed, it has been Britain's position in Europe for many years that we wish to see a free market trading openly with the rest of the world. This country also leads the way in welcoming the potential expansion of the EC to include the nations of what used to be called the eastern bloc.

The argument about Europe, at least in this country, is not about the pace at which we remove barriers to trade—the quicker the better for most of us—but about the character and development of the financial, monetary and political mechanisms which are thought to be necessary for the European market. As the discussion moves from the trade market to the mechanisms of finance, so the questions have less to do with co-operation and more to do with supranational and potentially undemocratic controls.

In my view, it is distracting, if not absurd, to contemplate a single currency for Europe run by an unelected central bank before we have begun properly to sort out the workings of the single market. With many of my right hon. and hon. Friends, I shall certainly play my part in ensuring that that remains the view of the British Government, especially in the days ahead in Rome. I was relieved by what I read into what my right hon. Friend the Foreign Secretary said on that matter.

I now refer to a European matter which is even more immediate and pressing than EMU—the exchange rate mechanism. Our entry into the ERM was welcomed by both sides of the House and by most of the press, but it is clear now that the bands within which the pound is allowed to float are sustained only by damagingly high rates of interest in Britain. That means, for instance, that German industry in recent months has enjoyed a 50 per cent. advantage over its British competitors in terms of the cost of its borrowings and investments.

Even with those differences in interest rates, highly disadvantageous as they are to our industry and commerce, the pound is falling towards the bottom of the band. There is, therefore, a case for arguing either that United Kingdom interest rates are too low to sustain the band or that the ERM bands are themselves too high. Far from believing that interest rates are too low, I have been concerned for many months about the level of interest rates and, from time to time, have expressed anxieties in writing to colleagues. In February—nine months ago—I wrote: There must be a danger now of a demand squeeze turning into a real threat to supply side confidence. There seems now to be a lag of about two years between a major change of interest rate levels and investment rates. Seven months later—in September—I wrote again: I have been asking myself again why it is that the UK continues to suffer worse swings of `stop-go' economic cycles than any of our competitors, with more serious effects in particular on business confidence. The answer I believe continues to be that our economic and monetary authorities have less of an appreciation than others of the lags in the economy in particular between changes in interest policy and business investment. They tend, as they have done for the past fifty years, to respond to the events of the day without projecting forward the effects of their policies for the necessary 18–24 months. These policies are therefore alternatively more severe and more lax than is required. Thus, for instance, high interest rates, introduced when the economy was already entering a downswing (and when inflationary forces were mostly caused by a slowdown of productivity increases) will begin seriously to bite as the economy enters a recession next year. The two arguments against reducing interest rates are now 1) inflation and 2) the pound. Inflation will be brought under control by the emerging recession. A pound related to genuine market conditions is surely what is required for our balance of payments. For this reason I have been convinced for some months that interest rates are too high and that they should start to be reduced at once. All of that was written before we entered the ERM. There are those who argue that if we now renegotiate the ERM bands, as I believe that we should, and thus devalue the pound, we shall stir up the embers of inflation, but I do not believe that. It would be true only if there existed the purchasing power here greatly to expand more expensive imports, which will clearly not be the case in the economically difficult months ahead. Despite the recent peculiar figures for consumer credit, the retail market is plainly in the doldrums and likely to remain there for the time being.

Others argue that the German mark will itself collapse as Germany sorts out its eastern half. It would, of course, make matters worse from our point of view if Germany responded by raising her interest rates. It would be ironic indeed if British industry had to pay the cost of German unification through high interest rates. The French are already beginning to grumble at that prospect as it dawns on them that Germany may choose high interest rates in preference to increasing taxes on her own people. For the United Kingdom, the hard probability is that if we are to reduce interest rates from their present dangerously high levels, and under the existing European financial mechanism the pressure may actually be upwards, we shall have to renegotiate the ERM band to a lower median level of the pound against the deutschmark.

Now is precisely the time to do it, while a new Prime Minister and a new Chancellor of the Exchequer are enjoying a honeymoon period at home and abroad. Should they wish to do so, they would be able in their negotiations to offer to reduce the range of the banding to the narrow 2.25 per cent. The alternative to such negotiations is high and probably rising interest rates at home. Those would, next year, turn a recession into a severe slump. The consequence of that would be the almost certain electoral defeat of my party at the next general election.

As a former deputy chairman of my party, I have never waivered in my belief that the economic cycle, and not such issues as the community charge, is the real and probably exclusive determinant of election results. What matters in politics is economics. Conservative Administrations have made historic improvements to the supply side of the economy. We must not now put all of that at risk by compelling British industry and commerce to compete unfairly through a combination of high interest rates and artificially high exchange rates, brought together within the present banding levels of the pound in the European exchange rate mechanism.

Several Hon. Members

rose——

Mr. Deputy Speaker (Sir Paul Dean)

Order. I remind the House that the 10-minute limit on speeches is now in operation.

7 pm

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Although I shall be putting a view that is not generally popular in the House, as I have only 10 minutes in which to speak, I shall not give way. I normally give way, because I believe in doing so. I appreciate the necessity for a time limit on speeches, although it means that we become like the continental hemicycles that we criticise for lending themselves to setpiece speeches.

It is about time, too, that the Front-Bench speakers in this place took their share of the limitation on time. I am sure that the House would not have suffered greatly if the one minute less than three quarters of an hour which the right hon. Member for Manchester, Gorton (Mr. Kaufman) took had been cut by half.

I, too, was at the assize in Rome. I found it a remarkable and inspiring occasion. I was enormously impressed by the general enthusiasm expressed by the representatives—they were very much representatives—of the political movements from all our partner countries in the Community.

The right hon. Member for Gorton complained because, he said, the Government did not know where they were going. I assure the House that Liberal Democrats know where we are going. We also know where we stand, and, what is more, we are not split. Indeed, the Liberal leaders in Berlin, when meeting on 23 November, urged, among other things, the Intergovernmental Conferences convened in December 1990 to take substantial steps towards transforming the Community into a genuine European Union based on a constitution of a federal type. That was part of the declaration of the assize, as hon. Members who were there will appreciate.

I fail to understand what all the objections and fears about federalism mean. After all, federalism represents a democratic limitation on central power, not the other way round. I am continually amazed by the apparent new conversion of Conservative Members, in particular, to the idea of decentralisation.

The Labour view, expressed over three quarters of an hour, boiled down in many respects to continually asking the Government when they would use their veto. There was a negativism about the speech of the right hon. Member for Gorton.

The Government view is that by day we will order a suit from a Bruges tailor, but by night we will slip into dungarees, make a few quick changes and hope that nobody notices. I am left wondering precisely where the Government stand. I notice, for example, that a friend of the Government, Mr. Jacques Chirac, reported in the Financial Times this morning, in launching a new party policy document, said: We refuse the conception of the French Socialists, as well as of the Germans and of the Italians"— doubtless he could have mentioned a number of others— for a federation of the Twelve. He went on to talk about an intergovernmental union of European nations. Is that what the Government want?

I do not have time to express in detail the Liberal Democratic view, but following the meeting on 23 November to which I referred, those attending said: the Intergovernmental Conferences should make a qualatitive leap forward to democracy by granting full co-decision powers to the directly elected European Parliament in all areas of Community legislation, with Council, when acting in its legislative capacity, deciding in public and by qualified majority. I do not have time to develop that point.

The right hon. Member for Bethnal Green and Stepney (Mr. Shore) considers those to be shameful declarations. There is nothing shameful about them. I accept that the concept is different, but it is a searching after democracy. We in this House are not all that accountable. We in this country do not apply subsidiarity particularly well. Was the poll tax in Scotland, on the basis of 28 per cent. of the vote and only 10 out of 72 Members of Parliament, an example of the operation of subsidiarity, a concept for which Conservative Members seem suddenly to have developed an enormous affection? I do not think so.

On enlargement, I have time only to agree with the view on Austria, although, in the view of the eastern countries and, I believe, the Scandinavians, we should not hold back the greater coherence of the European Community. Indeed, they would approve of it. We Liberal Democrats also accept references to foreign affairs, defence and security and we believe that in the end those will be European Community responsibilities. A Labour party document commented: A military role for the EC would make the position of Ireland as a neutral country very difficult—and make it impossible for Austria, Switzerland and Sweden, as neutral countries, to join. Why are they neutral, and between whom are they neutral? The neutrality agreement is dead, because the cold war is dead. In Ireland, Fine Gael is already asking for a re-examination of those questions.

I do not have time to deal with the question of European monetary union. The issue is how to share sovereignty properly in a different world, and it certainly is a different world in which we are now living. We often talk about the sovereignty of this House. Hon. Members who want to maintain the status quo frequently talk about it.

In reality, a strong party system based on a truly unrepresentative and divisive electoral system has created sovereign Governments who, when in office, do their will without much regard for Parliament. We want the citizen to have greater sovereignty; or, as the Leader of the Liberal Democrats said on Tuesday: The European debate must stop being one about the power of nations, and start to be one about the entitlements of the citizen. Liberal Democrats—Liberals generally—are about individuals and individual freedom. We naturally think that way.

The issue is not only London and Brussels. It is London and Edinburgh, London and Cardiff and York and Bristol. We were happy to co-operate with the Labour party in the Scottish convention, and that represented a relevant issue. It was an important illustration of the need to re-examine the nature of how we are governed, not only without but within the United Kingdom.

That does not only mean accepting that we can no longer do certain things alone at the European level. It means looking at subsidiarity internally, breaking down the centralisation of Whitehall and giving power back to the peoples in the old nations and regions of the United Kingdom. It also involves seeing whether in some areas the link need not be London to Brussels but Edinburgh, Cardiff and so on to Brussels.

We are in a period of great change. I do not agree with the Foreign Secretary when he says that there is no ineluctability—there is an ineluctable movement and we must ask ourselves how we should handle it because it will change the nature of the nation state. In that moment, Liberal Democrats will argue throughout for giving the individual citizen greater freedom and influence. That can be done within the frame of the ideas set out in the assize and argued in our policy statements on the European Community.

7.10 pm

Mr. Ray Whitney (Wycombe)

Due to the time constraints under which we are labouring, I hope that the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) will forgive me for not following his points, except to say that his contribution highlighted the diversity of opinion that understandably exists in the House. As is well recognised, that diversity spreads across and within our parties. Another feature of European affairs debates, as all of us who are regular attenders understand, is that the individual contributors are not at the centre of gravity of their party, but tend for the most part to reflect the extreme views of either position. There is a great mass of opinion in our party that should be more widely represented, but sadly is not.

My right hon. Friend the Foreign Secretary referred to continuity on the part of the Conservative party. It is a perfectly understandable and fair debating point for Opposition politicians to suggest that there is a lack of continuity. However, in that regard, the contribution of my right hon. Friend the Member for Finchley (Mrs. Thatcher) is underestimated. In a debate on the subject on 19 December 1988, I suggested that the Government would do well to take down from the archives a memorandum that my right hon. Friend the Member for Finchley put to her fellow Heads of Government in the European Community in 1984.

We learn from the press that there is discussion about whether there should be another Government paper about our attitude to European Community affairs. Whether or not there is to be another one, I recommend Ministers to re-read the 1984 statement of my right hon. Friend the Member for Finchley. In it, she said: responding to the needs and aspirations of its 270 million inhabitants"— of the Community before its enlargement— means giving greater depth to the Community in both its internal and external activities. It continued by saying that we had only just begun to take advantage of its the Community's— great potential. The memorandum stated that there was a need to create the sense of common purpose and momentum needed to … defend our collective interests in an increasingly troubled world; fulfill our international responsibility to the causes of freedom, democracy, prosperity and peace. It went on to talk about the need to develop a genuine common market and the intra-Community trade that we have seen in the evolution of the Single European Act and the Community market to which we are now moving, and to which the Government have made such a contribution.

The memorandum said that the common agricultural policy—a familiar target—needed a continuing effort to correct the distortions. As we well recognise, that effort continues to be needed. In the industrial sector, my right hon. Friend the Member for Finchley called for action on a Community basis rather than nationally and Better co-operation on research and development. She continued: Many environmental problems require action going beyond the capabilities of individual Member States. My right hon. Friend showed the great foresight and vision for which she is noted. Some six years ago, she spotted environmental problems and the contribution that the Community could make to help solve them.

My right hon. Friend said that our objective must be to aim beyond the common Commercial Policy through Political Co-operation towards a common approach to external affairs … The growth of Political Co-operation enables the members of the Community increasingly to adopt common positions on world problems … we must be ready in Europe to make progress towards the liberalisation of our trading practices, and to play a full part in strengthening the GATT trading system. How sad it is to reflect on that objective in the light of the events of the past few days in Brussels. Let us hope that progress can be made there.

The penultimate paragraph of my right hon. Friend's memorandum stated: Periodic expressions of pessimism about the future of the Community have never turned out to be justified. Europe needs to advance its internal development. The progress that has been made towards 'an ever-closer union of the peoples of Europe' of which the Treaty of Rome speaks in its first paragraph is unlikely to be reversed. That is the objective and aim on which we are set.

I do not believe that we shall ever be talking about a United States of Europe based on the model of that in north America. I simply do not know—no one knows—what we shall have achieved in 10 or 50 years. I know that it will be a difficult and exciting time, different from anything that exists, or has existed, in history. I also know that if this part of the globe, western Europe, is to achieve the stability, prosperity and security to which we and our constituents aspire, it will be crucial for Britain to play an active part in the process.

I strongly welcome the words of my right hon. Friends the Prime Minister and the Foreign Secretary, that our position should be on the playing field, participating. We shall certainly take part in the two intergovernmental conferences. The first one is on the institutions—we must find a more constructive role for the European Parliament. Due to the constraints of time, I cannot elaborate on what its role may be, but at present that Parliament is not efficiently or sufficiently used.

I shall offer a few principles on European monetary union. We should all approach with an open mind what will undoubtedly be long and complex negotiations. Although our 12 countries have been working together and have geographical continuity, nevertheless we are still different economically, socially and in many other significant ways. Therefore, any form of moving together in close co-operation will take a long time, and we should recognise that. It may well be that the hard ecu could make a contribution as a common currency. I am not convinced of that—none of us can be sure—but it is a strong possibility. In good time, it may turn out to be a stepping stone to a single currency. We should not shy away from what some people regard as a threat of a single currency.

The advantages of a single currency must be obvious. When, before 1914, our forefathers enjoyed with the gold standard what was, in effect, a single currency, no one was frightened about the threat to sovereignty. Our predecessors did not believe that the sovereignty of Parliament or the nation was threatened because we enjoyed the single currency of the gold standard. Moving towards a single currency will be hugely difficult, but the difficulties will not be so much for this country as between whatever colossus Germany develops into and Greece at the other extreme—we are somewhere in between. I believe that we can live with that.

I suspect that some hon. Members who are frightened of a single currency do not believe in the economic capacity and potential of our country. I do not share that pessimism. I believe that we can look our European partners in the face and live with it. A great help towards moving to a common currency would be the introduction of an independent central bank. It is significant that almost the first act of the Attlee Government after 1945 was the nationalisation of the Bank of England. We have privatised everything else, but we have not yet privatised that. I commend my right hon. Friend the Member for Blaby (Mr. Lawson) for his views on this matter.

