Single European Market

HC Deb 18 April 1989 vol 151 cc287-311 10.23 pm

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude)

I beg to move, That this House takes note of European Community Documents Nos. 9756/88 on completing the Single Market and 10413/88 on technical standards and regulations; recognises that the Single Market will bring important opportunities and challenges for business and benefits for the consumer; welcomes progress to date on the Single Market and endorses the Government's strong commitment to completing it; and welcomes the Government's campaign to encourage United Kingdom business to prepare now for the Single Market.

Mr. Speaker

I have not selected the amendment in the name of the hon. Member for Thanet, South (Mr. Aitken).

Mr. Maude

A year ago today, the Department of Trade and Industry launched its single market campaign. Its purpose was to alert business to the opportunities and challenges of the single market. We set ourselves then the target of achieving 90 per cent. awareness of the single market by the end of last year. We met that target well ahead of schedule, and now 50 per cent. of British business is taking action to prepare, recognising that the single market is already becoming a reality.

The need for this campaign is demonstrated by the progress report that we are debating tonight. The Commission was required to produce the report by article 8b of the treaty. It welcomes achievements to date in such areas as standards, financial services, capital movements, public procurement and professional qualifications. It also calls for faster progress in areas such as plant and animal health, taxation and frontier controls, and it stresses the importance of sustaining a rapid rate of progress.

The second report concerns the operation of directive 83/189, which is about preventing the creation of new technical barriers to trade within the Community and encouraging the production of European standards.

The Cecchini report suggested that the single market could create a 4 to 5 per cent. increase in Community GDP and nearly 2 million new jobs. But those benefits will not happen automatically. They depend on removal of all non-tariff barriers. They depend on open markets and a liberal approach.

Mr. Bob Cryer (Bradford, South)

With the removal of the internal barriers, the textile industry fears that all the imports into the Common Market might come into the United Kingdom. That seems likely, in view of our huge balance of trade deficit in manufactured goods. Do the Government have any plans to ensure that there is a fair allocation of textile imports throughout all the member states, rather than allowing them to flood into the United Kingdom?

Mr. Maude

That matter will have to be sorted out in the negotiations on the multi-fibre arrangement which, as the hon. Gentleman knows, falls to be considered in the current GATT round.

We have shown here in Britain that deregulation, openness and competition are central to economic success. For Europe to succeed, it needs to follow the same approach, and we are winning the argument. The completion of a real single market, which was, after all, what the EC was originally about, is unquestionably in the British interest.

On the few occasions on single market measures where we dissent from the majority, it is where we favour the more liberal, more European approach; while some of our partners, who may make more communautaire noises than we do, stand fast for narrow nationalistic protectionism.

But a recognition of the benefits of the free market approach is growing in Europe. Last year, the Council of Ministers agreed a resolution which reaffirmed our commitment to improving the climate for business. It recognised the importance of small and growing firms and the need to ensure that their enterprise and enthusiasm a re not strangled by red tape. It acknowledges that the development of the spirit of enterprise and the creation of new firms in the community must be encouraged". It also acknowledges that existing legislation should be reviewed with a view to simplification. I stress that that resolution was a proposal by the European Commission which was supported unanimously by all 12 member states.

We can claim some credit for creating the climate of opinion in which such a resolution was possible. A few years ago, it would not have been. The same mere market-oriented approach is seen in the field of standards. Old-style harmonisation has gone—the days of regulating every aspect of every product. Under the new approach to standards, we simply set the essential requirements—for example, relating to health and safety.

The specialist standards bodies then draw up the detailed standards to help companies meet the requirements. That new flexibility has resulted in agreements covering, for example, machine safety, construction products and toy safety. In that and other areas, we are making such harmonisation as is necessary a liberalising process, rather than a repressive and regulatory one.

In the past 12 months, we have seen key agreements on, for example, the liberalisation of capital movements, the mutual recognition of professional qualifications, the liberalisation of road haulage, and the opening up of public procurement markets. In air services, we are enjoying the benefits of liberalisation already, with new routes and lower fares.

Last Thursday, at the Internal Market Council, we reached agreement on a directive to remove barriers in trans-frontier broadcasting. Attempts by others to introduce rigid and protectionist provisions failed. The outcome is essentially flexible and liberal.

A priority for the future is financial services. We are discussing directives on banking, investment services and life assurance services.

Rev. Ian Paisley (Antrim, North)

Page 1 of the document on completing the single market says, in short, that completion of the internal market is the key not only to the Community's prosperity but to the Community's future. It is the key that will and must unlock the door. What is the Government's attitude to unlocking the door, and where will the unlocked door take us?

Mr. Maude

It is a somewhat cryptic phrase, but we agree entirely with the sentiment that the priority for the Community at the moment is completing the single market, and completing it in the sort of way that the United Kingdom finds congenial. That is undoubtedly the key to unlocking a great deal of prosperity that is diverted into needless costs and restrictions.

Mr. Dennis Skinner (Bolsover)

Is the Minister aware that some people have found the key to the door in the Common Market? The Mafia has found a golden key and unlocked the door. When it shouted, "Open sesame!" It found £6,000 million behind the door. It is odd that the Minister should come here with a motion supported by the Prime Minister who only a few months ago was lecturing everybody at Bruges about the dangers of the Common Market. Yet she has signed a motion welcoming the single market, having guillotined the measure in the House. It is high time the Minister told us about the hypocrisy of the Government in trying to give the impression that they are against the Common Market when late at night, as on this occasion, they come along, with the payroll vote, to push a motion through.

Mr. Maude

The hon. Gentleman may find it remarkable, but it is possible to be in favour of some parts of a concept without finding it necessary to embrace warmly every aspect of everyone's view of it. It is possible to be against illegal fraud, as we are—more robustly perhaps than others in the Community—and still be in favour of the completion of the single market. The hon. Gentleman, with his detailed and expert knowledge of the subject, should know that allegations of fraud within the European Community, which we take extremely seriously, have nothing to do with the completion of the single market. The single market is about removing barriers to trade across Europe and nothing to do with providing funds.

Mr. Teddy Taylor (Southend, East)

When he deals with the progress of the directive on machine safety, can the Minister give us any indication of how it will help free trade, particularly bearing in mind that it was considered by a Standing Committee for two minutes on 30 January, after it had already been agreed, and then passed by the House without a vote? As we know, it will add huge extra costs to the activities of small and medium industries. Can he tell me in what way that directive will further the interests of free trade in the Community?

Mr. Maude

It will do so by preventing those countries in Europe that might otherwise be minded to do so—in some instances they do so at the moment—from erecting bogus barriers to trade on the pretext of safety requirements. It will lay down that, if a machine meets the essential safety requirements set out in the directive, another country in Europe cannot prevent it from being marketed.

That is quintessentially what the single market is about. It is about preventing countries from erecting false barriers to trade on bogus pretexts. It will be effective in doing that. We have succeeded in achieving the bulk of our requirements. It is essentially a liberal directive, along the lines that we urged throughout. I hope that my hon. Friend will draw comfort from that. The suggestion that it will impose extra costs on small businesses is mistaken.

In respect of the financial services directive, our objective is to secure a sound framework of Community legislation that encourages competition and provides equal access to European Community financial markets. We have had strong objections to the Commission's proposals on reciprocity in financial services. We would like to see them dropped altogether, but the Commission's revised proposals, published last Thursday, are a real improvement, although significant points of difficulty remain.

We shall continue to resist attempts to use the single market as a pretext for the erection of protectionist barriers against the rest of the world. Again, recent developments are encouraging. Both Heads of Government and the Commission have reaffirmed the need for open markets.

The Community, after all, lives by trade. A policy of "fortress Europe" is simply not credible. Indeed, it would undermine the benefits of more competition and greater consumer choice that the single market is designed to bring. There is also a social dimension to the single market. It is inseparable from the economic benefits of more jobs, more choice and greater prosperity.

Mr. Jeremy Hanley (Richmond and Barnes)

In addition to the excellent initiative and effort being put into developing business advantages for small and medium enterprises in Europe, adding to that the great advantages that will exist for businesses trading in Europe under the single market, many companies that will not choose to trade in Europe will nevertheless be fully affected by the single market and by added competition from Europe. Will my hon. Friend encourage companies, whether or not they choose to trade in Europe, to carry out a full 1992 audit to discover the advantages, and in some cases perhaps the added competition, that they will face following 1992?

Mr. Maude

We have stressed throughout the campaign that we have run that the single market will affect every business in the country and that whether a business is now trading, or might in the future trade, in Europe, it will be affected. To the same extent that the rest of Europe becomes part of our home market, we will become part of the wider European market, so it will become commensurately easier for continental firms to trade here. My hon. Friends point is correct, and I hope that it is widely understood.

Mr. William Cash (Stafford)

My hon. Friend will be aware of the Commission document entitled "The company approach to 1992", which expressly omits any reference to the United Kindom Parliament and its scrutiny process but refers to the scrutiny processes in other parts of the Community, such as the European Parliament and the Commission.

Does my hon. Friend agree that it is essential not only that the scrutiny process in this Parliament is known at large, through documents published by the Commission—of which 50,000 have been distributed in this country—but that the Department of Trade and Industry should also make sure, as I understand that Department is about to do, that people know that this is the House to which Ministers and others are accountable and to which people are elected to represent their constituents?

Mr. Maude

We treat the process of scrutiny extremely seriously. The attention which my hon. Friend and his colleagues who sit on the European Legislation Select Committee devote to these measures is welcomed by the Government. I hope that he appreciates the effort that we are making to bring these matters before the relevant Committees at an earlier stage in the negotiating process because the comments that the House makes are useful to us as we continue the process of negotiation.

I was referring to the social dimension of the single market and said it was inseparable from the economic benefits which would flow from the single market by way of more jobs, more choice and greater prosperity. We welcome measures which help to tackle the problem of unemployment—which is now greater throughout most of the rest of the Community than it is in this country—and measures which improve health and safety.

But there are those in the Community who want to impose new social legislation on us. One example is compulsory worker participation in the running of companies. We are not opposed to the involvement of employees and we have done a great deal to encourage it but the imposition of rigid systems on all companies in all countries is alien to all that the Community should stand for.

I am encouraged to know that I can rely on the support of many Opposition Members for the Government's robust hostility to those proposals. I note from the debate last week on weights and measures how strongly many of them object to the imposition of measures of purely domestic concern by the Community. I look forward to receiving, particularly from the hon. Members for Bolsover (Mr. Skinner) and for Bradford, South (Mr. Cryer) robust support for our standpoint on this issue so that we may go forward on a bipartisan basis in opposing the imposition by others in the Community of alien measures.

Mr. Doug Henderson (Newcastle upon Tyne, North)

What evidence has the Minister that the system of worker participation which has been established in West Germany has damaged the efficiency of the German economy?

Mr. Maude

I did not say that it had. All I said was that it is a system not welcomed by companies here. Many companies, and all successful companies, establish their own systems for employee participation, but they are systems agreed by those companies in circumstances which are appropriate for them; and systems which are deemed apropriate by the German domestic legislature for German companies are not necessarily those which are appropriate in this country. I hope that the hon. Member will agree with us in strongly resisting this imposition. I can assure the hon. Member for Bolsover that we have not sold the pass but are defending it strongly—and I look forward to his support for our doing so.

10.40 pm

Mr. Doug Henderson (Newcastle upon Tyne, North)

I welcome the opportunity at this late hour to consider the progress towards the completion of the internal market and also to consider the procedure for the provision of information on technical standards, but I must point out, as have some of my colleagues previously, that this procedure is inadequate and that a short debate such as this gives us no proper opportunity to consider the very important matters before us. Parliamentary democracy requires parliamentary scrutiny and we cannot have that if decisions are already made before we come to the House. Parliamentary democracy cannot be guaranteed if Ministers increasingly fail to make statements in the House on progress on specific proposals which are absolutely vital to our economy, as is now the case, and if other decisions in Europe are reached in private sessions, in private rooms, initially in the Commission and later in the Council of Ministers. We have an excellent example this week of discussions of this sort, which have been taking place on economic and monetary union.

I was interested to hear the commitment of the Under-Secretary of State to raising awareness in the country of the impact of the single market. I hope that all hon. Members will recognise that change must take place in a new, expanded market, and that our role in that market must change. Having said that, however, I believe that there is increasing anxiety about the Government's relationship with Europe. Is this anxiety not a direct reflection of the Government's own anxiety? And is that not itself caused by the Government's own failure to understand in time the true nature of the Single European Act—as I think some of the Minister's colleagues will point out later in the debate? Is it not also the case that the Government's belated recognition that 1992 means more than the free movement of City capital is something on which they did not originally reckon?

Montagu Norman, the legendary pre-war Governor of the Bank of England said that he employed economists to explain to him why he was right. It is obvious to most hon. Members that the Prime Minister must have consulted Montagu Norman's memoirs before she appointed Mr. Walters and her other advisers. It might be wise for the current Governor of the Bank of England to check h is economic textbooks this evening to see on whose advice he has drawn in his discussions in Europe in recent weeks.

Does not this confusion and misapprehension about the Single European Act explain the hectoring and the blustering on behalf of our nation in Bruges not many months ago? Has it not made the task of all of us, of industrialists and of business men, all the more difficult in closing what is undoubtedly our Euro-credibility gap? If we do not do that, will we be able convincingly to press for reform in the Community? I hope that all of us would reckon that such reform is vital to our interests.

Mr. Jonathan Aitken (Thanet, South)

I am somewhat perplexed by the Labour party's policy after listening closely to that delphically obscure passage about governors, past and present, of the Bank of England. Is the Labour party policy to support the views of the present governor of the Bank of England on economic monetary union or has it come round to support the views of the Chancellor of the Exchequer? One way or another, the Labour party must now make its position clear.

Mr. Henderson

The views of the present Governor of the Bank of England are interesting. I am not sure that those of the Chancellor of the Exchequer are as interesting. The Labour party's view is quite clear: we will consider greater monetary union in Europe when the time is right and we get an exchange rate with which our industry is able to compete in Europe. People who know about industry will realise that that is crucial.

Why have the Government belatedly understood what the single European market is about? We should hardly have expected the Government to agree with everything said by Mr. Delors, but we would have expected them to have a greater rapport with Chancellor Kohl. One can imagine the horror in some of the back rooms of Victoria street last summer when it was heard that, in his Hanover speech, Chancellor Kohl said that he agreed with most of what Mr. Delors said about the importance of the social dimension. I was encouraged by the fact that the Under-Secretary of State said earlier that he had begun to understand the importance of that.

The Government have a number of important obligations in relation to the completion of the single market. They have an obligation to inform our own people, initiate change in Europe on our behalf, represent Britain's interests in Europe and, crucially, make changes in this country, which are necessary in preparation for 1992. It must be clear to the Department that we are the least well prepared for 1992 of the major EC countries.