I do not feel that I am losing my Englishness or Britishness as we move towards closer union, whatever that may be. The French are not losing their Frenchness, and I have no fear that we shall lose our Britishness.

7.20 pm

Mr. Denzil Davies (Llanelli)

To those of us who were around in this House in 1972—a dwindling band, unfortunately—and who voted during the debates when the United Kingdom first acceded to the treaty of Rome, these further debates on the EC begin to have a familiar ring. One of the characteristics of those earlier debates was a certain lack of candour and clarity on the part of the pro-marketeers and of the Government of the day. There were echoes of that in today's speech by the Foreign Secretary, particularly when he came to deal with economic and monetary union and with political union.

In 1972, there a was a failure to recognise that accession to the treaty of Rome was the first step leading to an act of union. The second step is economic and monetary union, and the third, intertwined with it, is political union. The EC is all about moving eventually towards political union—a European Parliament with full powers and a European Government of some sort. The exact form that that Government would take has not yet been thought through.

Since we signed the treaty, more powers have been transferred from Westminster and Whitehall to Brussels. I shall not talk about sovereignty—it is a dirty word these days, and a peculiarly British concept, we are told, relating to the House of Commons; and the Europeans do not understand it—so let us talk about political power. That power has gradually been transferred over the past 18 years—by 1992, it will be 20 years—from here to Brussels, largely to unelected, undemocratic bodies.

No British Government could now reimpose exchange controls, for instance. Our ability to control our trade policy is extremely limited, as the GATT negotiations have shown. Our ability to control agricultural policy is also extremely limited, as is our ability to restructure our industry without the—increasingly grudging—consent of Brussels.

When my hon. Friend the Member for Dunfermline, East (Mr. Brown) becomes Secretary of State for Trade and Industry, he will find that one of his hands is already tied behind his back, and in a few years' time, if these proposals go through, the other hand will be similarly tied.

In the past two weeks, the City, having clamoured to join the European monetary system, has begun to clamour for interest rate cuts—when the pound is bumping along at the bottom of its EMS band and the Government dare not reduce interest rates. That restriction, although incomplete, is nevertheless a restriction on our control of monetary policy.

Substantial powers are still left: powers over taxation, over the Budget, over borrowing and over public expenditure. But if these plans for economic and monetary union go ahead, those powers will go too, transferred to institutions in the EC.

The single European currency is not about whose head, or how many heads, should be on the coinage. It signifies a single monetary policy, a single economic policy and eventually a single Parliament and Government. If that comes about, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) will be bound hand and foot at the Treasury, trying to run British economic policy.

Whatever the technical merits of the ecu, and it has some—it is quite a clever dodge—it is a dead duck, not because of technicalities or economics but because the whole movement towards a single currency does not want 13 currencies: it wants one. That is why there is no chance, whatever the economic arguments favouring the ecu, of it succeeding. The single currency is not only about economics, as my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said; it is mainly about politics and political union.

The central bank will be a European Bundesbank, governed by the same sort of statutes as govern the real Bundesbank. Were it anything else, the Germans would not agree to it. It is no good pretending that there will be control by Ministers. One of Delors's reports mentions accountability. The new governor of the central bank would have to go along to the European Parliament twice a year to give a report, but the idea advanced by some that the Council of Ministers or a Committee thereof could control monetary policy of the central bank shows that those who hold the idea are living in cloud-cuckoo-land.

In this country, the Chancellor or the Prime Minister calls in the Governor to No. 10 or No. 11; interest rate policy is discussed; and the Government make the decision. In France, the governor is not even consulted—he may be now, but he certainly was not before. The Ministry of Finance decides. Even in Germany, when the political pressures were on, Herr Pöhl, who likes to see himself as the great custodian of monetary discipline, agreed to offer one west mark for one east mark—a purely political act. But when we have a European central bank, the 12 Finance Ministers will not be able to apply that sort of pressure. The bank will be even more independent than the Bundesbank.

With monetary union, there will have to be economic convergence. That will be disastrous for the weaker areas of Britain—of Wales, of Scotland and of the north of England—and for countries such as Spain, Greece and Portugal. A massive transfer of funds will be needed to try to restore the balance. Where will the money come from? The MacDougal report in 1977, issued before the enlargement of the Community, estimated that, in a federal Europe, about 25 per cent. of the EC's gross national product would have to go into its budget. The figure now is 1 per cent.

Who on earth will contribute these vast funds to facilitate economic and monetary union without its damaging the weaker regions? Will the German taxpayer pay? I doubt it, given all the problems of east Germany, eastern Europe and the Soviet Union. Will French taxpayers pay? Perhaps the plan is to impose a Euro income tax—the final erosion of our ability to raise the income tax that we want to raise.

The final stage will be political union, but by then that will come easily. Once all these other elements have fallen into place, political union will be bound to come. Once economic control has been taken away from nation states, there will be political union. If this momentum continues, we may be in that position by the year 2000.

The Foreign Secretary was reported in The Guardian as having said that he would not agree to turning Westminster into a body resembling Oxfordshire county council. Perhaps that analogy goes too far. A better analogy is provided by the German Lander. If all these plans go through, British control over economic policy will be no greater than the control exercised by a German Lander or a regional assembly anywhere else. Those who favour these movements, and the Government, have a duty to be frank and to tell the British people what is happening so that they can make up their own minds. This matter must never again be swept under the carpet because that is extremely dangerous. It is not a technical or an economic matter, but is at the heart of political control. From my experience of debates, and of events in 1972, I am not optimistic that we will get the candour and clarity that we deserve.

7.30 pm

Mr. Michael Lord (Suffolk, Central)

I am grateful for this opportunity to take part in a debate that seeks to understand where we are going in Europe. The right hon. Member for Llanelli (Mr. Davies) said that we should try to tell the British people where we are going. That is enormously difficult in view of the plethora of organisations that we have to discuss and the initials that must be understood.

Originally, the British people talked about the Common Market and sort of understood what it meant. Now the EEC has become the EC and we talk about single and common currencies, the ecu, the hard ecu, EMU, GATT, EFTA, NATO, the North Atlantic Assembly, the Council of Europe and the WEU. That makes it extremely difficult for anybody, except those with detailed knowledge, to understand what all those organisations are about and how they fit together. The Euro jargon would also be hilarious if it were not so serious.

I was amazed at some of the speeches that I heard in the assizes that I attended in Rome last week, along with several other people. Even allowing for difficulties in translation, my constituents would be hard pressed to understand exhortations such as: We must pool our legitimacies and co-ordinate our competences in order to embrace co-decision and subsidiarity. Perhaps when 12 try to speak as one it is inevitable that it should become unintelligible to everybody. Perhaps we should say, "Come back Esperanto, all is forgiven." I joke to make a serious point.

Plainly, definitions of all those issues are vital not just to hon. Members but in plain language to the British people before any more firm and binding decisions are taken. Europe is in such a state of flux that it is difficult for anyone clearly to understand all the components and how they can best be put and kept together. Could the framework of Europe be wider and looser in the form of the framework provided by the Council of Europe on which I serve? The Council contains representatives from every European democracy and has already allowed into its organisation the states of eastern and central Europe. Should the framework be narrower and tighter in the form of the framework offered by the Community? That may be good for nations within the organisation, but it is much harder and takes longer to enter, and sometimes creates friction with other nations and blocs.

As the Warsaw pact disappears, perhaps we should pause and ask ourselves whether large blocs of any kind are still such a good idea. I do not intend to enter the complex debate about economic and monetary union and an independent European central bank because time does not permit. However, I find it quite frightening, bearing in mind that all these proposed measures are of such huge proportions and have never been tried before, that so many people who are for or against, and especially those who are in favour, can be so sure of the outcome. No one can be certain, and for that reason we should move forward with great care.

The conference in Rome last week was an organisational pantomime and an object lesson in Euro manipulation. We went there as a national delegation and were immediately put in political groups. We went with a framework for discussion but were told that a framework did not exist and that there would be a free-for-all debate. The draft declaration which was to appear at the end of the conference was being produced as we arrived and the conclusion at the end of the conference was incidental. I greatly disagreed with the final declaration and I was one of the 13 who voted against it.

The one thing that came out clearly and strongly was that the relationship between national Parliaments and the European Parliament must be a partnership, not a power struggle. I see the national Parliaments as the senior partner. For that partnership to work, we need to establish procedures in our national Parliaments that will allow much fuller scrutiny of all Euro legislation before it is enacted and not afterwards. Somehow, we need to fit together like cogs on two interlocking wheels the parliamentary calendar and the decision-making processes of the two partners.

Although such a partnership may not immediately give more power to national Parliaments, it will certainly give them more responsibility and more confidence in what is happening. Only when the correct mechanism to link national Parliaments and the European Parliament is properly devised and in place will we be able to move forward in the right direction and at the right speed. Only then will the true and desirable balance of power and responsibility between all the parties involved become apparent. I urge the Government to undertake this organisational task with the greatest possible urgency.

7.34 pm

Miss Kate Hoey (Vauxhall)

We all know that Europe is living through a momentous period. The collapse of communism in the east, the unification of the two German states and the Gulf crisis create a new situation. At the same time, technological changes are speeding the globalisation of the economy and the environment. They are also reducing control of Governments over a future which in many ways, although hopeful, is more uncertain than ever.

I shall not use the word "assize" but will speak about the conference of European Parliaments in Rome which I attended last week. At that conference there was a great deal of discussion about what kind of Europe we wanted. Like many hon. Members, I had not spent much time thinking about Europe and discussing it, and at the conference I listened and learned a lot.

It is important for us to decide what kind of Europe we want and how it should be shaped. I want to see a Europe that is committed to reducing social inequality and underdevelopment. That means that it must set high social standards so that everyone benefits from the creation of the single market, which must have effective consumer protection. Such minimum social rights in every European country will prevent companies from competing unfairly through the lowering of employment and social conditions.

European economic developments must respect the environment. It has been said many times, but it is true and it needs to be repeated, that pollution knows no boundaries and does not respect nation states. Europe needs an environmental charter which sets out principles on which we can all co-operate and an environmental policy that will carry us forward into the next century. Europe must support its less prosperous regions. I think that there is a European term for that. At the conference I picked up all sorts of new European terminology. One of the things that came out of the conference was that we want to get ordinary people in Britain to think about Europe and understand it. We must stop using terms which mean nothing to most people. Many hon. Members use terms without really understanding them. I should like to see them try to explain those terms to their constituents.

Our new Europe must actively co-operate with the emerging democracies and not shut the door of membership to the rest of Europe. It must also continue to develop co-operation and not forget the peoples of the third world. Above all, the Europe that we want must be democratic if it is to exercise such responsibility. It must also be democratically accountable and must promote the involvement of all its citizens in decisions affecting their lives. Central to that is the extension of majority voting on environmental and social issues so as to prevent progressive policies proceeding only at the pace allowed by the most backward. Unfortunately, in the past few years Britain has been backward on many social and environmental issues.

We must also consider how we scrutinise what is happening in Europe. Perhaps in that respect I am as much to blame as any hon. Member. However, most of the time we discuss European directives and legislation late at night. If we are seriously to examine that or any other legislation, we should not do so at such ridiculous hours.

The national Parliaments and the European Parliament should complement each other's work so as to ensure proper democratic scrutiny. There is no need for any new institutions to bring the Parliaments together. We have enough institutions and bureaucracies already. How do we make people feel more European? How do we become more European? As I said at the conference, it does not happen overnight. People do not wake up one morning and say, "I feel European." To be honest, most people in this country do not feel European. We must bring together not just parliamentarians but people, throughout Europe. The success of the European ideal depends on the children and young people of Europe, and we have to find ways to bring them together. More and more, young people are travelling and working abroad, finding that countries have similarities, that they get on with people abroad—and that what is abroad is not just a foreign country.

Here I stress the importance of my interest In the language which transcends all other languages—the language of sport. Here is a simple example of how undemocratic the European Commission is and this is why we need to democratise it. Recently, it offered £6 million—to be divided among the countries of Europe—to bribe their Olympic athletes to wear a European symbol at the Olympic games in Barcelona. If that suggestion had been properly discussed in a democratic body, the money would be going not to elitist sport, but to the grass roots, to school sport and school exchanges. If we think that an Olympic athlete, from whatever country, wearing a European symbol will change the attitude of young people towards Europe, we are wrong. If the money went instead towards enabling children to compete against one another and towards the development of European sporting teams, such as the recent golf team, we should be doing better. We must ensure the free movement of football players in Europe. We should bring together the people of Europe, not just at parliamentary level, because that will change people's attitudes and make them feel European.

We have to make it clear that this Parliament and this country cannot accept the taking away of any more legislative power from our national Parliament unless and until the Community's decision—making procedure is far more democratic. It is wrong that control should be taken out of the hands of national Parliaments just so that Ministers can decide matters in secret meetings far from the public and from criticism by the Opposition.

We cannot afford to stick our heads in the sand and say that if we do nothing Europe will go away and we can go back to how things were 10 years ago. Europe is there for us to be involved in and to work with. We must bring about the kind of Europe that we want for the future of our children and our children's children.

7.43 pm

Mr. William Cash (Stafford)

The hon. Member For Vauxhall (Miss Hoey) said that Europe is here. Of course it is—it has been here for thousands, if not millions, of years. However, the definition of Europe, and who will run it, is what is at stake in this argument.

After some difficulty, I have just got hold of the statute for the proposed central bank. It was delivered to me late this afternoon, and contains some interesting material. At bottom, it means that the powers of the House will be taken and given to independent, unelected bankers so that they can run our affairs. That is the unvarnished truth, at the heart of which lies a bigger question. In the course of doing that, our democracy, our consent to and the control over the co-operation that we want in Europe will be taken as well.

I acknowledge that the Governor of the Bank of England has put a reserve on the statute, but I hope and trust that my hon. Friend the Minister will tell us that the Government have every intention of vetoing it, because there is no gradual progression down the route of this detailed statute. The issue is not whether we can gradually move down that path—the situation is clear cut against the background of the Ashford castle meeting in Dublin earlier this year and of the Delors committee report, and there is no doubt about where we are being taken—but that we have reached the point of decision.

Therefore, I look to the Government to make the position clear. I have asked on a number of occasions for a White Paper, as I did in the last business questions taken by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) as Leader of the House. I got pretty short shrift from him, as I have often done in the past when I raised the question of federalism, as long as five years ago. But these are fundamental questions not only about the position of the House but, more importantly, about the position of the ordinary man in the street and his consent to, and involvement in, the democratic government of the country. That is an even wider question, because it involves us as Members of Parliament and the trust that we hold on behalf of the people whom we represent. Therefore, we have no right to go down this path, as it would deny that trust. As Disraeli said, "Trust the people." We must do that in this context.

There is a broader background against which I shall set my remarks. Without any disrespect to the German people, there is an inevitable consequence—I can claim that that will be the case—of the fact that this bank will effectively cut through all the paper. I have some small experience on constitutional matters, and I know that the paperwork will not withstand the realities of power. In 1980–81, before I was elected to the House, I was advising on the Canadian provincial case for the patriation

proposals. The other day, I saw Mr. Delors at the assize. I said to him, "Please do not continue to allow us to be taken down this route, because we shall end up with 12 Quebecs."