It is right for the House, in this debate, to examine how the Government have discharged their responsibility.

Mr. Maude

What evidence does the hon. Gentleman have for that assertion?

Mr. Henderson

I am happy to refer the Under-Secretary of the Tyne and Wear chamber of commerce, which referred to an article in the Daily Mail—which I am sure the Under-Secretary has read. Ten major exporters in the United Kingdom were phoned up in French and asked if they could provide an order for the person making the call. Seven out of the 10 giggled at the switch board and the other three cut off the inquirer. When a similar inquiry was made in Germany and in France—in English—seven out of 10 in both cases understood the orders.

The noble Lord Young recently told industrialists that they should buy a ticket for Brussels. Surely, one has to know why one is going before travelling. I heard what the Under-Secretary said about the cost of air transport and liberalisation, but that has not done much to reduce the charge between there and London.

Writing in The Journal of Northern Business—which deals with the area that encourages Fujitsu and other companies—Lord Young says: DTI surveys show that, nationally, only around one firm in three has begun to prepare seriously for action"— that was in January this year— and there is no evidence that companies in the North are any better prepared. An article in Scottish Management Survey stated in February: The principal anxiety, however, arises from the lack of preparedness which the survey reveals in the approach of Scottish managers to the challenge of 1992 and the Single European Market. A third of the respondents simply say that the event is 'not important'. There is more evidence from the CBI. In its survey of 200 companies, 31 per cent. said that they had made no preparation for 1992; 3 per cent. said that they had opened sales offices; 4 per cent. had managed to open agencies; and only 7 per cent. had introduced new language training. I do not think that that is good enough.

Mr. Maude

I am sure that the hon. Gentleman will join me in welcoming the fact that since January—a date to which he did not refer until it was drawn from him—the proportion of businesses that are preparing for 1992 has risen from one third to half.

Mr. Henderson

I hear what the hon. Gentleman says. I shall be interested to hear the statistical basis for it in the morning.

Every dog has his day; does not every salesman have his? Is it not clear by now that the Secretary of State has failed in the preparation for 1992? He cannot even convince the friendly Institute of Directors of his case. Will the Under-Secretary now join his colleagues in expecting the boss to hang up his salesman's patter before it is hung up for him by his own boss? If the boss will not give assurances, as he cannot, will the Under-Secretary acknowledge that urgent action is needed if we are to inform and educate our business community? Does he recognise the danger of a hands-off attitude? Does he agree that an assessment by the Department of the likely impact in each industry is vital? I am sure that Miti in Japan would undertake such an assessment if it were in our position; indeed, it is undertaking one on behalf of Japanese companies.

Will the Under-Secretary make more resources available to co-ordinate the task through the DTI, as a matter of urgency? If he is somewhat weary of making commitments my colleagues and I may understand, although I am not sure that the business community will. I assure him that if he accedes to my requests it will not make him an interventionist; I am merely asking him to be an informationist.

Better information by itself is inadequate, however. The Government have an important obligation to engineer change in Europe. That is not only in Europe's interests; it is in ours. Europe cannot prosper as long as there is a great divide between the north and the south—or, more accurately, between the Bonn-Paris central axis and the most peripheral areas of southern Italy, Greece, Iberia, Ireland and, increasingly, many parts of the United Kingdom.

Some might argue that markets will resolve that division. Few in the Community seem to believe that, although there are some in Whitehall who do. Few believe that the poorer regions can achieve growth without strong regional policy, that skill levels can be raised without strong social policy or that infrastructure can be improved without intervention expenditure. Few in our textile industry, in regions already referred to, believe that they have any future without intervention in trade through the multifibre arrangement—and also intervention in this country to modernise plant and product and bring marketing to a standard that would allow it to compete principally in Europe. Few would argue that those objectives and others can be achieved without greater European public expenditure.

We should be taking the lead in those matters, in our own interests and in the interests of the Community. We should learn from others. We should learn from the Germans that public expenditure is worth while and can be justified to improve the private sector and that intervention is necessary if education standards are to be raised, training is to be improved and research and development is to reach the necessary standards. Perhaps then we would reach the standards of product development achieved by the Germans and take the lead in introducing some of the most important proposals, such as the three-way catalytic converter for vehicle exhausts, the new standards in ventilating equipment and the new environmentally safe batteries which will be a key issue in the coming months.

Perhaps it is possible to prosper without intervention domestically or with a social dimension in the EC, although I doubt that. But it is surely impossible for Britain to prepare for 1992 with such an overvalued currency. Industrialists throughout the country, including the CBI, tell us regularly that the one factor which destroys our ability to export is the exchange rate. Will the Government face up to the fact that it makes no sense for one of the weakest manufacturing nations in the EC to have one of the most overvalued currencies? That is a recipe for industrial devastation now, further problems in 1992 and even more severe difficulties if the proposals discussed by the governors of the European banks ever reach the political agenda.

The noble Lord Young may crawl to the recalcitrants in the Institute of Directors, saying that the abolition of exchange controls, the freeing of international road haulage or the freeing of non-life insurance shows that 1992 really means deregulation. I hope that the Under-Secretary of State for Corporate Affairs will he wiser than that and will agree with the manufacturing industry in Britain and in Europe that intervention is necessary to secure common high-technical standards, the best product design, structural changes in industry and the highest standards of environmental protection and safety.

To date, only 108 of the 279 proposals have achieved a common position. We shall face difficult issues in future, such as animal and plant controls, fiscal change, border controls and the movement of people, which are all vital to our future. The challenge to Britain is to produce a European agenda, to take a lead in European standards, technical, material and moral, and to recognise that our macro-economic policies, particularly our exchange rate, is crucial in any European context. Our challenge is to acknowledge that if supply-side improvements do not happen autonomously in Europe, why should they happen autonomously in Britain. Our challenge is to realise that unless all those measures and others are taken, far from being a great opportunity, 1992 will be a great threat.

I hope that the debate will help to clarify the issues in the documents, but the Opposition cannot support the motion. I hope that hon. Members from both sides of the House will express their concern and join us in opposing the motion.

10.58 pm

Mr. Teddy Taylor (Southend, East)

This is a very short debate on an important issue, and I shall say just a few words.

Everyone in the House tonight will probably agree that free trade in Europe would benefit the United Kingdom and Europe. Our massive balance of trade deficit with Europe suggests that free trade and the removal of artificial restraints and bureaucratic controls, particularly in Germany and to a lesser extent in France, would help us all. A real 1992, with free trade in Europe, would benefit us all. But we have to ask ourselves whether we are aiming for free trade, whether free trade will be achieved, and what is actually facing us.

What is happening? The Minister said that more and more people were aware of 1992. What worries me is that they are aware of something that is not going to happen at all. I can give many examples. I had the pleasure of attending a recent conference of the print industry and paper manufacturers. They were talking about 1992 and the great opportunities of the new changes. I asked all 160 people, including company chairmen, managing directors and accountants, whether they knew of any proposal in the 1992 measures designed for printing or books. I said, "You are the people who know—I don't. You are the company chairmen and managing directors, and you have paid a lot of money to come to a great conference and everyone is delighted with it. Do you know of any proposal that will help your industry?" I did not receive one response, and I know of none, save the possible imposition of VAT on newspapers and books.