There are enormous internal tensions within the Community, which will be made worse if the binding rules are imposed with the package of procedures that is laid down. Already there is potential for a civil war in some of the southern Mediterranean countries. When they are faced with the reality of their consensus being taken over by these independent bankers, and the paymasters—Germany and ourselves—resisting the amount of money that will be paid down that route, the problems will become more serious.

As I said to Mr. Delors, all those problems are avoidable now if only we would back off from this ridiculous progression towards what some people would call a historical necessity.

Mr. Bob Cryer (Bradford, South)

What did he say?

Mr. Cash

He said that he would see me again on another occasion.

Many questions arise from this draft statute, but there are even more questions for the Government to face. Everybody knows that I have been a completely loyal supporter of the Government since I came to the House. In addition, I have tabled motions, which have gained a great deal of support from Back Benchers, directed at this very question. I have no doubt that there is a similar feeling among Labour Members that we do not want to be sucked into a black hole. We want to make sure that we sustain democracy, not only in this country and our constituencies, but in Europe. As Bismark said, "Those who speak in grand terms about Europe are the ones whose motives I most suspect".

Without any disrespect to Germany, we must help it to understand how the enormous engine of power that it has at its disposal could be misused in the future. Only two nights ago, I had dinner with a most distinguished German journalist. He said, "For heaven's sake, make sure that this doesn't go through." He has written articles about this, and he knows that the reality is that, if Germany were to obtain the degree of control over Europe that would be the consequence of the proposed independent central bank, it would not be in the interests of Germany or Europe, and it would certainly not be in the interests of the United Kingdom.

I shall say no more about the farce of the European conference that I attended, where serious questions were raised about matters of consent. It had no legitimacy. I had hoped that we would have a serious discussion, but it was an opportunity lost—a tragedy.

The other day I had the pleasure and honour to be at Ditchley park, talking to some of the people whose opinions the House would respect. As the conference progressed there was an increasing awareness that the notion of subsidiarity is not on. That is because it begs the central question. Once one has arrived at the point of assuming that the higher tier—of which the independent central bank is to be the highest tier in terms of economic and monetary policy—is to be conceded, there is no need for subsidiarity. It eats itself up like Monty Python.

Subsidiarity would hand over democracy to a "judocracy". It would hand over to the courts intensely political decisions, and they do not want that. I cannot name some of the people to whom I have spoken on this subject. They are justices whose names I am not prepared to divulge at the moment. They have told me that they do not want subsidiarity incorporated in a treaty, because they could not cope with it. They would be asked political questions, and it is wrong for us to contemplate giving them that power.

Therefore, we must proceed not only with caution but with the confidence that we are talking about democracy in the EC, in the House and in Britain. If we were to depart from our conviction that that is what the House is all about, I for my part would say that we have brought Britain to a sorry state.

7.52 pm

Mr. Ron Leighton (Newham, North-East)

We all want the maximum co-operation in Europe, both east and west and, after the GATT negotiations, in countries outside Europe as well. The issue is not whether we are in or out of the EC, still less whether the Queen's head is to be on notes or coins; the real issue is whether we are to have new treaties, which will fundamentally transform our national life, our institutions and our relations with other countries, and on which British people have in no way been consulted. In fact, the opposite is true. The British people were promised precisely, and in specific terms, that that would not happen.

In preparation for the debate I looked up the manifesto issued by the Wilson Government at the time of the referendum in 1975. It said: There was a threat to employment in Britain from the movement in the Common Market towards an Economic and Monetary Union. This could have forced us to accept fixed exchange rates for the pound, restricting industrial growth and so putting jobs at risk. This threat has been removed. It is precisely that threat which we were told had been removed which will be reimposed by the new treaties.

The manifesto went on to say: Fact No. 2. No important new policy can be decided in Brussels or anywhere else without the consent of a British Minister answerable to a British Government and British Parliament … The Minister representing Britain can veto any proposal for a new law or a new tax if he considers it to be against British interests. How can a British Minister veto anything if there is majority voting and political union? It seems that the voters were misled, if not lied to at that time.

If the powers of Parliament are to be given away, it is not just a matter for us. The powers of Parliament are the powers of the people, and how are they to be consulted? After all, we are just the temporary custodians of those powers. It is not for us to barter those powers away without consulting those who sent us here.

There are to be two conferences. The first is on political union. What does that mean? Will someone explain that to us? Do we want it? What are the advantages? Would it be durable? The conference will deal with political integration, the division of powers between EC institutions, and the balance of power between the member states and the EC as a whole. Some people are demanding rather noisily that Community competence should be extended to foreign policy, defence policy and security policy. There are voices urging a single federal or unitary state, which would have one seat at the United Nations and in 100 other international bodies, a single embassy in foreign states and be endowed with single treaty-making powers.

Is there any suggestion that that is what our electors want? I have not had a single letter from any of my constituents saying that that is what they want. One thing is for sure and that is that the more power is centralised, the greater the loss of democratic accountability. There is no democracy anywhere in the EC. It is a no-go area for democracy.

The EC's executive is the Commission. Who elects it? There are no elections to that body at all. All its members are appointed. The legislature is the Council. It meets, works and legislates in secret. Ministers are not held to account in national Parliaments. They hide behind collective decisions, and they will do that more so if there is majority voting.

The European Parliament is elected, but it is not a real Parliament. A real Parliament legislates. The European Parliament does not. Its standing and reputation are poor. Few people show any interest in it, vote for it or know who their European Member of Parliament is. It can never be the focus for people's hopes and aspirations. If an attempt were made to turn it into a real Parliament, to give it more powers, where would those powers come from? They could be taken only from national Parliaments. A real European Parliament would imply a European Government, a centralised European state.

People say that we need not worry about that because we have the lovely principle of subsidiarity—that the centre at Community level should perform only those tasks that cannot be performed more effectively at the national or local level. That is all very well, but who decides what comes under subsidiarity? Hon. Members may have heard Beatrice Webb's explanation for the success of her marriage to Sidney. She said that they came to an agreement that Sidney would deal with important matters such as who declares war on China and she would deal with unimportant matters such as where the children were educated, where to go on family holidays, and that she would decide what is important and what is not.

That is true of subsidiarity. Where is the line to be drawn? There is no mention of subsidiarity in the treaties. It is not justiciable, and even if it were, who wants to give power to that court? It is a completely subjective judgment with no safeguard of any description. I could suggest where we should have subsidiarity. We should all have our own agricultural policy. Why should we have the monstrous common agricultural policy?

The second intergovernmental conference is on economic and monetary union. Let us not beat about the bush. We all know what that is about. The aim is a single currency, is it not? Do we want it? What are its merits? I have not heard anyone explain its merits. What I have heard is people saying that others want it—not everybody, not the Portuguese, the Spanish or the Greeks—but some others. They are determined to go ahead; we must not be left out. That was the intellectual argument of the Gadarene swine. Those who advocate a single currency must do better than that in explaining its merits.

It is commonly agreed that a single currency cannot work without convergence and that the economies of the member states must all perform in a similar way, with the same rates of investment, productivity, growth, interest and inflation. Some have even argued that they should have the same living standards. How is that to be achieved? How will Greece, Portugal, and Spain attain convergence with Germany, and Britain as well, and when? What comes first—convergence or the single currency?

I am indebted to Lord Hesketh for informing me that European inflation ranges from 3 per cent. to 22 per cent.; short-term interest rates from 8.5 per cent. to 19 per cent.; budget balances from a 1 per cent. surplus of gross domestic product to a 17 per cent. deficit; and unemployment from 1 per cent. to 16 per cent. British inflation is more than 300 per cent. higher than that in Germany, where interest rates are 8.5 per cent. by comparison to 14 per cent. in this country.

What are we to do in those circumstances? Some argue that we should take our courage in our hands, take a leap into the dark, and have a sort of big bang into the single currency, and that somehow all the jigsaw pieces will fit. That is an unrealistic and irresponsible attitude.

Others argue that we must take that action for political rather than economic reasons. Monetary union would benefit the stronger economies. However, it would be disastrous for the weaker economies. Where countries have different rates of productivity, inflation and costs, adjustments are usually made by movements in the exchange rates. While separate currencies remain, any problems will manifest themselves as balance of trade deficits or surpluses, which will alert countries to what is happening. If there was only a single currency, that problem would initially be concealed, and the weaker and debtor economies would be progressively converted into depressed areas. Producers, finding their costs too high, would contract and then close their operations. People would be thrown on the dole, and populations, capital and wealth would be sucked away. Britain could become the Northern Ireland of Europe.

Karl Otto Pöhl last week cited an example in what he called a nutshell, and in what I call a laboratory experiment. I refer to the national economy of two countries with different rates of productivity, having a single currency introduced—the deutschmark in the German monetary union—and it led to the collapse of east German industry and mass unemployment——

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. The hon. Gentleman has spoken for 10 minutes..

8.2 pm

Mr. Anthony Nelson (Chichester)

The House will be disappointed that the hon. Member for Newham., North-East (Mr. Leighton) was stopped in his tracks as he was just getting into his speech. I acknowledge his strength of feeling about the importance of safeguarding Britain's democratic institutions, but we part company at that point. I was amazed that in his closing remarks the hon. Gentleman could pray in aid Karl Otto Pöhl.

The hon. Member for Vauxhall (Miss Hoey) made an extremely good point about abandoning Euro-jargon. We should all endeavour to use language that our constituents can understand and not confuse the issues. Whatever happens, there should be an enhanced role for the British Parliament in considering European legislation and further economic and monetary union. In the atmosphere of fragile party unity that has broken out, I hope that my comments will be taken seriously by those of my right hon. and hon. Friends who do not share entirely my vision of the future Europe and Britain's part in it.

We should devote at least one whole day a week to European legislation, and not deal with it late at night. It must be given the priority and emphasis that it deserves. Also, it is ridiculous that Select Committees, which since 1979 have done such an excellent job of scrutinising and mirroring departmental responsibilities, do not do more every year consistently to scrutinise European legislation. The Select Committee on Foreign Affairs—to which I pay tribute, and whose chairman spoke earlier—invites the Foreign Secretary to appear before it in advance of attending Council of Europe meetings of Ministers. That is an excellent step forward, but every Select Committee ought, as part of its remit, to consider legislation emanating from Europe and report to the House, and we should examine that legislation more properly every week.

We should also grasp the nettle, however reluctant some of my right hon. and hon. Friends may be to do so, of establishing closer links with the European Parliament. It is ridiculous that one cannot easily telephone or visit it, or establish close connections there, given its role in legislation which directly affects the constituents whom we represent. Whether or not we agree with the grandiose plans for a new Europe, we should get the existing system, even with its limited remit, on a better footing.

I am a proponent of a single European currency. All our constituents want to be paid in a currency that is worth something, does not change in value from day to day, and does not cost them too much to borrow if they want to finance a house or business. Looking back over the past 10 years, recalling the volatility and gradual devaluation of our currency compared with the economic performance of continental currencies, which have enjoyed greater stability, lower inflation and higher standards of living, it is not hard to understand why my constituents would vote with their pockets. There is very real national self-interest in pursuing a single currency. If we deny ourselves the opportunity to link our currency with the great European economies, we shall be worse off for it. Going it alone is not an option. Much of the sloppy talk—for that is what it is—about retaining our democracy and independence belies the reality of the situation. What sovereignty or independence can there be if one's country is economically dominated by one's neighbour?

We shall not draw together right hon. and hon. Members from all parts of the House by promising implementation of the most grandiose visions of Europe, or by shutting the door on what some of us want to achieve in Europe. The way forward is a step by step, modular approach to economic and monetary union. I defy anyone to deny that that is not in our interests. We need to move forward on a step by step basis which is clearly in the interests of our constituents. For example, when we finally became full members of the exchange rate mechanism, there was a 1 per cent. fall in interest rates and mortgages. That was welcomed by all our constituents. If we moved on into the narrower band of the ERM and it brought a further 1 per cent. reduction in my constituents' mortgages, does anyone imagine that they would object? There can be no objection if such developments put money into their pockets, give them freedom of choice, and encourage a greater propensity to save than to spend. If from that we can develop statutes for an independent central bank and provide our currency with stability for the future, that would be another great step forward. The Bank of England already enjoys a high degree of independence, and the proposals for it to play a part within a European central banking mechanism would give it greater strength rather than less autonomy.

If Britain emerged from the intergovernmental conference having either vetoed the reasonable proposals which have already been made, or with a form of twin-track approach to Europe which would put us in a siding rather than in the slow lane, that would not reflect the tide of events or the interests of our constituents. This is the time to take a step forward—I do not agree with the Opposition Member who said that it is a leap in the dark—and take our people with us. One has only to consider what happened on that dramatic day when east and west Germany merged their currencies at a wholly artificial rate of one to one. Was the result turmoil in the international markets? Did the big bang result in massive depreciation of the value of the German people's savings? Nonsense. It did not. The currency remained stable and strong, and has done so ever since, which shows that if one has the political courage and determination, and if one shows a willing people that it is in their financial interests, they will vote with their pockets. Let us do the same by encouraging a more favourable attitude towards the intergovernmental conferences.

8.10 pm

Mr. John D. Taylor (Strangford)

If one looks at the Order Paper one will realise that, in theory, we are debating documents in preparation for two intergovernmental conferences this month. We are also supposed to be debating various decisions that have been taken in the Community during the past six months.

In practice, the debate is about something different. We are debating how power is creeping away from this Parliament, and from the people of the United Kingdom, to Europe. That is the real issue before the House this evening. Secondly, we are discussing the European Community and not Europe. Europe is a much larger subject than the European Community. Many hon. Members feel strongly about being Europeans. We identify with historical, political, cultural and religious developments that have taken place throughout the wider Europe over the centuries. It is an insult to some of us that some hon. Members have implied that one is only pro-European if one supports the European Community.

In his opening remarks, the Foreign Secretary confirmed that Government policy towards the European Community remains unchanged—only the style had changed; the content was the same. I am afraid that the Foreign Secretary fudged over several aspects of European Community policy, as did the right hon. Member for Manchester, Gorton (Mr. Kaufman). One new fact which emerged this evening was the dramatic news that it is now the official Opposition's policy to support a federal Europe—albeit with reservations. It has been revealed for the first time that the Labour party is now voting for a federal Europe.

One Conservative Member said that there were divisions within various parties in the House about Europe. That does not apply to the Ulster Unionist parliamentary party. We are united, with one voice, in our attitude to Europe and to the European Community. We are the only party which has resisted this nation's membership of the exchange rate mechanism right to the end.

What have we seen today? Yesterday, the Chancellor of the Exchequer confirmed before one of the Committees of the House that this nation is now in an economic recession. As business men—be it small, medium or large businesses—we want interest rates to be reduced as a response to that creeping recession. But the Government are no longer free to do so. They are trapped in the trap that they created by joining the exchange rate mechanism. Sterling is in the lower part of the band, and we are getting dangerously near to a situation in which no reduction can be ma de in our interest rates without breaking through the bottom of the band. That danger besets the Government's economic policy and could help the recession to increase its momentum in the United Kingdom.

The two intergovernmental conferences in Rome are about European monetary and political union. As regards monetary union, we oppose the single currency. Why? Because the creation of a single currency—we are not talking about a common currency—to replace the 12 national currencies will certainly mean that there will be controls on the elected Parliament of this country deciding its own level of public expenditure. There is no sense in electing Labour, Conservative or Unionist Members of Parliament once we have a single currency, because the public borrowing requirement affects the value of the currency whatever the colour of the Government who decide it. Therefore, the Government will have to be instructed by whomever controls the single currency in Europe as to the level of expenditure in the United Kingdom.