The Minister talked about insurance services. I am a director of an insurance company and I have been to lunch with people from many insurance companies. We hear constantly about the glorious new opportunities for insurance freedom in 1992, but I must ask the Minister what those opportunities are. I have read the directives with great care and we have studied them at board meetings, with experts submitting reports, but the only proposal for non-life insurance seems to be for a limited degree of freedom in what are known as large risks. That means that our company might have the opportunity to insure the Eiffel tower, if the French agreed. However, that freedom might not materialise, due to the rule put into the proposals by the Commission at the last minute to the effect that if a company can offer a suitable insurance service it can keep the other lot out. My insurance company—and two other leading insurance companies of which I am aware—thus came to the conclusion that there is no liberalisation in the proposals.

When one considers particular industries, it is nonsense to say, "Please prepare for 1992." Looking at the proposals, it is clear that free trade is not on the way. Sadly, the measures that we have considered to date have largely been matters of little significance. Sadly, too, there are major problems. Does my hon. Friend the Minister seriously think that we can have free trade in 1992 unless we sort out the inner German trade agreement? He will be well aware that the country with which we have the worst balance of payments deficit is Germany. He must be aware from reading Community documents that the position is disastrous.

In the reports about food aid, for example, we find that there were massive complaints last year about food contaminated by radioactivity, which apparently came from eastern Europe. My hon. Friend must be aware that trade is flowing in from East europe to East Germany and to West Germany under the inner German trade agreement. The only people who can control the trading conditions are the West German Government. We are all aware that trade is flowing from eastern Europe to Germany.

The Minister may think that that is a silly point, but let him go and speak to the textile industry or to the people working in the knitted goods industry. They have plenty of documents on the matter. I have one here from the Apparel, Knitting and Textile Alliance, which is clearly terrified that the alleged single European market will simply mean that east European goods will pour in. What can my hon. Friend do about that? We have put particular cases to him, but we are told that it is the German Government who determine that a certain percentage of value must be added before goods can come out of West Germany. What on earth can we do about that, and what is already being done?

I want to ask my hon. Friend about the interpretation and application of free trade. We have already had one or two minor free trade measures for which we should be delighted, such as one on buses. I appeal to my hon. Friend to come to Southend and ask people at the airport how they get on with the free trade in buses. The Minister should consult the Foreign and Commonwealth Office and his own Department. He will know that, although our right hon. and learned Friend the Foreign Secretary met Mr. Genscher, although our right hon. Friend the Minister of State took proceedings, and although I took a group of Southend councillors to West Germany with the help of our ambassador in Bonn, sadly, nothing happened. Before the Minister goes ahead with more of this massive timetable, I plead with him when talking of the glorious opportunities to ask whether those opportunities really exist or are being planned.

I hope that the Government will also consider what other countries think about "fortress Europe". I was in America last week and met many people in business there. Some firms, such as Ford and Du Pont say, "Don't stir things up—we're in Europe and we want to make sure that we don't stir things up unnecessarily and bring out any anti-American feeling there." If the Minister were to talk to those engaged in trade, however, he would find that when they consider the proposals—there is some element of protectionism in all of them—they are concerned that the proposals seem specifically designed to try to keep out foreign trade. If the Minister has any doubts about that, he should talk to those who export computer chips because there are new proposals about the basis of organisation and about where research and development must come.

The Minister should also talk to the American banks. He will know that in America there is a system of national treatment whereby foreign banks have to have the same facilities and the same rights as United States banks. But that is not what "reciprocity" means, as my hon. Friend the Minister must be well aware. This is something entirely new, which will be protectionism in banking. If he doubts that, he should ask the Bank of America and its vice-president, Mr. Coleman.

Mr. Maude

I am sure that my hon. Friend has seen the Commission's new proposals on reciprocity, which were issued on Thursday last week and which specifically refer to national treatment.

Mr. Taylor

My hon. Friend must be well aware that the document, which I have with me in this pile of documents, states that the question of reciprocity can be referred to the Commission for interpretation. We know that the Minister and the Common Market have, on a number of occasions, given many specific assurances. Does my hon. Friend recall Ministers coming to the House time and time again to say, for example, how delighted they were that in 1987 agricultural spending increased by only 3.7 per cent. but the Court of Auditors' report shows that that was achieved by accountancy fiddles and that the real figure was 24 per cent. If my hon. Friend doubts that, he should come to Southend and talk to our bus company.

Mr. Maude

I am not quite sure where my hon. Friend's last point takes us, as it seems to lead into a wholly different area. On his point about reciprocity, the Commission's new proposals specifically state that the Commission would have powers to act against other countries' banks seeking authorisation in the Community only if they did not offer national treatment to EC banks seeking authorisation there. As I said, that point has met many of the existing anxieties, and although it does not meet all our concerns, it goes a considerable way towards doing so.

Mr. Taylor

1 should be delighted if that were so, but on the basis of my discussions last week with American banks and on the basis of speeches made by them on the basis of what had been agreed, I can tell the Minister that they are still acutely concerned that when it comes to the assessment of reciprocity and the question of the national agreement, it is the Community as a whole that will be considered by the Commission, not individual member states. Am I right?

Mr. Maude

I stress again that the new proposals were only announced on Thursday, so the banks to which my hon. Friend properly spoke last week will not have been aware of this radically new set of proposals.

Mr. Taylor

I hope that the situation is indeed so dramatically changed, but my understanding was that the assessment of the national situation was on the basis of the group of Community countries as opposed to individual member states. I ask the Minister, what is the need for that in any event, and if it is not a problem, why is everybody so concerned about it? Let the Minister talk to the chairman of Millipore, who has said that trading with Europe is difficult now—but that after 1992 it will become much worse.

I ask my hon. Friend the Minister to consider another important point. What on earth will be the position of the rules being imposed on us, which will create massive problems? For example, how will this country benefit from the tax harmonisation to which he referred? I refer especially to the harmonisation of taxation on alcohol and tobacco, on which the Government claim that we still have a measure of unanimity although, as he well knows, the European Court can overturn that by taking action. If my hon. Friend doubts that, let him look back to the speeches by Labour Treasury Ministers at the time of the sixth directive, which stated that all our zero rates were safe—yet six have now been overturned by the European Court.

The Minister will be aware that the assessment of the Health Department, according to an answer given in Parliament on 18 May last year, was that if the proposals were implemented, the consumption of alcoholic beverages would be increased by between 10 and 35 per cent. and of tobacco by between 5 and 20 per cent. but, more importantly, that the Government would lose revenue of exactly £3 billion, which would have to be made up in other ways.

The Minister also said that the Mafia issue and fraud were completely apart from the issue of 1992 and free trading. He said that with conviction, as though it was absolutely clear. I appeal to him to contact Giovanni Falgone, Sicily's leading anti-Mafia magistrate, who said specifically in a speech, reported in the Financial Times on 24 February that one of the least desirable benefits of a European single market would be to facilitate the export of Mafia crime from Sicily under the guise of apparently respectable business operations.

My hon. Friend should not under-estimate the extent of Mafia involvement in the EEC. He will be aware that the House of Lords has said that about £100 million per week is being spent on fraud. He will know that I have repeatedly asked his Department and others what action was taken on the clear example of the 19 million lira paid to the Mafia by the EEC for the non-delivery of non-existent fruit juice to NATO headquarters in Palermo. I have asked that question year after year since it occurred and I have asked about many other examples, but nothing has happened and no information has been forthcoming. If my hon. Friend the Minister thinks that there is no connection between fraud and the Mafia, perhaps he will consult those who seem to specialise in the matter.