Political union raises the question of what kind of Europe we want. Do we want two different Europes? Do we want the Twelve within the European Community becoming more and more closely integrated, transferring more powers to Brussels and becoming more of a federal state? That is what the British Labour party voted for in Rome earlier this month—with reservations. Apparently a fax was sent by the Leader of the Opposition telling Labour Members to vote for a federal Europe as long as there were reservations.

Alternatively, do we want a wider Europe in which, instead of dismissing new democracies in the east as associated states—as the Foreign Secretary said—we shall involve them in a wider Europe, and give them a greater opportunity to advance their economies and democratic institutions? I believe that we should be integrating with the wider Europe, rather than establishing two degrees of Europe—first class within the European Community, with the poorer countries kept outside at a distance and treated as second-class citizens.

The Foreign Secretary referred to security and defence. He went out of his way to make it clear that they are now treated as two separate issues within the European Community, as we consider common policies on these matters. He specifically mentioned that considerable progress has been made towards a common security policy, and that only one country was withholding its support—the Republic of Ireland. As I represent Northern Ireland, hon. Members will understand that that comes as no surprise to me. In the final minutes of my speech, I shall mention certain specific matters that pertain to my part of the United Kingdom.

Terrorism is now an issue in various parts of Europe: in the Basque country, Italy, Germany and, because of the IRA, in Belgium and the Netherlands, as well as in the United Kingdom, both in Britain and in Northern Ireland.

We strongly believe in co-operation on security throughout Europe, and we want to see progress on that issue being made throughout the European Community. We already have limited co-operation on security with the Republic of Ireland, brought about by the introduction of the Anglo-Irish Agreement. It is interesting that the Republic of Ireland is not prepared to involve itself in a higher level of security co-operation within Europe. I suggest that one of the ways that we could get rid of the Anglo-Irish Agreement is to suggest to the Republic of Ireland that it should apply European standards of co-operation and security so that there will be no need to operate at a lower level of security than exists within the Anglo-Irish Agreement.

Three subjects affect us in the United Kingdom, in our relationship with the Republic of Ireland, which do not refer to the Secretary of State for Northern Ireland, but are the direct responsibilities of the Secretary of State for Transport, the Chancellor of the Exchequer and the Secretary of State for Trade and Industry. I would like the Government to pursue them further.

The first is the European Court decision that the Dublin Government acted improperly by imposing a 48-hour rule upon persons travelling from the Republic of Ireland to the United Kingdom to make purchases. The court ruled about six months ago that that was illegal. The Dublin Government have completely ignored the ruling of the European Court, and that embargo still applies on the border between Northern Ireland and the Republic in the Christmas shopping period.

If there were freedom of movement across our border, as there is elsewhere in Europe, towns on the border such as Londonderry, Enniskillen and Newry would benefit from cross-border trade. The Dublin Government, however, ignore the ruling of the court, and, as far as I can see, our Government have failed to ensure that the Community and the Commission will bring pressure to bear on Dublin to abide by that decision.

The European Community is involved, through regional policy, in the question of road and rail communications between Northern Ireland and the Republic. I asked the Government to try to ensure that Dublin takes up the opportunity to accept £50 million from the Community to modernise the Belfast-Dublin rail link. Finally, I ask them also to ensure that the present unfair competition in the Irish sea between the Republic's shipping fleets and those of Northern Ireland is ended. The Dublin Government must be asked to stop financing the Irish lights for Irish boats when these costs must be borne by boats in Northern Ireland. That is unfair competition.

8.20 pm

Mr. Tim Devlin (Stockton, South)

I was somewhat disheartened by some of the earlier speeches. I believe that many of our younger citizens have a much more positive attitude to the European Community than some hon. Members: the generation now growing up in Britain [s much more accustomed to travelling abroad, eats a much wider variety of foods from different countries and has a much greater vision of the world outside, thanks to television and other media, which bring the world to their doorsteps and into their living rooms every day.

I do not think that those young people believe, like the Foreign Secretary, that there are "ogres out there"; I think that they believe that Europe has many opportunities to offer, and involves none of the threatening, overweening bureaucracy that hon. Members often describe. They also understand that we already have a European Parliament, which they themselves elect. In my part of the country, we are well accustomed to the appearance of signs on our roads and railways telling us that funding for certain projects has come from the Community.

I think that it is entirely possible for us to separate fiscal and monetary policy, and that European monetary union—which, in my view, is now almost certain—will not necessarily lead us remorselessly to a united states of Europe. I do not know whether our younger people want a united states of Europe yet, but they certainly want peace and security, an end to customs duties, easier mobility between countries and the preservation of not only national but local differences.

At present, the EC has no role in peace and security; yet political union clearly implies the adoption of a common foreign policy, and the need to co-ordinate the defence policies of Community member states. Let me briefly set the matter in its wider context, as this is a sphere in which I feel that major progress is needed.

Before the intergovernmental conferences, we should try to prepare ourselves by placing the European question in a much broader perspective. In 1946, Churchill called for a united states of Europe, but at that stage he wanted to keep Great Britain out of it. It can, I think, be said that at the end of the second world war the small powers of Europe were driven together by the threat of the USSR and the overwhelming strength of the United States economy.

Europe, which had been the birthplace of a civilisation that now dominates the world, was a wrecked and weakened collection of former states that had been destroyed by the second German attempt at European hegemony. The Council of Europe was formed to prevent its fall to communism or, alternatively, its sell-out to American capitalism. France has been acutely aware of the cultural and economic threats that those two alternatives have posed throughout the cold war period; whereas Britain, unconquered this century and with its identity tempered by the crisis of 1940, still looked out, in 1946, into a world in which it still had an empire, a place and a role to play.

My hon. Friend the Member for Suffolk, Central (Mr. Lord) pointed out that the world has changed very much. That is true: the Soviet Union has now collapsed, and the United States—that former economic giant—depends on the Japanese and the Germans for the financing of its deficits. The states of eastern Europe are now free, and are lining up to join the European Community. What, then, is the role and the purpose of the Community in today's world? Perhaps we should go back to the vision of its founders, which is, in every way, as relevant today as it was in those very different circumstances.

In terms of global power, the world is now very much less safe than it was during the cold war. Then, every conflict was regulated, suppressed or settled by the intervention of two enemies of overwhelming might. With the collapse of one super-power and the relative decline of the other, as measured against medium-sized adversaries, the potential for conflict has been heightened. Into the vacuum created by the change has stepped the clash of regional and religious identities, Islam and the Pacific rim trading nations being prime examples.

In 1951, when the European Coal and Steel Community treaty was signed in Paris, there was little that Belgium, France, Germany, Italy, Luxembourg and the Netherlands could do to safeguard world peace through creative efforts commensurate with the dangers that then threatened it; yet that appears as the first commitment in the preamble. Indeed, there was little hope that any of the other aims highlighted in the preamble could be achieved—except in the last, the resolve to substitute for age-old rivalries the merging of their essential interest; to create, by establishing an economic community, the basis for a broader and deeper community among peoples long divided by bloody conflicts; and to lay the foundations for institutions which will give direction to a destiny henceforward shared". How much more relevant, however, is that preamble today, 40 years on? Others have spoken today of the reality of a German-dominated Community; surely, though, the greater size of the organisation—as it expands to take in new members from eastern and central Europe—makes that even less likely. If Britain really wants to play its traditional role of preserving the balance of world power, it should take stock of its present position and make its dispositions realistically, according to what it perceives.

Three aspects of international policy are currently uppermost in our minds. First, there is the need for military capability outside the NATO area. Secondly, there is the need for a credible response to changing developments in the Soviet Union, especially now that the high-tech arms race is over. Thirdly, there is the need to resolve matters connected with international trade. In my view, European co-operation offers us the best possible solution to all three.

First, in the treaty of Rome, we have Resolved by thus pooling our resources to preserve and strengthen peace and liberty. In the long term, we cannot continue to rely on the Americans to keep us safe. The United States today has roughly the same massive array of military obligations across the globe as it had in 1945, but at that time its share of the world gross national product, manufacturing production, military spending and armed forces personnel was very much larger than now.

Meanwhile, in power terms, the European Community has overtaken that so-called super-power. The combined regular army of the four leading members of the Community alone contains more than 1 million men, with 1.7 million in reserve. That is a larger force than the United States army and its reserves. Even at its present strength, once combined, the forces of the Community are very much larger than any other force in the world, except that of the Soviet Union. If the Community spent as much of its GNP as the Americans on its military might—that is, 7 per cent.—it would have the largest force in the world.

The European Community—which through the treaty of Rome and the Single European Act is committed to ever closer political union—has found its real power and effectiveness in defence and foreign policy stymied by the neutrality of the Irish and the independence of the French. We are now being asked to consider the future of the Austrians within the Community, which will only do more to reinforce the neutral outlook that it might have to adopt.

The European Community's response to events in the Soviet Union leaves much potential unexploited. In simple terms, the disarmament that follows from the damping down of tensions can afford even greater savings to us all if the European Community can agree to standardise its weapons and purchase them in Europe. The French and the Irish may press us on the development of a common European currency, but we can press them for greater unity in foreign policy and military matters.

I agree with my right hon. Friend the Foreign Secretary that we should nudge the Community forward on security issues. In fact, I believe that we should go further than my right hon. Friend is prepared to go. We could and should build up a European pillar of NATO and build ourselves up an independent out-of-area force. Some will undoubtedly say that that will mean a further loss of sovereignty. However, I must draw their attention to the difference between legal, effective and positive sovereignty and point out that we have already lost sovereignty over our military forces through our membership of NATO.

8.30 pm

Mr. Giles Radice (Durham, North)

I shall not follow the line taken by the hon. Member for Stockton, South (Mr. Devlin), although he made an interesting speech.

This is the last debate before the two intergovernmental conferences and I am surprised that the Foreign Secretary devoted so little of his speech to them. The conferences are vital for the future of our country. On that matter I agree with my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), although I did not agree with much else in his speech. We both accept that, whether or not we decide to be part of economic and monetary union or of moves towards greater political union, there is little doubt that what comes out of the conferences will profoundly affect our country. Given the high stakes, it is all the more essential that the United Kingdom plays a constructive and positive role at the conferences.

With the demise of the right hon. Member for Finchley (Mrs. Thatcher) as Prime Minister, many of us are looking for changes in the Government's policy on the EEC. One has only to listen to the new Prime Minister, the Foreign Secretary when he is not trying to put us to sleep and the Chancellor to notice that the tone has changed. With respect to the Chancellor, his style before the Select Committee was different from the strident, anti-European speech that he made to the Bruges group when he was seeking votes for the right hon. Member for Finchley in the leadership contest—different times, different styles. But if the style has changed, the substance is very much the same. The Government seem determined to push on with the hard ecu plan as an alternative to single currency proposals—the proposals accepted by the other 11 countries.

There has been considerable scepticism, not to say downright rejection, of those proposals by most of the countries, particularly the German authorities. It is true, and it will probably be quoted tonight, that the French Finance Minister said that the hard ecu could be of use. Ministers should note that he is saying that only as part of the second stage, not as an alternative to a single currency. For the Government's strategy at the intergovernmental conference on economic and monetary union to carry any weight, they will have to accept the objective of a single currency, not as something that will happen overnight, but as a long-term aim to be achieved perhaps at the end of the century. They will have to accept that a single currency is inevitable and that there are strong arguments for it.

The drive towards a single currency draws its roots from the increasing integration of European economies. That point seemed to have been forgotten by my right hon. Friend the Member for Bethnal Green and Stepney. That is what has changed between 1973 and now. European economies are far closer than they have ever been. A single currency is solidly based on the undoubted success of the exchange rate mechanism in providing greater monetary co-ordination and stabilisation within the Community. Above all, it is backed by 11 countries, including the two most powerful—France and Germany. Some form of economic and monetary union is bound to go ahead with or without Britain.

There are also strong, positive arguments why Britain should be part of economic and monetary union. My right hon. Friend the Member for Bethnal Green and Stepney has poured scorn on the argument that it would reduce the cost of doing business. He should not underestimate that. More important, it eliminates exchange rate instability and provides a stable environment for economic growth. One may say that that is done by joining the exchange rate mechanism, but it is done much more effectively if there is a single currency. We shall have to turn around the United Kingdom economy and that is far more likely to be achieved in an exchange rate mechanism that becomes gradually tighter and eventually, at the end of the century, in economic and monetary union. It is not as likely to be achieved outside, with our currency subject, as it has been throughout the 1980s, to all the whims of international speculation and currency markets. I am surprised to hear arguments for that sort of freedom from Opposition Members. They used to come from Conservative Members.

There is also an important tactical advantage to be gained if the Government accept a single currency as a long-term objective. It would give the Government the credibility and standing to argue about complementary policies such as regional policies and the ability to use fiscal policy, as I believe that we shall be able to do even within a single currency. It would also give them credibility to argue about the role and accountability of the European central bank. One cannot argue about those details unless one is signed up for the long-term objective. Above all, it would give the Government the standing necessary to argue about timing. We can all agree that, with all the differences in inflation and productivity levels, our economy would need a long period of adjustment before it could converge. If we accept the principle of a single currency, our voice is far more likely to be heard when we talk about its shape and timing. If we do not accept that principle, we shall not be listened to effectively.

In conclusion, I want to remind hon. Members about the history of the argument that we have been having. In my political lifetime Britain has missed a number of boats. The most notable was the original creation of the Common Market. At that time, the leadership of Europe was on offer for Britain, but, because we thought that we were still a world power, we rejected the offer out of hand. Both parties can be blamed for that. Yet, a few years later, after the shape of the EEC had been decided to our disadvantage, we had to come along, cap in hand, asking to join. Do not let us forget that. It was the same story over the exchange rate mechanism. Instead of going in at the beginning, we went in 11 years too late, at the wrong time, for the wrong reasons, and at the wrong rate. It is vital for the country's future that we do not make the same mistake over economic and monetary union. We must be in there from the beginning, helping to shape the course of events.

8.38 pm

Mr. Michael Knowles (Nottingham, East)

It is interesting that the earlier tone in the debate seemed to be a solid paean of hatred towards the Community and its institutions, yet the last few speeches have been precisely the opposite. That reflects the balance within the House. There is a great difference of opinion in the country, which cuts across the parties. That is why it is such a dangerous argument for both political parties. It is a deep emotional issue.

Hon. Members who oppose the European Community ask, "Do you want a federal Europe?" Are they saying that we should withdraw from the European Community? Have they thought what the effect of that would be on our industry? Where would our place in the world be? They had their way from 1957 to 1972, and we did not join. We tried to form a counter-bloc in the European Free Trade Area, which did not work. We tried traditional methods, none of which worked. We joined because we had to do so, not because we wanted to. Brute necessity drove us to join, and we have suffered badly from not joining sooner ever since.

Do they believe that one country—the United Kingdom—will be able to impose its will on the other 11 members? The original point of forming the Community was to move away from a Europe where one nation tried to impose its will on other nations. The Community will not accept that. A country can join the Community, but it cannot stop it. We might be able to slow matters or divert them, but a policy of hostility, if we have not learnt the lesson already, will get us nowhere.