My real worry is that in the Council of Ministers we are not able to control matters easily. I should like to ask the Minister about the control of firearms and immigration. The Minister will know that there is a proposal shortly to come before the Council of Ministers about mutual recognition of firearm certificates, which would mean that I could obtain a gun—perhaps a kalashnikov—in Sicily or Greece and then come to London and wander around with it. I understand that the Government oppose that and believe that it will undermine their firearm controls and and basis of the open frontiers.

There is a dispute, because the Commission appears to take the view that that should be decided by a majority vote and the Government take the view that it should be decided by unanimity. I ask the Minister what precise powers we have in that connection. My understanding from previous such occurrences is that, unless the Members of the Council of Ministers unanimously decide to reject the advice of the Commission, there is effectively nothing that we can do about it, apart from seeking to go to the European Court, perhaps three years later, which would not achieve a great deal.

I believe that that point is also relevant to immigration. We shall take a strong view on immigrants from Hong Kong after we hand over the country to the Communist Chinese, but what about the situation of the nearby Portuguese colonies which are classified as the overseas territories of Portugal and places such as French Guiana, which are classified as overseas territory of France? I suggest that the relationship of open frontiers could have an adverse effect on us.

Mr. A. J. Beith (Berwick-upon-Tweed)

rose—

Mr. Taylor

The main question is whether the Minister is really convinced that we are facing up to the real issue of free trade and not just going through a lot of silly nonsense on the various proposals that have come forward so far. I had the pleasure of having a long discussion with a civil servant, who had spent more than a year going backwards and forwards to and from Brussels engaged in the harmonisation of a proposal on clinical thermometers. His professional opinion was that there never had been any problem with clinical thermometers. I cannot see any problem that could emerge from clinical thermometers, but there was a real intention and a real need to get what was alleged to be a common standard.

When we consider the proposals for the noise levels of tower cranes, the regulations for the protection of hotels against fire, the recent modification of the lawn mower harmonisation of noise emission standards regulations and the hygiene conditions of fish—all of which I am sure are important to fish, to lawn mowers and to power cranes—I wonder whether we are really making progress on the real issues of free trade.

If the Minister has any doubts about this, he should think about insurance and banking, which matter a great deal to us. He should consider the implementation of the proposals. Before the Government go ahead and spend a lot more money seeking to persuade businesses of the unique opportunities open to them from a single market, they should try to establish—to some reasonable satisfaction—that the single market is likely to be created.

Sadly, I believe that the single market will not happen, although I wish it would, as it would be good for British business. I believe that we shall simply burden ourselves with a pile of rather foolish bureaucratic measures. We shall not solve the true problems of the EEC, such as the common agricultural policy and inability to control finance. Although it would be grand to say that we are moving towards free trade, sadly I believe that we are simply moving more and more towards protectionism and towards high expenditure, instead of the kind of liberality and freedom that Conservatives would choose.

11.15 pm

Mr. A. J. Beith (Berwick-upon-Tweed)

The hon. Member for Southend, East (Mr. Taylor) brings a great deal of information and the fruits of much inquiry to our debates. His logic, however, sometimes deserts him.

The hon. Gentleman has argued that 1992 will create a problem because holders of passports from Macao will be able to enter this country more easily after the abolition of border controls. The problem that the hon. Gentleman describes exists now. The border controls make no difference. The holder of a Portuguese passport issued in Macao is entitled to enter this country now. The disparity between the inhabitants of Macao and those of Hong Kong is of the Government's making and is not changed in any way by the arrival of 1992.

The hon. Gentleman argued that the progress towards the single market is almost non-existent, and he outlined a number of areas where the conditions are less than ideal. He then argued that 1992 will open up a vast range of new opportunities for the Mafia to clean up. The hon. Gentleman has ignored the fact that the single market does not involve the disbursement of funds, which is where fraud has occurred. The hon. Gentleman cannot have it both ways—either the single market will make a difference or it will make no significant difference and therefore will not open up new opportunities for fraud.

Mr. Teddy Taylor

rose—

Mr. Beith

The hon. Gentleman did not give way to me, so I do not feel obliged to give way to him. I attempted to intervene earlier to make my point.

The fact that we are debating now, at great length, making a reality of the single market, is a criticism of how the Community has developed. The essence of the creation of the Community was that it should be a single market—that is why it was called the Common Market. Wider political, social and strategic functions were in the minds of the founders of the Community, with the Common Market as its base.

The immediate advantage derived from a large market comparable to that of the United States sold the idea of the Community to many people in Britain. That we should have to set a target date to achieve some of the goals espoused at the Community's creation is a source of disappointment. Lord Cockfield, who is now in such bad odour with No. 10, played a large part in erecting 1992 as the target for achieving what should have been done years ago and thus to clear the way to free trade.

We often do not understand that the creation of common standards is necessary to bring down trade barriers. In that way, we will get away from the problem of another European country denying access to goods, on the grounds that they do not meet the required standard.

It is even more important to establish common standards now that concern about the environmental effects of products is so much greater. That concern has led to more and more necessary pressure for tighter standards. If those standards are not common throughout Europe, they will act as a restraint on trade. We might end up imposing conditions on our manufacturers which, desirable in themselves, may not have to be met by other European manufacturers. As a consequence, our manufacturers will suffer. It is of urgent importance that such common standards are achieved. In the course of achieving that goal, however, the Government have not killed the bogey of unnecessary harmonisation.

Mr. Quentin Davies (Stamford and Spalding)

Given that this country sometimes has higher standards governing health, safety or consumer protection, it is particularly in our interests that such standards should be harmonised, since otherwise our producers will be undercut in any free trade area—of which my hon. Friend the Member for Southend, East (Mr. Taylor) is in favour—by competition from the continent. That applies to manufacturing, where health, safety or environmental standards may be higher in this country, and also applies very much to financial services, a matter of legitimate concern to all parts of this House because it is a major British industry and one where we have very high standards of consumer protection, so it is particularly important that we are not undercut from the Continent by the lack of harmonisation.

Mr. Beith

I agree entirely with that view. It cuts both ways. Our standards are not always higher, whether one looks at some aspects of financial services or pollution standards in cars. We have not always been in the lead, but in some fields we are and have been, and we have a particular interest in ensuring that our standards are also required elsewhere.

Mr. Tim Janman (Thurrock)

Will the hon. Member give way?

Mr. Beith

I have just taken a rather long intervention, and I must make progress in what is a short debate. I know that other Members are seeking to take part.

I was about to say that the Government have not entirely killed off the bogey of unnecessary and pettifogging harmonisation in areas where it is not essential. A number of us were last week exchanging arguments with the Minister about goods which are not traded across the Community, buying 3 lb. of carrots or 5 lb of potatoes. When the Minister was saying earlier that this Government were pleased that harmonisation would not involve the imposition of legal restraints on matters not relevant to trade across the Community, I think he rather overlooked our exchanges last week and the likelihood that shopkeepers will be prosecuted for simply giving customers what they want when they weigh out goods on the spot; petty and trifling things like that give the European Community a bad name and give the objective of a single market in which different standards do not intervene a particularly bad name.

I feel the same about much of the VAT harmonisation. I was a member of the Treasury Select Committee when it produced its report critical of the VAT harmonisation proposals because, again, they are not directly relevant to the trading of goods between countries. Goods bear VAT in one country at the level at which it is applied in that country, and it is not a distortion of the price of the imported product that it is charged VAT at the same rate as the domestically produced product. That is another area where there can be an unnecessary degree of harmonisation.