For several years there will be a two-speed Europe. If Britain does not want to be on the inner track, it can be on the slower outside track and a member of an associated free trade area.

Mr. Teddy Taylor

Hear, hear.

Mr. Knowles

My hon. Friend says, "Hear, hear." Few people in this country will buy that argument.

My right hon. Friend the Member for Guildford (Mr. Howell) mentioned—this is one of the wonderful phrases that floats about the Community—a centralised, federalised system. Centralised and federal systems are exact opposites. Federalism is about the spreading of power. A country knows precisely where it is, and what are the powers of each function and level of government.

French politicians argue for a federal system to safeguard the position of France. If the Community follows the course that it has been following, there will be a centralised unitary state, which would not work. A case can be made for federalism, and in many ways we are already in that system. There are reserved areas at supranational level, and demarcation is decided by the European Court of Justice. The Government are considering taking a case to the court because they believe that article 100A is being used too much, and they are right. We are in an embryonic federal system and there is no point in kidding ourselves otherwise.

The House, yet again, has missed the opportunity of setting up a Grand Committee on European Affairs, which would look forward at policy instead of our holding the odd one-day debate such as this. We, the elected Chamber, should follow the example of the House of Lords; we have missed the opportunity, which we shall regret.

I object strongly to the way in which the institutions of the Community have developed. The Commission is top-heavy—17 people is nonsense. I should prefer a more open system of election, even a weighted system run by the Council. Most objectionable is the fact that the Council, as a legislative chamber, meets in secret. It is the only legislative chamber in the western world that does so. That is unacceptable, and it must be changed. I would have expected the Government to be leading that argument.

When we joined the Community, our partners said that they wanted us to join because of our experience in democracy. If we had that experience, we have added nothing to Community institutions except the importation of Question Time into the European Parliament. Apart from that, we have been happy to leave the system to roll along. The system suits national Executives, but it should not suit national Parliaments, or Parliaments of any kind.

Once the single market is in place, we shall have more of a single market than the United States. It will be more integrated and will have more common laws than the United States. The scale of the United States' economy and its single currency has probably been the biggest factor in building that industrial giant. I am not frightened by the prospect of the single market. I foresee it a long way ahead and many arguments along the way.

I believe that it is possible to separate fiscal from monetary sovereignty. Fiscal sovereignty should be retained because a country can thereby keep control of its taxation, but why is monetary sovereignty so vital? Until just after the first world war, everyone was on the gold standard and no Government had control. Are we saying that those Governments were not sovereign? The argument is nonsense. An independent monetary policy can act as a strong fiscal discipline—West German experience reinforces that point.

We get so worried about our dealings with European institutions that we will not let local government deal direct with Brussels. Funds which are desperately needed in Nottingham and which have been allocated by the Community are sitting in the bank, and we cannot lay our hands on them. I am arguing this as a Conservative Member and the council is Labour controlled. The fear is not only control of local government spending but the idea that extra funding direct from Brussels could somehow subvert national sovereignty. That argument is gibberish.

I shall conclude by mentioning two countries, one of which was mentioned by my right hon. Friend the Foreign Secretary, and which essentially are both third-world countries. The first is the Soviet Union, where we can see the collapse coming rapidly. The problem with the Soviet Government is that, although they can see that the command economy has collapsed, they are not prepared to move to a free-market economy. I am not sure whether pouring in aid will solve the problem. The key argument is the ownership of land. In the Russian republic, it is proposed to restore private ownership of land. That is the key, because on that a private economy can be built. Without it, little can be done to help the Soviet Union.

The second country is South Africa. Ironically, South Africa and the Soviet Union contain all the raw materials that the world needs, but both are in deep trouble. Sooner or later, the Community will have to consider dropping sanctions. I heard today that it is projected that, next year, the mining industry in South Africa will lay off 10,000 miners in the coal industry and 40,000 in the gold industry. As dependants run at 10 or 12 to one, 500,000 people will have no source of income, because there is no welfare state in Africa. We must reconsider that problem.

I plead with my hon. Friend the Minister to agree that we must seize the initiative in the Community by arguing for the democratic legitimacy of the institutions and for more open government. If one visits——

Madam Deputy Speaker

Order. I must call on the hon. Gentleman to terminate his speech.

8.48 pm

Mr. Robert N. Wareing (Liverpool, West Derby)

During the 1975 referendum on the Common Market, I stood on an anti-Common Market platform and made the point that there were no panaceas for this country inside or outside the Common Market. I stand by that today. However, I also believe that an appalling disaster would befall many of those we represent if we found ourselves alone outside the other countries of Europe.

Hon. Members from all parties have argued today that we should come out of the Common Market. They have not said that in so many words, but that is what they mean. Yet at this very time, Sweden, Austria, Cyprus and Norway are thinking of coming into the European Community. My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said that Europe is very different today from what it was in 1973 when we joined the European Community, and he was right to say so. There is a demand from other countries to join the European Community. The cold war has ended and it may now be possible to expand the Community to include the countries of eastern Europe.

The emphasis in the Community has changed considerably. There is now the prospect of a European Community that can be converted into something rather different. I know that Conservative Members will disagree, but I believe that there is a great opportunity for the development of democratic socialism in the European Community.

Mr. Teddy Taylor

Oh yes?

Mr. Wareing

I am glad that the hon. Member for Southend, East (Mr. Taylor) agrees with me. That confirms my positive approach to the European Community. In future, the economy in Europe will be neither the Stalinist dictatorship economy nor the extreme Thatcherite market economy.

When the Foreign Secretary tells us that the Soviet empire is breaking up, I am worried that many hon. Members, especially Conservative Members such as the right hon. Member for Finchley (Mrs. Thatcher), have not yet discovered that the British empire has broken up. From her speech at Bruges and from her speeches in Parliament in recent weeks, it is clear that the right hon. Lady still harks back to the old imperialist slogans, and that she has forgotten that the world has moved on. She has not caught up with history.

Some hon. Members, including some of my hon. Friends, have told me that we shall lose sovereignty. What did we lose when we signed the Bretton Woods agreements? What did we lose when we signed the treaty of Havana and joined the general agreement on tariffs and trade? Many of our problems now stem from the fact that we cannot reach an agreement at the Uruguay round. We are internationally committed to being a member of GATT. When we joined NATO, we lost sovereignty.

I ask my hon. Friends to consider this. If we remain outside an expanded Europe which contains within it a central bank and a single currency, what sovereignty shall we have? What chance shall we have to save the jobs of those who sent us to the House? How shall I be able to fight for the jobs of people in Liverpool if I have no access to funds? What shall we do if investors refuse to invest in Britain because it is the only country in Europe that does not have the single currency?

The hard ecu does not answer the problem. One of the assets of a single currency is that one cuts out currency speculation. If we had the hard ecu but there were still individual currencies within the system, there would still be speculation of one currency against another. If some. countries in Europe accepted the hard ecu, but also said that they would no longer use the deutschmark or the franc, there would be speculation against the British pound. That would occur because of some false idea of sovereignty which has long been extinguished.

There are problems of convergence. Some of my hon. Friends would say that there is a problem because Spain, Portugal and Greece have areas that are even poorer than Merseyside, parts of Wales and Scotland. That is right, but that is the challenge. Our areas will be even poorer if we are not involved with our friends in the European Community. There must be a regional policy in that convergence. Instead of British Foreign Secretaries and Ministers going to Councils in Europe and attempting to show how much muscle they have compared with the rest of the Community, they should fight for a positive regional policy. We might then get somewhere and we should prove—if the new Prime Minister wants to prove it—that we mean business by collaborating with our partners in the European Community.

Sovereignty and the old ideas of imperialism have ended. What sovereignty would there be for Britain outside the European Community when there was a central bank, acting as the Bundesbank acts now, within a powerful economy, and changing the rates of interest? Do hon. Members really believe that Britain could stand against those pressures? Of course it could not. It would be even more difficult then than it is now to stand against the Bundesbank.

There are problems in regional policy and I hope the Government will address themselves to one particular aspect of it—that of additionality. Funds are already made available by the Community for our regions. The problem is that the European Community provides funds for our deprived areas, but those areas do not receive them because they are used as funds to help the national Exchequer. That practice must end. If our people are to feel that they belong to the Community, they must have access to funds and not see them frittered away as subsidies to the national Exchequer which, under this Government, is more concerned with giving tax relief to the very wealthy.

My hon. Friends talk about the absence of democracy in the institutions, but they do not say that we should do something about that by giving the European Parliament more powers, and by ensuring that it has control over the Commission and over the Council. If we are really internationalists—I appeal especially to socialists—we should work for a democratic, socialist Europe. That would mean a European Parliament that had such powers. All right, it means that some of our powers are diminished—so what? We were sent here to fight for the betterment of people's conditions. If that can be done only on an international scale, that is the way in which it must be done in future.

I should like briefly to address two problems that I hope the Minister will examine. Assistance is desperately needed in the Soviet Union. In Berlin, Soviet army men and women are already selling their uniforms. There is already the dribble of a migration problem that will become more and more severe next year when the Supreme Soviet passes a law allowing freedom of mobility for Soviet citizens. The situation is desperate. The problem will not end in Germany; it will find its way here.

I hope that the intergovernmental conference will discuss the problem of Yugoslavia and the possible break-up there. It is a severe problem, and it may create all sorts of problems for Yugoslavia's neighbours and will not simply stop in Austria or Hungary—it may cause severe problems for us as well.

8.58 pm

Mr. Patrick Ground (Feltham and Heston)

Like the hon. Member for Liverpool, West Derby (Mr. Wareing), I propose to concentrate my remarks on the negotiations for the common or single currency. I was interested to hear of the evolution of the hon. Gentleman's thoughts on this matter. I share several of his conclusions, although I have come to them by a different process of reasoning.

I should declare that I have an interest in a small business which deals in currencies, although it seems completely belittled by the scope of this discussion.

I welcome the fact that we have joined the exchange rate mechanism and that we did so with a 6 per cent. margin rather than with a 2.25 per cent. margin. On the Rome summit, we would have been better off deciding what was to go into stage 2 before deciding how long it would last. The procedural objection taken by the Government is likely to prove to have been correct.

On the behaviour of the Italian president of the conference and the impression of the discussions which took place at the summit and some of the remarks that have been made concerning the hard ecu proposals, I would say that in terms of political maturity and currency stability the record of this country in the past 300 years bears comparison with that of any other member country concerned. I hope that members will be willing to listen to our views at the coming conferences.

Treasury proposals for a hard ecu have several positive attractions. As a common currency, the hard ecu is likely to be harder than any single currency that can be devised at present. By ensuring that it could never be devalued against other Community countries, its stable anti-inflationary character would be ensured. After the record of the past few years, it is easy to assume that a system based upon the deutschmark would be bound to be stable, but that was certainly not always the case in Germany, and nor is it bound to be in future. Less than 70 years ago, in the early days of the Weimar republic, inflation in Germany was worse than it has ever been in this country. For the future, the reunification of East and West Germany has been agreed on such an extraordinary monetary basis that it is likely to increase the budget deficit of Germany and inflation to a degree that is not easy to foresee at present.

It is also salutary perhaps to remind ourselves that it is less than 10 years since Italy and France had to pay 34 per cent. or 35 per cent. for short money. Therefore, if one is looking for a European common currency, there is considerable attraction in settling upon a currency which cannot be devalued against other Community currencies. If there proves to be an overwhelming demand for a single currency—like many right hon. and hon. Members, I believe that that could be the case—the hard ecu could prove to be a more attractive route to a single currency because it would be based upon choice rather than upon compulsion. Any fear of individual countries concerning matters of sovereignty would be lessened by the circumstance that each country could retain its freedom to issue its existing currency. I hope, therefore, that my right hon. Friend the Chancellor will attract much support for his proposals from member Governments attending the intergovernmental conference and from business and industry in this country. I hope that at least some of the ingredients of the proposals will be adopted.

The proposals would be an effective way of moving towards a single currency if several countries were prepared to adopt them and, in effect, to turn over in substance to a hard ecu common currency at a relatively early date. It must be recognised that unless that happened, and unless a substantial part of business and industry in individual member countries operating the system was prepared to turn over to the system, at least for large transactions, the system would be unsuccessful because of the transaction costs. Going into and out of a common currency would be so expensive and so beneficial to the banks that in the end it would be unattractive. The only way that it could succeed would be if there was a substantial measure of support from the countries concerned and from those carrying on a substantial part of their activities.

In approaching the issue of a single currency, we should be careful to avoid sentimentality and euphoria. It is important to avoid the sentimentality of thinking that, because the pound has served us well in the past, it should necessarily be retained for ever. The pound has served us well because it has generally kept its value and been widely acceptable to people and countries throughout the world. The same could be equally true of a common or single currency.

Similarly, I agree with the hon. Member for Newham, North-East (Mr. Leighton) that there is a danger of euphoria in thinking that we should immediately accept that a single market must necessarily involve a single currency within a short time, regardless of the great differences between the member countries. We have differences in inflation from 2.5 to 22 per cent., in short-term interest rates from 8 to 18 per cent., and in public sector accounts from a surplus of 3 per cent. of GDP to a deficit of more than 17 per cent. Faced with those differences, there is nothing which inevitably leads from a single market to a single currency.

I cannot believe that with a common or single currency things would be anything like my hon. Friend the Member for Stafford (Mr. Cash) envisages or as is envisaged by hon. Members who paint bogey pictures of life under a central bank. I do not believe that the European proposals would lead to anything like that. There is no such thing as a truly independent central bank. The Bundesbank was shown not to be entirely independent when faced with the prospect of the reunification of Germany. Faced with reunification, the gentlemen in charge of the Bundesbank had to change their ideas quickly, and even under the system to which my hon. Friend the Member for Stafford referred, central bankers would still be subject to appointment by national Governments. There would still be national banks acting on behalf of the central bank. There is no great difference in kind between the governor of a central bank which has a relatively independent character and a collection of independent governors appointed by national Governments. There may be a difference, but it is not completely different in character from the position in the United States and western Germany. The landscape would not be completely changed; it would still be recognisable.

The House has already made a number of important decisions, giving the European Community and courts power to regulate European trade. The House took those decisions because it believed that, on balance, they were beneficial to this country. If the House thought that it would benefit the industry, the people and the economy of this country to have a single currency, that decision would not be any different in character from or any more irrevocable than those already taken in relation to the single market and the European Community.

Just as the House ultimately has power to say that if we go into the European Community we can also come out of it, it would have a similar power in relation to a single or common currency. The Bank of England would be there, albeit as an agent of the central bank, and it would not require a great step in legislative terms to put that bank back into its previous position. It would be an immense administrative nightmare, but it would be within the powers of the House and the sovereignty of this country.

I accept that decisions about a single currency are by no means easy, but I detect that, even since our entry into the exchange rate mechanism, there has been noticeably more interest on the part of industry and individuals in this country to the idea of a common or single currency, and that interest will grow. Although such a step would involve difficult decisions, just as decisions taken by the House about the European Community were difficult, it is within the proper discharge of the duties of the House to make such a future decision for the benefit of the people in this country. If it were decided that entry into a single or common currency would benefit the country, that would be a good decision and one which the House would be entitled to make.