Mr. Janman

The hon. Gentleman talks about what is relevant to the market. Does he not agree that, when we are talking about a market within one member state or a market across western Europe, market forces will determine which goods and services, and therefore that the standards on which those goods and services are based, will win in the marketplace? One does not need Eurocrats and politicians to make decisions on what those standards should be. If the hon. Member believes in a genuine free market across Europe, yes, let us have the free movement of goods and services across national boundaries, but it should be up to the customer within that European market to decide which set of standards will prevail.

Mr. Beith

The answer to the hon. Gentleman's question is no, it is not possible to assume that the market will sort out standards when national Governments will impose differing standards across the Community. It is not sufficient to assume that the market can be left wide open to the exploitation of the consumers by the failure of producers to apply standards, particularly in matters not immediately apparent to the consumer, on quality, safety or matters which may not harm the consumer but may harm others when he uses the product, such as the emission standards in vehicles. So there are all sorts of reasons why Government action in these areas is necessary, and compelling reasons why that action should not be taken solely by national Governments, because if it is, it will produce different standards and restraint of trade.

There are other anxieties about 1992 and the single market, some of which we ought to be able to dispel. I was quite struck by an article which appeared in The Independent on Monday by Catherine Itzin and Corinne Sweet about pornography. They make the point quite clearly: EC deregulation in 1992 will open the UK market to European pornography. I should be grateful if the Minister will comment on this in his reply. It does not seem to me that the existence of a single market will in any way remove the controls which we have in this country and in other countries on pornography and its distribution, and if it leaves any gap, we should do something about it.

Mr. Cryer

The hon. Gentleman is a member of the Liberal party, which is the Euro-fanatic party par excellence. Does he not realise that imports cannot be controlled without some scrutiny at borders? He referred to pornography, but the same argument can be applied to drugs. If we remove border controls, we remove scrutiny. We must consider illegal weapons and terrorists, but the Minister did not mention those matters, which are of great concern.

Mr. Beith

It is not true that there is no control over pornography, drugs or terrorism in the absence of border controls. A large proportion of the successful action taken against drugs is taken not by border controls, but occurs as a result of intervention within the country into which the drugs are brought. That occurs from tip-offs and detection work, not as a direct result of border controls. I am not aware of the balance in the case of pornography, but border control plays only a limited role in the detection of the passage of drugs.

Border controls do not stop criminals; they stop policemen and law enforcers. Who stops at the border? Not the person carrying the drugs. The police force stops at the border and must enter another jurisdiction and involve Interpol before it can take effective action across the borders. Criminals do not know these bounds. Where criminality is fuelled by vast sums of money, for example with drugs and pornography, borders are now of virtually no conseqence and are of little importance.

The hon. Member for Bradford, South (Mr. Cryer) is correct to say that we should have more discussion about border controls and their relevance, not least with regard to entry to the Community as a whole. Much of what enters this country is making its first landfall in the Community. We could have a complicated debate about that.

Mr. Hanley

Will the hon. Gentleman give way?

Mr. Beith

I want to make progress, because I know that other hon. Members want to speak.

The Government's motion refers to the Government's "strong commitment" to preparing for 1992. Where is that strong commitment with regard to the essential investment which will be required in 1992 if Britain is to compete in the single European market? Where is the commitment to investment in links from the north of England, Scotland and north Wales to the Channel tunnel? Ministers have appeared at meetings and said that that is a matter for British Rail.

There are major strategic decisions to be taken in areas where Governments most legitimately and necessarily are concerned. The French Government have no such inhibitions about involvement in ensuring that investment takes place in transport links to the Channel tunnel. Such investment is very important for industry in the north-east of England if it is to participate in the single European market. We clearly need a sign of the Government's commitment to the single European market in that area.

Where is the Government's commitment to the European monetary system and to the other monetary developments referred to in the report produced by the central bankers yesterday? The EMS is the most obvious first step. The Minister referred to the financial aspects of 1992, but he fails to recognise that industrialists want a stable and satisfactory exchange rate from 1992. Indeed, they want it sooner than that. They do not want to be at the mercy of a rapidly changing currency level or one that is prone to unrealistic valuation.

It is clear that the Chancellor of the Exchequer privately shares most of the views expressed by industry. Perhaps the Minister does as well; I do not know. He is not allowed to take that view, because the Prime Minister says that he cannot. The Government are divided on a fundamental issue of economic policy which has implications for this subject and for many others.

An historic statement was made tonight. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) announced from the Labour Front Bench that it was Labour party policy that Britain should join the European monetary system when the time is right. I feel that I must be right, because once again I find myself in disagreement with both the Conservative and the Labour parties, which are in agreement with each other. I think that that is a new development.

Mr. Henderson

Will the hon. Member accept my correction—that we would consider the matter of joining the EMS if the time were right?

Mr. Beith

Of course I accept the hon. Gentleman's clarification. Whereas the Government will join the European monetary system, when the time is right—and we all know that the time will not be right so long as the Prime Minister is in office—the Labour party will consider whether to join the European monetary system when the time is right. Whether the words "when the time is right" refer to the time to join or to the time to consider joining is a matter for further clarification, for which I will not press tonight.

These are all weasel words, designed to escape a fundamental disagreement that now appears to exist between those two parties as to whether we should join the exchange rate mechanism of the European monetary system. I submit that that should be in that mechanism. I know that that is the view of the Chancellor, and he is in a ludicrous position to be presiding as Chancellor when he cannot implement it.

11.31 pm

Rev. Ian Paisley (Antrim. North)

What is the future of Europe in the eyes of the Government and the Opposition? The Liberal spokesman, too—the hon. Member for Berwick-upon-Tweed (Mr. Beith)—failed to tell us his idea of the future. The explanatory document contains what I call high-falutin language about the key that will … unlock the door. Where will this door take us? Anybody who has been in the European Parliament knows that the door will take us to a federal Europe, a united states of Europe, a Europe in which national Parliaments have very little, if any, say.

The explanatory document says: we can stride confidently ahead into the new Europe which awaits us. What is that new Europe?

Mr. Cash

It is not a federal Europe.

Rev. Ian Paisley

The hon. Gentleman does not know very much about the trends in Europe. He does not know about the President of the Commission. He does not know very much about the votes in the European Parliament. I advise him to take a look at some of those votes.

Let us have a look at the rest of this document. It says: we are all the guardians of the future of Europe. The people of Europe expect us to deliver. We must do no less. What do they expect us to deliver? What are the Government telling the people of the United Kingdom they must deliver? The people of this country have a right to know. We have been told that we can make changes. The fact is that, when Europe makes up its mind, we can make no changes. When Europe has made a decision, this Parliament and all the other national Parliaments have to bow to it. That is the sad thing.

This document refers to a "truly European broadcasting area". It says: Such an area also involves freedom to broadcast, receive and transmit radio and television programmes". Who will control that? It will not be controlled by Acts of this Parliament. That is the vision of the great Europe that is ahead.

When we come to the abolition of controls on persons at internal frontiers, we have a very serious situation. If the Commission approves a directive that a person is entitled to carry a firearm, and if someone gets a firearm, say, in Sicily, nobody at a country's frontier can prevent that person from entering or take the gun away.

The hon. Member for Newcastle-upon-Tyne, North (Mr. Henderson) talked about the sort of scrutiny we are having tonight. We in Northern Ireland have suffered from that in our own legislation.

Orders in Council cannot be amended, and it is not possible to debate them properly. Now, in respect of Europe, we are into the same category of debate.

People should look very seriously at this matter. It is all very well to talk about a great, grand, new Europe and about doors opening. I should like to know what sort of Europe the Government envisage. What I have learnt from the European Parliament, from the European Commission's President, to whom I have talked, and from all the attitudes of Europe, is that they want a united states of Europe, in which they will govern, and we will be like a parish council with no real authority to govern our own country.

11.34 pm

Mr. Nigel Spearing (Newham, South)

I shall follow the hon. Member for Antrim, North (Rev. Ian Paisley) in some personal remarks in a few moments, but first, in my semi-official capacity, I want to refer to the scrutiny procedure.

The Minister said how seriously the Government treat scrutiny. I shall believe that when the time given for debates of this importance is more than that allocated to domestic statutory instruments by a Conservative Government in 1951, who kept the House up all night when such statutory instruments were open-ended. That is a measure of the procedural slippage on our domestic legislation. That our debates on these important matters are still limited to an hour and a half after 10 o'clock shows the concern that Her Majesty's Government have for such matters. It so happens that not many hon. Members are here tonight. That is not commensurate with the importance of the topic. If they were, three hours would be a better time.

I am rather disappointed with the report. It is the halfway stage in the creation of a single market, and document 9756/89 is supposed to tell us what has been happening. Instead of listing 279 documents in an appendix, as I thought it would, it looks ahead at what is still to happen. We do not know how far things have got. There is no index tick sheet or list of where the documents have gone. We know that some have been adopted, some have been proposed and some are in the process of being discussed. There is no appendix to tell us how far that process has gone.

I now switch to a personal hat. I am afraid that Conservative Members are living in an area of unreality, despite the efforts of the noble Lord Young. We keep on referring to 1992. It is not then at all; it is now. It is by the end of 1992. The French refer to 1993, but it is happening now. If business men or Conservative Members want to know what is going on they had better have a look at the weekly reports of the Scrutiny Committee. I do not know how many Conservative Members read them or send them to their chambers of commerce weekly or whether those chambers of commerce buy them. We made 44 reports last year and there will probably be the same number this year. Anything up to 20 complex and detailed proposals and documents are reported on each week. That is what is going on.

Let me deal now with one or two definitions. The EEC is not just a free trade area. As we know, it is something far more. I shall telescope my remarks and my logic because this fills in what the hon. Member for Antrim, North was saying. With the abolition of frontiers, which is what the 1992 package is all about, the frontier is not definable. Until now we have thought of lorries and guns and most of the points that my hon. Friend the Member for Bradford, South (Mr. Cryer) made. But surely by definition a frontier marks a difference of jurisdiction—Britain, France, whatever it may be. We may not appreciate that, because if we go from here to Portugal we go to another jurisdiction via the sea. If the law is different from one side of the border to the other, the border exists. Ergo, the dissolution of frontiers means the dissolution of differences of jurisdiction and law. But over what area does that apply?

Recently I asked the Attorney-General to what areas of law the abolition of frontiers did not apply. I think that he said family and criminal law. There is hardly an aspect of life in Britain, whether commecial, industrial, specifications, standards of safety and all sorts of things, which cannot be within the scope of the single European market without frontier. Ergo, it means that our jurisdiction over these matters is ended—the point made by the hon. Member for Antrim, North—and we are subject by and large to a superior jurisdiction, that of the combined institutions of the Commission, the Council and the European Parliament. If any Conservative Member wishes to contest that, he is free to do so, but surely one follows from the other. That is what the Single European Act was about. That is why the Government, who want to listen to what we have to say now, did not want to listen in 1986 when the Act was railroaded through on a guillotine.

These debates, important though they are, are only advisory. The Minister can go and do what he does at Brussels at his peril. It is difficult to find out exactly what he does. It is no wonder that not many hon. Members come to these debates even though they are shorter than they should be.

The Government are committed not just to that other jurisdiction but to economic and monetary union. As long ago as 19 June 1983, the Prime Minister signed the solemn declaration on European union at Stuttgart, which reads: determined to achieve a comprehensive and coherent common political approach and reaffirming their will to transform the whole complex of relations between their States into a European Union. It may not be the united states of Europe, to which the hon. Member for Antrim, North has just referred, and to which the Prime Minister referred at Bruges. It is something unitary. It is not the united states of Europe because the states do not exist. It is one nation, a European union. Laws are made in a unitary manner. Of that there can be no doubt.

It is not therefore surprising that the latest emanation is the expression of the single market that we had in the Delors banking report yesterday: as capital movements are liberalised and as the internal market programme is implemented, each country will be less and less shielded from developments elsewhere in the Community. The attainment of national economic objectives will become more dependent on a co-operative approach to policy-making. Hon. Members may translate that as they will. Later, it said: Although in many respects a natural consequence of the commitment to create a market without internal frontiers, the move towards economic and monetary union represents a quantum jump which could secure a significant increase in economic welfare in the Community. Indeed, economic and monetary union implies far more than the single market programme and, as is discussed in the following two Parts of this Report, will require further major steps in all areas of economic policy-making. Hon. Members may say that we have not agreed to that. But we have, because on at least two occasions—at Stuttgart and in the preamble to the Single European Act—we signed a declaration that we are in favour of economic and monetary union.

As Mr. Delors and his friends, including in an individual capacity the Governor of the Bank of England, have said, this cannot be done without a central bank, one currency, a single economic policy and, of course, harmonisation of taxation. So it is not just a single market that we are in; it is much bigger. One goes with the other. It is something to which Her Majesty's Government, knowingly or otherwise, are committed but to which I hope that my hon. Friends and I are not.

11.43 pm

Mr. William Cash (Stafford)

I do not share the pessimism that has permeated much of the debate. Many aspects of the single market can and should be welcomed, but I have grave reservations about what I have consistently described as creeping federalism. There is continuing evidence of that. There is no doubt that the European Court of Justice itself has a centre of gravity which inevitably will draw us further in that direction unless we do something about it.

I was heartened—this is one reason for my current state of optimism—by a recent visit that I paid to France with my fellow members of the Select Committee on European Legislation. It transpired while we were there, by coincidence—apparently following the lines that we in this country have been adopting in our small campaign to ensure that federalism does not take a grip—that in the French Parliament—in the National Assembly and in the Senate—Bills of Parliament were introduced to reassert their say over European legislation. Obviously, that say has been diminishing to a point when they could take it no longer.

I believe that we shall find that happening elsewhere in Europe. While, therefore, I am a supporter of the single market, for all the reasons that can be adduced—greater liberalisation of capital movements and so on—some of which have been under-estimated in a number of the speeches made tonight, there is now a great opportunity for us, through the national Parliaments of the Community, to make up for what has been described as a democratic deficit. The European Parliament—unless we were to become a federal state—will not do that.

It is vital that we use the fermentation process of debates of this kind to raise the awareness of the people of this country to what is going on in Europe. At the same time, we can alert them to the advantages of what is going on—and the reservations we have. We can then allow the democratic process to do its job. As some French senators told us, Britain is, in effect, leading Europe back into democracy through what we have been doing in this House.

It is indicative that tonight, while we do not have a full Chamber, there are many more Members in attendance at this late hour than there are for many debates which take place in prime time. I agree with the hon. Member for Newham, South (Mr. Spearing) that a disproportionate amount of time is spent on the directives compared with primary legislation. We dealt with the second banking directive in about an hour and a half, whereas we spent about two months looking into the Banking Bill before it was passed in 1987. It seems, from what has been said by the Leader of the House and others, that there will be changes in our procedures.

The hon. Member for Antrim, North (Rev. Ian Paisley) referred to what is contained on pages 13 and 14 of the report that is before the House, under the description "The prospect ahead". We find there descriptions that go way over the top of what is involved. For example, we are told that heroic decisions are to be taken to ensure that the internal market is completed.