I agree that before we can reach such a decision we need a much more careful analysis of the benefits of such a course and exact calculations of the benefit to trade, the savings of transaction costs and advantages to the administration of affairs in this country and the Community. Such a decision could be arrived at only after an objective analysis of the benefits involved.

9.13 pm

Mr. Teddy Taylor (Southend, East)

I have only a few minutes, but I hope that the Secretary of State and the Minister will bear in mind one or two points. The Secretary of State probably thought that he was reassuring some of us when he said that the Government's attitudes were unchanged after the change in Prime Minister, but he should be aware that some of us believe that we were in cloud-cuckoo-land before and that we seem to be in the same position now as a result of the Government's attitude on several matters. I hope that the Government will consider the dangers of going forward towards some new bright vision—we have had plenty of those—without remembering how many of the visions of the past have turned out to be disasters.

There will be a huge impact on jobs and factories in all our constituencies if the GATT talks break down—and if they do break down, the responsibility will lie almost exclusively with the EC's protectionist policies. We have presented the GATT conference with a paper on our 30 per cent. reductions. Even the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), who follows these matters closely, will be aware that the alleged 30 per cent. cut is no cut at all. It represents nothing. Nothing could be more insulting to our friends in GATT than to present a paper which includes no cut in agricultural spending. We claim that half the 30 per cent. cut has already been made and we say that the other 15 per cent. will be made up in additional subsidies. That is insulting and wrong.

Of course I appreciate that it is difficult to resolve this matter, but I appeal to the Government and to hon. Members to be cautious about taking another giant leap which may be well intended without realising that all the leaps of the past have turned out disastrously.

I hope that even my hon. Friends who are bankers will appreciate my second point—that we should not disregard the fact that many of the reform plans brought in to try to sort out grievances have resulted in making matters worse. I mention only expenditure on the common agricultural policy. Only this week we were told that, despite all the assurances about cuts in spending on that policy, it would increase to £23 billion in 1991, and that is almost certain to be an underestimate. In 1974 the policy cost £1.6 billion, so there has been a 1,400 per cent. increase. Since the Conservative Government came to power, there has been a 300 per cent. increase. That cash could be used to provide jobs in Lanarkshire, Southend, Nottingham and Liverpool. How can we possibly justify a policy which becomes continually more expensive?

Thirdly, I hope that the Government will bear in mind the terrible problem created by protectionism in the EC. We kid ourselves if we pretend that it is a free trade organisation. In almost all its activities, from industrial policy to dumping, far from being an open trading organisation, the EC is becoming more and more protectionist.

Fourthly, I hope that the Government will not just say that they are opposed to federalism, because even that would be a step forward in some ways. Under federalism, Parliament deals with some issues and some are dealt with elsewhere; but now, apart from defence, there is no area of policy in which the Commission or the Council of Ministers cannot interfere by majority vote.

Fifthly, it is rather a waste of time to talk about the extension of majority voting—or its diminution—because the issue appears not to be in the Council's control. The Minister will know from the firearms control regulations that we discussed earlier this week and from a host of other such measures—and Mr. Speaker's Counsel has drawn attention to this—that the EC Commission has the power to decree that a directive is the subject of majority voting under article 100A, so there is nothing that we can do about it, however ridiculous the issue, unless we can persuade every member state to object to majority voting on First Reading. We are therefore powerless. We cannot say when majority voting should apply and when it should not. That stems from the Single European Act, which was rushed through this House in an all-night sitting. Meanwhile, the Commission is extending its power almost ceaselessly.

I hope that Ministers, particularly the Foreign Secretary, will bear in mind in the GATT discussions that Britain happens to be almost the largest exporter of goods in the world. We are always saying that the continent is a grand place and rubbishing Britain, and that argument is often used by the Opposition as a reason in favour of going further with the EC. According to the Library's information today, we export $5,700 worth of goods per head of population, compared with the Japanese figure of $3,400, the United States' $2,400, and France's $4,900. The only one of the big countries to exceed us is Germany, which is slightly ahead at $6,800.

If there is disruption of world trade, we shall suffer more than any country on the continent, with the possible exception of Germany. We are creating this problem by putting forward a bogus and meaningless proposal, saying that we are cutting spending on agriculture but at the same time increasing expenditure more and more every year.

My final point is extremely important. As some hon. Members have said, a single currency and central bank control may turn out to be splendid—but it may also be a great disaster. Hon. Members with Liverpool constituencies know about the problems of unemployment. What would they advise British people to do if by chance the transfer of economic and monetary power to a central bank created mass unemployment here? That is no scare story-some of us believe that it might be brought about by a single currency. If that happened, what could our people do? The answer is that they would be powerless, and they could not put out the Government or the Opposition. There is a great democratic issue involved here.

9.20 pm

Mr. George Robertson (Hamilton)

This is an interesting and important debate and it takes place on the eve of the intergovernmental conference that is of major importance to Britain and the whole of Europe. We have heard interesting speeches and a wide range of views. It is invidious to single out speeches, but I should like to mention a few. My hon. Friends the Members for Liverpool, West Derby (Mr. Wareing) and for Vauxhall (Miss Hoey) made refreshing, new speeches. Those of us who have sat through European debates for more years than we deserve welcome my two hon. Friends to them. They had much to say.

Even though it may be embarrassing for him, I should like to single out the interesting and brave speech by the hon. Member for Wycombe (Mr. Whitney). I have no doubt that that compliment will further blight his career. The hon. Member for Worcestershire, South (Mr. Spicer) also made an interesting speech and mentioned that he had returned to the Back Benches. I understand from the public prints that he resigned from the Government in order to write books. Look at what that has done for the foreign Secretary. Perhaps such actitivies will again raise the hon. Member for Worcestershire, South up the greasy pole.

My hon. Friend the Member for Durham, North (Mr. Radice) and my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) made speeches of some distinction. I agreed with practically everything in the speech by my hon. Friend the Member for Durham, North. My right hon. Friend the Member for Bethnal Green and Stepney and I shared the task of challenging the Government over their guillotine on the Single European Act, but we have taken different paths since then. Although we disagree on this issue, we agree on many others.

If there was one issue above all that brought the former Prime Minister to grief it was her attitude to Europe and on how Britain should play its role. She was fatally wrong on a series of issues such as the poll tax, interest rates and education vouchers if we are to judge by the pronouncement of those who abandoned her so quickly one and a half weeks ago. However, it was on Europe that she made her final and fatal mistake and she was judged, dispatched and displaced in two weeks. That was the lady who only eight weeks ago was cheered at the Conservative party conference with a chorus of, "Ten more years". It can all be put down to her attitude to Europe.

Just 15 days before the right hon. and learned Member for Surrey, East (Sir G. Howe) made his memorable speech, he defended the former Prime Minister on the Walden programme. It was an implausible effort, but it was still memorable because at almost the precise moment when the Prime Minister and the Foreign Secretary were at a press conference in Rome belabouring our European partners, the former deputy Prime Minister told Brian Walden: We've had occasions like this before. I've attended a number of summit meetings with the Prime Minister in which at this particular stage we have found ourselves expressing a sharply different view—an apparently sharply different view. You may remember that before we achieved the so-called Single European Act, that's the last major treaty between us, we had a summit meeting six months before where we appeared to be completely at odds with most, if not quite all, of our European partners. But at the end of the day, when we came to a Single European Act by hard negotiations we achieved a result which Parliament endorsed quite readily. Leaving aside the fact that it was the right hon. Member for Shropshire, North (Mr. Biffen), that great European, who got the measure through by use of the guillotine, that is what the then Deputy Prime Minister said, although we now know that it was not what he was thinking. Let the House again savour what the right hon. and learned Member for Surrey, East said, for these words are the ball-bearings on which the right hon. Member for Finchley (Mrs. Thatcher) rolled down into oblivion. He said: We must at all costs avoid presenting ourselves yet again with an over-simplified choice, a false antithesis, a bogus dilemma, between one alternative, starkly labelled 'co-operation between independent sovereign states' and a second, equally crudely labelled alternative, 'centralised, federal super-state', as if there were no middle way in between. He went on, referring specifically to economic and monetary union, to say: We must be positively and centrally involved in this debate and not fearfully and negatively detached. The costs of disengagement here could be very serious indeed. No one who heard that speech or read it will ever forget it. In his peroration he said: If we detach ourselves completely, as a party or a nation, from the middle ground of Europe, the effects will be incalculable and very hard ever to correct. I quote those words not simply to extract the last juices from the convulsions that have swept away the iron lady, nor to dance on the grave of the false unity that only three weeks ago marked the public face of Tory party policy on Europe. I quote them because the House wants to know, and the country needs to know, where the new team, which is nothing more than the old team minus the manager, stands on what the right hon. and learned Member for Surrey, East rightly called "this desperately serious situation".

If the right hon. and learned Gentleman found that his task as Foreign Secretary and deputy Prime Minister had become futile, trying to stretch the meaning of words beyond what was credible, and trying to pretend that there was a common policy when every step forward risked being subverted by some casual comment or impulsive answer", where stands the Foreign Office today? Is there a new policy or is the same pretence going on?

When the new Prime Minister was Chancellor, he was party to that pretence. Has he now seen the light? The Foreign Secretary was party to what the right hon. and learned Gentleman called a pretence of a common policy, so where does he stand now? The Minister who will reply to the debate, whose role in the downfall and replacement of his erstwhile mistress was significant—the St. Catherine's place plot—must have been party to the pretence. Will he recant and confess to us what the truth is and where Britain's real interest lies?

I ask those questions not lightly or frivolously, even when there is great fun to be had in doing so, but because, in its first week in office, the new team, liberated as it is from the risk of subversion by some casual comment or impulsive answer"—[Official Report, 13 November 1990; Vol 180, c.463–65.] still seems mightly confused about where it stands.

Mr. Lord

Will the hon. Gentleman come to the heart of the debate and tell us why he voted for a united Europe last week in Rome?

Mr. Robertson

The hon. Gentleman sat on the opposite side of the hemicycle of the Italian Parliament last week with his Conservative party delegation to the conference. Out of that delegation, three voted for the declaration that has become a point of controversy.

Mr. Lord

How did the hon. Gentleman vote?

Mr. Robertson

The right hon. Member for Guildford (Mr. Howell), the leader of the delegation, could not find it in himself to vote against it, but he did not vote for it—he deliberately abstained—and three Conservative Members of Parliament voted, along with every Tory Member of the European Parliament, for the declaration. I voted for the declaration and my hon. Friend the Member for Swansea, East (Mr. Anderson) did the same We did so with reservations that we expressed. This was a unique meeting. This was not a resolution of the House of Commons; it was a conference of European parliamentarians, using the rules of the European Parliament and. we voted for the general sentiments of the resolution—whatever the imperfections of the resolution and the procedure—believing that that conference was a chance and an opportunity for parliamentarians——

Mr. Nicholls

Will the hon. Gentleman give way?

Mr. Robertson

The hon. Gentleman will simply reiterate the question, so he should sit down.

We believe that Britain should have its say in the discussions that are going on and the conference provided a unique opportunity. We made our view and our reservations on the subject known, and that is the end of the story.

Mr. Cash

Will the hon. Gentleman give way?

Mr. Robertson

No, I shall not give way. When my right hon. Friend the Member for Bethnal Green and Stepney talked earlier about the small change of the argument, I thought that he was referring to the hon. Member for Stafford (Mr. Cash), whose speeches we hear time and again, and which add nothing either to this Parliament or to the Italian Chamber of Deputies.

But the confusion in the Government goes deep and I give just one example to add to those given by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman). The new Chancellor of the Exchequer—the previous Chief Secretary, one of those who pretended that there was a common policy—went to the ECOFIN meeting in Monza on Sunday last. He briefed his fellow Finance Ministers and the press. What, therefore, is the new policy of the central issue of this debate?

The Independent on Monday morning said: Lamont hopes for a deal on EC monetary union. But The Times said: Lamont reaffirms policy on currency. The Guardian headline said: Lamont signals EC deal. But The Daily Telegraph said: Lamont stands fast on monetary union. The Financial Times said: Shift in tone on monetary union signalled to EC. We are back again to the confusion described by the right hon. and learned Member for Surrey, East—stretching the meaning of words beyond what is credible.

What did the Chancellor of the Exchequer mean—this is of central importance to what will happen in Rome next week—when last Sunday he said: I have every hope that the intergovernmental conference can reach an agreement acceptable to us and to our Community partners and which will keep us moving forward together"?

Mr. Hurd

It is simple.

Mr. Robertson

The Foreign Secretary, who comes from a stable of fiction writing, tells us that it is simple. Of course it is if one is writing fiction, but not if one is living in the real world.

In the same press conference the Chancellor said: We do not accept the need for the European central bank. But since the European central bank is the very foundation of the EMU intergovernmental conference, either the Chancellor is stupid in pretending that there is any hope of getting an agreement or—despite what my right hon. Friend the Member for Gorton says, no one could be that stupid—it is yet another example of the meaning of words being stretched beyond what is credible.

The policy was no, no, no. Now it is perhaps, perhaps, perhaps, and it will be yes, yes, yes. Plus ca change, plus c'est la méme chose, as they say every day in Hamilton. This pantomime of twisted words and convoluted, confused policies would be a joke if the issue before us was not so deeply serious. Europe now faces some of its most important decisions for a generation, which will affect the whole way of life of the people of Britain and of the continent for many years to come. Our debate has highlighted the importance and gravity of the decisions that must be made.

The GATT talks, on which the world's trading relationships are based, and on which thousands of jobs and livelihoods depend, are in crisis—even as we debate. There may be a final climbdown. That will be something else for the fiction writers. The Foreign Secretary wrote an enthralling novel about life in the European Community. He is the only man who could possibly have written a thriller about the European Community. That must have given him the qualification for becoming Foreign Secretary, but obviously it was not enough to become Prime Minister.

In one week's time, two intergovernmental conferences will open, and they will determine not only the economic and monetary framework that will dictate the way in which this and future generations live, but set an ambitious pattern for the political dimension of the future Europe.

Even more serious is the situation to the east of our continent, as the Soviet Union enters an unprecedented winter of discontent. Its people are hungry, its shops are empty, and its ruling party is without authority. Its very integrity as a nation is in question. Its leader, Mikhail Gorbachev, has—in common with only a very few figures in history—changed the whole world for the better, yet he is now being condemned and may even be replaced because he cannot get bread and meat on to the shop shelves.

The Foreign Secretary rightly drew attention to that situation, and to the need for the British people to rise to the challenge of providing food aid to the Soviets. Just as the German people have risen to that challenge, so too should the British people. A country that was once the greatest power in Europe and a nuclear super-power is now in a shambles, and after 70 years of being held behind barriers, its people are about to spill into the wastelands in considerable numbers, and that could easily overwhelm us.

If that were not enough to bring sobriety to us over the next few weeks, the newly democratised states of central and eastern Europe, whose freedom we have celebrated all year, urgently need our help. If their economic experiments are not to die, and if their bright new dawn is not to vanish in an anarchic tide of nationalism, we must extend the assistance which those new nations need, and which help to secure our own stability as well.

That is a tough enough agenda, but it is especially tough for a Government who will not tell us where they stand on the monetary and political union intergovernmental conferences. I refer not just to EMU, which brought the Thatcher statues tumbling down in Tory committee rooms across the land, but to all the other key issues that must be resolved.

Is our future to be left to the bankers? Where do the Government stand on regional transfers? Are they willing to allow unprosperous areas of Europe to be swamped by the market place? What is the Government's view on convergence? Where is their agenda for the political union intergovernmental conference that was promised so long ago? Why are the Government so reluctant to address the essential and central questions of decision-making and accountability in respect of the European Parliament? Why is Britain alone resisting the social charter and so many of the features of European legislation that would be to our advantage?

The Tory party has discarded a leader whose European policies it viewed as a liability and a millstone. It was right, and it did Britain a service by removing the right hon. Member for Finchley. However, she left a bitter legacy. She stoked up the fires of isolationist nationalism on Conservative Benches, and they will not easily be extinguished—least of all by a new Prime Minister who has so long and strongly been identified with the former premier's failed Bruges approach. The Prime Minister will certainly be unable to mend the splits before next week's conference.

There is a new mood in Europe today. Those of us who were privileged enough to attend the conference of the Parliaments in Rome last week can testify that across the Community, from left to right, people are committed to a process of closer integration. We cannot wish that mood away. They do not think that that process challenges their own precious national identities, and neither should we.

Britain can be part of that process—shaping it, influencing it and moulding its outcome. We can choose to stay apart, uncontaminated. The choice is ours. What we cannot do is fool the British people into believing that their lives will not be for ever affected intimately by what others agree on.

I fear that this divided Government, with no clear vision, unprepared for the new mood, and criminally responsible for the fact that our economy is not prepared for what it is about to join, are no Government fit to face Europe's future. It is time that they stepped aside and allowed a Government with commitment to take over.

9.40 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Tristan Garel-Jones)

This has been a valuable debate and, despite a late start, 18 hon. Members have spoken. I shall do my best, in the course of my remarks, to touch on the points made by hon. Members on both sides of the House.

My right hon. Friend the Secretary of State in his opening remarks dealt with aid to the Soviet Union and to eastern Europe. He also touched on the Community's approach to the Gulf, progress on the single market, the European Free Trade Area negotiations and enlargement, as well as defence and security aspects of the future of our continent.

My hon. Friend the Member for Southend, East (Mr. Taylor), with his well-known persistence, remained to the very end of the debate, and asked a question about the general agreement on tariffs and trade which I am delighted to be able to answer. My hon. Friend will be pleased to know that some progress has been made today on services and intellectual property rights, and that the Council of Ministers authorised the Commission to continue negotiations on agriculture on the basis of a text tabled by the chairman of the negotiating group. Negotiations are again joined, and are likely to continue through the night.

A number of hon. Members referred to the intergovernmental conference on economic and monetary union. The right hon. Member for Llanelli (Mr. Davies) made a brisk but distinguished speech, and I should like to touch on that and on those made by the hon. Members for Durham, North (Mr. Radice), for Liverpool, West Derby (Mr. Wareing), by my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) and my hon. Friends the Members for Wycombe (Mr. Whizney) and for Worcestershire, South (Mr. Spicer).

The right hon. Member for Llanelli made it clear that an imposed single currency would cause massive damage in the weaker regions. He mentioned south Wales and Spain—two areas to which I am especially attached. That is precisely why the Spanish Government have shown interest in our hard ecu proposals, which would move with the grain of the market, and avoid the sort of dislocations to which the right hon. Gentleman referred.

The majority of hon. Members have concentrated their remarks on the other IGC conference, and I shall do likewise. There will shortly be a debate on the intergovernmental conference on European monetary union, and although it meets on 15 December, that is a short ceremonial meeting which will deal with organisational matters only, and the conference will not begin its work until January.

The Government's starting and finishing point at these conferences is the House. Those of us who live and work here, Mr. Speaker, would not claim perfection for it. Nevertheless, few would deny that it has a unique ability to express and give voice to the concerns of those we represent.

No EC directive—whether it deals with asparagus, fishing, or standards for lawn mowers—can hope to slip past the beady eyes of the Scrutiny Committee chaired by the hon. Member for Newham, South (Mr. Spearing). If any constituency or group interest is affected, then the Minister concerned can expect to be bombarded by early-day motions, written and oral questions, speeches and visits. That is not always convenient for the Executive, but we believe that democratic accountability begins at home. No British Government who sought to undermine or diminish the House's ability to carry out its duty on behalf of its Members' constituents could claim to be taken seriously. That point was stressed by my hon. Friend the Member for Stafford (Mr. Cash). It is to the House that we must ultimately answer.

Why do we feel so strongly? The fact is that this country is the only member of the Community whose democratic institutions have not been entirely uprooted at least once in the past 100 years, as my hon. Friend the Member for Stockton, South (Mr. Devlin) pointed out. Consequently, hon. Members on both sides of the House feel pretty attached to them. As I have said, we do not claim perfection for the House or for our institutions, but we feel that they have an intrinsic value, which, with no sense of presumption, we commend to our Community partners.

Our general approach, then, is one of respect for this House and a hope that what is best about it may commend itself to our partners, coupled with a willingness to listen to other ideas, wherever they may come from.

Mr. Graham Allen (Nottingham, North)

Will the Minister give way?

Mr. Garel-Jones

I am afraid not. I have very little time, and I should like to touch on speeches made by hon. Members on both sides of the House.

That, then, is the spirit in which we shall enter the intergovernmental conference. We believe that the institutional balance within the Community between the Council of Ministers, the Commission and the European Parliament is broadly right, and our proposals are aimed at building carefully on those institutions. There will, of course, be a lot of high falutin' language flying about—the maximalist proposals in the Commission paper provide a good example. We shall consider proposals on their merits, resisting those that we dislike and pushing those that we want. I remind the House that no treaty amendment can be made without unanimity, and that the final outcome of our discussions will have to be ratified by the House.

I will outline some of the principal proposals that we shall be presenting. The first relates to subsidiarity, which has been mentioned by a number of hon. Members on both sides of the House. Like any other organisation, the Community tends to build a momentum of its own, and seeks to extend its competence ever wider. We want to impose a simple test. The treaty already sets limits on Community competence, but, even where it allows for Community action, that may not be the right way of taking such action. As my right hon. Friend the Foreign Secretary said in his opening speech, the first test should be whether it is necessary to act at Community level, or could things be done as well or better at national level? We would like that principle of subsidiarity to be built into the treaty and, of course, we shall also need an effective mechanism—not necessarily the European Court of Justice—to apply that principle.

Mr. Shore

Will the Minister give way?

Mr. Garel-Jones

I hope that the right hon. Gentleman will forgive me if I do not give way. I have very little time, and I want to cover a good deal of ground.

My next point concerns implementation and compliance. Of the 284 single market measures, two thirds have been adopted by the Council, but of the 107 requiring transposition into national law, only 20 have been implemented in all member states. The United Kingdom and Denmark have the best record, with fewer than 20 still to implement; half the member states still have more than 30 to implement, and one has more than 60. That is why we need stronger measures to ensure that Community legislation is implemented.

Mr. Stuart Randall (Kingston upon Hill, West)

Will the Minister give way?

Mr. Garel-Jones

No, I will not give way.

We also need to ensure that laws are correctly applied As my right hon. Friend the Foreign Secretary said in his opening remarks, at the end of last year more than 80 judgments against member states by the European Court of Justice were still outstanding. Only one involves the United Kingdom, whereas in one member state no fewer than 37 adverse judgments still have not been implemented. We want to improve compliance throughout the Community, which may well mean enabling the European Court of Justice to enforce its judgments more effectively.

I will deal next with the question of democratic accountability. As the House will know, we have just improved our systems of scrutiny and we now need to see how they work. They may be susceptible to further improvements and some hon. Members, including the hon. Member for Vauxhall (Miss Hoey) and my hon. Friends the Members for Suffolk, Central (Mr. Lord), for Chichester (Mr. Nelson) and for Nottingham, East (Mr. Knowles), have made suggestions in that direction.

Mr. Randall

rose——

Mr. Garel-Jones

No, I shall not give way. I want to continue.

We believe that all the people in Europe are entitled to have these matters scrutinised at home. I am sure that other national Parliaments think about setting minimum standards of democratic scrutiny even if they do not want to go as far as we do.

That brings me to the question of the involvement of the House and other national Parliaments in the Community's affairs. I have already referred to scrutiny and we would like to see the House play an increasing role inside the Community. Already the Scrutiny Committee, chaired by the hon. Member for Newham, South, has met its opposite numbers throughout the Community and there may be ways in which that can be developed and built upon.

Unlike the hon. Member for Hamilton (Mr. Robertson), who was thrilled, we were disappointed by the parliamentary assembly in Rome last week. We were disappointed that instead of making any practical suggestions for the involvement of national Parliaments in the Community's work, it presented us with a maximalist wish list. The House is interested to know—the hon. Member for Hamilton was not very forthcoming—about the role that Opposition Front Bench Members played at that meeting. I understand from my right hon. Friend the Member for Guildford (Mr. Howell), who led the British delegation, that there was a telephone call from Walworth road——

Mr. Robertson

Oh.

Mr. Garel-Jones

Someone else suggested that there may have been a telex. Whatever instructions were issued, whether from the national executive committee or from the right hon. Member for Manchester, Gorton (Mr. Kaufman), the hon. Members for Hamilton and for Islington, South and Finsbury (Mr. Smith) signed up to more executive powers for the Commission and co-decisions for the European Parliament and the Council. They signed up for a federalist charter which is not acceptable to the House or to the British people. I can do no better than to read from a press release issued by the hon. Member for Newham, South, who did not vote for the federalist charter. He said that what his hon. Friends signed up to destroys self-government and gives a diminished degree of democratic accountability at the price of giving assent to the emergence of a new European super state. No party or Government in the United Kingdom has any mandate to give away the rights of its citizens. We agree with the hon. Member for Newham, South. I am disappointed that the hon. Member for Hamilton was not able to give us more of an explanation.

We will not be deterred by that. We shall be making proposals of our own after consultation with my right hon. Friend the Member for Guildford, the hon. Member for Newham, South and others on both sides of the House. We shall be proposing ways in which the House and its Members can become directly involved in the European Community on behalf of their constituents. The role of the European Parliament can be pivotal to scrutiny and control of the Commission, not in passing new laws but in monitoring Community expenditure. [Interruption.] The right hon. Member for Gorton experienced great difficulty in making a distinction between security and defence. I despair of the right hon. Gentleman understanding even the most simple propositions.

Next year's Community budget will total about £38 billion in commitments. With that sum, we need to improve financial management in the Community, maximise value for money in the use of Community resources, and ensure proper accountability. To that end, at the intergovernmental conference we shall propose an enhancement of the role of the European Parliament in scrutinising the implementation of the budget and the discharge procedure and, in tandem, a streamlining of the organisation of the Court of Auditors to increase its efficiency and to extend the value of its work.

That underlines the Government's wish to play an active and central role in the debate on Europe's future, in contrast with the unprincipled approach of the Opposition—an approach which has consistently damaged the interests of Britain for the past 20 years.

Mr. Randall

Will the Minister give way?

Mr. Garel-Jones

No, I am not giving way to the hon. Gentleman.

Mr. Randall

rose——

Mr. Garel-Jones

No, I am not giving way.

I am delighted to see the hon. Members for Bolsover (Mr. Skinner) and for Bradford, South (Mr. Cryer) in their places, but I regret that the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) is not with them.

Mr. Randall

rose——

Mr. Speaker

Order. The hon. Gentleman must resume his seat if the Minister does not give way.

Mr. Garel-Jones

Those three hon. Members are generally in their places like the three witches from Macbeth—bubble, bubble toil and trouble.

Mr. Randall

On a point of order, Mr. Speaker. I would like your advice——

Mr. Speaker

Order. The hon. Member knows better than that. I do not give advice on a point of order.

Mr. Randall

I should like your ruling. Is it because the Minister is making his maiden speech from the Dispatch Box that he is not prepared to give way? Can you make him——

Mr. Speaker

Order. I thought that I heard a cry of "Bogus", and I am afraid that it was.

Mr. Garel-Jones

Those three hon. Members represent what I would call Labour party thinking on the matter. The hon. Member for Bradford, South, who represents what we can now confidently call a marginal seat—a Tory gain at the next election—has been consistent in his opposition to the Community, but he has not let that stand in the way of his ambition. He did not hesitate to take the place in Government vacated by the hon. Member for Liverpool, Walton (Mr. Heller), who resigned over the Community——

Mr. Leighton

No, he did not.

Mr. Garel-Jones

Yes, he did.

Having lost his seat in 1983, the hon. Member for Bradford, South crawled away to draw a Euro-salary before returning to the House to inflict on us his own special brand of sanctimonious claptrap. His constituency will be a Tory gain at the next election, and we very much hope that it will be "adieu" and not "au revoir" to the hon. Gentleman.

The hon. Member for Bolsover has at least been consistent——

Mr. Ronnie Campbell (Blyth Valley)

Will the Minister give way?

Mr. Garel-Jones

I am not giving way to the hon. Member. [Interruption.] If the hon. Member for Rhondda (Mr. Rogers) wants to hear what is being said, he should invite his hon. Friends to listen.

Mr. Cryer

Will the Minister give way?

Mr. Garel-Jones

No, I will not give way.

Mr. Ronnie Campbell

rose——

Mr. Speaker

Order. If the Minister does not give way, the hon. Gentleman should sit down.

Mr. Garel-Jones

The hon. Member for Bolsover is a Euro-phoney and a Euro-cynic, and he is led by a Euro-phoney and a Euro-cynic. The House expects the Opposition to answer the questions raised in Rome.

Mr. Allen

rose——

Mr. Derek Foster (Bishop Auckland)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the amendment be made:—

The House divided: Ayes 215, Noes 308.