This is, in many respects, a prosaic exercise with much at stake, and we must get it right. But I have reservations, for example, about the directive on health and safety, which no doubt contains much useful material. If a law is passed but not enforced elsewhere in the Community, that sets up an anti-competitive regime. It means that, whereas the Health and Safety Executive in this country is enforcing the requirements, they may not be enforcing them elsewhere in Europe.

When the hormone regulations were about to go through, we debated them in the House. We made sure that there was a debate before adoption. We should follow that principle—as set down in a resolution of this Parliament in 1980—in every respect.

There are great economic advantages in the single market, but there are distinct disadvantages if we are to go down a federal route. I say that with no apology for repetition. There is a centre of gravity towards federalism; we can and will resist it, but we will be able to do that only by taking effective measures in the House and in the country. Other member states will follow us towards that end.

11 .49 pm

Mr. Maude

My hon. Friend the Member for Stafford (Mr. Cash) finished on a note that will command widespread support in the House. There may be those in the Community who wish the Community to move in a federalist direction, and he asserts firmly, as I am content to do also, that the Government will resist such a move. It is quite inappropriate, and also quite unnecessary in achieving the real benefits that are to be gained under the provisions of the single European act. I can reassure him and others who have voiced such fears that the Government will continue robustly to resist moves in that direction.

My hon. Friend the Member for Southend, East (Mr. Taylor) mentioned firearms and frontiers. It is important to be clear about this: steps are being taken and work is being done on removing some of the inconveniences of frontiers for legitimate travellers, and it is perfectly proper that that work should go foward; but we have said repeatedly that the work should come to fruition only as far as is consistent with retaining proper control over the illegal passage of drugs, firearms and other things which concern us all.

My hon. Friend the Member for Southend, East referred specifically to the directive on firearms. He is quite right to say that we have opposed this proposal, as have several other member states. We shall continue to do so. Article 36 of the treaty allows restrictions on imports which are justified on the grounds of public security, and we shall continue to uphold our right to restrict the import of things which come under this heading.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) referred to the free circulation of pornography. The self-same article of the treaty allows import restrictions justified on grounds of public morality. I hope that that reassures the hon. Gentleman. We will maintain our right to impose checks at frontiers to control the movement of drugs, pornography, terrorists and firearms.

My hon. Friend the Member for Southend, East also referred to the problems of inner-German trade. I recognise that there is concern about this. That is why officials of my Department have been in Bonn today to discuss with the German Government their control methods and their checks to deter fraud. The German Government put a great deal of effort into checking goods at the inner-German borders to ensure that goods are not being diverted from other eastern bloc countries. They carry out checks at factories in Germany, all of which must be authorised before they can carry on inner-German trade. They have taken severe action where fraud has been found, and people have been sent to prison for such frauds. For all these reasons, leakage of East German goods into member states is low, but we will follow up any specific cases which the hon. Member for Southend, East or any other hon. Member cares to raise with us.

The hon. Member for Berwick-upon-Tweed talked much good sense on this subject, greatly at odds, if I may say so, with what was aptly described as the "Euro-fanaticism" of many in his party. He took a practical view of what the single market can achieve. There are real benefits for this country, but we must not allow ourselves to be diverted—

It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 (Exempted business).

The House divided: Ayes 106, Noes 17.

Division No. 165]	[11.54 pm
AYES
Amess, David	Knowles, Michael
Amos, Alan	Lang, Ian
Arbuthnot, James	Lawrence, Ivan
Arnold, Jacques (Gravesham)	Leigh, Edward (Gainsbor'gh)
Arnold, Tom (Hazel Grove)	Lightbown, David
Atkinson, David	Lilley, Peter
Batiste, Spencer	Livsey, Richard
Beith, A. J.	Lloyd, Peter (Fareham)
Bennett, Nicholas (Pembroke)	Lord, Michael
Bevan, David Gilroy	Lyell, Sir Nicholas
Boswell, Tim	Maclean, David
Bowis, John	McLoughlin, Patrick
Brandon-Bravo, Martin	Mans, Keith
Brazier, Julian	Maude, Hon Francis
Bright, Graham	Meyer, Sir Anthony
Brown, Michael (Brigg & Cl't's)	Miller, Sir Hal
Browne, John (Winchester)	Mills, Iain
Burns, Simon	Moynihan, Hon Colin
Burt, Alistair	Neubert, Michael
Carlisle, Kenneth (Lincoln)	Nicholls, Patrick
Carrington, Matthew	Nicholson, David (Taunton)
Cash, William	Norris, Steve
Chapman, Sydney	Paice, James
Coombs, Anthony (Wyre F'rest)	Porter, David (Waveney)
Coombs, Simon (Swindon)	Portillo, Michael
Davies, Q. (Stamf'd & Spald'g)	Raffan, Keith
Davis, David (Boothferry)	Rhodes James, Robert
Day, Stephen	Sackville, Hon Tom
Douglas-Hamilton, Lord James	Shaw, David (Dover)
Durant, Tony	Shaw, Sir Michael (Scarb')
Ewing, Mrs Margaret (Moray)	Steel, Rt Hon David
Fallon, Michael	Stern, Michael
Fearn, Ronald	Stevens, Lewis
Fenner, Dame Peggy	Stewart, Allan (Eastwood)
Forman, Nigel	Stradling Thomas, Sir John
Forsyth, Michael (Stirling)	Summerson, Hugo
Forth, Eric	Taylor, John M (Solihull)
Fry, Peter	Thompson, D. (Calder Valley)
Garel-Jones, Tristan	Thompson, Patrick (Norwich N)
Gill, Christopher	Thurnham, Peter
Goodhart, Sir Philip	Twinn, Dr Ian
Hanley, Jeremy	Waddington, Rt Hon David
Hargreaves, Ken (Hyndburn)	Wallace, James
Harris, David	Waller, Gary
Howarth, Alan (Strat'd-on-A)	Watts, John
Howarth, G. (Cannock & B'wd)	Welsh, Andrew (Angus E)
Hunt, David (Wirral W)	Wheeler, John
Irvine, Michael	Widdecombe, Ann
Jack, Michael	Wilkinson, John
Jackson, Robert	Wilshire, David
Janman, Tim	Wood, Timothy
Johnston, Sir Russell
King, Roger (B'ham N'thfield)	Tellers for the Ayes:
Kirkwood, Archy	Mr. Stephen Dorrell and
Knapman, Roger	Mr. David Heathcoat-Amory.
NOES
Barnes, Harry (Derbyshire NE)	Paisley, Rev Ian
Dixon, Don	Powell, Ray (Ogmore)
Foster, Derek	Skinner, Dennis
Golding, Mrs Llin	Spearing, Nigel
Haynes, Frank	Wardell, Gareth (Gower)
Henderson, Doug	Wareing, Robert N.
Kilfedder, James
Loyden, Eddie	Tellers for the Noes:
McFall, John	Mr. A. J. Beith and
McKay, Allen (Barnsley West)	Mr. Bob Cryer.
Molyneaux, Rt Hon James

Question accordingly agreed to.

Resolved, That this House takes note of European Community Documents Nos. 9756/88 on completing the Single Market and 10413/88 on technical standards and regulations; recognises that the Single Market will bring important opportunities and challenges for business and benefits for the consumer; welcomes progress to date on the Single Market and endorses the Government's strong commitment to completing it, and welcomes the Government's campaign to encourage UK business to prepare now for the Single Market.