Division No. 23]	[10 pm
AYES
Abbott, Ms Diane	Beckett, Margaret
Adams, Mrs. Katharine	Beggs, Roy
Allen, Graham	Bell, Stuart
Anderson, Donald	Bellotti, David
Archer, Rt Hon Peter	Benn, Rt Hon Tony
Armstrong, Hilary	Bennett, A. F. (D'nt'n & R'dish)
Ashdown, Rt Hon Paddy	Benton, Joseph
Ashley, Rt Hon Jack	Bermingham, Gerald
Ashton, Joe	Boateng, Paul
Banks, Tony (Newham NW)	Boyes, Roland
Barnes, Harry (Derbyshire NE)	Bradley, Keith
Barron, Kevin	Bray, Dr Jeremy
Battle, John	Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)	Illsley, Eric
Buckley, George J.	Ingram, Adam
Caborn, Richard	Johnston, Sir Russell
Callaghan, Jim	Jones, Martyn (Clwyd S W)
Campbell, Menzies (Fife NE)	Kaufman, Rt Hon Gerald
Campbell, Ron (Blyth Valley)	Kinnock, Rt Hon Neil
Campbell-Savours, D. N.	Kirkwood, Archy
Canavan, Dennis	Lamond, James
Clark, Dr David (S Shields)	Leadbitter, Ted
Clay, Bob	Leighton, Ron
Clelland, David	Lewis, Terry
Clwyd, Mrs Ann	Litherland, Robert
Cohen, Harry	Livingstone, Ken
Coleman, Donald	Lloyd, Tony (Stretford)
Cook, Robin (Livingston)	Lofthouse, Geoffrey
Corbett, Robin	Loyden, Eddie
Corbyn, Jeremy	McAllion, John
Cousins, Jim	McAvoy, Thomas
Cox, Tom	Macdonald, Calum A.
Crowther, Stan	McKay, Allen (Barnsley West)
Cryer, Bob	McKelvey, William
Cummings, John	McLeish, Henry
Cunliffe, Lawrence	McMaster, Gordon
Cunningham, Dr John	McNamara, Kevin
Dalyell, Tam	McWilliam, John
Darling, Alistair	Madden, Max
Davies, Rt Hon Denzil (Llanelli)	Mahon, Mrs Alice
Davis, Terry (B'ham Hodge H'l)	Marek, Dr John
Dewar, Donald	Marshall, David (Shettleston)
Dixon, Don	Marshall, Jim (Leicester S)
Dobson, Frank	Martin, Michael J. (Springburn)
Doran, Frank	Martlew, Eric
Duffy, A. E. P.	Maxton, John
Dunnachie, Jimmy	Meacher, Michael
Dunwoody, Hon Mrs Gwyneth	Meale, Alan
Eadie, Alexander	Michael, Alun
Eastham, Ken	Michie, Bill (Sheffield Heeley)
Evans, John (St Helens N)	Mitchell, Austin (G't Grimsby)
Ewing, Harry (Falkirk E)	Molyneaux, Rt Hon James
Ewing, Mrs Margaret (Moray)	Moonie, Dr Lewis
Fatchett, Derek	Morgan, Rhodri
Faulds, Andrew	Morley, Elliot
Field, Frank (Birkenhead)	Morris, Rt Hon A. (W'shawe)
Fields, Terry (L'pool B G'n)	Morris, Rt Hon J. (Aberavon)
Fisher, Mark	Mullin, Chris
Flannery, Martin	Murphy, Paul
Flynn, Paul	Nellist, Dave
Foot, Rt Hon Michael	Oakes, Rt Hon Gordon
Forsythe, Clifford (Antrim S)	O'Brien, William
Foster, Derek	O'Hara, Edward
Fraser, John	O'Neill, Martin
Fyfe, Maria	Orme, Rt Hon Stanley
Galbraith, Sam	Patchett, Terry
Galloway, George	Pendry, Tom
Garrett, John (Norwich South)	Pike, Peter L.
Garrett, Ted (Wallsend)	Prescott, John
George, Bruce	Primarolo, Dawn
Gilbert, Rt Hon Dr John	Quin, Ms Joyce
Godman, Dr Norman A.	Radice, Giles
Golding, Mrs Llin	Randall, Stuart
Gordon, Mildred	Rees, Rt Hon Merlyn
Gould, Bryan	Reid, Dr John
Graham, Thomas	Richardson, Jo
Grant, Bernie (Tottenham)	Robertson, George
Griffiths, Nigel (Edinburgh S)	Robinson, Geoffrey
Grocott, Bruce	Rogers, Allan
Hardy, Peter	Rooker, Jeff
Harman, Ms Harriet	Rooney, Terence
Hattersley, Rt Hon Roy	Ross, Ernie (Dundee W)
Henderson, Doug	Ross, William (Londonderry E)
Hoey, Ms Kate (Vauxhall)	Rowlands, Ted
Hogg, N. (C'nauld & Kilsyth)	Ruddock, Joan
Home Robertson, John	Sedgemore, Brian
Hood, Jimmy	Sheerman, Barry
Howarth, George (Knowsley N)	Sheldon, Rt Hon Robert
Howells, Dr. Kim (Pontypridd)	Shore, Rt Hon Peter
Hoyle, Doug	Short, Clare
Hughes, John (Coventry NE)	Skinner, Dennis
Hughes, Robert (Aberdeen N)	Smith, Andrew (Oxford E)
Hughes, Roy (Newport E)	Smith, C. (Isl'ton & F'bury)

Smith, Rt Hon J. (Monk'ds E)	Wareing, Robert N.
Smith, J. P. (Vale of Glam)	Watson, Mike (Glasgow, C)
Snape, Peter	Welsh, Andrew (Angus E)
Soley, Clive	Welsh, Michael (Doncaster N)
Spearing, Nigel	Williams, Rt Hon Alan
Steel, Rt Hon Sir David	Williams, Alan W. (Carm'then)
Steinberg, Gerry	Wilson, Brian
Stott, Roger	Winnick, David
Strang, Gavin	Wise, Mrs Audrey
Straw, Jack	Worthington, Tony
Taylor, Rt Hon J. D. (S'ford)	Wray, Jimmy
Thompson, Jack (Wansbeck)	Young, David (Bolton SE)
Trimble, David
Vaz, Keith	Tellers for the Ayes
Walker, A. Cecil (Belfast N)	Mr. Frank Haynes and Mr. John McFall.
Wallace, James
Warden, Gareth (Gower)

NOES
Adams, Mrs. Katherine	Critchley, Julian
Adley, Robert	Currie, Mrs Edwina
Aitken, Jonathan	Curry, David
Alexander, Richard	Davies, Q. (Stamf'd & Spald'g)
Alison, Rt Hon Michael	Davis, David (Boothferry)
Allason, Rupert	Day, Stephen
Amery, Rt Hon Julian	Devlin, Tim
Amess, David	Dorrell, Stephen
Amos, Alan	Douglas-Hamilton, Lord James
Arbuthnot, James	Dunn, Bob
Arnold, Jacques (Gravesham)	Durant, Tony
Arnold, Sir Thomas	Dykes, Hugh
Ashby, David	Eggar, Tim
Aspinwall, Jack	Emery, Sir Peter
Atkins, Robert	Evans, David (Welwyn Hatf'd)
Baker, Nicholas (Dorset N)	Evennett, David
Baldry, Tony	Fallon, Michael
Banks, Robert (Harrogate)	Favell, Tony
Batiste, Spencer	Fenner, Dame Peggy
Bellingham, Henry	Field, Barry (Isle of Wight)
Bendall, Vivian	Fishburn, John Dudley
Bennett, Nicholas (Pembroke)	Fookes, Dame Janet
Bevan, David Gilroy	Forman, Nigel
Biffen, Rt Hon John	Forth, Eric
Blaker, Rt Hon Sir Peter	Fowler, Rt Hon Sir Norman
Bonsor, Sir Nicholas	Fox, Sir Marcus
Boscawen, Hon Robert	Franks, Cecil
Boswell, Tim	Freeman, Roger
Bottomley, Peter	French, Douglas
Bottomley, Mrs Virginia	Fry, Peter
Bowden, Gerald (Dulwich)	Gale, Roger
Bowis, John	Gardiner, George
Boyson, Rt Hon Dr Sir Rhodes	Garel-Jones, Tristan
Brandon-Bravo, Martin	Gill, Christopher
Brazier, Julian	Gilmour, Rt Hon Sir Ian
Bright, Graham	Glyn, Dr Sir Alan
Brooke, Rt Hon Peter	Goodhart, Sir Philip
Brown, Michael (Brigg & Cl't's)	Goodlad, Alastair
Browne, John (Winchester)	Goodson-Wickes, Dr Charles
Bruce, Ian (Dorset South)	Gorman, Mrs Teresa
Buck, Sir Antony	Gorst, John
Burt, Alistair	Grant, Sir Anthony (CambsSW)
Butler, Chris	Greenway, Harry (Ealing N)
Butterfill, John	Greenway, John (Ryedale)
Carlisle, John, (Luton N)	Gregory, Conal
Carlisle, Kenneth (Lincoln)	Griffiths, Peter (Portsmouth N)
Carrington, Matthew	Grist, Ian
Cash, William	Ground, Patrick
Chalker, Rt Hon Mrs Lynda	Hague, William
Channon, Rt Hon Paul	Hamilton, Neil (Tatton)
Chapman, Sydney	Hampson, Dr Keith
Chope, Christopher	Hanley, Jeremy
Churchill, Mr	Hannam, John
Clark, Hon Alan (Plym'th S'n)	Hargreaves, Ken (Hyndburn)
Clark, Dr Michael (Rochford)	Harris, David
Clark, Sir W. (Croydon S)	Haselhurst, Alan
Conway, Derek	Hawkins, Christopher
Coombs, Simon (Swindon)	Hayes, Jerry
Cormack, Patrick	Hayhoe, Rt Hon Sir Barney
Couchman, James	Hayward, Robert
Cran, James	Heathcoat-Amory, David

Heseltine, Rt Hon Michael	Moss, Malcolm
Hicks, Mrs Maureen (Wolv' NE)	Moynihan, Hon Colin
Hicks, Robert (Cornwall SE)	Mudd, David
Higgins, Rt Hon Terence L.	Neale, Gerrard
Hill, James	Needham, Richard
Hind, Kenneth	Nelson, Anthony
Hogg, Hon Douglas (Gr'th'm)	Neubert, Michael
Holt, Richard	Newton, Rt Hon Tony
Hordern, Sir Peter	Nicholls, Patrick
Howard, Rt Hon Michael	Nicholson, David (Taunton)
Howarth, Alan (Strat'd-on-A)	Nicholson, Emma (Devon West)
Howarth, G. (Cannock & B'wd)	Norris, Steve
Howe, Rt Hon Sir Geoffrey	Onslow, Rt Hon Cranley
Howell, Rt Hon David (G'dford)	Oppenheim, Phillip
Howell, Ralph (North Norfolk)	Page, Richard
Hughes, Robert G. (Harrow W)	Paice, James
Hunt, David (Wirral W)	Patnick, Irvine
Hunt, Sir John (Ravensbourne)	Patten, Rt Hon Chris (Bath)
Hunter, Andrew	Patten, Rt Hon John
Hurd, Rt Hon Douglas	Pawsey, James
Irvine, Michael	Peacock, Mrs Elizabeth
Jack, Michael	Porter, Barry (Wirral S)
Jackson, Robert	Porter, David (Waveney)
Janman, Tim	Portillo, Michael
Johnson Smith, Sir Geoffrey	Powell, William (Corby)
Jones, Gwilym (Cardiff N)	Price, Sir David
Jones, Robert B (Herts W)	Raffan, Keith
Kellett-Bowman, Dame Elaine	Raison, Rt Hon Timothy
King, Roger (B'ham N'thfield)	Rathbone, Tim
Kirkhope, Timothy	Redwood, John
Knapman, Roger	Renton, Rt Hon Tim
Knight, Greg (Derby North)	Rhodes James, Robert
Knight, Dame Jill (Edgbaston)	Riddick, Graham
Knowles, Michael	Ridsdale, Sir Julian
Knox, David	Rifkind, Rt Hon Malcolm
Lamont, Rt Hon Norman	Roberts, Sir Wyn (Conwy)
Lang, Ian	Rossi, Sir Hugh
Latham, Michael	Rost, Peter
Lawrence, Ivan	Ryder, Richard
Lee, John (Pendle)	Sackville, Hon Tom
Leigh, Edward (Gainsbor'gh)	Sayeed, Jonathan
Lester, Jim (Broxtowe)	Scott, Rt Hon Nicholas
Lloyd, Sir Ian (Havant)	Shaw, David (Dover)
Lloyd, Peter (Fareham)	Shaw, Sir Giles (Pudsey)
Lord, Michael	Shaw, Sir Michael (Scarb')
Luce, Rt Hon Richard	Shelton, Sir William
Lyell, Rt Hon Sir Nicholas	Shephard, Mrs G. (Norfolk SW)
McCrindle, Sir Robert	Shepherd, Colin (Hereford)
MacGregor, Rt Hon John	Shersby, Michael
MacKay, Andrew (E Berkshire)	Sims, Roger
Maclean, David	Skeet, Sir Trevor
McLoughlin, Patrick	Smith, Sir Dudley (Warwick)
McMaster, Gordon	Smith, Tim (Beaconsfield)
McNair-Wilson, Sir Patrick	Soames, Hon Nicholas
Madel, David	Speed, Keith
Malins, Humfrey	Spicer, Sir Jim (Dorset W)
Mans, Keith	Spicer, Michael (S Worcs)
Maples, John	Squire, Robin
Marland, Paul	Stanbrook, Ivor
Marlow, Tony	Stanley, Rt Hon Sir John
Marshall, John (Hendon S)	Stern, Michael
Marshall, Sir Michael (Arundel)	Stevens, Lewis
Martin, David (Portsmouth S)	Stewart, Allan (Eastwood)
Mates, Michael	Stewart, Andy (Sherwood)
Maude, Hon Francis	Stewart, Rt Hon Ian (Herts N)
Mawhinney, Dr Brian	Sumberg, David
Maxwell-Hyslop, Robin	Summerson, Hugo
Mayhew, Rt Hon Sir Patrick	Tapsell, Sir Peter
Mellor, David	Taylor, Ian (Esher)
Meyer, Sir Anthony	Taylor, Teddy (S'end E)
Miller, Sir Hal	Tebbit, Rt Hon Norman
Mills, Iain	Temple-Morris, Peter
Miscampbell, Norman	Thompson, D. (Calder Valley)
Mitchell, Andrew (Gedling)	Thompson, Patrick (Norwich N)
Mitchell, Sir David	Thorne, Neil
Moate, Roger	Thornton, Malcolm
Montgomery, Sir Fergus	Thurnham, Peter
Moore, Rt Hon John	Townend, John (Bridlington)
Morris, M (N'hampton S)	Townsend, Cyril D. (B'heath)
Morrison, Sir Charles	Tracey, Richard

Tredinnick, David	Whitney, Ray
Twinn, Dr Ian	Widdecombe, Ann
Vaughan, Sir Gerard	Wiggin, Jerry
Viggers, Peter	Wilkinson, John
Wakeham, Rt Hon John	Wilshire, David
Walden, George	Winterton, Nicholas
Walker, Bill (T'side North)	Wolfson, Mark
Walker, Rt Hon P. (W'cester)	Wood, Timothy
Waller, Gary	Woodcock, Dr. Mike
Walters, Sir Dennis	Yeo, Tim
Ward, John	Young, Sir George (Acton)
Wardle, Charles (Bexhill)	Younger, Rt Hon George
Warren, Kenneth
Watts, John	Tellers for the Noes:
Wells, Bowen	Mr. David Lightbown and Mr. John M. Taylor.
Wheeler, Sir John

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That this House takes note of—

1. (a) developments in the European Community, in particular in view of the forthcoming European Council in Rome on 14th-15th December. with reference also to the White Paper on Developments in the European Community January-June 1990 (Cm. 1234); and
2. European Community Document No. 9431/90, the European Commission's opinion on the calling of the Inter-Governmental Conference on Political Union which was issued in accordance with Article 236 of the Treaty.

10.15 pm

Mr. Cryer

On a point of order, Mr. Speaker. The House may recall that the Minister made certain comments about me during the debate and failed to give the usual response. It is out of order for a Minister, either intentionally or casually, to mislead the House. The Minister suggested that I joined the Government to replace my hon. Friend the Member for Liverpool, Walton (Mr. Heifer) who had resigned—in fact, he was dismissed—over the referendum. The House will no doubt be pleased to know that the Minister's claim was entirely false. I joined the Government more than 12 months after that incident, under a different Prime Minister.

Mr. Speaker

That was not really a point of order, but if it has put the record straight, let us leave it at that.

Mr. Garel-Jones

If anything I said was inaccurate, I naturally withdraw it.

Mr. Speaker

I think honour is satisfied.